Exhibit 10.1
STOCK PURCHASE AGREEMENT
DATED AS OF AUGUST 8, 2007
AMONG
NARROWSTEP INC.
AND
THE PURCHASERS LISTED ON EXHIBIT A
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "AGREEMENT") is dated as of August 8,
2007 by and among Narrowstep Inc., a Delaware corporation (the "COMPANY"), and
each of the Purchasers of shares of common stock of the Company whose names are
set forth on EXHIBIT A hereto (individually, a "PURCHASER" and collectively, the
"PURCHASERS").
The parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF COMMON STOCK
1.1 PURCHASE AND SALE OF STOCK. Upon the following terms and conditions,
the Company shall issue and sell to the Purchasers, and each of the Purchasers
shall purchase from the Company, shares of the Company's common stock, par value
$0.000001 per share (the "COMMON STOCK"), in the amounts set forth opposite such
Purchaser's name on EXHIBIT A hereto (the "COMMON SHARES"), at a purchase price
of $.25 per share. 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 Rule 506 of Regulation D ("REGULATION D") as
promulgated by the United States Securities and Exchange Commission (the
"COMMISSION") under the Securities Act of 1933, as amended (the "SECURITIES
ACT") or Section 4(2) of the Securities Act.
1.2 WARRANTS. Upon the following terms and conditions and for no
additional consideration, each of the Purchasers shall be issued Warrants, in
substantially the form attached hereto as EXHIBIT B (the "WARRANTS"), each to
purchase the number of shares of Common Stock equal to fifty percent (50%) of
the number of shares of Common Stock purchased by each Purchaser pursuant to the
terms of this Agreement, as set forth opposite such Purchaser's name on EXHIBIT
A hereto. Each of the Warrants shall have an exercise price per share equal to
the $.50 per share (subject to adjustment as provided in the Warrants) and shall
have a five (5) year term, subject to the terms of the Warrants.
1.3 CONVERSION SHARES. The Company has authorized and has reserved and
covenants to continue to reserve, free of preemptive rights and other similar
contractual rights of stockholders, a number of shares of Common Stock equal to
the number of shares of Common Stock as shall from time to time be sufficient to
effect the full exercise of all of the Warrants then outstanding. Any shares of
Common Stock issuable upon exercise of the Warrants (and such shares when
issued) are herein referred to as the "WARRANT SHARES." The Common Shares and
the Warrant Shares are collectively referred to as the "Shares." The Shares and
the Warrants are collectively referred to as the "SECURITIES."
1.4 PURCHASE PRICE AND CLOSING. Subject to the terms and conditions
hereof, 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 Common Shares and the Warrants for an
aggregate purchase price of set forth on EXHIBIT A (the "PURCHASE PRICE"). The
number of Common Shares and Warrants sold pursuant to this Agreement shall be in
an amount not less than is needed to produce a minimum aggregate Purchase Price
of $12,000,000 and not more than is needed to produce maximum aggregate Purchase
Price of $15,000,000. The minimum Purchase Price per Purchaser shall be
$250,000.
The Common Shares and Warrants shall be sold and funded in a single
closing (the "CLOSING"). The Closing shall take place on or about August 8, 2007
(the "CLOSING DATE"), but in no event later than August 10, 2007. The Closing
shall take place at the offices of ▇▇▇▇▇▇ and ▇▇▇▇▇, LLP, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, at 10:00 a.m., Texas time. Subject to
the terms and conditions of this Agreement, at the Closing the Company shall
deliver or cause to be delivered to each Purchaser (x) irrevocable transfer
instructions to the Company's transfer agent to issue to each Purchaser promptly
following the Closing a certificate for the number of Common Shares set forth
opposite the name of such Purchaser on EXHIBIT A hereto, (y) its Warrants to
purchase such number of shares of Common Stock as is 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. At the Closing, each Purchaser shall
deliver its Purchase Price by wire transfer to an escrow account designated by
the Escrow Agent (as defined below). The Purchase Price shall be disbursed
pursuant to the terms of the Escrow Agreement (as defined in SECTION 2.1(B)).
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Purchasers, as of the date hereof and the Closing
Date, as follows:
(a) ORGANIZATION, GOOD STANDING AND POWER. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware 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 and each such subsidiary is duly qualified as a foreign
corporation to do business 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 (as defined in SECTION 2.1(H) hereof) on the Company's financial
condition.
(b) AUTHORIZATION; ENFORCEMENT. The Company has the requisite corporate
power and authority to enter into and perform this Agreement, the Registration
Rights Agreement in the form attached hereto as EXHIBIT C (the "REGISTRATION
RIGHTS AGREEMENT"), the Lock-Up Agreement in the form attached hereto as EXHIBIT
D (the "LOCK-UP AGREEMENT"), the Escrow Agreement by and among the Company, the
Purchasers and the escrow agent named therein (the "ESCROW AGENT"), dated as of
the date hereof, substantially in the form of EXHIBIT E attached hereto (the
"ESCROW AGREEMENT"), and the Warrants (collectively, the "TRANSACTION
DOCUMENTS") and to issue and sell the Shares and the Warrants in accordance with
the terms hereof. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action, and no further consent or authorization of the
Company or its Board of Directors or stockholders is required in connection
therewith. This Agreement and the other Transaction Documents have been duly
executed and delivered by the Company. Each of the Transaction Documents
constitutes a valid and binding obligation of the Company enforceable against
the Company in accordance with its 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
equitable principles of general application.
(c) CAPITALIZATION. The reports previously filed by the Company (the "SEC
REPORTS") pursuant to the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), set forth the Company's capitalization as of the dates set
forth therein. All of the outstanding shares of the Common Stock and the Common
Shares have been duly and validly authorized. None of the Securities are subject
to preemptive rights and, except as described in the SEC Reports and except for
awards made pursuant to the Company's existing incentive plans since the date of
such SEC Reports, no shares of Common Stock
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are entitled to registration 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. Except as described in the SEC Reports, 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 as described in the SEC Reports, the Company is not
a party to any agreement granting registration or anti-dilution rights to any
person with respect to any of its equity or debt securities. The Company is not
a party to, and it has no knowledge of, any agreement restricting the voting of
any shares of the capital stock of the Company, or restricting the transfer of
the Securities (except as set forth in the Transaction Documents). The offer and
sale of all capital stock, convertible securities, rights, warrants, or options
of the Company issued prior to the Closing complied with all applicable Federal
and state securities laws, and no stockholder has a right of rescission or claim
for damages with respect thereto. The Company has furnished or made available to
the Purchasers true and correct copies of the Company's Amended and Restated
Certificate of Incorporation as in effect on the date hereof (the
"CERTIFICATE"), and the Company's Amended and Restated Bylaws as in effect on
the date hereof (the "BYLAWS").
