MEDEFILE INTERNATIONAL, INC. SECURITIES PURCHASE AGREEMENT
This
Securities Purchase Agreement (this
“Agreement”) is made and entered into as of
______________, by and among Medefile International, Inc., a
Nevada corporation (the “Company”), and each of the
purchasers listed on Exhibit A attached hereto (collectively, the
“Purchasers” and individually, a
“Purchaser”).
Recitals
A. The
Company desires to issue and sell to the Purchasers, and the Purchasers desire
to purchase from the Company, up to 20,000,000 units (each, a “Unit”), each Unit
consisting of one share of common stock, par value $0.001 per share, of the
Company (the “Common Stock”), and six-tenths of one
three-year warrants (a “Warrant” and collectively, the
“Warrants”) on the terms and
subject to the conditions
set forth in this Agreement.
B. The
Company and each Purchaser are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by the
provisions of Regulation D (“Regulation D”), as
promulgated by the United States Securities and Exchange Commission (the
“SEC”) under the Securities Act of 1933, as amended
(the “Securities Act”).
The
parties hereto agree as follows:
1. Agreement
To Purchase And Sell Stock.
(a) Authorization. The
Company’s Board of Directors has authorized the issuance and sale, pursuant to
the terms and conditions of this Agreement, of up to 20,000,000 Units,
consisting of up to 20,000,000 shares of Common Stock (the “Purchased
Shares”) and three-year warrants to purchase up to 12,000,000 shares,
substantially in the form attached hereto as Exhibit A. Each whole
Warrant included in the Units shall be exercisable to purchase one share of
Common Stock at $0.60 per share (the “Purchased Warrants” and together with the
Purchased Shares, the “Purchased Securities”).
(b) Agreement
to Purchase and Sell Securities. On the terms and subject to
the conditions contained in this Agreement, each Purchaser severally agrees
to
purchase, and the Company agrees to sell and issue to each Purchaser, at Closing
(as defined below), that number of Shares set forth on such Purchaser’s
signature page. The purchase price of each Share (the “Per Share
Price”) shall be $0.15.
(c) Use
of Proceeds. The Company intends to apply the net proceeds
from the sale of the Purchased Securities for working capital and general
corporate purposes, as well as for strategic purposes in connection with
selected acquisitions that may be considered in the future to expand its product
and service offerings.
(d) Obligations
Several Not Joint. The obligations of each Purchaser under
this Agreement are several and not joint with the obligations of any other
Purchaser, and no Purchaser shall be responsible in any way for the performance
of the obligations of any other Purchaser under this
Agreement. Nothing contained herein, and no action taken by any
Purchaser pursuant hereto, shall be deemed to constitute the Purchasers as
a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or
as
a group with respect to such obligations or the transactions contemplated by
this Agreement. Each Purchaser shall be entitled to independently
protect and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other Purchaser
to
be joined as an additional party in any proceeding for such
purpose.
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2. Closing. The
closing of the purchase and sale of the Purchased Securities shall take place
at
the offices of Sichenzia ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the “SRFF Offices”) at 10:00
a.m. Eastern time on ______________, , or at such other time and place as the
Company and Purchasers representing a majority of the Shares to be purchased
mutually agree upon (which time and place are referred to in this Agreement
as
the “Closing”). At the Closing, the Company
shall, against delivery of payment for the Purchased Securities by wire transfer
of immediately available funds in accordance with the Company’s instructions,
(a) authorize its transfer agent to issue to each Purchaser one or more stock
certificates (the “Certificates”) registered in the
name of each Purchaser (or in such nominee name(s) as designated by such
Purchaser in the Stock Certificate Questionnaire (attached hereto as Appendix
I)
(the “Stock Certificate Questionnaire”), representing
the appropriate number of Purchased Shares based on the number of Shares to
be
purchased by such Purchaser as set forth on such Purchaser’s signature page, and
bearing the legend set forth in Section 4(j) herein. Closing
documents may be delivered by facsimile with original signature pages sent
by
overnight courier. The date of the Closing is referred to herein as the “Closing
Date.”
3. Representations
and Warranties of The Company. The Company hereby represents
and warrants to each Purchaser that the statements in this Section 3 are true
and correct:
(a) Organization,
Good Standing and Qualification. The Company and each of its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it was formed. Each of
the
Company and its Subsidiaries has all corporate power and authority required
to
carry on its business as presently conducted and as described in the SEC
Documents (as described below), and the Company has all corporate power and
authority required to enter into this Agreement and the other agreements,
instruments and documents contemplated hereby, and to consummate the
transactions contemplated hereby and thereby. Each of the Company and
its Subsidiaries is duly qualified as a foreign entity to do business and is
in
good standing in each jurisdiction in which the failure to so qualify would
have
a Material Adverse Effect. As used in this Agreement
“Subsidiaries” means any entity in which the Company owns, directly or
indirectly, 100% of the capital stock. Further, as used in this
Agreement, “Material Adverse Effect” means a material adverse effect
on, or a material adverse change in, or a group of such effects on or changes
in, the business, operations, condition, financial or otherwise, results of
operations, prospects, assets or liabilities of the Company and its
subsidiaries, taken as a whole.
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(b) Capitalization. The
capitalization of the Company, without listing the Purchased Securities to
be
purchased pursuant to this Agreement, is as follows:
(i) The
authorized capital stock of the Company consists of 300,000,000 shares of Common
Stock, par value $0.001 per share, and 10,000,000 shares of preferred stock,
par
value $0.001 per share (“Preferred Stock”), of which
no shares of Preferred Stock are issued or outstanding.
(ii) As
of
November 14, 2007, the issued and outstanding capital stock of the Company
consisted of 178,733,910 shares of Common Stock and no shares of Preferred
Stock. The shares of issued and outstanding capital stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable and
have not been issued in violation of or are not otherwise subject to any
preemptive or other similar rights. All such shares have been issued
in compliance with applicable securities laws.
(iii) As
of
November 14, 2007 the Company had (a) 5,640,000 shares of Common Stock reserved
for issuance upon exercise of outstanding options granted under the Company’s
2006 Stock Option Plan (the “Option Plan”); and (b) no
shares of Common Stock reserved for issuance upon exercise of outstanding
warrants.
(iv) As
of
November 14, 2007, the Company had 4,360,000 shares of Common Stock available
for future grant under the Option Plan.
(v) As
of
November 14, 2007, the Company had 10,200,000 shares of Common Stock reserved
for issuance upon exercise of outstanding warrants issued to consultants for
services to be provided.
