XA, INC. SECURITIES PURCHASE AGREEMENT As of December 21, 2007
Exhibit
10.6
As
of
December 21, 2007
THIS
SECURITIES PURCHASE
AGREEMENT, dated as of this 21st day of December 2007 (this “Agreement”),
between XA, INC., a Nevada corporation (the “Company”),
and
Vision Opportunity Master Fund, Ltd. (the “Purchaser”).
W
I T N E S S E T
H:
WHEREAS,
the Company has
previously entered into Securities Purchase Agreements on August 8, 2006,
September 26, 2006 and October 23, 2006 (the “Prior
Closing”
and the “Prior
Purchase
Agreements”), whereby it sold an aggregate of $2,700,000 in 11%
Senior Secured Convertible Promissory Notes (the “Prior
Notes”)
and 392,500 warrants to purchase shares of its common stock at an exercise
price
of $1.10 per share and 433,333 warrants to purchase shares of its common stock
at an exercise price of $0.30 per share (collectively the “Prior
Warrants”), to six entities (including the Purchaser) and two
individuals (the “Prior
Purchasers”) which Prior Notes were secured by Security Agreements
(the “Prior
Security
Agreements”);
WHEREAS,
the Company has
previously entered into Securities Purchase Agreements on June 11, 2007, June
22, 2007, and June 29, 2007 (the “Follow
On
Closing” and the “Follow
On Purchase
Agreements”), whereby it sold an aggregate of $450,000 in 11%
Senior Secured Convertible Promissory Notes (the “Follow
On
Notes”) and 450,000 warrants to purchase shares of its common
stock at an exercise price of $0.30 per share (the “Follow
OnWarrants”),
to
six entities (including the Purchaser) and two individuals (the “Follow
On
Purchasers”) which Follow On Notes were secured by Security
Agreements (the “Follow
OnSecurity
Agreements”). The shares of common stock which the
Prior Notes and the Follow On Notes were convertible into and the shares of
common stock which the Prior Warrants and Follow On Warrants were convertible
into and an aggregate of 1,000,000 additional warrants previously issued
exercisable at $0.30 per share (collectively the “Prior
Underlying
Shares”), were granted registration rights pursuant to
Registration Rights Agreements (the “Prior
Registration
Agreements”);
WHEREAS,
the Company desires
to issue to the Purchaser, and the Purchaser desires to purchase from the
Company, the additional Securities (as such term is defined below) as set forth
below (the “Offering”);
and
WHEREAS,
certain capitalized
terms used in this Agreement are defined in Section 9.1
hereof;
NOW,
THEREFORE, in
consideration of the promises and mutual covenants and agreements hereinafter
contained, and for good and valuable consideration the receipt and adequacy
of
which are hereby acknowledged, the parties hereto hereby agree as
follows:
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1. Sale
and Purchase of
Securities.
1.1 Sale
and Purchase of
Securities. Subject to the terms and conditions of this
Agreement, on the Closing Date (as defined in Section 3.1 hereof),
the Company shall issue, sell and deliver to the Purchaser, and the Purchaser
shall purchase from the Company for the Purchase
Price (as defined in Section 2.1 hereof)
(i) 11% Senior Subordinated Secured Convertible Promissory Notes in the
aggregate principal amount of $200,000 on or about the date of this Agreement,
which are part of a sale of an aggregate of up to $600,000 in 11% Senior
Subordinated Convertible Promissory Notes by the Company (collectively the
“Notes”)
and
warrants to purchase Two Hundred Thousand
(200,000) shares (subject to adjustment as described therein), of the Company’s
common stock, par value $0.001 per share (the “Common
Stock”)
at an exercise price of $0.30 per share (subject to adjustment as described
therein), of the Company’s Common Stock (each a “Warrant”
and
collectively the “Warrants”).
The Notes and Warrants shall hereinafter sometimes be collectively referred
to
as the “Securities.”
The names, addresses and principal amount of Notes purchased and Warrants
received by the Purchaser shall be set forth on Schedule 1.1
hereto.
2. Purchase
Price.
2.1 Purchase
Price. (i) The aggregate purchase price of the
Securities to be purchased pursuant to Section 1.1 shall be
$200,000 (the “Purchase
Price”).
2.2 Payment
of the Purchase
Price. At the Closing (as defined in Section 3.1 hereof),
the Purchaser shall pay the Purchase Price by wire transfer of immediately
available funds or by such other method as may be reasonably acceptable to
the
Company and the Purchaser, to such account of the Company as shall have been
designated in advance to the Purchaser by the Company.
3. Closing.
3.1 Closing
Date. The closing of the sale and purchase of the Securities
(the “Closing”)
shall take place on December 21, 2007, or at such other time, date or place
as
the parties hereto may mutually agree; provided, that all
conditions to the Closing set forth in this Agreement have been satisfied or
waived by such date. The date on which the Closing is held is
referred to in this Agreement as the “Closing
Date.”
At the Closing (i) the Company shall deliver, or cause to be
delivered, the
Notes, each executed by the Company and (ii) the documents referred to in Section 8
hereof.
3.2
Mastodon
Warrants. The Company shall issue Mastodon Ventures, Inc. an aggregate of
350,000 warrants to purchase shares of the Company’s common stock at an exercise
price of $0.30 per share, in connection with the Closing (the “Mastodon
Warrants”). The Company has previously issued 1,000,000
warrants to Mastodon Ventures, Inc., which warrants have an exercise price
of
$0.30 per share. Additionally, the Company has learned that a portion
of such Warrants have been assigned to various parties by Mastodon.
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3.3 PriorWarrants
and Follow On
Warrants Amendments. The expiration date of the Prior Warrants
and the Follow On Warrants will automatically be amended to the date five years
from the date of the Closing Date.
3.4 Management
Shares and
Warrants. The Company, and the Company’s Chief Executive
Officer, ▇▇▇▇▇▇ ▇▇▇▇▇▇ (“▇▇▇▇▇▇”),
agree that a condition to the Closing is that
▇▇▇▇▇▇ put all of the shares of the Company’s common stock, and all warrants to
purchase shares of the Company’s common stock which he beneficially owns (the
“▇▇▇▇▇▇
Securities”) into a lock-▇▇▇▇, and that ▇▇▇▇▇▇ shall not be able
to sell any of the ▇▇▇▇▇▇ Securities until the earlier of (a) the date the
Notes
are repaid in full; (b) the date all of the Underlying Shares have been
registered with the Securities and Exchange Commission; or (c) the date such
Underlying Shares can be sold without restriction pursuant to Rule 144, or
otherwise. The Company will inform the Company’s transfer agent
by letter, of the placement of the ▇▇▇▇▇▇ Securities in the lock-box and the
restrictions thereon after the parties entry into this Agreement.
3.5 Amendment
to Follow On
Warrants. The Company and the Purchaser agree that Section 16
of the Follow On Warrants shall be amended to provide for the Purchaser to
be
able to provide the Company five (5) days prior written notice of their intent
to hold more than 9.9% of the Company’s common stock in connection with such
Waiver Notice, as defined in the Follow On Warrants.
4. Representations
and Warranties of the
Company. The Company hereby represents, covenants and warrants as of the
date hereof and as of the Closing Date to the Purchaser, acknowledging that
the
Purchaser is relying upon the accuracy and completeness of the representations
and warranties set forth herein to, among other things, ensure that registration
under Section 5 of the Securities Act is not required in connection with
the sale of the Securities hereby, as follows:
4.1
Organization and
Good
Standing; Capitalization.
(a) The
Company (and each Subsidiary) is duly organized, validly existing and in good
standing under the laws of the state of Nevada and has the corporate power
and
authority to own, lease and operate its properties and assets and to carry
on
its business as now conducted and as it is proposed to be
conducted. The Company is in good standing under the laws of each
jurisdiction in which the conduct of its business or the ownership of its
properties or assets requires such qualification or authorization.
(b) All
the outstanding shares of capital stock of the Company have been duly
authorized, and are validly issued, fully paid and
non-assessable. Except as disclosed on Schedule 4.1(b) (i)
there is no option, warrant, call, right, commitment or other agreement of
any
character to which the Company is a party, (ii) there are no securities of
the
Company outstanding which upon conversion or exchange, and (iii) there are
no
share appreciation rights, or other similar rights based on securities of the
Company which, in the case of clause (i), (ii) or (iii), would require the
issuance, sale or transfer of any additional shares of capital stock or other
equity securities of the Company or other securities convertible into,
exchangeable for or evidencing the right to subscribe for or purchase share
capital or other equity securities of the Company. Other than as
contemplated by this Agreement or Transaction Documents (as defined in Section 4.2), the
Company is not a party to, nor is it aware of, any voting trust or other voting,
stockholders or similar agreement with respect to any of the securities of
the
Company or of any agreement relating to the issuance, sale, redemption, transfer
or other disposition of the shares of capital stock on other securities of
the
Company.
