DEBENTURE EXCHANGE AGREEMENT
THIS
DEBENTURE EXCHANGE AGREEMENT (this “Agreement”) is dated
as of April ___, 2010, by and between Epic Energy Resources, Inc., a Colorado
corporation (the “Corporation”), and
the undersigned individual (a “Holder” and
collectively, the “Holders”). The
Corporation and Holder are referred to as a “Party” and
collectively as the “Parties”.
WHEREAS, Holder owns a 10%
Secured Debenture (the “Debenture”);
WHEREAS, the Holders each
desire to exchange the principal amount of their Debenture set forth on their
signature page hereto (collectively, the “Tendered Principal
Amount”) for common stock of the Corporation, no par value (the “Shares”);
and
WHEREAS, the Corporation
desires to exchange (the “Exchange”) fourteen
newly issued and unregistered Share for each $1.00 of Tendered Principal Amount
(the Shares received in the Exchange, referred to in this Agreement as the
“Exchanged
Securities”), but only up to 14,000,000 Shares.
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Exchange.
(a) Exchange
Ratio. The Corporation and Holder hereby agree to exchange at
the Closing fourteen Exchanged Security for each $1.00 of Tendered Principal
Amount.
(b) Exchange. To
effect this Exchange, Holder will deliver to the Corporation this executed
Agreement stating the Tendered Principal Amount, the outstanding principal
amount of the Holder’s Debenture will be permanently reduced by an amount equal
to Tendered Principal Amount (equivalent in effect to the payment of a principal
payment in an amount equal to the Tendered Principal Amount) and the Corporation
will deliver to Holder a stock certificate representing the number of shares of
Exchanged Securities that is equal to the Tendered Principal Amount being so
transferred by the Holder to the Corporation within 10 business days after the
Closing Date.
2. The
Closing.
(a) Closing
Date. The closing of the transactions contemplated by this
Agreement (the “Closing”) shall take
place at the offices of ▇▇▇▇▇ ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m., Houston time, on April 9, 2010 (“Closing Date”), or at
such other place, date or time as the Corporation may determine in its sole
discretion.
(b) Conditions to Closing of
Holders. The obligation of Holders to consummate the
transactions on the Closing Date as contemplated by this Agreement shall be
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(i) the
Corporation shall have performed and complied in all material respects with all
obligations and agreements required to be performed and complied with by the
Corporation hereunder on or prior to the Closing Date; and
(ii) the
representations and warranties of the Corporation contained in this Agreement
shall be true and correct in all material respects as of the Closing Date as if
made as of such date.
(c) Conditions to Closing of
Corporation. The obligation of the Corporation to consummate
the transactions on the Closing Date shall be subject to the satisfaction or
waiver on or prior to the Closing Date of the following conditions:
(i) Holder
shall have each performed and complied in all material respects with all
obligations and agreements required to be performed and complied with by Holder
hereunder on or prior to the Closing Date;
(ii) the
representations and warranties of Holder contained in this Agreement shall be
true and correct in all material respects as of the Closing Date as if made as
of such date;
(iii) there
shall not have occurred or be likely to occur any event materially affecting the
Corporation’s business or financial affairs that would or might reasonably be
expected to prohibit, prevent, restrict or delay the Closing or that might
reasonably be expected to be material to any Holder in deciding whether to
participate in the Exchange;
(iv) there
shall not have been any action taken or threatened, or any statute, rule,
regulation, judgment, order, stay, decree or injunction promulgated, enacted,
entered, enforced or deemed applicable to the Exchange, by or before any court
or governmental regulatory or administrative agency or authority, tribunal,
domestic or foreign, that (a) challenges the making of the Exchange or might
reasonably be expected to, directly or indirectly, prohibit, prevent, restrict
or delay consummation of, or might otherwise reasonably be expected to adversely
affect in any material manner, the Exchange; or (b) could reasonably be expected
to materially adversely affect the Corporation’s business, condition (financial
