LIFEN, INC.
COMMON STOCK PURCHASE AGREEMENT
MAY 15, 2002
TABLE OF CONTENTS
Page
1. Purchase and Sale of Stock................................................. 1
1.1 Authorization and Sale of Common Stock............................... 1
1.2 Closing.............................................................. 1
1.3 Right to Purchase Additional Shares.................................. 1
2. Representations and Warranties of the Company.............................. 4
2.1 Organization, Good Standing and Qualification........................ 4
2.2 Capitalization and Voting Rights..................................... 5
2.3 Subsidiaries......................................................... 5
2.4 Authorization........................................................ 5
2.5 Valid Issuance of Common Stock....................................... 6
2.6 No General Solicitation or Advertising in Regard to this Transaction. 6
2.7 Governmental Consents................................................ 6
2.8 Offering............................................................. 6
2.9 Litigation........................................................... 6
2.10 Compliance with Other Instruments.................................... 7
2.11 Agreements; Action................................................... 7
2.12 Related-Party Transactions........................................... 8
2.13 Current Reports...................................................... 8
2.14 SEC Documents........................................................ 8
2.15 No Liabilities....................................................... 9
2.16 Changes.............................................................. 9
2.17 Tax Returns..........................................................10
2.18 Environmental and Safety Laws........................................11
2.19 Disclosure...........................................................11
2.20 Registration Rights..................................................11
2.21 Corporate Documents; Minute Books....................................11
2.22 Title to Property and Assets.........................................11
2.23 Employee Benefit Plans...............................................12
2.24 No Misrepresentation.................................................12
3. Representations and Warranties of each Investor............................12
3.1 Authorization........................................................12
3.2 Purchase Entirely for Own Account....................................12
3.3 Disclosure of Information............................................12
3.4 Investment Experience................................................13
3.5 Accredited Investor..................................................13
3.6 Restricted Securities................................................13
3.7 Further Limitations on Disposition...................................13
3.8 Legends..............................................................13
3.9 Further Representations by Foreign Investor..........................14
4. California Commissioner of Corporations....................................14
4.1 Corporate Securities Law.............................................14
5. Conditions of Investors' Obligations at Closing............................14
5.1 Representations and Warranties.......................................14
5.2 Performance..........................................................14
5.3 Restated Certificate.................................................14
5.4 Restated Bylaws......................................................14
5.5 Termination of Current Contracts.....................................15
5.6 Company's Officers and Directors.....................................15
5.7 Operating Cash.......................................................15
5.8 No Proceedings.......................................................15
5.9 Due Diligence........................................................15
5.10 No Material Adverse Effect...........................................15
5.11 Proceedings Satisfactory to Counsel..................................15
5.12 Closing Documents....................................................15
5.13 Qualifications.......................................................16
5.14 Proceedings and Documents............................................16
5.15 Board of Directors...................................................16
5.16 Opinion of Company Counsel...........................................16
5.17 Employment Agreement.................................................16
5.18 Investor's Rights Agreement..........................................16
6. Conditions of the Company's Obligations at Closing.........................16
6.1 Representations and Warranties.......................................16
6.2 Payment of Purchase Price............................................16
6.3 Qualifications.......................................................17
6.4 Investor's Rights Agreement..........................................17
7. Miscellaneous..............................................................17
7.1 Survival.............................................................17
7.2 Successors and Assigns...............................................17
7.3 Governing Law; Venue.................................................17
7.4 Titles and Subtitles.................................................17
7.5 Notices..............................................................17
7.6 Finder's Fee.........................................................17
7.7 Expenses.............................................................18
7.8 Severability.........................................................18
7.9 Aggregation of Stock.................................................18
7.10 Entire Agreement.....................................................18
7.11 Indemnification......................................................18
7.12 Counterparts.........................................................19
7.13 Disclosure...........................................................19
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement is made on the 15th day of May,
2002 by and among Lifen, Inc., a Delaware corporation (the "Company"), the
individual stockholders of the Company listed on Schedule A (the "Stockholders")
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and Malahide Investments (individually, an "Investor" and
collectively, the "Investors").
The parties hereby agree as follows:
1. Purchase and Sale of Stock.
1.1 Authorization and Sale of Common Stock.
(a) On or before the Closing (as defined below), the Company
shall adopt and file with the Secretary of State of Delaware the Restated
Certificate of Incorporation substantially in the form attached hereto as
Exhibit A (the "Restated Certificate").
(b) On or before the Closing, the Company shall adopt the
Restated Bylaws substantially in the form attached hereto as Exhibit B (the
"Restated Bylaws").
(c) At the Closing, the Company shall authorize the issuance and
sale to Investors an aggregate number of shares equal to 20% (including these
shares) of the fully diluted number of issued and outstanding shares of the
Company's Common Stock, par value $0.0001 (including rights, options, or
warrants to subscribe for, purchase or otherwise acquire either (i) Common Stock
or (ii) any evidences of indebtedness, shares or other securities convertible
into or exchangeable for Common Stock).
(d) Subject to the terms and conditions of this Agreement,
Investors agree to purchase at the Closing, and the Company agrees to sell and
issue to Investors at the Closing, that number of shares of Common Stock
authorized above for an aggregate purchase price of One Hundred Thousand Dollars
($100,000). Each Investor shall purchase that percentage of this aggregate
number of shares of Common Stock as shown on Exhibit C.