(d) ISSUANCE OF SHARES. The Common Shares to be issued and the Warrants to
be granted at the Closing have been duly authorized by all necessary corporate
action and the Common Shares, when paid for or issued in accordance with the
terms hereof, shall be validly issued and outstanding, fully paid and
nonassessable. When the Warrant Shares are issued in accordance with the terms
of the Warrants, such shares will be duly authorized validly issued and
outstanding, fully paid and nonassessable, and the holders shall be entitled to
all rights accorded to a holder of Common Stock.
(e) NO CONFLICTS. The execution, delivery and performance of the
Transaction Documents by the Company, and the performance by the Company of its
obligations contemplated herein and therein do not and will not (i) violate any
provision of the Company's Certificate or Bylaws, (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 the Company is a party or by which it or its properties or assets are
bound, (iii) create or impose a lien, mortgage, security interest, charge or
encumbrance of any nature on any property of the Company under any agreement or
any commitment to which the Company is a party or by which the Company is bound
or by which any of its respective properties or assets are bound, or (iv) 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 the Company or any of its subsidiaries or by
which any property or asset of the Company or any of its subsidiaries are bound
or affected, except, in cases other than violations pursuant to clause (i)
above, for such conflicts, defaults, terminations, amendments, accelerations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect. The business of the Company and its subsidiaries is not being
conducted in violation of any laws, ordinances or regulations of any
governmental entity, except for violations which singularly or in the aggregate
do not or will not have a Material Adverse Effect. The Company is not required
under Federal, state 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 Common
Shares, the Warrants, and the Warrant Shares in accordance with the terms hereof
or thereof (other than any filings which may be required to be made by the
Company with the Commission or state securities administrators subsequent to the
Closing and any registration statement which may be filed pursuant hereto or any
other Transaction Document); PROVIDED that, for purposes of the representation
made in this sentence, the Company is assuming and relying upon the accuracy of
the relevant representations and agreements of the Purchasers herein.
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(f) SEC REPORTS. (i) the SEC Reports constitute all of the documents and
reports that the Company was required to file with the SEC pursuant to the
Exchange Act and the rules and regulations promulgated thereunder by the ▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) as of their respective dates, the SEC Reports, as
amended as of the date hereof, complied in all material respects with the
requirements of the Securities Act of 1933, as amended, and/or the Exchange Act,
as the case may require, and the rules and regulations promulgated thereunder.
The Company has delivered to the Purchasers true and complete copies of the
Company's audited financial statements for the fiscal year ended February 28,
2007 (the "AUDITED FINANCIAL STATEMENTS DATE"). Such audited financial
statements, together with all financial statements of the Company contained in
the SEC Reports filed since June 30, 2005, are collectively referred to as the
"FINANCIAL STATEMENTS". The Financial Statements complied in all material
respects with the requirements of the Exchange Act, and the rules and
regulations of the Commission promulgated thereunder. Such Financial Statements
have been prepared in accordance with accounting principles generally accepted
in the United States ("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).
(g) SUBSIDIARIES. 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. There are 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. 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.
(h) NO MATERIAL ADVERSE CHANGE. Since the Audited Financial Statements
Date, the Company has not experienced or suffered any Material Adverse Effect or
any event that is reasonably likely, through the passage of time or otherwise,
to result in a Material Adverse Effect. For the purposes of this Agreement,
"MATERIAL ADVERSE EFFECT" means any material adverse effect on the business,
properties, assets, operations, results of operations or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole, or on the
transactions contemplated hereby and the other Transaction Documents or by the
agreements and instruments to be entered into in connection herewith or
therewith, or on the authority or ability of the Company to perform its
obligations under the Transaction Documents and/or any condition, circumstance,
or situation that would prohibit or otherwise materially interfere with the
ability of the Company to perform any of its obligations under the Transaction
Documents in any material respect.
(i) NO UNDISCLOSED LIABILITIES. Since the Audited Financial Statements
Date, 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) of a nature
required to be included on a balance sheet prepared in accordance with generally
accepted accounting principles other than those incurred in the ordinary course
of the Company's or its subsidiaries respective
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businesses. Except as described in the SEC Reports, since the Audited Financial
Statements Date, none of the Company or any of its subsidiaries has participated
in any transaction which is outside of the ordinary course of its business.
(j) NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. No event or circumstance has
occurred or exists with respect to the Company or its subsidiaries or their
respective businesses, properties, prospects, 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.
(k) TITLE TO ASSETS. Except as described in the SEC Reports, each of the
Company and the subsidiaries has good and marketable title to all of its owned
real and personal property whether tangible or intangible (collectively, the
"ASSETS"), free and clear of any mortgages, pledges, charges, liens, security
interests, claim, community property interest, condition, equitable interest or
other encumbrances, license, option, right of first refusal or restriction of
any kind, including any restriction on use, voting, transfer, receipt of income
or exercise of any other attribute of ownership ("LIENS"). To the Company's
knowledge, all leases of the Company and each of its subsidiaries are valid and
subsisting and in full force and effect and neither this Agreement nor the
transactions contemplated hereby will give any party to such leases any right to
terminate or modify the leases.
(l) ACTIONS PENDING. There is no action, suit, claim, investigation,
arbitration, alternate dispute resolution proceeding or any 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 the transactions contemplated hereby or thereby
or any action taken or to be taken pursuant hereto or thereto. Except as
described in the SEC Reports there is no action, suit, claim, investigation,
arbitration, alternate dispute resolution proceeding or any 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, if determined adversely to the Company or any subsidiary, is reasonably
likely to result in a Material Adverse Effect. 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 subsidiary in their capacities as such.
(m) 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 for such noncompliance that, individually or in the aggregate, would not
cause 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.
(n) TAXES. The Company and each of the subsidiaries has accurately
prepared and filed all material foreign, federal, state income and all other tax
returns, reports and declarations required by law to be paid or filed by it by
any jurisdiction to which the Company is subject, has paid or made provisions
for the payment of 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. None of the federal income tax returns of the Company or any
subsidiary have 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
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assessment, adjustment or contingency. The Company and its subsidiaries have
complied in all material respects with all applicable legal requirements
relating to the payment and withholding of taxes and, within the time and in the
manner prescribed by law, has withheld from wages, fees and other payments, and
paid over to the proper governments or regulatory authorities, all amounts
required.
(o) CERTAIN FEES. No brokers, finders or financial advisory fees or
commissions will be payable by the Company or any subsidiary or any Purchaser
with respect to the transactions contemplated by this Agreement.
