STRATOS RENEWABLES CORPORATION UNSECURED CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT
STRATOS
RENEWABLES CORPORATION
This
Unsecured Convertible Note and Warrant Purchase Agreement (this “Agreement”)
is
made as of August 27, 2008, by and between Stratos Renewables Corporation,
a
Nevada corporation (the “Company”),
and
the investors listed on Schedule
I
(the
“Schedule
of Investors”)
attached to this Agreement (each an “Investor”
and
together the “Investors”).
RECITALS:
A. The
Company and each Investor is executing and delivering this Agreement in reliance
upon the exemption from securities registration afforded by Section 4(2) of
the
Securities Act of 1933, as amended (the “Securities
Act”),
and
Rule 506 of Regulation D (“Regulation
D”)
as
promulgated by the United States Securities and Exchange Commission (the
“SEC”)
under
the Securities Act.
B. Each
Investor wishes to purchase, and the Company wishes to sell, upon the terms
and
conditions stated in this Agreement, (i) an unsecured convertible promissory
note convertible into shares of the common stock, par value $0.001 per share
(the “Common
Stock”)
of the
Company, (each, a “Note,”
and
collectively, the “Notes”
and
as
converted, collectively, the “Note
Shares”),
in
the principal amount set forth opposite such Investor’s name in the Schedule of
Investors and (ii) a warrant to acquire up to that number of additional shares
of Common Stock set forth opposite such Investor’s name in the Schedule of
Investors (the “Warrants,”
and
the
shares of Common Stock issuable upon exercise, collectively, the “Warrant
Shares.”)
C. The
Notes, the Warrants, the Note Shares and the Warrant Shares collectively are
referred to herein as the “Securities.”
D. The
Company is hereby offering to the Investors: (a) a minimum of $5,000,000 in
aggregate principal of the Notes and related Warrants (the “Initial
Investment”),
and
(b) up to a maximum aggregate principal amount of not more than $10,000,000,
inclusive of the Initial Investment, in additional Notes and related Warrants
(the “Maximum
Aggregate Investment”).
NOW,
THEREFORE,
the
Company and each Investor hereby agree as follows:
SECTION
1
Purchase,
Sale and Issuance of Notes
and Warrants
1.1 Sale
and Issuance of Notes
and Warrants.
Subject to the terms and conditions of this Agreement, at the Closing (as
defined below), each Investor agrees to purchase, severally and not jointly,
and
the Company agrees to sell and issue to each Investor, (a) a Note in the
principal amount set forth opposite the Investor’s name on Schedule I hereto,
and (b) Warrants to purchase up to that number of Warrant Shares equal to the
quotient of (x) the principal amount of an Investor’s investment in the Notes
divided by (y) $0.70 (the “Stated
Conversion Price”),
multiplied by 35% (subject
to adjustment as set forth in the Warrant).
The
Warrants shall be exercisable for Common Stock at the price of $0.75 per share,
subject to adjustment as set forth in the Warrant (the “Warrant
Exercise Price”).
The
Notes and the Warrants shall be issued in substantially the same form as
attached hereto as Exhibit
A
and
Exhibit B
respectively.
1
1.2 Purchase
Price.
The
purchase price for the Notes and related Warrants to be purchased by each
Investor at the Closing shall be the amount set forth opposite such Investor’s
name in the Schedule of Investors (the “Purchase
Price”).
SECTION
2
Closing
Date and Delivery
2.1 Closing.
The
purchase, sale and issuance of the Notes and the Warrants shall take place
at a
closing (the “Closing”)
at the
offices of Stratos Renewables Corporation, ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇,
to be consummated simultaneously with the execution of this Agreement (the
“Closing
Date”).
2.2 Delivery.
At
the Closing, (a) each Investor shall pay its respective amount of the Purchase
Price to the Company for the Notes and Warrants to be issued and sold to such
Investor at the Closing, by wire transfer of immediately available funds in
accordance with the Company’s written wire instructions, (b) the Company will
deliver to the Investor (i) one or more Notes such Investor is purchasing as
is
set forth opposite such Investor’s name in the Schedule of Investors and (ii) a
Warrant pursuant to which such Investor shall have the right to acquire such
number of Warrant Shares as is set forth opposite such Investor’s name in the
Schedule of Investors (subject to adjustment as set forth in the Warrant),
in
all cases duly executed on behalf of the Company and registered in the name
of
such Investor.
SECTION
3
Representations
and Warranties of the Company
The
Company hereby represents and warrants to each Investor that, except as set
forth on the Disclosure Schedule attached as Exhibit
C
to this
Agreement, the following representations are true and complete as of the date
hereof and as of the Closing. The Disclosure Schedule shall be delivered
separately to the Investors and shall be arranged in sections corresponding
to
the numbered and lettered sections and subsections contained in this
Section
3,
and the
disclosures in any section or subsection of the Disclosure Schedule shall
qualify other sections and subsections in this Section
3
if and
only to the extent that it is reasonably apparent to someone unfamiliar with
the
Company and its business from the face of such disclosure that such disclosure
is applicable to such other sections and subsections.
2
3.1 Due
Incorporation, Qualification, etc.
The
Company (a) is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation; (b) has the power and
authority to own, lease and operate its properties and carry on its business
as
now conducted and as proposed to be conducted by the Company in the SEC
Documents (as defined below); and (c) is duly qualified, licensed to do business
and in good standing as a foreign corporation in each jurisdiction where it
does
business except where the failure to be so qualified or licensed could
reasonably be expected to have a Material Adverse Effect. For the purposes
of
this Agreement, “Material
Adverse Effect”
shall
mean a material adverse effect on (i) the business, assets, operations,
prospects or financial or other condition of the Company and its Subsidiaries
(as defined below) considered together; (ii) the ability or authority of
the Company to pay or perform its obligations under this Agreement in accordance
with the terms of this Agreement and the other Transaction Documents (as defined
below) and to avoid an event of default, or an event which, with the giving
of
notice or the passage of time or both, would constitute an event of default,
under any Transaction Document; or (iii) the rights and remedies of the
Investor under this Agreement, the other Transaction Documents or any related
document, instrument or agreement.
3.2 Subsidiaries.
The
Company has no direct or indirect Subsidiaries other than those listed in
Section
3.2
of the
Disclosure Schedule.
Except
as disclosed in Section
3.2
of the
Disclosure Schedule, the Company owns, directly or indirectly, all of the
capital stock or comparable equity interests of each Subsidiary free and clear
of any and all liens, charges, claims, security interests, encumbrances, rights
of first refusal or other restrictions (collectively, “Liens”)
and
all the issued and outstanding shares of capital stock or comparable equity
interest of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights.
For the
purposes of this Agreement, “Subsidiary”
shall
mean, with respect to any Person, each corporation or other entity of which
(a)
such Person or any other Subsidiary of such Person is a general partner or
a
manager (b) or at least 50% of the securities or other ownership interests
having by their terms ordinary voting power to elect at least 50% of the board
of directors or other Persons performing similar functions is directly or
indirectly owned or controlled by such Person, by any one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries. For the
purposes of this Agreement, “Person”
shall
mean and include an individual, a partnership, a corporation (including a
business trust), a joint stock company, a limited liability company, an
unincorporated association, a joint venture or other entity or a governmental
authority.
3.3 Authority.
The
execution, delivery and performance by the Company of this Agreement, the Notes
and the Warrants, and all such other documents required by the terms of this
Agreement to be executed by the Company (collectively, the “Transaction
Documents”),
the
consummation of the transactions contemplated hereby and thereby, the issuance
of the Notes, and the reservation and issuance of the Note Shares and Warrant
Shares, (a) are within the power of the Company and (b) have been duly
authorized by all necessary actions on the part of the Company and no further
filing, consent or authorization is required by the Company, its Board of
Directors or its stockholders in connection with any of the
foregoing.
3.4 Enforceability.
Each
Transaction Document has been duly executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as limited by
bankruptcy, insolvency or other laws of general application relating to or
affecting the enforcement of creditors’ rights generally and general principles
of equity.
