SERIES B PREFERRED STOCK PURCHASEAGREEMENT Dated as of December 31, 2008 by and among BOND LABORATORIES, INC. and THE PURCHASERS LISTED ON EXHIBIT A
SERIES
B PREFERRED STOCK
PURCHASEAGREEMENT
Dated
as of December 31, 2008
by
and among
and
THE
PURCHASERS LISTED ON EXHIBIT A
KL2 2561696.7
TABLE OF
CONTENTS
Page
|
ARTICLE I
|
Purchase and Sale of Series B Preferred Stock |
1
|
|
|
Section
1.1
|
Purchase
and Sale of Preferred Stock
|
1
|
|
|
Section
1.2
|
Purchase
Price and Closing
|
1
|
|
ARTICLE II
|
Representations and Warranties |
2
|
|
|
Section
2.1
|
Representations
and Warranties of the Company
|
2
|
|
|
Section
2.2
|
Representations and Warranties of the Purchasers |
14
|
|
ARTICLE III
|
Covenants |
17
|
|
|
Section
3.1
|
Securities
Compliance
|
17
|
|
|
Section
3.2
|
Registration
and Listing
|
17
|
|
|
Section
3.3
|
Inspection
Rights
|
18
|
|
|
Section
3.4
|
Compliance
with Laws
|
18
|
|
|
Section
3.5
|
Keeping
of Records and Books of Account
|
18
|
|
|
Section
3.6
|
Reporting
Requirements
|
18
|
|
|
Section
3.7
|
Other
Agreements
|
18
|
|
|
Section
3.8
|
Use
of Proceeds
|
19
|
|
|
Section
3.9
|
Reporting
Status
|
19
|
|
Section
3.10
|
Intentionally
Omitted
|
19
|
|
Section
3.11
|
Disclosure
of Material Information
|
19
|
|
Section
3.12
|
Form
D
|
19
|
|
Section
3.13
|
No
Integrated Offerings
|
19
|
|
Section
3.14
|
Pledge
of Securities
|
19
|
|
Section
3.15
|
▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act
|
19
|
|
ARTICLE IV
|
Conditions |
20
|
|
|
Section
4.1
|
Conditions
Precedent to the Obligation of the Company to Close and to Sell the
Securities
|
20
|
|
|
Section
4.2
|
Conditions
Precedent to the Obligation of the Purchasers to Close and to Purchase the
Securities
|
20
|
|
ARTICLE V
|
Certificate Legend |
22
|
|
|
Section
5.1
|
Legend
|
22
|
|
ARTICLE VI
|
Indemnification |
23
|
|
|
Section
6.1
|
Company
Indemnity.
|
23
|
|
|
Section
6.2
|
Indemnification
Procedure
|
24
|
|
ARTICLE II
|
Representations and Warranties |
25
|
|
|
Section
7.1
|
Fees
and Expenses
|
25
|
|
|
Section
7.2
|
Specific
Performance; Consent to Jurisdiction; Venue.
|
25
|
|
|
Section
7.3
|
Entire
Agreement; Amendment
|
25
|
|
|
Section
7.4
|
Notices
|
26
|
|
|
Section
7.5
|
Waivers
|
26
|
|
|
Section
7.6
|
Headings
|
26
|
|
|
Section
7.7
|
Successors
and Assigns
|
27
|
TABLE OF
CONTENTS
(continued)
Page
|
|
Section
7.8
|
Intentionally
Omitted
|
27
|
|
|
Section
7.9
|
No
Third Party Beneficiaries
|
27
|
|
|
Section
7.10
|
Governing
Law
|
27
|
|
|
Section
7.11
|
Survival
|
27
|
|
|
Section
7.12
|
Counterparts
|
27
|
|
|
Section
7.13
|
Publicity
|
27
|
|
|
Section
7.14
|
Severability
|
27
|
|
|
Section
7.15
|
Further
Assurances
|
27
|
KL2 2561696.7
This
SERIES B PREFERRED STOCK PURCHASEAGREEMENT (this “Agreement”), dated as
of December 31, 2008 by and among Bond Laboratories, Inc., a Nevada corporation
(the “Company”), and the
purchasers listed on Exhibit A hereto
(each a “Purchaser” and
collectively, the “Purchasers”), for the
purchase and sale of shares of the Company’s Series B Preferred Stock (the
“Series B Preferred
Stock”) and shares of the Company’s common stock, par value $0.001 per
share (the “Common
Stock”) by the Purchasers.
The
parties hereto agree as follows:
ARTICLE
I
PURCHASE
AND SALE OF SERIES B PREFERRED STOCK
Section
1.1 Purchase and Sale of
Preferred Stock.
(a) Upon the
following terms and conditions, the Company shall issue and sell to the
Purchasers, and the Purchasers shall purchase from the Company, shares of Series
B Preferred Stock (each a “Preferred Share” and
collectively the “Preferred Shares”) at
a price per share of $10,000.00 (the “Per Share Purchase
Price”) for an aggregate purchase price of up to Ten Million Dollars
($10,000,000) (the “Purchase
Price”). Each Purchaser shall pay the portion of the Purchase
Price set forth opposite its name on Exhibit A hereto as
the same may be amended or supplemented from time to time. The designation,
rights, preferences and other terms and provisions of the Series B Convertible
Preferred Stock are set forth in the Certificate of Designation of the Relative
Rights and Preferences of the Series B Convertible Preferred Stock attached
hereto as Exhibit
B (the “Certificate of Designation”). The Company and the
Purchasers are executing and delivering this Agreement in accordance with and in
reliance upon the exemption from securities registration afforded by Section
4(2) of the U.S. Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the “Securities Act”),
including Regulation D (“Regulation D”),
and/or upon such other exemption from the registration requirements of the
Securities Act as may be available with respect to any or all of the investments
to be made hereunder.
(b) Upon the
following terms and conditions without additional consideration, each of the
Purchasers shall be issued 60,000 shares of the Company’s common stock, par
value $.001 per share (the “Common Shares”) for
each Preferred Share purchased, as set forth opposite such Purchaser’s name on
Exhibit A
hereto. The Preferred Shares, and the Common Shares are sometimes
collectively referred to herein as the “Securities.”
Section
1.2 Purchase Price and
Closing. In consideration of and in express reliance upon the
representations, warranties, covenants, terms and conditions of this Agreement,
the Company agrees to issue and sell to the Purchasers and, in consideration of
and in express reliance upon the representations, warranties, covenants, terms
and conditions of this Agreement, the Purchasers, severally but not jointly,
agree to purchase the number of Preferred Shares and Common Shares set forth
opposite their respective names on Exhibit
A. The Preferred Shares
1
Section
1.3 may be
funded in multiple closings under this Agreement, with each closing being
defined as the “Closing.” An
initial Closing under this Agreement (the “Initial Closing”)
shall take place on December 31, 2008 (the “Initial Closing Date”) and
shall be funded in the amount of One Million Two Hundred Fifty Thousand Dollars
($1,250,000). Any additional Closings shall each be defined as the
“Additional
Closing.” Each Closing under this Agreement shall take place at the
offices of the Company, provided, that all of
the conditions set forth in Article IV hereof and applicable to such Closing
shall have been fulfilled or waived in accordance herewith. At each
Closing and upon receipt by the Company of the appropriate
purchase price from each Purchaser (i.e., a purchase price equal to the number
of Preferred Shares to be purchased by such Purchaser multiplied by the Per
Share Purchase Price), the Company shall deliver or cause to be delivered
to each such Purchaser (x) a certificate
for the number of Preferred Shares set forth opposite the name of such Purchaser
on Exhibit A
hereto, (y) a certificate for the number of Common Shares set forth opposite the
name of such Purchaser on Exhibit A hereto and
(z) any other documents required to be delivered pursuant to Article IV
hereof. Each Purchaser shall
deliver each of the documents required to be
delivered by it pursuant to Article IV hereof as well as its portion of the
Purchase Price by wire transfer to the Company prior to each
Closing.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES
Section
2.1 Representations and
Warranties of the Company. The Company hereby represents and
warrants to the Purchasers as follows, as of the date hereof (or other
applicable date as stated in this Section 2.1) e, except as set forth on the
Schedule of Exceptions attached hereto with each numbered Schedule corresponding
to the section number herein:
(a) Organization, Good Standing
and Power. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Nevada and
has the requisite corporate power to own, lease and operate its properties and
assets and to conduct its business as it is now being conducted. The
Company does not have any Subsidiaries (as defined in Section 2.1(g)) or own
securities of any kind in any other entity except as set forth on Schedule 2.1(g)
hereto. The Company and each such Subsidiary (as defined in Section
2.1(g)) is duly qualified to do business as a foreign corporation and is in good
standing in every jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary except for any
jurisdiction(s) (alone or in the aggregate) in which the failure to be so
qualified will not have a Material Adverse Effect. For the purposes
of this Agreement, “Material Adverse
Effect” means any effect on the business, results of operations, assets
or condition (financial or otherwise) of the Company that is material and
adverse to the Company and its Subsidiaries (as hereafter defined) taken as a
whole, and/or any condition, circumstance, or situation that would prohibit or
otherwise materially interfere with the ability of the Company from entering
into and performing any of its obligations under the Transaction Documents (as
defined below) in any material respect; provided, however, that Material Adverse Effect shall not be deemed to
include: (i) changes in applicable law or (ii) any effect resulting from the
public announcement of the transactions
2
(b) contemplated by this Agreement or the consummation of the transactions contemplated by this
Agreement.