1.2 Closing.
(a) The closing of the purchase and sale of the Common Stock
shall take place at the offices of ▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇▇ Street
Tower, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 9 A.M., on June 1,
2002 or at such other time and place as the Company and Investors mutually agree
upon orally or in writing (which time and place are designated as the
"Closing"). At the Closing the Company shall deliver to Investors a certificate
representing the Common Stock that each Investor is purchasing against payment
of the purchase price therefor by check or wire transfer or any combination
thereof. If at the Closing any of the conditions specified in Section 5 of this
Agreement shall not have been fulfilled, Investors shall, at their election, be
relieved of all of its obligations under this Agreement without thereby waiving
any other right Investors may have by reason of such failure or such non-
fulfillment.
1.3 Right to Purchase Additional Shares.
(a) Subject to subsection 1.3(b) below, on each Vesting Date
(as defined below) after the Closing, each Investor shall also have the right
to purchase at a purchase price, or exercise price, of $0.0001 per share that
number of shares of Common Stock equal to twenty five percent (25%) of that
aggregate number of (i) additional shares of Common Stock issued after the
Closing in connection with any Acquisition (as defined below) plus (ii) the
aggregate maximum number of additional shares of Common Stock that may be issued
pursuant to any security convertible into Common Stock, warrant, option or
similar agreement or arrangement granted after the Closing in connection with
any Acquisition (whether or not such shares are ever issued). For purposes of
this Agreement, the "Vesting Expiration Date" shall mean the first annual
anniversary of the closing date of the Company's first Acquisition after the
Closing, and "Vesting Date" shall mean the date that is the last day of each
calendar month prior to the month in which the Vesting Expiration Date occurs,
or, if the Company undergoes a transaction to which subsection 1.3(b)(i) of this
Agreement applies prior to the end of any such calendar month and prior to the
Vesting Expiration Date, the day preceding the effective date of such
transaction. Each Investor's right to purchase these additional shares of
Common Stock shall expire one year after the Vesting Expiration Date (the
"Expiration Date"). For purposes of this Agreement, "Acquisition" shall mean
any business combination in which the Company issues or may issue shares of
Common Stock for the consideration thereof, including, without limitation, a
stock purchase, sale, merger, joint venture or otherwise and whether in one or
more transactions for the purchase of an organization's equity, debt securities
or assets, or by means of a merger, consolidation, reorganization, spin-off,
joint venture, partnership, tender offer, exchange offer, purchase, lease,
licensing arrangement, strategic alliance or any other transaction of a like
nature, regardless of form. This right is exercisable with respect to any or
all of the shares issuable pursuant to this Section 1.3, at the option of the
Investor, at any time and from time to time at or prior to the Expiration Date,
upon Investor giving notice of his or its intention to exercise such right and
payment of an amount equal to the exercise price multiplied by the number of
shares of Common Stock with respect to which this right is being exercised.
Payment of the exercise price for the shares of Common Stock issuable pursuant
to the rights granted in this Section 1.3 is being exercised shall be made, at
the option of Investor, (X) by delivery of cash payable by wire transfer of
immediately available funds, (Y) by cancellation by the Investor of indebtedness
of the Company to Investor, or (Z) by any combination of items (X)-(Y). Any
partial exercise of this right prior to the Expiration Date shall
correspondingly reduce the number of shares issuable pursuant to this
Section 1.3.
(b) The purchase price per share and the number of shares
purchasable under this Section 1.3 are subject to adjustment from time to time
as follows:
(i) Merger, Sale of Assets, Etc. If at any time this right
to purchase additional shares of Common Stock is outstanding and unexpired
there shall be (A) a reorganization (other than a combination, reclassification,
exchange or subdivision of shares otherwise provided for herein), a merger or
consolidation of the Company with or into another corporation in which the
Company is not the surviving entity (but excluding any merger effected
exclusively for the purpose of changing the domicile of the Company), or a
reverse triangular merger in which the Company is the surviving entity but the
shares of the Company's capital stock outstanding immediately prior to the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash, or otherwise, or (B) a sale or transfer of the
Company's properties and assets as, or substantially as, an entirety to any
other person, then, as a part of such reorganization, merger, consolidation,
sale or transfer, lawful provision shall be made so that each Investor shall
thereafter be entitled to receive upon exercise of the rights granted pursuant
to this Section 1.3, during the period specified herein and upon payment of the
exercise price then in effect, the number of shares of stock or other securities
or property of the successor corporation resulting from such reorganization,
merger, consolidation, sale or transfer which a holder of the shares deliverable
upon exercise of the right granted in this subsection 1.3 would have been
entitled to receive in such reorganization, consolidation, merger, sale or
transfer if this right had been exercised immediately before such
reorganization, merger, consolidation, sale or transfer, all subject to further
adjustment as provided in this subsection 1.3(b). The foregoing provisions of
this subsection 1.3(b) shall similarly apply to successive reorganizations,
consolidations, mergers, sales and transfers and to the stock or securities of
any other corporation which are at the time receivable upon the exercise of the
rights granted in this Section 1.3. If the per share consideration payable to
Investors for shares in connection with any such transaction is in a form other
than cash or marketable securities, then the value of such consideration shall
be determined in good faith by the Company's Board of Directors. In all events,
appropriate adjustment (as determined in good faith by the Company's Board of
Directors) shall be made in the application of the provisions of this right with
respect to the rights and interests of each Investor after the transaction, to
the end that the provisions of this Section 1.3 shall be applicable after that
event, as near as reasonably may be, in relation to any shares or other property
deliverable after that event upon exercise of the rights granted in this
Section 1.3.