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4.2 Authorization
of Agreement;
Enforceability. The Company has all requisite corporate power and
authority to execute and deliver this Agreement and each other agreement,
document, instrument and certificate, including, but not limited to, Waiver
Agreements, the Bank Consent, the Notes, Warrants, Registration Rights Agreement
and Security Agreement, to be executed by the Company in connection with the
consummation of the transactions contemplated by this Agreement (collectively,
the “Transaction
Documents”), and to perform fully its obligations hereunder and
thereunder. The execution, delivery and performance by the Company of
this Agreement and the Transaction Documents have been duly authorized by all
necessary corporate action on the part of the Company and its
stockholders. This Agreement and each of the Transaction Documents
have been duly and validly executed and delivered by the Company and, assuming
the due authorization, execution and delivery thereof by the Purchaser, this
Agreement and each of the Transaction Documents constitutes the legal, valid
and
binding obligations of the Company, enforceable against the Company in
accordance with its respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors’
rights and remedies generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
4.3 No
Conflicts. The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated thereby,
do
not and will not (i) conflict with or violate any provision of the
Company’s and/or any Subsidiary’s Articles of Incorporation or by-laws and any
and all amendments thereto (collectively, the “Internal
Documents”), (ii) conflict with, or constitute a default (or
an event that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration
or
cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a Company or Subsidiary
debt or otherwise), or other understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction
of
any court or governmental authority to which the Company or a Subsidiary is
subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company or a Subsidiary is bound or
affected.
4.4 Subsidiaries,
Joint
Ventures, Partnerships, Etc.
(a) As
of the Closing (i) The Experiential Agency, Inc., (ii) XA Scenes, Inc., (iii)
XA
Interactive, Inc., and (iv) Fiori XA, Inc. (collectively the “Subsidiaries”)
are the only subsidiaries of the Company. Each Subsidiary is wholly
owned by the Company, is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation with corporate power
and
corporate authority under such laws to own, lease and operate its properties
and
conduct its business as currently conducted; and is in good standing (if
applicable) in each other jurisdiction in which it owns or leases property
of a
nature, or transacts business of a type, that would make such qualification
necessary other than such qualifications which the failure to have would not
reasonably be expected to have a Material Adverse Effect.
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(b) Neither
the Company nor its Subsidiaries is a party to any joint venture, partnership
or
similar arrangement or agreement.
4.5 Consents
of Third
Parties. None of the execution and delivery by the Company of
this Agreement and the Transaction Documents, the Bank Consent, the consummation
of the transactions contemplated hereby or thereby, or compliance by the Company
with any of the provisions hereof or thereof will (a) conflict with, or result
in the breach of, any provision of the Certificate of Incorporation or Bylaws
of
the Company (or any Subsidiary), (b) conflict with, violate, result in the
breach or termination of, or constitute a default or give rise to any right
of
termination or acceleration or right to increase the obligations or otherwise
modify the terms thereof under any Permit or Order to which the Company (or
any
Subsidiary) is a party or any Contract to which the Company or its Subsidiaries
is bound or by which the Company or any of its properties or assets is bound,
other than such conflicts, violations, breaches, defaults, termination or
accelerations that would not reasonably be expected to have a Material Adverse
Effect, (c) constitute a violation of any Law applicable to the Company (or
any
Subsidiary) or (d) result in the creation of any Lien upon the properties or
assets of the Company (or any Subsidiary). No consent, waiver,
approval, Order, Permit or authorization of, or declaration or filing with,
or
notification to, any Person or Governmental Body is required on the part of
the
Company and/or its Subsidiaries in connection with the execution and delivery
of
this Agreement, and/or the Transaction Documents, or the compliance by the
Company with any of the provisions hereof or thereof.
4.6 Authorization
of
Securities.
(a) On
the Closing Date, the issuance, sale, and delivery of the Securities to be
purchased pursuant to Section 1.1 will have
been duly authorized by all requisite action of the Company, and, when issued,
sold, delivered and paid for in accordance with this Agreement, the Securities
will be validly issued and outstanding, with no personal liability attaching
to
the ownership thereof.
(b) On
the Closing Date, the issuance and delivery of the shares of Common Stock to
be
delivered upon conversion of the Notes (the “Conversion
Shares”) and upon exercise of the Warrants (the “Warrant
Shares”) in accordance with the terms thereof (collectively, the
Conversion Shares and the Warrants Shares, the “Underlying
Shares”) will have been duly authorized by all requisite action of
the Company and, when issued and delivered in accordance with the terms of
the
Securities, the Underlying Shares will be validly issued and outstanding, fully
paid and non-assessable, with no personal liability attaching to the ownership
thereof, and not subject to preemptive or any other similar rights of the
stockholders of the Company or others.
4.7 Rule
144 Holding Period. The Company agrees and confirms that the
Purchaser’s holding period for the purposes of Rule 144 relates back to October
23, 2006 in connection with the Prior Notes purchased by the Purchaser and
June
29, 2007 in connection with the Follow On Notes purchased by the
Purchaser. The Company also agrees and confirms, that in the event of
a cashless exercise of the Prior Warrants issued to the Purchaser in connection
with Purchaser’s subscription for the Prior Notes, the applicable Rule 144
holding period will relate back to October 23, 2006, and in the event of a
cashless exercise of the Follow On Warrants issued to the Purchaser in
connection with Purchaser’s subscription for the Follow On Notes, the applicable
Rule 144 holding period will relate back to June 29,
2007.
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4.8 Capitalization
and Increase in Authorized Shares.
(a)
Capitalization.
Schedule
4.8 hereto
sets forth in detail all outstanding securities of the Company (including the
terms, the holders and the amounts thereof). Other than as disclosed in Schedule 4.8,
(i) there are no outstanding securities of the Company or any of its
Subsidiaries which contain any preemptive, redemption or similar provisions,
nor
is any holder of securities of the Company or any Subsidiary entitled to
preemptive or similar rights arising out of any agreement or understanding
with
the Company or any Subsidiary by virtue of any of the Transaction Documents,
and
there are no contracts, commitments, understandings or arrangements by which
the
Company or any of its Subsidiaries is or may become bound to redeem a security
of the Company or any of its Subsidiaries; (ii) the Company does not have any
stock appreciation rights or "phantom stock" plans or agreements or any similar
plan or agreement; and (iii) there are no outstanding options, warrants, script
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, except as a result of the purchase and sale of
the
Transaction Securities, or rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings, or
arrangements by which the Company or any Subsidiary is or may become bound
to
issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock.
(b)
Increase
in Authorized
Shares. The Company agrees to use its best efforts to file a
Form 14a Proxy Statement with the Securities and Exchange Commission on or
prior
to February 15, 2008, to request shareholder approval to increase the Company’s
authorized shares of Common Stock, $0.001 par value per share to 50,000,000
shares, and to re-authorize the Company’s preferred stock, $0.001 par value per
share.
4.9 SEC
Reports; Financial
Statements. The Company has filed all reports required to be filed by it
under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or Section 15(d) of the Exchange Act, for the
one (1) year preceding the date hereof (or such shorter period as the Company
was required by law to file such material) (the foregoing materials, including
the exhibits thereto, being collectively referred to herein as the “SEC
Reports”). As of their respective dates, the SEC
Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, as applicable, and none of the SEC Reports,
when filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were
made, not misleading. All material agreements to which the Company is a party
or
to which the property or assets of the Company are subject have been filed
as
exhibits to the SEC Reports to the extent required. The financial
statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (“GAAP”),
except
as may be otherwise specified in such financial statements or the notes thereto
and except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods
then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments. Additionally, since the adoption of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the “New
Act”) and
to the extent that the Company is subject to the New Act, the Company has
complied in all material respects with the laws, rules and regulation under
the
New Act.
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4.10 Material
Changes.
Since December 31, 2006, other than as disclosed in the SEC Reports,
(i) there has been no event, occurrence or development that has had or that
could reasonably be expected to result in a Material Adverse Effect,
(ii) the Company has not incurred any material liabilities (contingent or
otherwise) other than (A) trade payables and accrued expenses incurred in the
ordinary course of business consistent with past practice and (B) liabilities
not required to be reflected in the Company's financial statements pursuant
to
GAAP or required to be disclosed in filings made with the Commission,
(iii) the Company has not altered its method of accounting or the identity
of its auditors, (iv) the Company has not declared or made payment or
distribution of any dividend or distribution of cash or other property to its
holders of Common Stock or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock and (v) the Company has
not issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock option plans.