(p) DISCLOSURE. Without expanding the scope or coverage of the
representations and warranties contained herein, the representations and
warranties of the Company set forth in this Agreement do not contain any untrue
statement of a material fact or omit 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.
(q) INTELLECTUAL PROPERTY. The Company has no knowledge of any claim that,
or inquiry as to whether, any product, activity or operation of the Company or
any of its subsidiaries infringes upon or involves, or has resulted in the
infringement of, any trademarks, trade-names, service marks, patents, copyrights
or other proprietary rights of any other person, corporation or other entity;
and no such proceedings have been instituted, are pending or are threatened
against the Company or any of its subsidiaries. The Company and its
subsidiaries: (i) owns or possesses all rights to use, option and/or license, as
the case may be, all patents, patent applications, provisional patents,
trademarks, service marks, trade names, trademark registrations, service ▇▇▇▇
registrations, copyrights, licenses, formulae, mask works, customer lists,
internet domain names, know-how and other intellectual property (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures, "INTELLECTUAL PROPERTY") necessary for the
conduct of their respective businesses as currently being conducted, except
where the failure to own or possess such rights could not reasonably be expected
to result in a Material Adverse Effect, and (ii) have no knowledge that the
conduct of their respective businesses conflict with, and have not received any
notice of any claim of conflict with, any such right of others, which conflict
would have a Material Adverse Effect. To the Company's knowledge, there is no
infringement by third parties of any Intellectual Property. There are no pending
or, to the Company's knowledge, threatened actions, suits, proceedings or claims
by others challenging the Company or any of its subsidiaries' rights in or to
any Intellectual Property. There is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others that the Company or any
of its subsidiaries infringes or otherwise violates any Intellectual Property
rights of others, in each case which would be reasonably likely to have a
Material Adverse Effect.
(r) ENVIRONMENTAL COMPLIANCE. 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. "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. 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, the absence of which would have a Material Adverse Effect. To its
knowledge, the Company and each of its subsidiaries are also in compliance in
all material respects with all other
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limitations, restrictions, conditions, standards, requirements, schedules and
timetables required or imposed under all Environmental Laws. Except 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 may violate any Environmental Law after the
Closing Date or that may 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.
(s) BOOKS AND RECORDS INTERNAL ACCOUNTING CONTROLS. The books and records
of the Company and its subsidiaries accurately reflect in all material respects
the information relating to the business of the Company and the subsidiaries,
the location and collection of their assets, and the nature of all transactions
giving rise to the obligations or accounts receivable of the Company or any
subsidiary to the extent required to be contained therein. The Company and each
of its subsidiaries maintain a system of internal accounting controls
sufficient, in the judgment of the Company, 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, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate actions is taken with respect to any differences.
(t) MATERIAL AGREEMENTS. Except for such instances as would not reasonably
be likely to result in 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 Agreement, and (iv) neither this Agreement nor
the transactions contemplated hereby will give any party to the Material
Agreements any right to terminate or modify the Material Agreements.
(u) SECURITIES ACT OF 1933. 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) in connection with the offer or sale of the Shares. Based in part
upon the representations and covenants 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 Shares and the Warrants 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 Shares, the Warrants or similar
securities to, or solicit offers with respect thereto from any person, or has
taken or will take any action so as to bring the issuance and sale of any of the
Shares and the Warrants 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 Shares and the Warrants.
(v) GOVERNMENTAL APPROVALS. Except for the filing of any notice prior or
subsequent to the Closing Date that may be required under applicable state
and/or Federal securities laws (which if required, shall be filed on a timely
basis), including the filing of a Form D and a registration statement or
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statements pursuant to the Registration Rights Agreement, 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 Common Shares and the
Warrants, or for the performance by the Company of its obligations under the
Transaction Documents.
(w) EXECUTIVE OFFICERS. No executive officer of the Company (as defined in
Rule 501(f) of the Securities Act) has notified the Company in writing that such
officer intends to leave the Company or otherwise terminate such officer's
employment with the Company. No executive officer of the Company, to the
knowledge of the Company, is in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant.
(x) ABSENCE OF CERTAIN DEVELOPMENTS. Except as described in the SEC
Reports Since the Audited Financial Statements Date, neither the Company nor any
subsidiary has:
(i) issued any stock, bonds or other corporate securities or any
rights, options or warrants with respect thereto except awards granted pursuant
to the Company's existing incentive plans;
(ii) incurred any indebtedness for borrowed money;
(iii) 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;
(iv) sold, assigned or transferred any other tangible assets, or
canceled any debts or claims, except in the ordinary course of business;
(v) sold, assigned or transferred any patent rights, trademarks,
trade names, copyrights, trade secrets or other intangible assets or
intellectual property rights, or disclosed any proprietary confidential
information to any person except to customers in the ordinary course of business
or to the Purchasers or their representatives;
(vi) suffered any material losses or waived any rights of material
value, whether or not in the ordinary course of business, or suffered the loss
of any material amount of prospective business;
(vii) suffered any material damage, destruction or casualty loss,
whether or not covered by insurance; or
(viii) entered into an agreement, written or otherwise, to take any
of the foregoing actions.
(y) INVESTMENT COMPANY ACT STATUS. 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.
(z) ERISA. No liability to the Pension Benefit Guaranty Corporation has
been incurred with respect to any Plan (as defined below) 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
8
and the issuance and sale of the Common Shares will not involve any transaction
which is a "prohibited transaction" under Section 406 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") or in connection with which an
excise tax could be imposed pursuant to Section 4975 of the Internal Revenue
Code of 1986, as amended (the "CODE"), 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. No Plan is subject to
Title IV of ERISA or the minimum funding requirements of Code Section 412. As
used in this Section 2.1(bb), the term "PLAN" shall mean an "employee pension
benefit plan" (as defined in Section 3(2) 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 treated as
a single employer, as described in Code Section 414(b), (c), (m) or (o).
(aa) NO INTEGRATED OFFERING. 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 Shares
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 Shares pursuant to Rule 506 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 Shares to be integrated with other offerings. Except as
described in the SEC Reports, the Company does not have any registration
statement pending before the Commission or currently under the Commission's
review and since July 1, 2006, the Company has not offered or sold any of its
equity securities or debt securities convertible into shares of Common Stock.
(bb) ▇▇▇▇▇▇▇▇-▇▇▇▇▇ ACT. The Company is in compliance in all material
respects with the provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the
"▇▇▇▇▇▇▇▇-▇▇▇▇▇ ACT"), and the rules and regulations promulgated thereunder,
that are effective and applicable to it.
