BONDS.COM GROUP, INC. UNIT PURCHASE AGREEMENT December 31, 2009
Exhibit 10.1
EXECUTION
COPY
▇▇▇▇▇.▇▇▇
GROUP, INC.
December
31, 2009
▇▇▇▇▇.▇▇▇
GROUP, INC.
This Unit
Purchase Agreement (this “Agreement”) is made
as of December 31, 2009 (the “Effective Date”) by
and between ▇▇▇▇▇.▇▇▇ Group, Inc., a Delaware corporation
(the “Company”), and
▇▇▇▇▇▇▇ Venture Partners III, LLC, a Delaware limited liability company (the
“Purchaser”).
RECITALS
Subject
to the terms and conditions set forth in this Agreement and pursuant to Sections
4(2) and 4(6) of the Securities Act of 1933, as amended (the “Securities Act”), and
Rule 506 promulgated thereunder, the Company desires to issue and sell to
Purchaser, and Purchaser desires to purchase from the Company, Units (as defined
below) of securities of the Company, as more fully described in this
Agreement. As used herein, each “Unit” shall consist of: (i) 2,667
shares of common stock of the Company (the “Common Stock”); and
(ii) the right, within three years of the applicable Closing Date (as defined
below) upon which the Unit is purchased, to purchase 7,200 (as equitably
adjusted for stock splits, combinations and the like) additional shares of
Common Stock at a purchase price of $0.375 (as equitably adjusted for stock
splits, combinations and the like) per share (the “Rights”). The
Units, the Common Stock, the Rights and the shares of Common Stock to be issued
pursuant to the exercise of the Rights are referred to herein as the “Securities”.
AGREEMENT
In
consideration of the mutual promises contained herein and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties to
this Agreement agree as follows:
1. Purchase
and Sale of Securities.
(a) Purchase of
Units.
(i) Units. Subject
to the satisfaction (or waiver) of the conditions set forth herein, the Company
shall issue and sell to the Purchaser, and the Purchaser agrees to purchase from
the Company at the Closings (as defined below), an aggregate of up to 2,000
Units.
(ii) Closings. The
consummation of the purchases and sales of Units contemplated by this Agreement
shall occur in one or more closings (each a “Closing”) starting on
the Effective Date and ending on January 31, 2010 (each a “Closing Date”);
provided that the Company must consent to any Closing after December 31,
2009. At each Closing, the Purchaser shall purchase and the Company
shall issue and sell to the Purchaser a number of Units equal to the Purchaser’s
Received Capital (as defined below) divided by the Purchase Price (as defined
below) for a single Unit. The term “Purchaser’s Received
Capital” means all funds received by Purchaser from investors or
purchasers of its membership interests or other securities as of such Closing,
but in no event to exceed an aggregate of $2,000,000. For avoidance
of doubt, in no event shall the Purchaser be required to Purchase or the Company
be required to issue and sell more than 2,000 Units hereunder. The
time of each Closing shall be 10:00 A.M., Eastern Standard Time or such later
time as is mutually agreed to by the Company and Purchaser.
(iii) Purchase
Price. The purchase price for each Unit (the “Purchase Price”)
shall be One Thousand Dollars ($1,000).
(iv) [Intentionally left
blank.]
(v) Form of
Payment. On each respective Closing Date, subject to the
satisfaction of the conditions to closing, the Purchaser shall deliver by wire
transfer to an account designated by the Company, no later than the close of
business on such respective Closing Date, the aggregate Purchase Price for the
Units purchased on such respective Closing Date.
(vi) Location of
Closing. Each Closing shall take place at the offices of Hill ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇. Alternatively, the
Closings can take place by the exchange of final executed closing documents
between legal counsel for the Company and Purchaser.
(vii) Deliverables of Company at
Closing. On the applicable Closing Date, the Company shall
deliver to the Purchaser: (i) a certificate representing the number of shares of
Common Stock to be purchased at such Closing Date by the Purchaser; (ii) a
certificate representing the number of Rights to be purchased at such Closing
Date by the Purchaser; (iii) an executed copy of this Agreement; (iv) a
certificate, dated the Closing Date and signed on behalf of the Company by the
chief executive officer of the Company, certifying solely on behalf and as a
representative of the Company that (A) all representations and warranties
contained herein and in the other Transaction Documents (as defined below) shall
be true and correct in all material respects except for those representations
and warranties which are qualified as to materiality or Material Adverse Effect
which shall be true and correct in all respects, (B) the Company has performed
and complied in all material respects with all agreements, covenants and
conditions required to be performed and complied with by it under the
Transaction Documents at or before the Closing, (C) nothing shall have occurred
since September 30, 2009 which has had, or could reasonably be expected to have,
(1) a Material Adverse Effect or (2) a material adverse effect on the
transactions contemplated hereby, (D) there are no actions, suits or proceedings
pending or threatened (1) with respect to the transactions contemplated
hereby, this Agreement or any other Transaction Document, or (2) which has
had, or could reasonably be expected to have, a Material Adverse Effect, and (E)
the SEC Reports (as defined below) filed on or after April 1, 2009, taken as a
whole with the written information disclosed by the Company to the Purchaser in
connection with the investment contemplated by this Agreement, do not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; (v) all information and copies of all documents and papers,
including records of corporate proceedings, governmental approvals, good
standing certificates and bring-down telegrams or facsimiles, if any, which
Purchaser reasonably may have requested in connection therewith, such documents
and papers where appropriate to be certified by proper corporate officials or
governmental entities; and (vi) a certificate of the Secretary of the Company
and attested to by an executive officer of the Company, dated as of the Closing
Date, certifying as to (A) the Certificate of Incorporation and By-laws of the
Company, (B) the resolutions of the Board of Directors of the Company
authorizing the execution, delivery and performance of this Agreement and the
issuance of the Securities and (C) the incumbency of the officers duly
authorized to execute this Agreement and the other Transaction Documents; provided, however, that the Company may, at its
option, deliver the certificates referenced in clause (i) and (ii) above within
three (3) Business Days of each Closing if Purchaser does not inform the Company
of its investment amount at least one (1) Business Day prior to such
Closing.