4.11 No
Undisclosed
Liabilities. Other than as disclosed in the SEC Reports,
neither the Company nor its Subsidiaries has any liabilities (whether accrued,
absolute, contingent or otherwise, and whether due or to become due or asserted
or unasserted), except (a) liabilities provided for in the Financial Statements
(other than liabilities which, in accordance with GAAP, need not be disclosed),
(b) liabilities disclosed on Schedule 4.11 hereto
and (c) liabilities incurred in the ordinary course of business which do not
materially exceed historic levels.
4.12 Absence
of Certain
Developments. In the ordinary course of business or in
the context of the Transactions contemplated in this Agreement and the
Transaction Documents:
(a) there
has not been any Material Adverse Change nor has any event occurred which could
result in any Material Adverse Change;
(b) there
has not been any declaration, setting a record date, setting aside or
authorizing the payment of, any dividend or other distribution in respect of
any
shares of capital stock
of
the Company or its Subsidiaries or any repurchase, redemption or other
acquisition by the Company or its Subsidiaries, of any of the outstanding shares
of capital stock or other securities of, or other ownership interest in, the
Company or its Subsidiaries;
8
(c) there
has not been any transfer, issue, sale or other disposition by the Company
of
any shares of capital stock or other securities of the Company or its
Subsidiaries or any grant of options, warrants, calls or other rights to
purchase or otherwise acquire shares of such capital stock or such other
securities;
(d) neither
the Company nor its Subsidiaries has (i) awarded or paid any bonuses to
employees or representatives of the Company, (ii) entered into any employment,
deferred compensation, severance or similar agreements (nor amended any such
agreement), other than in the ordinary course of business;
(e) neither
the Company nor its Subsidiaries has made any loans, advances (other than
advances to officers and employees of the Company or its Subsidiaries which
advances are made in the ordinary course of business), or capital contributions
to, or investments in, any Person or paid any fees or expenses to any Affiliate
of the Company other than its Subsidiaries;
(f) neither
the Company nor its Subsidiaries has transferred or granted any rights under
any
Contracts or licenses, used by the Company in its business;
(g) there
has not been any damage, destruction or loss, whether or not covered by
insurance, with respect to the property or assets of the Company or its
Subsidiaries having a replacement cost of more than $10,000 for any single
loss
or $20,000 for all such losses;
(h) neither
the Company nor its Subsidiaries has mortgaged, pledged or subjected to any
Lien
any of its assets, or acquired any assets for a purchase price in excess of
$10,000 in the aggregate or sold, assigned, transferred, conveyed, leased or
otherwise disposed of any assets of the Company or its Subsidiaries for a sale
price in excess of $10,000 in the aggregate except for assets acquired or sold,
assigned, transferred, conveyed, leased or otherwise disposed of in the ordinary
course of business;
(i) neither
the Company nor its Subsidiaries has canceled or compromised any debt or claim,
or amended, canceled, terminated, relinquished, waived or released any Contract
or right, except in the ordinary course of business consistent with past
practice and which, individually or in the aggregate, would not be material
to
the Company or its Subsidiaries;
(j) neither
the Company nor its Subsidiaries has made any binding commitment to make any
capital expenditures or capital additions or betterments in excess of $20,000
individually or $50,000 in the aggregate;
(k) neither
the Company nor its Subsidiaries has incurred any debts, obligations or
liabilities, whether due or to become due, except current liabilities incurred
in the ordinary
course of business, none of which current liabilities (individually or in the
aggregate) could result in a Material Adverse Change;
9
(l)
neither the Company nor its Subsidiaries has entered into any transaction other
than in the ordinary course of business except for (in the case of the Company)
this Agreement;
(m) neither
the Company nor its Subsidiaries has encountered any labor difficulties or
labor
union organizing activities;
(n) neither
the Company nor its Subsidiaries has made any change in the accounting
principles, methods or practices followed by it or depreciation or amortization
policies or rates theretofore adopted;
(o) neither
the Company nor its Subsidiaries has disclosed to any Person any material trade
secrets except for disclosures made to Persons subject to valid and enforceable
confidentiality agreements;
(p) neither
the Company nor its Subsidiaries has suffered or experienced any change in
the
relationship or course of dealings between the Company and/or its Subsidiaries
and any of their suppliers or customers which supply goods or services to the
Company or its Subsidiaries or purchase goods or services from the Company
and
or its Subsidiaries; and
(q) neither
the Company nor its Subsidiaries has made any payment to, or received any
payment from, or made or received any investment in, or entered into any
transaction or series of related transactions (including without limitation,
the
purchase, sale, exchange or lease of assets, property or services, or the making
of a loan or guarantee) with any Affiliate in each case, in excess of $10,000
or
its equivalent (other than any transactions between or among the Company and
its
Subsidiaries) (each, an “Affiliate
Transaction”).
4.13 Taxes. The
Company and its Subsidiaries have filed all Tax returns (including statements
of
estimated Taxes owed) and reports required to be filed within the applicable
periods (subject to extensions) for such filings and have paid all Taxes
required to be paid, and has established adequate reserves (net of estimated
Tax
payments already made) for the payment of all Taxes payable in respect of the
period subsequent to the last periods covered by such returns. No
deficiencies for any Tax are currently assessed against the Company or any
Subsidiary. There is no Tax Lien, whether imposed by any federal,
state or local taxing authority, outstanding against the assets, properties
or
business of the Company or its Subsidiaries other than Liens for Taxes which
are
not yet due. Neither the Company nor its Subsidiaries has executed
any waiver of the statute of limitations on the assessment or collection of
any
Tax or governmental charge. The Company and its Subsidiaries have
properly charged, collected and paid all applicable stamp, sales, use and other
similar Taxes on or before the Closing Date.
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4.14 Real
Property. The Company currently has (i) leased certain
locations for office space , and (ii) owns real property, all of which leases
and real property are listed (including the terms of such leases) on Schedule
4.14.
4.15 Tangible
Personal Property;
Assets. All material items of personal property and assets
owned or leased by the Company and its Subsidiaries are in good operating
condition, normal wear and tear excepted.
4.16 Intangible
Property. 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 rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets
and
rights necessary to conduct their respective businesses as now conducted, the
lack of which could reasonably be expected to have a Material Adverse
Effect. The Company and its Subsidiaries do not have any knowledge of
any infringement by the Company or its Subsidiaries of trademarks, trade name
rights, patents, patent rights, copyrights, inventions, licenses, service names,
service marks, service ▇▇▇▇ registrations, trade secrets or other similar rights
of others, or of any such development of similar or identical trade secrets
or
technical information by others and no claim, action or proceeding has been
made
or brought against, or to the Company's knowledge, has been threatened against,
the Company or its Subsidiaries regarding trademarks, trade name rights,
patents, patent rights, inventions, copyrights, licenses, service names, service
marks, service ▇▇▇▇ registrations, trade secrets or other infringement, except
where such infringement, claim, action or proceeding would not reasonably be
expected to have either individually or in the aggregate a Material Adverse
Effect. None of the Company’s employees, officers, or consultants are 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 the use of such employee’s,
officer’s, or consultant’s commercially reasonable efforts to promote the
interests of the Company or that would conflict with the Company’s business as
conducted. Neither the execution nor delivery of the Transaction
Documents, nor the carrying on of the Company’s business by the employees of the
Company, nor the conduct of the Company’s business, will, to the Company’s
knowledge, conflict with or result in a breach of the terms, conditions, or
provisions of, or constitute a default under, any contract, covenant, or
instrument under which any of such employees, officers or consultants are now
obligated.
4.17 Material
Contracts.
Other
than as set forth on Schedule 4.17, or
otherwise disclosed in the Company’s Securities and Exchange Commission filings
(a) neither the Company nor its Subsidiaries nor any of their respective
properties or assets is a party to or bound by any (i) Contract not made in
the
ordinary course of business, or involving a commitment or payment by the Company
or any Subsidiary in excess of $10,000 or, in the Company’s belief, otherwise
material to the business of the Company or its Subsidiaries, (ii) Contract
among
members or granting a right of first refusal or for a partnership or a joint
venture or for the acquisition, sale or lease of any assets or share capital
of
the Company or any other Person or involving a sharing of profits,
(iii) mortgage, pledge, conditional sales contract, security agreement,
factoring agreement
or other similar Contract with respect to any real or tangible personal property
of the Company or its Subsidiaries, (iv) loan agreement, credit agreement,
promissory note, guarantee, subordination agreement, letter of credit or any
other similar type of Contract, (v) Contract with any Governmental Body outside
the ordinary course of business, (vi) Contract with respect to the discharge,
storage or removal of hazardous materials or (vii) binding commitment or
agreement to enter into any of the foregoing.
