SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of March 21,
2006, by and among IPEX, Inc., a Nevada corporation with offices located at ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), RGB
Channel, Inc., a Nevada corporation and wholly owned subsidiary of the Company
with offices located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("RGB Channel"), and each of the purchasers set forth on the
signature pages hereto (the "Buyers").
WHEREAS:
A. The Company, RGB Channel and the Buyers are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by the rules and regulations as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Securities Act");
B. Buyers desire to purchase and the Company desires to issue and sell,
upon the terms and conditions set forth in this Agreement 10% secured
convertible notes of the Company, in the form attached hereto as Exhibit "A", in
the minimum aggregate principal amount of Five Hundred Thousand Dollars
($500,000) (together with any note(s) issued in replacement thereof or as a
dividend thereon or otherwise with respect thereto in accordance with the terms
thereof, the "Notes"), convertible into shares of common stock, $.001 par value
per share, of the Company (the "IPEX Common Stock") or shares of common stock,
$.001 par value per share, of RGB Channel (the "RGB Common Stock") upon the
terms and subject to the limitations and conditions set forth in such Notes (the
IPEX Common Stock and the RGB Common Stock is collectively referred to herein as
the "Common Stock");
C. Each Buyer wishes to purchase, upon the terms and conditions stated
in this Agreement, such principal amount of Notes as is set forth immediately
below its name on the signature pages hereto;
D. Contemporaneous with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Security Agreement, in the
form attached hereto as Exhibit "B" (the "Security Agreement"), pursuant to
which the Company has agreed to grant the Buyers a first priority security
interest in certain property of Company and RGB Channel to secure the prompt
payment, performance and discharge in full of all of the Company's obligations
under the Notes.
NOW THEREFORE, the Company, RGB Channel and each of the Buyers severally
(and not jointly) hereby agree as follows:
1. PURCHASE AND SALE OF NOTES.
a. Purchase of Notes. On the Closing Date (as defined below), the
Company shall issue and sell to each Buyer and each Buyer severally agrees to
purchase from the Company such principal amount of Notes as is set forth
immediately below such Buyer's name on the signature pages hereto.
b. Form of Payment. On the Closing Date (as defined below), (i)
each Buyer shall pay the purchase price for the Notes to be issued and sold to
it at the Closing (as defined below) (the "Purchase Price") by wire transfer of
immediately available funds to the Company, in accordance with the Company's
written wiring instructions, against delivery of the Notes in the principal
amount equal to the Purchase Price, and (ii) the Company shall deliver such
Notes duly executed on behalf of the Company, to such Buyer, against delivery of
such Purchase Price. Wire instructions for the Company are:
Bank: ▇▇▇▇▇ Fargo Bank
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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For Credit to: Ipex Inc. - Convertible Note Funding Account.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇
Account No.: ▇▇▇ ▇▇▇ ▇▇▇▇
Routing No.: ▇▇▇▇▇▇▇▇▇
c. Closing Date. Subject to the satisfaction (or written waiver)
of the conditions thereto set forth in Section 5 and Section 6 below, the date
and time of the issuance and sale of the Notes pursuant to this Agreement (the
"Closing Date") shall be 3:00 p.m., Eastern Standard Time on March 3, 2006, or
such other mutually agreed upon time. The closing of the transactions
contemplated by this Agreement (the "Closing") shall occur on the Closing Date
at such location as may be agreed to by the parties.
2. BUYERS' REPRESENTATIONS AND WARRANTIES. Each Buyer severally (and
not jointly) represents and warrants to the Company solely as to such Buyer
that:
a. Investment Purpose. As of the date hereof, the Buyer is
purchasing the Notes and the shares of Common Stock issuable upon conversion of
or otherwise pursuant to the Notes (including, without limitation, such
additional shares of Common Stock, if any, as are issuable (i) on account of
interest on the Notes, or (ii) as a result of the events described in Section
1.5(g) of the Notes, such shares of Common Stock being collectively referred to
herein as the "Conversion Shares" and, collectively with the Notes, the
"Securities", for its own account and not with a present view towards the public
sale or distribution thereof, except pursuant to sales registered or exempted
from registration under the Securities Act.
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b. Accredited Investor Status. The Buyer is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D promulgated
pursuant to the Securities Act (an "Accredited Investor").
c. Reliance on Exemptions. The Buyer understands that the
Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and the
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Securities.
d. Information. The Buyer and its advisors, if any, have been,
and for so long as the Notes remain outstanding will continue to be, furnished
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Securities which
have been requested by the Buyer or its advisors. The Buyer and its advisors, if
any, have been, and for so long as the Notes remain outstanding will continue to
be, afforded the opportunity to ask questions of the Company. Notwithstanding
the foregoing, the Company has not disclosed to the Buyer any material nonpublic
information and will not disclose such information unless such information is
disclosed to the public prior to or promptly following such disclosure to the
Buyer. Neither such inquiries nor any other due diligence investigation
conducted by Buyer or any of its advisors or representatives shall modify, amend
or affect Buyer's right to rely on the Company's representations and warranties
contained in Section 3 below. The Buyer understands that its investment in the
Securities involves a significant degree of risk.
e. Governmental Review. The Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.