(ii) Notices. If the Company proposes at any time to merge
with or into any other corporation, or sell, lease or convey all or
substantially all its property or business, or to liquidate, dissolve or wind
up, including any transaction to which subsection 1.3(b)(i) above applies, then
the Company shall send to each Investor at least 20 days' prior written notice
of the date on which a record shall be taken for determining rights to vote in
respect of such event.
(iii) Reclassification, etc. At any time this right to
purchase additional shares of Common Stock is outstanding and unexpired, if the
Company, by reclassification of securities or otherwise, changes any of the
securities as to which purchase rights under this Section 1.3 exist into the
same or a different number of securities of any other class or classes, this
right shall thereafter represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities which were subject to the purchase rights under this Section
1.3 immediately prior to such reclassification or other change and the exercise
price therefor shall be appropriately adjusted, all subject to further
adjustment as provided in this Section 1.3(b).
(iv) Split, Subdivision or Combination of Shares. At any
time this right to purchase additional shares of Common Stock is outstanding and
unexpired, if the Company shall split, subdivide or combine the securities as to
which purchase rights under this Section 1.3 exist, into a different number of
securities of the same class, the exercise price for such securities shall be
proportionately decreased in the case of a split or subdivision or
proportionately increased in the case of a reverse split or combination.
(v) Adjustments for Dividends in Stock or Other Securities
or Property. At any time this right to purchase additional shares of Common
Stock is outstanding and unexpired if the Investors shall have received, or, on
or after the record date fixed for the determination of eligible stockholders,
shall have become entitled to receive, without payment therefor, other or
additional stock or other securities or property (other than cash) of the
Company by way of dividend, then and in each case, the right to purchase
additional shares in this Section 1.3 shall represent the right to acquire, in
addition to the number of shares of the security receivable upon exercise of
such rights, and without payment of any additional consideration therefor, the
amount of such other or additional stock or other securities or property (other
than cash) of the Company which such Investor would hold on the date of such
exercise had it been the holder of record of the security receivable upon
exercise of this right on the date hereof and had thereafter, during the period
from the date hereof to and including the date of such exercise, retained such
shares and/or all other additional stock available by it as aforesaid during
such period, giving effect to all adjustments called for during such period by
the provisions of this Section 1.3(b).
(vi) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment pursuant to this Section 1.3(b), the Company at
its expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to each Investor a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon the written
request, at any time, of any such holder, furnish or cause to be furnished to
such holder a like certificate setting forth: (i) such adjustments and
readjustments; (ii) the exercise price at the time in effect; and (iii) the
number of shares and the amount, if any, of other property which at the time
would be received upon the exercise of this right.
(c) The Company and the Investors, having adverse interests and
as a result of arms-length bargaining, agree that:
(i) Neither any Investor nor any affiliated entity has
rendered any services to the Company in connection with this Agreement.
(ii) The anti-dilution protection being granted by the right
to purchase additional shares in this Section 1.3 is not being issued as
compensation, but was separately bargained for by Investors.
(iii) All tax returns and other information returns of each
party relative to this Agreement and to the Common Stock issued pursuant hereto
shall consistently reflect the matters agreed to this subsection (c).
2. Representations and Warranties of the Company. As a material
inducement to the Investors to enter into this Agreement and purchase the shares
of Common Stock hereunder, the Company and the Stockholders hereby represent and
warrant to Investors that, except as set forth on a Schedule of Exceptions (the
"Schedule of Exceptions") furnished to Investors and special counsel for the
Investors prior to execution hereof and attached hereto as Schedule B
specifically identifying the relevant subsection hereof, which exceptions shall
be deemed to be representations and warranties as if made hereunder:
2.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company is duly qualified to transact business
and is in good standing in each jurisdiction in which such qualification is
required. The Company has all required power and authority necessary to own and
operate its property, to carry on its business as now conducted.
2.2 Capitalization and Voting Rights. The authorized capital of the
Company consists, or will consist immediately prior to the Closing, of:
(a) Common Stock. 50,000,000 of common stock, par value $0.0001
("Common Stock"), of which 9,424,000 are issued and outstanding.
(b) Preferred Stock. 10,000,000 of Preferred Stock, par value
$0.0001 (the "Preferred Stock"), none of which are issued and outstanding.
(c) The outstanding shares of Common Stock are owned by the
stockholders and in the numbers specified in Exhibit D hereto.
(d) The outstanding shares of Common Stock are all duly and
validly authorized and issued, fully paid and nonassessable and were issued in
compliance with all applicable state and federal laws concerning the issuance
of securities.
(e) There are no outstanding options, warrants, rights
(including conversion or preemptive rights) or agreements for the purchase or
acquisition from the Company of any shares of its capital stock. The Company is
not a party or subject to any agreement or understanding, and there is no
agreement or understanding between any persons and/or entities, which affects or
relates to the voting or giving of written consents with respect to any security
or by a director of the Company.
2.3 Subsidiaries. The Company does not presently own or control,
directly or indirectly, or hold any rights to acquire, any interest in any other
corporation, association or other business entity nor has the Company ever held
such interest. The Company is not a participant in any joint venture,
partnership or similar arrangement nor has the Company ever been a participant
in any such arrangement.
2.4 Authorization. All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement, the Investor's Rights Agreement
substantially in the form attached hereto as Exhibit F (the "Investor's Rights
Agreement"), and all other agreements contemplated hereby to which the Company
is a party, the performance of all obligations of the Company hereunder and
thereunder, the Restated Certificate, the Restated Bylaws and the authorization,
sale and issuance (or reservation for issuance) of the Common Stock being sold
hereunder has been taken or will be taken prior to the Closing. The Investor's
Rights Agreement and all other agreements contemplated hereby to which the
Company is a party and the Restated Certificate constitute valid and legally
binding obligations of the Company, enforceable in accordance with their
respective terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies.
