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SECURITIES PURCHASE AGREEMENT
BY AND BETWEEN
VITAL LIVING, INC.
AND
THE INVESTORS
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Dated December 15, 2003
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") is made as of the 15th
day of December, 2003, by and between Vital Living, Inc., a Nevada corporation
(the "Company"), and the investors listed on the Schedule of Investors attached
hereto as such Schedule may be amended from time to time to include Additional
Investors (as defined in Section 7.12) (each an "Investor" and collectively, the
"Investors").
W I T N E S S E T H:
WHEREAS, the Company desires to sell to the Investors, and the Investors
desire to purchase from the Company, (a) 12% senior secured convertible notes
(the "Notes") in the aggregate principal amount of up to $6,000,000, in the form
attached as Exhibit A hereto, and (b) warrants (the "Warrants"), in the form
attached as Exhibit B hereto, to purchase a number of shares of the Company's
common stock, $0.001 par value per share (the "Common Stock") equal to 100% of
the principal amount of the Notes, pursuant to the provisions of this Agreement;
and
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties do hereby
agree as follows: 1. Purchase and Sale of Notes and Warrants.
1.1 Issuance and Sale of Notes and Warrants. Subject to the terms and
conditions of this Agreement, the Investors agree to purchase at the Initial
Closing (as hereafter defined), and the Company agrees to issue and sell to the
Investors at the Initial Closing, the amount of Notes and the Warrants set forth
opposite each Investor's name on the Signature Page hereto.
1.2 Closing.
(a) The Company may close on any amount of Notes, up to
$6,000,000 in aggregate principal amount, without a minimum. However, the
Company intends to effect a closing ("Initial Closing") upon the purchase and
sale of Notes in an aggregate principal amount of not less than $2,030,000 and a
like number of Warrants (the "Purchase Price"), since the holders of the
Company's $1,530,000 aggregate principal amount Senior Convertible Promissory
Notes ("Bridge Notes") sold in October and November 2003 have agreed to exchange
such notes for the Notes sold hereby if at least $500,000 aggregate principal
amount of Notes, in addition to the Bridge Notes, are sold. The Initial Closing
shall take place at the offices of HCFP/▇▇▇▇▇▇▇ Securities, LLC, ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m., on December 15,
2003, or at such time and place as the Company and the Investors mutually agree
upon orally or in writing.
(b) At the Initial Closing, the Company shall deliver to the
Investors, the Notes and the Warrants, against payment of the Purchase Price by
wire transfer to an account designated by the Company or through the exchange of
the Bridge Notes described above.
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(c) The Company may thereafter effect an interim closing (an
"Interim Closing" and each of the Initial Closing and any Interim Closings
hereafter referred to as a "Closing") upon the purchase and sale of additional
Notes. The Interim Closing may take place at any time thereafter at the offices
of HCFP/▇▇▇▇▇▇▇ Securities, LLC, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ at such time and place as the Company and the Investors mutually
agree upon orally or in writing, with the delivery of, and payment for, such
additional Notes and warrants as described in Section 1.2(b) above.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investors, except as set forth on a Schedule of
Exceptions to Representations and Warranties attached hereto as Exhibit C (the
"Schedule of Exceptions"), the following:
2.1 Subsidiaries. The Company does not presently own or control,
directly or indirectly, any interest in any other corporation, association, or
other business entity except as disclosed in the SEC Reports (as hereinafter
defined) (each, a "Subsidiary" and collectively, the "Subsidiaries"). Unless the
context requires otherwise, all references herein to the "Company" shall refer
to the Company and its Subsidiaries. The Company is not a party to any joint
venture, partnership, or similar arrangement.
2.2 Organization, Good Standing, and Qualification. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Nevada, and has all requisite corporate power and authority
to own its properties and assets and to carry on its business as presently
conducted. The Subsidiaries are duly organized in their respective jurisdictions
of organization, validly existing and in good standing in such respective
jurisdictions and each has the power and authority to own its properties and
assets and to carry on its respective business as now conducted. The Company and
the Subsidiaries are duly qualified to transact business and are in good
standing in each jurisdiction where such qualification is required, except where
the failure so to qualify could not reasonably be expected to have a Material
Adverse Effect (as hereafter defined) on the Company's business or properties.