or otherwise), income, operations, properties, assets, liabilities or prospects,
or materially impair the contemplated benefits of the Exchange, or the
consummation of the Exchange as a whole to the Corporation or that might be
material to Holders in deciding whether to participate in the
Exchange;
(v) the
Corporation’s sale of a minimum of 3,500,000 shares of the Corporation’s Series
A Preferred Stock, as contemplated by Corporation’s confidential private
placement memorandum dated as of March 13, 2010, as supplemented on April 8,
2010 (the “Private Placement Memorandum”);
(vi) the
holders of the Corporation’s Series C Warrants tender, and do not withdraw, 100%
of the Corporation’s outstanding Series C Warrants, as contemplated by the
Private Placement Memorandum;
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(vii) the
holders of the Corporation’s Series D Warrants tender, and do not withdraw, 100%
of the Corporation’s outstanding Series D Warrants, as contemplated by the
Private Placement Memorandum;
(viii) holders
of at least 90% of the outstanding principal amount of the Debentures execute
the Waiver and Amendment to Debenture and the Amendment to Securities Purchase
Agreement, as contemplated by the Private Placement Memorandum; and
(ix) the
exchange by the Corporation and management and directors of deferred
compensation and board fees for prior periods and a permanent reduction of
management’s 2010 base salaries for 1,200,000 shares of the Corporation’s Series
A Preferred Stock, as contemplated in the Private Placement
Memorandum.
3. Representations and
Warranties of the Corporation. The Corporation represents and
warrants to Holder as follows:
(a) Corporate
Status. The Corporation is a corporation duly organized,
validly existing and in good standing under the laws of the State of Colorado
and is duly licensed or qualified to transact business as a foreign corporation
and is in good standing in each jurisdiction in which the nature of the business
transacted by it or the character of the properties owned or leased by it
requires such licensing or qualification, except where the failure to be so
licensed or qualified would not reasonably be expected to have a material
adverse effect on the business, condition (financial or otherwise) or assets of
the Corporation. The Corporation has full power and authority,
corporate or otherwise, to own and hold its properties and to carry on its
business as now conducted and as proposed to be conducted, to execute, deliver
and perform this Agreement.
(b) Authorization/Enforceability. The
execution and delivery of this Agreement and the performance by the Corporation
of its obligations hereunder, have been duly authorized by all requisite action,
corporate or otherwise, and constitute the valid and legally binding obligations
of the Corporation, enforceable in accordance with its terms and
conditions. The Corporation need not give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
Governmental Authority in order to consummate the transactions contemplated by
this Agreement, except with respect to federal and state securities
laws.
(c) Non-Contravention. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, will not violate any provision of law, any
order of any court or other agency of government or the Articles of
Incorporation or Bylaws of the Corporation, as may be amended to date, and do
not and will not result in a material breach of or constitute (with due notice
or lapse of time or both) a material default under any provision of any
indenture, agreement or other instrument to which the Corporation, or any of its
properties or assets, is bound.
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(d) Consents/Approvals. No
consent, approval, authorization, order, registration or qualification of or
with any Governmental Authority or other Person or entity is required for the
issuance and sale of the Exchanged Securities by the Corporation to Holder or
the consummation by the Corporation of the transactions contemplated by this
Agreement.
(e) Exchanged Securities
Authorization. The Exchanged Securities have been duly
authorized and, when issued and delivered, will be duly and validly issued and
fully paid and nonassessable. Upon consummation of the transactions
contemplated hereby, good and valid title to the Exchanged Securities, free and
clear of all Claims, will be transferred by the Corporation to
Holder.