2.5 Valid Issuance of Common Stock. The Common Stock that is being
purchased by the Investors hereunder, when issued, sold and delivered in
accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid and nonassessable and will
be free of restrictions on transfer, other than restrictions on transfer under
this Agreement and under applicable state and federal securities laws.
2.6 No General Solicitation or Advertising in Regard to this
Transaction. Neither the Company nor any of its affiliates nor, to the
knowledge of the Company, any person acting on its or their behalf (i) has
conducted or will conduct any general solicitation (as that term is used in Rule
502(c) of Regulation D) or general advertising with respect to the sale of the
shares of Common Stock, or (ii) made any offers or sales of any security or
solicited any offers to buy any security under any circumstances that would
require registration of the shares of Common Stock under the Securities Act.
2.7 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except for such filings required pursuant to
applicable federal and state securities laws, which filings will be effected
within the required statutory period.
2.8 Offering. Subject in part to the truth and accuracy of
Investors' representations set forth in Section 3 of this Agreement, the offer,
sale and issuance of the Common Stock as contemplated by this Agreement are
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Act"), and the qualification or registration requirements of all
other applicable blue sky laws. Neither the Company nor any authorized agent
acting on its behalf will take any action hereafter that would cause the loss of
such exemptions.
2.9 Litigation. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company (or, to the
best of the Company's knowledge, threatened against or affecting any of the
officers, directors or employees of the Company with respect to their current
businesses) that questions the validity of this Agreement or the right of the
Company to enter into such agreement or to consummate the transactions
contemplated hereby, or that might result, either individually or in the
aggregate, in any material adverse changes in the business, assets or condition
of the Company, financially or otherwise, or any change in the current equity
ownership of the Company nor is the Company aware that there is any basis for
the foregoing. The foregoing includes, without limitation, actions, suits,
proceedings or investigations pending or threatened (or any basis therefor known
to the Company) involving the prior employment of any of the Company's
employees, their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former employers
or their obligations under any agreements with prior employers. The Company is
not a party or subject to the provisions of any order, writ, injunction,
judgment or decree of any court or government agency or instrumentality. The
Company has not received any opinion or memorandum or legal advice from legal
counsel to the effect that it is exposed, from a legal standpoint, to any
liability. There is no action, suit, proceeding or investigation by the Company
currently pending or that the Company intends to initiate.
2.10 Compliance with Other Instruments. The Company is not in
violation of or default under any provision of its Restated Certificate or
Restated Bylaws or of any instrument, judgment, order, writ, decree or contract
to which it is a party or by which it is bound, or of any provision of any
federal or state statute, rule or regulation applicable to the Company. The
execution, delivery and performance of this Agreement and all other agreements
contemplated hereby to which the Company is a party and the consummation of the
transactions contemplated hereby will not result in any such violation, or be
in conflict with or constitute, with or without the passage of time and giving
of notice, either a default under any such provision, instrument, judgment,
order, writ, decree or contract or an event that results in the creation of any
lien, charge or encumbrance upon any assets of the Company or the suspension,
revocation, impairment, forfeiture or nonrenewal of any permit, license,
authorization or approval applicable to the Company, its business or operations
or any of its assets or properties.
2.11 Agreements; Action.
(a) Except for agreements explicitly contemplated hereby, there
are no agreements, understandings or proposed transactions between the Company
and any of its officers, directors, affiliates or any affiliate thereof.
(b) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or by which it is bound that may involve (i) obligations
(contingent or otherwise) of, or payments to, the Company in excess of $1,000,
(ii) the license of any patent, copyright, trade secret or other proprietary
right to or from the Company, other than licenses arising from the purchase of
"off the shelf" or other standard products, or (iii) indemnification by the
Company with respect to infringements of proprietary rights.
(c) The Company has not (i) declared or paid any dividends or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities individually in excess of $1,000 or, in the case of
indebtedness and/or liabilities individually less than $1,000, in excess of
$2,500 in the aggregate, (iii) made any loans or advances to any person, or
(iv) sold, exchanged or otherwise disposed of any of its assets or rights.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
(e) All of the contracts, agreements and instruments of the
Company are set forth on the Schedule of Exceptions (the "Current Contracts").
The Company has performed all material obligations required to be performed by
it and is not in default under or in breach of nor in receipt of any claim of
default or breach under any contract, agreement or instrument and the Company
does not have any present expectation or intention of not fully performing all
such obligations. No event has occurred which with the passage of time or the
giving of notice or both would result in a default, breach or event of
noncompliance by the Company under any contract, agreement or instrument. The
Company has no knowledge of any breach or anticipated breach by the other
parties to any contract, agreement, instrument or commitment. The Company shall
have no further obligations under the Current Contracts immediately following
the Closing.
(f) The special counsel to the Investors has been supplied with
a true and correct copy of each of the written instruments, plans, contracts and
agreements and an accurate description of each of the oral arrangements,
contracts and agreements that are referred to on the Schedule of Exceptions
pursuant to this Section 2.12, together with all amendments, waivers or other
changes thereto.
(g) The Company is not a party to and is not bound by any
contract, agreement or instrument, or subject to any restriction under its
Restated Certificate that adversely affects its business as now conducted, its
properties or its financial condition.