f. Transfer or Re-sale. The Buyer understands that (i) except as
provided in Section 4(d) of this Agreement, the sale or re-sale of the
Securities has not been and is not being registered under the Securities Act or
any applicable state securities laws, and the Securities may not be transferred
unless (A) the Securities are sold pursuant to an effective registration
statement under the Securities Act, (B) the Buyer shall have delivered to the
Company an opinion of counsel that shall be in form, substance and scope
customary for opinions of counsel in comparable transactions to the effect that
the Securities to be sold or transferred may be sold or transferred pursuant to
an exemption from such registration, which opinion shall be accepted by the
Company, (C) the Securities are sold or transferred to an "affiliate" (as
defined in Rule 144 promulgated under the Securities Act (or a successor rule)
("Rule 144")) of the Buyer who agrees to sell or otherwise transfer the
Securities only in accordance with this Section 2(f) and who is an Accredited
Investor, (D) the Securities are sold pursuant to Rule 144, or (E) the
Securities are sold pursuant to Regulation S under the Securities Act (or a
successor rule) ("Regulation S"), and the Buyer shall have delivered to the
Company an opinion of counsel that shall be in form, substance and scope
customary for opinions of counsel in corporate transactions, which opinion shall
be accepted by the Company; (ii) any sale of such Securities made in reliance on
Rule 144 may be made only in accordance with the terms of said Rule and further,
if said Rule is not applicable, any re-sale of such Securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the Securities
Act) may require compliance with some other exemption under the Securities Act
or the rules and regulations of the SEC thereunder; and (iii) neither the
Company nor any other person is under any obligation to register such Securities
under the Securities Act or any state securities laws or to comply with the
terms and conditions of any exemption thereunder (in each case, other than
pursuant to Section 4(d) of this Agreement).
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g. Legends. The Buyer understands that the Notes and, until such
time as the Conversion Shares have been registered under the Securities Act as
contemplated by Section 4(d) of this Agreement or otherwise may be sold pursuant
to Rule 144 or Regulation S without any restriction as to the number of
securities as of a particular date that can then be immediately sold, the
Conversion Shares may bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of the
certificates for such Securities):
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
securities may not be sold, transferred or assigned in the
absence of an effective registration statement for the
securities under said Act, or an opinion of counsel, in form,
substance and scope customary for opinions of counsel in
comparable transactions, that registration is not required under
said Act or unless sold pursuant to Rule 144 or Regulation S
under said Act."
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by applicable state securities laws, (a)
such Security is registered for sale under an effective registration statement
filed under the Securities Act or otherwise may be sold pursuant to Rule 144 or
Regulation S without any restriction as to the number of securities as of a
particular date that can then be immediately sold, or (b) such holder provides
the Company with an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public
sale or transfer of such Security may be made without registration under the
Securities Act, which opinion shall be accepted by the Company so that the sale
or transfer is effected or (c) such holder provides the Company with reasonable
assurances that such Security can be sold pursuant to Rule 144 or Regulation S.
The Buyer agrees to sell all Securities, including those represented by a
certificate(s) from which the legend has been removed, in compliance with
applicable prospectus delivery requirements, if any.
h. Authorization; Enforcement. This Agreement, the Security
Agreement and the Notes have been duly and validly authorized. This Agreement
has been duly executed and delivered on behalf of the Buyer, and this Agreement
constitutes, and upon execution and delivery by the Buyer of the Security
Agreement, such agreement will constitute, valid and binding agreements of the
Buyer enforceable in accordance with their terms.
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i. Residency. The Buyer is a resident of the jurisdiction set
forth immediately below such Buyer's name on the signature pages hereto.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND RGB CHANNEL. The
Company and RGB Channel each represents and warrants to each Buyer as follows:
a. Organization and Qualification. The Company and each of its
Subsidiaries (as defined below), if any, is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated, with full power and authority (corporate and other) to
own, lease, use and operate its properties and to carry on its business as and
where now owned, leased, used, operated and conducted. Schedule 3(a) sets forth
a list of all of the Subsidiaries of the Company and the jurisdiction in which
each is incorporated. The Company and each of its Subsidiaries is duly qualified
as a foreign corporation to do business and is in good standing in every
jurisdiction in which its ownership or use of property or the nature of the
business conducted by it makes such qualification necessary except where the
failure to be so qualified or in good standing would not have a Material Adverse
Effect. "Material Adverse Effect" means any material adverse effect on the
business, operations, assets, financial condition or prospects of the Company or
its Subsidiaries, if any, taken as a whole, or on the transactions contemplated
hereby or by the agreements or instruments to be entered into in connection
herewith. "Subsidiaries" means any corporation or other organization, whether
incorporated or unincorporated, in which the Company owns, directly or
indirectly, any equity or other ownership interest.
b. Authorization; Enforcement. (i) Each of the Company and RGB
Channel has all requisite corporate power and authority to enter into and
perform this Agreement, the Security Agreement and the Notes and to consummate
the transactions contemplated hereby and thereby and to issue the Securities, in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
this Agreement, the Security Agreement and the Notes by the Company and RGB
Channel and the consummation of the transactions contemplated hereby and thereby
(including without limitation, the issuance of the Notes and the issuance and
reservation for issuance of the Conversion Shares issuable upon conversion or
exercise thereof) have been duly authorized by each of the Company's and RGB
Channel's Board of Directors and no further consent or authorization of the
Company, RGB Channel, their respective Board of Directors, or shareholders is
required, (iii) this Agreement has been duly executed and delivered by the
Company and by RGB Channel by their respective authorized representative, and
such authorized representative is the true and official representative with
authority to sign this Agreement and the other documents executed in connection
herewith and bind the Company and RGB Channel accordingly, and (iv) this
Agreement constitutes, and upon execution and delivery by the Company and/or RGB
Channel of the Security Agreement and the Notes, each of such instruments will
constitute, legal, valid and binding obligations of the Company and RGB Channel
enforceable against the Company and RGB Channel in accordance with its terms.