(c) Authorization;
Enforcement. The Company has the requisite corporate power and
authority to enter into and perform this Agreement, by and among the
Company, and the Purchasers (together with any additional documents
required to be executed in connection with the transaction contemplated by this
Agreement, the “Transaction
Documents”), and to issue and sell the Securities in accordance with the
terms hereof and to complete the transactions contemplated by the Transaction
Documents. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly and validly authorized by all necessary
corporate action, and, except as set forth on Schedule 2.1(b), no
further consent or authorization of the Company, its Board of Directors or
stockholders is required. When executed and delivered by the Company,
each of the Transaction Documents shall constitute a valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as rights to indemnity and contribution may be limited by federal
or state securities laws and except as such enforceability may be limited by
applicable bankruptcy, reorganization, moratorium, liquidation, conservatorship,
receivership or similar laws relating to, or affecting generally the enforcement
of, creditors’ rights and remedies or by other equitable principles of general
application.
(d) Capitalization. The
authorized capital stock of the Company as of the date hereof is set forth on
Schedule 2.1(c)
hereto. All of the outstanding shares of the Common Stock and any
other outstanding security of the Company have been duly and validly authorized
and validly issued, fully paid and nonassessable and were issued in accordance
with the registration or qualification provisions of the Securities Act, or
pursuant to valid exemptions therefrom. Except as provided in this
Agreement or as set forth on Schedule 2.1(c)
hereto, including the rights, preferences and privileges of the Company’s Series
A Convertible Preferred Stock, no shares of Common Stock or any other security
of the Company are entitled to preemptive rights, registration rights, rights of
first refusal or similar rights and there are no outstanding options, warrants,
scrip, rights to subscribe to, call or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company. Furthermore, except (i) as set forth in this
Agreement, (ii) for stock options and restricted stock issued by the Company to
its employees, directors and consultants, (iii) as set forth in the Commission
Documents (as defined in Section 2.1(f)), and (iv) as set forth on Schedule 2.1(c)
hereto, there are no contracts, commitments, understandings, or arrangements by
which the Company is or may become bound to issue additional shares of the
capital stock of the Company or options, securities or rights convertible into
shares of capital stock of the Company. Except for customary transfer
restrictions contained in agreements entered into by the Company in order to
sell restricted securities or as provided in the Registration Rights Agreement
or except as set forth in the Commission Documents or on Schedule 2.1(c)
hereto, the Company is not a party to or bound by any agreement or understanding
granting registration or anti-dilution rights to any person with respect to any
of its equity or debt securities. Except as set forth in the
Commission Documents and on Schedule 2.1(c), the
Company is not a party to, and it has no Knowledge of, any agreement or
understanding restricting the voting or transfer of any shares of the capital
stock of the Company. Except as disclosed in the Commission Documents
or on Schedule
2.1(c), (i) there
3
(e) are no
outstanding debt securities, or other form of material debt of the Company or
any of its Subsidiaries, (ii) there are no contracts, commitments,
understandings, agreements or arrangements under which the Company or any of its
Subsidiaries is required to register the sale of any of their securities under
the Securities Act, (iii) there are no outstanding securities of the Company or
any of its Subsidiaries which contain any redemption or similar provisions, and
there are no contracts, commitments, understandings, agreements or arrangements
by which the Company or any of its Subsidiaries is or may become bound to redeem
a security of the Company or any of its Subsidiaries, (iv) there are no
securities or instruments containing anti-dilution or similar provisions that
will be triggered by the issuance of the Securities, (v) the Company does not
have any stock appreciation rights or “phantom stock” plans or agreements, or
any similar plan or agreement and (vi) as of the date of this Agreement, to the
Company’s and each of its Subsidiaries’ Knowledge, no Person (as defined below)
or group of related Persons beneficially owns (as determined pursuant to Rule
13d-3 promulgated under the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder (the “Exchange Act”)) or
has the right to acquire by agreement with or by obligation binding upon the
Company, beneficial ownership of in excess of 10% of the Common
Stock. Any Person with any right to purchase securities of the
Company that would be triggered as a result of the transactions contemplated
hereby or by any of the other Transaction Documents has waived such rights or
the time for the exercise of such rights has passed, except where failure of the
Company to receive such waiver would not have a Material Adverse
Effect. Except as set forth in the Commission Documents, on Schedule 2.1(c) or
the rights, preferences and privileges of the Company’s Series A Convertible
Preferred Stock, there are no options, warrants or other outstanding securities
of the Company (including, without limitation, any equity securities issued
pursuant to any Company Plan) the vesting of which will be accelerated by the
transactions contemplated hereby or by any of the other Transaction
Documents. Except as set forth in Schedule 2.1(c), none
of the transactions contemplated by this Agreement or by any of the other
Transaction Documents shall cause, directly or indirectly, the acceleration of
vesting of any options issued pursuant the Company’s stock option
plans. For purposes of this Agreement, “Knowledge” means (i)
the actual knowledge of those officers of the Company required to file
statements relating to their ownership of the Company’s securities pursuant to
Section 16 of the Exchange Act, and (ii) with respect to each Subsidiary, the
executive officers of such Subsidiary.
(f) Issuance of
Securities. The Preferred Shares and the Common Shares to be
issued at the Closing have been duly authorized by all necessary corporate
action and, when paid for and issued in accordance with the terms hereof, and
subject to and in reliance on the representations, warranties and covenants of
the Purchasers made herein, the Preferred Shares and the Common Shares will be
validly issued, fully paid and nonassessable and free and clear of all liens,
encumbrances and rights of refusal of any kind and the holders shall be entitled
to all rights accorded to a holder of Common Stock.
(g) No
Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not and will not (i) violate any
provision of the Company's Articles of Incorporation (the “Articles”) or Bylaws
(the “Bylaws”),
each as amended to date, or any Subsidiary's comparable charter documents, (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to
4
(h) others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, mortgage, deed of trust, indenture, note, bond, license, lease
agreement, instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries'
respective properties or assets are bound, or (iii) result in a violation of any
federal, state or local statute, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations) applicable to the
Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected, except, in all cases,
other than violations pursuant to clauses (i) or (iii) (with respect to federal
and state securities laws) above, for such conflicts, defaults, terminations,
amendments, acceleration, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries is required
under federal, state, foreign or local law, rule or regulation to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or perform any
of its obligations under the Transaction Documents or issue and sell the
Securities in accordance with the terms hereof (other than any filings, consents
and approvals which may be required to be made by the Company under applicable
state and federal securities laws, or rules).
(i) Commission Documents,
Financial Statements. The Common Stock of the Company is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and, except
as disclosed on Schedule 2.1(f)
hereto, the Company has timely filed all reports, schedules, forms, statements
and other documents required to be filed by it with the Securities and Exchange
Commission (the “Commission”) pursuant
to the reporting requirements of the Exchange Act, including pursuant to
Sections 13, 14 or 15(d) thereof (all of the foregoing and all exhibits included
therein and financial statement and schedules thereto, including filings
incorporated by reference therein being referred to herein as the “Commission
Documents”). At the times of their respective filings, the
Form 10-Q for the fiscal quarters ended March 31, June 30, and September 30,
2008 (collectively, the “Form 10-Q”) and the
Form 10-KSB for the fiscal year ended December 31, 2007 (the “Form 10-K”) complied
in all material respects with the requirements of the Exchange Act and the rules
and regulations of the Commission promulgated thereunder, and, to the Knowledge
of the Company, the Form 10-Q and Form 10-K at the time of their respective
filings did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of their respective dates, the financial
statements of the Company included in the Commission Documents complied as to
form and substance in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission or other
applicable rules and regulations with respect thereto. Such financial
statements, together with the related notes and schedules thereto, have been
prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the Notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements), and fairly present in all material respects the financial
position of the Company and its Subsidiaries as of the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit
adjustments).
5
(j) Subsidiaries. The
Commission Documents or Schedule 2.1(g)
hereto sets forth each Subsidiary of the Company, showing the jurisdiction of
its incorporation or organization and showing the percentage of each person's
ownership of the outstanding stock or other interests of such
Subsidiary. For the purposes of this Agreement, “Subsidiary” shall
mean any corporation or other entity of which at least a majority of the
securities or other ownership interest having ordinary voting power (absolutely
or contingently) for the election of directors or other persons performing
similar functions are at the time owned directly or indirectly by the Company
and/or any of its other Subsidiaries. All of the outstanding shares of
capital stock of each Subsidiary have been duly authorized and validly issued,
and are fully paid and nonassessable. Except as set forth in the Commission Documents,
there is no
outstanding preemptive, conversion or other rights, options, warrants or
agreements granted or issued by or binding upon any Subsidiary for the purchase
or acquisition of any shares of capital stock of any Subsidiary or any other
securities convertible into, exchangeable for or evidencing the rights to
subscribe for any shares of such capital stock. Neither the Company
nor any Subsidiary is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of the capital stock of any
Subsidiary or any convertible securities, rights, warrants or options of the
type described in the preceding sentence except as set forth on Schedule 2.1(g)
hereto or in the Commission Documents. Except as set forth in the
Commission Documents, neither the Company nor any Subsidiary is party to, nor
has any Knowledge of, any agreement
restricting the voting or transfer of any shares of the capital stock of any
Subsidiary.