With
the
exception of the foregoing in this Section 3(b) and except as set forth in
the
SEC Documents (as defined in Section 3(k)(i) below), there are no outstanding
subscriptions, options, warrants, convertible or exchangeable securities or
other rights granted to or by the Company to purchase shares of Common Stock
or
other securities of the Company and there are no commitments, plans or
arrangements to issue any shares of Common Stock or any security convertible
into or exchangeable for Common Stock. Except as set forth in SEC
Documents, (A) no securities of the Company are entitled to preemptive or
similar rights, and no person has any right of first refusal, preemptive right,
right of participation, or any similar right to participate in the transactions
contemplated by this Agreement; and (B) the issue and sale of the
Purchased Securities will not obligate the Company to issue shares of Common
Stock or other securities to any person (other than the Purchasers) and will
not
result in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under such securities. There are
no stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s
stockholders.
(c) Subsidiaries. Except
as set forth in the SEC Documents, (i) the Company does not have any
subsidiaries, and, does not own any capital stock of, assets
comprising the business of, obligations of, or any other interest (including
any
equity or partnership interest) in, any person or entity; (ii) the Company
owns,
directly or indirectly, all of the capital stock or other equity interests
of
each subsidiary free and clear of any liens, and all the issued and outstanding
shares of capital stock of each subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to subscribe
for
or purchase securities.
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(d) Due
Authorization. All corporate actions on the part of the
Company necessary for the authorization, execution, delivery of, and the
performance of all obligations of the Company under this Agreement and the
authorization, issuance, reservation for issuance and delivery of all of the
Purchased Securities being sold under this Agreement have been taken, no further
consent or authorization of the Company or the Board of Directors or its
stockholders is required, and this Agreement constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except (i) as may be limited by (A) applicable bankruptcy,
insolvency, reorganization or others laws of general application relating to
or
affecting the enforcement of creditors’ rights generally and (B) the effect of
rules of law governing the availability of equitable remedies and (ii) as rights
to indemnity or contribution may be limited under federal or state securities
laws or by principles of public policy thereunder.
(e) Valid
Issuance of Purchased Securities.
(i) Purchased
Shares. The Purchased Shares will be, upon payment therefor
by the Purchasers in accordance with this Agreement, duly authorized, validly
issued, fully paid and non-assessable, free from all taxes, liens, claims,
encumbrances with respect to the issuance of such Purchased Shares and will
not
be subject to any pre-emptive rights or similar rights.
(ii) Purchased
Warrants. The Purchased Warrants will be, upon payment
therefor by the Purchasers in accordance with this Agreement, duly authorized
and validly issued, free from all taxes, liens, claims, encumbrances with
respect to the issuance of such Purchased Warrants and will not be subject
to
any pre-emptive rights or similar rights.
(iii) Underlying
Shares of Common Stock. The issuance of the shares of Common
Stock issued or issuable from time to time upon the exercise of the Purchased
Warrants (the “Underlying Shares”) will be, and at all times prior to
such exercise, will have been, duly authorized, duly reserved for issuance
upon
such exercise and payment of the exercise price of the Purchased Warrants,
and
will be, upon such exercise and payment, validly issued, fully paid and
non-assessable free from all taxes, liens, claim, encumbrances with respect
to
the issuance of such shares and will not be subject to any pre-emptive rights
or
similar rights. The Purchased Shares and the Underlying Shares are
sometimes referred to herein as the Securities.
(iv) Compliance
with Securities Laws. Subject to the accuracy of the
representations made by the Purchasers in Section 4 hereof, the Purchased
Securities (assuming no unlawful redistribution of the Purchased Securities
by
the Purchasers or other parties as of the date hereof) will be issued to the
Purchasers in compliance with applicable exemptions from (A) the registration
and prospectus delivery requirements of the Securities Act and (B) the
registration and qualification requirements of all applicable securities laws
of
the states of the United States.
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(f) Consents
and Approvals. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with,
or
notice to, any federal, state or local governmental authority or self regulatory
agency or any other person on the part of the Company is required in connection
with the issuance of the Purchased Securities to the Purchasers, or the
consummation of the other transactions contemplated by this Agreement, except
(i) such filings as have been made prior to the date hereof and (ii) such
additional post-Closing filings as may be required to comply with applicable
state and federal securities laws.
(g) Non-Contravention. The
execution, delivery and performance of this Agreement by the Company, and the
consummation by the Company of the transactions contemplated hereby (including
issuance of the Purchased Securities), do not: (i) contravene or conflict with
the Certificate of Incorporation of the Company, as amended to date (the
“Certificate of Incorporation”), or the Bylaws of the
Company, as amended to date (the “Bylaws”) or the
organizational documents of any Subsidiary; (ii) constitute a violation of
any
provision of any federal, state, local or foreign law, rule, regulation, order
or decree applicable to the Company; or (iii) constitute a default (or an event
that with notice or lapse of time or both would become a default) or require
any
consent under, give rise to any right of termination, cancellation or
acceleration of, or to a loss of any material benefit to which the Company
is
entitled under, or result in the creation or imposition of any lien, claim
or
encumbrance on any assets of the Company under, any material contract to which
the Company is a party or any material permit, license or similar right relating
to the Company or by which the Company may be bound or affected.
(h) Litigation. Except
as set forth in the SEC Documents, there is no action, suit, proceeding, claim,
arbitration or investigation (“Action”) pending or, to
the Company’s knowledge, threatened in writing: (i) against the Company or
any of its Subsidiaries, their respective activities, properties or assets,
or
any officer, director or employee of the Company or any of its Subsidiaries
in
connection with such officer’s, director’s or employee’s relationship with, or
actions taken on behalf of, the Company or any of its Subsidiaries, that is
reasonably likely to have a Material Adverse Effect; or (ii) that seeks to
prevent, enjoin, alter, challenge or delay the transactions contemplated by
this
Agreement (including the issuance of the Purchased
Securities). Neither the Company nor any of its Subsidiaries is a
party to or subject to the provisions of, any order, writ, injunction, judgment
or decree of any court or government agency or instrumentality. No
Action is currently pending nor does the Company or any of its Subsidiaries
intend to initiate any Action that is reasonably likely to have a Material
Adverse Effect.
(i) Compliance. The
Company is not in violation or default of any provisions of the Certificate
of
Incorporation or the Bylaws and none of the Company’s Subsidiaries is in
violation nor default of any provisions of their respective organizational
documents. The Company and each of its Subsidiaries has complied and
is currently in compliance with all applicable statutes, laws, rules,
regulations and orders of the United States of America and all states thereof,
foreign countries and other governmental bodies and agencies having jurisdiction
over the Company’s or each subsidiary’s respective businesses or properties,
except for any instance of non-compliance that has not had, and would not
reasonably be expected to have, a Material Adverse Effect. Neither
the Company nor any of its Subsidiaries is in default under or in violation
of
(and no event has occurred that has not been waived that, with notice or lapse
of time or both, would result in a default by the Company or any subsidiary
under), nor has the Company or any Subsidiary received notice of a claim that
it
is in default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), except as does not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect.
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(j) Material
Non-Public Information. The Company has not provided to the
Purchasers any material non-public information other than information related
to
the transactions contemplated by this Agreement, all of which information
related to the transactions contemplated hereby shall be disclosed by the
Company pursuant to Section 8(n) hereof. The Company understands and
confirms that each Purchaser shall be relying on the foregoing representations
in effecting transactions in securities of the Company.