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c. Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of: (i) 75,000,000 shares of IPEX Common Stock, of
which 17,861,293 shares are issued and outstanding, and 4,357,159 shares are
reserved for issuance pursuant to securities (other than the Notes) exercisable
for, or convertible into or exchangeable for shares of IPEX Common Stock; and
(ii) no shares of preferred stock. As of the date hereof, the authorized capital
stock of RGB Channel consists of: (i) 100,000,000 shares of RGB Common Stock, of
which one share is issued and outstanding, 10,000,000 shares are reserved for
issuance to IPEX as consideration for the transfer and assignment of certain
assets to RGB Channel, and no shares are reserved for issuance pursuant to
securities (other than the Notes) exercisable for, or convertible into or
exchangeable for shares of RGB Common Stock; and (ii) 5,000,000 shares of
preferred stock, of which no shares are issued and outstanding and no shares are
reserved for issuance. All of such outstanding shares of capital stock of the
Company and of RGB Channel are, or upon issuance will be, duly authorized,
validly issued, fully paid and nonassessable. No shares of capital stock of the
Company or of RGB Channel are subject to preemptive rights or any other similar
rights of the shareholders of the Company or RGB Channel or any liens or
encumbrances imposed through the actions or failure to act of the Company or RGB
Channel. Except as disclosed in Schedule 3(c), as of the effective date of this
Agreement, (i) there are no outstanding options, warrants, scrip, rights to
subscribe for, puts, calls, rights of first refusal, agreements, understandings,
claims or other commitments or rights of any character whatsoever relating to,
or securities or rights convertible into or exchangeable for any shares of
capital stock of the Company, or any of its Subsidiaries including, but not
limited to RGB Channel, or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries, (ii) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of its or their securities under the Securities Act
(except pursuant to Section 4(d) of this Agreement) and (iii) there are no
anti-dilution or price adjustment provisions contained in any security issued by
the Company or RGB Channel (or in any agreement providing rights to security
holders) that will be triggered by the issuance of the Notes or the Conversion
Shares. The Company has furnished to the Buyer true and correct copies of the
Company's Articles of Incorporation and RGB Channel's Articles of Incorporation
as in effect on the date hereof ("Articles of Incorporation"), the Company's and
RGB Channel's By-laws, as in effect on the date hereof (the "By-laws"), and the
terms of all securities convertible into or exercisable for IPEX Common Stock or
RGB Common Stock and the material rights of the holders thereof in respect
thereto.
d. Issuance of Shares. The Conversion Shares are duly authorized
and reserved for issuance and, upon conversion of the Notes in accordance with
their terms, will be validly issued, fully paid and non-assessable, and free
from all taxes, liens, claims and encumbrances with respect to the issue thereof
and shall not be subject to preemptive rights or other similar rights of
shareholders of the Company or of RGB Channel and will not impose personal
liability upon the holder thereof.
e. Acknowledgment of Dilution. The Company and RGB Channel
understands and acknowledges the potentially dilutive effect to the Common Stock
upon the issuance of the Conversion Shares upon conversion of the Notes. The
Company and RGB Channel each further acknowledges that its obligation to issue
Conversion Shares upon conversion of the Notes in accordance with this Agreement
and the Notes is absolute and unconditional regardless of the dilutive effect
that such issuance may have on the ownership interests of other shareholders of
the Company or of RGB Channel.
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f. No Conflicts. The execution, delivery and performance of this
Agreement, the Security Agreement and the Notes by the Company and/or RGB
Channel and the consummation by the Company and by RGB Channel of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance and reservation for issuance of the Conversion Shares) will not (i)
conflict with or result in a violation of any provision of the Articles of
Incorporation or By-laws of each respective company, (ii) violate or conflict
with, or result in a breach of any provision of, or constitute a default (or an
event which with notice or lapse of time or both could become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture, patent, patent license or instrument
to which the Company or any of its Subsidiaries is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and regulations of any
self-regulatory organizations to which the Company, RGB Channel or their
respective securities are subject) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect). Neither
the Company nor any of its Subsidiaries is in violation of its Articles of
Incorporation, By-laws or other organizational documents and neither the Company
nor any of its Subsidiaries is in default (and no event has occurred which with
notice or lapse of time or both could put the Company or any of its Subsidiaries
in default) under, and neither the Company nor any of its Subsidiaries has taken
any action or failed to take any action that would give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party or by which any property or assets of the Company or any of its
Subsidiaries is bound or affected, except for possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect. The businesses
of the Company and its Subsidiaries, if any, are not being conducted, and shall
not be conducted so long as a Buyer owns any of the Securities, in violation of
any law, ordinance or regulation of any governmental entity. Except as
specifically contemplated by this Agreement and as required under the Securities
Act and any applicable state securities laws, neither the Company nor RGB
Channel is required to obtain any consent, authorization or order of, or make
any filing or registration with, any court, governmental agency, regulatory
agency, self regulatory organization or stock market or any third party in order
for it to execute, deliver or perform any of its obligations under this
Agreement, the Security Agreement or the Notes in accordance with the terms
hereof or thereof or to issue and sell the Notes in accordance with the terms
hereof and to issue the Conversion Shares upon conversion of the Notes. All
consents, authorizations, orders, filings and registrations which the Company is
required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof. The Company is not in violation of the
listing requirements of the OTC Bulletin Board (the "OTCBB") and does not
reasonably anticipate that the IPEX Common Stock will be delisted by the OTCBB
in the foreseeable future. The Company and its Subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing.