(viii) Deliverables of Purchaser at
Closing. On the applicable Closing Date, the Purchaser shall
deliver to the Company: (i) an executed copy of this Agreement, and (ii) the
applicable consideration provided for in Section 1(a)(iii) hereof.
(ix) Fractional
Units. No fractional Units shall be sold by the
Company.
(x) Use of Proceeds. The
proceeds from the sale of the Units will be for general working capital of the
Company.
(b) Exercise of Rights.
Subject to the terms and provisions contained herein,
(i) The
Rights may be exercised at any time from the applicable Closing Date upon which
the Unit pertaining to such Rights is purchased until the date which is three
years from such date (the “Exercise
Period”).
(ii) Within
the Exercise Period, the Rights may be exercised in whole or in part at the
price per share of $0.375 per share of Common Stock (each, the “Rights Exercise
Price”), such number of shares of Common Stock and Rights Exercise Price
subject to equitable adjustment for stock splits, combinations and the like,
payable by certified wire transfer to an account designated by the
Company. Upon delivery of a Notice of Exercise Form duly executed in
the form attached to the Ordinary Rights Certificate (as defined below) (which
Notice of Exercise Form may be submitted by delivery to the Company), together
with payment of the aggregate Rights Exercise Price for the shares of Common
Stock purchased, the Purchaser shall be entitled to receive a certificate or
certificates for the shares of Common Stock so purchased. The Rights
will be certificated in the form attached hereto as Exhibit
A (the “Ordinary Rights
Certificate”). All Rights shall include a cashless exercise
feature.
2. Representations
and Warranties of the Company. The Company
hereby represents and warrants to the Purchaser as of the Effective Date, as
follows:
(a) Organization and
Qualification. The Company and its Subsidiaries (as set forth
on Schedule
2(a) hereto) are entities duly organized and validly existing and, to the
extent legally applicable, in good standing under the laws of the State of
Delaware and have the requisite power and authorization to own their properties
and to carry on their business as now being conducted. Except as set
forth on Schedule
2(a), each of the Company and its Subsidiaries is duly qualified as a
foreign entity to do business and to the extent legally applicable, is in good
standing in every jurisdiction in which its ownership of property or the nature
of the business conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing would not
reasonably be expected to have a Material Adverse Effect (as defined
below). As used in 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
or the other Transaction Documents or the other 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
(b) Authorization; Enforcement;
Validity. The Company has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement and
each of the other agreements entered into by the parties hereto in connection
with the transactions contemplated by this Agreement (collectively, the "Transaction
Documents") and to issue the Securities in accordance with the terms
hereof and thereof. The execution and delivery of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby, including, without limitation, the issuance of
the Units, the Rights and the reservation for issuance and the issuance of the
shares (the “Underlying Shares”)
upon exercise of the Rights, have been duly authorized by the Company's Board of
Directors and no further filing, consent, or authorization is required by the
Company, its Board of Directors or its stockholders. This Agreement
and the other Transaction Documents have been duly executed and delivered by the
Company, and constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.
(c) Issuance of
Securities. The Securities are duly authorized and, when
issued and paid for in accordance with the applicable Transaction Documents,
will be duly and validly issued, fully paid and nonassessable, free and clear of
all liens imposed by the Company other than restrictions on transfer provided
for in the Transaction Documents. The Underlying Shares, when issued in
accordance with the terms of the Transaction Documents, will be validly issued,
fully paid and nonassessable, free and clear of all liens imposed by the Company
other than restrictions on transfer provided for in the Transaction
Documents.
(d) No
Conflicts. Except as set forth on Schedule 2(d), the
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the issuance of the Securities) will not
(i) result in a violation of any certificate of incorporation, certificate of
formation, any certificate of designations or other constituent documents of the
Company or any of its Subsidiaries, any capital stock of the Company or any of
its Subsidiaries or bylaws of the Company or any of its Subsidiaries or (ii)
conflict with, or constitute a default or breach (or an event which with notice
or lapse of time or both would become a default or breach) in any respect under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party, or (iii) result in a violation of any law,
rule, regulation, order, judgment or decree (including foreign, federal and
state securities laws and regulations) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected, except in the case of clauses (ii) and (iii)
above, to the extent that such violations conflict, default or right would not
reasonably be expected to have a Material Adverse Effect.
(e) Consents. Except
as set forth on Schedule 2(e),
Neither the Company nor any of its Subsidiaries is required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court, governmental agency or any regulatory or self-regulatory agency or any
other Person (as defined below) in order for it to execute, deliver or perform
any of its obligations under or contemplated by the Transaction Documents, in
each case in accordance with the terms hereof or thereof. “Person”
means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof
(f) Capitalization. The
Company has not issued any capital stock since its most recently filed periodic
report under the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the “Exchange Act”), other
than capital stock issued: (i) pursuant to the terms hereof, (ii) by the Company
and reported by the Company pursuant to a Current Report filed on Form 8-K under
the Exchange Act, (iii) pursuant to stock options under the Company’s stock
option plans and/or the issuance of shares of Common Stock to employees pursuant
to the Company’s employee stock purchase plans or (iv) upon the conversion or
exercise of securities of the Company outstanding as of the date of the most
recently filed periodic report under the Exchange Act. No Person has any right
of first refusal, preemptive right, right of participation, or any similar right
to participate in the transactions contemplated by the Transaction
Documents.