(k) SEC
Documents.
(i) Reports. The
Company has filed in a timely manner 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”), and the rules and regulations
promulgated thereunder. The Company has made available to the
Purchasers prior to the date hereof copies of its Annual Report on Form 10-KSB
for the fiscal year ended December 31, 2006 (the “Form
10-KSB”), its Quarterly Report on Form 10-QSB for the fiscal
quarter ended June 30, 2007 (the “Form 10-QSB”) and
any Current Report on Form 8-K for events occurring since December 31, 2006
(“Forms 8-K”) filed by the Company with the SEC (the
Form 10-KSB, the Form 10-QSB and the Forms 8-K are collectively referred to
herein as the “SEC Documents”). Each of the
SEC Documents, as of the respective dates thereof (or, if amended or superseded
by a filing prior to the Closing Date, then on the date of such filing), did
not
contain any untrue statement of a material fact or omit to state a material
fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. Each SEC
Document, as it may have been subsequently amended by filings made by the
Company with the SEC prior to the date hereof, complied in all material respects
with the requirements of the Exchange Act and the rules and regulations of
the
SEC promulgated thereunder applicable to such SEC Document.
(ii) ▇▇▇▇▇▇▇▇-▇▇▇▇▇. The
Chief Executive Officer and the Chief Financial Officer of the Company have
signed, and the Company has furnished to the SEC, all certifications required
by
Sections 302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002. Such
certifications contain no qualifications or exceptions to the matters certified
therein and have not been modified or withdrawn; and neither the Company nor
any
of its officers has received notice from any governmental entity questioning
or
challenging the accuracy, completeness, form or manner of filing or submission
of such certifications. The Company is otherwise in compliance in all
material respects with all applicable effective provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act of 2002 and the rules and regulations issued thereunder by the
SEC. The Company has established disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company
and
designed such disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or submits
under
the Exchange Act is recorded, processed, summarized and reported, within the
time periods specified in the SEC’s rules and forms. The Company’s
certifying officers have evaluated the effectiveness of the Company’s disclosure
controls and procedures as of the end of the period covered by the Company’s
most recently filed periodic report under the Exchange Act (such date, the
“Evaluation Date”). The Company presented in its most recently
filed periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures
based
on their evaluations as of the Evaluation Date. Since the Evaluation
Date, there have been no changes in the Company’s internal control over
financial reporting (as such term is defined in the Exchange Act) that has
materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.
6
(iii) Financial
Statements. The financial statements of the Company in the
SEC Documents present fairly, in accordance with United States generally
accepted accounting principles (“GAAP”), consistently applied, the
financial position of the Company as of the dates indicated, and the results
of
its operations and cash flows for the periods therein specified, subject, in
the
case of unaudited financial statements for interim periods, to normal year-end
audit adjustments.
(l) Absence
of Certain Changes since the Balance Sheet Date. Except as
set forth in the SEC Documents, since December 31, 2006, the business and
operations of the Company and each of its Subsidiaries have been conducted
in
the ordinary course consistent with past practice, and there has not
been:
(i) any
declaration, setting aside or payment of any dividend or other distribution
of
the assets of the Company or any of its Subsidiaries with respect to any shares
of capital stock of the Company or any of its Subsidiaries or any repurchase,
redemption or other acquisition by the Company or any subsidiary of the Company
of any outstanding shares of the Company’s capital stock (and the Company has
not made any agreements to do any of the foregoing);
(ii) any
damage, destruction or loss, whether or not covered by insurance, except for
such occurrences, individually and collectively, that have not had, and would
not reasonably be expected to have, a Material Adverse Effect;
(iii) any
waiver by the Company or any of its Subsidiaries of a valuable right or of
a
material debt owed to it, except for such waivers, individually and
collectively, that have not had, and would not reasonably be expected to have,
a
Material Adverse Effect;
(iv) any
material change or amendment to, or any waiver of any material right under
a
material contract or arrangement by which the Company or any of its Subsidiaries
or any of its or their respective assets or properties is bound or
subject;
(v) any
change by the Company in its accounting principles, methods or practices or
in
the manner in which it keeps its accounting books and records, except any such
change required by a change in GAAP or by the SEC; or
(vi) any
other
event or condition of any character, except for such events and conditions
that
have not resulted, and are not expected to result, either individually or
collectively, in a Material Adverse Effect.
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(m) Intellectual
Property.
(i) Except
as
set forth in the SEC Documents, the Company and each of its Subsidiaries owns
or
possesses sufficient rights to use all patents, patent rights, inventions,
trade
secrets, know-how, trademarks, service marks, trade names, copyrights,
information and other proprietary rights and processes (collectively,
“Intellectual Property”), which are necessary to
conduct its or their respective businesses as currently conducted and as
described in the SEC Documents free and clear of all liens, encumbrances and
other adverse claims, except where the failure to own or possess free and clear
of all liens, encumbrances and other adverse claims would not reasonably be
expected to result, either individually or in the aggregate, in a Material
Adverse Effect.
(ii) Neither
the Company nor any of its Subsidiaries has received any written notice of,
nor
has knowledge of, any infringement of or conflict with rights of others with
respect to any Intellectual Property and neither the Company nor any of its
Subsidiaries has knowledge of any infringement, misappropriation or other
violation of any Intellectual Property by any third party, which, in either
case, either individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would reasonably be expected to have a Material
Adverse Effect.
(iii) To
the
Company’s knowledge, none of the patent rights owned or licensed by the Company
or any of its Subsidiaries are unenforceable or invalid.
(iv) Each
employee, consultant and contractor of the Company and each of its Subsidiaries
who has had access to the Intellectual Property has executed a valid and
enforceable agreement to maintain the confidentiality of such Intellectual
Property and assigning all rights to the Company or such subsidiary to any
inventions, improvements, discoveries or information relating to the business
of
the Company or such subsidiary. The Company is not aware that any of
its or its Subsidiaries’ employees is obligated under any contract (including
licenses, covenants or commitments of any nature) or other agreement, or subject
to any judgment, decree or order of any court or administrative agency, that
would interfere with their duties to the Company or such subsidiary or that
would conflict with the Company’s or such subsidiary’s business.
(v) Neither
the Company nor any of its Subsidiaries is subject to any “open source” or
“copyleft” obligations or otherwise required to make any public disclosure or
general availability of source code either used or developed by the Company
or
any of its Subsidiaries.
(n) Registration
Rights. Except as set forth in the SEC Documents, the Company is not
currently subject to any agreement providing any person or entity any rights
(including piggyback registration rights) to have any securities of the Company
registered with the SEC or registered or qualified with any other governmental
authority.