(k) No Material Adverse
Change. Since December 31, 2007, the Company has not
experienced or suffered any Material Adverse Effect, except as disclosed in the
Commission Documents or on Schedule 2.1(h)
hereto.
(l) No Undisclosed
Liabilities. Except as disclosed in the Commission Documents
or on Schedule
2.1(i) hereto, since December 31, 2007, neither the Company nor any of
its Subsidiaries has incurred any liabilities, obligations, claims or losses
(whether liquidated or unliquidated, secured or unsecured, absolute, accrued,
contingent or otherwise) that would be required to
be disclosed on a balance sheet of the Company or any Subsidiary (including the
notes thereto) in conformity with GAAP and are not disclosed in the Commission
Documents, other than those incurred in the ordinary course of the
Company's or its Subsidiaries respective businesses or which, individually or in
the aggregate, are not reasonably likely to have a Material Adverse
Effect. Since December 31, 2007, except as disclosed in Commission
Documents or on Schedule 2.1(i)
hereto, none of the Company or any of its Subsidiaries has participated in any
transaction material to the condition of the Company which is outside of the
ordinary course of its business.
(m) No Undisclosed Events or
Circumstances. Since December, 2007, except as disclosed in
the Commission Documents or on Schedule 2.1(j)
hereto, no event or circumstance has occurred or exists with respect to the
Company or its Subsidiaries or their respective businesses, properties,
operations or financial condition, which, under applicable law, rule or
regulation, requires public disclosure or announcement by the Company but which
has not been so publicly announced or disclosed and which, individually or in
the aggregate, would have a Material Adverse Effect.
6
(n) Indebtedness. The
Commission Documents or Schedule 2.1(k)
hereto sets forth as of the date hereof all outstanding secured and unsecured
Indebtedness of the Company or any Subsidiary, or for which the Company or any
Subsidiary has commitments. For the purposes of this Agreement,
“Indebtedness”
shall mean (a) any liabilities for borrowed money or amounts owed in excess of
$100,000 (other than trade accounts payable incurred in the ordinary course of
business), (b) all guaranties, endorsements and other contingent obligations in
respect of liabilities for borrowed money of others in excess of $100,000,
whether or not the same are or should be reflected in the Company’s balance
sheet (or the notes thereto), except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business; and (c) the present value of any lease payments in excess of
$25,000 due under leases required to be capitalized in accordance with
GAAP. Neither the Company nor any Subsidiary is in default with
respect to any Indebtedness.
(o) Title to
Assets. Each of the Company and the Subsidiaries has good and
marketable title to all of its real
and personal property reflected in the Commission Documents that is material to the business of the
Company, free and clear of any
mortgages, pledges, charges, liens, security interests or other encumbrances,
except for those indicated in the Commission Documents or on Schedule 2.1(l)
hereto or such that, individually or in the aggregate, do not cause a Material
Adverse Effect, and except for Permitted
Liens. All such leases of the Company and each of its
Subsidiaries are valid and subsisting and in full force and effect in all material respects. “Permitted Liens” means (i) statutory liens for taxes, assessments and
other governmental charges which are not yet due and payable or are due but not
delinquent or are being contested in good faith by appropriate proceedings, (ii)
statutory or common law liens to secure landlords, sublandlords, licensors or
sublicensors under leases or rental agreements, (iii) deposits or pledges made
in connection with, or to secure payment of, workers’ compensation, unemployment
insurance, old age pension or other social security programs mandated under
applicable laws, (iv) statutory or common law liens in favor of carriers,
warehousemen, mechanics, workmen, repairmen and materialmen to secure claims for
labor, materials or supplies and other like liens, (v) restrictions on transfer
of securities imposed by applicable state and federal securities laws, (vi) any
other encumbrance affecting any asset which does not materially impede or
otherwise affect the ownership or operation of such asset, (vii) liens resulting
from a filing by a lessor as a precautionary filing for a true lease, (viii)
deposits to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds an other obligations of
a like nature incurred in the ordinary course of business, (ix) vendor’s liens
to secure payment, or (x) rights or claims of customers or tenants under
licenses or leases.
(p) Actions
Pending. Except as set forth in
the Commission Documents or on Schedule 2.1(m) hereto, there is no action, suit, claim,
investigation, arbitration, alternate dispute resolution proceeding or other
proceeding pending or, to the Knowledge of
the Company, threatened against the Company or any Subsidiary which questions
the validity of this Agreement or any of the other Transaction Documents or any
of the transactions contemplated hereby or thereby or any action taken or to be
taken pursuant hereto or thereto. Except as set forth in the
Commission Documents or on Schedule 2.1(m)
hereto, there is no action, suit, claim, investigation, arbitration, alternate
dispute resolution proceeding or other proceeding pending or, to the Knowledge of the Company, threatened against or
involving the Company, any Subsidiary or any of their respective properties or
assets, which individually or
7
(q) in the
aggregate, could reasonably be expected to have a Material Adverse
Effect. Except as set forth in the
Commission Documents, there are no outstanding orders, judgments,
injunctions, awards or decrees of any court, arbitrator or governmental or
regulatory body against the Company or any Subsidiary or any officers or
directors of the Company or any Subsidiary in their capacities as such, which
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(r) Compliance with
Law. The business of the Company and the Subsidiaries has been
and is presently being conducted in accordance with all applicable federal,
state and local governmental laws, rules, regulations and ordinances, except as
set forth in the Commission Documents or on Schedule 2.1(n)
hereto or such that, individually or in the aggregate, the noncompliance
therewith would not reasonably be expected to have a Material Adverse
Effect. The Company and each of its Subsidiaries have all franchises,
permits, licenses, consents and other governmental or regulatory authorizations
and approvals necessary for the conduct of its business as now being conducted
by it unless the failure to possess such franchises, permits, licenses, consents
and other governmental or regulatory authorizations and approvals, individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(s) Taxes. Except
as set forth in the Commission Documents or on Schedule 2.1(o)
hereto, and except for matters that would not,
individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect, the Company and each of the Subsidiaries has
accurately prepared and filed all federal, state and other tax returns required
by law to be filed by it, has paid all taxes shown to be due and all additional
assessments, and adequate provisions have been and are reflected in the
financial statements of the Company and the Subsidiaries for all current taxes
and other charges to which the Company or any Subsidiary is subject and which
are not currently due and payable. Except as disclosed on Schedule 2.1(o)
hereto, none of the federal income tax returns of the Company or any Subsidiary
has been audited by the Internal Revenue Service. The Company has no
Knowledge of any additional assessments, adjustments or contingent tax liability
(whether federal or state) of any nature whatsoever, whether pending or
threatened against the Company or any Subsidiary for any period, nor of any
basis for any such assessment, adjustment or contingency.
(t) Certain
Fees. Except as set forth on Schedule 2.1(p)
hereto, the Company has not employed any broker or finder or incurred any
liability for any brokerage or investment banking fees, commissions, finders'
structuring fees, financial advisory fees or other similar fees in connection
with the Transaction Documents.
(u) Disclosure. Neither
this Agreement or the Schedules hereto nor any other documents, certificates or
instruments furnished to the Purchasers by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by this Agreement
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements made herein or therein, in the
light of the circumstances under which they were made herein or therein, not
misleading.
(v) Operation of
Business. The Company and each of the Subsidiaries owns or
possesses the rights to use all patents, trademarks, domain names (whether or
not registered)
8
(w) and any
patentable improvements or copyrightable derivative works thereof, websites and
intellectual property rights relating thereto, service marks, trade names,
copyrights, licenses and authorizations which are necessary for the conduct of
its business as now conducted, which the failure to so have would reasonably be
expected to have a Material Adverse Effect. Except as set forth in
the Commission Documents, neither the Company nor any Subsidiary has received
written notice that the intellectual property rights used by the Company or any
Subsidiary, and necessary for their respective business, violates or infringes
upon the rights of any third party.