(f) Capitalization. The
capitalization of the Corporation is as set forth on Schedule 3(f), which
Schedule 3(f) shall also include the number of shares of the Corporation’s
common stock, no par value (“Common Stock”) owned
beneficially, and of record, by Affiliates of the Corporation as of April 5,
2010. The Corporation has not issued any capital stock since its most
recently filed periodic report under the Securities Exchange Act of 1934, as
amended (“Exchange
Act”), other than pursuant to the exercise of employee stock options
under the Corporation’s stock option plans, the issuance of shares of Common
Stock to employees pursuant to the Corporation’s employee stock purchase plans
and pursuant to the conversion and/or exercise of other securities of the
Corporation that are convertible into Common Stock outstanding as of the date of
the most recently filed periodic report under the Exchange Act. The
issuance of securities hereunder will not obligate the Corporation to issue
shares of Common Stock or other securities to any Person (other than the
Holders) and will not result in a right of any holder of Corporation securities
to adjust the exercise, conversion, exchange or reset price under any of such
securities. All of the outstanding shares of capital stock of the Corporation
are validly issued, fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws, and none of such outstanding shares
was issued in violation of any preemptive rights or similar rights to subscribe
for or purchase securities. There are no stockholders agreements,
voting agreements or other similar agreements with respect to the Corporation’s
capital stock to which the Corporation is a party or, to the knowledge of the
Corporation, between or among any of the Corporation’s
stockholders.
4. Representations and
Warranties of Holder. Holder represents and warrants,
severally and not jointly, to the Corporation as follows:
(a) Legal
Capacity. Holder has full legal right, power and capacity to
execute and deliver this Agreement and to perform his, her or its obligations
hereunder. This Agreement constitutes the valid and legally binding
obligation of Holder, enforceable in accordance with its terms and
conditions. Holder need not give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any third party or
Governmental Authority in order to consummate the transactions contemplated by
this Agreement. Except as set forth on the signature page hereto, no
Person has any community property rights by virtue of marriage or otherwise in
the Debenture owned by such Holder. Any such Person with community
property rights has duly executed and delivered to the Corporation at or prior
to the Closing a copy of the consent attached hereto as Exhibit
A. If such Holder is not a natural person, it has been duly
organized, and is validly existing and in good standing, under the laws of its
jurisdiction of formation, and it has properly taken all corporate, limited
liability, partnership or other action required to be taken by such Holder with
respect to the execution and delivery of this Agreement and consummate the
transactions contemplated by this Agreement.
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(b) Title to the
Debenture. Holder is the lawful record and beneficial owner of
the Debenture with respect to which it will be tendering the Tendered Principal
Amount that will be exchanged pursuant to Section 1 of
this Agreement with good and marketable title thereto, and the Holder has the
right to sell, assign, convey, transfer and deliver the Tendered Principal
Amount. Holder acknowledges and agrees that it will have no further
rights or claims with respect to such Tendered Principal Amount of its
Debenture. The exchange of the securities as contemplated herein will
reduce the outstanding principal amount of Holder’s Debenture by the Tendered
Principal Amount.
(c) Non-Contravention. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, will not violate any provision of law, any
order of any court or other agency of government or the organizational documents
of the Holder, as may be applicable and as amended to date, and do not and will
not result in a material breach of or constitute (with due notice or lapse of
time or both) a material default under any provision of any indenture, agreement
or other instrument to which the Holder, or any of its properties or assets, is
bound.
(d) Consents/Approvals. No
consent, approval, authorization, order, registration or qualification of or
with any Governmental Authority or other entity or Person is required for the
Exchange or the consummation by Holder of the transactions contemplated by this
Agreement.
(e) Investment
Representations.
(i) Holder
qualifies as an “accredited investor” (as defined in Rule 501(a) of Regulation D
under the Securities Act of 1933, as amended (the “Securities Act”)) and
is acquiring the Exchanged Securities hereunder for its own account and with no
intention of distributing or selling the Exchanged Securities except pursuant to
a registration or an available exemption under applicable law. Holder
understands that the Exchanged Securities have not been (and are not being)
registered under the Securities Act by reason of their contemplated issuance in
transaction(s) exempt from the registration and prospectus delivery requirements
of the Securities Act pursuant to Section 4(2) thereof (including the rules
and regulations promulgated thereunder), and that the reliance of the
Corporation on such exemption from registration may be predicated in part on the
representations and warranties of Holder hereunder.