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g. SEC Documents; Financial Statements. The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (all of the foregoing
filed prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents (other than exhibits to such
documents) incorporated by reference therein, being hereinafter referred to
herein as the "SEC Documents"). The Company has delivered to each Buyer true and
complete copies of the SEC Documents not available on the ▇▇▇▇▇ system that have
been requested by each Buyer. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the SEC promulgated thereunder applicable to the
SEC Documents. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with United States generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements) and fairly present
in all material respects the consolidated financial position of the Company and
its consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit adjustments).
Except as set forth in the financial statements of the Company included in the
SEC Documents, the Company has no liabilities, contingent or otherwise, other
than (i) liabilities incurred in the ordinary course of business subsequent to
December 31, 2004 and (ii) obligations under contracts and commitments incurred
in the ordinary course of business and not required under generally accepted
accounting principles to be reflected in such financial statements, which,
individually or in the aggregate, are not material to the financial condition or
operating results of the Company.
h. Absence of Certain Changes. Since December 31, 2004, there has
been no material adverse change and no material adverse development in the
assets, liabilities, business, properties, operations, financial condition,
results of operations or prospects of the Company or any of its Subsidiaries
which has not been reported in the SEC Documents.
i. Absence of Litigation. There is no action, suit, claim,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened against or
affecting the Company or any of its Subsidiaries, or their officers or directors
in their capacity as such, that could have a Material Adverse Effect. The
Company and its Subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing which fact or circumstances have not
been reported in the SEC Documents.
j. Patents, Copyrights, etc. The Company and each of its
Subsidiaries owns or possesses the requisite licenses or rights to use all
patents, patent applications, patent rights, inventions, know-how, trade
secrets, trademarks, trademark applications, service marks, service names, trade
names and copyrights ("Intellectual Property") necessary to enable it to conduct
its business as now operated and described in the SEC Documents; there is no
claim or action by any person pertaining to, or proceeding pending, or to the
Company's knowledge threatened, which challenges the right of the Company or of
a Subsidiary with respect to any Intellectual Property necessary to enable it to
conduct its business as now operated; to the best of the Company's knowledge,
the Company's or its Subsidiaries' current and intended products, services and
processes do not infringe on any Intellectual Property or other rights held by
any person; and the Company is unaware of any facts or circumstances which might
give rise to any of the foregoing. The Company and each of its Subsidiaries have
taken reasonable security measures to protect the secrecy, confidentiality and
value of their Intellectual Property.
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k. No Materially Adverse Contracts, Etc. Neither the Company nor
any of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company's officers has or is expected in the future to have a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a
party to any contract or agreement which in the judgment of the Company's
officers has or is expected to have a Material Adverse Effect.
l. Tax Status. Except as set forth on Schedule 3(l), the Company
and each of its Subsidiaries has made or filed all federal, state and foreign
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject (unless and only to the extent that the
Company and each of its Subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on
its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Company know of no
basis for any such claim. The Company has not executed a waiver with respect to
the statute of limitations relating to the assessment or collection of any
foreign, federal, state or local tax. None of the Company's or RGB Channel's tax
returns is presently being audited by any taxing authority.
m. Certain Transactions. Except as described in the SEC
Documents, none of the officers, directors, or employees of the Company is
presently a party to any transaction with the Company or any of its Subsidiaries
(other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company, any corporation, partnership,
trust or other entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.
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n. Disclosure. All information relating to or concerning the
Company or any of its Subsidiaries set forth in this Agreement and otherwise in
connection with the transactions contemplated hereby is true and correct in all
material respects and the Company has not omitted to state any material fact
necessary in order to make the statements made herein or therein, in light of
the circumstances under which they were made, not misleading. No event or
circumstance has occurred or exists with respect to the Company or any of its
Subsidiaries or its or their business, properties, prospects, operations or
financial conditions, which, under applicable law, rule or regulation, requires
public disclosure or announcement by the Company but which has not been so
publicly announced or disclosed.
o. Acknowledgment Regarding Buyers' Purchase of Securities. The
Company acknowledges and agrees that the Buyers are acting solely in the
capacity of arm's length purchasers with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that no Buyer
is acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any statement made by any Buyer or any of their respective
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is not advice or a recommendation and is merely incidental
to the Buyers' purchase of the Securities. The Company further represents to
each Buyer that the Company's decision to enter into this Agreement has been
based solely on the independent evaluation of the Company and its Subsidiaries.