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(o) Title
to Property and Assets. Except as set forth in the SEC
Documents, the properties and assets of the Company and its Subsidiaries are
owned by the Company and its Subsidiaries free and clear of all mortgages,
deeds
of trust, liens, charges, encumbrances and security interests except for (i)
statutory liens for the payment of current taxes that are not yet delinquent and
(ii) liens, encumbrances and security interests that arise in the ordinary
course of business and do not in any material respect affect the properties
and
assets of the Company. With respect to the property and assets it
leases, the Company is in compliance with such leases in all material
respects.
(p) Taxes. The
Company and each of its Subsidiaries has filed or has valid extensions of the
time to file all necessary federal, state, and foreign income and franchise
tax
returns due prior to the date hereof and has paid or accrued all taxes shown
as
due thereon, and the Company has no knowledge of any material tax deficiency
that has been or might be asserted or threatened against it or any of its
Subsidiaries.
(q) Insurance. The
Company and its Subsidiaries maintain insurance of the types and in the amounts
that the Company reasonably believes is prudent and adequate for its business
and which is at least as extensive as is customary for other companies in the
Company’s industry, all of which insurance is in full force and
effect.
(r) Labor
Relations. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees
of
the Company or any of its Subsidiaries. No executive officer, to the
knowledge of the Company, is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality, disclosure or
proprietary information agreement or 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 of its
Subsidiaries to any liability with respect to any of the foregoing
matters.
(s) Internal
Accounting Controls. The Company and its 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 GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken
with
respect to any differences.
(t) Transactions
With Officers and Directors. Except as set forth in the SEC
Documents, none of the officers or directors of the Company has entered into
any
transaction with the Company or any Subsidiary that would be required to be
disclosed pursuant to Item 404(a) or (c) of Regulation S-K of the
SEC.
(u) General
Solicitation. Neither the Company nor any other person or
entity authorized by the Company to act on its behalf has engaged in a general
solicitation or general advertising (within the meaning of Regulation D of
the
Securities Act) of investors with respect to offers or sales of the Purchased
Securities. The Company has offered the Securities for sale only to
the Purchasers and certain other “accredited investors” within the meaning of
Rule 501 under the Securities Act.
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(v) Listing
Matters. The Common Stock of the Company is listed on the
Over The Counter Bulletin Board (the “OTCBB”) under
the ticker symbol “MDFI.” The issuance and sale of the Purchased
Securities under this Agreement does not contravene the rules and regulations
of
the OTCBB.
(w) Investment
Company. The Company and each of its Subsidiaries is not
now, and after the sale of the Purchased Securities under this Agreement and
the
application of the net proceeds from the sale of the Purchased Securities
described in Section 1(b) herein will not be, an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.
(y) No
Integrated Offering. Neither the Company, nor any
Affiliate of the Company, nor any person acting on its or their behalf has,
directly or indirectly, engaged in any form of general solicitation or general
advertising with respect to any security or made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that
would cause the offering or issuance of the Purchased Securities to be
integrated with prior offerings by the Company for purposes of the Securities
Act which would cause Regulation D or any other applicable exemption from
registration under the Securities Act to be unavailable, or would cause any
applicable state securities laws exemptions or any applicable stockholder
approval provisions exemptions, including, without limitation, under the rules
and regulations of any national securities exchange or automated quotation
system on which any of the securities of the Company are listed or designated
to
be unavailable, nor will the Company take any action or steps that would cause
the offering or issuance of the Purchased Securities to be integrated with
other
offerings.
(z) Brokers. Neither
the Company nor any Subsidiary has any liability to pay any fees, commissions
or
other similar compensation to any broker, finder, investment banker, financial
advisor or other similar person in connection with the transactions contemplated
by this Agreement. The Purchasers shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of other
persons for fees of a type contemplated in this Section that may be due in
connection with the transactions contemplated by this Agreement.
(aa) Pensions;
Benefits. (a) Neither the Company nor any
subsidiary or ERISA Affiliate maintains or contributes to any Plan other than
those disclosed in the SEC Documents.
(i) The
Company and each ERISA Affiliate is in compliance with ERISA and no
contributions required to be made by the Company or any ERISA Affiliate to
any
pension plan are overdue.
(ii) No
liability to the PBGC has been or is expected to be incurred by the Company
or
any ERISA Affiliate with respect to any pension plan that, individually or
in
the aggregate, could reasonably be expected to have a Material Adverse
Effect. No circumstance exists that constitutes grounds under section
4042 of ERISA entitling the PBGC to institute proceedings to terminate, or
appoint a trustee to administer, any pension plan or trust created thereunder,
nor has the PBGC instituted any such proceeding.
10
(ii) Neither
the Company nor any ERISA Affiliate has incurred or presently expects to incur
any withdrawal liability under Title IV of ERISA with respect to any
multiemployer plan. There have been no “reportable events” (as such
term is defined in section 4043 of ERISA) with respect to any multiemployer
plan
that could result in the termination of such multiemployer plan and give rise
to
a liability of the Company or any ERISA Affiliate in respect
thereof. Neither the Company or any subsidiary has incurred or does
it expect to incur liability under Sections 412 or 4971 of the Code; and each
“pension plan” for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code has been determined by the
Internal Revenue Service to be so qualified and nothing has occurred, whether
by
action or by failure to act, which could reasonably be expected to cause the
loss of such qualification.
For
purposes of this section 3(aa) “Code” means the
Internal Revenue Code of 1986; “ERISA” means the
Employee Retirement Income Security Act of 1974; “ERISA
Affiliate” means any person required to be aggregated with the
Company or any subsidiary of the Company under Sections 414(b), (c), (m) or
(o)
of the Code; “PBGC” means the Pension Benefit Guaranty
Corporation; and “Plan” means any employee benefit
plan, program or arrangement, whether oral or written, maintained or contributed
to by the Company, any subsidiary of the Company or any ERISA Affiliate, or
with
respect to which the Company, any of its Subsidiaries or any ERISA Affiliate
may
incur liability.
(bb) Application
of Takeover Protections. The Company and its Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s Certificate of Incorporation (or
similar charter documents) or the laws of its state of incorporation that is
or
could become applicable to the Purchasers as a result of the Purchasers and
the
Company fulfilling their obligations or exercising their rights under this
Agreement, including without limitation as a result of the Company’s issuance of
the Purchased Securities and the Purchasers’ ownership of the Purchased
Securities.
(cc) Purchaser
Representations. The Company acknowledges and agrees that no
Purchaser makes or has made any representations or warranties with respect
to
the transactions contemplated hereby other than those specifically set forth
in
Section 4 hereof.