(g) SEC Reports; Financial
Statements. The Company has filed all reports, schedules, forms,
statements and other documents required to be filed by the Company under the
Securities Act and the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, for the two years preceding the date hereof (or such shorter
period as the Company was required by law or regulation to file such material)
(the foregoing materials, including the exhibits thereto and documents
incorporated
by
reference therein, being collectively referred to herein as the “SEC Reports”) on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension. As of
their respective dates, except as disclosed in Schedule 2(g), the
SEC Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act, as applicable, and none of the SEC Reports,
when filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. Except as disclosed in Schedule 2(g), the
financial statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and
regulations of the Securities and Exchange Commission (the “Commission”) with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved
(“GAAP”),
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated Subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
(h) Material Changes.
Except as set forth on Schedule 2(h) or
elsewhere on the schedules hereto, since the date of the latest audited
financial statements included within the SEC Reports, except as specifically
disclosed in a subsequent SEC Report filed prior to the date hereof: (i) there
has been no event, occurrence, development or regulatory action that has had or
that could reasonably be expected to result in a Material Adverse Effect, (ii)
the Company has not incurred any liabilities (contingent or otherwise) other
than (A) trade payables and accrued expenses incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be
reflected in the Company’s financial statements pursuant to GAAP or disclosed in
filings made with the Commission, (iii) the Company has not altered its method
of accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or affiliate, except pursuant to existing Company stock option plans.
Except as set forth on Schedule 2(h), the
Company does not have pending before the Commission any request for confidential
treatment of information. Except for the issuance of the Securities contemplated
by this Agreement or as set forth on Schedule 2(h) or
elsewhere on the Schedules hereto, no event, liability or development has
occurred or exists with respect to the Company or its Subsidiaries or their
respective business, properties, operations or financial condition, that would
be required to be disclosed by the Company under applicable securities laws at
the time this representation is made or deemed made that has not been publicly
disclosed at least 1 trading day prior to the date that this representation is
made.
(i) Litigation. Except as
disclosed within the SEC Reports or in Schedule 2(i), there
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) which (i) adversely affects or
challenges the legality, validity or enforceability of any of the Transaction
Documents or the Securities or (ii) could, if there were an unfavorable
decision, have or reasonably be expected to result in a Material Adverse
Effect.
(j) Labor Relations.
Except as set forth in Schedule 2(j),
no material labor dispute exists or, to the knowledge of the Company, is
imminent with respect to any of the employees of the Company which could
reasonably be expected to result in
a
Material Adverse Effect. None of the Company’s or its Subsidiaries’ employees is
a member of a union that relates to such employee’s relationship with the
Company or such Subsidiary, and neither the Company nor any of its Subsidiaries
is a party to a collective bargaining agreement, and the Company and its
Subsidiaries believe that their relationships with their employees are
good.
(k) Compliance. Except as set forth in Schedule 2(k),
neitherthe Company nor any Subsidiary: (i) is in default under or in
violation of (and no event has occurred that has not been waived that, with
notice or lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received notice of a
claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not such
default or violation has been waived), (ii) is in violation of any order of any
court, arbitrator or governmental body or (iii) is or has been in violation of
any statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws applicable to its business
and all such laws that affect the environment, except in each case as could not
have or reasonably be expected to result in a Material Adverse
Effect.
(l) Regulatory Permits.
Except as set forth in Schedule 2(l), to the
Company’s knowledge, the Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct their respective businesses
as described in the SEC Reports, except where the failure to possess such
permits could not reasonably be expected to result in a Material Adverse Effect
(“Material
Permits”), and neither the Company nor any Subsidiary has received any
notice of proceedings relating to the revocation or modification of any Material
Permit.
(m) Title to Assets.
Company and the Subsidiaries have good and marketable title in fee simple
to all real property owned by them and good and marketable title in all personal
property owned by them that is material to the business of the Company and the
Subsidiaries, in each case free and clear of all security interests, liens,
claims, charge or encumbrances (“Liens”), except for
(i) liens for current taxes not yet due and (ii) minor imperfections of title,
if any, not material in amount and not materially detracting from the value or
impairing the use of the property subject thereto or impairing the operations of
the Company.
(n) Patents and
Trademarks. Except as set forth in
Schedule 2(n), the Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights as described
in the SEC Reports as necessary or material for use in connection with their
respective businesses and which the failure to so have could have a Material
Adverse Effect (collectively, the “Intellectual Property
Rights”). Neither the Company nor any Subsidiary has received a notice
(written or otherwise) that any of the Intellectual Property Rights used by the
Company or any Subsidiary violates or infringes upon the rights of any third
party. To the knowledge of the Company, except as
set forth in Schedule 2(n), all
such Intellectual Property Rights are enforceable and there is no existing
infringement by any third party of any of the Intellectual Property Rights. The
Company and its Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their intellectual properties,
except where failure to do so could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(o) Intentionally
Omitted.
(p) Private Placement.
Assuming the accuracy of the Purchasers’ representations and warranties set
forth in Section 3 hereof, no registration under the Securities Act is required
for the offer and sale of the Securities by the Company to the Purchasers as
contemplated hereby.
