SECURITIES PURCHASE AGREEMENT
Exhibit
10.25
THIS
SECURITIES PURCHASE AGREEMENT (this
“Agreement”), dated as of July 13, 2007, by and among
C-▇▇▇▇
International, Inc., a South Carolina corporation, with headquarters
located at ▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the
“Company”), and the Buyers listed on Schedule I attached
hereto (individually, a “Buyer” or collectively
“Buyers”).
WITNESSETH:
WHEREAS,
the Company and the Buyer(s) are executing and delivering this Agreement in
reliance upon an exemption from securities registration pursuant to Section
4(2)
and/or Rule 506 of Regulation D (“Regulation D”) as promulgated by
the U.S. Securities and Exchange Commission (the “SEC”) under the
Securities Act of 1933, as amended (the “1933 Act”);
WHEREAS,
the parties desire that, upon the terms and subject to the conditions contained
herein, the Company shall issue and sell to the Buyer(s), as provided herein,
and the Buyer(s) of which Seven Hundred Thirty Seven Thousand Three Hundred
Thirty Five Dollars and ninety five cents ($737,335.95) shall be funded on
the
date hereof pursuant to four separate Secured Debentures (the “First
Closing”), and the remainder shall be funded on a date that is mutually
acceptable to the Company and the Buyers, for a total purchase price of up
to
One Million Dollars ($1,000,000), (the “Purchase Price”) in the
respective amounts set forth opposite each Buyer(s) name on Schedule I (the
“Subscription Amount”); and
WHEREAS,
upon repayment by the Company of amounts funded by the Buyers, the Purchase
Price shall be increased by the amount of such principal repaid hereunder,
provided however that in no event shall the outstanding principal amount funded
by the Buyers exceed One Million Dollars at any time
WHEREAS,
contemporaneously with the execution and delivery of this Agreement, the parties
hereto are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as Exhibit A (the “Investor
Registration Rights Agreement”) pursuant to which the Company has agreed to
provide certain registration rights under the 1933 Act and the rules and
regulations promulgated there under, and applicable state securities laws;
and
WHEREAS,
the aggregate proceeds of the sale of the Secured Debentures contemplated hereby
shall be held in escrow pursuant to the terms of an escrow agreement
substantially in the form of the Escrow Agreement attached hereto as Exhibit
B; and
WHEREAS,
the parties hereto previously executed and delivered Irrevocable Transfer Agent
Instructions substantially in the form attached hereto as Exhibit C (the
“Irrevocable Transfer Agent Instructions”); and
WHEREAS,
contemporaneously with the execution and delivery of this Agreement, the parties
hereto are executing and delivering a Security Agreement substantially in the
form attached hereto as Exhibit D (the “Security Agreement”)
pursuant to which the Company has agreed to provide the Buyer a security
interest in Pledged Collateral (as this term is defined in the Security
Agreement dated the date hereof) to secure Company’s obligations under this
Agreement, the Secured Debenture, the Investor Registration Rights Agreement,
the Irrevocable Transfer Agent Instructions, the Security Agreement or any
other
obligations of the Company to the Buyer; and
1
NOW,
THEREFORE, in consideration of the mutual covenants and other
agreements contained in this Agreement the Company and the Buyer(s) hereby
agree
as follows:
1. PURCHASE
AND SALE OF SECURED DEBENTURES.
(a) Purchase
of Secured Debentures. Subject to the satisfaction (or waiver) of
the terms and conditions of this Agreement, each Buyer agrees, severally and
not
jointly, to purchase at Closing (as defined herein below) and the Company agrees
to sell and issue to each Buyer, severally and not jointly, at Closing, Secured
Debentures in amounts corresponding with the Subscription Amount set forth
opposite each Buyer’s name on Schedule I hereto. Upon execution
hereof by a Buyer, the Buyer shall wire transfer the Subscription Amount set
forth opposite his name on Schedule I in same-day funds or a check payable
to:
”▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇, P.A. as Escrow Agent for C-▇▇▇▇ International,
Inc./Trafalgar Capital Investment Fund”, which Subscription Amount shall be held
in escrow pursuant to the terms of the Escrow Agreement (as hereinafter defined)
and disbursed in accordance therewith. Notwithstanding the foregoing,
a Buyer may withdraw his Subscription Amount and terminate this Agreement as
to
such Buyer at any time after the execution hereof and prior to Closing (as
hereinafter defined).