11
(b) (i) Each
of the Contracts listed on Schedule 4.17 are
valid and enforceable against the Company or its Subsidiaries in accordance
with
their terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity), and
there
is no default under any Contract listed on Schedule 4.17 by
the Company or any of its Subsidiaries or, to the knowledge of the Company,
by
any other party thereto, which is likely to have a Material Adverse Effect,
and
no event has occurred that with the lapse of time or the giving of notice or
both would constitute a default by the Company thereunder which is likely to
have a Material Adverse Effect.
(ii) No
previous or current party to any Contract has given written notice to the
Company or any Subsidiary of, or made a claim, verbal or written, with respect
to any breach or default thereunder and the Company has no knowledge of any
notice of or claim with respect to any such breach or default other than such
notices or claims with respect to any such breaches or defaults that would
not,
either individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect.
(c) With
respect to the Contracts listed on Schedule 4.17 that
were assigned to the Company or any Subsidiary by a third party, all necessary
consents to such assignment have been obtained other than such contents which
the failure to obtain would not be reasonably expected to have a Material
Adverse Effect.
4.18 Employee
Benefits. Except as set forth on Schedule
4.18,
neither the Company nor any of its Subsidiaries has in effect any employment
agreements, consulting agreements, deferred compensation, pension or retirement
agreements or arrangements, bonus, incentive or profit-sharing plans or
arrangements, or labor or collective bargaining agreements, written or
oral. The Company and its Subsidiaries are in compliance in all
material respects with all applicable Laws relating to labor, employment, fair
employment practices, terms and conditions of employment, and wages and
hours.
4.19 Employees.
(a) No
key executive Employee, group of Employees nor independent contractors of the
Company or its Subsidiaries has any plans to terminate his or her employment
or
relationship as an Employee or independent contractor with the Company or its
Subsidiaries.
(b) To
the best of the Company’s knowledge, no key executive Employee or any other
Employee of the Company or its Subsidiaries is a party to or is otherwise bound
by any agreement
or arrangement (including, without limitation, confidentiality agreements,
non-competition agreements, licenses, covenants, or commitments of any nature),
or subject to any judgment, decree, or Order of any court or Governmental Body,
(i) that would conflict with such employee’s obligation diligently to promote
and further the interest of the Company or its Subsidiaries or (ii) that would
conflict with the Company’s (or its Subsidiaries’) business as now conducted or
as proposed to be conducted.
(c) Schedule
4.19(c) sets
forth a list of each of the key executive Employees of the Company who have
entered into an employment and/or confidentiality agreement with the
Company.
12
4.20 Litigation. Other
than is set forth on Schedule 4.20, there
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, currently threatened against or
affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency and/or
regulatory authority (federal, state, county, local or foreign), (collectively,
an “Action”)
which
(i) does and/or could adversely affects or challenges the legality, validity
or
enforceability of any of the Transaction Documents and/or the Securities or
to
consummate the transactions contemplated hereby or thereby or (ii) could,
if there were an unfavorable decision, have or reasonably be expected to result
in, either individually or in the aggregate, a Material Adverse
Effect. The Commission has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by the Company
or any Subsidiary under the Exchange Act or the Securities Act. The foregoing
includes, without limitation, actions, pending or threatened (or any basis
therefor known to the Company), involving the prior employment of any of the
Company’s employees, their use in connection with the Company’s business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior
employers. The Company is not a party or subject to the provisions of
any order, writ, injunction, judgment, or decree of any court or government
agency or instrumentality.
4.21 Compliance
with Laws;
Permits. Neither the Company nor any Subsidiary (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default
by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, mortgage, decree, lease, license, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is or has been in violation of
any statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws applicable to its
business, except in the case of clauses (i), (ii) and (iii) as would
not result in a Material Adverse Effect. Neither the Company nor any of the
Subsidiaries has received any written notice of any violation of or
noncompliance with, any federal, state, local or foreign laws, ordinances,
regulations and orders (including, without limitation, those relating to
environmental protection, occupational safety and health, federal securities
laws, equal employment opportunity, consumer protection, credit reporting,
“truth-in-lending”, and warranties and trade practices) applicable to its
business or to the business of any Subsidiary, the violation of, or
noncompliance with, which would have a materially adverse effect on either
the
Company’s business or operations, or that of any Subsidiary, and the Company
knows of no facts or set of circumstances which would give rise to such a
notice. The execution, delivery, and performance of the Transaction Documents
and the consummation of the transactions contemplated thereby will not result
in
any such violation or be in conflict with or constitute, with or without the
passage of time and giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree or contract, or an event which results
in the creation of any lien, charge, or encumbrance upon any assets of the
Company or the suspension, revocation, impairment, forfeiture, or nonrenewal
of
any material permit, license, authorization, or approval applicable to the
Company, its business or operations, or any of its assets or properties, except
as would not reasonably be expected to have a Material Adverse
Effect.
4.22 Environmental
and Safety
Laws. Neither the Company nor its Subsidiaries are in
violation of any applicable Laws relating to the environment or occupational
health and safety where the failure to so comply could have a Material Adverse
Effect and no material expenditures are or will be required in order to comply
with any such existing Laws.
4.23 Investment
Company
Act. The Company is not, nor is it directly or indirectly
controlled by or acting on behalf of, any Person that is an investment company
within the meaning of the Investment Company Act of 1940, as
amended.
4.24 Financial
Advisors. Except for ▇▇▇▇▇▇▇,
no agent, broker, investment banker, finder, financial advisor or other Person
is or will be entitled to any broker’s or finder’s fee or any other commission
or similar fee from the Company, directly or indirectly, in connection with
the
transactions contemplated by this Agreement or any Transaction Document and
no
Person is entitled to any fee or commission or like payment from the Company
in
respect thereof based in any way on agreements, arrangements or understandings
made by or on behalf of the Company.
13
4.25 Condition
of
Properties. All facilities, machinery, equipment, fixtures,
vehicles and other properties owned, leased or used by the Company and its
Subsidiaries are in good operating condition and repair, are reasonably fit
and
usable for the purposes for which they are being used, are adequate and
sufficient for the Company and its Subsidiaries respective businesses and
conform in all material respects with all applicable Laws.
4.26 Pending
Changes. The Company has no knowledge of any development which
might reasonably be expected to result in a material adverse affect on the
operations or financial condition of the Company or its
Subsidiaries.
4.27 Securities
Laws. The Company has complied in all material respects with
all applicable U.S. federal and state securities laws in connection with (i)
all
offers, issuances and sales of its securities prior to the date hereof and
(ii)
the offer, issuance and sale of the Securities. All sales and
issuances of currently outstanding securities by the Company have been to
accredited
investors within the meaning of Rule 501 of Regulation D under the Securities
Act. Prior to the Closing, neither the Company nor anyone acting on
its behalf has sold, offered to sell or solicited offers to buy the Securities
or similar securities to, or solicited offers with respect thereto from, or
entered into any preliminary conversations or negotiations relating thereto
with, any Person, so as to bring the issuance and sale of the Securities under
the registration provisions of the Securities Act, and applicable state
securities laws. Neither the Company nor any Person acting on its
behalf has offered the Securities to any Person by means of general or public
solicitation or general or public advertising, such as by newspaper or magazine
advertisements, by broadcast media, or at any seminar or meeting whose attendees
were solicited by such means.
4.28 Registration
Rights. Except for any rights granted under the Transaction
Documents and the Prior Registration Agreements, no Person has demand or other
rights to cause the Company to file any registration statement under the
Securities Act relating to any securities of the Company or any right to
participate in any such registration statement.
4.29 Disclosure;
Survival. There is no fact which has not been disclosed to the
Purchaser of which the Company has knowledge and which has had or could
reasonably be anticipated to result in a Material Adverse Change. All
representations and warranties set forth in this Agreement or in any of the
Transaction Documents or in any writing or certificate delivered in connection
with this Agreement shall survive the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby for a period of
two
(2) years (except where expressly stated otherwise) (the “Survival
Period”) and shall not be affected by any examination made for or
on behalf of the Purchaser, the knowledge of the Purchaser, or the acceptance
by
the Purchaser of any certificate or opinion.
4.30 No
General
Solicitation. Neither the Company, its Subsidiaries, any of their
affiliates nor any person acting on their behalf, has engaged in any form of
general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale
of the Notes and the Warrants.
4.31 Insurance. The
Company has in full force and effect fire and casualty insurance policies,
with
extended coverage, sufficient in amount (subject to reasonable deductibles)
to
allow it to replace any of its properties that might be damaged or destroyed,
and the Company has insurance against other hazards, risks, and liabilities
to
persons and property to the extent and in the manner customary for companies
in
similar businesses similarly situated.