3
3.5 Non-Contravention.
The
execution and delivery by the Company of the Transaction Documents and the
performance and consummation of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Notes and the Warrants
and
the reservation for issuance and issuance of the Note Shares and Warrant Shares)
do not and will not (a) violate the Company’s Articles of Incorporation or
Bylaws, as amended, as the case may be (“Charter
Documents”),
or
any material judgment, order, writ, decree, statute, rule or regulation
applicable to the Company or any of its Subsidiaries; (b) violate any
provision of, or result in the termination, amendment, cancellation or breach
or
the acceleration of, or entitle any other Person to accelerate (whether after
the giving of notice or lapse of time or both), any material mortgage,
indenture, agreement, instrument or contract to which the Company or any of
its
Subsidiaries is a party or by which it is bound; or (c) result in the
creation or imposition of any lien upon any property, asset or revenue of the
Company or any of its Subsidiaries or the suspension, revocation, impairment,
forfeiture, or nonrenewal of any material permit, license, authorization or
approval applicable to the Company or any of its Subsidiaries, their respective
businesses or operations, or any of their respective assets or properties.
3.6 Approvals.
The
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court, governmental agency or any
regulatory or self-regulatory agency or any other Person in order for it to
execute, deliver or perform any of its obligations under or contemplated by
the
Transaction Documents, in each case in accordance with the terms hereof or
thereof other than such as have been made or obtained and except for the filing
of Form D pursuant to Regulation D or any “blue sky” filing.
3.7 Title
to Assets.
The
Company and its Subsidiaries have good and marketable title to all real property
owned by them that is material to the business of the Company and the Company
and its Subsidiaries have good and marketable title in all personal property
owned by them that is material to the business of the Company and the
Subsidiaries, in each case free and clear of all Liens, except for Liens that
do
not, individually or in the aggregate, have or result in a Material Adverse
Effect. To the Company’s knowledge, any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under valid and
subsisting leases of which the Company and the Subsidiaries are in material
compliance.
3.8 No
Violation or Default.
Each of
the Company and its Subsidiaries, as applicable, is not in violation of or
in
default with respect to (a) its Charter Documents or any material judgment,
order, writ, decree, statute, rule or regulation applicable to it; (ii) any
material mortgage, indenture, agreement, instrument or contract to which it
is a
party or by which it is bound (nor is there any waiver in effect which, if
not
in effect, would result in such a violation or default), (iii) any order of
any
court, arbitrator or governmental body or (iv) any material statute, rule or
regulation of any governmental authority, where, in each case, such violation
or
default, individually, or together with all such violations or defaults, could
reasonably be expected to have a Material Adverse Effect.
3.9 Litigation.
No
actions (including, without limitation, derivative actions), suits, proceedings
or investigations are pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries at law or in equity
in any court or before any other governmental authority that if adversely
determined (a) would (alone or in the aggregate) reasonably be expected to
have a Material Adverse Effect or (b) seeks to enjoin, either directly or
indirectly, the execution, delivery or performance by the Company of the
Transaction Documents or the transactions contemplated thereby.
4
3.10 Taxes.
Within
the times and in the manner prescribed by law, the Company and each of its
Subsidiaries (i) has filed all foreign, federal, state and local income and
all
other material tax returns, reports and declarations required by any
jurisdiction to which it is subject, (ii) has paid all taxes, assessments and
penalties due and payable that are material in amount, shown or determined
to be
due on such returns, reports and declarations, except those being contested
in
good faith and (iii) has set aside on its books provision reasonably adequate
for the payment of all taxes for periods subsequent to the periods to which
such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and, to the knowledge of the Company, there is no basis for any such
claim.
3.11 OTCBB
Compliance.
The
Company is in compliance with all requirements for, and its Common Stock is
quoted on the Electronic Over-the-Counter Bulletin Board system.
3.12 SEC
Documents.
The
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”).
Such
reports, schedules, forms, statements and other documents together with any
materials filed or furnished by the Company under the Exchange Act, whether
or
not any such reports were required, are collectively referred to herein as
the
“SEC Documents.” As of their respective dates, the SEC Reports filed by the
Company complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the SEC
promulgated thereunder, and none of the SEC Reports, when filed by the Company,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied in all material respects with
applicable accounting requirements and the published rules and regulations
of
the SEC with respect
thereto as in effect at the time of filing. Such financial statements have
been
prepared in accordance with United States generally accepted accounting
principles, consistently applied, during the periods involved (except (a) as
may
be otherwise indicated in such financial statements or the notes thereto, or
(b)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in
all
material respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the results of operations
and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). All material agreements
to
which the Company or any Subsidiary is a party or to which the property or
assets of the Company or any Subsidiary are subject are included as part of
or
identified in the SEC Documents, to the extent such agreements are required
to
be included or identified pursuant to the rules and regulations of the
SEC.
3.13 Absence
of Certain Changes.
Since
June 30, 2008, there has been no material adverse change and no material adverse
development in the business, properties, operations, condition (financial or
otherwise), or results of operations or prospects of the Company and its
Subsidiaries, considered together. Since June 30, 2008, the Company has not
declared or paid any dividends. Neither the Company nor any of its Subsidiaries
have taken any steps to seek protection pursuant to any bankruptcy law nor
does
the Company or any of its Subsidiaries have any knowledge or reason to believe
that its creditors intend to initiate involuntary bankruptcy proceedings or
any
actual knowledge of any fact that would reasonably lead a creditor to do so.
The
Company is not as of the date hereof, and after giving effect to the
transactions contemplated hereby to occur at the Closing, will not be Insolvent
(as defined below). For purposes of this Section 3.13,
“Insolvent”
means,
with respect to any Person, (i) the present fair saleable value of such Person’s
assets is less than the amount required to pay such Person’s total indebtedness,
(ii) such Person is unable to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured, (iii) such Person intends to incur or believes that it will incur
debts
that would be beyond its ability to pay as such debts mature or (iv) such Person
has unreasonably small capital with which to conduct the business in which
it is
engaged as such business is now conducted and is currently proposed to be
conducted.
5
3.14 Internal
Accounting Controls.
The
Company and the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting principles
and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific authorization, and
(iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect
to
any differences.
3.15 ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act.
The
Company is in compliance in all material respects with applicable requirements
of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and applicable rules and regulations
promulgated by the SEC thereunder, except where such noncompliance would not
have, individually or in the aggregate, a Material Adverse Effect.
3.16 Disclosure
Controls and Procedures.
The
Company maintains disclosure controls and procedures (as such term is defined
in
Rule 13a-15 of the General Rules and Regulations under the Exchange Act) that
comply with the requirements of the Exchange Act; such disclosure controls
and
procedures have been designed to provide reasonable assurance that information
required to be disclosed by the Company and its Subsidiaries is accumulated
and
communicated to the Company’s management, including the Company’s principal
executive officer and principal financial officer by others within those
entities, and such disclosure controls and procedures are
effective.
3.17 Capitalization.
The
authorized capital stock of the Company currently consists of 250,000,000 shares
of Common Stock and 50,000,000 shares of Preferred Stock, $.001 par value (the
“Preferred
Stock”).
All
outstanding shares of capital stock of the Company have been duly authorized,
validly issued, and are fully paid and nonassessable.
(a) Except
as
set forth in Section
3.17(a)
of the
Disclosure Schedule, there are no outstanding shares of Common Stock, Preferred
Stock, options, rights, warrants, debentures, instruments, convertible
securities or other agreements or commitments obligating the Company to issue
any additional shares of its capital stock of any class.
6
(b) Except
as
set forth in Section
3.17(b)
of the
Disclosure Schedule, there are no (i) outstanding debt securities, notes, credit
agreements, credit facilities or other agreements, documents or instruments
evidencing indebtedness of the Company or by which the Company is or may become
bound; (ii) financing statements securing obligations in any material amounts,
either singly or in the aggregate, filed in connection with the Company; (iii)
agreements or arrangements under which the Company is obligated to register
the
sale of any of its securities under the Securities Act; (iv) there are no
outstanding securities or instruments of the Company which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company is or may become bound
to
redeem a security of the Company
(c) Except
as
set forth on Section
3.17(c)
of the
Disclosure Schedule, and except for customary adjustments as a result of stock
dividends, stock splits, combinations of shares, reorganizations,
recapitalizations, reclassifications or other similar events, there are no
anti-dilution or price adjustment provisions contained in any security issued
by
the Company (or in any agreement providing rights to security holders) and
the
issuance and sale of the Securities will not obligate the Company to issue
shares of Common Stock or other securities to any Person (other than the
Investors) and will not result in a right of any holder of securities to adjust
the exercise, conversion, exchange or reset price under such securities. To
the
knowledge of the Company, except as disclosed in the SEC Documents and any
Schedules filed with the SEC pursuant to Rule 13d-1 of the Exchange Act by
reporting persons or in Section
3.13
of the
Disclosure Schedule, no Person or group of related Persons beneficially owns
(as
determined pursuant to Rule 13d-3 under the Exchange Act), or has the right
to
acquire, by agreement with or by obligation binding upon the Company, beneficial
ownership of in excess of 5% of the outstanding Common Stock.