p. No Integrated Offering. Neither the Company, RGB Channel, nor
any of their affiliates, nor any person acting on its or their behalf, has
directly or indirectly made any offers or sales in any security or solicited any
offers to buy any security under circumstances that would require registration
under the Securities Act of the issuance of the Securities to the Buyers. The
issuance of the Securities to the Buyers will not be integrated with any other
issuance of the Company's or RGB Channel's securities (past, current or future).
q. No Brokers. Except as set forth on Schedule 3(q), neither the
Company nor RGB Channel has taken any action which would give rise to any claim
by any person for brokerage commissions, transaction fees or similar payments
relating to this Agreement or the transactions contemplated hereby.
r. Permits; Compliance. The Company and each of its Subsidiaries
is in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the "Company Permits"), and there is
no action pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits. Neither the Company
nor any of its Subsidiaries is in conflict with, or in default or violation of,
any of the Company Permits, except for any such conflicts, defaults or
violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. Since December 31, 2004, neither the
Company nor any of its Subsidiaries has received any notification with respect
to possible conflicts, defaults or violations of applicable laws, except for
notices relating to possible conflicts, defaults or violations, which conflicts,
defaults or violations would not have a Material Adverse Effect.
10
s. Environmental Matters.
(i) To the Company's knowledge, with respect to the Company
or any of its Subsidiaries or any predecessor of the Company, there are no past
or present violations of Environmental Laws (as defined below), releases of any
material into the environment, actions, activities, circumstances, conditions,
events, incidents, or contractual obligations which may give rise to any common
law environmental liability or any liability under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 or similar
federal, state, local or foreign laws and neither the Company nor any of its
Subsidiaries has received any notice with respect to any of the foregoing, nor
is any action pending or, to the Company's knowledge, threatened in connection
with any of the foregoing. The term "Environmental Laws" means all federal,
state, local or foreign laws relating to pollution or protection of human health
or the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants contaminants, or toxic or hazardous substances or wastes
(collectively, "Hazardous Materials") into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.
(ii) Other than those that are or were stored, used or
disposed of in compliance with applicable law, no Hazardous Materials are
contained on or about any real property currently owned, leased or used by the
Company or any of its Subsidiaries, and no Hazardous Materials were released on
or about any real property previously owned, leased or used by the Company or
any of its Subsidiaries during the period the property was owned, leased or used
by the Company or any of its Subsidiaries, except in the normal course of the
Company's or any of its Subsidiaries' business.
(iii) To the Company's knowledge, there are no underground
storage tanks on or under any real property owned, leased or used by the Company
or any of its Subsidiaries that are not in compliance with applicable law.
t. Title to Property. The Company and its Subsidiaries have good
and marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as would not have a Material Adverse
Effect. Any real property and facilities held under lease by the Company and its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as would not have a Material Adverse Effect.
u. Insurance. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.
11
v. Internal Accounting Controls. The Company and each of its
Subsidiaries maintain a system of internal accounting controls sufficient, in
the judgment of the Company's board of directors, to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
w. Foreign Corrupt Practices. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any Subsidiary has, in the course of his actions
for, or on behalf of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
as amended, or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any foreign or domestic government official or
employee.
x. Solvency. The Company (after giving effect to the transactions
contemplated by this Agreement) is solvent (i.e., its assets have a fair market
value in excess of the amount required to pay its probable liabilities on its
existing debts as they become absolute and matured) and currently the Company
has no information that would lead it to reasonably conclude that the Company
would not, after giving effect to the transaction contemplated by this
Agreement, have the ability to, nor does it intend to take any action that would
impair its ability to, pay its debts from time to time incurred in connection
therewith as such debts mature.
y. No Investment Company. Neither the Company nor RGB Channel is,
and upon the issuance and sale of the Securities as contemplated by this
Agreement will not be an "investment company" required to be registered under
the Investment Company Act of 1940 (an "Investment Company"). Neither the
Company nor RGB Channel is controlled by an Investment Company.
4. COVENANTS.
a. Best Efforts. The parties shall use their best efforts to
satisfy timely each of the conditions described in Section 5 and Section 6 of
this Agreement.
b. Form D; Blue Sky Laws. The Company and RGB Channel each agrees
to file a Form D with respect to the Securities as required under Regulation D.
The Company and RGB Channel shall, on or before the Closing Date, take such
action as the Company shall reasonably determine is necessary to qualify the
Securities for sale to the Buyers at the Closing pursuant to this Agreement
under applicable securities or "blue sky" laws of the states of the United
States (or to obtain an exemption from such qualification).
12
c. Reporting Status; Eligibility to Use Form SB-2. The IPEX
Common Stock is registered under Section 12(g) of the Exchange Act. The Company
represents and warrants that it meets the requirements for the use of Form SB-2
for registration of the sale by the Buyer of the Registrable Shares (as defined
herein). So long as the Buyer beneficially owns any of the Securities, the
Company shall timely file all reports required to be filed with the SEC pursuant
to the Exchange Act, and the Company shall not terminate its status as an issuer
required to file reports under the Exchange Act even if the Exchange Act or the
rules and regulations thereunder would permit such termination.
d. Registration Rights.