(h) The Company has not engaged in the past three (3) months in
any discussion (i) with any representative of any corporation or corporations
regarding the consolidation or merger of the Company with or into any such
corporation or corporations, (ii) with any corporation, partnership, association
or other business entity or any individual regarding the sale, conveyance or
disposition of all or substantially all of the assets of the Company or a
transaction or series of related transactions in which more than fifty percent
(50%) of the voting power of the Company is disposed of, or (iii) regarding
any other form of acquisition, liquidation, dissolution or winding up of the
Company.
2.12 Related-Party Transactions. No employee, stockholder, officer
or director of the Company or member of his or her immediate family is indebted
to the Company, nor is the Company indebted (or committed to make loans or
extend or guarantee credit) to any of them. To the best of the Company's
knowledge, none of such persons has any direct or indirect ownership interest in
any firm or corporation with which the Company is affiliated or with which the
Company has a business relationship. No member of the immediate family of any
officer or director of the Company is directly or indirectly interested in any
material contract with the Company.
2.13 Current Reports. The Company has registered its Common Stock
pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (the "Exchange
Act"), and is in full compliance with all reporting requirements of the Exchange
Act.
2.14 SEC Documents. As of their respective dates, all of the
Company's filings (the "SEC Documents") with the Securities and Exchange
Commission (the "SEC") complied in all material respects with the requirements
of the Exchange Act or the Act, as applicable, and rules and regulations of the
SEC promulgated thereunder and such filings did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents (the "Financial
Statements") complied in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC or other
applicable rules and regulations with respect thereto at the time of such
inclusion. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the financial position
of the Company as of the dates thereof and the results of operations and cash
flows for the periods then ended (subject, in the case of unaudited interim
statements, to normal year-end audit adjustments). Neither the Company nor any
of its subsidiaries has any material indebtedness, obligations or liabilities of
any kind (whether accrued, absolute, contingent or otherwise, and whether due or
to become due) that would have been required to be reflected in, reserved
against or otherwise described in the financial statements or in the notes
thereto in accordance with GAAP, which was not fully reflected in, reserved
against or otherwise described in the financial statements or the notes thereto
included in the SEC Documents or was incurred since the last date of such
financial statements.
2.15 No Liabilities. Except as set forth in the Financial Statements,
the Company does not have any liabilities (whether accrued, absolute,
unliquidated, contingent or otherwise, whether or not known to the Company,
whether due or to become due and regardless of when asserted) arising out of
transactions entered into at or prior to the Closing, or any action or inaction
at or prior to the Closing or any state of facts existing at or prior to the
Closing The Company is not a guarantor or indemnitor of any indebtedness of any
other person, firm or corporation. The Company maintains and will continue to
maintain a standard system of accounting established and administered in
accordance with generally accepted accounting principles.
2.16 Changes. Since February 28, 2002 there has not been:
(a) any change in the assets, liabilities, financial condition
or operating results of the Company from that reflected in the Financial
Statements;
(b) any damage, destruction or loss, whether or not covered by
insurance, adversely affecting the assets, properties, financial condition,
operating results or business of the Company;
(c) any waiver by the Company of a valuable right or of a debt
owed to it;
(d) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company;
(e) any change or amendment to a contract or arrangement by
which the Company or any of its assets or properties is bound or subject;
(f) any change in any compensation arrangement or agreement
with any employee;
(g) any sale, assignment or transfer of any patents or patent
applications, trademarks or trademark applications, service marks, trade names,
corporate names, copyrights or copyright registrations, trade secrets or other
intangible assets, or disclosure of any proprietary confidential information to
any person;
(h) any declaration, payment, setting aside or other
distribution of cash or other property to its stockholders with respect to its
capital stock or other equity securities (including without limitation, any
warrants, options or other rights to acquire its capital stock or other equity
securities);
(i) any mortgage, pledge, transfer of a security interest in, or
lien, created by the Company, with respect to any of its properties or assets,
except liens for taxes not yet due or payable;
(j) any charitable contributions or pledges made by the Company;
(k) capital expenditures or commitments therefor made by the
Company;
(l) any loans or advances to, guarantees for the benefit of, or
any investments in, any person (including but not limited to any of the
Company's employees, officers or directors, or any members of their immediate
families), corporation, partnership, joint venture or other entity made by the
Company;
(m) any other event or condition of any character that might
materially and adversely affect the assets, properties, financial condition or
future operating results of the Company; or
(n) any agreement or commitment by the Company to do any of the
things described in this Section 2.16.
2.17 Tax Returns. Except as set forth on the Schedule of Exceptions,
(a) The Company has timely filed all tax returns (federal, state and local)
required to be filed by it and all Taxes (as defined below), assessments and
other government charges imposed upon the Company, or upon any of the assets,
income or franchises of the Company, have been timely paid or, if not yet
payable, are adequately accrued on the Company's books and records; (b) there
are no actual or proposed Tax deficiencies, assessments or adjustments with
respect to the Company or any assets or operations of the Company; (c) no
consent has been given with respect to the Company to extend the time in which
any Tax may be assessed or collected by any taxing authority; (d) there are no
ongoing or pending Tax audits by any taxing authority against the Company; (e)
the Company has never filed a consent relating to any assets or property
pursuant to Section 341(f) of the Internal Revenue Code of 1986, as amended
(the "Code"), relating to collapsible corporations; and (f) none of the assets
or income items of the Company has been or potentially is subject to Tax under
Code Section 1374 (or any corresponding provision of state, local or foreign
law). "Tax" or "Taxes" means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, property, windfall, profits, environmental, customs, capital stock,
franchise, employees' income withholding, foreign or domestic withholding,
social security, unemployment, disability, real property, personal property,
sales, use, transfer, value added, alternative or add-on minimum or other
similar tax, governmental fee, governmental assessment or governmental charge of
any kind whatsoever, including any interest, penalties or additions to Tax or
additional amounts with respect to the foregoing.