2.3 Capitalization and Voting Rights. The number of authorized, issued
and outstanding capital stock of the Company is set forth in Exhibit C. All
outstanding shares have been duly authorized and are validly issued, fully paid
and nonassesasble. Except as disclosed in Exhibit C, no securities of the
Company or any Subsidiary are entitled to preemptive or similar rights, nor is
any holder of securities of the Company or any Subsidiary entitled to preemptive
or similar rights arising out of any agreement or understanding with the Company
or any Subsidiary by virtue of any of the Transaction Documents (defined
hereinafter). Except as disclosed in Exhibit C, there are no outstanding
options, warrants, script rights to subscribe for or acquire calls or
commitments of any character whatsoever relating to, or securities, except as a
result of the purchase and sale of the Securities, or rights or obligations
convertible into or exchangeable for, or giving any Person (as defined below)
any right to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings, or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common Stock. To
the knowledge of the Company, except as specifically disclosed in the SEC
Reports (as defined below) or in Exhibit C, no Person or group of related
Persons beneficially owns (as determined pursuant to Rule 13d-3 promulgated
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under the Securities Exchange Act of 1934, as amended (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 5% of the Common Stock. A "Person"
means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
2.4 Authorization. All corporate action on the part of the Company,
its officers, directors, and shareholders necessary for the due authorization,
execution, and delivery of this Agreement, the Ancillary Agreements (as
hereafter defined), the Notes and the Warrants (collectively, the "Transaction
Documents"), the performance of all obligations of the Company hereunder and
thereunder and the due authorization, valid issuance (or reservation for
issuance) and delivery of the Notes and the Warrants hereunder and the Common
Stock issuable upon conversion of the Notes or upon exercise of the Warrants
(collectively, the "Securities"), has been taken or will be taken prior to the
Initial Closing, and the Transaction Documents constitute or, in the case of the
Notes, the Warrants and the Common Stock, will constitute, valid and legally
binding obligations of the Company, enforceable in accordance with their
respective terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, and (iii) to the extent the indemnification provisions contained in
the Transaction Documents may be limited by applicable federal or state laws.
2.5 Valid Issuance of Notes, Warrants and Common Stock. The Notes and
the Warrants being purchased by the Investors hereunder have been duly and
validly authorized and, when issued and delivered in accordance with the terms
hereof for the consideration provided for herein, will be validly issued and
will constitute legally binding obligations of the Company in accordance with
their terms and will have been issued in compliance with all applicable federal
and state securities laws. The Common Stock issuable upon conversion of the
Notes and upon exercise of the Warrants has been duly and validly reserved for
issuance and, upon issuance in accordance with the terms of the Notes and the
Warrants (and upon payment of the exercise price as required by the Warrants),
respectively, will be validly issued, fully paid and nonassessable, and will
have been issued in compliance with all applicable federal and state securities
laws.
2.6 Filings, Consents and Approvals. Neither the Company nor any Subsidiary
is required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in connection with
the execution, delivery and performance by the Company of the Transaction
Documents or the consummation of the transactions contemplated thereby, other
than (i) the filing of a proper Form D in accordance with Regulation D
promulgated under the Securities Act of 1933, as amended (the "Securities Act"
or "Act"), and applicable Blue Sky filings, (ii) such filings as may be
necessary to perfect the security interest granted to the Investors under the
Security Agreement (as defined below) and (iii) in all other cases where the
failure to obtain such consent, waiver, authorization or order, or to give such
notice or make such filing or registration could not reasonably be expected to
have or result in, individually or in the aggregate, a material adverse effect
on the assets, business, operations, financial condition, liquidity or prospects
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of the Company and its Subsidiaries taken as a whole ("Material Adverse
Effect").
2.7 Litigation. There is no action, suit, proceeding, claim or
investigation pending or, to the knowledge of the Company, currently threatened
against the Company or its affiliates which questions the validity of the
Transaction Documents, or the right of the Company to enter into any of them, or
to consummate the transactions contemplated hereby or thereby, or which might
result or that could reasonably be expected to have a Material Adverse Effect,
either individually or in the aggregate, or result in any change in the current
equity ownership of the Company, nor is the Company aware that there is any
basis for the foregoing. The foregoing includes, without limitation, actions,
pending or threatened (or any basis therefor known to the Company), involving
the prior employment of any of the Company's employees, their use in connection
with the Company's business of any information or techniques allegedly
proprietary to any of their former employers, or their obligations under any
agreements with prior employers. The Company is not a party or subject to any
order, writ, injunction, judgment, or decree of any court or government agency
or instrumentality. 2.8 Patents and Trademarks. The Company and each of its
Subsidiaries owns, or is licensed or otherwise possesses legally enforceable
rights to use all patents, trademarks, trade names, service marks, copyrights,
and any applications therefore, technology, know-how, computer software programs
or applications, and tangible or intangible proprietary information or materials
that are used in the business of the Company and its Subsidiaries as currently
conducted, except for any such failures to own, be licensed or possess that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect, and to the knowledge of the officers of the Company all
patents, trademarks, trade names, service marks and copyrights held by the
Company and/or its Subsidiaries are valid and subsisting.