4.32 Regulatory
Permits.
The Company and the Subsidiaries possess all licenses, certificates,
authorizations and permits issued by the appropriate federal, state, local
or
foreign regulatory authorities necessary to conduct their respective businesses,
except where the failure to possess such permits would not have or reasonably
be
expected to result in a Material Adverse Effect (“Material
Permits”), and believes it can obtain, without undue burden or
expense, any similar authority for the conduct of its business as planned to
be
conducted, and neither the Company nor any Subsidiary has received any notice
of
proceedings relating to the revocation or modification of any Material
Permit.
14
4.33 Title
to Property and
Assets. The Company (and each Subsidiary) owns its property and assets
free and clear of all mortgages, liens, loans, pledges, security interests,
claims, equitable interests, charges, and encumbrances, except such encumbrances
and liens which arise in the ordinary course of business and do not materially
impair the Company’s (and each Subsidiary’s) ownership or use of such property
or assets and/or any such liens, encumbrances and security interests which
arose
in connection with the Prior Security Agreement. With respect to the property
and assets it leases, the Company (and each Subsidiary) is in compliance with
such leases and, to its knowledge, holds a valid leasehold interest free of
any
liens, claims, or encumbrances.
4.34 Foreign
Assets Control
Legislation. Neither the sale of the Notes nor the Warrants by
the Company hereunder nor its use of the proceeds thereof will violate the
Trading with the Enemy Act, as amended, or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) or any enabling legislation or executive order relating
thereto. Without limiting the foregoing, neither the Company nor any of its
Subsidiaries (a) is a person whose property or interests in property are blocked
pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) or (b) engages in
any
dealings or transactions, or be otherwise associated, with any such person.
The
Company and its Subsidiaries are in compliance with the USA Patriot Act of
2001
(signed into law October 26, 2001).
4.35 Solvency. Based
on the financial condition of the Company as of the Closing Date (after giving
effect to the transactions contemplated herein and in the other Transaction
Documents), the Company’s assets do not constitute unreasonably small capital to
carry on its business for the current fiscal year 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. 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 to its debt).
5. Representations
and Warranties of the
Purchaser. Each Purchaser hereby represents and warrants as of the date
hereof and as of the Closing Date to the Company, acknowledging that the Company
is relying upon the accuracy and completeness of the representations and
warranties set forth herein to, among other things, ensure that registration
under Section 5 of the Securities Act is not required in connection with
the sale of the Securities hereby, as follows:
5.1 Organization;
Authority. Such Purchaser is an entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization
with
full right, corporate or limited liability company power and authority to enter
into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations thereunder. The execution,
delivery and performance by such Purchaser of the transactions contemplated
by
this Agreement have been duly authorized by all necessary corporate
or similar action on the part of such Purchaser. Each Transaction Document
to
which it is a party has been duly executed by such Purchaser, and when delivered
by such Purchaser in accordance with the terms hereof, will constitute the
valid
and legally binding obligation of such Purchaser, enforceable against it in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors’ rights generally and (ii) as limited by
laws relating to the availability of specific performance, injunctive relief,
or
other equitable remedies.
15
5.2 Investment
Intent.
The Purchaser represents and warrants to the Company that it is (a) an
“accredited investor” as defined in Rule 501 of Regulation D of the Securities
Act; and (b) acquiring the Purchased Securities to be purchased by it pursuant
to this Agreement for investment and not with a view to the distribution
thereof.
5.3 Investment
Purposes.
(a) The Purchaser is acquiring the Securities for investment purposes only,
for
its own account, and not as nominee or agent for any other Person, and not
with
a view to, or for resale in connection with, any distribution thereof within
the
meaning of the Securities Act, (b) it understands and acknowledges that the
Securities have not been registered under the Securities Act or any other
securities laws, (c) it is not an “affiliate” (as defined in Rule 144 under the
Securities Act) of the Company, (d) it has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its investment, (e) it is an “accredited investor” within the meaning
of Rule 501 of Regulation D under the Securities Act, (f) the Company has made
available to it the opportunity to ask questions and to receive answers, and
to
obtain information necessary to evaluate the merits and risks of this
investment, and (g) it understands, acknowledges and agrees that the Securities
have not been registered under (and that the Company has no present intention
to
register the Securities under) the Securities Act or applicable state securities
laws, and may not be sold or otherwise transferred by the Purchaser to a United
States person unless the Securities have been registered under the Securities
Act and applicable U.S. state securities laws or are sold or transferred in
a
transaction exempt therefrom.
5.4 Short
Selling. The
Purchaser hereby represents to the Company that the Purchaser will not make
or
maintain a “short” position in the Company's securities while any Notes or Prior
Notes held by the Purchaser are outstanding.
5.5 Prior
Warrants and Prior
Notes. Purchaser agrees that the $1,250,000 in Prior Notes
previously sold to Purchaser by the Company on October 23, 2006, had their
Conversion Price (as defined therein) re-priced to the Conversion Price as
defined in the Follow On Warrants. Purchaser also agrees to waive any
anti-dilution and/or reset rights that Purchaser may have pursuant to the Prior
Warrants or Follow On Warrants (as provided by Section 4 therein) granted to
Purchaser in connection with the applicable Prior Closing and Follow On Closing,
in connection with any of the Warrants granted to Purchaser herein, and/or
any
other Warrants granted to any purchasers in connection with the offering, of
which this Agreement is a part.
16
6. Further
Agreements of the Parties.
6.1 Reserved
Shares. For so long as the Securities are outstanding, the
Company shall reserve that number of shares of Common Stock issuable upon
conversion of the Notes and exercise of the Warrants, which shares shall not
be
subject to any preemptive or other similar rights.
6.2 Access
to
Information. The Purchaser and its representatives shall be
entitled, upon reasonable notice, to make such investigation of the properties,
business and operations of the Company and such examination of the books,
records and financial condition of the Company as it reasonably requests to
make
extracts and copies of such books and records, upon reasonable notice during
regular business hours. Any such investigation and examination shall
be conducted during regular business hours and under reasonable circumstances
without material interference with the Company’s normal business operations, and
the Company and its representatives shall cooperate fully therein. No
investigation by a Purchaser or its Representatives prior to or after the date
of this Agreement shall diminish or obviate any of the representations,
warranties, covenants or agreements of the Company contained in this Agreement
or the Transaction Documents. In order for Purchaser to have full
opportunity to make such physical, business, accounting and legal review,
examination of the affairs of the Company and investigation as may be reasonably
requested, the Company shall cause its Representatives to cooperate fully with
the Representatives of the Purchaser in connection with such review and
examination.
6.3 Confidentiality. Except
as may be required by applicable Law or as otherwise agreed among the parties
hereto, neither the Company, the Purchaser nor any of its Affiliates shall
at
any time divulge, disclose, disseminate, announce or release any information
to
any Person concerning this Agreement, the Transaction Documents, the
transactions contemplated hereby or thereby, any trade secrets or other
confidential information of the Company or the Purchaser, without first
obtaining the prior written consent of the other parties hereto.
6.4 Other
Actions. The Company and the Purchaser agree to execute and
deliver such other documents and take such other actions as the other parties
may reasonably request for the purpose of carrying out the intent of this
Agreement and the Transaction Documents.
6.5 Indemnification.
The
Company shall indemnify and hold harmless each Purchaser, the officers,
directors, agents and employees of each of them, each Person who controls any
such Purchaser (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent permitted
by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable attorneys' fees)
and expenses (including the cost (including without limitation, reasonable
attorneys’ fees) and expenses relating to an Indemnified Party’s (as defined
below) actions to enforce the provisions of this Section 6.5)
(collectively, “Losses”),
as
incurred, to the extent arising out of or relating to (i) any material
misrepresentation or breach of any representation or warranty made by
the
Company in the Transaction Documents, or (ii) any material breach of any
covenant, agreement or obligation of the Company contained in the Transaction
Documents, or (iii) any cause of action, suit or claim brought or made against
such Indemnified Party and arising out of or resulting from the execution,
delivery, performance or enforcement of the Transaction Documents executed
pursuant hereto by any of the Indemnified Parties. If the indemnification
provided for in this Section 6.5 is held
by a court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to any Losses, then the Indemnifying Party (as defined below),
in
lieu of indemnifying such Indemnified Party hereunder, shall contribute to
the
amount paid or payable by such Indemnified Party as a result of Losses in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection
with the actions or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The Company shall notify the
Purchaser promptly of the institution, threat or assertion of any proceeding
of
which the Company is aware in connection with the transactions contemplated
by
this Agreement.