(i) If at any time after the Buyers convert all of the Notes
into IPEX Common Stock or RGB Common Stock the Company (or RGB Channel if the
Buyers convert the Notes into RGB Common Stock) shall determine to file with the
SEC a registration statement (the "Registration Statement") relating to an
offering for its own account or the account of others under the Securities Act,
of any of its equity securities (other than on Form S-4 or Form S-8 or their
then equivalents relating to equity securities to be issued solely in connection
with an acquisition of any entity or business or equity securities issuable in
connection with employee benefit plans), the Company (or RGB Channel if the
Buyers convert the Notes into RGB Common Stock) shall include in such
Registration Statement all of the IPEX Common Stock or RGB Common Stock issued
upon conversion of the Notes (the "Registrable Shares"). The Company (or RGB
Channel if the Buyers convert the Notes into RGB Common Stock) shall use its
best efforts to cause the Registration Statement to be declared effective by the
Commission as promptly as possible after the filing thereof and shall use its
best efforts to keep the Registration Statement continuously effective until the
earlier of: (A) the date when all Registrable Shares covered by such
Registration Statement have been sold publicly; or (B) the date when all
Registrable Shares may be sold pursuant to Rule 144(k) under the Securities Act
(the "Effectiveness Period").
(ii) In connection with the registration obligations
hereunder, the Company (or RGB Channel if the Buyers convert the Notes into RGB
Common Stock) shall: (A) prepare and file with the SEC such amendments,
including post-effective amendments, to the Registration Statement and the
prospectus used in connection therewith as may be necessary to keep the
Registration Statement continuously effective as to the Registrable Shares for
the Effectiveness Period; (B) cause the related prospectus to be amended or
supplemented by any required prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424 promulgated under the Securities Act;
(C) respond as promptly as reasonably possible to any comments received from the
SEC with respect to the Registration Statement or any amendment thereto; and (D)
comply in all material respects with the provisions of the Securities Act and
the Exchange Act with respect to the disposition of all Registrable Shares
covered by the Registration Statement during the applicable period in accordance
with the intended methods of disposition by the selling shareholders set forth
in the Registration Statement as so amended or in such prospectus as so
supplemented.
13
(iii) The Company (or RGB Channel if the Buyers convert the
Notes into RGB Common Stock) shall pay all fees and expenses incident to the
performance of or compliance with this Section 4(d), including: (A) all
registration and filing fees and expenses, including without limitation those
related to filings with the SEC; and (B) printing expenses (including without
limitation expenses of printing certificates for Registrable Shares and of
printing prospectuses requested by the Buyers).
e. Use of Proceeds. The Company shall use the proceeds from the
sale of the Notes in the manner set forth in Schedule 4(d) attached hereto and
made a part hereof and shall not, directly or indirectly, use such proceeds for
any loan to or investment in any other corporation, partnership, enterprise or
other person (except in connection with its currently existing direct or
indirect Subsidiaries).
f. Subsequent Financings of the Company. So long as the Company
shall have any obligation under the Notes, if the Company sells IPEX Common
Stock or any warrants or other rights, whether or not immediately exercisable,
to subscribe for or to purchase IPEX Common Stock or other securities
convertible into or exchangeable for IPEX Common Stock pursuant to a financing
transaction, the Borrower shall use the proceeds of such a financing transaction
to redeem the Notes.
g. Authorization and Reservation of Shares. The Company and RGB
Channel each shall at all times while the Notes are outstanding have authorized,
and reserved for the purpose of issuance, a sufficient number of shares of
Common Stock to provide for the full conversion of the outstanding Notes and
issuance of the Conversion Shares in connection therewith (based on the
Conversion Price of the Notes in effect from time to time) and as otherwise
required by the Notes (the "Reserved Amount"). If at any time the number of
shares of Common Stock authorized and reserved for issuance ("Authorized and
Reserved Shares") is below the Reserved Amount, the Company and/or RGB Channel,
as applicable, will promptly take all corporate action necessary to authorize
and reserve a sufficient number of shares, including, without limitation,
calling a special meeting of shareholders to authorize additional shares to meet
the obligations under this Section 4(g), in the case of an insufficient number
of authorized shares, obtain shareholder approval of an increase in such
authorized number of shares, and voting the management shares of the Company and
RGB Channel in favor of an increase in the authorized shares to ensure that the
number of authorized shares is sufficient to meet the Reserved Amount.
h. Corporate Existence. So long as a Buyer beneficially owns any
Notes, the Company and RGB Channel shall maintain its respective corporate
existence and shall not sell all or substantially all of its respective assets
without the prior written consent of the Buyers, except in the event of a merger
or consolidation or sale of all or substantially all of such assets, where the
surviving or successor entity in such transaction (i) assumes the Company's and
RGB Channel's obligations hereunder and under the agreements and instruments
entered into in connection herewith and (ii) is a publicly traded corporation.