(q) Transactions With Affiliates
and Employees. Other than as contemplated herein or described in SEC
Reports, and except as set forth on Schedule 2(q), none
of the officers, directors, employees and/or affiliates of Company or the
Subsidiaries is a party to any transaction with Company or any Subsidiary (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director employee or such affiliate
or, to the knowledge of Company, any entity in which any officer, director, or
any such employee has a substantial interest or is an officer, director,
trustee, partner or affiliate other than (a) for payment of salary or
consulting fees for services rendered, (b) reimbursement for expenses
incurred on behalf of Company and (c) for other employee benefits,
including stock option agreements under any stock option plan of Company, which
in the aggregate (for the total amount in (a), (b) and (c) combined) does not
exceed the amount of $25,000 for any officer, director, employee or
affiliate.
(r) Registration Rights.
Except as provided herein or as set forth in Schedule 2(r), no
Person has any right to cause the Company to effect the registration under the
Securities Act of any securities of the Company.
(s) No General
Solicitation. Neither the Company nor any person acting on behalf of the
Company has offered or sold any of the Securities by any form of general
solicitation or general advertising. The Company has offered the Securities for
sale only to the Purchasers and certain other “accredited investors” within the
meaning of Rule 501 under the Securities Act.
(t) Disclosure. All
disclosure furnished by or on behalf of the Company to the Purchasers regarding
the Company, its business and the transactions contemplated hereby, including
the Schedules to this Agreement, is true and correct and does not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
(u) Brokers and Finders.
Except as set forth in Schedule 2(u),
no agent, broker, Person or firm acting on behalf of the Company or its
affiliates is, or will be, entitled to any fee, commission or broker’s or
finder’s fees from any of the parties hereto, or from any Person controlling,
controlled by, or under common control with any of the parties hereto, in
connection with this Agreement or any of the transactions contemplated
hereby.
3. Representations
and Warranties of the Purchaser. The Purchaser
hereby represents, warrants and covenants to the Company that:
(a) Authorization. Such Purchaser has
full power and authority to enter into this Agreement. This
Agreement, when executed and delivered by the Purchaser, will constitute a
valid and legally binding obligation of the Purchaser, enforceable in accordance
with its terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and any other laws of general
application affecting enforcement of creditors’ rights generally, and as limited
by laws relating to the availability of a specific performance, injunctive
relief, or other equitable remedies.
(b) Purchase Entirely for Own
Account. This Agreement is made with the Purchaser in reliance
upon the Purchaser’s representation to the Company, which by the Purchaser’s
execution of this Agreement, the Purchaser hereby confirms,
that the
Securities to be acquired by the Purchaser will be acquired for investment for
the Purchaser’s own account, not as a nominee or agent, and not with a view to
the resale or distribution of any part thereof, and that the Purchaser has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, the Purchaser
further represents that the Purchaser does not presently have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities. The Purchaser has not been formed for the specific purpose of
acquiring any of the Securities.
(c) Knowledge. The
Purchaser is aware of the Company’s business affairs and financial condition and
has acquired sufficient information about the Company to reach an informed and
knowledgeable decision to acquire the Securities. The Purchaser has had the
opportunity to review and read the SEC Reports, including without limitation the
“Risk Factors” set forth therein, and hereby acknowledge that they understand
the disclosures made in such SEC Reports and the existence of such “Risk
Factors”.
(d) Restricted
Securities. The Purchaser understands that the Securities have
not been, and will not be, registered under the Securities Act, by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment intent
and the accuracy of the Purchaser’s representations as expressed
herein. The Purchaser understands that the Securities are “restricted
securities” under applicable U.S. federal, state and province securities laws
and that, pursuant to these laws, the Purchaser must hold the Securities indefinitely unless they
are registered with the Commission and qualified by state authorities, or an
exemption from such registration and qualification requirements is
available. Other than as set forth herein, the Purchaser acknowledges
that the Company has no obligation to register or qualify the Securities for
resale. The Purchaser further acknowledges that if an exemption from
registration or qualification is available, it may be conditioned on various
requirements including, but not limited to, the time and manner of sale, the
holding period for the Securities, and on requirements relating to the Company
which are outside of the Purchaser’s control, and which the Company is under no
obligation and may not be able to satisfy.
(e) General Solicitation.
Such Purchaser is not purchasing the Securities as a result of any
advertisement, article, notice or other communication regarding the Securities
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
solicitation or general advertisement.
(f) Short Sales and
Confidentiality Prior To The Date Hereof. Other than consummating the
transactions contemplated hereunder, such Purchaser has not directly or
indirectly, nor has any person or entity acting on behalf of or pursuant to any
understanding with such Purchaser, executed any purchases or sales, including
“short sales" as defined in Rule 200 of Regulation SHO under the Exchange Act,
of the securities of the Company (“Stock Transactions”)
during the period commencing from the time that such Purchaser first received a
term sheet (written or oral) from the Company or any other person or entity
representing the Company setting forth the material terms of the transactions
contemplated hereunder until the date hereof (“Discussion Time”).
The Purchaser further agrees not to engage in any Stock Transactions until the
Company files a Current Report on Form 8-K under the Exchange Act which annexes
copies of the Transaction Documents thereto. The Company covenants to
file such Current Report on Form 8-K under the Exchange Act within one trading
day of the Effective Date.
(g) Accredited
Investor. The Purchaser is
an accredited investor as defined in Rule 501(a) of Regulation D promulgated
under the Securities Act and has accurately and truthfully completed the Company an Accredited Investor Questionnaire attached hereto as Exhibit
B.