2.18 Environmental and Safety Laws. The Company, the operation of
its business and any real property that the Company owns or has owned, leases or
has leased or otherwise occupies or uses or has occupied or used (the
"Premises") are in compliance with all applicable Environmental Laws (as defined
below) and orders or directives of any governmental authorities having
jurisdiction under such Environmental Laws. The Company has not received any
citation, directive, letter or other communication, written or oral, or any
notice of any proceeding, claim or lawsuit, from any person arising out of the
ownership or occupation of the Premises, or the conduct of its operations, and
the Company is not aware of any basis therefor. No material expenditures are or
will be required in order to comply with any Environmental Laws. For purposes
of this Agreement, the term "Environmental Laws" shall mean any Federal, state,
local or foreign law, ordinance, rule, regulation, permit and authorization
pertaining to the protection of human health or the environment.
2.19 Disclosure. The Company has fully provided each Investor with
all the information that such Investor has requested for deciding whether to
purchase the Common Stock and all information that the Company believes is
reasonably necessary to enable such Investor to make such decision. Neither
this Agreement (including all the exhibits and schedules hereto) nor any other
statements or certificates made or delivered in connection herewith contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements herein or therein not misleading in light of the
circumstances under which they were made. Except as set forth in this Agreement
or the Schedules or Exhibits attached hereto, there is no fact that the Company
has not disclosed to the Investor in writing and of which any of its officers,
directors or executive employees is aware and that has had or would reasonably
be expected to have a material adverse effect upon the financial condition,
operating results, assets, customer or supplier relations, employee relations or
business prospects of the Company.
2.20 Registration Rights. Except as provided in the Investor's
Rights Agreement, the Company has not granted or agreed to grant any
registration rights, including piggyback rights, to any person or entity.
2.21 Corporate Documents; Minute Books. Except for amendments
necessary to satisfy representations and warranties or conditions contained
herein (the forms of which amendments have been approved by the Investors), the
Restated Certificate and Restated Bylaws of the Company are in the form
previously provided to special counsel for the Investors. The minute books of
the Company provided to the Investors contain a complete summary of all meetings
of directors and stockholders since the time of incorporation and reflect all
transactions referred to in such minutes accurately in all material respects.
2.22 Title to Property and Assets. The property and assets the
Company owns are owned by the Company free and clear of all mortgages, liens,
loans and encumbrances, except (i) as reflected in the Financial Statements,
(ii) for statutory liens for the payment of current taxes that are not yet
delinquent, and (iii) for liens, encumbrances and security interests that arise
in the ordinary course of business and minor defects in title, none of which,
individually or in the aggregate, materially impair the Company's ownership or
use of such property or assets. With respect to the property and assets it
leases, the Company is in compliance with such leases and holds a valid
leasehold interest free of any liens, claims or encumbrances, subject to clauses
(i)-(iii).
2.23 Employee Benefit Plans. The Company presently does not maintain
or contribute to, and has never maintained or contributed to, any "employee
benefit plan," as such term is defined in the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). To the Company's best knowledge,
any such employee benefit plan listed on the Schedule of Exceptions is in
compliance with ERISA and the Code.
2.24 No Misrepresentation. The representations and warranties of the
Company contained in this Agreement, any schedule or exhibit hereto and any
agreement, instrument or certificate furnished by the Company to the Investors
pursuant to 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
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
3. Representations and Warranties of each Investor. Each Investor
hereby represents, warrants and covenants that:
3.1 Authorization. Such Investor has full power and authority to
enter into the Investor's Rights Agreement, and such agreement constitutes its
valid and legally binding obligation, enforceable in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies.
3.2 Purchase Entirely for Own Account. This Agreement is made with
such Investor in reliance upon such Investor's representation to the Company,
which by such Investor's execution of this Agreement such Investor hereby
confirms, that the Common Stock to be received by such Investor and the Common
Stock issuable upon conversion thereof (collectively, the "Securities") will be
acquired for investment for such Investor'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 such Investor has no present intention of selling, granting any
participation in or otherwise distributing the same. By executing this
Agreement, such Investor further represents that such Investor does not 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.
3.3 Disclosure of Information. Such Investor believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Common Stock. Such Investor further represents that it
has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Common Stock and the
properties, prospects and financial condition of the Company. The foregoing,
however, does not limit or modify the representations and warranties of the
Company in Section 2 of this Agreement or the right of the Investor to rely
thereon.
3.4 Investment Experience. Such Investor is an investor in
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment, and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Common
Stock. If other than an individual, such Investor also represents it has not
been organized for the purpose of acquiring the Common Stock.
3.5 Accredited Investor. Such Investor is an "accredited investor"
within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.
3.6 Restricted Securities. Such Investor understands that the
Securities it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations such Securities may be resold without registration under
the Act only in certain limited circumstances. In the absence of an effective
registration statement covering the Securities (or the Common Stock issued on
conversion thereof) or an available exemption from registration under the Act,
the Common Stock (and any Common Stock issued on conversion thereof) must be
held indefinitely. In this connection, such Investor represents that it is
familiar with SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act.