(x) Environmental
Compliance. Except as disclosed in the Commission Documents or
on Schedule
2.1(s) hereto, the Company and each of its Subsidiaries have obtained all
material approvals, authorization, certificates, consents, licenses, orders and
permits or other similar authorizations of all governmental authorities, or from
any other person, that are required under any Environmental Laws, except where failure to obtain such material
approvals, authorization, certificates, consents, licenses, orders and permits
or other similar authorizations would not individually or in the aggregate have
a Material Adverse Effect. “Environmental Laws”
shall mean all applicable laws relating to the protection of the environment
including, without limitation, all requirements pertaining to reporting,
licensing, permitting, controlling, investigating or remediating emissions,
discharges, releases or threatened releases of hazardous substances, chemical
substances, pollutants, contaminants or toxic substances, materials or wastes,
whether solid, liquid or gaseous in nature, into the air, surface water,
groundwater or land, or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of hazardous
substances, chemical substances, pollutants, contaminants or toxic substances,
material or wastes, whether solid, liquid or gaseous in
nature. Except as set forth in the
Commission Documents or on Schedule 2.1(s)
hereto, the Company has all necessary governmental approvals required under all
Environmental Laws and used in its business or in the business of any of its
Subsidiaries, except for such instances as would not individually or in the
aggregate have a Material Adverse Effect. Except as disclosed in the
Commission Documents, the Company and each of its
Subsidiaries are also in compliance with all other limitations, restrictions,
conditions, standards, requirements, schedules and timetables required or
imposed under all Environmental Laws, except where
failure to be in compliance would not individually
or in the aggregate have a Material Adverse Effect. Except as
disclosed in the Commission Documents or for such instances as would not
individually or in the aggregate have a Material Adverse Effect, there are no
past or present events, conditions, circumstances, incidents, actions or
omissions relating to or in any way affecting the Company or its Subsidiaries
that violate or would be reasonably likely to violate any Environmental Law
after the Closing or that would be reasonably likely to give rise to any
environmental liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation (i) under any
Environmental Law or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including, without limitation,
underground storage tanks), disposal, transport or handling, or the emission,
discharge, release or threatened release of any hazardous
substance.
(y) Books and Records; Internal
Accounting Controls. The records and documents of the Company
and its Subsidiaries accurately reflect in all material respects the information
relating to the business of the Company and its Subsidiaries, the location and
collection of their assets, and the nature of all transactions giving rise to
the obligations or
9
(z) accounts
receivable of the Company or any Subsidiary. The Company and each of
its Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate actions are taken with
respect to any differences and (v) accounts, notes and other receivables and
inventory are recorded accurately, and proper and adequate procedures are
implemented to effect the collection thereof on a current and timely
basis. Except as set forth on Schedule 2.1(t)
hereto or in the Commission Documents, there are no significant deficiencies or
material weaknesses in the design or operation of internal controls over
financial reporting that would reasonably be expected to materially and
adversely affect the Company’s ability to record, process, summarize and report
financial information, and there is no fraud, whether or not material, that
involves management or, to the Knowledge of the Company, other employees who
have a significant role in the Company’s internal controls and the Company has
provided to the Purchaser copies of any written materials relating to the
foregoing.
(aa) Material
Agreements. Except for the Transaction Documents (with respect
to clause (i) of this Section 2.1(u) only) or as set forth in the Commission
Documents or on Schedule 2.1(u)
hereto, or as would not be reasonably likely to have a Material Adverse Effect,
(i) the Company and each of its Subsidiaries have performed all obligations
required to be performed by them to date under any written or oral contract,
instrument, agreement, commitment, obligation, plan or arrangement, filed or
required to be filed with the Commission (the “Material
Agreements”), (ii) neither the Company nor any of its Subsidiaries has
received any notice of default under any Material Agreement and, (iii) to the
Company's Knowledge, neither the Company nor any of its Subsidiaries is in
default under any material provision of any Material Agreement.
(bb) Transactions with
Affiliates. Except as set forth in the Commission Documents or
on Schedule
2.1(v) hereto, there are no loans, leases, agreements, contracts, royalty
agreements, management contracts or arrangements or other continuing
transactions exceeding $50,000 in value between (a) the Company, any Subsidiary
or any of their respective customers or suppliers on the one hand, and (b) on
the other hand, any officer, employee, consultant or director of the Company, or
any of its Subsidiaries (except for reimbursements to such persons for
reasonable expenses incurred on behalf of the Company or any Subsidiary, or
arrangements entered into by and between any such person and the Company or any
Subsidiary as part of the normal and customary terms of such person’s employment
or services as a director or consultant with the Company or any of its
Subsidiaries), or any person owning any capital stock of the Company or any
Subsidiary or any member of the immediate family of such officer, employee,
consultant, director or stockholder or any corporation or other entity
controlled by such officer, employee, consultant, director or stockholder, or a
member of the immediate family of such officer, employee, consultant, director
or stockholder which, in each case, is required to be disclosed in the
Commission Documents or in the Company’s most recently filed definitive proxy
statement on Schedule 14A, that is not so disclosed in the Commission Documents
or in such proxy statement.
10
(cc) Securities Act of
1933. Subject to the accuracy and completeness of the
representations and warranties of the Purchasers contained in the Transaction
Documents, the Company has complied and will comply with all applicable federal
and state securities laws in connection with the offer, issuance and sale of the
Securities hereunder. Neither the Company nor anyone acting on its
behalf, directly or indirectly, has or will sell, offer to sell or solicit
offers to buy any of the Securities or similar securities to, or solicit offers
with respect thereto from, or enter into any negotiations relating thereto with,
any person, or has taken or will take any action so as to bring the issuance and
sale of any of the Securities under the registration provisions of the
Securities Act and applicable state securities laws, and neither the Company nor
any of its affiliates, nor any person acting on its or their behalf, has engaged
in any form of general solicitation or general advertising (within the meaning
of Regulation D under the Securities Act) in connection with the offer or sale
of any of the Securities.
(dd) Governmental
Approvals. Except as set forth on Schedule 2.1(x)
hereto or disclosed in the Commission Documents, and except for the filing of
any notice prior or subsequent to the Closing that may be required under
applicable state and/or federal securities laws (which if required, shall be
filed on a timely basis), no authorization, consent, approval, license,
exemption of, filing or registration with any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, is or
will be necessary for, or in connection with, the execution or delivery of the
Securities, or for the performance by the Company of its obligations under the
Transaction Documents except for such authorizations, consents, approvals,
licenses, exemptions, filings or registrations the Company’s failure of which to
obtain would not, individually or in the aggregate, constitute a Material
Adverse Effect.
(ee) Employees. Neither
the Company nor any Subsidiary has any collective bargaining arrangements or
agreements covering any of its employees, except as set forth on Schedule 2.1(y)
hereto or disclosed in the Commission Documents. Except as set forth
on Schedule
2.1(y) hereto or disclosed in the Commission Documents, neither the
Company nor any Subsidiary has any employment contract, agreement regarding
proprietary information, non-competition agreement, non-solicitation agreement,
confidentiality agreement, or any other similar contract or restrictive
covenant, relating to the right of any officer, employee or consultant to be
employed or engaged by the Company or such Subsidiary required to be disclosed
in the Commission Documents that is not so disclosed. Since December
31, 2007, no officer, consultant or key employee of the Company or any
Subsidiary whose termination, either individually or in the aggregate, would be
reasonably likely to have a Material Adverse Effect, has terminated, or
indicated to the Company his or her intent to terminate, his or her employment
or engagement with the Company or any Subsidiary.
(ff) Labor Relations. Except as set forth in the
Commission Documents or as could not reasonably be
expected to have a Material Adverse Effect, (i) neither the Company nor any of
its Subsidiaries is engaged in any unfair labor practice, (ii) there is no
strike, labor dispute, slowdown or stoppage pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries, and (iii)
neither the Company nor any of its Subsidiaries is a party to any collective
bargaining agreement or contract.
11
(gg) Absence of Certain
Developments. Except as disclosed in the Commission Documents
or on Schedule
2.1(aa) hereto, since December 31, 2007, neither the Company nor any
Subsidiary has:
(i) issued
any stock, bonds or other corporate securities or any right, options or warrants
with respect thereto other than under the Company’s stock option plan(s) and
otherwise in the ordinary course of business;
(ii) borrowed
any amount or incurred or become subject to any liabilities (absolute or
contingent) except current liabilities incurred in the ordinary course of
business which are comparable in nature and amount to the current liabilities
incurred in the ordinary course of business during the comparable portion of its
prior fiscal year, as adjusted to reflect the current nature and volume of the
Company’s or such Subsidiary’s business;
(iii) discharged
or satisfied any lien or encumbrance or paid any obligation or liability
(absolute or contingent), other than Permitted Liens and current liabilities
paid in the ordinary course of business;
(iv) declared
or made any payment or distribution of cash or other property to stockholders
with respect to its stock, or purchased or redeemed, or made any agreements so
to purchase or redeem, any shares of its capital stock other than under any
equity incentive plans of the Company;
(v) sold,
assigned or transferred any other tangible assets, or canceled any debts or
claims, except in the ordinary course of business;
(vi) sold,
assigned or transferred any patent rights, trademarks, trade names, copyrights,
trade secrets or other intangible assets or intellectual property rights
necessary for the conduct of its business as presently conducted;
(vii) suffered
any material losses or waived any rights of material value, whether or not in
the ordinary course of business;
(viii) made any
changes in employee compensation except in the ordinary course of business and
consistent with past practices;
(ix) made
capital expenditures or commitments therefor that aggregate in excess of
$100,000;
(x) made
charitable contributions or pledges in excess of $10,000;
(xi) experienced
any material problems with labor or management in connection with the terms and
conditions of their employment; or
12
(xii) entered
into an agreement, written or otherwise, to take any of the foregoing
actions.