Except as disclosed in Exhibit C or as could not reasonably be
expected to have a Material Adverse Effect:
(a) the Company is not, nor will it be as a result of the
execution and delivery of the Transaction Documents or the consummation of the
transactions contemplated thereby, in violation of any licenses, sublicenses and
other agreements as to which the Company is a party and pursuant to which the
Company is authorized to use any third-party patents, trademarks, service marks,
copyrights, trade secrets or computer software (collectively, "Third-Party
Intellectual Property Rights").
(b) no claims with respect to (i) the patents, registered and
material unregistered trademarks and service marks, registered copyrights, trade
names, and any applications therefore, trade secrets or computer software owned
by the Company or any of its Subsidiaries (collectively, the "Company
Intellectual Property Rights"); or (ii) Third-Party Intellectual Property Rights
are currently pending or, to the knowledge of the officers of the Company, are
threatened by any Person;
(c) the officers of the Company do not know of any valid grounds
for any bona fide claims (i) to the effect that the manufacture, sale, licensing
or use of any product as now used, sold or licensed or proposed for use, sale or
license by the Company or any of its Subsidiaries, infringes on any copyright,
patent, trademark, service ▇▇▇▇ or trade secret of any Person; (ii) against the
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use by the Company or any of its Subsidiaries, of any Company Intellectual
Property Right or Third-Party Intellectual Property Right used in the business
of the Company or any of its Subsidiaries as currently conducted or as proposed
to be conducted; (iii) challenging the ownership, validity or enforceability of
any of the Company Intellectual Property Rights; or (iv) challenging the license
or legally enforceable right to use of the Third-Party Intellectual Rights by
the Company or any of its Subsidiaries; and
(d) to the knowledge of the officers of the Company, there is no
unauthorized use, infringement or misappropriation of any of the Company
Intellectual Property Rights by any third party, including any employee or
former employee of the Company or any of its Subsidiaries.
2.9 Compliance with Other Instruments. The Company is not in violation
or default of any provisions of its Amended and Restated Articles of
Incorporation or Bylaws or any instrument, judgment, order, writ, decree,
mortgage, indenture, lease, license or contract to which it is a party or by
which it is bound or any provision of federal, state, or local statute, rule, or
regulation applicable to the Company, except as could not reasonably be
expected, singly or in the aggregate, to have a Material Adverse Effect or to
burden or impair the ability of the Company to consummate the transactions
contemplated hereby. The execution, delivery, and performance of the Transaction
Documents and the consummation of the transactions contemplated thereby will not
result in any such violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, either a default under any
such provision, instrument, judgment, order, writ, decree or contract, or an
event which results in the creation of any lien, charge, or encumbrance upon any
assets of the Company or the suspension, revocation, impairment, forfeiture, or
nonrenewal of any material permit, license, authorization, or approval
applicable to the Company, its business or operations, or any of its assets or
properties, except as could not reasonably be expected, singly or in the
aggregate, to have a Material Adverse Effect.
2.10 Permits. The Company has all franchises, permits, licenses, and
any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect and believes it can
obtain, without undue burden or expense, any similar authority for the conduct
of its business as planned to be conducted. The Company is not in default in any
material respect under any of such franchises, permits, licenses, or other
similar authority.
2.11 Compliance with Laws. The conduct of business by the Company and
each Subsidiary as presently, conducted or proposed to be conducted is not
subject to continuing oversight, supervision, regulation or examination by any
governmental official or body of the United States or any other jurisdiction
wherein the Company or any Subsidiary conducts or proposes to conduct such
business, except such regulation as is applicable to commercial enterprises
generally. Neither the Company nor any of the Subsidiaries has received any
notice of any violation of or noncompliance with, any federal, state, local or
foreign laws, ordinances, regulations and orders (including, without limitation,
those relating to environmental protection, occupational safety and health,
federal securities laws, equal employment opportunity, consumer protection,
credit reporting, "truth-in-lending", and warranties and trade practices)
applicable to its business or to the business of any Subsidiary, the violation
of, or noncompliance with, which could reasonably be expected to have a Material
6
Adverse Effect, individually or in the aggregate, or burden or impair the
ability of the Company to consummate the transactions contemplated hereby and
the Company knows of no facts or set of circumstances which could give rise to
such a notice.