(dd) Solvency. Based
on the financial condition of the Company as of the Closing Date after giving
effect to the receipt by the Company of the proceeds from the sale of the
Purchased Securities hereunder, (i) the fair saleable value of the Company’s
assets exceeds the amount that will be required to be paid on or in respect
of
the Company’s existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company’s assets do not constitute
unreasonably small capital to carry on its business as now conducted and as
proposed to be conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the Company, and
projected capital requirements and capital availability thereof; and (iii)
the
current cash flow of the Company, together with the proceeds the Company would
receive, were it to liquidate all of its assets, after taking into account
all
anticipated uses of the cash, would be sufficient to pay all amounts on or
in
respect of its liabilities when such amounts are required to be
paid. The Company does not intend to incur debts beyond its ability
to pay such debts as they mature (taking into account the timing and amounts
of
cash to be payable on or in respect of its debt). The SEC Documents
set forth as of the dates thereof all outstanding secured and unsecured
Indebtedness of the Company or any subsidiary, or for which the Company or
any
subsidiary has commitments. For the purposes of this Agreement,
“Indebtedness” shall mean (a) any liabilities for
borrowed money or amounts owed in excess of $50,000 (other than trade accounts
payable incurred in the ordinary course of business), (b) all guaranties,
endorsements and other contingent obligations in respect of Indebtedness of
others, whether or not the same are or should be reflected in the Company’s
balance sheet (or the notes thereto), except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in
the
ordinary course of business; and (c) the present value of any lease payments
in
excess of $50,000 due under leases required to be capitalized in accordance
with
GAAP. Neither the Company nor any subsidiary is in default with respect to
any
Indebtedness.
11
(ee) No
Disagreements with Accountants and Lawyers. There are no
disagreements of any kind presently existing, or reasonably anticipated by
the
Company to arise, between the Company and the accountants and lawyers formerly
or presently employed by the Company.
(ff) Acknowledgment
Regarding Purchasers’ Purchase of Purchased Securities. The
Company acknowledges and agrees that each of the Purchasers is acting solely
in
the capacity of an arm’s length purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges
that no Purchaser is acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by any Purchaser or any of their
respective representatives or agents in connection with this Agreement and
the
transactions contemplated hereby is merely incidental to the Purchasers’
purchase of the Purchased Securities. The Company further represents
to each Purchaser that the Company’s decision to enter into this Agreement has
been based solely on the independent evaluation of the transactions contemplated
hereby by the Company and its representatives.
(gg) Manipulation
of Price. 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 Purchased
Securities, (ii) sold, bid for, purchased, or, paid any compensation for
soliciting purchases of, any of the Purchased Securities or (iii) paid or agreed
to pay to any person any compensation for soliciting another to purchase any
other securities of the Company, other than, in the case of clauses (ii) and
(iii), compensation paid to the Company’s placement agent and any approved
broker-dealers in connection with the placement of the Purchased
Securities.
(hh) Legend
Removal. The Company agrees, upon a Purchaser’s reasonable
request, to reissue certificates representing any of the Purchased Shares
without the legend set forth in Section 4(j)(i) below: (i) while a registration
statement covering the resale of such securities is effective under the
Securities Act, (ii) following any sale of such securities pursuant to Rule
144
(assuming the transferor is not an affiliate of the Company), (iii) if such
Securities are eligible for sale under Rule 144(k) (to the extent that the
applicable Purchaser provides a certification or legal opinion to the Company
to
that effect), or (iv) if such legend is not required under applicable
requirements of the Securities Act (including controlling judicial
interpretations and pronouncements issued by the Commission). Following the
effective date of a registration statement, which includes the Purchased
Securities, or at such earlier time as a legend is no longer required for the
Purchased Shares and the Underlying Shares, the Company will, promptly following
the delivery by a Purchaser to the Company or the Company’s transfer agent of a
legended certificate representing such securities, deliver or cause to be
delivered to such Purchaser a certificate representing such securities that
is
free from all restrictive legends. If requested by a Purchaser,
certificates for securities subject to legend removal hereunder shall be
transmitted by the transfer agent of the Company to the Purchasers by crediting
the account of the Purchaser’s prime broker with the Depository Trust Company
(“DTC”).
12
(jj) Equal
Treatment of Purchasers. No consideration shall be offered
or paid to any person to amend or consent to a waiver or modification of any
provision of any of this Agreement unless the same consideration is also offered
to all of the parties to such agreements. For clarification purposes,
this provision constitutes a separate right granted to each Purchaser by the
Company and negotiated separately by each Purchaser, and is intended for the
Company to treat the Purchasers as a class and shall not in any way be construed
as the Purchasers acting in concert or as a group with respect to the purchase,
disposition or voting of Securities or otherwise.
4.
Representations,
Warranties and Certain Agreements of The Purchasers. Each
Purchaser hereby represents and warrants to the Company, severally and not
jointly, and agrees that:
(a) Organization,
Good Standing and Qualification. The Purchaser has all
corporate, membership or partnership power and authority required to enter
into
this Agreement and the other agreements, instruments and documents contemplated
hereby, and to consummate the transactions contemplated hereby and
thereby.
(b) Authorization. The
execution of this Agreement has been duly authorized by all necessary corporate,
membership or partnership action on the part of the Purchaser. This
Agreement constitutes the Purchaser’s legal, valid and binding obligation,
enforceable in accordance with its terms, except (i) as may be limited by (A)
applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting the enforcement of creditors’ rights
generally and (B) the effect of rules of law governing the availability of
equitable remedies and (ii) as rights to indemnity or contribution may be
limited under federal or state securities laws or by principles of public policy
thereunder.
(c) Litigation. There
is no Action pending to which such Purchaser is a party that is reasonably
likely to prevent, enjoin, alter or delay the transactions contemplated by
this
Agreement.
13
(d) Purchase
for Own Account. The Purchased Securities are being acquired
for investment for the Purchaser’s own account, not as a nominee or agent, and
not with a view to the public resale or distribution thereof within the meaning
of the Securities Act, without prejudice, however, to such Purchaser’s right at
all times to sell or otherwise dispose of all or any part of such securities
in
compliance with applicable federal and state securities laws and as otherwise
contemplated by this Agreement. The Purchaser also represents that it
has not been formed for the specific purpose of acquiring the Purchased
Securities.
(e) Investment
Experience. The Purchaser understands that the purchase of
the Purchased Securities involves substantial risk. The Purchaser has
experience as an investor in securities of companies and acknowledges that
it
can bear the economic risk of its investment in the Purchased Securities and
has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of this investment in the Purchased
Securities and protecting its own interests in connection with this
investment.
(f) Accredited
Investor Status. The Purchaser is an “accredited investor”
within the meaning of Regulation D promulgated under the Securities
Act.
(g) Reliance
Upon Purchaser’s Representations. The Purchaser understands
that the issuance and sale of the Purchased Securities to it will not be
registered under the Securities Act on the ground that such issuance and sale
will be exempt from registration under the Securities Act pursuant to Section
4(2) thereof, and that the Company’s reliance on such exemption is based on each
Purchaser’s representations set forth herein.