(b) Closing
Date. The Closing of the purchase and sale of the Secured
Debentures shall take place at 10:00 a.m. Eastern Standard Time on the date
hereof, subject to notification of satisfaction of the conditions to the Closing
set forth herein and in Sections 6 and 7 below (or such later date as is
mutually agreed to by the Company and the Buyer(s)) (the “FirstClosing
Date”) and subsequent closings shall take place on dates that are mutually
agreed to by the Company and the Buyers (“Subsequent Closing Dates” and
with the First Closing Date, the “Closing Dates”),
The Closings shall occur on their respective Closing Dates at the
offices of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇, P.A., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇ ▇▇▇▇▇ (or such other place as is mutually agreed to by the Company
and the Buyer(s)).
(c) Escrow
Arrangements; Form of Payment. Upon execution hereof by Buyer(s)
and pending the Closing, the aggregate proceeds of the sale of the Secured
Debentures to Buyer(s) pursuant hereto shall be deposited in a non-interest
bearing escrow account with ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇, P.A., as escrow agent (the
“Escrow Agent”), pursuant to the terms of an escrow agreement between the
Company, the Buyer(s) and the Escrow Agent in the form attached hereto as
Exhibit B (the “Escrow Agreement”). Subject to the
satisfaction of the terms and conditions of this Agreement, on the Closing
Dates, (i) the Escrow Agent shall deliver to the Company in accordance with
the
terms of the Escrow Agreement such aggregate proceeds for the Secured Debentures
to be issued and sold to such Buyer(s), minus the fees and expenses as set
forth
herein which shall be paid directly from the gross proceeds held in escrow
at
each Closing by wire transfer of immediately available funds and (ii) the
Company shall deliver to each Buyer, Secured Debentures which such Buyer(s)
is
purchasing in amounts indicated opposite such Buyer’s name on Schedule I, duly
executed on behalf of the Company.
2
(d) “Closing
Date
Exchange Rate” means the Euro to US dollar spot exchange rate as quoted in the
London edition of the Financial Times on the Closing Date.
(e) “Repayment
Exchange Rate” means in relation to each date of a
Redemption Notice, the Euro to US dollar spot exchange
rate as quoted by in the London edition of the Financial Times on such
date.
(f) If
on the
date of any Redemption Notice, the Repayment Exchange Rate is less than the
Closing Date Exchange Rate then the number of Shares to be issued shall be
increased by the same percentage as results from dividing the Closing Date
Exchange Rate by the relevant Repayment Exchange Rate. By way of
example, if the number of Shares to be issued in respect of a particular
Redemption Notice would, but for this Clause 1(f), be 1,000 and if the Closing
Date Exchange Rate is 1.80 and the relevant Repayment Exchange Rate is 1.75,
then 1,029 Shares will be issued in relation to that Redemption Notice, as
the
case may be.
(g) If
on the
Repayment Date or any Interest Repayment Date, the Cash Payment Date Exchange
Rate, as defined below is less than the Closing Date Exchange Rate then the
amount of cash required to satisfy the amounts due at such time shall be
increased by the same percentage as results from dividing the Closing Date
Exchange Rate by the relevant Cash Payment Date Exchange Rate. “Cash Payment
Date Exchange Rate” means in
relation to each Repayment Date or Interest Repayment Date
the Euro to US dollar spot exchange
rate as quoted in the London edition of the Financial Times on such
date. By way of example, if the amount of cash required to repay all
amounts due on such date would, but for this Clause 1(g), be $1,000 and if
the
Closing Date Exchange Rate is 1.80 and the relevant Repayment Date Exchange
Rate
is 1.75 then the amount of cash from the Cash Payment required to repay all
amounts due on such date will be $1,028.57.