(b) Conduct
of Indemnification
Proceedings. If any proceeding shall be brought or asserted against any
Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the other
party (the “Indemnifying
Party”) in writing, and the Indemnifying Party shall have the
right to assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of all fees
and
expenses incurred in connection with defense thereof; provided, however,
that the
failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that such failure shall have materially and
adversely prejudiced the Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any such
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such proceeding and to employ counsel reasonably satisfactory to
such
Indemnified Party in any such proceeding; or (3) the named parties to any such
proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing
that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense thereof
and the reasonable fees and expenses of one separate counsel for all Indemnified
Parties in any matters related on a factual basis shall be at the expense of
the
Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such proceeding affected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of
any
pending proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party
from
all liability on claims that are the subject matter of such
proceeding.
17
The
indemnification obligations under this Section 6.5 are in
addition to any indemnification or similar obligations under any other
Transaction Document.
(d) The
provisions of this Section 6.5 shall
survive the termination of this Agreement for a period of three (3)
years.
(e) All
payments to be made to Purchaser pursuant to this Section 6.5, shall be
paid no later than five (5) business days after request for payment is sent
to
the Company.
6.6 Co-Investment
Rights.
Each Purchaser hereby shall have the pro rata right of first refusal (which
right shall be shared with the other Purchasers, who purchase Notes in
connection with the Company’s current offering or Prior Closing) to invest (in
such amounts that all of such Purchasers (including the Prior Purchasers and
other Purchasers who invest during the offering to which this Agreement is
a
part) shall so elect) in any and all future financings (“Future
Financings”) of the Company for thirty-six (36) months from the
date of this Agreement on the identical terms offered to other investors. The
Company shall provide each Purchaser with (i) express prior written notice
of a Future Financing, and (ii) all required documentation requested by the
Purchaser related to any Future Financing all no later than ten (10) business
days prior to the final date of the offering period (or other applicable
investment period) for any such Future Financings. Such Co-Investment
rights shall continue even if a Purchaser elects not to invest in one or more
Future Financing.
6.7 [Internationally
removed].
6.8 Board
Representation. The Company,
effective
on the Closing, hereby grants Purchaser, which right shall be shared with all
of
the Purchasers (including the Prior Purchasers and other Purchasers who invest
during the offering to which this Agreement is a part), the right to appoint
one
Director, or if it so elects, a Board Advisory Seat (with both the Prior
Purchasers and current Purchaser electing as a group, one Director or Board
Advisory Seat), and to receive all financial and other information provided
to
board members and to observe at all board meetings. The Purchaser nominee shall
be immediately included and maintained in the Company’s Director and Officer
insurance coverage. In the event Purchaser exercises its right to appoint a
board member, the Company shall nominate an additional board member so that
the
total number of board members will be five (5). The Company shall provide to
the
Purchaser and any then designated observer, concurrently with, and by the same
method of, transmission to the Board or any committee thereof, any notice of
meeting, agenda and other materials.
6.9 Bank
Consent. The
Company, prior to the Closing Date shall obtain the express written consent
and/or necessary waivers from LaSalle Bank Nation Association (the “Bank”)
and any
other person, so as to approve and/or waive, as the case may be (i) this
Agreement; (ii) the Notes and Warrants; (iii) any defaults or event of default
that may have or will have occurred; and (iv) all other such Transaction
Documents as may be deemed necessary (the “Bank
Consent”).
18
6.10 Fees
and
Expenses. Each party shall pay the fees and expenses of its
advisors, counsel, accountants and other experts, if any, and all other
expenses, incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this
Agreement. Notwithstanding the foregoing sentence, the Company shall
pay to The Loev Law Firm, PC, thousand dollars ($10,000), which amount may
be
withheld from the Purchase Price paid upon closing.
7. Other
Obligations of the Parties.
7.1 Public
Announcements. The Company hereby agrees not to, and not to
permit its Subsidiaries to, issue any press release, or otherwise make any
public statements (collectively, “Press
Releases”) with respect to the transactions contemplated hereby
without the prior written consent of the Purchaser, except as may be required
by
law. Furthermore, where the Company desires to issue any such Press
Release, the parties agree to cooperate in good faith in order to prepare such
Press Release in such form and substance as is agreeable to both
parties.
7.2 Furnishing
Information. Each of the parties hereto will, as soon as
practicable after reasonable request therefor, furnish all the information
concerning it required for inclusion in any statement or application made by
any
of them to any governmental or regulatory body in connection with the
transactions contemplated by this Agreement.
7.3 Transfer
Restrictions.
(a) The
Underlying Shares may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of the Underlying Shares other
than pursuant to an effective registration statement, or in connection with
a
pledge, as contemplated in Section 7.3(c)
hereof, the Company may require the transferor thereof to provide to the Company
an opinion of counsel selected by the transferor, the form and substance of
which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred Underlying
Shares under the Securities Act. As a condition of transfer, any such transferee
shall agree in writing to be bound by the terms of this Agreement and shall
have
the rights of a Purchaser under this Agreement and the Registration Rights
Agreement.
(b) The
Purchaser agrees to the imprinting, so long as is required by Section 7.3(b),
of a legend on any of the Underlying Shares in the following form:
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.
19
(c) Certificates
evidencing the Underlying Shares shall not contain any legend (including the
legend set forth in Section 7.3(b))
(i) subsequent to the date the Commission declares effective a registration
statement covering the resale of the Underlying Shares, (ii) following any
sale of the Underlying Shares pursuant to Rule 144, or (iii) if such
Underlying Shares are eligible for sale under Rule 144(k). The
Company agrees that at such time as such legend is no longer required under
and
pursuant to this Section 7.3(c),
it will, no later than two (2) Trading Days following the delivery by a
Purchaser to the Company or the Company’s transfer agent of a Note for
conversion, a Warrant for exercise, a restricted stock certificate or a lost
securities affidavit, if any, of such securities are lost, as the case may
be,
deliver to such Purchaser a certificate representing Underlying Shares that
is
free from all restrictive and other legends (the “Deadline”).
The Company may not make any notation on its records or give instructions to
any
transfer agent of the Company that enlarge the restrictions on transfer set
forth in this Section.
7.4 Underlying
Share Delivery
Damages. In the event that a non-legended certificate for Underlying
Shares is not received by a Purchaser by the Deadline, as partial compensation
to the Purchaser for such loss as a result of such delivery delay, the Company
shall pay (as liquidated damages and not a penalty) to the Purchaser for late
issuance of the Underlying Shares an amount of $100 per business day after
the
Deadline for each $10,000 of principal amount of the Note being converted,
and/or or $10,000 of market value (based upon the then stock price of the
Company) of Underlying Shares of the Warrant being exercised for, as the case
may be, which are not timely delivered. The penalties in this Section 7.4 are in
addition to and shall not limit any other penalty provisions in the Transaction
Documents and shall not limit the Purchaser’s right to collect other damages
and/or remedies.
7.5 Integration.
The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the
Securities Act) that would be integrated with the offer or sale of any of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Purchaser or that would be integrated
with the offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market. The Purchaser and the Company
agree that the current Registration Statement which has been filed with the
SEC
will be withdrawn and refiled.
7.6 Use
of Proceeds. The
Company covenants and agrees that the net proceeds that it receives from the
sale of the Notes shall be used as follows: $200,000 to pay LaSalle and $400,000
for working capital.
7.7 Form D
and Blue
Sky. The Company shall file a Form D with respect to the Securities
as required under Regulation D under the Securities Act and, upon written
request, provide
a
copy thereof to each Purchaser promptly after such filing. The Company shall,
on
or before the Closing, take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for or to qualify any
Securities for sale to the Purchaser pursuant to this Agreement under applicable
securities or “Blue Sky” laws of the states of the United States, and shall
provide evidence of any such action so taken to the Purchaser on or prior to
the
Closing. The Company shall make all filings and reports relating to the offer
and sale of the Securities required under applicable securities or “Blue Sky”
laws of the states of the United States following the Closing.
20
7.8 Reservation
of Common
Stock. As of the date hereof, the Company has reserved and the
Company shall continue to reserve and keep available at all times, free of
preemptive rights, a sufficient number of shares of Common Stock for the purpose
of enabling the Company to issue the Conversion Shares and the Warrant
Shares.
7.9 Securities
Laws
Disclosure. The Company shall, by the end of business on the fourth (4th)
Business Day following the Closing, use its best efforts to issue a press
release or file a Current Report on Form 8-K, disclosing the transactions
contemplated hereby and make such other filings and notices in the manner and
time required by the Commission.
8. Conditions
to Closing.