(hh) Public Utility Holding
Company Act and Investment Company Act Status. The Company is
not a “holding company” or a “public utility company” as such terms are defined
in the Public Utility Holding Company Act of 1935, as amended. The
Company is not, and as a result of and immediately upon the Closing will not be,
an “investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as
amended.
(ii) ERISA. Except
as set forth in the Commission Documents, no liability to the Pension Benefit
Guaranty Corporation has been incurred with respect to any Plan by the Company
or any of its Subsidiaries which is or would be materially adverse to the
Company and its Subsidiaries. The execution and delivery of this
Agreement and the issuance and sale of the Securities will not involve any
transaction which is subject to the prohibitions of Section 406 of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”) or in
connection with which a tax could be imposed pursuant to Section 4975 of the
Internal Revenue Code of 1986, as amended, provided that, if any of the
Purchasers, or any person or entity that owns a beneficial interest in any of
the Purchasers, is an “employee pension benefit plan” (within the meaning of
Section 3(2) of ERISA) with respect to which the Company is a “party in
interest” (within the meaning of Section 3(14) of ERISA), the requirements of
Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met. As
used in this Section 2.1(cc), the term “Plan” shall mean an “employee pension
benefit plan” (as defined in Section 3 of ERISA) which is or has been
established or maintained, or to which contributions are or have been made, by
the Company or any Subsidiary or by any trade or business, whether or not
incorporated, which, together with the Company or any Subsidiary, is under
common control, as described in Section 414(b) or (c) of the Code.
(jj) Independent Nature of
Purchasers. The Company acknowledges that the obligations of
each Purchaser under the Transaction Documents are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance of the obligations of any other Purchaser under the
Transaction Documents and the Company shall not be excused from performance of
its obligations to any Purchaser under the Transaction Documents as a result of
nonperformance or breach by any other Purchaser. The Company
acknowledges that the decision of each Purchaser to purchase Securities pursuant
to this Agreement has been made by such Purchaser independently of any other
purchaser and independently of any information, materials, statements or
opinions as to the business, affairs, operations, assets, properties,
liabilities, results of operations, condition (financial or otherwise) or
prospects of the Company or of its Subsidiaries which may have made or given by
any other Purchaser or by any agent or employee of any other
Purchaser. The Company acknowledges that nothing contained herein, or
in any Transaction Document, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by the
Transaction Documents. The Company acknowledges that each Purchaser
shall be entitled to independently protect and enforce its
13
(kk) rights,
including without limitation, the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose.
(ll) Anti-takeover
Device. Neither the Company nor
any of its Subsidiaries has any outstanding shareholder rights plan or “poison
pill” or any similar arrangement. There are no provisions of any anti-takeover
or business combination statute applicable
to the Company, the Articles and the Bylaws which would preclude the issuance and sale of the Securities,
and the consummation of the other transactions contemplated by this Agreement or
any of the other Transaction Documents.
(mm) No Integrated
Offering. Assuming the accuracy of the Purchasers’
representations and warranties herein, neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would cause the offering of the
Securities pursuant to this Agreement to be integrated with prior offerings by
the Company for purposes of the Securities Act which would prevent the Company
from selling the Securities pursuant to Regulation D and Rule 506 thereof under
the Securities Act, or any applicable exchange-related stockholder approval
provisions, nor will the Company or any of its affiliates or Subsidiaries take
any action or steps that would cause the offering of the Securities to be
integrated with other offerings if such other offering, if integrated, would
cause the offer and sale of the Securities not to be exempt from registration
pursuant to Regulation D and Rule 506 thereof under the Securities
Act. Except as set forth on Schedule 2.1(ff)
hereto, the Company does not have any registration statement pending before the
Commission or currently under the Commission’s review and since December 1,
2007, the Company has not offered or sold any of its equity securities or debt
securities convertible into shares of Common Stock.
(nn) ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act. The Company is in compliance with the applicable provisions of
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”),
and the rules and regulations promulgated thereunder, that are effective and for
which compliance by the Company is required as of the date hereof.
(oo) DTC
Status. The Company’s current transfer agent is a participant
in and the Common Stock is eligible for transfer pursuant to the Depository
Trust Company Automated Securities Transfer Program. The name,
address, telephone number, fax number, contact person and email address of the
Company’s transfer agent is set forth on Schedule 2.1(hh)
hereto.
(pp) Insurance. The
Company and its Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged (not including directors and officers insurance
coverage). Such insurance contracts and policies are accurate and
complete in all material respects. Neither the Company nor any
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business without a significant increase in cost.
14
(qq) Representations and
Warranties of the Purchasers. Each of the Purchasers hereby
represents and warrants to the Company with respect solely to itself and not
with respect to any other Purchaser as follows as of the date hereof, except as
set forth on the Schedule of Exceptions attached hereto with each numbered
schedule corresponding to the section number herein:
(rr) Organization and Standing of
the Purchasers. If the Purchaser is an entity, such Purchaser
is a corporation, limited liability company or partnership duly incorporated or
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization.
(ss) Authorization and
Power. Such Purchaser has the requisite power and authority to
enter into and perform its obligations under the Transaction Documents and to
purchase the Securities being sold to it hereunder. The execution,
delivery and performance of the Transaction Documents by such Purchaser and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate, partnership or other action, and no
further consent or authorization of such Purchaser or its Board of Directors,
stockholders, partners or members, as the case may be, is
required. When executed and delivered by the Purchasers, the
Transaction Documents shall constitute valid and binding obligations of such
Purchaser enforceable against such Purchaser in accordance with their terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership or similar laws relating to, or affecting generally the enforcement
of, creditor's rights and remedies or by other equitable principles of general
application.
(tt) No
Conflict. The execution, delivery and performance of the
Transaction Documents by such Purchaser and the consummation by such Purchaser
of the transactions contemplated thereby and hereby do not and will not (i)
violate any provision of such Purchaser’s charter or organizational documents,
(ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, mortgage, deed of trust, indenture, note, bond, license, lease
agreement, instrument or obligation to which such Purchaser is a party or by
which such Purchaser’s respective properties or assets are bound, or (iii)
result in a violation of any federal, state, local or foreign statute, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to such Purchaser or by which any property or
asset of such Purchaser are bound or affected, except, in all cases, other than
violations pursuant to clauses (i) or (iii) (with respect to federal and state
securities laws) above, for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, materially and adversely affect such Purchaser’s ability to perform
its obligations under the Transaction Documents.
(uu) Acquisition for
Investment. Such Purchaser is purchasing
the Securities solely for its own
account for the purpose of investment and not with a view to or for sale in
connection with distribution. Such Purchaser does not have
a present intention to sell any of the Securities, nor a present arrangement (whether or
not legally binding) or intention to effect any distribution of any of the Securities to or through any person
or entity; provided, however,
15
(vv) that by
making the representations herein, such Purchaser does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time in
accordance with the terms and provisions of the
Transaction Documents and Federal and state securities laws applicable to
such disposition. Such Purchaser acknowledges that (i) it has such knowledge and experience in financial
and business matters such that Purchaser is capable of evaluating the merits and
risks of Purchaser's investment in the Company, (ii) it is able to bear the financial risks associated
with an investment in the Securities, (iii) it
has been given full access to such records of the Company and the
Subsidiaries and to the officers of the Company and the Subsidiaries as it has
deemed necessary or appropriate to conduct its due diligence investigation, (iv) it has reviewed or received copies of the
Commission Documents, (v) it and has sought such accounting, legal and tax
advice as it has considered necessary to make an informed investment decision
with respect to its acquisition of the Securities, (vi) except for this
Agreement and the transactions contemplated hereby, neither the Company nor its
employees have disclosed to such Purchaser any material non-public information
that, according to applicable law, rule or regulation, should have been
disclosed publicly by the Company prior to the date hereof but which has not
been so disclosed, and (vii) it (and not the Company) shall be responsible for
its own tax liabilities that may arise as a result of this investment or the
transactions contemplated by this Agreement. Purchaser has the
financial capability to perform all of its obligations under this Agreement,
including the financial capability to purchase the Securities.
(ww) Rule
144. Such Purchaser understands that the Securities must be
held indefinitely unless such Securities are registered under the Securities Act
or an exemption from registration is available. Such Purchaser
acknowledges that such person is familiar with Rule 144 of the rules and
regulations of the Commission, as amended, promulgated pursuant to the
Securities Act (“Rule
144”), and that such Purchaser has been advised that Rule 144 permits
resales only under certain circumstances. Such Purchaser understands
that to the extent that Rule 144 is not available, such Purchaser will be unable
to sell any Securities without either registration under the Securities Act or
the existence of another exemption from such registration
requirement.