(h) Arrangement with
FHLLC. Purchaser acknowledges that Purchaser has arranged
and agreed directly with FHLLC (as defined below) that a portion of the Rights
it would otherwise have acquired hereunder shall be sold by the Company to FHLLC
and a portion thereof will be transferred by FHLLC to ▇▇▇▇▇▇▇ &
Company (UK) Ltd., as more fully set forth in
Section 9(a).
4. Intentionally
Omitted.
5. Other
Agreements of the Parties.
(a) Transfer
Restrictions.
(i) The
Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Securities other
than pursuant to an effective registration statement or Rule 144, to the Company
or to an affiliate of Purchaser, the Company may require the transferor thereof
to provide to the Company an opinion of counsel selected by the transferor and
reasonably acceptable to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under the
Securities Act. As a condition of transfer, any such transferee shall
agree in writing to be bound by the terms of this Agreement.
(ii) The
Purchaser agrees to the imprinting, so long as is required by this Section 5(a),
of a legend on any of the Securities in the following form:
[NEITHER]
THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] HAS
[NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
(b) Removal of Legend.
Certificates evidencing the Securities shall not contain any legend (including
the legend set forth in Section 5(a) hereof): (i) while a registration statement
covering the resale of such security is effective under the Securities Act, or
(ii) following any sale of such Underlying Shares pursuant to Rule 144, (iii) if
such Securities are eligible for sale under Rule 144, without the requirement
for the Company to be in compliance with the current public information required
under Rule 144 as to such Securities and without volume or manner-of-sale
restrictions, or (iv) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission). The Company
agrees that at such time as such legend is no longer required under this Section
5(b), it will, no later than three trading days following the delivery by a
Purchaser to the Company or the Company’s transfer agent of a certificate
representing the Securities, as applicable, issued with a restrictive legend
(such third trading day, the "Legend Removal Date"), along with an acceptable
legal opinion (the costs of which will be borne by the Company) and broker
representation letter, deliver or cause to be delivered to such Purchaser a
certificate representing such shares that is free from all restrictive and other
legends. The Company
may not make any notation on its records or give instructions to the Company’s
transfer agent that enlarge the restrictions on transfer set forth in this
Section.
(c) Compliance with Securities
Act. Purchaser agrees that such Purchaser will sell any
Securities pursuant to either the registration requirements of the Securities
Act, including any applicable prospectus delivery requirements, or an exemption
therefrom, and that if Securities are sold pursuant to a registration statement,
they will be sold in compliance with the plan of distribution set forth therein,
and acknowledges that the removal of the restrictive legend from certificates
representing Securities as set forth in Section 5(b) is predicated upon the
Company's reliance upon this understanding.
(d) Furnishing of
Information. Until the time that Purchaser no longer owns
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act even if the Company is not then subject to the reporting
requirements of the Exchange Act. As long as Purchaser owns
Securities, if the Company is not required to file reports pursuant to the
Exchange Act, it will prepare and furnish to the Purchasers and make publicly
available in accordance with Rule 144(c) such information as is required for the
Purchasers to sell the Securities under Rule 144. The Company further
covenants that it will take such further action as any holder of Securities may
reasonably request, to the extent required from time to time to enable such
Person to sell such Securities without registration under the Securities Act
within the requirements of the exemption provided by Rule 144.
(e) Disclosure;
Publicity. Purchaser shall not issue any press release or
other public disclosure with respect to the transactions contemplated hereby,
and neither the Company nor Purchaser shall issue any such press release or
otherwise make any such public statement without the prior consent of the
Company.
(f) Form D and Blue
Sky. If required, Company shall file a Form D with respect to the
issuance of the Securities as required under Regulation D under the
Securities Act and, upon written request, provide a copy thereof to Purchaser
promptly after such filing. The Company shall take such action as the Company
shall reasonably determine is necessary in order to obtain an exemption for or
to qualify the Securities for sale to Purchaser pursuant to the terms hereof
under applicable securities or “Blue Sky” laws of the states of the United
States, and shall provide evidence of any such action so taken to Purchaser
promptly after such filing. However, the Company shall not be
required to execute any general consent to service of process in order to obtain
such blue sky clearance, except in a jurisdiction where the Company is already
subject to such process.
6. Registration
Rights.
(a) Definitions. In
addition to the terms defined above and herein, the term “Registrable
Securities”, at any point in time, shall mean the shares of Common Stock
issued and outstanding to the Purchaser hereunder, and all shares of Common
Stock issued or issuable pursuant to Rights issued under Units purchased
hereunder; provided, however, that the
foregoing definition shall exclude in all cases any Registrable Securities sold
by a person in a transaction in which his or her rights under this Agreement are
not assigned. Notwithstanding anything contained herein to the contrary,
securities shall cease to be Registrable Securities when (a) a Registration
Statement covering such Registrable Securities has been declared effective by
the Commission and they have been disposed of pursuant to such effective
Registration Statement or (b) such Registrable Securities may be sold pursuant
to Rule 144 under the Securities Act, without volume restriction.
(b) Demand
Registration. If the Company shall receive a written request
from FHLLC (as defined below) that the Company file a registration statement
under the Securities Act pursuant to Section 6(b) of the Original Agreement (as
defined below), then the Purchaser shall be entitled to include any and all of
its Registrable Securities on such registration statement and the Purchaser
shall receive all of the benefits of the Original Agreement relating to such
rights. The Company and FHLLC shall give prior written notice to the
Purchaser promptly after a demand registration request is made under Section
6(b) of the Original Agreement. In addition FHLLC acknowledges and
agrees that if the Purchaser requests, on or after the first anniversary of the
date hereof, that FHLLC exercise its demand registration rights under the
Original Agreement for at least a majority of the Registrable Securities owned
by the Purchaser hereunder, then FHLLC shall demand such registration pursuant
to Section 6(b) of the Original Agreement as its one demand registration
right.