(ii) Holder
agrees that it will not sell or otherwise dispose of any of the Exchanged
Securities unless such sale or other disposition has been registered or is
exempt from registration under the Securities Act and has been registered or
qualified or is exempt from registration or qualification under applicable
securities laws of any state.
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(iii) Holder
understands that a restrictive legend consistent with the foregoing set forth in
Section 7(a) of
this Agreement has been or will be placed on the certificates evidencing the
Exchanged Securities to be issued to it hereunder, and related stop transfer
instructions will be noted in the transfer records of the Corporation and/or its
Transfer Agent for the Exchanged Securities during the Suspension.
(iv) Holder
represents that it is not an Affiliate of the Corporation, and Holder covenants
and agrees that if it becomes an Affiliate, it will promptly provide notice to
the Corporation of such status and comply with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ laws and policies
and the applicable “control securities” provisions of Rule 144 in addition to
any other obligations set forth in this Agreement.
(v) Holder
has such knowledge and experience in financial and business matters so as to be
capable of evaluating the merits and risk of an investment in the Exchanged
Securities. Holder acknowledges that it has had access to all
information concerning the Corporation and its respective businesses, assets,
liabilities, financial statements, and obligations which have been requested and
has been provided the opportunity to ask questions of and receive answers from
the Corporation to fully and effectively evaluate the Exchange and the
transactions contemplated herein. Holder acknowledges and represents
that it has received and reviewed the Private Placement
Memorandum. Holder understands that a new holding period for purposes
of Rule 144 under the Securities Act will be triggered with respect to the
Exchanged Securities, and such Holder is able to bear the economic risk of loss
of the investment in such Exchanged Securities and is able to afford a complete
loss of such investment.
5. Withdrawal. Any
Holder as to itself only (but not with respect to the other Holders) may
withdraw all of such Holder’s Tendered Principal Amount from the Exchange on or
prior to March 31, 2010.
6. Certain
Definitions.
(a) “Affiliate” (and, with
a correlative meaning, “affiliated”) means,
with respect to any Person, any direct or indirect subsidiary of such Person,
and any other Person that directly, or through one or more intermediaries,
Controls or is Controlled by or is under common Control with such first
Person. As used in this definition, “Control” (and, with
correlative meanings, “Controlled by” and
“under common Control
with”) means the possession, directly or indirectly, of the power to
direct the management or policies of a Person (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise) and shall be construed as such term is used in the rules promulgated
under the Securities Act.
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(b) “Claims” shall mean
the following of any nature whatsoever: security interests, liens, deeds of
trust, hypothecations, pledges, claims (pending or threatened), charges,
escrows, encumbrances, lock-up arrangements, options, rights of first offer or
refusal, community property rights, mortgages, indentures, security agreements
or other agreements, arrangements, contracts, commitments, understandings or
obligations, whether written or oral and whether or not relating in any way to
credit or the borrowing of money.
(c) “Commission” means the
United States Securities and Exchange Commission.
(d) “Governmental
Authority” means any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, including
any governmental authority, independent or autonomous official authority,
agency, department, board, commission or instrumentality of the United States or
any other country, or any political subdivision thereof, whether federal, state
or local, and any tribunal, court or arbitrator(s) of competent
jurisdiction.
(e) “Person(s)” means and
includes any natural persons, sole proprietorships, corporations, limited
partnerships, limited liability companies, general partnerships, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, all Governmental Authorities and all other
entities.
(f) “Registration Rights
Agreement” means the Registration Right Agreement, dated the date hereof,
among the Corporation and the Holders and other signatories
thereto.