(h) Receipt
of Information. The Purchaser has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the issuance and sale of the Purchased Securities and the
business, properties, prospects and financial condition of the Company and
to
obtain any additional information requested and has received and considered
all
information it deems relevant to make an informed decision to purchase the
Purchased Securities. Neither such inquiries nor any other
investigation conducted by or on behalf of such Purchaser or its representatives
or counsel shall modify, amend or affect such Purchaser’s right to rely on the
truth, accuracy and completeness of such information and the Company’s
representations and warranties contained in this Agreement.
(i) Restricted
Securities. The Purchaser understands that the Purchased
Securities have not been registered under the Securities Act and will not sell,
offer to sell, assign, pledge, hypothecate or otherwise transfer any of the
Purchased Securities unless (i) pursuant to an effective registration statement
under the Securities Act, (ii) such holder provides the Company with an opinion
of counsel, in form and substance reasonably acceptable to the Company, to
the
effect that a sale, assignment or transfer of the Purchased Securities may
be
made without registration under the Securities Act and the transferee agrees
to
be bound by the terms and conditions of this Agreement, (iii) such holder
provides the Company with reasonable assurances (in the form of seller and
broker representation letters) that the Purchased Shares or the Underlying
Shares, as the case may be, can be sold pursuant to Rule 144 promulgated under
the Securities Act (“Rule 144”) or (iv) pursuant to
Rule 144(k) promulgated under the Securities Act following the applicable
holding period. Notwithstanding anything to the contrary contained in
this Agreement, the Purchaser may transfer (without restriction and without
the
need for an opinion of counsel) the Purchased Shares to its Affiliates (as
defined below) provided that each such Affiliate is an “accredited investor”
under Regulation D, and such Affiliate agrees to be bound by the terms and
conditions of this Agreement and shall have the rights of a Purchaser
hereunder.
14
For
the
purposes of this Agreement, an “Affiliate” of any
specified Purchaser means any other person or entity directly or indirectly
controlling, controlled by or under direct or indirect common control with
such
specified Purchaser. For purposes of this definition,
“control” means the power to direct the management and
policies of such person or firm, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise.
(j) Legends.
(i) Purchased
Shares and Underlying Shares. The Purchaser agrees that the
certificates for the Purchased Shares and Underlying Shares shall bear the
following legend and that the Purchaser will comply with the restrictions on
transfer set forth in such legend:
|
“THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN
A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
EFFECT,
THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.”
|
The
Company acknowledges and agrees that a Purchaser may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Purchased Securities to a
financial institution that is an “accredited investor” as defined in Rule 501(a)
under the Securities Act and who agrees to be bound by the provisions of this
Agreement and, if required under the terms of such arrangement, such Purchaser
may transfer pledged or secured Purchased Securities to the pledgees or secured
parties. Further, no notice shall be required of such pledge. At the appropriate
Purchaser’s expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Purchased Securities may
reasonably request in connection with a pledge or transfer of the Purchased
Securities, the preparation and filing of any required prospectus supplement
under Rule 424(b)(3) under the Securities Act or other applicable provision
of
the Securities Act to appropriately amend the list of selling stockholders
thereunder.
15
In
addition, the Purchaser agrees that the Company may place stop transfer orders
with its transfer agent with respect to such certificates in order to implement
the restrictions on transfer set forth in this Agreement. The
appropriate portion of the legend and the stop transfer orders will be removed
promptly (but in no event later
than three (3) business days) upon delivery to the Company of such
satisfactory evidence as reasonably may be required by the Company that such
legend or stop orders are not required to ensure compliance with the Securities
Act. In addition, upon the declaration of the effectiveness of the
Registration Statement which includes the Purchased Securities, the Company
shall cause its counsel to deliver a blanket opinion (or separate opinions
if
the transfer agent will not accept a blanket opinion) to its transfer agent
to
cause the stock certificates evidencing the Purchased Shares to be issued to
the
Purchasers free of any Securities Act restrictive legends assuming compliance
with the prospectus delivery requirements, to the extent required by Rule 172
of
the Securities Act. Each of the Purchaser acknowledges and agrees that the
Company will endeavor to remove any Securities Act restrictive legends pursuant
to this Section j(ii) upon the representation contained herein that the
Purchasers will comply with the prospectus delivery requirements, to the extent
required by Rule 172 of the Securities Act.
(ii) Purchased
Warrants. The Purchaser agrees that Purchased Warrants shall
bear the following legend:
|
“THIS
WARRANT AND THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE NOT
BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES
ACT”) OR WITH ANY STATE SECURITIES COMMISSION, AND MAY NOT BE TRANSFERRED
OR DISPOSED OF BY THE HOLDER IN THE ABSENCE OF A REGISTRATION
STATEMENT
WHICH IS EFFECTIVE UNDER THE SECURITIES ACT AND APPLICABLE STATE
LAWS AND
RULES, OR, UNLESS, IMMEDIATELY PRIOR TO THE TIME SET FOR TRANSFER,
SUCH
TRANSFER MAY BE EFFECTED WITHOUT VIOLATION OF THE SECURITIES
ACT AND OTHER
APPLICABLE STATE LAWS AND RULES.”
|
(k) Questionnaires. The
Purchaser has completed or caused to be completed the Stock Certificate
Questionnaire, and the answers to such questionnaires are true and
correct as of the date of this Agreement; provided, that the Purchasers
shall be entitled to update such information by providing written notice thereof
to the Company before the effective date of the Registration
Statement.
(l) Prohibited
Transactions. During the last thirty (30) days prior to the
date hereof, neither such Purchaser nor any Affiliate of such Purchaser, foreign
or domestic, has, directly or indirectly, effected or agreed to effect any
“short sale” (as defined in Rule 200 under Regulation SHO), whether or not
against the box, established any “put equivalent position” (as defined in Rule
16a-1(h) under the ▇▇▇▇ ▇▇▇) with respect to the Common Stock, borrowed or
pre-borrowed any shares of Common Stock, or granted any other right (including,
without limitation, any put or call option) with respect to the Common Stock
or
with respect to any security that includes, relates to or derived any
significant part of its value from the Common Stock or otherwise sought to
hedge
its position in the Company’ securities (each, a “Prohibited
Transaction”).
16
(m) Form
D Filing; Registration; Compliance With The Securities Act. The Company
hereby agrees that it shall file in a timely manner a Form D relating to the
sale of the Purchased Securities under this Agreement, pursuant to Regulation
D
promulgated under the Securities Act;
5. Conditions
to The Purchaser’s Obligations at the Closing. The obligations of
the Purchasers under Section 1(b) of this Agreement are subject to the
fulfillment or waiver, on or before the Closing, of each of the following
conditions:
(a) Representations
and Warranties True. Each of the representations and
warranties of the Company contained in Section 3 shall be true and correct
in
all material respects on and as of the date hereof (provided, however,
that such materiality qualification shall only apply to representations or
warranties not otherwise qualified by materiality) and on and as of the date
of
the Closing with the same effect as though such representations and warranties
had been made as of the Closing; provided, however, that if a representation
and
warranty is made as of a specific date, it shall be true and correct in all
material respects only as of such date.