3.7 Further Limitations on Disposition. Without in any way limiting
the representations set forth above, such Investor further agrees not to make
any disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3 and the Investor's Rights Agreement, and:
(a) There is then in effect a registration statement under the
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(b) (i) Such Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
requested by the Company, such Investor shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company that such disposition
will not require registration of such shares under the Act. It is agreed that
the Company will not require opinions of counsel for transactions made pursuant
to Rule 144 except in unusual circumstances.
3.8 Legends. It is understood that the certificates evidencing the
Securities may bear one or all of the following legends:
(a) "These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required or unless
sold pursuant to Rule 144 of such Act."
Any legend required by the laws of the State of California, including
any legend required by the California Department of Corporations and Sections
417 and 418 of the California Corporations Code.
3.9 Further Representations by Foreign Investor. If an Investor is
not a United States person, such Investor hereby represents that it has
satisfied itself as to the full observance of the laws of its jurisdiction in
connection with any invitation to subscribe for the Securities or any use of
this Agreement, including (i) the legal requirements within its jurisdiction
for the purchase of the Securities, (ii) any foreign exchange restrictions
applicable to such purchase, (iii) any governmental or other consents that may
need to be obtained, and (iv) the income tax and other tax consequences, if any,
that may be relevant to the purchase, holding, redemption, sale or transfer of
the Securities. Such Investor's subscription and payment for, and its continued
beneficial ownership of the Securities, will not violate any applicable
securities or other laws of its jurisdiction.
4. California Commissioner of Corporations.
4.1 Corporate Securities Law. THE SALE OF THE SECURITIES THAT ARE
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
5. Conditions of Investors' Obligations at Closing. The obligations of
Investors under subsection 1.1(b) of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions, the
waiver of which shall not be effective against any Investor who does not consent
in writing thereto:
5.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
5.2 Performance. The Company shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
5.3 Restated Certificate. The Restated Certificate shall have been
duly adopted by the Company's stockholders and filed with the Secretary of State
of Delaware.
5.4 Restated Bylaws. The Restated Bylaws shall have been duly
adopted by the Company's Board of Directors.
5.5 Termination of Current Contracts. All of the Current Contracts
shall be terminated, effective as of the Closing, and the Company shall have no
future obligations or liabilities under such agreements.
5.6 Company's Officers and Directors. The Company shall have
received the resignation of all of its current directors and officers. ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ shall have been appointed Secretary of the Company.
5.7 Operating Cash. The Company shall have a minimum of Four Hundred
Thousand Dollars ($400,000) cash available in its bank account for operating
expenses incurred after the Closing, exclusive of the purchase price for the
Common Stock purchased hereunder.
5.8 No Proceedings. Since the date of this Agreement, there must not
have been commenced or threatened against either the Investors or the Company or
against any person affiliated with either the Investors or the Company, any
proceeding involving a challenge to, or seeking damages or other relief in
connection with, any of the transactions contemplated hereby, or that may have
the effect of preventing, delaying, making illegal or otherwise interfering with
any of the transactions contemplated hereby or the Company's ability to become
eligible for trading on the over-the-counter bulletin board.
5.9 Due Diligence. The Investors shall have completed and approved
their due diligence review of the business, affairs, operations and prospects of
the Company as determined in their sole and absolute discretion.
5.10 No Material Adverse Effect. Since the date of this Agreement,
the Company shall not have experienced any material adverse effect on its
business, assets, properties, operations or condition (financial or otherwise).
5.11 Proceedings Satisfactory to Counsel. All proceedings taken by
the Company and the Stockholders and all instruments executed and delivered by
the Company and the Stockholders on or prior to the Closing in connection with
the transactions contemplated herein shall be reasonably satisfactory in form
and substance to counsel for the Investors.
5.12 Closing Documents. The Company shall have delivered to
Investors all of the following documents:
(a) A Compliance Certificate, dated the date of the Closing,
stating that the conditions specified in Sections 5.1 and 5.2 have been
fulfilled and stating that there shall have been no adverse change in the
business, affairs, operations, properties, assets or condition of the Company
since February 28, 2002.
(b) Certified copies of the resolutions duly adopted by the
Company's board of directors authorizing the execution, delivery and performance
of the Investor's Rights Agreement and each of the other agreements contemplated
hereby, the filing of the amendment and restatement of the Restated Certificate,
the adoption of the Company's Restated Bylaws, the issuance and sale of the
Common Stock and the consummation of all other transactions contemplated by this
Agreement;
(c) Certified copies of the Restated Certificate and the
Company's Restated Bylaws, each as in effect at the Closing;
(d) Certificates of good standing issued by the secretary of
state for each state where the Company is authorized to do business; and
(e) Copies of all third party and governmental consents,
approvals and filings required in connection with the consummation of the
transactions hereunder (including, without limitation, all blue sky law filings
and waivers of all preemptive rights and rights of first refusal).
5.13 Qualifications. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
5.14 Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Investors' special counsel, and they shall have received all such
counterpart original and certified or other copies of such documents as they
may reasonably request.
5.15 Board of Directors. The Company shall have taken all necessary
corporate action such that immediately following the Closing, the directors of
the Company shall be ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, F. ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇, and there shall be one vacancy on the Board of Directors.
5.16 Opinion of Company Counsel. nvestors shall have received from
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, counsel for the Company, an opinion, dated as of the
Closing, in the form attached hereto as Exhibit G.
5.17 Employment Agreement. The Company and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall
have entered into that certain Employment Agreement in the form attached hereto
as Exhibit E.
5.18 Investor's Rights Agreement. The Company and each other
Investor shall have entered into the Investor's Rights Agreement in the form
attached as Exhibit F.