2.12 Disclosure. This Agreement, the Notes, the Warrants and any other
statements or certificates made or delivered in connection herewith or
therewith, when taken together with the Disclosure Materials (as defined below),
do not contain any untrue statement of a material fact or omits to state a
material fact necessary to make the statements herein or therein not misleading.
2.13 Title to Property and Assets. The Company owns its property and
assets free and clear of all mortgages, liens, loans, pledges, security
interests, claims, equitable interests, charges, and encumbrances, except such
encumbrances and liens which arise in the ordinary course of business and do not
materially impair the Company's ownership or use of such property or assets.
With respect to the property and assets it leases, the Company is in compliance
with such leases and, to the best of its knowledge, holds a valid leasehold
interest free of any liens, claims, or encumbrances.
2.14 Tax Returns, Payments, and Elections. The Company has timely
filed all tax returns and reports as required by law, and all such returns and
reports are true and correct in all material respects. The Company has paid all
taxes and other assessments due, if any, except those contested by it in good
faith which are listed in the Schedule of Exceptions. The provisions for taxes
of the Company as shown in the Financial Statements is adequate for taxes due or
accrued as of the date thereof. The Company has not elected pursuant to the
Internal Revenue Code of 1986, as amended ("Code"), to be treated as a
Subchapter S corporation or a collapsible corporation pursuant to Section 341(f)
or Section 1362(a) of the Code.
2.15 Insurance. The Company has in full force and effect fire and
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed, and the Company has insurance against other
hazards, risks, and liabilities to persons and property to the extent and in the
manner customary for companies in similar businesses similarly situated.
2.16 SEC Reports; Financial Statements. The Company has filed all
reports required to be filed by it under the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the three years preceding the date hereof
(or such shorter period as the Company was required by law to file such
material) (the foregoing materials being collectively referred to herein as the
"SEC Reports" and, together with the Schedule of Exceptions to this Agreement
and the documents filed as exhibits to the Company's Registration Statement on
Form SB-2, as amended, the "Disclosure Materials") on a timely basis or has
received a valid extension pursuant to Rule 12b-25 under the Exchange Act of
such time of filing and has filed any such SEC Reports prior to the expiration
of any such extension. As of their respective dates, the SEC Reports complied in
all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted 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. Except as set
forth in Exhibit C, all material agreements to which the Company is a party or
7
to which the property or assets of the Company are subject have been filed as
exhibits to the SEC Reports. The financial statements of the Company included in
the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis during the periods involved, except as may be
otherwise specified in such financial statements or the notes thereto, and
fairly present in all material respects the financial position of the Company
and its consolidated 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, immaterial, year-end audit adjustments. Except
as disclosed in the Disclosure Documents, since September 30, 2003 (a) there has
been no event, occurrence or development that has had or that could reasonably
be expected to have or result in a Material Adverse Effect, (b) the Company has
not incurred any liabilities (contingent or otherwise) other than (x)
liabilities incurred in the ordinary course of business consistent with past
practice and (y) liabilities not required to be reflected in the Company's
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (c) the Company has not altered its method of
accounting or the identity of its auditors and (d) the Company has not declared
or made any payment or distribution of cash or other property to its
stockholders or officers or directors (other than in compliance with existing
Company stock option plans) with respect to its capital stock, or purchased,
redeemed (or made any agreements to purchase or redeem) any shares of its
capital stock. Additionally, since the adoption of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002 (the "New Act"), the Company has complied in all material respects with the
laws, rules and regulation under the New Act which are applicable to it.
2.17 No Conflict of Interest. Except as otherwise disclosed in the
Disclosure Materials, the Company is not indebted in excess of $5,000, directly
or indirectly, to any of its employees, officers or directors or to their
respective spouses or children, in any amount whatsoever other than in
connection with expenses or advances of expenses incurred in the ordinary course
of business or relocation expenses of employees, officers and directors, nor is
the Company contemplating such indebtedness as of the date of this Agreement.