(cc) 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. 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 purchase 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, and no Purchaser or any of its agents
or employees shall have any liability to any Purchaser (or any other person)
relating to or arising from any such information, materials, statements or
opinions. 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 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. The Company
acknowledges that for reasons of administrative convenience only, the
Transaction Documents have been prepared by counsel for one of the Purchasers
and such counsel does not represent all of the Purchasers
9
but only such Purchaser and the other Purchasers have retained their own
individual counsel with respect to the transactions contemplated hereby. The
Company acknowledges that it has elected to provide all Purchasers with the same
terms and Transaction Documents for the convenience of the Company and not
because it was required or requested to do so by the Purchasers. The Company
acknowledges that such procedure with respect to the Transaction Documents in no
way creates a presumption that the Purchasers are in any way acting in concert
or as a group with respect to the Transaction Documents or the transactions
contemplated hereby or thereby.
(dd) PLACEMENT AGENT'S FEES. The Company shall be responsible for the
payment of any placement agent's fees, financial advisory fees, or brokers'
commissions (other than for persons engaged by any Purchaser or its investment
advisor) relating to or arising out of the sale of the Shares and the Warrants
as contemplated hereby. The Company shall pay, and hold each Purchaser harmless
against, any liability, loss or expense (including, without limitation,
reasonable attorney's fees and out-of-pocket expenses) arising in connection
with any such claim. The Company acknowledges that it has engaged ▇▇▇▇▇▇▇▇
Curhan Ford & Co. and Brimberg & Co. as placement agents (together the "AGENTs")
in connection with the sale of the Shares. Other than the Agents, the Company
has not engaged any placement agent or other agent in connection with the sale
of the Shares.
(ee) FOREIGN CORRUPT PRACTICES. Neither the Company, nor any of its
subsidiaries, nor, to the Company's knowledge, any director, officer, agent,
employee or other person acting on behalf of the Company or any of its
subsidiaries has, in the course of its actions for, or on behalf of, the Company
(i) used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expenses relating to political activity; (ii) made any direct
or indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; (iii) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv)
made any unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or employee.
(ff) LISTING AND MAINTENANCE REQUIREMENTS. The Company's common stock is
currently quoted on the OTC Bulletin Board. The Company has not, since June 30,
2005, received any notice from the OTC Bulletin Board or the NASD or any trading
market on which the Company's common stock is or has been listed or quoted to
the effect that the Company is not in compliance with the quoting, listing or
maintenance requirements of the OTC Bulletin Board or such other trading market.
The Company is in compliance in all material respects with all such quoting,
listing and maintenance requirements.
(gg) NO SEC OR NASD INQUIRIES. The Company is not, and has never been, the
subject of any formal or informal inquiry or investigation by the SEC or NASD.
(hh) 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 or its Certificate of
Incorporation or Bylaws which would preclude the issuance and sale of the Shares
or the Warrants, and the consummation of the other transactions contemplated by
this Agreement.
2.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each of the
Purchasers hereby makes the following representations and warranties to the
Company with respect solely to itself and not with respect to any other
Purchaser:
(a) INCORPORATION AND STANDING OF THE PURCHASER. If the Purchaser is an
entity, such Purchaser is a corporation, limited liability company or
partnership duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation.
10
(b) AUTHORIZATION AND POWER. Each Purchaser has the requisite power and
authority to enter into and perform this Agreement and the Registration Rights
Agreement and to purchase the Securities being sold to it hereunder. The
execution, delivery and performance of this Agreement and the Registration
Rights Agreement by such Purchaser and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate or partnership action, and no further consent or
authorization of such Purchaser or its Board of Directors, stockholders, or
partners, as the case may be, is required. Each of this Agreement and the
Registration Rights Agreement has been duly authorized, executed and delivered
by such Purchaser and constitutes, or shall constitute when executed and
delivered, a valid and binding obligation of the Purchaser enforceable against
the Purchaser in accordance with the terms thereof.
(c) NO CONFLICTS. The execution, delivery and performance of this
Agreement and the Registration Rights Agreement and the consummation by such
Purchaser of the transactions contemplated hereby and thereby or relating hereto
or thereto do not and will not (i) result in a violation of such Purchaser's
charter documents or bylaws or other organizational documents or (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, indenture or
instrument or obligation to which such Purchaser is a party or by which its
properties or assets are bound, or result in a violation of any law, rule, or
regulation, or any order, judgment or decree of any court or governmental agency
applicable to such Purchaser or its properties (except for such conflicts,
defaults and violations as would not, individually or in the aggregate, have a
Material Adverse Effect on such Purchaser). Such Purchaser is not required 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 this Agreement or the
Registration Rights Agreement or to purchase the Securities in accordance with
the terms hereof, provided that for purposes of the representation made in this
sentence, such Purchaser is assuming and relying upon the accuracy of the
relevant representations and agreements of the Company herein.
(d) ACQUISITION FOR INVESTMENT. Each Purchaser is acquiring 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. Each Purchaser does not have a
present intention to sell or otherwise dispose of the Securities, nor a present
arrangement (whether or not legally binding) or intention to effect any
distribution of the Securities to or through any person or entity; PROVIDED,
HOWEVER, that by making the representations herein, such Purchaser does not
agree to hold the Securities for any minimum or other specific term and reserves
the right to dispose of the Securities at any time in accordance with Federal
and state securities laws applicable to such disposition. Each Purchaser
acknowledges that it is able to bear the financial risks associated with an
investment in the Securities and that 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 and received such information as it has deemed necessary or
appropriate to conduct its due diligence investigation and has sufficient
knowledge and experience in investing in companies similar to the Company in
terms of the Company's stage of development so as to be able to evaluate the
risks and merits of its investment in the Company.
(e) STATUS OF PURCHASERS. Each Purchaser is an "accredited investor" as
defined in Rule 501(a) promulgated under the Securities Act. Each Purchaser has
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of investing in the Securities. Such Purchaser
is not a broker-dealer or an affiliate of a broker-dealer. Each Purchaser's
principal executive office is located at the address set forth on the signature
pages hereto.
(f) OPPORTUNITIES FOR ADDITIONAL INFORMATION. Each Purchaser acknowledges
that such Purchaser has had the opportunity to ask questions of and receive
answers from, or obtain additional
11
information from, the executive officers of the Company concerning the financial
and other affairs of the Company, and to the extent deemed necessary in light of
such Purchaser's personal knowledge of the Company's affairs, such Purchaser has
asked such questions and received answers to the full satisfaction of such
Purchaser, and such Purchaser desires to invest in the Company.
(g) NO GENERAL SOLICITATION. Each Purchaser acknowledges that the
Securities have not been 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.