(g) “Trading Day” means a
day on which the principal Trading Market is open for trading.
(h) “Trading Market” means
any of the following markets or exchanges on which the Common Stock is listed or
quoted for trading on the date in question: the NYSE AMEX, the Nasdaq Capital
Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York
Stock Exchange or the OTC Bulletin Board (or any successors to any of the
foregoing).
(i) “Transfer Agent” shall
mean TranShare Corporation at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, in its capacity as transfer agent to the Corporation, or any successor
transfer agent to the Corporation.
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7. Miscellaneous.
(a) Transfer
Restrictions.
(i) The
Exchanged Securities may only be disposed of in compliance with state and
federal securities laws. In connection with any transfer of Exchanged Securities
other than pursuant to an effective registration statement or Rule 144, to the
Corporation or to an Affiliate of a Holder or in connection with a pledge as
contemplated in Section 7(a)(iii), the Corporation may require the transferor
thereof to provide to the Corporation an opinion of counsel selected by the
transferor and reasonably acceptable to the Corporation, the form and substance
of which opinion shall be reasonably satisfactory to the Corporation, to the
effect that such transfer does not require registration of such transferred
Exchanged 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 and shall have the rights of a Holder under this Agreement and the
Registration Rights Agreement.
(ii) The
Holder agrees to the imprinting, so long as is required by this Section 7(a), of
a legend on any of the Exchanged Securities in the following form:
THE
SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR THE SECURITIES LAWS
OF ANY STATE OR OTHER JURISDICTION. THE SHARES MAY NOT BE OFFERED,
SOLD, PLEDGED, OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT, OR (2) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH
ALL APPLICABLE STATE SECURITIES LAWS AND THE SECURITIES LAWS OF OTHER
JURISDICTIONS, AND IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS
THE CORPORATION HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT
THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND
SUCH OTHER APPLICABLE LAWS.
(iii) The
Corporation acknowledges and agrees that Holder may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Exchanged Securities to a
financial institution that is an “accredited investor” as defined in Rule 501(a)
under the Securities Act and who agrees to be bound by the provisions of this
Agreement and the Registration Rights Agreement and, if required under the terms
of such arrangement, such Holder may transfer pledged or secured Exchanged
Securities to the pledgees or secured parties. Such a pledge or transfer would
not be subject to approval of the Corporation and no legal opinion of legal
counsel of the pledgee, secured party or pledgor shall be required in connection
therewith. Further, no notice shall be required of such pledge. At the Holder’s
expense, the Corporation will execute and deliver such reasonable documentation
as a pledgee or secured party of Exchanged Securities may reasonably request in
connection with a pledge or transfer of the Exchanged Securities, including, if
the Exchanged Securities are subject to registration pursuant to the
Registration Rights Agreement, the preparation and filing of any required
prospectus supplement under Rule424(b)(3) under the Securities Act or other
applicable provision of the Securities Act to appropriately amend the list of
selling stockholders thereunder.
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(iv) Certificates
evidencing the Exchanged Securities shall not contain any legend (including the
legend set forth in Section 7(a)(ii) 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 Exchanged Securities pursuant to Rule 144, or
(iii) if such Common Stock is eligible for sale pursuant to Rule 144, 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 Corporation shall cause its counsel to issue a
legal opinion to the Transfer Agent promptly after the effective date of a
registration statement if required by the Transfer Agent to effect the removal
of the legend hereunder. The Corporation agrees that following the
effective date of a registration statement or at such time as such legend is no
longer required under this Section 7, it will, no later than three Trading Days
following the delivery by Holder to the Corporation or the Transfer Agent of a
certificate representing the Exchanged Securities, as applicable, issued with a
restrictive legend, deliver or cause to be delivered to Holder a
certificate representing such shares that is free from all restrictive and other
legends. The Corporation may not make any notation on its records or give
instructions to the Transfer Agent that enlarge the restrictions on transfer set
forth in this Section 7. Certificates for the Exchanged Securities
subject to legend removal hereunder shall be transmitted by the Transfer Agent
to Holder by crediting the account of the Holder’s prime broker with the
Depository Trust Corporation System as directed by Holder.