14
i. No Integration. Neither the Company nor RGB Channel shall make
any offers or sales of any security (other than the Securities) under
circumstances that would require registration of the Securities being offered or
sold hereunder under the Securities Act or cause the offering of the Securities
to be integrated with any other offering of securities by the Company or RGB
Channel.
j. Registration Rights Waivers. The Company shall use its best
efforts to obtain, on or before the Registration Statement is filed pursuant to
Section 4(d), waivers from all holders of registration rights relating to its
securities of any kind whatsoever and will not, whether or not such waivers are
obtained, include for registration on the Registration Statement any securities
held by any holders other than the Buyers.
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of
the Company hereunder to issue and sell the Notes to a Buyer at the
Closing is subject to the satisfaction, at or before the Closing Date of each of
the following conditions, provided that these conditions are for the Company's
sole benefit and may be waived by the Company at any time in its sole
discretion:
a. The applicable Buyer shall have executed this Agreement and
the Security Agreement, and delivered the same to the Company.
b. The applicable Buyer shall have delivered the Purchase Price
in accordance with Section 1(b) above.
c. The representations and warranties of the applicable Buyer
shall be true and correct in all material respects as of the date when made and
as of the Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date), and the applicable Buyer shall
have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the applicable Buyer at or prior to the Closing
Date.
d. No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.
6. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE. The obligation of
each Buyer hereunder to purchase the Notes at the Closing is subject to the
satisfaction, at or before the Closing Date of each of the following conditions,
provided that these conditions are for such Buyer's sole benefit and may be
waived by such Buyer at any time in its sole discretion:
a. The Company and RGB Channel shall have executed this Agreement
and the Security Agreement and delivered the same to the Buyer.
15
b. The Company shall have delivered to such Buyer duly executed
Notes in accordance with Section 1(b) above.
c. The representations and warranties of the Company shall be
true and correct in all material respects as of the date when made and as of the
Closing Date as though made at such time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing Date.
d. No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.
e. No event shall have occurred which could reasonably be
expected to have a Material Adverse Effect on the Company or any of its
Subsidiaries.
7. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law. THIS AGREEMENT SHALL BE ENFORCED, GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS. THE PARTIES HERETO HEREBY SUBMIT
TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN SAN
DIEGO, CALIFORNIA WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT, THE
AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. ALL PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING. ALL PARTIES FURTHER AGREE
THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED
IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW. ALL PARTIES AGREE THAT A FINAL NON-APPEALABLE
JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED
IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER.
THE PARTY OR PARTIES WHICH DO NOT PREVAIL IN ANY DISPUTE ARISING UNDER THIS
AGREEMENT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING ATTORNEYS'
FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH DISPUTE.
b. Counterparts; Signatures by Facsimile. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
but all of which shall constitute one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party. This Agreement, once executed by a party, may be delivered to the
other party hereto by facsimile transmission of a copy of this Agreement bearing
the signature of the party so delivering this Agreement.
16
c. Headings. The headings of this Agreement are for convenience
of reference only and shall not form part of, or affect the interpretation of,
this Agreement.
d. Severability. In the event that any provision of this
Agreement is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any provision hereof which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
hereof.
e. Entire Agreement; Amendments. This Agreement and the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Buyer
makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by
an instrument in writing signed by the party to be charged with enforcement.
f. Notices. Any notices required or permitted to be given under
the terms of this Agreement shall be sent by certified or registered mail
(return receipt requested) or delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile and shall be effective
five days after being placed in the mail, if mailed by regular United States
mail, or upon receipt, if delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile, in each case addressed
to a party. The addresses for such communications shall be:
If to the Company or RGB Channel:
IPEX, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
17
With a copy to (which shall not constitute notice):
Sichenzia ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to a Buyer: To the address set forth immediately below such Buyer's
name on the signature pages hereto.
Each party shall provide notice to the other party of any change in
address.
g. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and assigns.
Neither the Company nor any Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other.
Notwithstanding the foregoing, subject to Section 2(f), any Buyer may assign its
rights hereunder to any person that purchases Securities in a private
transaction from a Buyer or to any of its "affiliates," as that term is defined
under the Exchange Act, and who is an Accredited Investor without the consent of
the Company.
h. Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. Survival. The representations and warranties of the Company
and the agreements and covenants set forth in Sections 2, 3, 4 and 7 shall
survive the Closing hereunder notwithstanding any due diligence investigation
conducted by or on behalf of the Buyers.
j. Further Assurances. Each party shall do and perform, or cause
to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
k. No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
l. Remedies. The Company and RGB Channel each acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the
Buyers by vitiating the intent and purpose of the transaction contemplated
hereby. Accordingly, the Company and RGB Channel each acknowledges that the
remedy at law for a breach of its obligations under this Agreement will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company or RGB Channel of the provisions of this Agreement, that the Buyers
shall be entitled, in addition to all other available remedies at law or in
equity, and in addition to the penalties assessable herein, to an injunction or
injunctions restraining, preventing or curing any breach of this Agreement and
to enforce specifically the terms and provisions hereof.
18
IN WITNESS WHEREOF, the Company and RGB Channel have caused this
Securities Purchase Agreement to be duly executed as of the date first above
written.
IPEX, INC.
__________________________________________
Sothi Thillairajah
Chief Executive Officer
RGB CHANNEL, INC.
__________________________________________
Sothi Thillairajah
Chief Executive Officer
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGES FOR BUYERS FOLLOW.]
19
[BUYER SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, undersigned Buyer has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.