3.18 Issuance
of Notes.
The
Notes and the Warrants are duly authorized and, upon issuance in accordance
with
the terms hereof, shall be validly issued and free from all preemptive or
similar rights, taxes, liens and charges with respect to the issue thereof.
As
of the Closing, the Company shall have duly authorized and reserved for issuance
a number of shares of Common Stock which equals the number of Note Shares and
Warrant Shares. The Company shall, so long as any of the Notes and Warrants
are
outstanding, take all action necessary to reserve and keep available out of
its
authorized and unissued capital stock, solely for the purpose of effecting
the
conversion of the Notes and the exercise of the Warrants, 100% of the number
of
shares of Common Stock issuable upon the conversion of the Notes and the
exercise of the Warrants. When issued upon conversion of the Notes and/or
exercise of the Warrants, the Note Shares and the Warrant Shares, as applicable,
will be validly issued, fully paid and nonassessable and free from all
preemptive or similar rights, taxes, liens and charges with respect to the
issue
thereof, with the holders being entitled to all rights accorded to a holder
of
Common Stock. The issuance by the Company of the Securities is exempt from
registration under the Securities Act.
3.19 Related
Party Transactions.
No
affiliate, officer, director, or any Related Party is a party to any agreement
with the Company. No employee of the Company or any Related Party is indebted
in
any amount to the Company and, except for accrued payroll obligations, the
Company is not indebted to any of its employees or any Related Party. For
purposes of this Agreement, “Related
Party”
shall
mean with respect to any specified Person (i) each Person who, together with
its
affiliates, owns of record or beneficially at least five percent (5%) of the
outstanding capital stock of the specified Person as of the date of this
Agreement; (ii) each individual who is, or who has at any time been, an officer
or director of the specified Person; (iii) each affiliate of the Persons
referred to in clauses (i) and (ii) above; (iv) any trust or other entity (other
than the specified Person) in which any one of the Persons referred to in
clauses (i), (ii) and (iii) above holds (or in which more than one of such
Persons collectively hold), beneficially or otherwise, a voting, proprietary
or
equity interest; and (v) any trust or other entity (other than the specified
Person) with which any of such Persons is affiliated.
7
3.20 Off
Balance Sheet Arrangements.
There
is no transaction, arrangement, or other relationship between the Company and
an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its Exchange Act filings and is not so disclosed
or
that otherwise would be reasonably likely to have a Material Adverse
Effect.
3.21 Patents
and Trademarks.
To the
Company’s knowledge, the Company and its Subsidiaries own, or possess adequate
rights or licenses to use, all trademarks, trade names, service marks, service
▇▇▇▇ registrations, service names, patents, patent applications, patent rights,
copyrights, inventions, licenses, approvals, governmental authorizations, trade
secrets and other intellectual property rights (“Intellectual
Property Rights”)
necessary to conduct their respective businesses
as now
conducted. Except as disclosed in the SEC Documents, there is no claim, action
or proceeding being made or brought, or to the knowledge of the Company, being
threatened, against the Company or its Subsidiaries regarding its Intellectual
Property Rights.
3.22 Insurance.
The
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses and location in which the Company and the
Subsidiaries are engaged.
Neither
the Company nor any of its subsidiaries has sustained since the date of the
latest unaudited financial statements included in the SEC Documents any loss
or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the SEC Documents Prospectus that would individually or in
the
aggregate result in a Material Adverse Effect.
3.23 Regulatory
Permits.
To the
Company’s knowledge, the Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state, local
or
foreign regulatory authorities necessary to conduct their respective businesses
as described in the SEC Documents (“Material
Permits”),
except
where the failure to possess such permits does not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect, and neither the Company nor any Subsidiary has received any written
notice of proceedings relating to the revocation or modification of any Material
Permit.
3.24 Employee
Relations.
Neither
the Company nor any of its Subsidiaries is a party to any collective bargaining
agreement or, to the Company’s knowledge, employs any member of a union. No
current executive officer of the Company or any of its Subsidiaries has notified
in writing the Company or any such Subsidiary that such officer intends to
leave
the Company or any such Subsidiary or otherwise terminate such officer's
employment with the Company or any such Subsidiary. To the knowledge of the
Company or any such Subsidiary, no executive officer of the Company or any
of
its Subsidiaries is in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does
not
subject the Company or any such Subsidiary to any liability with respect to
any
of the foregoing matters.
8
3.25 Labor
Matters.
The
Company and its Subsidiaries are in compliance in all material respects with
all
federal, state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of
employment and wages and hours, except where failure to be in compliance would
not, either individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.
3.26 Environmental
Laws.
To the
Company’s knowledge, the Company and its Subsidiaries (i) are in compliance
in all material respects with any and all Environmental Laws (as hereinafter
defined), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance in all material respects with all
terms and conditions of any such permit, license or approval where, in each
of
the foregoing clauses (i), (ii) and (iii), the failure to so comply would
be reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect. The term “Environmental
Laws”
means
all federal, state, local or foreign laws relating to pollution or protection
of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, “Hazardous
Materials”)
into
the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands
or
demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated or approved
thereunder.
3.27 Foreign
Corrupt Practices.
Neither
the Company nor any of its Subsidiaries nor, to the knowledge of the Company,
any director, officer, agent, employee or other Person acting on behalf of
the
Company or any of its Subsidiaries has, in the course of its actions for, or
on
behalf of, the Company (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; (ii) made or offered to make any direct or indirect
unlawful payment to any foreign or domestic government official or employee
from
corporate funds; (iii) violated or is in violation of any provision of the
U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made or
offered to make any unlawful bribe, rebate, payoff, influence payment, kickback
or other unlawful payment to any foreign or domestic government official or
employee.
3.28 Application
of Takeover Protections.
Except
as described in Section 3.28
of the
Disclosure Schedule, there is no control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s Charter Documents
or the laws of its state of incorporation that is or could become applicable
to
any of the Investors as a result of the Investors and the Company fulfilling
their obligations or exercising their rights under the Transaction Documents,
including, without limitation, as a result of the Company’s issuance of the
Securities and the Investors’ ownership of the Securities.
3.29 Regulation
M Compliance.
The
Company has not, and to its knowledge no one acting on its behalf has,
(i) taken, directly or indirectly, any action designed to cause or to
result in the stabilization or manipulation of the price of any security of
the
Company to facilitate the sale or resale of any of the Securities,
(ii) sold, bid for, purchased, or, paid any compensation for soliciting
purchases of, any of the Securities, or (iii) paid or agreed to pay to any
Person any compensation for soliciting another to purchase any other securities
of the Company.
9
3.30 General
Solicitation.
Neither
the Company, nor any of its affiliates, nor any Person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D promulgated under the Securities Act) in
connection with the offer or sale of the Notes or Warrants. As provided in
Section 8.2
hereof,
the Company shall be responsible for the payment of any placement agent’s fees,
financial advisory fees, or brokers’ commission (other than for persons engaged
by any Investor or its investment advisor) relating to or arising out of the
issuance of the Securities pursuant to this Agreement.
3.31 No
Integration.