(xx) General. Such
Purchaser understands that the Securities are being offered and sold in reliance
on a transactional exemption from the registration requirements of federal and
state securities laws and the Company is relying upon the truth and accuracy of
the representations, warranties, agreements, acknowledgments and understandings
of such Purchaser set forth herein in order to determine the applicability of
such exemptions and the suitability of such Purchaser to acquire the
Securities. Such Purchaser understands that no United States federal
or state agency or any government or governmental agency has passed upon or made
any recommendation or endorsement of the Securities.
(yy) No General
Solicitation. Such Purchaser acknowledges that the Securities
were not offered to such Purchaser by means of any form of general or public
solicitation or general advertising, or publicly disseminated advertisements or
sales literature, including (i) any advertisement, article, notice or other
communication published in any newspaper, magazine, or similar media, or
broadcast over television or radio, or (ii) any seminar or meeting to which such
Purchaser was invited by any of the foregoing means of
communications. Such Purchaser, in making the decision to purchase
the Securities, has relied upon independent
16
(zz) investigation
made by it and the representations, warranties, agreements, acknowledgments and
understandings set forth in the Transaction Documents and has not relied on any
information or representations made by third parties.
(aaa) Accredited
Investor. Such Purchaser is an “accredited investor” (as
defined in Rule 501 of Regulation D), and such Purchaser has such experience in
business and financial matters that it is capable of evaluating the merits and
risks of an investment in the Securities. Such Purchaser is not
required to be registered as a broker-dealer under Section 15 of the Exchange
Act and such Purchaser is not a broker-dealer. Such Purchaser
acknowledges that an investment in the Securities is speculative and involves a
high degree of risk.
(bbb) Certain
Fees. The Purchasers have not employed any broker or finder or
incurred any liability for any brokerage or investment banking fees,
commissions, finders' structuring fees, financial advisory fees or other similar
fees in connection with the Transaction Documents.
(ccc) Independent
Investment. Except as may be disclosed in any filings with the
Commission by the Purchasers under Section 13 and/or Section 16 of the Exchange
Act, no Purchaser has agreed to act with any other Purchaser for the purpose of
acquiring, holding, voting or disposing of the Preferred Shares purchased
hereunder for purposes of Section 13(d) under the Exchange Act, and each
Purchaser is acting independently with respect to its investment in the
Securities.
(ddd) No
Shorting. No Purchaser has not engaged in any short sales of
any securities of the Company or instructed any third parties to engage in any
short sales of securities of the Company on its behalf prior to the Closing
Date. Each Purchaser covenants and agrees that it will not be in a
net short position with respect to the shares of Common Stock issued or issuable
to it.
(eee) Not an
Affiliate. Such Purchaser is not an officer, director or
“affiliate” (as defined in Rule 405 of the Securities Act) of the
Company.
ARTICLE
III
COVENANTS
The
Company covenants with each Purchaser as follows, which covenants are for the
benefit of each Purchaser and their respective permitted assignees.
Section
3.1 Securities
Compliance. The Company shall notify the Commission in
accordance with its rules and regulations, of the transactions contemplated by
any of the Transaction Documents and shall take all other necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation, for the legal and valid issuance of the Securities to the
Purchasers, or their respective subsequent holders.
Section
3.2 Registration and
Listing. The Company shall use commercially reasonable efforts
to (i) cause its Common Stock to continue to be registered under
Sections
17
Section
3.3 12(b) or
12(g) of the Exchange Act, (ii) to comply in all respects with its reporting and
filing obligations under the Exchange Act, (iii) to comply with all requirements
related to any registration statement filed pursuant to this Agreement, and (iv)
to not take any action or file any document (whether or not permitted by the
Securities Act or the rules promulgated thereunder) to terminate or suspend such
registration or to terminate or suspend its reporting and filing obligations
under the Exchange Act or Securities Act, except as permitted
herein. The Company will use commercially reasonable efforts to
continue the listing or trading of its Common Stock on the OTC Bulletin Board or
any successor market. Subject to the terms of the Transaction
Documents, the Company further covenants that it will take such further action
as the Purchasers may reasonably request, all to the extent required from time
to time to enable the Purchasers to sell the Securities without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144 promulgated under the Securities Act. Upon the request of
the Purchasers, the Company shall deliver to the Purchasers a written
certification of a duly authorized officer as to whether it has complied with
such requirements.
Section
3.4 Inspection
Rights. The Company shall permit, during normal business hours
and upon reasonable request and reasonable notice, each Purchaser or any
employees, agents or representatives thereof, so long as such Purchaser shall be
obligated hereunder to purchase the Preferred Shares or shall beneficially own
any Preferred Shares, for purposes reasonably related to such Purchaser's
interests as a stockholder to examine and make reasonable copies of the records
and books of account of, and visit and inspect the properties, assets,
operations and business of the Company and any Subsidiary, and to discuss the
affairs, finances and accounts of the Company and any Subsidiary with any of its
officers, consultants, directors, and key employees.
Section
3.5 Compliance with
Laws. The Company shall comply, and cause each Subsidiary to
comply, with all applicable laws, rules, regulations and orders, noncompliance
with which would be reasonably likely to have a Material Adverse
Effect.
Section
3.6 Keeping of Records and Books
of Account. The Company shall keep and cause each Subsidiary
to keep adequate records and books of account, in which complete entries will be
made in accordance with GAAP consistently applied, reflecting all financial
transactions of the Company and its Subsidiaries.
Section
3.7 Reporting
Requirements. If the Company ceases to file its periodic
reports with the Commission, or if the Commission ceases making these periodic
reports available via the Internet without charge, then the Company shall,
promptly after filing with the Commission, furnish the following to each
Purchaser so long as such Purchaser shall be obligated hereunder to purchase the
Securities or shall beneficially own Preferred Shares or Common
Shares:
(a) Quarterly
Reports filed with the Commission on Form 10-Q;
(b) Annual
Reports filed with the Commission on Form 10-K; and
(c) Copies of
all notices, information and proxy statements in connection with any meetings,
that are, in each case, provided to holders of shares of Common
Stock,
18
(d) contemporaneously
with the delivery of such notices or information to such holders of Common
Stock.
Section
3.8 Other
Agreements. The Company shall not enter into any agreement in
which the terms of such agreement would restrict or impair the right or ability
of the Company or any Subsidiary to perform its material obligations under the
Transaction Documents.
Section
3.9 Use of
Proceeds. The net proceeds from the sale of the Preferred
Shares will be used by the Company for working capital and general corporate
purposes and not to redeem any Common Stock or securities convertible,
exercisable or exchangeable into Common Stock or to settle any outstanding
litigation.
Section
3.10 Reporting
Status. So
long as a Purchaser beneficially owns any of the Securities, the Company shall
timely file all reports required to be filed with the Commission pursuant to the
Exchange Act, and the Company shall not terminate its status as an issuer
required to file reports under the Exchange Act even if the Exchange Act or the
rules and regulations thereunder would permit such termination.
Section
3.11 Intentionally
Omitted.
Section
3.12 Disclosure of Material
Information. The Company covenants and agrees that neither it
nor any other person acting on its behalf has provided or will provide any
Purchaser or its agents or counsel with any information that the Company
believes constitutes material non-public information, unless prior thereto such
Purchaser shall have executed a written agreement regarding the confidentiality
and use of such information. The Company understands and confirms that
each Purchaser shall be relying on the foregoing representations in effecting
transactions in securities of the Company.
Section
3.13 Form D. The
Company agrees to file a Form D with respect to the Securities as required by
Rule 506 under Regulation D and to provide a copy thereof to the Purchasers
promptly after such filing.
Section
3.14 No Integrated
Offerings. The Company shall not make any offers or
sales of any security (other than the Securities being offered or sold
hereunder) under circumstances that would require registration of the Securities
being offered or sold hereunder under the Securities Act.
Section
3.15 Pledge of
Securities. The Company acknowledges and agrees that the
Securities may be pledged by a Purchaser in connection with a bona fide margin agreement
or other loan or financing arrangement that is secured by the Common
Stock. The pledge of Common Stock shall not be deemed to be a
transfer, sale or assignment of the Common Stock hereunder, and no Purchaser
effecting a pledge of Common Stock shall be required to provide the Company with
any notice thereof or otherwise make any delivery to the Company pursuant to
this Agreement or any other Transaction Document; provided that a Purchaser and
its pledgee shall be required to comply with the provisions of Article V hereof
in order to effect a sale, transfer or assignment of Common Stock to such
pledgee. At the Purchasers' expense, the
19
Section
3.16 Company
hereby agrees to execute and deliver such documentation as a pledgee of the
Common Stock may reasonably request in connection with a pledge of the Common
Stock to such pledgee by a Purchaser.
Section
3.17 ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act. The Company shall comply with the applicable provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, and the rules and regulations promulgated thereunder, upon
the effectiveness of such provisions or the date by which compliance therewith
by the Company is required.
ARTICLE
IV
CONDITIONS
Section
4.1 Conditions Precedent to the
Obligation of the Company to Close and to Sell the
Securities. The obligation hereunder of the Company to close
and issue and sell the Securities to the Purchasers at each Closing Date is
subject to the satisfaction or waiver, at or before such Closing, of the
conditions set forth below. These conditions are for the Company's
sole benefit and may be waived by the Company at any time in its sole
discretion.