Except as otherwise disclosed in the Disclosure Materials, none of said
employees, officers or directors, or any member of their immediate families, is
directly or indirectly indebted to the Company (other than in connection with
purchases of the Company's stock) or have any direct or indirect ownership
interest in any firm or corporation with which the Company is affiliated or with
which the Company has a business relationship or any firm or corporation which
competes with the Company, nor is the Company contemplating such indebtedness as
of the date of this Agreement, except that employees, officers, directors and/or
shareholders of the Company may own stock in publicly traded companies (not in
excess of 1% of the outstanding capital stock thereof) which may compete with
the Company. Except as otherwise disclosed in the Disclosure Materials, no
employee, shareholder, officer or director, or any member of their immediate
families, is, directly or indirectly, interested in any material contract with
the Company, nor does any such person own, directly or indirectly, in whole or
in part, any material tangible or intangible property that the Company uses or
contemplates using in the conduct of its business. The Company is not a
guarantor or indemnitor of any indebtedness of any other Person.
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3. Representations and Warranties of the Investors. Each of the Investors,
severally and not jointly, hereby represent and warrant that:
3.1 Authorization. The Investor represents that it has full power and
authority to enter into the Transaction Documents. The Transaction Documents
entered into by the Investor constitute the valid and legally binding
obligations of the Investor enforceable in accordance with their terms, except
(i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
3.2 Purchase Entirely for Own Account. The Securities will be acquired
for investment for the Investor's own account and not with a view to the resale
or distribution of any part thereof.
3.3 Disclosure of Information. The Investor acknowledges that all of
the SEC Reports and Disclosure Materials were made fully available to it and it
has reviewed and understands them. The Investor acknowledges that it has
received all the information that it has requested relating to the Company and
the purchase of the Notes and the Warrants. The Investor further represents that
it has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Notes and the
Warrants. The foregoing, however, does not limit or modify the representations
and warranties of the Company in Section 2 of this Agreement or the right of the
Investor to rely thereon.
3.4 Accredited Investor. The Investor is an "accredited investor"
within the meaning of Rule 501 of Regulation D under the Securities Act.
3.5 Restricted Securities. Investor understands that the Notes and the
Warrants (and the shares of Common Stock issuable upon conversion of the Notes
and exercise of the Warrants) that it is purchasing are "restricted securities"
under the federal securities laws and that under such laws and applicable
regulations such securities may only be sold pursuant to an effective
registration statement or an available exemption from registration.
3.6 Legends. It is understood that the certificates evidencing the
Notes and the Warrants (and the Common Stock issuable upon conversion and
exercise thereof, respectively) may bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN
THIS CERTIFICATE. THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL,
REASONABLY ACCEPTABLE TO COUNSEL FOR THE COMPANY, TO THE EFFECT THAT
THE PROPOSED SALE, TRANSFER, OR DISPOSITION MAY BE EFFECTUATED WITHOUT
REGISTRATION UNDER THE ACT."
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4. Conditions of the Investors' Obligations at each Closing. The
obligations of the Investors under subsection 1.1 of this Agreement are subject
to the fulfillment on or before each Closing of each of the following
conditions:
4.1 Representations and Warranties. The representations and warranties
of the Company contained in Section 2 hereof shall be true and correct on and as
of the date of this Agreement and as of each Closing with the same effect as
though such representations and warranties had been made on and as of the date
of such Closing.
4.2 Performance. The Company shall have performed and complied with
all agreements, obligations, and conditions contained in this Agreement that are
required to be performed or complied with by it on or before each Closing.
4.3 Compliance Certificate. The President of the Company shall deliver
to the Investors, at each Closing, a certificate certifying that the conditions
specified in Sections 4.1 and 4.2 have been fulfilled and stating that, except
as set forth in the Disclosure Materials, there has been no material adverse
change in the business, affairs, prospects, operations, properties, assets,
condition, capital shares, long-term debt, results of operations, financial
condition or liquidity of the Company since September 30, 2003.
4.4 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at each Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Investors and counsel to the Investors, and they shall have received all such
counterpart original and certified or other copies of such documents as they may
reasonably request.
4.5 Opinion of Company Counsel. The Investors shall have received from
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ an opinion, dated as of each Closing, in form attached hereto as
Exhibit D.
4.6 Good Standing Certificates. The Company shall have delivered to
the Investors, dated as of a date within five (5) business days of each Closing,
a certificate issued by the State of Nevada to the effect that it is legally
existing and in good standing.