Neither
the Company nor any of its affiliates nor, any Person acting on the Company’s
behalf has, directly or indirectly, at any time within the past six months,
made
any offer or sale of any security or solicitation of any offer to buy any
security under circumstances that would (i) eliminate the availability of
the exemption from registration under Regulation D under the Securities Act
in connection with the offer and sale by the Company of the Securities as
contemplated hereby or (ii) cause the offering of the Securities pursuant
to the Transaction Documents to be integrated with prior offerings by the
Company for purposes of any applicable stockholder approval provisions. The
Company is not required to be registered as, and is not an affiliate of, an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended. The Company is not required to be registered as a United States
real
property holding corporation within the meaning of the Foreign Investment in
Real Property Tax Act of 1980.
3.32 Private
Placement.
Assuming the accuracy of the representations and warranties of the Investors
contained in Section SECTION
4
of this
Agreement and the compliance by the Investors with the provisions set forth
herein, it is not necessary, in connection with the issuance and sale of any
Securities, in the manner contemplated by the Transaction Documents, to register
any Securities under the Securities Act.
3.33 Registration
Rights.
Except
as described in Section 3.33
of the
Disclosure Schedule, the Company has not granted or agreed to grant to any
Person any rights (including “piggy-back” registration rights) to have any
securities of the Company registered with the SEC or any other governmental
authority that have not been satisfied or waived.
3.34 Disclosure;
Accuracy of Information Furnished.
The
Company confirms that neither it nor any officers, directors or affiliates,
has
provided any of the Investors or their agents or counsel with any information
that constitutes or might constitute material, nonpublic information (other
than
the existence and terms of the issuance of Securities, as contemplated by this
Agreement). The Company understands and confirms that each of the Investors
may
rely on the foregoing representations in effecting transactions in securities
of
the Company. None of the Transaction Documents and none of the other
certificates, statements or information furnished to the Investor by or on
behalf of the Company in connection with the Transaction Documents or the
transactions contemplated thereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading. The Company acknowledges and agrees that no Investor
makes
or has made any representations or warranties with respect to the transactions
contemplated hereby other than those set forth in the Transaction Documents.
10
3.35 Undisclosed
Liabilities.
The
Company has not undertaken or incurred any liability or obligation, direct
or
contingent, except for liabilities or obligations disclosed in the SEC
Documents.
SECTION
4
Representations
and Warranties of the Investor
Each
Investor represents and warrants with respect to only itself
that:
4.1 Authority
and Binding Obligation.
The
execution, delivery and performance by the Investor of the Transaction Documents
and the consummation of the transactions contemplated thereby (a) are
within the power of the Investor and (b) have been duly authorized by all
necessary actions on the part of the Investor. Each Transaction Document has
been, or will be, duly executed and delivered by the Investor and constitutes,
or will constitute, a legal, valid and binding obligation of the Investor,
enforceable against the Investor in accordance with its terms, except as limited
by bankruptcy, insolvency or other laws of general application relating to
or
affecting the enforcement of creditors’ rights generally and general principles
of equity.
4.2 No
Public Sale or Distribution.
Such
Investor is (i) acquiring the Notes and the Warrants and (ii) upon the
conversion of the Notes or the exercise of the Warrants, will acquire the Note
Shares or the Warrant Shares issuable upon conversion or exercise thereof,
as
applicable, in the ordinary course of business for its own account and not
with
a view towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales registered or exempted under
the
Securities Act and such Investor does not have a present arrangement to effect
any distribution of the Securities to or through any person or entity;
provided,
however,
that by
making the representations herein, such Investor does not agree to hold any
of
the Securities for any minimum or other specific term and reserves the right
to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the Securities Act. Such Investor
is acquiring the Securities hereunder in the ordinary course of its business.
Such Investor does not presently have any agreement or understanding, directly
or indirectly, with any Person to distribute any of the Securities.
4.3 Securities
Law Compliance.
Such
Investor understands that the Securities are being offered and sold to it in
reliance on specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying in
part
upon the truth and accuracy of, and such Investor’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings
of
such Investor set forth herein in order to determine the availability of such
exemptions and the eligibility of such Investor to acquire the Securities.
The
Investor has not been formed solely for the purpose of making this investment
and is purchasing the Securities for its own account for investment, not as
a
nominee or agent, and not with a view to, or for resale in connection with,
the
distribution thereof. The Investor has such knowledge and experience in
financial and business matters that the Investor is capable of evaluating the
merits and risks of such investment, is able to incur a complete loss of such
investment and is able to bear the economic risk of such investment for an
indefinite period of time. The Investor is an accredited investor as such term
is defined in Rule 501 of Regulation D under the Securities
Act.
11
4.4 Access
to Information.
Such
Investor and its advisors, if any, have been furnished with all materials
relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities which have been requested
by
such Investor. Such Investor and its advisors, if any, have been afforded the
opportunity to ask questions of the Company. Neither such inquiries nor any
other due diligence investigations conducted by such Investor or its advisors,
if any, or its representatives shall modify, amend or affect such Investor’s
right to rely on the Company’s representations and warranties contained herein.
Such Investor understands that its investment in the Securities involves a
high
degree of risk and is able to afford a complete loss of such investment. Such
Investor has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its
acquisition of the Securities.
4.5 No
Governmental Review.
Such
Investor understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation
or
endorsement of the Securities or the fairness or suitability of the investment
in the Securities nor have such authorities passed upon or endorsed the merits
of the offering of the Securities.
4.6 Transfer
or Resale.
Such
Investor understands that except as provided in Section 5.1 (Registration
Rights) hereof: (i) the Securities have not been and are not being registered
under the Securities Act or any state securities laws, and may not be offered
for sale, sold, assigned or transferred unless (A) subsequently registered
thereunder, (B) such Investor shall have delivered to the Company an opinion
of
counsel, in a form reasonably acceptable to the Company, to the effect that
such
Securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, or (C) such
Investor provides the Company with reasonable assurance that such Securities
can
be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated
under the Securities Act (collectively, “Rule
144”);
(ii)
any sale of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the Person through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the Securities Act) may require compliance with
some
other exemption under the Securities Act or the rules and regulations of the
SEC
thereunder; and (iii) neither the Company nor any other Person is under any
obligation to register the Securities under the Securities Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder. Notwithstanding the foregoing, the Securities may be pledged in
connection with a bona fide margin account or other loan secured by the
Securities and such pledge of Securities shall not be deemed to be a transfer,
sale or assignment of the Securities hereunder, and no Investor effecting a
pledge of Securities shall be required to provide the Company with any notice
thereof or otherwise make any delivery to the Company pursuant to this Agreement
or any other Transaction Document, including, without limitation, this Section
4.6;
provided,
that in
order to make any sale, transfer or assignment of Securities, such Investor
and
its pledgee makes such disposition in accordance with or pursuant to a
registration statement or an exemption under the Securities Act.
12
4.7 Legends.
Such
Investor understands that the certificates or other instruments representing
the
Notes and the Warrants and the stock certificates representing the Note Shares
and the Warrant Shares, except as set forth below, shall bear any legend as
required by the “blue sky” laws of any state and a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):
[NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS INSTRUMENT NOR
THE
SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE OR FOR WHICH THEY ARE
EXERCISABLE HAVE BEEN][THE
SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN]
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT),
OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933,
AS
AMENDED, OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE
COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
4.8 Residency.
Such
Investor is a resident of that jurisdiction specified below its address on
the
Schedule of Investors.
4.9 Broker-Dealer
Status.
Such
Investor is a not a registered broker-dealer or, if such Investor is an
affiliate of a broker-dealer, such Investor is acquiring the Securities
hereunder in the ordinary course of its business and such Investor does not
presently have any agreement or understanding, directly or indirectly, with
any
Person to distribute any of the Securities.
4.10 Foreign
Investors.
If the
Investor is not a United States person (as defined by Section 7701(a)(30)
of the Internal Revenue Code of 1986, as amended (the “Code”)),
the
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
(a) the legal requirements within its jurisdiction for the purchase of the
Securities, (b) any foreign exchange restrictions applicable to such
purchase, (c) any governmental or other consents that may need to be
obtained, and (d) the income tax and other tax consequences, if any, that
may be relevant to the purchase, holding, redemption, sale, or transfer of
the
Securities. The Investor’s subscription and payment for and continued beneficial
ownership of the Securities will not violate any applicable securities or other
laws of the Investor’s jurisdiction.
13
SECTION
5
Certain
Agreements
5.1 Piggyback
Registration Rights.
(a) Registration
Requirements.