(h) RULE 144. Such Purchaser understands that the Securities must be held
indefinitely unless the Securities are registered under the Securities Act or an
exemption from registration is available. Such Purchaser acknowledges that such
Purchaser 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 person has been advised that Rule 144 may permit the resale of the
Securities 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.
(i) GENERAL. Such Purchaser understands that the Securities are being
offered and sold in reliance on a transactional exemption from the registration
requirement 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.
(j) 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 Securities for
purposes of Section 13(d) under the Exchange Act, and each Purchaser is acting
independently with respect to its investment in the Securities.
(k) TRADING ACTIVITIES; NO SHORT Sales. Each Purchaser's trading
activities with respect to the Company's securities shall be in compliance with
all applicable federal and state securities laws. No Purchaser nor any of its
affiliates currently has an open short position in the Common Stock. Since the
earlier of (a) such time when such Purchaser was first contacted by the Company
or any other person acting on behalf of the Company regarding the transactions
contemplated hereby or (b) thirty (30) days prior to the date hereof, neither
such Purchaser nor any affiliate of such Purchaser which (x) had knowledge of
the transactions contemplated hereby, (y) has or shares discretion relating to
such Purchaser's investments or trading or information concerning such
Purchaser's investments, including in respect of the Securities, or (z) is
subject to such Purchaser's review or input concerning such affiliate's
investments or trading (collectively, "TRADING AFFILIATES") has, directly or
indirectly, effected or agreed to effect any short sale, whether or not against
the box, established any "put equivalent position" (as defined in Rule 16a-1(h)
under the Exchange Act) with respect to the Common Stock, granted any other
right (including, without limitation, any put or call option) with respect to
the Common Stock or with respect to any security that includes, relates to or
derived any significant part of its value from the Common Stock or otherwise
sought to hedge its position in the Securities (each, a "PROHIBITED
TRANSACTION"). Prior to the earliest to occur of (i) the termination of this
Agreement, (ii) the effective date of the registration statement contemplated by
the Registration Rights Agreement or (iii) the date by which such registration
12
statement is required to be effective under the Registration Rights Agreement,
such Purchaser shall not, and shall cause its Trading Affiliates not to, engage,
directly or indirectly, in a Prohibited Transaction. Such Purchaser acknowledges
that the representations, warranties and covenants contained in this clause (k)
are being made for the benefit of the Purchasers as well as the Company and that
each of the other Purchasers shall have an independent right to assert any
claims against such Purchaser arising out of any breach or violation of the
provisions of this paragraph (k).
ARTICLE III
COVENANTS
The Company covenants with each of the Purchasers as follows, which
covenants are for the benefit of the Purchasers and their permitted assignees
(as defined herein).
3.1 SECURITIES COMPLIANCE. The Company shall notify the Commission in
accordance with their rules and regulations, of the transactions contemplated by
any of the Transaction Documents, including filing a Form D with respect to the
Securities as required under Regulation D, 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 subsequent holders.
3.2 OTHER AGREEMENTS. The Company shall not enter into any agreement in
which the terms of such agreement would restrict or impair in any material
respect the right or ability to perform of the Company or any subsidiary under
any Transaction Document.
3.3 USE OF PROCEEDS. The Company will use the net proceeds from the sale
of the Shares hereunder for general corporate purposes.
3.4 RESERVATION OF SHARES. So long as any of the Warrants remain
outstanding, the Company shall take all action necessary to at all times have
authorized, and reserved for the purpose of issuance, no less than one hundred
percent (100%) of the aggregate number of shares of Common Stock needed to
provide for the issuance of the Warrant Shares.
3.5 REPORTING STATUS. So long as the Purchasers beneficially own an
aggregate of at least 25% of the Securities purchased pursuant to this
Agreement, the Company shall timely file (or obtain proper and timely extensions
in respect thereof and file within the applicable grace period under the
Exchange Act) 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; PROVIDED,
HOWEVER, that the provisions of this SECTION 3.5 shall terminate and be of no
further force and effect in the event of the acquisition of the Company or
substantially all of its assets.
3.6 DISCLOSURE OF TRANSACTION. The Company shall issue a press release
describing the material terms of the transactions contemplated hereby (the
"PRESS RELEASE") as soon as practicable after the Closing but in no event later
than 9:00 A.M. Eastern Time on the first Trading Day following the Closing Date.
The Press Release shall be subject to prior review and comment by the
Purchasers. "TRADING DAY" means any day during which the OTC Bulletin Board (or
other quotation venue or principal exchange on which the Common Stock is quoted
or traded) shall be open for trading.
3.7 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
13
(other than with respect to the transactions contemplated by this Agreement),
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.
3.8 PLEDGE OF SECURITIES. The Company acknowledges and agrees that the
Shares 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. No Purchaser effecting such 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 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. Notwithstanding the above, no Purchaser shall
permit any such pledgee, or such pledgee's affiliates, to engage in any short
sales in respect of any such pledged shares.
3.9 FORM SB-2 ELIGIBILITY. The Company currently meets the "registrant
eligibility" and transaction requirements set forth in the general instructions
to Form SB-2 applicable to "resale" registrations on Form SB-2.
3.10 LOCK-UP AGREEMENT. ▇▇▇▇▇ ▇▇▇▇▇▇▇, the Company's Chairman and CEO,
shall be subject to the terms and provisions of the Lock-Up Agreement, which
shall provide the manner in which he will sell, transfer or dispose of his
shares of Common Stock.
3.11 DTC STATUS. Prior to the effective date of the Registration
Statement, the Company's transfer agent shall be a participant in and the Common
Stock shall be eligible for transfer pursuant to the Depository Trust Company
Automated Securities Transfer Program.
3.12 VARIABLE RATE TRANSACTIONS; ADDITIONAL REGISTRATION STATEMENTS.
(a) For a period of two (2) years following the Closing Date, the Company
shall be prohibited from effecting or entering into an agreement to effect any
subsequent financing involving a "VARIABLE RATE TRANSACTION". The term "VARIABLE
RATE TRANSACTION" shall mean a transaction in which the Company issues or sells
(i) any debt or equity securities that are convertible into, exchangeable or
exercisable for, or include the right to receive additional shares of Common
Stock either (A) at a conversion, exercise or exchange rate or other price that
is based upon and/or varies with the trading prices of or quotations for the
shares of Common Stock at any time after the initial issuance of such debt or
equity securities, or (B) with a conversion, exercise or exchange price that is
subject to being reset at some future date after the initial issuance of such
debt or equity security or upon the occurrence of specified or contingent events
directly or indirectly related to the business of the Company or the market for
the Common Stock or (ii) any amortizing convertible security which amortizes
prior to its maturity date, where the Company is required to or has the option
to (or the investor in such transaction has the option to require the Company
to) make such amortization payments in shares of Common Stock (whether or not
such payments in stock are subject to certain equity conditions), or (iii)
enters into any agreement, including, but not limited to, an equity line of
credit, whereby the Company may sell securities at a future determined price.