(c) Underwriting. If the
Purchaser intends to include the Registrable Securities in a demand registration
made by FHLLC as discussed in Section 6(b), the Purchaser shall so advise the
Company within 15 days after it receives the notice specified in Section
6(b). The right of any holder of Common Stock (each, a “Holder”) to
include his own registrable securities (each, a “Holder’s Registrable
Securities”) in such registration shall be conditioned upon such Holder’s
participation in such underwriting and the inclusion of such Holder’s
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Purchaser and such Holder) to the extent provided
herein. All Holders proposing to distribute their securities through
such underwriting shall enter into an underwriting agreement in customary form
with the underwriter or underwriters selected for such
underwriting. Notwithstanding the foregoing, if a registration
involves an underwritten offering, and the lead managing underwriter shall
advise Company that the amount of securities to be included in the offering
exceeds the amount which can be sold in the offering, the number of securities
owned by Purchaser to be included in the offering shall be eliminated or reduced
as required by the managing underwriter.
(d) Delay in Filing.
Notwithstanding the foregoing, if the Company shall furnish to Purchaser and the
Holders requesting a registration statement pursuant to this section, a
certificate signed by the Chief Executive Officer or President of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its stockholders
for such registration statement to be filed and it is therefore essential to
defer the filing of such registration statement, the Company shall have the
right to defer such filing for the period of time which the Board of Directors
of the Company, in consultation with its legal counsel determine, to be the
shortest period reasonably necessary to avoid such detriment to the Company,
which in any event shall not exceed 120 days following receipt of the request of
the Purchaser.
(e) Limitations. In
addition, the Company shall not be obligated to effect, or to take any action to
effect, any registration pursuant to this Section 6 after the Company has
already effected one (1) registration pursuant to this Section 6 and such
registration has been declared or ordered effective.
(f) Obligations of
Company. The Company shall: (i) prepare and file with the Commission such
amendments and supplements to such registration statement as may be necessary to
keep such registration statement effective until the disposition of all
securities covered by such registration statement; (ii) register and qualify the
securities covered by such registration statement under applicable state
securities and blue sky laws; (iii) cause the securities covered by such
registration statement to be listed or quoted on the trading market on which
Company’s securities are then listed or quoted and (iv) take all reasonable
actions required to ensure such shares of Common Stock are DTC
eligible. In addition, the Company shall pay all registration
expenses, filing fees and printing expenses incurred in connection with any
registration statement filed pursuant to Sections 6(b) or 6(h).
(g) Obligations of
Purchaser. As a condition to the Company filing the registration
statement, Purchaser shall furnish to the Company such information regarding
itself, the Registrable Securities held by it, and the intended method of
disposition of such securities as shall be required to effect the registration
of such Holder’s Registrable Securities, and such Purchaser shall represent and
warrant that such information provided in connection herewith by such Purchaser
shall be full, accurate and complete.
(h) Piggyback Registration
Rights. If, at any time, there is not an effective registration statement
covering the resale all of the Registrable Securities, and Company shall
determine to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under the
Securities Act, of any of its equity securities (other than: (i) on Form S-4 (as
promulgated under the Securities Act), (ii) Form S-8 (as promulgated under the
Securities Act), (iii) on Form S-1A with respect to equity securities that have
already been registered under the Securities Act as of the date hereof, or (iv)
the then equivalents of Form S-4 or S-8 relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans), then Company shall send to Purchasers a written notice of such
determination and, if within ten (10) days after receipt by Purchasers of such
notice, Company shall receive a request in writing from Purchasers, Company
shall include in such registration statement all or any part of such Registrable
Securities holders requests to be registered at no cost to Holders (other than
underwriting discounts, fees and commissions). Notwithstanding the
foregoing, if a registration involves an underwritten offering, and the lead
managing underwriter shall advise Company that the amount of securities to be
included in the offering exceeds the amount which can be sold in the offering,
the number of securities owned by Purchaser to be included in the offering shall
be eliminated or reduced as required by the managing
underwriter. Notwithstanding anything contained herein to the
contrary, securities shall cease to be Registrable Securities when (a) a
Registration Statement covering such Registrable Securities has been declared
effective by the Commission and it has been disposed of pursuant to such
effective Registration Statement or (b) such Registrable Securities may be sold
pursuant to Rule 144 under the Securities Act without volume
restriction.
(i) Indemnification for
Registration Statements. To the extent permitted by law, the
Company will indemnify and hold harmless Purchaser, and the partners, members,
officers and directors of Purchaser, against any losses, claims, damages, or
liabilities to which they may become subject under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any of the following statements, omissions or violations (collectively a
“Violation”) by the Company: (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement or
incorporated by reference therein, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law in
connection with the offering covered by such registration statement; and the
Company will reimburse Purchaser, and/or its partners, members, officers, or
directors for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; providedhowever, that the
indemnity contained in this Section 6(i) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company, which consent shall
not be unreasonably withheld, nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for inclusion in such
registration statement by Purchaser,
or its partners, members, officers, or directors, or any other holder of Common
Stock registering its shares in connection with such registration
statement.
7. Adjustments
to Purchase Price of and Number of Shares Issuable pursuant to the
Rights.