6. Conditions of the Company's Obligations at Closing. The obligations
of the Company to each Investor under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions by
that Investor:
6.1 Representations and Warranties. The representations and
warranties of the Investor contained in Section 3 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the Closing.
6.2 Payment of Purchase Price. Investor shall have delivered the
purchase price specified in Section 1.1(b).
6.3 Qualifications. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
6.4 Investor's Rights Agreement. Each Investor shall have entered
into the Investor's Rights Agreement in the form attached as Exhibit E.
7. Miscellaneous.
7.1 Survival. The warranties, representations and covenants of the
Company and each Investor contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing and shall
in no way be affected by any investigation of the subject matter thereof made by
or on behalf of the Investor or the Company.
7.2 Successors and Assigns. Except as otherwise provided herein, 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 (including
transferees of any Securities). 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.
7.3 Governing Law; Venue. This Agreement shall be governed by and
construed under the laws of the State of Delaware as applied to agreements among
Delaware residents entered into and to be performed entirely within Delaware.
Each of the parties hereto irrevocably consents to the exclusive jurisdiction
and venue of any federal or state court within San Francisco County, California,
in connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein, agrees that process may be served upon them in any
manner authorized by the laws of the State of Delaware for such persons and
waives and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction, venue and such process.
7.4 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.5 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the
address as set forth on the signature page hereof or at such other address as
such party may designate by ten days advance written notice to the other parties
hereto.
7.6 Finder's Fee. Each party represents that it neither is nor will
be obligated for any finders' fee or commission in connection with this
transaction. Each Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which such Investor or any of its officers, partners,
employees or representatives is responsible. The Company agrees to indemnify
and hold harmless each Investor from any liability for any commission or
compensation in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for which the Company or
any of its officers, employees or representatives is responsible.
7.7 Expenses. Irrespective of whether the Closing is effected, the
Company shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement. If the
Closing is effected, the Company shall, at the Closing, reimburse the reasonable
fees of special counsel for the Investors, and shall, upon receipt of a ▇▇▇▇
therefor, reimburse the reasonable out of pocket expenses of such counsel. If
any action at law or in equity is necessary to enforce or interpret the terms of
the Investor's Rights Agreement or the Restated Certificate, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
7.8 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
7.9 Aggregation of Stock. All shares of the Common Stock or Common
Stock issued upon conversion thereof held or acquired by affiliated entities or
persons shall be aggregated together for the purpose of determining the
availability of any rights under this Agreement.
7.10 Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or therein.
7.11 Indemnification. The Company and the Stockholders agree to
indemnify and hold harmless each Investor (the "Indemnitee"), against any
investigations, proceedings, claims or actions and for any expenses, damages,
liabilities or losses (joint or several) arising out of such investigations,
proceedings, claims or actions, to which the Indemnitee may become subject under
the Securities Act of 1933, as amended (the "Act"), and any rules or regulations
promulgated thereunder, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and any rules or regulations promulgated thereunder, or any
state law or regulation, or common law, arising out of, related to or in any
way attributable to the Indemnitee's investment in the Company, including, but
not limited to, investigations, proceedings, claims or actions and any expenses,
losses, damages or liabilities (or actions in respect thereof) that arise out of
or are based upon (i) any breach of any representation, warranty, agreement or
covenant of the Company contained herein, (ii) any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
filed by the Company or any amendment or supplement thereto, or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, (iii) any untrue statement or alleged
untrue statement of any material fact contained in any prospectus distributed by
the Company or any amendment or supplement thereto, or the omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, or (iv) any statement by or on behalf of the Company or
action taken by the Company. Upon written request, the Company agrees to
reimburse the Indemnitee for any legal or other expenses reasonably incurred in
connection with investigating or defending any such investigations, proceedings,
claims or actions, as such expenses or other costs are incurred. The Indemnitee
may select its own counsel.
This indemnity shall extend upon the same terms and conditions to, and
shall inure to the benefit of, each person, if any, who controls any Indemnitee
within the meaning of the Act or the Exchange Act. This indemnity shall be in
addition to any obligations that the Company may otherwise have with respect to
each Investor, including, but not limited to, any obligations to such Investor
or representatives of such Investor in their individual capacities as directors
of the Company.
7.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.13 Disclosure. Except and to the extent required by law, without
the prior written consent of the Investors, neither the Company nor the
Stockholders will, and each will direct their respective representatives not to
make, directly or indirectly, any public comment, statement, or communication
with respect to, or otherwise disclose or permit the disclosure of the existence
of discussions regarding, the potential purchase of Common Stock by the
Investors hereunder, or any of the terms, conditions, or other aspects of the
transactions contemplated by this Agreement. If a party is required by law to
make any such disclosure, it must first provide the Investors the content of the
proposed disclosure, the reasons that such disclosure is required by law, and
the time and place that the disclosure will be made.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
LIFEN, INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇, President
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INVESTORS:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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MALAHIDE INVESTMENTS
/s/ Malahide Investments
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STOCKHOLDERS:
ATLANTIC INTERNATIONAL CAPITAL HOLDINGS LTD.
/s/ ▇▇▇▇ ▇ ▇▇▇▇▇, Secretary
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AWIXA TRUST
/s/ Awixa Trust
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▇▇▇▇▇ INTERNATIONAL
/s/ ▇▇▇▇▇ International
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AUSTRALIAN ADVISORS
/s/ Australian Advisors
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/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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J.J. Kadele
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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PEARLCO
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇, President
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REMSEN GROUP LTD.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
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WILMONT HOLDINGS CORP.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
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