If, at
any time, the Company files a registration statement after the execution of
this
Agreement if, the Company proposes to register any of its securities under
the
Securities Act (other than pursuant to Form ▇-▇, ▇▇▇▇ ▇-▇ or any successor
form
of limited purpose), the Company will give notice at least 20 days prior to
the
filing of each such registration statement to the Investor or the holder of
the
Note Shares or Warrant Shares as applicable (collectively the “Conversion
Shares”)
of its
intention to effect such a registration and will include in such registration
all Conversion Shares with respect to which the Company has received requests
for inclusion therein within 10 days after receipt of the Company's notice.
In
connection with any offering involving an underwriting of shares of the
Company’s capital stock, the Company shall not be required to include any of the
Investor’s
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and its underwriters, and then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total number
of
securities, including the Conversion Shares, requested by stockholders to be
included in such offering exceeds the amount of securities to be sold other
than
by the Company that the underwriters determine in their reasonable discretion
is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including the
Conversion Shares, which the underwriters and the Company determine in their
sole discretion will not jeopardize the success of the offering.
(b) The
Company shall use its best efforts to:
(i) furnish
to the Investor with respect to the Conversion Shares registered under the
registration statement such number of copies of the registration statement
and
the prospectus (including supplemental prospectuses) filed with the SEC in
conformance with the requirements of the Securities Act and other such documents
as the Investor may reasonably request, in order to facilitate the public sale
or other disposition of all or any of the Conversion Shares by the Investor;
(ii) make
any
necessary blue sky filings to permit the Conversion Shares to be sold in any
state requested by the Investor;
(iii) pay
the
expenses incurred by the Company and the Investor in complying with this Section
5.1, including, all registration and filing fees, FINRA fees, exchange listing
fees, printing expenses, fees and disbursements of counsel for the Company,
blue
sky fees and expenses and the expense of any special audits incident to or
required by any such registration (and including attorneys’ fees of one counsel
to the Investor, but excluding any and all underwriting discounts and selling
commissions applicable to the sale of Conversion Shares by the
Investor);
14
(iv) advise
the Investor, promptly after it shall receive notice or obtain knowledge of
the
issuance of any stop order by the SEC delaying or suspending the effectiveness
of the registration statement or of the initiation of any proceeding for that
purpose; and it will promptly use its commercially reasonable best efforts
to
prevent the issuance of any stop order or to obtain its withdrawal at the
earliest possible moment if such stop order should be issued; and
(v) with
a
view to making available to the Investor the benefits of Rule 144 and any other
rule or regulation of the SEC that may at any time permit the Investor to sell
Conversion Shares to the public without registration, the Company covenants
and
agrees to use its commercially reasonable best efforts to: (i) make and keep
public information available, as those terms are understood and defined in
Rule
144, until the earlier of (A) such date as all of the Conversion Shares qualify
to be resold pursuant to Rule 144 within any 90 day period without restriction
or any other rule of similar effect or (B) such date as all of the Conversion
Shares shall have been resold; (ii) file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act
and
under the Exchange Act; and (iii) furnish to the Investor upon request, as
long
as the Investor owns any Conversion Shares, (A) a written statement by the
Company as to whether it has complied with the reporting requirements of the
Securities Act and the Exchange Act, (B) a copy of the Company’s most recent
Annual Report on Form 10-K or Quarterly Report on Form 10-Q, and (C) such other
information as may be reasonably requested in order to avail the Investor of
any
rule or regulation of the SEC that permits the selling of any such Conversion
Shares without registration.
The
Company understands that the Investor disclaims being an underwriter, but
acknowledges that a determination by the SEC that the Investor is deemed an
underwriter shall not relieve the Company of any obligations it has
hereunder.
(c) For
the
purpose of this Section 5.1:
(i) the
term
“Selling
Shareholder”
shall
mean the Investor, its executive officers and directors and each person, if
any,
who controls the Investor within the meaning of Section 15 of the Securities
Act
or Section 20 of the Exchange Act;
(ii) the
term
“Registration
Statement”
shall
include any final prospectus, exhibit, supplement or amendment included in
or
relating to, and any document incorporated by reference in, the Registration
Statement (or deemed to be a part thereof) referred to in this section; and
(iii) the
term
“untrue
statement”
shall
mean any untrue statement or alleged untrue statement of a material fact, or
any
omission or alleged omission to state in the Registration Statement a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
15
(d) The
Company agrees to indemnify and hold harmless each Selling Shareholder from
and
against any losses, claims, damages or liabilities to which such Selling
Shareholder may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon (i) any untrue statement of
a
material fact contained in the Registration Statement, (ii) any inaccuracy
in
the representations and warranties of the Company contained in this Agreement
or
the failure of the Company to perform its obligations hereunder or (iii) any
failure by the Company to fulfill any undertaking included in the Registration
Statement, and the Company will reimburse such Selling Shareholder for any
reasonable legal expense or other actual accountable out-of-pocket expenses
reasonably incurred in investigating, defending or preparing to defend any
such
action, proceeding or claim; provided, however, that the Company shall not
be
liable in any such case to the extent that such loss, claim, damage or liability
arises out of, or is based upon, an untrue statement made in such Registration
Statement in reliance upon and in conformity with written information furnished
to the Company by or on behalf of such Selling Shareholder specifically for
use
in preparation of the Registration Statement or the failure of such Selling
Shareholder to comply with its covenants and agreements contained herein or
any
statement or omission in any prospectus that is corrected in any subsequent
prospectus that was delivered to the Selling Shareholder prior to the pertinent
sale or sales by the Selling Shareholder.
(e) The
Investor severally (as to itself), and not jointly, agrees to indemnify and
hold
harmless the Company (and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act, each officer of the Company
who
signs the Registration Statement and each director of the Company) from and
against any losses, claims, damages or liabilities to which the Company (or
any
such officer, director or controlling person) may become subject (under the
Securities Act or otherwise), insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or
are
based upon, (i) any failure by that Investor to comply with the covenants and
agreements contained herein or (ii) any untrue statement of a material fact
contained in the Registration Statement if, and only if, such untrue statement
was made in reliance upon and in conformity with written information furnished
by or on behalf of the Investor specifically for use (and identified as such)
in
preparation of the Registration Statement, and the Investor will reimburse
the
Company (or such officer, director or controlling person, as the case may be),
for any reasonable legal expense or other reasonable actual accountable
out-of-pocket expenses reasonably incurred in investigating, defending or
preparing to defend any such action, proceeding or claim. The obligation to
indemnify shall be limited to the net amount of the proceeds received by the
Investor from the sale of the Common Shares pursuant to the Registration
Statement.
(f) Promptly
after receipt by any indemnified person of a notice of a claim or the beginning
of any action in respect of which indemnity is to be sought against an
indemnifying person pursuant to this Section 5.1, such indemnified person shall
notify the indemnifying person in writing of such claim or of the commencement
of such action, but the omission to so notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party under
this Section 5.1 (except to the extent that such omission materially and
adversely affects the indemnifying party’s ability to defend such action) or
from any liability otherwise than under this Section 5.1(c). Subject to the
provisions hereinafter stated, in case any such action shall be brought against
an indemnified person, the indemnifying person shall be entitled to participate
therein, and, to the extent that it shall elect by written notice delivered
to
the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, shall be entitled to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified person. After notice from the
indemnifying person to such indemnified person of its election to assume the
defense thereof (unless it has failed to assume the defense thereof and appoint
counsel reasonably satisfactory to the indemnified party), such indemnifying
person shall not be liable to such indemnified person for any legal expenses
subsequently incurred by such indemnified person in connection with the defense
thereof; provided, however, that if there exists or shall exist a conflict
of
interest that would make it inappropriate, in the reasonable opinion of counsel
to the indemnified person, for the same counsel to represent both the
indemnified person and such indemnifying person or any affiliate or associate
thereof, the indemnified person shall be entitled to retain its own counsel
(who
shall not be the same as the opining counsel) at the expense of such
indemnifying person; provided, however, that no indemnifying person shall be
responsible for the fees and expenses of more than one separate counsel
(together with appropriate local counsel) for all indemnified parties. In no
event shall any indemnifying person be liable in respect of any amounts paid
in
settlement of any action unless the indemnifying person shall have approved
the
terms of such settlement; provided that such consent shall not be unreasonably
withheld. No indemnifying person shall, without the prior written consent of
the
indemnified person, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified person is or could reasonably
have been a party and indemnification could have been sought hereunder by such
indemnified person, unless such settlement includes an unconditional release
of
such indemnified person from all liability on claims that are the subject matter
of such proceeding.