(i) The
number and kind of securities purchasable upon the exercise of the Rights if
any, and the Rights Exercise Price, if any, shall be subject to adjustment from
time to time upon the occurrences and terms set forth herein. In case
the Company shall (i) pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock to holders of its outstanding Common
Stock, (ii) subdivide its outstanding shares of Common Stock into a greater
number of shares, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock, (iv) issue any shares of its capital
stock in a reclassification of the Common Stock, then the number of shares of
Common Stock purchasable upon exercise of the Rights, if any, immediately prior
thereto shall be adjusted so that the Purchaser shall be entitled to receive the
kind and number of shares of Common Stock or other securities of the Company
which it would have owned or have been entitled to receive had such Rights, if
any, been exercised in advance thereof. Upon each such adjustment of
the kind and number of shares of Common Stock or other securities of the Company
which are purchasable pursuant to exercise of the Rights, if any, the Purchaser
shall thereafter be entitled to purchase the number of shares of Common Stock or
other securities resulting from such adjustment at a purchase price per share of
Common Stock or other security obtained by multiplying the purchase price in
effect immediately prior to such adjustment by the number of shares of Common
Stock purchasable pursuant hereto immediately prior to such adjustment and
dividing by the number of shares of Common Stock or other securities of the
Company resulting from such adjustment. An adjustment made pursuant to this
paragraph shall become effective immediately after the effective date of such
event retroactive to the record date, if any, for such event.
(ii) Prior
to the exercise of the Rights, if any, in the event that the Company shall
sell any shares of Common Stock to any person or entity other then pursuant to
an Exempted Transaction (as defined below) at a price less than $0.375 per share
(the “Lesser
Price”), the Purchaser shall be entitled to purchase the shares of Common
Stock underlying the Rights, as the case may be, at the Lesser
Price. For the purposes hereof, the term Exempted Transaction shall
mean: (i) the issuance of options and/or restricted stock to employees and
consultants of the Company and approved by the board of directors of the
Company; and (ii) warrants issued to third parties in strategic transactions and
approved by the board of directors of the Company and the affirmative vote of
Chairman ▇▇▇▇▇▇▇▇ (to the extent that ▇▇. ▇▇▇▇▇▇▇▇ remains on the Board of
Directors of the Company).
8. Additional
Conditions to Closing.
(a) Conditions
to Purchaser’s Obligations at the Closing. Purchaser’s
obligation to purchase the Units is subject to the satisfaction (or waiver by
the Purchaser) of the following conditions:
(i) Expenses. On
the dates of each of the Closings, the Company shall be responsible for the
following costs of the Purchaser in connection with this Agreement and the
transactions contemplated hereunder, to be paid from the proceeds upon each
respective Closing: (i) 5% of the gross investment amount as commission payable
to ▇▇▇▇▇▇▇ & Company (UK) Ltd. Subject to the foregoing clause,
each of the parties shall be responsible for their own legal and other
associated costs of this transaction.
9. Miscellaneous.
(a) Successors
and Assigns. The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement. The Company and
Purchaser shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other party; provided, that (i)
the Purchaser may assign some or all of its rights and obligations hereunder to
an affiliate of the Purchaser, without the consent of the Company, in which
event such assignee shall be deemed to be the Purchaser hereunder with respect
to such assigned rights and obligations; provided further that
as a condition to any such assignment the assignee shall agree to be bound by
the terms of this Agreement as the Purchaser hereunder and the Purchaser shall
not be relieved of liability for the performance of its obligations hereunder
and (ii) on each Closing, for each Unit purchased by the Purchaser, Purchaser
will assign to ▇▇▇▇▇▇▇ & Company (UK) Ltd. or its designees 1,866 of the
7,200 Rights included with each Unit so purchased. Pursuant to the
Unit Purchase Agreement, dated as of August 28, 2009, as amended (the “Original Agreement”),
between the Company and Fund Holdings LLC, a Florida limited liability company
(“FHLLC”), the
Company and FHLLC acknowledge and agree that the purchase of Units by the
Purchaser pursuant to this Agreement shall be credited against FHLLC’s
obligation under the Original Agreement to purchase 5,000 Units and FHLLC hereby
consents to the Purchaser’s purchase of up to 2,000 Units under the Original
Agreement (it being understood and agreed that, if the Purchaser does not
purchase 2,000 Units pursuant to the terms hereof, FHLLC shall retain the right
to purchase the balance of any unpurchased Units in accordance with the terms of
the Original Agreement); provided that for each Unit purchased by Purchaser
pursuant to this Agreement, FHLLC shall have the right to purchase 2,397 Rights
at the cost of $0.01 per Unit and FHLLC hereby directs the Company to issue 600
of such Rights to ▇▇▇▇▇▇▇ & Company (UK) Ltd. FHLLC
also acknowledges and agrees that no fee shall be required to be paid by the
Company to Radnor Research & Advisory Co., LLC, Member NYSE, with respect to
the purchases made by the Purchaser hereunder.
(b) Governing
Law. This Agreement
and all acts and transactions pursuant hereto and the rights and obligations of
the parties hereto shall be governed, construed and interpreted in accordance
with the laws of the State of New York, without giving effect to principles of
conflicts of law. Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether
brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in New York County, New
York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in New York County, New
York for the adjudication of any dispute hereunder or in connection herewith or
with any transaction contemplated hereby or discussed herein (including with
respect to the enforcement of any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is improper or is an inconvenient
venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any other manner permitted by law. If
either party shall commence an action or proceeding to enforce any provisions of
the Transaction Documents, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its reasonable attorneys'
fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.
(c) Counterparts. This Agreement
may be executed in two or more counterparts, each of which shall be deemed
an original and all of which together shall constitute one
instrument.