(b) For the period commencing on the Closing Date and ending on the date
that is ninety (90) days following the effective date of the Registration
Statement (as defined in the Registration Rights Agreement), the Company shall
not file any new registration statement under the Securities Act (other
14
than a registration statement on Form S-4 or Form S-8) without the prior written
consent of the Purchasers except for the Registration Statement to be filed in
accordance with the Registration Rights Agreement to the transactions
contemplated by this Agreement.
ARTICLE IV
CONDITIONS
4.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO SELL THE
SECURITIES. The obligation hereunder of the Company to issue and sell the Common
Shares and the Warrants to the Purchasers is subject to the satisfaction or
waiver, at or before the Closing, of each 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 EACH PURCHASER'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of each Purchaser shall be true and correct in
all material 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 as of such date.
(b) PERFORMANCE BY THE PURCHASERS. Each Purchaser shall have performed,
satisfied and complied in all 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.
(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 Purchase Price for the Common Shares
and Warrants has been delivered to the Company at the Closing Date.
(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.
4.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASERS TO PURCHASE
THE SECURITIES. The obligation hereunder of each Purchaser to acquire and pay
for the Common Shares and the Warrants is subject to the satisfaction or waiver,
at or before the Closing, of each of the conditions set forth below. These
conditions are for each Purchaser's sole benefit and may be waived by such
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
Registration Rights Agreement shall be true and correct in all material 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 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.
15
(c) NO SUSPENSION, ETC. Trading in the Common Stock shall not have been
suspended by the Commission or the principal exchange or market on which Common
Stock is quoted or traded (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, nor shall there have occurred
any material outbreak or escalation of hostilities or other national or
international calamity or crisis of such magnitude in its effect on, or any
material adverse change in any financial market which, in each case, in the
judgment of such Purchaser, makes it impracticable or inadvisable to purchase
the Common Shares.
(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) DELIVERY OF TRANSACTION DOCUMENTS. The Transaction Documents shall
have been duly executed and delivered by the Company and, with respect to the
Escrow Agreement, the Escrow Agent, to the Purchasers.
(g) OPINION OF COUNSEL, ETC. At the Closing, the Purchasers shall have
received the legal opinion of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC, legal counsel to the
Company, dated the date of the Closing, in the form of EXHIBIT F hereto, and
such other certificates and documents as the Purchasers or its counsel shall
reasonably require incident to the Closing.
(h) REGISTRATION RIGHTS AGREEMENT. At the Closing, the Company shall have
executed and delivered the Registration Rights Agreement to each Purchaser.
(i) LOCK-UP AGREEMENT. As of the Closing Date, ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have
delivered to the Purchasers a fully executed Lock-Up Agreement.
(j) ESCROW AGREEMENT. At the Closing, the Company and the Escrow Agent
shall have executed and delivered the Escrow Agreement to each Purchaser.
(k) SECRETARY'S CERTIFICATE. The Company shall have delivered to such
Purchaser a secretary's certificate, dated as of the Closing Date, as to (i) the
resolutions adopted by the Company's Board of Directors or any committee thereof
approving the transactions contemplated hereby, (ii) the Certificate, (iii) the
Bylaws, each as in effect at the 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.
(l) OFFICER'S CERTIFICATE. The Company shall have delivered to the
Purchasers a certificate of an executive officer of the Company, dated as of the
Closing Date, confirming the accuracy of the Company's representations,
warranties and covenants as of the Closing Date and confirming the
16
compliance by the Company with the conditions precedent set forth in this
SECTION 4.2 as of the Closing Date.
(m) MATERIAL ADVERSE EFFECT. No Material Adverse Effect shall have
occurred at or before the Closing Date.
(n) MINIMUM/MAXIMUM PURCHASE PRICE. The Escrow Agent shall have received
funds from the Purchasers pursuant to the Escrow Agreement in at least the
minimum amount of the Purchase Price as described in SECTION 1.4, and not in
excess of the maximum amount of the Purchase Price as described in SECTION 1.4.
ARTICLE V
STOCK CERTIFICATE LEGEND
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 UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR THE COMPANY 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
Securities, without the legend set forth above if at such time, prior to making
any transfer of any such securities, (i) such holder thereof shall provide the
Company with a an opinion of counsel reasonably satisfactory to the Company, to
the effect that the registration of the Securities under the Securities Act and
applicable state securities laws 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 effective under the Securities Act and such holder
certifies that such transfer is being made in accordance with the Plan of
Distribution set forth therein and that any prospectus delivery requirement will
be complied with or (iii) the holder provides the Company with customary
documentation that such transfer is being made in accordance with Rule 144. The
Company will respond to any such notice from a holder within three (3) trading
days. 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 Warrant Shares is required to be issued to a Purchaser without
a legend, in lieu of delivering physical certificates representing the Warrant
Shares (provided that a registration statement under the Securities Act
providing for the resale of the Warrant Shares is then in effect and such
request is in connection with a sale and the other provisions set forth above
have been complied with), the Company shall, if requested by the Purchaser,
cause its transfer agent to electronically transmit the Warrant Shares to a
Purchaser by crediting the account of such Purchaser's Prime Broker with the
Depository Trust Company ("DTC") through its Deposit Withdrawal Agent Commission
("DWAC") system (to the extent not inconsistent with any provisions of this
Agreement) provided that the Company and the Company's transfer agent are
participating in DTC through the DWAC system.
17
ARTICLE VI
INDEMNIFICATION
6.1 COMPANY INDEMNITY. The Company agrees to indemnify and hold harmless
the Purchasers (and their respective directors, officers, managers, partners,
members, stockholders, affiliates, agents, successors and assigns) from and
against any and all losses, liabilities, deficiencies, costs, damages and
expenses (including, without limitation, reasonable attorneys' fees, charges and
disbursements) incurred by the Purchasers as a result of any inaccuracy in or
breach of the representations, warranties or covenants made by the Company
herein.
6.2 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 party entitled to indemnification hereunder 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 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 indemnified party a
conflict of interest between it and the indemnifying party may exist with
respect of such action, proceeding or claim, 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 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.
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.