(v) Holder
agrees that Holder will sell any Exchanged Securities pursuant to either the
registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom, and that if
Exchanged 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 Exchanged Securities as set forth in this Section 7 is predicated
upon the Corporation’s reliance upon this understanding.
(b) Material Nonpublic
Information. Holder acknowledges and agrees that it has
received material nonpublic information in connection with the Exchange and that
it will not sell or otherwise dispose of any of the Exchanged Securities unless
such material nonpublic information has been publicly disclosed or no longer
constitutes material nonpublic information. The Corporation shall,
within 4 Trading Days of the date hereof, issue a Current Report on Form 8-K
disclosing the material terms of the transactions contemplated hereby, and shall
attach this Agreement and all other related agreements thereto (the “8-K
Filing”). From and after the filing of the 8-K Filing with the
Commission, the Holder shall not be in possession of any material, nonpublic
information received from the Corporation or any of its officers, directors,
employees or agents, that is not disclosed in the 8-K Filing. The
Corporation shall consult with the Holders in issuing any other press releases
with respect to the transactions contemplated hereby.
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(c) DISCLAIMER. THE
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION CONTAINED IN SECTION 3
CONSTITUTE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF THE
CORPORATION IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. EXCEPT FOR SUCH REPRESENTATIONS AND WARRANTIES, NO PARTY NOR
ANY OTHER PERSON MAKES ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY
WITH RESPECT TO THE CORPORATION OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, AND THE CORPORATION DISCLAIMS ANY OTHER REPRESENTATIONS OR
WARRANTIES, WHETHER MADE BY SUCH PARTY OR ANY OF ITS AFFILIATES, OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES (INCLUDING WITH RESPECT TO THE
DISTRIBUTION OF THE PRIVATE PLACEMENT MEMORANDUM, OR ANY PERSON’S RELIANCE ON,
ANY INFORMATION, DISCLOSURE OR OTHER DOCUMENT OR OTHER MATERIAL MADE
AVAILABLE).
(d) Equitable
Remedy. Each Party shall agree that in addition to any other
remedy that may be available to such Party hereunder, the Party shall be
entitled to specific performance. Notwithstanding anything to the
contrary in this Agreement, each Party shall be responsible for paying its own
expenses, including legal fees, incurred in enforcing this
Agreement.
(e) Notices. All
notices, claims, demands and other communications hereunder shall be in writing
and shall be deemed given upon (i) confirmation of receipt of a facsimile
transmission, (ii) confirmation of delivery when delivered by a standard
overnight carrier or (iii) the expiration of five (5) business days
after the day when mailed by registered or certified mail (postage prepaid,
return receipt requested), addressed to the respective Parties at the following
addresses (or such other address for a Party as shall be specified by like
notice):
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If to the Corporation, to:
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Attention:
▇▇▇▇ ▇▇▇▇▇▇
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Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
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Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
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Email:
▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
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If
to any Holder, to:
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At
the Holder’s address, phone or
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fax
number appearing on the signature
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page
hereto.
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(f) No Third-Party
Beneficiaries. Unless otherwise specifically set forth herein,
this Agreement shall not confer any rights or remedies upon any Person other
than the Parties hereto and their respective successors and
assigns.
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(g) Entire
Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the parties hereto and supersedes
any prior understandings, agreements, or representations by or among the
parties, written or oral, to the extent they relate in any way to the subject
matter hereof.
(h) Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original but all of which together will constitute one and the same
instrument.
(i) Headings. The
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement.
(j) Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each Party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and (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 the City of New York. Each Party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, 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 this Agreement, 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.