(b) Performance. The
Company shall have performed and complied in all material respects with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing and
shall have obtained all approvals, consents and qualifications necessary to
complete the purchase and sale described herein; provided, however,
that the Company may furnish to each Purchaser a facsimile copy of stock
certificate representing the Purchased Shares, with the original stock
certificate held in trust by counsel for the Company until delivery thereof
on
the next business day.
(c) Compliance
Certificate. The Company will have delivered to the
Purchasers a certificate signed on its behalf by its Chief Executive Officer
or
Chief Financial Officer certifying that the conditions specified in Sections
6(a) and 6(b) hereof have been fulfilled.
(d) Agreement. The
Company shall have executed and delivered to the Purchasers this
Agreement.
(e) Securities
Exemptions. The offer and sale of the Purchased Securities
to the Purchasers pursuant to this Agreement shall be exempt from the
registration requirements of the Securities Act and the registration and/or
qualification requirements of all applicable state securities laws.
17
(f) No
Suspension of Trading or Listing of Common Stock. The Common
Stock of the Company (i) shall be designated for quotation or listed on the
OTCBB and (ii) shall not have been suspended from trading on the
OTCBB.
(g) Good
Standing Certificates. The Company shall have delivered to
the Purchasers a certificate of the Secretary of State of the State of Delaware,
dated as of a date within ten days of the date of the Closing, with respect
to
the good standing of the Company.
(h) Secretary’s
Certificate. The Company shall have delivered to the
Purchasers a certificate of the Company executed by the Company’s Secretary
attaching and certifying to the truth and correctness of (i) the Certificate
of
Incorporation, (ii) the Bylaws and (iii) the resolutions adopted by the
Company’s Board of Directors in connection with the transactions contemplated by
this Agreement.
(i) Opinion
of Company Counsel. The Purchasers will have received an
opinion on behalf of the Company, dated as of the date of the Closing, from
Sichenzia ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, counsel to the Company, in the form
attached as Exhibit B.
(j) No
Statute or Rule Challenging Transaction. No statute, rule,
regulation, executive order, decree, ruling, injunction, action, proceeding
or
interpretation shall have been enacted, entered, promulgated, endorsed or
adopted by any court or governmental authority of competent jurisdiction or
any
self-regulatory organization or the staff of any of the foregoing, having
authority over the matters contemplated hereby that questions the validity
of,
or challenges or prohibits the consummation of, any of the transactions
contemplated by this Agreement.
(k) Other
Actions. The Company shall have executed such certificates,
agreements, instruments and other documents, and taken such other actions as
shall be customary or reasonably requested by the Purchasers in connection
with
the transactions contemplated hereby.
6. Conditions
to The Company’s Obligations at the Closing. The obligations
of the Company to the Purchasers under this Agreement are subject to the
fulfillment or waiver, on or before the Closing, of each of the following
conditions:
(a) Representations
and Warranties True. The representations and warranties of
the Purchasers contained in Section 4 shall be true and correct in all material
respects on and as of the date hereof (provided, however, that such
materiality qualification shall only apply to representations and warranties
not
otherwise qualified by materiality) and on and as of the date of the Closing
with the same effect as though such representations and warranties had been
made
as of the Closing.
(b) Performance. The
Purchasers shall have performed and complied in all material respects with
all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing and
shall have obtained all approvals, consents and qualifications necessary to
complete the purchase and sale described herein.
18
(c) Agreement. The
Purchasers shall have executed and delivered to the Company this Agreement
(and
Appendix I hereto).
(d) Securities
Exemptions. The offer and sale of the Purchased Securities
to the Purchasers pursuant to this Agreement shall be exempt from the
registration requirements of the Securities Act and the registration and/or
qualification requirements of all applicable state securities laws.
(e) Payment
of Purchase Price. The Purchasers shall have delivered to
the Company by wire transfer of immediately available funds, full payment of
the
purchase price for the Purchased Securities as specified in Section
1(b).
(f) No
Statute or Rule Challenging Transaction. No statute, rule,
regulation, executive order, decree, ruling, injunction, action, proceeding
or
interpretation shall have been enacted, entered, promulgated, endorsed or
adopted by any court or governmental authority of competent jurisdiction or
any
self-regulatory organization or the staff of any of the foregoing, having
authority over the matters contemplated hereby that questions the validity
of,
or challenges or prohibits the consummation of, any of the transactions
contemplated by this Agreement.
7. MISCELLANEOUS.
(a) Successors
and Assigns. The terms and conditions of this Agreement will
inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties. The Company shall not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Purchasers holding a majority of the total aggregate number
of
Purchased Shares then outstanding (excluding any shares sold to the public
pursuant to Rule 144 or otherwise). Any Purchaser may assign its
rights under this Agreement to any person to whom the Purchaser assigns or
transfers any Purchased Securities, provided that such transferee agrees in
writing to be bound by the terms and provisions of this Agreement, and such
transfer is in compliance with the terms and provisions of this Agreement and
permitted by federal and state securities laws.
(b) Governing
Law. This Agreement will be governed by and construed and
enforced under the internal laws of the State of New York, without reference
to
principles of conflict of laws or choice of laws. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH
OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
(c) Survival. The
representations and warranties of the Company and the Purchasers contained
in
Sections 3 and 4 of this Agreement shall survive until the second anniversary
of
the Closing Date.
(d) Counterparts. This
Agreement may be executed in two or more counterparts, each of which will be
deemed an original, but all of which together will constitute one and the same
instrument.
19
(e) Headings. The
headings and captions used in this Agreement are used for convenience only
and
are not to be considered in construing or interpreting this
Agreement. All references in this Agreement to sections, paragraphs,
exhibits and schedules will, unless otherwise provided, refer to sections and
paragraphs hereof and exhibits and schedules attached hereto, all of which
exhibits and schedules are incorporated herein by reference.
(f) Notices. Any
notices and other communications required or permitted under this Agreement
shall be in writing and shall be delivered (i) personally by hand or by courier,
(ii) mailed by United States first-class mail, postage prepaid or (iii) sent
by
facsimile directed (A) if to a Purchaser, at such Purchaser’s address or
facsimile number set forth on such Purchaser’s signature page to this Agreement,
or at such address or facsimile number as such Purchaser may designate by giving
at least ten days’ advance written notice to the Company or (B) if to the
Company, to its address or facsimile number set forth below, or at such other
address or facsimile number as the Company may designate by giving at least
ten
days’ advance written notice to the Purchaser. All such notices and
other communications shall be deemed given upon (I) receipt or refusal of
receipt, if delivered personally, (II) three days after being placed in the
mail, if mailed, or (III) confirmation of facsimile transfer, if
faxed.