16
(g) If
the
indemnification provided for in this Section 5.1 is unavailable to or
insufficient to hold harmless an indemnified party under subsection (d) or
(e)
above in respect of any losses, claims, damages or liabilities (or actions
or
proceedings in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative
fault of the Company on the one hand and the Investor on the other in connection
with the statements or omissions or other matters which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as
any
other relevant equitable considerations. The relative fault shall be determined
by reference to, among other things, in the case of an untrue statement, whether
the untrue statement relates to information supplied by the Company on the
one
hand or the Investor on the other and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement. The Company and the Investor agrees that it would not be just and
equitable if contribution pursuant to this subsection (g) were determined by
pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to above in this subsection (g).
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above
in this subsection (g) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (g), Investor shall not be required to contribute any amount in
excess of the amount by which the net amount received by the Investor from
the
sale of the Conversion Shares to which such loss relates exceeds the amount
of
any damages which the Investor has otherwise been required to pay to the Company
by reason of such untrue statement. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
17
(h) The
Company, and the Investor by its acceptance of this Agreement, hereby
acknowledge that they are sophisticated business persons who were represented
by
counsel during the negotiations regarding the provisions hereof including,
without limitation, the provisions of this Section 5.1, and are fully informed
regarding said provisions. They further acknowledge that the provisions of
this
Section 5.1 fairly allocate the risks in light of the ability of the parties
to
investigate the Company and its business in order to assure that adequate
disclosure is made in the Registration Statement as required by the Securities
Act and the Exchange Act.
(i) The
Company may request the Investor to furnish the Company with such information
with respect to the Investor and the Investor’s proposed distribution of
securities being purchased hereunder pursuant to the Company Registration
Statement, as applicable, as the Company may from time to time reasonably
request in writing or as shall be required by law or by the SEC in connection
therewith, and the Investor agrees to furnish the Company with such information
as a condition to the inclusion of any of the Investor’s Securities in such
Company Registration Statement.
(j) The
obligations of the Company and of the Investor under this Section 5.1 shall
survive completion of any offering of Conversion Shares in such Registration
Statement for a period of two years from the effective date of the Registration
Statement. No indemnifying party, in the defense of any such claim or
litigation, shall, except with the consent of each indemnified party, consent
to
entry of any judgment or enter into any settlement which does not include as
an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim
or
litigation.
5.2 Special
Right of Participation in Future Securities Offerings by I2BF Venture
Capital.
(a) Defined
Terms.
When
used herein, the following terms shall have the respective meanings
indicated:
(i) “Excluded
Security”
means
(i) securities purchased under this Agreement; (ii) securities issued upon
exercise of the Warrants; (iii) securities issued upon the conversion of the
Notes, (iv) shares of Common Stock issuable or issued to (x) employees,
consultants or directors from time to time either directly or upon the exercise
of options, in such case granted or to be granted by the Company’s Board of
Directors, pursuant to one or more stock option plans or restricted stock plans
or stock purchase plans in effect as of the Closing or subsequently approved
by
the Board of Directors, (y) vendors pursuant to warrants to purchase Common
Stock that are outstanding on the date hereof or issued hereafter, provided
such
issuances are approved by the Board of Directors, or (z) banks,
equipment lessors or other financial institutions, or to real property lessors,
pursuant to a bona fide debt financing, project financing, equipment leasing
or
real property leasing transaction approved by the Board of Directors of the
Company;
(v)
shares of Common Stock issued in connection with any stock split, stock dividend
or recapitalization of the Company; (vi) shares of Common Stock issued in
connection with the acquisition by the Company of any corporation or other
entity or substantially all of the assets of any corporation or other entity
or
division thereof occurring after the Closing Date; (vii) shares of Common Stock
issued upon the exercise or conversion of any securities of the Company
outstanding on the Closing Date; (viii) shares of Common Stock issued in
connection with a joint venture, strategic alliance or other commercial
relationship relating to the operation of the Company’s business the primary
purpose of which is not to raise equity capital; and (ix) securities issued
pursuant to a bona fide firm commitment underwritten public
offering.
18
(ii) “Pro
Rata Share”
means,
with respect to affiliates of I2BF Venture Capital (collectively “I2BF”)
at any
time, the percentage determined by dividing the aggregate number of I2BF’s Note
Shares and Warrant Shares issuable under the Notes and Warrants at such time,
determined on a fully diluted basis after giving effect to the exercise in
full
of such Warrants (without regard to any restrictions on such exercise that
may
be set forth in the Warrants) and the conversion in full of the Notes (without
regard to any restrictions on such conversion that may be set forth in the
Notes), by the number of shares of Company Common Stock outstanding plus the
number of Note Shares and Warrant Shares issuable under the Notes and Warrants
at such time.
(iii) “Subsequent
Placement”
means
the issuance, sale, exchange, or agreement or obligation to issue, sell or
exchange or reserve, or agreement to or set aside for issuance, sale or exchange
any shares of Common Stock (or securities or rights convertible, exercisable
or
exchangeable, directly or indirectly, for Common Stock) that are offered or
sold
by the Company for a per share price that is less than the Stated Conversion
Price (proportionately adjusted for stock splits, stock dividends and similar
event); provided,
however,
that
the issuance or sale, or agreement to issue or sell, an Excluded Security shall
not constitute a Subsequent Placement.
(b) Offered
Securities.
From
the Closing Date through the earlier to occur of: (i) when I2BF’s Warrants are
no longer outstanding and have either been exercised or have expired, or (ii)
the third anniversary of the date of this Agreement, the Company will not,
directly or indirectly, effect a Subsequent Placement, unless in each such
case
the Company shall have first offered to sell to I2BF its Pro Rata Share of
the
securities being offered in such Subsequent Placement (the securities being
offered to I2BF being referred to herein as the “Offered
Securities”).
The
Company shall offer to sell to I2BF its Pro Rata Share of the Offered
Securities, at a price and on such other terms as in the Subsequent Placement
generally and as shall have been specified by the Company in writing delivered
to I2BF (the “Offer”),
which
Offer by its terms shall remain open and irrevocable for a period of not less
than fifteen (15) Days from I2BF’s receipt of the terms of the Offer in writing
(the “Offer
Period”).
I2BF
agrees that it will keep the terms of any such Subsequent Placement confidential
until such information is publicly available. Additionally, I2BF agrees that
it
will not purchase or sell any of the Company’s securities while in possession of
information regarding any Subsequent Placement until such information is
publicly available.
(c) Notice
of Acceptance.
If I2BF
wishes to accept the Offer, I2BF shall deliver written notice thereof (a
“Notice
of Acceptance”)
to the
Company prior to the expiration of the Offer Period, specifying the amount
of
the Offered Securities that it elects to purchase.
(d) Permitted
Sales of Refused Securities.
In the
event that a Notice of Acceptance is not timely delivered by I2BF in respect
of
all the Offered Securities, the Company shall have forty-five (45) days from
the
expiration of the Offer Period to close the sale of all or any part of such
Offered Securities as to which a Notice of Acceptance has not been given by
I2BF
(the “Refused
Securities”)
to the
person or persons specified in the Offer, but only upon terms and conditions,
including, without limitation, unit price and interest rates (if applicable),
which are, in the aggregate, no more favorable to such other person or persons
or less favorable to the Company than those set forth in the Offer.
19
(e) Reduction
in Amount of Offered Securities.
In the
event that the Company proposes to sell less than all the Refused Securities
(any such sale to be in the manner and on the terms specified in Section
5.2(d) above),
then I2BF may, at its option and in its sole and absolute discretion, reduce
the
number or other units of the Offered Securities specified in its Notice of
Acceptance to an amount which shall be not less than the amount of the Offered
Securities which I2BF elected to purchase pursuant to Section
5.2(c)
above
multiplied by a fraction, (A) the numerator of which shall be the amount of
Offered Securities which the Company actually proposes to sell, and (B) the
denominator of which shall be the amount of all Offered Securities. In the
event
that I2BF so elects to reduce the number or amount of Offered Securities
specified in its Notice of Acceptance, the Company may not sell or otherwise
dispose of more than the reduced amount of the Offered Securities until such
securities have been reoffered to I2BF in accordance herewith.