(a) Accuracy of the Purchasers’
Representations and Warranties. The representations and
warranties of each Purchaser shall be true and correct in all material respects
(except for those representations and warranties that are qualified by
materiality or Material Adverse Effect, which shall be true and correct in all
respects) as of the date when made and as of the Closing Date, as though made at
that time, except for representations and warranties that are expressly made as
of a particular date, which shall be true and correct in all material respects
(except for those representations and warranties that are qualified by
materiality or Material Adverse Effect, which shall be true and correct in all
respects) as of such date.
(b) Performance by the
Purchasers. Each Purchaser shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by such
Purchaser at or prior to the Closing Date.
(c) No
Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(d) Delivery of Purchase
Price. The Purchasers shall have delivered to the Company the
applicable purchase price for the Preferred Shares to be purchased by each
Purchaser.
(e) Delivery of Transaction
Documents. The Transaction Documents shall have been duly
executed and delivered by the Purchasers and, with respect to the Escrow
Agreement, the escrow agent, to the Company.
20
(f) Intentionally
Omitted.
Section
4.2 Conditions Precedent to the
Obligation of the Purchasers to Close and to Purchase the
Securities. The obligation hereunder of each Purchaser to
purchase the Securities and consummate the transactions contemplated by this
Agreement is subject to the satisfaction or waiver, at or before each Closing
Date, of each of the conditions set forth below. These conditions are
for the Purchaser’s sole benefit and may be waived by the Purchaser at any time
in its sole discretion.
(a) Accuracy of the Company's
Representations and Warranties. Each of the representations
and warranties of the Company in this Agreement and the other Transaction
Documents shall be true and correct in all material respects (except for those
representations and warranties that are qualified by materiality or Material
Adverse Effect, which shall be true and correct in all respects) as of the date
when made and as of the Closing Date as though made at that time, except for
representations and warranties that are expressly made as of a particular date,
which shall be true and correct in all material respects (except for those
representations and warranties that are qualified by materiality or Material
Adverse Effect, which shall be true and correct in all respects) as of such
date.
(b) Performance by the
Company. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Date.
(c) No Suspension,
Etc. Trading in the Common Stock shall not have been suspended
by the Commission or the OTC Bulletin Board (except for any suspension of
trading of limited duration agreed to by the Company, which suspension shall be
terminated prior to the Closing), and, at any time prior to the Closing Date,
trading in securities generally as reported by Bloomberg Financial Markets
(“Bloomberg”)
shall not have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by Bloomberg, or on the New
York Stock Exchange, nor shall a banking moratorium have been declared either by
the United States or New York State authorities.
(d) No
Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(e) No Proceedings or
Litigation. No action, suit or proceeding before any
arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Company or any Subsidiary, or any of the officers, directors or affiliates
of the Company or any Subsidiary seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in connection
with such transactions.
(f) Opinion of
Counsel. The Purchasers shall have received an opinion of
counsel to the Company, dated the date of such Closing, substantially in the
form of Exhibit
C
21
(g) hereto,
with such exceptions and limitations as shall be reasonably acceptable to
counsel to the Purchasers.
(h) Preferred Shares and Common
Shares. At or prior to the Closing, the Company shall have
delivered to the Purchasers certificates representing the Preferred Shares (in
such denominations as each Purchaser may request) and the Common Shares (in such
denominations as each Purchaser may request) duly executed by the Company, in
each case, being acquired by the Purchasers at such Closing.
(i) Secretary's
Certificate. The Company shall have delivered to the
Purchasers a secretary's certificate, dated as of the Closing Date, as to (i)
the resolutions adopted by the Board of Directors approving the transactions
contemplated hereby, (ii) the Articles, (iii) the Bylaws, each as in effect at
such Closing, and (iv) the authority and incumbency of the officers of the
Company executing the Transaction Documents and any other documents required to
be executed or delivered in connection therewith.
(j) Officer's
Certificate. On the Closing Date, the Company shall have
delivered to the Purchasers a certificate signed by an executive officer on
behalf of the Company, dated as of the Closing Date, confirming the accuracy of
the Company's representations, warranties and its compliance with covenants as
of the Closing Date and confirming the compliance by the Company with the
conditions precedent set forth in paragraphs (b)-(e) of this Section 4.2 as of
the Closing Date (provided that, with respect to the matters in paragraphs (d)
and (e) of this Section 4.2, such confirmation shall be based on the Knowledge
of the Company).
(k) Intentionally
Omitted.
(l) Intentionally
Omitted.
(m) Material Adverse
Effect. No Material Adverse Effect shall have occurred at or
before the Closing Date.
(n) Intentionally
Omitted.
ARTICLE
V
CERTIFICATE
LEGEND
Section
5.1 Legend. Each
certificate representing the Securities shall be stamped or otherwise imprinted
with a legend substantially in the following form (in addition to any legend
required by applicable state securities or “blue sky” laws):
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED
22
UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR BOND LABORATORIES,
INC. SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.
The
Company agrees to reissue certificates representing any of the Preferred Shares
and the Common Shares, without the legend set forth above if at such time, prior
to making any transfer of any such Preferred Shares or Common Shares, such
holder thereof shall give written notice to the Company describing the manner
and terms of such transfer and removal as the Company may reasonably
request. Such proposed transfer and removal will not be effected
until: (a) either (i) the Company has received an opinion of counsel reasonably
satisfactory to the Company, to the effect that the registration of the
Preferred Shares or Common Shares under the Securities Act is not required in
connection with such proposed transfer, (ii) a registration statement under the
Securities Act covering such proposed disposition has been filed by the Company
with the Commission and has become and remains effective under the Securities
Act, (iii) the Company has received other evidence reasonably satisfactory to
the Company that such registration and qualification under the Securities Act
and state securities laws are not required, or (iv) the holder provides the
Company with reasonable assurances that such security can be sold pursuant to
Rule 144 under the Securities Act; and (b) either (i) the Company has received
an opinion of counsel reasonably satisfactory to the Company, to the effect that
registration or qualification under the securities or “blue sky” laws of any
state is not required in connection with such proposed disposition, or (ii)
compliance with applicable state securities or “blue sky” laws has been effected
or a valid exemption exists with respect thereto. The Company will
respond to any such notice from a holder within five (5) business
days. In the case of any proposed transfer under this Section 5.1,
the Company will use reasonable efforts to comply with any such applicable state
securities or “blue sky” laws, but shall in no event be required, (x) to qualify
to do business in any state where it is not then qualified, or (y) to take any
action that would subject it to tax or to the general service of process in any
state where it is not then subject. The restrictions on transfer
contained in this Section 5.1 shall be in addition to, and not by way of
limitation of, any other restrictions on transfer contained in any other section
of this Agreement. Whenever a certificate representing the Preferred
Shares or Common Shares is required to be issued to a Purchaser without a
legend, in lieu of delivering physical certificates representing the Preferred
Shares or Common Shares, provided the Company's transfer agent is participating
in the Depository Trust Company (“DTC”) Fast Automated
Securities Transfer program, the Company shall use its commercially reasonable
efforts to cause its transfer agent to electronically transmit the Preferred
Shares or Common Shares to a Purchaser by crediting the account of such
Purchaser's Prime Broker with DTC through its Deposit Withdrawal Agent
Commission (“DWAC”) system (to the
extent not inconsistent with any provisions of this Agreement).
23
INDEMNIFICATION
Section
5.2 Company
Indemnity. The Company agrees to indemnify and hold harmless
the Purchasers (and their respective directors, officers, affiliates, agents,
successors and assigns) (each, a “Purchaser Indemnified
Party” and collectively, the “Purchaser Indemnified
Parties”) from and against any and
all losses, liabilities, deficiencies, costs, damages and expenses (including,
without limitation, reasonable attorneys’ fees, charges and disbursements) (“Damages”) incurred by the Purchaser Indemnified Parties as a result of any
inaccuracy in or breach of the representations, warranties or covenants made by
the Company herein; provided, however, that the Company shall not be liable under this
Section 6.1 to a Purchaser Indemnified Party to the extent that such Damages
resulted or arose from the breach by a Purchaser Indemnified Party of any
representation, warranty, covenant or agreement of a Purchaser Indemnified Party
contained in the Transaction Documents or the gross negligence, recklessness,
willful misconduct or bad faith of a Purchaser Indemnified
Party.