(k) Amendments and
Waivers. No amendment of any provision of this Agreement shall
be valid unless the same shall be in writing and signed by the Corporation and
Holder.
(l) Gender. All
pronouns and any variation thereof shall be deemed to refer to the masculine,
feminine, neuter, singular, or plural as the identity of the person or entity or
the context may require.
11
(m) Severability. Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction.
(n) No Presumption Against
Drafter. Each of the Parties has jointly participated in the
negotiation and drafting of this Agreement. In the event of any
ambiguity or a question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by each of the Parties and no presumptions or
burdens of proof shall arise favoring any Party by virtue of the authorship of
any of the provisions of this Agreement.
(o) Successors and
Assigns. Except as otherwise specifically provided herein,
this Agreement shall be binding upon, and inure to the benefit of, the Parties
hereto and their respective successors and permitted assigns.
(p) Survival. All
covenants, agreements, representations and warranties made herein shall survive
the Closing and the consummation of the exchange of the Debenture.
12
signature
page
IN
WITNESS WHEREOF, the undersigned has executed this signature page evidencing its
tender of the principal amount of 10% Secured Debenture identified below in
exchange for Shares in the Corporation.
|
Principal
Amount of 10% Secured Debenture tendered:
|
|
|
$____________
Debenture
|
Signature:
_____________________________
|
|
Print
Name: ____________________________
|
|
|
Address:______________________________
|
|
|
Phone:________________________________
|
|
|
Fax:__________________________________
|
|
|
If
applicable, Community Property Interest
|
|
|
In
the 10% Secured Debenture
|
|
|
Signature:______________________
|
|
|
Print
Name: ____________________
|
NOTE: PLEASE
DO NOT DATE THIS AGREEMENT AS IT WILL BE DATED IF AND WHEN ACCEPTED BY THE
CORPORATION.
IN
WITNESS WHEREOF, the Corporation has agreed to and accepted this Debenture
Exchange Agreement subject to the terms and conditions hereof as of the day and
year set forth below.
|
Date:
___________________, 2010:
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
Exhibit
A
FORM
OF
COMMUNITY
PROPERTY WAIVER
The
undersigned spouse of _____________________ hereby acknowledges that she has
read, understands and consents to the terms and provisions of the Debenture
Exchange Agreement (the “Agreement”), executed
as of ______________, 2010, consents to the execution of the Agreement and any
amendments, modifications and supplements thereto by _____________________ and
agrees that the undersigned’s interest in the Debenture shall be subject to and
bound by the Agreement. The undersigned’s obligations hereunder shall
not be affected by any amendment or other modification of the Agreement or any
document related thereto, which may be amended or modified at any time and from
time to time, without the consent of or notice to the undersigned.
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|
|
|
Name
|
Schedule
3(f)
The
following table sets forth our capitalization as of March 9, 2010 on
an actual basis.
|
Cash
|
$ | 153 | ||
|
Debentures
|
14,922 | |||
|
Note
Payable Secured by Assets Acquired
|
1.343 | |||
|
Note
Payable – EIS Acquisition
|
1,070 | |||
|
Other
Liabilities
|
7,568 | |||
|
Total
Debt
|
$ | 24,903 | ||
|
Stockholders’
equity
|
||||
|
Series
A Preferred Stock
|
$ | - | ||
|
Common
Stock, no par value, authorized 100,000,000 shares; outstanding
45,413,7811, net of treasury
stock
|
33,639 | |||
|
Warrants
|
- | |||
|
Additional
paid-in capital
|
1,924 | |||
|
Accumulated
deficit
|
(31,778 | ) | ||
|
Accumulated
other comprehensive loss
|
- | |||
|
Treasury
stock, at cost, no shares
|
- | |||
|
Total
stockholders’ equity
|
3,785 | |||
|
Total
Capitalization
|
$ | 28,688 |
1 Of
which, Affiliates of the Company own 77.5%.