(f) Closing.
Upon
each closing of the purchase and sale of Offered Securities, I2BF shall purchase
from the Company, and the Company shall sell to I2BF the number of Offered
Securities specified in its Notice of Acceptance, as reduced pursuant to
Section
5.2(e)
above if
I2BF has so elected, upon the terms and conditions specified in the Offer.
The
purchase by I2BF of any Offered Securities is subject in all cases to the
preparation, execution and delivery by the Company and I2BF of a purchase
agreement relating to such Offered Securities on the same terms and conditions
applicable to other persons purchasing the Offered Securities.
(g) Further
Sale.
In each
case, any Offered Securities not purchased by I2BF or other person or persons
in
accordance herewith may not be sold or otherwise disposed of by the Company
until they are again offered to I2BF under the procedures specified
herein.
5.3 Certain
Covenants.
(a) Defined
Terms.
When
used herein, the following terms shall have the respective meanings
indicated:
(i) “Debt”
means,
as to a particular Person at the specified time of determination, the sum of
the
following, but without duplication, in accordance with GAAP:
(1) all
obligations of such Person for borrowed money, including obligations evidenced
by bonds, debentures, notes or other similar instruments
and
accruals for interest not yet earned, but excluding any and all indebtedness
incurred in the ordinary course of business owed to or for, trade creditors,
financial institutions, vendors, employees, consultants, professionals, taxes,
supplies, raw material
and for
other similar purposes;
(2) every
reimbursement obligation of such Person with respect to letters of credit,
bankers’ acceptances or similar facilities that is issued to support an
obligation for borrowed money or that creates an obligation under a
credit facility pursuant to which obligations for borrowed money are
created;
(3) every
obligation of such Person as a guarantor with respect to the items referenced
in
(1)-(2); and
20
(4) all
monetary obligations under any leasing or similar arrangement which, in
connection with GAAP, is classified as a capital lease (provided that, for
purposes of clarification, the term “Debt” shall not include any bona fide lease
or the use or occupation of real property, not classified as a capital lease
in
connection with GAAP).
(ii) “GAAP”
means
generally accepted accounting principles as in effect from time to time in
the
United States of America, applied on a consistent basis.
(iii) “Issuer
Party”
means
the Company or any Subsidiary of the Company and “Issuer
Parties”
means
all of them.
(b) The
Company may sell additional unsecured convertible promissory notes (the
“Other
Notes”)
and
common stock purchase warrants (the “Other
Warrants”)
to
investors on terms not less favorable to the Company than the Notes and Warrants
until the Company has raised the Maximum Aggregate Investment, inclusive of
the
Initial Investment.
(c) So
long
as the Notes are outstanding, no Issuer Party may, without the prior written
consent of the holders of a majority of the then outstanding aggregate unpaid
principal amount of the Notes and Other Notes, incur Debt other
than:
(i)
the
Notes
and the Other Notes; (ii) Debt in existence or committed on the date hereof;
and;
(iii) Debt of any Issuer Party to any other Issuer Party; (iv) obligations
less
than an aggregate of $10,000,000 that are treated as capitalized lease
obligations in accordance with GAAP; and (v) borrowings, the proceeds of which
shall be used to repay the Notes and Other Notes.
SECTION
6
Conditions
to the Investor’s Obligation to Close
Each
Investor’s obligations at the Closing are subject to the fulfillment, on or
prior to the Closing Date, of all of the following conditions, any of which
may
be waived in whole or in part by the Investor:
6.1 Representations
and Warranties.
The
representations and warranties made by the Company in Section 3 hereof
shall have been true and correct when made, and shall be true and correct on
the
Closing Date.
6.2 Performance.
The
Company shall have performed and complied with all covenants, agreements,
obligations and conditions contained in this Agreement that are required to
be
performed or complied with by the Company on or before such
Closing.
6.3 Governmental
Approvals and Filings.
The
Company shall have obtained all governmental approvals required in connection
with the lawful sale and issuance of the Notes and the Warrants.
6.4 Legal
Requirements.
At the
Closing, the sale and issuance by the Company, and the purchase by the Investor,
of the Notes and the Warrants shall be legally permitted by all laws and
regulations to which the Investor or the Company are subject.
21
6.5 Proceedings
and Documents.
All
corporate and other proceedings in connection with the transactions contemplated
at the Closing and all documents and instruments incident to such transactions
shall be reasonably satisfactory in substance and form to the
Investor.
6.6 Transaction
Documents.
The
Company shall have duly executed and delivered to the Investor each of the
Transaction Documents.
6.7 Compliance
Certificate.
The
President of the Company shall deliver to the Investors at Closing a certificate
certifying that the conditions specified in Sections
6.1
and
6.2
have
been fulfilled.
6.8 Secretary’s
Certificate.
The
Secretary of the Company shall deliver to the Investors at Closing a certificate
attaching and certifying to the truth and correctness of the resolutions of
the
Company’s Board of Directors adopted in connection with the transactions
contemplated by this Agreement.
6.9 Good
Standing Certificates.
The
Company shall have delivered to Investors (i) a certificate of the Secretary
of
State of the State of Nevada, with respect to the good standing of the Company,
(ii) a certificate of good standing from the applicable governmental entity
in
each jurisdiction where the Company is required to be qualified to do business,
and (iii) with respect to each of the Company’s Subsidiaries, (X) a certificate
of good standing (or equivalent document) from the Secretary of State (or
equivalent governmental entity) of the jurisdiction of incorporation or
organization of such Subsidiary, and (Y) a certificate of good standing from
the
applicable governmental entity in each jurisdiction where it is required to
be
qualified to do business, all of which are dated within five (5) Business Days
prior to the Closing.
6.10 Opinion.
The
Investor shall have received from ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, counsel for the
Company, an opinion, dated as of the Closing Date, in form and substance
reasonably satisfactory to the Investor.
SECTION
7
Conditions
to Company’s Obligation to Close
The
Company’s obligation to issue and sell the Notes and the Warrant at the Closing
is subject to the fulfillment, on or prior to the Closing Date, of the following
conditions, any of which may be waived in whole or in part by the
Company:
7.1 Representations
and Warranties.
The
representations and warranties made by the Investor in Section 4 shall be true
and correct when made, and shall be true and correct on the Closing
Date.
7.2 Performance.
The
Investors shall have performed and complied with all covenants, agreements,
obligations and conditions contained in this Agreement that are required to
be
performed or complied with by them on or before such Closing.
7.3 Governmental
Approvals and Filings.
The
Company shall have obtained all governmental approvals required in connection
with the lawful sale and issuance of the Notes and the Warrant.
22
7.4 Legal
Requirements.
At the
Closing, the sale and issuance by the Company, and the purchase by the
Investors, of the Notes and the Warrant shall be legally permitted by all laws
and regulations to which the Investor or the Company are subject.
7.5 Purchase
Price.
The
Investors shall have delivered to the Company the Purchase Price.
7.6 Timing
of Closing.
The
Closing shall have occurred not later than August 27, 2008 and shall have
resulted in gross proceeds to the Company of not less than
$5,000,000.
SECTION
8
Miscellaneous
8.1 Fees
and Expenses.
Upon
the Closing, the Company shall pay the reasonable fees and expenses of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., the counsel for I2BF, in an amount not to
exceed, in the aggregate, $50,000, which fees and expenses shall be documented
by I2BF prior to payment of such fees and expenses. At the Closing, the Company
will remit such amount by wire transfer directly to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇, P.C. on behalf of the Company. Except for the amount payable to
such firm, the Company shall not be liable for and shall have no obligation
to
pay the fees and expenses of counsel to any other Investor.
8.2 Finder’s
Fees and Commissions.