The
address of the Company for the purpose of this Section 8(f) is as
follows:
▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇)
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Fax: (973)
________
Attention:
▇▇▇▇▇▇ ▇▇▇▇▇▇
with
a
copy to:
Sichenzia
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇,
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Tel: (▇▇▇)
▇▇▇-▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
(g) Amendments
and Waivers. This Agreement may be amended and the observance of any
term of this Agreement may be waived only with the written consent of the
Company and the Purchasers holding a majority of the total aggregate number
of
Purchased Shares then outstanding (excluding any shares sold to the public
pursuant to Rule 144 or otherwise). Any amendment effected in
accordance with this Section 8(g) will be binding upon the Purchasers, the
Company and their respective successors and permitted assigns.
(h) Severability. If
any provision of this Agreement is held to be unenforceable under applicable
law, such provision will be excluded from this Agreement and the balance of
the
Agreement will be interpreted as if such provision were so excluded and will
be
enforceable in accordance with its terms.
20
(i) Entire
Agreement. This Agreement, together with all exhibits and
schedules hereto and thereto, constitutes the entire agreement and understanding
of the parties with respect to the subject matter hereof and supersedes any
and
all prior negotiations, correspondence, agreements, understandings, duties
or
obligations between the parties with respect to the subject matter
hereof.
(j) No
Additional Agreements. The Company does not have any written or oral
contract, agreement, arrangement or understanding with any Purchaser with
respect to the transactions contemplated by this Agreement other than as
expressly stated herein.
(k) Further
Assurances. From and after the date of this Agreement, upon
the request of the Company or the Purchasers, the Company and the Purchasers
will execute and deliver such instruments, documents or other writings, and
take
such other actions, as may be reasonably necessary or desirable to confirm
and
carry out and to effectuate fully the intent and purposes of this
Agreement.
(l) Meaning
of Include and Including. Whenever in this Agreement the
word “include” or “including” is used, it shall be deemed to mean “include,
without limitation” or “including, without limitation,” as the case may be, and
the language following “include” or “including” shall not be deemed to set forth
an exhaustive list.
(m) Fees,
Costs and Expenses. All fees, costs and expenses (including
attorneys’ fees and expenses) incurred by any party hereto in connection with
the preparation, negotiation and execution of this Agreement and the exhibits
and schedules hereto and the consummation of the transactions contemplated
hereby and thereby shall be the sole and exclusive responsibility of such
party. In addition, the Company will pay the costs associated with
any filings with, or compliance with any of the requirements of any governmental
authorities.
(n) 8-K
Filing and Publicity; Standstill. On or before 8:30 a.m., eastern time,
on the second business day following the date of this Agreement, the Company
shall issue a press release describing the terms of the transactions
contemplated by this Agreement, but not including the names of the Purchasers
or
the individual amounts of Purchased Securities purchased hereby without the
Purchaser’s consent. On or before 8:30 a.m., eastern time, on the
fourth business day following the date of this Agreement, the Company shall
file
a Current Report on Form 8-K describing the terms of the transactions
contemplated by this Agreement in the form required by the Exchange Act and
attaching this Agreement as an exhibit to such filing (the “8-K
Filing”), but not including the names of the Purchasers or the
individual amounts of Purchased Securities purchased hereby without the
Purchaser’s consent. From and after the filing of the 8-K Filing with the SEC,
the Purchasers as a consequence of participating in the transactions
contemplated by this Agreement shall not be in possession of any material,
nonpublic information received from the Company, any of its subsidiaries or
any
of their respective officers, directors, employees or agents authorized to
disclose such information, that is not disclosed in the 8-K
Filing. The Company shall not, and shall cause each of its
subsidiaries and its and each of their respective officers, directors, employees
and agents, not to, provide the Purchasers with any material, nonpublic
information regarding the Company or any of its subsidiaries from and after
the
filing of the 8-K Filing with the SEC without the consent of the
Purchasers. If a Purchaser has, or believes it has, received any such
material, nonpublic information regarding the Company or any of its subsidiaries
prior to the Closing Date, it shall provide the Company with written notice
thereof and the Company shall within five (5) business days thereafter, make
public disclosure of such material, nonpublic information if permitted under
applicable law or without breach or violation of any agreement, contract or
other obligation of the Company unless the Board of Directors of the Company
shall determine that such disclosure would reasonably be expected to result
in a
material and adverse effect on the Company or its business, prospects, finances
or properties. Except for such disclosure as the Company is advised by counsel
is required to be included in documents filed with the SEC or otherwise required
by law, the Company shall not use the name of, or make reference to, any
Purchaser or any of its Affiliates in any press release or in any public manner
(including any reports or filings made by the Company under the Exchange Act)
without such Purchaser's prior written consent, which consent shall not be
unreasonably withheld.
21
(o) Stock
Splits, Dividends and other Similar Events. The provisions
of this Agreement shall be appropriately adjusted to reflect any stock split,
stock dividend, reorganization or other similar event that may occur with
respect to the Company after the date hereof.
(p) Remedies. In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, each Purchaser and the Company will be
entitled to specific performance under this Agreement. The parties
agree that monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance
of
any such obligation the defense that a remedy at law would be
adequate.
(p) Several
Liability; Advice. Each Purchaser agrees that no other Purchaser nor
the respective controlling persons, officers, directors, partners, agents or
employees of any other Purchaser shall be liable to such Purchaser for any
losses incurred by such Purchaser in connection with its investment in the
Company. Each Purchaser acknowledges that it is not relying upon any
person, firm or corporation (including without limitation any other Purchaser),
other than the Company and its officers and directors (acting in their capacity
as representatives of the Company), in deciding to invest and in making its
investment in the Company. The Company acknowledges that no Purchaser is acting
or has acted as an advisor, agent or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and any advice given by any Purchaser
or any of its representatives in connection with this Agreement is merely
incidental to the Purchasers’ purchase of securities of the Company
hereunder.
The
parties hereto have executed this Agreement as of the date and year first above
written.
| Medefile International, Inc | |||
|
By:
|
/s/ | ||
| ▇▇▇▇▇▇ ▇▇▇▇▇▇ | |||
| Chief Executive Officer | |||
.
22
[PURCHASER
SIGNATURE PAGES TO FOLLOW]
23
SIGNATURE
PAGE TO
DATED
AS OF _____________,
BY
AND AMONG
AND
EACH PURCHASER NAMED THEREIN
The
undersigned hereby executes and delivers to Medefile International, Inc., the
Securities Purchase Agreement (the “Agreement”) to
which this signature page is attached, which Agreement and signature page,
together with all counterparts of such Agreement and signature pages of the
other Purchasers named in such Agreement, shall constitute one and the same
document in accordance with the terms of such Agreement.
| Number of Shares: ______________________ | ||
| Name of Purchaser | ||
| Signature: ____________________________ | ||
| By: _________________________________ | ||
| Title: ________________________________ | ||
| Address: _____________________________ | ||
| _____________________________ | ||
| _____________________________ | ||
| Telephone: ___________________________ | ||
| Fax: _________________________________ | ||
| Tax ID Number: ________________________ |
24