(h) Revolving
Nature of Secured Debentures. Subject to the terms of this
Agreement, upon repayment by the Company of amounts funded by the Buyers, the
Purchase Price shall be increased by the amount of such principal repaid
hereunder, provided however that in no event shall the outstanding principal
amount funded by the Buyers exceed One Million Dollars at any
time. All Secured Debentures sold hereunder shall be substantially in
the form of the Secured Debentures executed on the date hereof and each shall
be
individually secured by the accounts receivable relating to the project such
Secured Debenture funds.
2. BUYER’S
REPRESENTATIONS AND WARRANTIES.
Each
Buyer represents and warrants, severally and not jointly, that:
(a) Investment
Purpose. Each Buyer is acquiring the Secured Debentures, for its
own account for investment only and not with a view towards, or for resale
in
connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the 1933 Act; provided, however, that by
making the representations herein, such Buyer reserves the right to dispose
of
the shares issued upon default of the Secured Debenture at any time in
accordance with or pursuant to an effective registration statement covering
such
shares or an available exemption under the 1933 Act.
3
(b) Accredited
Investor Status. Each Buyer is an “Accredited Investor” as
that term is defined in Rule 501(a)(3) of Regulation D.
(c) Reliance
on Exemptions. Each Buyer understands that the Secured Debentures
are being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws
and
that the Company is relying in part upon the truth and accuracy of, and such
Buyer’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order
to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire such securities.
(d) Information. Each
Buyer and its advisors (and his or, its counsel), if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and information he deemed material to making an informed investment
decision regarding his purchase of the Secured Debentures, which have been
requested by such Buyer. Each Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company and its
management. Neither such inquiries nor any other due diligence
investigations conducted by such Buyer or its advisors, if any, or its
representatives shall modify, amend or affect such Buyer’s right to rely on the
Company’s representations and warranties contained in Section 3
below. Each Buyer understands that its investment in the Secured
Debentures involves a high degree of risk. Each Buyer is in a
position regarding the Company, which, based upon employment, family
relationship or economic bargaining power, enabled and enables such Buyer to
obtain information from the Company in order to evaluate the merits and risks
of
this investment. Each Buyer has sought such accounting, legal and tax
advice, as it has considered necessary to make an informed investment decision
with respect to its acquisition of the Secured Debentures.
(e) No
Governmental Review. Each Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Secured Debentures,
or the fairness or suitability of the investment in the Secured Debentures,
nor
have such authorities passed upon or endorsed the merits of the offering of
the
Secured Debentures.
(f) Transfer
or Resale. Each Buyer understands that except as provided in the
Investor Registration Rights Agreement: (i) the Secured Debentures have not
been
and are not being registered under the 1933 Act or any state securities laws,
and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, or (B) such Buyer shall have delivered
to
the Company an opinion of counsel, in a generally acceptable form, to the effect
that such securities to be sold, assigned or transferred may be sold, assigned
or transferred pursuant to an exemption from such registration requirements;
(ii) any sale of such securities made in reliance on Rule 144 under the 1933
Act
(or a successor rule thereto) (“Rule 144”) may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of 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 ▇▇▇▇ ▇▇▇) may require compliance
with some other exemption under the 1933 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 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder.
4
(g) Legends. Each
Buyer understands that the certificates or other instruments representing the
Secured Debentures shall bear a restrictive legend in substantially the
following form (and a stop transfer order may be placed against transfer of
such stock certificates):
|
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND MAY NOT BE OFFERED
FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION
OF
COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED
UNDER SAID ACT OR APPLICABLE STATE SECURITIES
LAWS.
|
The
legend set forth above shall be removed and the Company within two (2) business
days shall issue a certificate without such legend to the holder of the Secured
Debenture upon which it is stamped, if, unless otherwise required by state
securities laws, (i) in connection with a sale transaction, provided the Secured
Debenture is registered under the 1933 Act or (ii) in connection with a sale
transaction, after such holder provides the Company with an opinion of counsel,
which opinion shall be in form, substance and scope customary for opinions
of
counsel in comparable transactions, to the effect that a public sale, assignment
or transfer of the Secured Debenture may be made without registration under
the
1933 Act.
(h) Authorization,
Enforcement. This Agreement has been duly and validly authorized,
executed and delivered on behalf of such Buyer and is a valid and binding
agreement of such Buyer enforceable in accordance with its terms, except as
such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies.