Except
for the placement agent commission payable by the Company to Citation Capital
Management Limited, an investment advisory company authorized and regulated
by
the Financial Services Authority of the United Kingdom,
as
set
forth in Schedule
8.2,
each
party represents that it neither is nor will be obligated for any finder’s 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 finder’s or broker’s fee arising out of this
transaction (and the costs and expenses of defending against such liability
or asserted liability) for which each or any Investor of its officers,
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 finder’s or broker’s fee arising out of
this transaction (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.
8.3 Independent
Nature of Investors’ Obligations and Rights.
The
obligations of each Investor under any Transaction Document are several and
not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Investor pursuant hereto
or thereto, shall be deemed to constitute the Investors as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents and the Company acknowledges that the Investors are not
acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. Each Investor confirms
that it has independently participated in the negotiation of the transaction
contemplated hereby with the advice of its own counsel and advisors. Each
Investor shall be entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this Agreement or
out
of any other Transaction Documents, and it shall not be necessary for any other
Investor to be joined as an additional party in any proceeding for such
purpose.
23
8.4 Public
Announcements.
Except
as otherwise required by applicable laws, rules or regulations, neither the
Company, nor the Investor shall make any public announcement with respect to
this Agreement or the transactions contemplated hereby, without the written
consent of the Company and I2BF (on behalf of the Investors); provided,
however,
that
the Company shall not be required to obtain such consent if a governmental
entity specifically requests disclosure.
8.5 Waivers
and Amendments.
Any
provision of this Agreement may be amended, waived or modified only upon the
written consent of the Company and the Investor.
8.6 Delays
or Omissions.
Except as expressly provided herein, no delay or omission to exercise any right,
power or remedy accruing to either party to this Agreement upon any breach
or
default of the other party under this Agreement shall impair any such right,
power or remedy of such non-defaulting party, nor shall it be construed to
be a
waiver of any such breach or default, or an acquiescence therein, or of or
in
any similar breach or default thereafter occurring, nor shall any waiver of
any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval
of
any kind or character on the part of any party of any breach or default under
this Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only
to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any party to this Agreement,
shall be cumulative and not alternative.
8.7 Attorney’s
Fees.
In the
event that any suit or action is instituted to enforce any provisions in this
Agreement, the prevailing party in such dispute shall be entitled to recover
from the losing party all fees, costs and expenses of enforcing any right of
such prevailing party under or with respect to this Agreement, including without
limitation, such reasonable fees and expenses of attorneys and accountants,
which shall include, without limitation, all fees, costs and expenses of
appeals.
8.8 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 California, 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 (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced in the state and federal courts sitting
in the City of Los Angeles. Each party hereto hereby irrevocably submits to
the
exclusive jurisdiction of the state and federal courts sitting in the City
of
Los Angeles for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of this Agreement), 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. Each party hereto
(including its affiliates, agents, officers, directors and employees) hereby
irrevocably waives, to the fullest extent permitted by applicable law, any
and
all right to trial by jury in any legal proceeding arising out of or relating
to
this Agreement or the transactions contemplated hereby. 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 attorneys fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.
24
8.9 Survival.
The
representations, warranties, covenants and agreements made herein shall survive
the execution and delivery of this Agreement.
8.10 Successors
and Assigns.
This
Agreement, and any and all rights, duties and obligations hereunder, shall
not
be assigned, transferred, delegated or sublicensed by either party without
the
prior written consent of the non-assigning party; provided, that the Investor
may assign its rights hereunder (including the rights in Section SECTION
5)
to any
of its affiliates without the Company’s prior consent. Except as set forth in
the previous sentence, any attempt by the Investor without such permission
to
assign, transfer, delegate or sublicense any rights, duties or obligations
that
arise under this Agreement shall be void. Subject to the foregoing and except
as
otherwise provided herein, the provisions of this Agreement shall inure to
the
benefit of, and be binding upon, the successors, assigns, heirs, executors
and
administrators of the parties hereto.
8.11 Registration,
Transfer and Replacement of the Note.
The
Notes shall be registered notes. The Company will keep, at its principal
executive office, books for the registration and registration of transfer of
the
Notes. Prior to presentation of any Note for registration of transfer, the
Company shall treat the Person in whose name such Note is registered as the
owner and holder of such Note for all purposes whatsoever, whether or not such
Note shall be overdue, and the Company shall not be affected by notice to the
contrary. Subject to any restrictions on or conditions to transfer set forth
in
any Note, the holder of any Note, at its option, may in person or by duly
authorized attorney surrender the same for exchange at the Company’s chief
executive office, and promptly thereafter and at the Company’s expense, except
as provided below, receive in exchange therefor one or more new Note(s), each
in
the principal amount requested by such holder, dated the date to which interest
shall have been paid on the Note so surrendered or, if no interest shall have
yet been so paid, dated the date of the Note so surrendered and registered
in
the name of such Person or Persons as shall have been designated in writing
by
such holder or its attorney for the same principal amount as the then unpaid
principal amount of the Note so surrendered. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note and (i) in
the case of loss, theft or destruction, of indemnity reasonably satisfactory
to
it; or (ii) in
the case of mutilation, upon surrender thereof, the Company, at its expense,
will execute and deliver in lieu thereof a new Note executed in the same manner
as the Note being replaced, in the same principal amount as the unpaid principal
amount of such Note and dated the date to which interest shall have been paid
on
such Note or, if no interest shall have yet been so paid, dated the date of
such
Note.
8.12 Entire
Agreement.
This
Agreement together with the other Transaction Documents constitute and contain
the entire agreement between the Company and the Investor and supersede any
and
all prior agreements, negotiations, correspondence, understandings and
communications among the parties, whether written or oral, respecting the
subject matter hereof.
25
8.13 Notices.
All
notices, requests, demands, consents, instructions or other communications
required or permitted hereunder shall in writing and faxed, mailed or delivered
to each party as follows: (a) if to the Investor, at the Investor’s address
or facsimile number set forth on the signature page hereto, or at such other
address as the Investor shall have furnished the Company in writing, or
(b) if to the Company, at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, facsimile: (▇▇▇)
▇▇▇-▇▇▇▇, or at such other address or facsimile number as the Company shall
have
furnished to the Investor in writing. All such notices and communications will
be deemed effectively given the earlier of (i) when received,
(ii) when delivered personally, (iii) one business day after being
delivered by facsimile (with receipt of appropriate confirmation), (iv) one
business day after being deposited inside the United States with an overnight
courier service of recognized standing for delivery within the United States,
(v) three business day after being deposited within the United States with
an overnight courier service of recognized standing for delivery outside of
the
United States or vice versa or (v) four days after being deposited in the
U.S. mail, first class with postage prepaid, provided that first class mail
shall not be used for the delivery of notice outside of the United
States.
8.14 Severability.
If any provision of this Agreement becomes or is declared by a court of
competent jurisdiction to be illegal, unenforceable or void, portions of such
provision, or such provision in its entirety, to the extent necessary, shall
be
severed from this Agreement, and such court will replace such illegal, void
or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the same economic, business and
other
purposes of the illegal, void or unenforceable provision. The balance of this
Agreement shall be enforceable in accordance with its terms.
8.15 Further
Assurances.
Each party hereto agrees to execute and deliver, by the proper exercise of
its
corporate, limited liability company, partnership or other powers, all such
other and additional instruments and documents and do all such other acts and
things as may be reasonably necessary to more fully effectuate this
Agreement.
8.16 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which will be
deemed an original, but all of which together will constitute one and the same
agreement. Facsimile copies of signed signature pages will be deemed binding
originals.
8.17 No
Strict Construction.
The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent, and no rules of strict construction
will
be applied against any party.
26
IN
WITNESS WHEREOF,
each
Investor and the Company have caused its respective signature page to this
Unsecured Convertible Note and Warrant Purchase Agreement to be duly executed
as
of the date first written above.
|
STRATOS
RENEWABLES
|
|
|
CORPORATION
|
|
|
By:
|
/s/
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
|
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
|
|
|
Chief
Executive Officer
|
|
IN
WITNESS WHEREOF,
each
Investor and the Company have caused its respective signature page to this
Unsecured Convertible Note and Warrant Purchase Agreement to be duly executed
as
of the date first written above.
|
INVESTORS:
|
|
I2BF
BIODIESEL LIMITED
|
|
/s/
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
|
|
▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇
Director
|