8.1 Conditions
of Obligations of
the Purchaser. The obligation of the Purchaser to purchase and
pay for the Securities is subject to the fulfillment prior to or on the Closing
Date of the following conditions, any of which may be waived in whole or in
part
by the Purchaser:
(a) Representations,
Warranties
and Covenants. The representations and warranties of the
Company under this Agreement shall be deemed to have been made again on the
Closing Date (other than those representations and warranties made expressly
as
of a date prior to the Closing Date) and shall then be true and
correct. The Company shall represent to the Purchaser that all of the
information contained herein does not contain any untrue statement of a material
fact, or contain any omission of a material fact relating to such information
that is necessary in order to make the information, in light of the
circumstances under which the information is provided, not
misleading.
(b) Compliance
with
Agreement. The Company shall have performed and complied with
all covenants, agreements and conditions required by this Agreement to be
performed or complied with by the Company on or before the Closing
Date.
(c) Approvals. The
Company shall have obtained any and all consents, waivers, approvals or
authorizations, with or by any Governmental Body or any other Person required
for the valid execution of this Agreement and the transactions contemplated
hereby.
(d) No
Injunction. No Governmental Body or any other Person shall
have issued an Order which shall then be in effect restraining or prohibiting
the completion of the transactions contemplated hereby, nor shall any such
Order
be threatened or pending.
21
(e) No
Material Adverse
Change. Since March 31, 2007, there shall not have been a
Material Adverse Change.
(f) Certificate
of
Officer. The Company shall have delivered to the Purchaser a
certificate dated the Closing Date, executed by its Chief Executive Officer
and
Chief Financial Officer, certifying the satisfaction of the conditions specified
in paragraphs (a), (b), (c), (d) and (e) of this Section
8.1.
(g) Opinion
of the Company’s
Counsel. The Purchaser shall have received from Company
counsel, in a form satisfactory to the Purchaser and its counsel, an opinion
dated the Closing Date.
(h) Certificate
of Incorporation
and By-Laws. The Certificate of Incorporation, as amended, and
the By-Laws, shall be in full force and effect as of the Closing under the
laws
of the State of Nevada and shall not have been further amended or
modified. A certified copy of the Certificate of Incorporation, as so
amended, shall have been delivered to counsel for the Purchaser.
(i) Closing
Documents Provided
By Company. The Purchaser (or such other person as referred to
herein) shall have received the following:
(i)
a Note in favor of each Purchaser, duly executed by the Company,
entitling the Purchaser to payment in the amount as stated in Schedule 1.1
herein;
(ii)
Warrants in the name of the Purchaser, duly executed by the Company, entitling
the Purchaser to purchase such amount of Warrant Shares as stated in Schedule 1.1
herein;
(iii) the
Registration Rights Agreement duly executed by the Company;
(iv) the
Security Agreement duly executed by the Company and all documents necessary
to
perfect the security interest of the Purchaser;
(v)
this Agreement duly executed by the Company;
(vi)
Secretary’s Certificate in a form reasonably acceptable to Purchaser, with the
Officer’s Certificate and good standing certificates of the Company and each
Subsidiary as of a recent date;
(vii) Legal
Opinion;
(viii) Copy
of the Bank Consent for the Company to enter into this new debt and all
necessary waivers of Bank covenants prohibiting such action;
(ix)
Copies of all Uniform Commercial Code Financing Statements filed in the
State of Nevada, California, Illinois, New Jersey and New York in connection
with the Security Agreement; and
(ix) such
other documents as the Purchaser and/or its legal counsel may request and/or
deem necessary (including, but not limited to, a Good Standing Certificate
of
recent date from the Secretary of State of the State of Nevada).
22
8.2 Conditions
of Company’s
Obligations. The Company’s obligation to issue and sell the
Securities to the Purchaser on the Closing Date is subject to the fulfillment
prior to or on the Closing Date of the following conditions, any of which may
be
waived in whole or in part by the Company:
(a) Representations
and
Warranties. The representations and warranties of the
Purchaser under this Agreement shall be deemed to have been made again on the
Closing Date and shall then be true and correct in all material
respects.
(b) Compliance
with
Agreement. The Purchaser shall have performed and complied
with all agreements and conditions required by this Agreement to be performed
or
complied with by such Purchaser on or before the Closing.
(c) Approvals. The
Purchaser shall have obtained any and all consents, waivers, approvals, Permits
or authorizations, with or by any Governmental Body or any other Person required
for the valid execution of this Agreement and the transactions contemplated
hereby including, but not limited to the approval by.
(d) Payment
of Purchase
Price. The Purchaser shall have delivered to the Company the
Purchase Price specified in Section 2.1
hereof.
(e) No
Injunction. No Governmental Body or any other Person shall
have issued an Order which shall then be in effect restraining or prohibiting
the completion of the transactions contemplated hereby, nor shall any such
Order
be threatened or pending.
(f) Closing
Documents Provided
By Purchaser. The Company shall have received the
following:
(i)
this Agreement duly executed by
the Purchaser;
(ii)
the Registration Rights Agreement
duly executed by the Purchaser; and
(iii)
the
Security Agreement executed by the Purchaser.
8.3 Post
Closing
Obligations. Following the Closing Date:
(i) the Company shall file all necessary documents in accordance with
their obligations under the Security Agreement;
(ii)
Company’s Counsel shall file all post closing Form D Filings and Blue Sky
filings in the necessary jurisdictions.
23
9. Miscellaneous.
9.1 Certain
Definitions.
“Action”
shall
have the meaning ascribed to such term in Section 4.20.
“Affiliate”
of
any Person means any Person that directly or indirectly controls, or is under
control with, or is controlled by, such Person. As used in this
definition, “control”
(including with its correlative meanings, “controlled
by”
and “under control
with”) shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a Person
(whether through ownership of securities or partnership or other ownership
interests, by contract or otherwise).
“Business
Day”
means any day except Saturday, Sunday and any day which shall
be a federal legal
holiday or a day on which banking institutions in the State of New York are
authorized or required by law or other governmental action to
close.
“Closing”
means
the closing of the purchase and sale of the Notes and the Warrants pursuant
to
Section 3.1 on
December 21, 2007, or such other date as mutually agreed to by the
parties.
“Closing
Date”
means the date of the Closing.
“Code”
means
the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder.
“Commission”
means the Securities and Exchange Commission.
“Common
Stock”
means the shares of common stock, par value $0.001 per share,
of the
Company.
24
“Company
Counsel” means ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
“Contract”
means any contract, agreement, indenture, note, bond, loan, instrument, lease,
conditional sales contract, mortgage, license, franchise, insurance policy,
commitment or other arrangement or agreement, whether written or
oral.
“Conversion
Shares”
means
all shares of Common Stock issuable upon conversion of the
Notes.
“Employee”
means any current employee, office consultant, agent, officer or director of
the
Company.
“Exchange
Act”
means the Securities Exchange Act of 1934, as amended.
“Exhibits”
shall mean the following exhibits attached hereto and made a part of this
Agreement:
Exhibit
A–
Registration Rights Agreement
Exhibit
B– Form of
Warrants
Exhibit
C– Form of
Note
Exhibit
D– Security
Agreement
“Governmental
Body” means any government or governmental or regulatory body
thereof, or political subdivision thereof, whether federal, state, local or
foreign, or any agency, instrumentality or authority thereof, or any court
or
arbitrator (public or private).
“Law”
means
any
federal, state, local or foreign law, statute, code, ordinance, rule, regulation
or other requirement or guideline.
“Legal
Proceeding” means any judicial, administrative or arbitral
actions, suits, proceedings (public or private), claims or governmental
proceedings.
“Lien”
means
any mortgage, pledge, security interest, encumbrance, lien or charge of any
kind, including, without limitation, any conditional sale or other title
retention agreement, any lease in the nature thereof and the filing of or
agreement to give any financing statement under the Uniform Commercial Code
(or
similar laws) of any jurisdiction and including any lien or charge arising
by
statute or other law.
“Material
Adverse
Change” means any material adverse change in the business, assets,
liabilities, prospects, properties, results of operations or condition
(financial or otherwise) of the Company and its Subsidiaries, taken as a
whole.
25
“Material
Adverse
Effect” means any event, circumstance, condition, fact, effect, or
other matter which has had or could reasonably be expected to have a material
adverse effect (i) on the business, assets, liabilities, prospects, properties,
results of operations or condition (financial or otherwise) of the Company
and
its Subsidiaries taken as a whole or (ii) on the ability of the Company or
its
Subsidiaries to perform on a timely basis any material obligation under this
Agreement or to consummate the transactions contemplated hereby.
“Notes”
shall
have the meaning ascribed to such term in Section 1.1.
“Order”
means
any order, injunction, judgment, decree, ruling, writ, assessment or arbitration
award.
“Permits”
means
any approvals, authorizations, consents, licenses, permits or certificates
by or
of any Governmental Body.