Name of Buyer (Please Print):
---------------------------------------------------
Signature of Authorized Signatory of Buyer:
-------------------------------------
Name of Authorized Signatory (Please Print):
------------------------------------
Title of Authorized Signatory (Please Print):
-----------------------------------
Email Address of Authorized Signatory:
------------------------------------------
State or Country of Residence:
--------------------------------------------------
Address of Buyer:
Address for Delivery of Securities for Buyer (if not same as above):
Aggregate Purchase Price:
Aggregate Principal Amount of Notes:
Federal EIN or SSN: [PROVIDE THIS UNDER SEPARATE COVER]
20
Disclosure Schedules
to
Securities Purchase Agreement
(Prepared in connection with Notes sold by the Company to the Buyers pursuant to
the Securities Purchase Agreement dated as of March 21, 2006 (the "March 2006
Purchase Agreement"). Capitalized terms not defined herein shall have the
meaning given to such terms in the March 2006 Purchase Agreement.)
March 21, 2006
Schedule 3(a)
Subsidiaries
------------
AICI, Inc., a Nevada corporation 100% owned by the Company.
RGB Channel, Inc., a Nevada corporation 100% owned by the Company.
Schedule 3(c)
Capitalization
--------------
Outstanding Warrants
--------------------
On March 18, 2005, the Company completed a private placement (the "March
2005 Transaction") of an aggregate of 3,500,000 shares of IPEX Common Stock,
Series A Warrants to purchase 1,750,000 shares of IPEX Common Stock (the "Series
A Warrants") and Series B Warrants to purchase 1,750,000 shares of IPEX Common
Stock (the "Series B Warrants") to 76 accredited investors for aggregate gross
proceeds of $3,500,000. The IPEX Common Stock, Series A Warrants and Series B
Warrants were sold as Units, with each Unit consisting of two shares of IPEX
Common Stock, one Series A Warrant and one Series B Warrant, for a per Unit
purchase price of $2.00. Each Series A Warrant entitles the holder to purchase
one share of common stock at $1.50 per share, exercisable for a period of five
years. Each Series B Warrant entitles the holder to purchase one share of common
stock at $2.00 per share, exercisable for a period of five years.
Outstanding Options
-------------------
The Company has outstanding options to purchase 291,666 shares of IPEX
Common Stock owned by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, the Company's former director and former
Chief Executive Officer. Such options have an exercise price of $2.71 and expire
February 15, 2016. These options were issued to ▇▇. ▇▇▇▇▇▇▇▇ as compensation for
services rendered to an employee and/or director of the Company.
The Company has outstanding options to purchase 65,493 shares of IPEX
Common Stock owned by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, the Company's former director and former
Chief Executive Officer. Such options have an exercise price of $2.36 and expire
February 15, 2016. These options were issued to ▇▇. ▇▇▇▇▇▇▇▇ as compensation for
services rendered to an employee and/or director of the Company.
The Company has outstanding options to purchase 500,000 shares of IPEX
Common Stock owned by Sothi Thillairajah, a current director of the Company and
the Company's current Chief Executive Officer and Chief Operating Officer. Such
options have an exercise price of $2.75 and expire July 6, 2011. These options
were issued to ▇▇. ▇▇▇▇▇▇▇▇▇▇▇▇ as compensation for services rendered to an
employee of the Company.
Outstanding Registration Rights
-------------------------------
The Company has agreed to file a registration statement with the
Securities and Exchange Commission covering the resale of the IPEX Common Stock
and IPEX Common Stock issuable upon exercise of the Series A Warrants and Series
B Warrants sold in the March 2005 Transaction as soon as practicable, but in no
event later than 90 days after March 18, 2005. The Company agreed to use its
best efforts to have such registration statement declared effective and remain
effective until the selling shareholders have sold all their securities which
were included in the registration statement or such securities may be sold under
Rule 144(k) under the Securities Act. As of March 3, 2006 the Company has not
filed such registration statement and the Company has not obtained any waivers
related to the filing of such registration statement.
Outstanding Anti-Dilution or Price Adjustment Provisions
--------------------------------------------------------
The Series A Warrants and the Series B Warrants sold by the Company in the
March 2005 Transaction contain anti-dilution provisions and price adjustment
provisions. The issuance of the Notes will cause the exercise price of the
Series A Warrants and the Series B Warrants to be adjusted to $1.00 per share.
If the Conversion Price (defined in the Notes) of the Notes is adjusted in
accordance with Section 1.7(f) of the Notes, then such adjustment may cause a
further downward adjustment to the exercise price of the Series A Warrants and
the Series B Warrants.
Upon any adjustment to the exercise price of the Series A Warrants and the
Series B Warrants as described above, the number of shares of IPEX Common Stock
issuable pursuant to the Series A Warrants and the Series B Warrants will be
adjusted by multiplying such number by a fraction, the numerator of which will
be the exercise price in effect immediately prior to such adjustment and the
denominator of which shall be the exercise price in effect immediately
thereafter.
Schedule 3(l)
Tax Status
----------
None.
Schedule 3(q)
No Brokers
----------
None.
Schedule 4(d)
Use of Proceeds
---------------
All proceeds from the sale of the Notes will be used for general working
capital purposes.