18
ARTICLE VII
MISCELLANEOUS
7.1 FEES AND EXPENSES. Except as otherwise set forth in this Agreement and
the other Transaction Documents, 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 ▇▇▇▇ Capital Group, Inc. in connection with
(i) the preparation, negotiation, execution and delivery of this Agreement and
the other Transaction Documents and the transactions contemplated thereunder,
(ii) the filing and declaration of effectiveness by the Commission of the
Registration Statement (as defined in the Registration Rights Agreement) and
(iii) any amendments, modifications or waivers of this Agreement or any of the
other Transaction Documents requested by the Company, subject to a cap of
$26,000 for legal fees incurred on or before the Closing Date. The fees set
forth in this SECTION 7.1 and which are incurred prior to the Closing Date shall
be paid at Closing.
7.2 SPECIFIC ENFORCEMENT 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 were not
performed in accordance with their specific terms or were 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 Registration Rights Agreement 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.
7.3 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 Transaction Documents, neither the Company nor any of the
Purchasers makes any representations, 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.
No provision of this Agreement may be waived or amended other than by a written
instrument signed by the Company and the holders of at least a majority of the
Common Shares then outstanding (and which shall include the consent of all
Purchasers who own at least 20% of the Common Shares then outstanding,
aggregating the share ownership of all Purchasers who are advised by the same
investment advisor). No such amendment shall be effective to the extent that it
applies to less than all of the holders of the Common Shares then outstanding.
No consideration shall be offered or paid to any person to amend or consent to a
waiver or modification of any provision of any of the Transaction Documents
unless the same consideration is also offered to all of the parties to the
Transaction Documents or holders of Common Shares, as the case may be.
7.4 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 or delivery by telex (with correct answer back
received), e-mail or facsimile 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:
19
If to the Company: Narrowstep Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
with copies to (which copy ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, PC
shall not constitute ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
notice): ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
If to any Purchaser: At the address of such Purchaser set forth
on EXHIBIT A to this Agreement
with copies to (which copy ▇▇▇▇▇▇ and ▇▇▇▇▇, LLP
shall not constitute ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
notice): ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Tel No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇.▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Any party hereto may from time to time change its address for notices
by giving at least ten (10) days' written notice of such changed address to the
other party hereto.
7.5 WAIVERS. No waiver by either party of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any other provisions, 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.
7.6 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.
7.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and assigns.
7.8 NO THIRD PARTY BENEFICIARIES. 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.
7.9 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of
New York without regard to the choice of law principles thereof. This Agreement
shall not be interpreted or construed with any presumption against the party
causing this Agreement to be drafted. Each of the parties hereto irrevocably
submits to
20
the exclusive jurisdiction of the courts of the State of New York located in New
York County, and the United States District Court for the Southern District of
New York for the purpose of any suit, action, proceeding or judgment relating to
or arising out of this Agreement and the transactions contemplated hereby.
Service of process in connection with any such suit, action or proceeding may be
served on each party hereto anywhere in the world by the same methods as are
specified for the giving of notices under this Agreement. Each of the parties
hereto irrevocably consents to the jurisdiction of any such court in any such
suit, action or proceeding and to the laying of venue in such court. Each party
hereto irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum.
7.10 SURVIVAL. The representations, warranties, covenants and agreements
of the Company and the Purchasers shall survive the execution and delivery
hereof and the Closing; provided, however, that the representations and
warranties of the Company contained herein shall expire on the second
anniversary of the Closing.
7.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement 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. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding obligation
of the party executing (or on whose behalf such signature is executed) the same
with the same force and effect as if such facsimile signature were the original
thereof.
7.12 SEVERABILITY. The provisions of this Agreement and the Transaction
Documents 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 or the Transaction Documents 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 or the Transaction Documents
and such provision 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.
COMPANY:
NARROWSTEP INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------------
Title: Chairman & CEO
--------------------------------------------
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
PURCHASERS:
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President
RENAISSANCE US GROWTH INVESTMENT TRUST PLC
By: ▇▇▇▇ Capital Group, Inc.
Its: Investment Manager
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President
US SPECIAL OPPORTUNITIES TRUST PLC
By: ▇▇▇▇ Capital Group, Inc.
Its: Investment Adviser
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President
PREMIER ▇▇▇▇ US EMERGING GROWTH FUND LIMITED
By: ▇▇▇▇ Capital Group, Inc.
Its: Investment Adviser
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
PURCHASERS:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------------
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------------
Title: Chairman & CEO
-------------------------------------------
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
PURCHASERS:
SANO VENTURES XII LLC
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------------
Title: CFO
-------------------------------------------
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
PURCHASERS:
▇▇▇▇▇ OPPORTUNITY FUND LP
/s/ ▇▇▇▇▇ Opportunity Fund LP
--------------------------------------------------
By: General Partner
----------------------------------------------
Title: General Partner
-------------------------------------------
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
PURCHASERS:
STIASSNI CAPITAL, LLC
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------
By: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------------
Title: General Partner
-------------------------------------------
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
PURCHASERS:
LONDON FAMILY TRUST
/s/ ▇▇▇▇▇▇ London
--------------------------------------------------
By: ▇▇▇▇▇▇ London
----------------------------------------------
Title: Trustee
-------------------------------------------
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
PURCHASERS:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------------------------
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------------------
Title:
-------------------------------------------
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
PURCHASERS:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Jr.
--------------------------------------------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Jr.
----------------------------------------------
Title:
-------------------------------------------
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
PURCHASERS:
IROQUOIS MASTER FUND LTD.
/s/ Iroquois Master Fund Ltd.
--------------------------------------------------
By: Authorized Signator
----------------------------------------------
Title: Authorized Signator
-------------------------------------------
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
PURCHASERS:
ALB PRIVATE INVESTMENTS LLC
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
--------------------------------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
----------------------------------------------
Title: Managing Member
-------------------------------------------
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
PURCHASERS:
SOPHROSYNE TECHNOLOGY FUND LTD.
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------
By: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------------
Title: Managing Member of General Partner
-------------------------------------------
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
PURCHASERS:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------------
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------------
Title:
-------------------------------------------
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
PURCHASERS:
/s/ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------------
By: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------
Title:
-------------------------------------------
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
PURCHASERS:
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------------
By: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------------
Title:
-------------------------------------------
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
PURCHASERS:
▇▇▇▇▇▇▇▇ CURHAN FORD & CO.
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------------
By: ▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------------
Title: CEO
-------------------------------------------
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
PURCHASERS:
STONEPINE CAPITAL, L.P.