“Person”
means
any individual, corporation, partnership, firm, joint venture, association,
joint-stock company, trust, unincorporated organization, Governmental Body
or
other entity.
“Registration
Statement” means a registration statement meeting the requirements
set forth in the Registration Rights Agreement and covering, among other items,
the resale by the Purchaser of the Underlying Shares.
“Registration
Rights
Agreement” means the Registration Rights Agreement, dated as of
the date of this Agreement, among the Company and the Purchaser, in the form
of
Exhibit A
hereto.
“Rule 144”
means Rule 144 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.
“SEC
Reports”
shall have the meaning ascribed to such term in Section 4.9.
“Securities
Act” means the Securities Act of 1933, as amended, or any similar
federal statute, and the rules and regulations of the Securities and Exchange
Commission thereunder, all as the same shall be in effect at the
time.
“Subsidiary”
shall have the meaning ascribed to such term in Section 4.4.
26
“Taxes”
means
any federal, state, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Section 59A of the Code), customs duties,
share capital, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value-added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
“Trading
Day”
means (a) a day on which the Common Stock is traded on a Trading Market,
or
(b) if the Common Stock is not quoted on a Trading Market, a day on which
the Common Stock is quoted in the over-the-counter market as reported by the
National Quotation Bureau Incorporated (or any similar organization or agency
succeeding to its functions of reporting price); provided, that in the event
that the Common Stock is not listed or quoted as set forth in (a), and
(b) hereof, then Trading Day shall mean a Business Day.
“Trading
Market” means the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the OTC
Bulletin Board, the American Stock Exchange, the New York Stock Exchange, the
Nasdaq National Market or the Nasdaq SmallCap Market.
“Warrant
Shares”
means
all shares of Common Stock issuable upon exercise of the
Warrants.
“Warrants”
shall have the meaning ascribed to such term in Section 1.1.
9.2 Further
Assurances. The Company and the Purchaser agree to execute and
deliver such other documents or agreements as may be necessary or desirable
for
the implementation of this Agreement and the consummation of the transactions
contemplated hereby.
9.3 Entire
Agreement; Amendments
and Waivers. This Agreement (including the Schedules and
Exhibits hereto) represents the entire understanding and agreement among the
parties hereto with respect to the subject matter hereof and can be amended,
supplemented or changed, and any provision hereof can be waived, only by written
instrument making specific reference to this Agreement signed by the parties
hereto. No action taken pursuant to this Agreement, including without
limitation, any investigation by or on behalf of any party, shall be deemed
to
constitute a waiver by the party taking such action of compliance with any
representation, warranty, covenant or agreement contained herein. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a further or continuing waiver of such breach
or
as a waiver of any other or subsequent breach. No failure on the part
of any party to exercise, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of such right, power or remedy by such party preclude any other or
further exercise thereof or the exercise of any other right, power or
remedy. All remedies hereunder are cumulative and are not exclusive
of any other remedies provided by law.
9.4 Construction. The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. 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.
9.5 Successors
and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. The Company
may not assign this Agreement or any rights or obligations hereunder without
the
prior written consent of each Purchaser. Any Purchaser, however, may assign
any
or all of its Securities and/or rights under any of the Transaction Documents
to
any Person, provided such transferee agrees in writing to be bound, with respect
to the transferred Securities and otherwise, by the provisions hereof that
apply
to the “Purchaser.”
27
9.6 No
Third-Party
Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and
is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person.
9.7 Governing
Law. This Agreement shall be governed by and construed
exclusively in accordance with the internal laws of the State of New York
without regard to the conflicts of laws principles thereof. The parties hereto
hereby irrevocably agree that any suit or proceeding arising directly and/or
indirectly pursuant to or under this Agreement, shall be brought solely in
a
federal or state court located in the City, County and State of New York. By
its
execution hereof, the parties hereby covenant and irrevocably submit to the
in personam
jurisdiction
of the federal and state courts located in the City, County and State of New
York and agree that any process in any such action may be served upon any of
them personally, or by certified mail or registered mail upon them or their
agent, return receipt requested, with the same full force and effect as if
personally served upon them in New York City. The parties hereto waive any
claim
that any such jurisdiction is not a convenient forum for any such suit or
proceeding and any defense or lack of inpersonam
jurisdiction
with respect thereto. In the event of any such action or proceeding, the party
prevailing therein shall be entitled to payment from the other party hereto
of
all of its reasonable legal fees and expenses.
9.8 Headings;
Interpretive
Matters. The section headings of this Agreement are for
reference purposes only and are to be given no effect in the construction or
interpretation of this Agreement. No provision of this Agreement will
be interpreted in favor of, or against, any of the parties hereto by reason
of
the extent to which any such party or its counsel participated in the drafting
thereof or by reason of the extent to which any such provision is inconsistent
with any prior draft hereof or thereof.
9.9 Confidentiality. Each
party hereto covenants and agrees
to treat any non-public information provided to it by the Company concerning
the
business and finances of the Company (“Corporate
Information”) as confidential
and agrees further
that it will not use, exploit, reproduce, disclose or provide Corporate
Information to any third-party (other than any agents of the parties who are
bound by substantially similar obligations of
confidentiality)
on its own behalf or otherwise, except with the consent of the Company or as
required by law, legal process or any federal or state regulatory body having
jurisdiction over such party. The provisions of this Section
9.9 shall not apply
to any information which:
(a) was
within the public domain prior to the time of disclosure of Corporate
Information to the receiving party or which comes into the public domain other
than as a result of a breach by the party of this Section
9.9;
(b) was
rightfully acquired by the receiving party from a third party without, to the
knowledge of the receiving party, any restriction or any obligation of
confidentiality; or
(c) was
independently developed by the receiving party without any use or reference
to
the Corporate Information.
The
provisions of this Section 9.9 shall
survive the termination of this Agreement, either in whole or as to any party,
for a period of two (2) years.
28
9.10 Notices. Any
and all notices or other communications or deliveries required or permitted
to
be provided hereunder shall be in writing and shall be deemed given and
effective on (a) the next Business Day, if sent by U.S. nationally
recognized overnight courier service, or (b) upon actual receipt by the
party to whom such notice is required to be given. The address for such notices
and communications to the Company shall be as set forth below and for each
Purchaser shall be as set forth on the signature pages attached
hereto.
|
|
If
to the Company:
|
▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇
▇▇▇▇▇▇, President
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
|
|
With
a copy to:
|
▇▇▇▇▇
▇.
▇▇▇▇
The
Loev
Law Firm, PC
▇▇▇▇
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Telephone:
▇▇▇-▇▇▇-▇▇▇▇
|
|
If
to the Purchaser:
|
______________________
______________________
______________________
______________________
______________________
|
|
With
a copy to:
|
|
|
______________________
|
______________________
______________________
______________________
______________________
______________________
29
All
notices are effective upon receipt or upon refusal if properly
delivered.
9.11 Severability.
If any
provision of this Agreement is invalid or unenforceable, the balance of this
Agreement shall remain in effect.
9.12 Binding
Effect;
Assignment. This Agreement shall be binding upon and insure to the
benefit of the parties and their respective successors and permitted
assigns. No assignment of this Agreement or of any rights or
obligations hereunder may be made by the Company or the Purchaser (by operation
of law or otherwise) without the prior written consent of the other parties
hereto and any attempted assignment without the required consents shall be
void.
9.13 Counterparts. This
Agreement may be executed simultaneously in two or more counterparts, each
of
which shall be deemed an original but all of which together shall constitute
one
and the same instrument.
9.14 Incorporation
by Reference;
Breach of Security Agreement. Any default and/or breach of the Security
Agreement shall be considered a breach and/or default of this
Agreement. All covenants, agreements and obligations of the Company
in the Security Agreement shall be expressly incorporated by reference herein
as
if made directly herein and shall survive termination of this
Agreement.
[The
rest
of this page has been intentionally left blank]
30
IN
WITNESS WHEREOF, the
parties hereto have executed or have caused this Agreement to be executed by
their respective officers thereunto duly authorized, as of the date first
written above.
By:
/s/ ▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇
Chief
Executive Officer
31
PURCHASER’S
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
Vision
Opportunity Master Fund, Ltd.
By: /s/
▇▇▇▇
▇▇▇▇▇▇▇▇
Name:
▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:
Director
Address:
▇▇ ▇. ▇▇▇▇ ▇▇, ▇▇▇ ▇▇. ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile
Number: ▇▇▇-▇▇▇-▇▇▇▇
$200,000
32
Schedule
1.1
Purchaser
|
NAME
AND
ADDRESS
OF
EACH
PURCHASER
|
PRINCIPAL
NOTE
AMOUNT
PURCHASED
|
||
|
Vision
Opportunity
Master
Fund, Ltd.
|
$200,000
|
||
33