4.7 Secretary's Certificate. The Company shall have delivered to the
Investors a certificate executed by the Secretary of the Company dated as each
Closing attending, true and correct copies of the following documents: (a) the
resolutions adopted by the Company's Board of Directors authorizing the
transactions contemplated by this Agreement; and (b) the Amended and Restated
Articles of Incorporation and Bylaws of the Company.
4.8 Delivery of Notes and Warrants. The Company shall have delivered
the Notes and the Warrants to the Investors for each Closing, as specified in
Section 1.
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4.9 Ancillary Agreements.
4.9.1 The Company and the Investors shall have entered into a
security agreement dated of even date herewith, a form of which is attached
hereto as Exhibit E (the "Security Agreement").
4.9.2 The Company and the Investors shall have entered into a
registration rights agreement dated of even date herewith, a form of which is
attached hereto as Exhibit F (the "Registration Rights Agreement").
4.9.3 The Company and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall have entered into the
escrow agreement dated of even date herewith, a form of which is attached hereto
as Exhibit G (the "Escrow Agreement") and together with the Security Agreement
and Registration Rights Agreement, the "Ancillary Agreements").
4.10 Other Payments. Concurrent with each Closing, the Company shall
pay the compensation set forth in Section 7.7 hereto.
5. Conditions of the Company's Obligations at each Closing. The obligations
of the Company to Investor under this Agreement is subject to the fulfillment on
or before each Closing of each of the following conditions by the Investor:
5.1 Representations and Warranties. The representations and warranties
of the Investors contained in Section 3 shall be true and correct on and as of
the date of this Agreement and as of each Closing with the same effect as though
such representations and warranties had been made on and as of such Closing.
5.2 Payment of Purchase Price. The Investor shall have delivered the
Purchase Price.
5.3 Ancillary Agreements. The Company and the Investors shall have
entered into the Ancillary Agreement.
6. Indemnification.
6.1 General. The Company agrees to indemnify and hold harmless the
Investors and any of their general partners, shareholders, employees, officers,
directors, members, agents and other representatives (collectively, the
"Indemnitees"), against any losses, damages, liabilities, or judgments or
settlements of any nature or kind, including all costs and expenses relating
thereto, including without limitation, interest, penalties and reasonable
attorneys' fees (the "Losses") (joint or several) (i) arising out of any
investigations, proceedings, claims or actions, to which the Indemnitees may
become subject, whether under the Securities Act or the Exchange Act or any
rules or regulations promulgated thereunder, or any state law or regulation, or
common law, arising out of, related to or in any way attributable to the
Indemnitee's investment in the Company, or (ii) that arise out of or are based
upon any breach of any representation, warranty, agreement, obligation or
covenant of the Company contained herein or in any of the Transaction Documents.
The Company also agrees to reimburse the Indemnitees for any legal or other
expenses reasonably incurred in connection with investigating or defending any
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such investigations, proceedings, claims or actions, as such expenses or other
costs are incurred. The indemnity provided in this Section 6.1 is not limited to
Losses asserted by third parties against any Indemnitee, but includes Losses
incurred or sustained by any such Indemnitee in the absence of third party
claims.
6.2 Non-Exclusive Remedy. The indemnification remedies provided in
this Section 6 shall not be deemed to be exclusive. Accordingly, the exercise by
any person of any of its rights under this Section 6 shall not be deemed to be
an election of remedies and shall not be deemed to prejudice, or to constitute
or operate as a waiver of, any other right or remedy that such person may be
entitled to exercise (whether under this Agreement, under any other contract,
under any law or regulation or otherwise); provided, however, that no person
shall seek other remedies in those situations where they have received full
indemnification payments with respect to such situations.
7. Miscellaneous.
7.1 Survival of Warranties. All of the representations and warranties
made herein shall survive the execution and delivery of this Agreement. The
Investors are entitled to rely, and the parties hereby acknowledge that the
Investors have so relied, upon the truth, accuracy and completeness of each of
the representations and warranties of the Company contained herein, irrespective
of any independent investigation made by Investors. The Company is entitled to
rely, and the parties hereby acknowledge that the Company has so relied, upon
the truth, accuracy and completeness of each of the representations and
warranties of the Investors contained herein, irrespective of any independent
investigation made by the Company.