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------------
By: ▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------------
Title: Managing Member
-------------------------------------------
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
PURCHASERS:
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------------
By: ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------
Title:
-------------------------------------------
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
PURCHASERS:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------------------
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------------
Title: Principal, Investment Banking
-------------------------------------------
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
PURCHASERS:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------------
Title: Vice-President
-------------------------------------------
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
PURCHASERS:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------------
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------------
Title: INDIVIDUAL
-------------------------------------------
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
EXHIBIT A
LEGAL ENTITY NAME & ADDRESS OF PURCHASER NUMBER OF COMMON SHARES & DOLLAR AMOUNT OF
WARRANTSPURCHASED INVESTMENT
RENAISSANCE US GROWTH INVESTMENT TRUST PLC Common Shares: 8,000,000 $2,000,000
Frost National Bank Warrants: 4,000,000
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
ATTN: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ T-8
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Contact for docs: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇/ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC. Common Shares: 4,000,000 $1,000,000
Frost National Bank Warrants: 2,000,000
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
ATTN: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ T-8
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Contact for docs: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇/ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
US SPECIAL OPPORTUNITIES TRUST PLC Common Shares: 4,000,000 $1,000,000
Frost National Bank Warrants: 2,000,000
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
ATTN: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ T-8
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Contact for docs: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇/ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
PREMIER ▇▇▇▇ US EMERGING GROWTH FUND LTD. Common Shares: 2,000,000 $500,000
Premier ▇▇▇▇ US Emerging Growth Fund Ltd. Warrants: 1,000,000
Acct # PRN01/17-28085
c/o ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
The Northern Trust Company
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Contact for docs: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇/ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
A-1
Legal Entity Name & Number of Common Shares & Dollar Amount of
Address of Purchaser Warrants Purchased Investment
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 4,000,000 shares $1,000,000
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ 2,000,000 warrants
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A-2
Legal Entity Name & Number of Common Shares & Dollar Amount of
Address of Purchaser Warrants Purchased Investment
SANO VENTURES XII LLC COMMON SHARES $1,000,000
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ 4,000,000
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ 2,000,000
A-2
Legal Entity Name & Number of Common Shares & Dollar Amount of
Address of Purchaser Warrants Purchased Investment
▇▇▇▇▇ Opportunity Fund LP 3,132,000 shares $783,000
1,556,000 warrants
▇▇▇ Opportunity LTD 908,000 shares $227,000
454,000 warrants
A-2
Legal Entity Name & Number of Common Shares & Dollar Amount of
Address of Purchaser Warrants Purchased Investment
Stiassni Capital 4,000,000 common $1,000,000.00
Partners, L.P. 2,000,000 warrants
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Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
310/▇▇▇-▇▇▇▇
310/544-6349 FAX
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A-2
Legal Entity Name & Number of Common Shares & Dollar Amount of
Address of Purchaser Warrants Purchased Investment
London Family Trust 1.6 million shares $400,000
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇ 800,000 warrants
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A-2
Legal Entity Name & Number of Common Shares & Dollar Amount of
Address of Purchaser Warrants Purchased Investment
STARWOOD CAPITAL 1,600,000 COMMON SHARES $400,000
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇. 800,000 WARRANTS
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A-2
Legal Entity Name & Number of Common Shares & Dollar Amount of
Address of Purchaser Warrants Purchased Investment
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ JR. 750,000 COMMON SHARES $300,000.00
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ 375,000 WARRANTS
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MAIL TO:
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A-2
Legal Entity Name & Number of Common Shares & Dollar Amount of
Address of Purchaser Warrants Purchased Investment
Iroquois Master Fund Ltd. 1,000,000 shares 250,000
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇. 26th Fl. 500,000 warrants
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A-2
Legal Entity Name & Number of Common Shares & Dollar Amount of
Address of Purchaser Warrants Purchased Investment
ALB Private 400,000 COMMON SHARES $100,000.00
Investments, LLC 200,000 WARRANTS
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A-2
Legal Entity Name & Number of Common Shares & Dollar Amount of
Address of Purchaser Warrants Purchased Investment
Sophrosyne Technology 600,000 COMMON SHARES $150,000
Fund Ltd. 300,000 WARRANTS
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
F/B/O/ SOPHROSYNE
TECHNOLOGY FUND LTD.
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A-2
Legal Entity Name & Number of Common Shares & Dollar Amount of
Address of Purchaser Warrants Purchased Investment
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 200,000 SHARES $50,000
▇▇ ▇▇▇▇'▇ ▇▇▇ ▇▇▇▇ 100,000 WARRANTS
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A-2
Legal Entity Name & Number of Common Shares & Dollar Amount of
Address of Purchaser Warrants Purchased Investment
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ COMMON: 200,000 $50,000
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇. WARRANTS: 100,000
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Email:
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Phone: ▇▇▇-▇▇▇-▇▇▇▇
A-2
Legal Entity Name & Number of Common Shares & Dollar Amount of
Address of Purchaser Warrants Purchased Investment
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 200,000 shares $50,0000
12 Darien Close 100,000 warrants
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A-2
Legal Entity Name & Number of Common Shares & Dollar Amount of
Address of Purchaser Warrants Purchased Investment
▇▇▇▇▇▇▇▇ Curhan Ford & Co. 630,000 COMMON SHARES $157,500
Ford & Co. 315,000 WARRANTS
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A-2
Legal Entity Name & Number of Common Shares & Dollar Amount of
Address of Purchaser Warrants Purchased Investment
STONEPINE CAPITAL, L.P. 100,000 shares $25,000
▇▇▇ ▇▇▇▇▇▇▇ ▇▇. 50,000 warrants
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A-2
Legal Entity Name & Number of Common Shares & Dollar Amount of
Address of Purchaser Warrants Purchased Investment
▇▇▇▇ ▇▇▇▇▇▇▇ 100,000 COMMON SHARES $25,000
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇. 50,000 WARRANTS
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A-2
Legal Entity Name & Number of Common Shares & Dollar Amount of
Address of Purchaser Warrants Purchased Investment
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 100,000 shares $25,000
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, 50,000 warrant shares
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A-2
Legal Entity Name & Number of Common Shares & Dollar Amount of
Address of Purchaser Warrants Purchased Investment
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 60,000 shares $15,000.00
▇▇▇▇ ▇▇▇▇ ▇▇. 30,000 warrants
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A-2
Legal Entity Name & Number of Common Shares & Dollar Amount of
Address of Purchaser Warrants Purchased Investment
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 10,000 SHARES $2,500.00
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 5,000 WARRANTS
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HOME: (▇▇▇) ▇▇▇-▇▇▇▇
EMAIL: ▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
A-2
EXHIBIT B
FORM OF WARRANT
EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT D
FORM OF LOCK-UP AGREEMENT
EXHIBIT E
FORM OF ESCROW AGREEMENT
EXHIBIT F
FORM OF OPINION OF COUNSEL