Section
5.3 Indemnification
Procedure. Any party entitled to indemnification under this Article
VI (an “indemnified
party”) will give written notice to the indemnifying party of any matters
giving rise to a claim for indemnification; provided, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under this Article VI except to the extent
that the indemnifying party is actually prejudiced by such failure to give
notice. In case any such action, proceeding or claim is brought
against an indemnified party in respect of which indemnification is sought
hereunder, the indemnifying party shall be entitled to participate in and,
unless in the reasonable judgment of the indemnifying party a conflict of
interest between it and the indemnified party exists with respect to such
action, proceeding or claim (in which case the indemnifying party shall be
responsible for the reasonable fees and expenses of one separate counsel for the
indemnified parties), to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. In the event that the
indemnifying party advises an indemnified party that it will not contest such a
claim for indemnification hereunder, or fails, within thirty (30) days of
receipt of any indemnification notice to notify, in writing, such person of its
election to defend, settle or compromise, at its sole cost and expense, any
action, proceeding or claim (or discontinues its defense at any time after it
commences such defense), then the indemnified party may, at its option, defend,
settle or otherwise compromise or pay such action or claim. In any
event, unless and until the indemnifying party elects in writing to assume and
does so assume the defense of any such claim, proceeding or action, the
indemnified party's costs and expenses arising out of the defense, settlement or
compromise of any such action, claim or proceeding shall be losses subject to
indemnification hereunder. The indemnified party shall cooperate
fully with the indemnifying party in connection with any negotiation or defense
of any such action or claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available to the indemnified party
which relates to such action or claim. The indemnifying party shall
keep the indemnified party fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. If the
indemnifying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense. The indemnifying party
shall not be liable for any settlement of any action, claim or proceeding
effected without its prior written consent
24
Section
5.4 which
shall not be unreasonably withheld. Notwithstanding anything in this
Article VI to the contrary, the indemnifying party shall not, without the
indemnified party's prior written consent, settle or compromise any claim or
consent to entry of any judgment in respect thereof which imposes any future
obligation on the indemnified party or which does not include, as an
unconditional term thereof, the giving by the claimant or the plaintiff to the
indemnified party of a release from all liability in respect of such
claim. The indemnification required by this Article VI shall be made
by periodic payments of the amount thereof during the course of investigation or
defense, as and when bills are received or expense, loss, damage or liability is
incurred, so long as the indemnified party irrevocably agrees to refund such
moneys if it is ultimately determined by a court of competent jurisdiction that
such party was not entitled to indemnification. The indemnity
agreements contained herein shall be in addition to (a) any cause of
action or similar rights of the indemnified party against the indemnifying party
or others, and (b) any liabilities the indemnifying party may be subject to
pursuant to the law.
ARTICLE
VI
MISCELLANEOUS
Section
6.1 Fees and
Expenses. Each party shall pay the fees and expenses of its
advisors, counsel, accountants and other experts, if any, and all other
expenses, incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement, provided that the
Company shall pay all actual attorneys' fees and expenses (including
disbursements and out-of-pocket expenses) incurred by the Purchasers in
connection with (i) the preparation, negotiation, execution and delivery of this
Agreement, and the transactions contemplated thereunder, which payment shall be
made at the Initial Closing and shall not exceed $5,000, and (ii) any
amendments, modifications or waivers of this Agreement or any of the other
Transaction Documents. The Company and the Purchasers hereby agree
that the prevailing party in any suit, action or proceeding arising out of or
relating to the Securities, or this Agreement shall be entitled to reimbursement
for reasonable legal fees from the non-prevailing
party.
Section
6.2 Specific Performance;
Consent to Jurisdiction; Venue.
(a) The
Company and the Purchasers acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement or the other
Transaction Documents are not performed in accordance with their specific terms
or are otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent or cure breaches of
the provisions of this Agreement or the other Transaction Documents and to
enforce specifically the terms and provisions hereof or thereof, this being in
addition to any other remedy to which any of them may be entitled by law or
equity.
(b) The
parties agree that venue for any dispute arising under this Agreement will lie
exclusively in the state or federal courts located in New York County, New York,
and the parties irrevocably waive any right to raise forum non conveniens or any
other argument that New York is not the proper venue. The parties
irrevocably consent to personal jurisdiction
25
(c) in the
state and federal courts of the state of New York. The Company and
each Purchaser consent to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing in
this Section 7.2 shall affect or limit any right to serve process in any other
manner permitted by law. The Company and the Purchasers hereby agree
that the prevailing party in any suit, action or proceeding arising out of or
relating to the Securities, or this Agreement shall be entitled to reimbursement
for reasonable legal fees from the non-prevailing party.
Section
6.3 Entire Agreement;
Amendment. This Agreement and the Transaction Documents
contain the entire understanding and agreement of the parties with respect to
the matters covered hereby and, except as specifically set forth herein or in
the other Transaction Documents, neither the Company nor any Purchaser make any
representation, warranty, covenant or undertaking with respect to such matters,
and they supersede all prior understandings and agreements with respect to said
subject matter, all of which are merged herein. Following the
Closing, no provision of this Agreement may be waived or amended other than by a
written instrument signed by the Company and the Purchasers holding at least a
majority of all Preferred Shares then held by the Purchasers. Any
amendment or waiver effected in accordance with this Section 7.3 shall be
binding upon each Purchaser (and their permitted assigns) and the
Company.
Section
6.4 Notices. Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery, by telecopy or facsimile (or other electronic transmission) at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second
business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications
shall be:
If to the
Company:
Bond Laboratories, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
Attention:
Chief Executive Officer
Tel. No.:
(▇▇▇) ▇▇▇-▇▇▇▇
Fax No.:
(▇▇▇) ▇▇▇-▇▇▇▇
If to any
Purchaser: At the address of such Purchaser set forth on Exhibit A to this
Agreement.
Any party
hereto may from time to time change its address for notices by giving written
notice of such changed address to the other parties hereto.
Section
6.5 Waivers. No
waiver by any party of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing
26
Section
6.6 waiver in
the future or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of any party to exercise any right hereunder in
any manner impair the exercise of any such right accruing to it
thereafter.
Section
6.7 Headings. The
article, section and subsection headings in this Agreement are for convenience
only and shall not constitute a part of this Agreement for any other purpose and
shall not be deemed to limit or affect any of the provisions
hereof.
Section
6.8 Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and assigns. After the
Closing, the assignment by a party to this Agreement of any rights hereunder
shall not affect the obligations of such party under this
Agreement. Subject to Section 5.1 hereof, the Purchasers may assign
the Securities and its rights under this Agreement and the other Transaction
Documents and any other rights hereto and thereto without the consent of the
Company; provided, however, that such
Purchaser shall not assign such Securities and such rights under this Agreement
and the other Transaction Documents to any known competitor of the
Company. Notwithstanding the foregoing to the contrary, a Purchaser
may assign its rights as provided herein so long as (i) such Purchaser agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
assignment, (ii) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the rights and/or securities with respect to
which such rights are being transferred or assigned, (iii) following such
transfer or assignment the further disposition of such securities by the
transferee or assignees is restricted under the Securities Act and applicable
state securities laws, (iv) at or before the time the Company receives the
written notice contemplated by clause (ii) of this Section 7.7, the transferee
or assignee agrees in writing with the Company to be bound by all of the
provisions of this Agreement and the other Transaction Documents, and (v) such
transfer shall have been made in accordance with the applicable requirements of
this Agreement.
Section
6.9 Intentionally
Omitted.
Section
6.10 No Third Party
Beneficiaries. Subject to the provisions of Article VI hereof,
this Agreement is intended for the benefit of the parties hereto and their
respective permitted successors and assigns and is not for the benefit of, nor
may any provision hereof be enforced by, any other person.
Section
6.11 Governing
Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to any of the conflicts of law principles which would result in the
application of the substantive law of another jurisdiction. This
Agreement shall not be interpreted or construed with any presumption against the
party causing this Agreement to be drafted.
Section
6.12 Survival. The
representations and warranties of the Company and the Purchasers shall survive
the execution and delivery hereof and the Closing until the third anniversary of
the Closing Date.
27
Section
6.13 Counterparts. This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument and shall become effective
when counterparts have been signed by each party and delivered to the other
parties hereto, it being understood that all parties need not sign the same
counterpart.
Section
6.14 Publicity. The
Company agrees that it will not disclose, and will not include in any public
announcement, the names of the Purchasers without the consent of the Purchasers,
which consent shall not be unreasonably withheld or delayed, or unless and until
such disclosure is required by law, rule or applicable regulation, and then only
to the extent of such requirement.
Section
6.15 Severability. The
provisions of this Agreement are severable and, in the event that any court of
competent jurisdiction shall determine that any one or more of the provisions or
part of the provisions contained in this Agreement shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision or part of a
provision of this Agreement and this Agreement shall be reformed and construed
as if such invalid or illegal or unenforceable provision, or part of such
provision, had never been contained herein, so that such provisions would be
valid, legal and enforceable to the maximum extent possible.
Section
6.16 Further
Assurances. From and after the date of this Agreement, upon
the request of the Purchasers or the Company, the Company and each Purchaser
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
28
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the date first above
written.
By:_____________________________________
Name:
Title:
PURCHASER:
By:_____________________________________
Name:
Title:
EXHIBIT
A
LIST
OF PURCHASERS
|
|
Names
and
Addresses Number
of Preferred
Shares
Dollar Amount
of
Purchasers
& Common
Shares
Purchased Investment
INITIAL
CLOSING:
1
EXHIBIT
B
CERTIFICATE
OF DESIGNATION
2
EXHIBIT
C
FORM
OF OPINION
3