7.2 Successors and Assigns. This Agreement is personal to each of the
parties and may not be assigned without the written consent of the other
parties; provided, however, that any of the Investors shall be permitted to
assign its rights under this Agreement and the Ancillary Agreements to any
affiliate of such Investor.
7.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of New York as applied to agreements among New York
residents entered into and to be performed entirely within New York. The Company
(1) agrees that any legal suit, action or proceeding arising out of or relating
to this Agreement shall be instituted exclusively in New York State Supreme
Court, County of New York, or in the United States District Court for the
Southern District of New York, (2) waives any objection which the Company may
have now or hereafter to the venue of any such suit, action or proceeding, and
(3) irrevocably consents to the jurisdiction of the New York State Supreme
Court, County of New York, and the United States District Court for the Southern
District of New York in any such suit, action or proceeding. The Company further
agrees to accept and acknowledge service of any and all process which may be
served in any such suit, action or proceeding in the New York State Supreme
Court, County of New York, or in the United States District Court for the
Southern District of New York and agrees that service of process upon the
Company mailed by certified mail to the Company's address shall be deemed in
every respect effective service of process upon the Company, in any such suit,
action or proceeding. THE PARTIES HERETO AGREE TO WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY.
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7.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement, once
executed by a party, may be delivered to the other party hereto by facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.
7.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.6 Notices. Unless otherwise provided, any notice, authorization,
request or demand required or permitted to be given under this Agreement shall
be given in writing and shall be deemed effectively given upon personal delivery
to the party to be notified or three (3) days following deposit with the United
States Post Office, by registered or certified mail, postage prepaid, or two
days after it is sent by an overnight delivery service, or when sent by
facsimile with machine confirmation of delivery addressed as follows:
If to the Investors to:
The address set forth opposite their name on the Schedule
of Investors attached hereto
If to Company, to:
Vital Living, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President (e-mail: ▇▇▇▇▇▇▇@▇▇▇.▇▇▇)
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In either case, with a copy to:
HCFP/▇▇▇▇▇▇▇ Securities, LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇ (e-mail: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇)
and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Esq. (e-mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇)
Any party may change its address for such communications by giving notice
thereof to the other parties in conformity with this Section.
7.7 Finder's Fee. Each party represents that it neither is nor will be
obligated for any finders' or brokers' fee or commission in connection with this
transaction; provided, however, that the Company is obligated to pay certain
compensation upon consummation of the transactions contemplated hereby to ▇▇▇▇▇
Securities Corp., Atlas Capital, HCFP/▇▇▇▇▇▇▇ Securities, LLC and Aegis Capital
Corp.
7.8 Transaction Expenses; Enforcement of Transaction Documents. The
Company and each Investor shall pay their respective costs and expenses incurred
with respect to the negotiation, execution, delivery and performance of this
Agreement. If any action at law or in equity is necessary to enforce or
interpret the terms of the Transaction Documents, the prevailing party shall be
entitled to reasonable attorney's fees, costs, and necessary disbursements in
addition to any other relief to which such party may be entitled.
7.9 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and Investor or Investors holding Notes
evidencing, in the aggregate, an amount equal to not less than 50.1% of the
aggregate principal amount of all Notes then outstanding. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any securities purchased under this Agreement at the time outstanding
(including securities into which such securities are convertible), each future
holder of all such securities, and the Company.
7.10 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
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7.11 Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein.
7.12 Additional Investors. In the event that, at any time or from time
to time, the Company holds an Interim Closing and issues additional Notes and
Warrants to additional investors (collectively the "Additional Investors" and
individually an "Additional Investor"), as a condition precedent to such
Closing, the Company shall countersign a copy of this Agreement with each
Additional Investor and each such Additional Investor shall agree to sign a copy
of this Agreement (for and on behalf of himself or itself, his or its legal
representatives and his or its transferees and assigns) thereby agreeing to be
bound by all applicable provisions of this Agreement as a party hereto and in
the capacity as an Investor. Except as provided herein, upon any such Interim
Closing, all references to the Investors or to any Investor shall thereafter be
deemed to include such Additional Investors, and upon such Closing, each such
Additional Investor shall be added to the Schedule of Investors.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
Vital Living, Inc.
By:
--------------------------------------------
Name:
Title:
EACH OF THE INVESTORS SET FORTH ON
THE ATTACHED SCHEDULE OF INVESTORS
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SCHEDULE OF INVESTORS
Name and Address Amount Signature
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