(d) Titles
and Subtitles. The titles and
subtitles used in this Agreement are used for convenience only and are not
to be considered in construing or interpreting this Agreement.
(e) Notices. Any notice
required or permitted by this Agreement shall be in writing and shall be deemed
sufficient upon receipt, when delivered personally or by courier, overnight
delivery service, or 48 hours after being deposited in the U.S. mail as
certified or registered mail with postage prepaid and return receipt requested,
if such notice is addressed to the party to be notified at such party’s address
as set forth below or as subsequently modified by written notice.
(f) Replacement
of Securities. If
any certificate or instrument evidencing any Securities is mutilated, lost,
stolen or destroyed, the Company shall issue or cause to be issued in exchange
and substitution for and upon cancellation thereof (in the case of mutilation),
or in lieu of and substitution therefor, a new certificate or instrument, but
only upon receipt of evidence reasonably satisfactory to the Company of such
loss, theft or destruction. The applicant for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs (including customary indemnity) associated with the issuance of such
replacement Securities.
(g) Amendments
and Waivers. Any term of this
Agreement may be amended or waived only with the written consent of the Company
and the Purchaser. Any amendment or waiver effected in accordance with this
Section 9(g) shall be binding upon Purchaser and each transferee of the
Securities, each future holder of all such Securities, and the
Company.
(h) Severability. If one or more
provisions of this Agreement are held to be unenforceable under applicable
law, the parties agree to renegotiate such provision in good faith, in order to
maintain the economic position enjoyed by each party as close as possible to
that under the provision rendered unenforceable. In the event that
the parties cannot reach a mutually agreeable and enforceable replacement for
such provision, then (i) such provision shall be excluded from this
Agreement, (ii) the balance of this Agreement shall be interpreted as if
such provision were so excluded and (iii) the balance of this Agreement
shall be enforceable in accordance with its terms.
(i) Entire
Agreement. This Agreement,
and the documents referred to herein constitute the entire agreement between the
parties hereto pertaining to the subject matter hereof, and any and all other
written or oral agreements existing between the parties hereto are expressly
canceled.
(j) Survival
of Representations, Warranties and Covenants; Additional Matters. The representations and
warranties contained in Sections 2 hereof shall survive until such time as the
date on which all the Securities, if any, have been exercised in full or
expired. In the event the conclusion, settlement or determination of
any action, suit, proceeding, arbitration or dispute between the Company and
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, Inc. related to the matters described on Schedule 2(i) results
in the Company issuing shares of capital stock to ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, Inc. or any
of its affiliates, the Company shall issue (and take such steps as are necessary
in order to issue) to Purchaser such number of shares of capital stock and
rights to acquire shares of capital stock of the same type and with the same
terms as are then held by Purchaser so that Purchaser’s fully-diluted ownership
percentage as of the time immediately prior to the issuance to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Inc. (the “Measure Time”) is not decreased by such issuance; provided that the relative
amount of shares of capital stock and rights to acquire shares of capital stock
that are issued to Purchaser as a result of the foregoing will be in the same
relative amounts as each class or series of capital stock and each right to
purchase shares of
capital
stock held by Purchaser as of the Measure Time. For avoidance of
doubt, (A) if Purchaser does not own either shares of capital stock or rights to
purchase shares of capital stock as of the Measure Time, then none of such
securities would be issued pursuant to the foregoing provision, and (B) if, as
of the Measure Time, Purchaser holds rights to purchase capital stock with
different terms, then each such right shall be considered a different right to
purchase capital stock and the rights to be issued pursuant to this provision
shall be issued in the same relative amounts as such rights held by Purchaser as
of the Measure Time. Notwithstanding the foregoing, in no event will
shares of capital stock or rights to purchase shares of capital stock be issued
to Purchaser pursuant to the foregoing provisions to the extent any dilution to
Purchaser is eliminated through other anti-dilution protection rights (including
any reduction of the exercise price of any rights to purchase capital
stock).
(k) Exculpation
Among Purchasers. Purchaser
acknowledges that it is not relying upon any person, firm or corporation, other
than the Company and its officers and directors, in making its investment or
decision to invest in the Company.
[Signature
Page Follows]
The
parties have executed this Unit Purchase Agreement as of
the date first written above.
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COMPANY:
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▇▇▇▇▇.▇▇▇
GROUP, INC.
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By:
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Name:
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Title:
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Address:
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Facsimile
Number:
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PURCHASER:
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▇▇▇▇▇▇▇
VENTURE PARTNERS III, LLC
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By:
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Name:
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Title:
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Address:
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Facsimile
Number:
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For
purposes of Section 6(b), 8(a)(i) and 9(a) only, Fund Holdings LLC accepts and
agrees to the provisions of Sections 6(b) and 8(a)(i) and the last two sentences
of Section 9(a) hereof.
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FUND
HOLDINGS LLC
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By:
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Name:
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Title:
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For
purposes of Sections 8(a)(i) and 9(a) only, Radnor Research & Advisory Co.,
LLC accepts and agrees to the provisions of the first sentence of Section
8(a)(i) hereof and the last sentence of Section 9(a) hereof) and waives any
rights to any payments it would otherwise be entitled to under Section 8(a)(i)
of the Original Agreement.
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RADNOR
RESEARCH & ADVISORY CO., LLC
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By:
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Name:
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Title:
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SIGNATURE
PAGE TO UNIT PURCHASE AGREEMENT
EXHIBIT
A
Form
of Rights Certificate
EXHIBIT
B
Accredited
Investor Questionnaire