5
(i) Receipt
of
Documents. Each Buyer and his or its counsel has received and
read in their entirety: (i) this Agreement and each representation,
warranty and covenant set forth herein, the Security Agreement, the Investor
Registration Rights Agreement, the Escrow Agreement, and the Irrevocable
transfer Agent Instructions; (ii) all due diligence and other information
necessary to verify the accuracy and completeness of such representations,
warranties and covenants; and (iii) answers to all questions each Buyer
submitted to the Company regarding an investment in the Company; and each Buyer
has relied on the information contained therein and has not been furnished
any
other documents, literature, memorandum or prospectus.
(j) Due
Formation of Corporate and Other Buyers. If the Buyer(s) is a
corporation, trust, partnership or other entity that is not an individual
person, it has been formed and validly exists and has not been organized for
the
specific purpose of purchasing the Secured Debentures and is not prohibited
from
doing so.
(k) No
Legal
Advice From the Company. Each Buyer acknowledges, that it had the
opportunity to review this Agreement and the transactions contemplated by this
Agreement with his or its own legal counsel and investment and tax
advisors. Each Buyer is relying solely on such counsel and advisors
and not on any statements or representations of the Company or any of its
representatives or agents for legal, tax or investment advice with respect
to
this investment, the transactions contemplated by this Agreement or the
securities laws of any jurisdiction.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
The
Company represents and warrants as of the date hereof and as of each Closing
Date to each of the Buyers that:
(a) Organization
and
Qualification. The Company and its subsidiaries are corporations
duly organized and validly existing in good standing under the laws of the
jurisdiction in which they are incorporated, and have the requisite corporate
power to own their properties and to carry on their business as now being
conducted. Each of the Company and its subsidiaries is duly qualified
as a foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on
the
Company and its subsidiaries taken as a whole.
(b) Authorization,
Enforcement, Compliance with Other Instruments. (i) The
Company has the requisite corporate power and authority to enter into and
perform this Agreement, the Security Agreement, the Investor Registration Rights
Agreement, the Escrow Agreement, the Irrevocable Transfer Agent Instructions,
and any related agreements, and to issue the Secured Debentures in accordance
with the terms hereof and thereof, (ii) the execution and delivery of this
Agreement, the Security Agreement, the Investor Registration Rights Agreement,
the Escrow Agreement, the Irrevocable Transfer Agent Instructions (as defined
herein) and any related agreements by the Company and the consummation by it
of
the transactions contemplated hereby and thereby, including, without limitation,
the issuance of the Secured Debentures, the Warrants and the reservation for
issuance and the issuance of the shares issuable upon exercise thereof, have
been duly authorized by the Company’s Board of Directors and no further consent
or authorization is required by the Company, its Board of Directors or its
stockholders, (iii) this Agreement, the Security Agreement, the Investor
Registration Rights Agreement, the Escrow Agreement, the Irrevocable Transfer
Agent Instructions and any related agreements have been duly executed and
delivered by the Company, (iv) this Agreement, the Security Agreement, the
Investor Registration Rights Agreement, the Escrow Agreement, the Irrevocable
Transfer Agent Instructions and any related agreements constitute the valid
and
binding obligations of the Company enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally,
the
enforcement of creditors’ rights and remedies. The authorized officer
of the Company executing this Agreement, the Security Agreement, the Investor
Registration Rights Agreement, the Escrow Agreement, the Irrevocable Transfer
Agent Instructions and any related agreements knows of no reason why the Company
cannot file the registration statement as required under the Investor
Registration Rights Agreement or perform any of the Company’s other obligations
under such documents.
6
(c) Capitalization. The
authorized capital stock of the Company consists of 500 million shares of Common
Stock, par value $.0001 per share and no shares of Preferred
Stock. As of the date hereof, the Company has 89,632,500 shares of
Common Stock and no shares of Preferred Stock issued and
outstanding. All of such outstanding shares have been validly issued
and are fully paid and nonassessable. No shares of Common Stock are
subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company. As of the date of
this Agreement, (i) there are no outstanding options, warrants, scrip, rights
to
subscribe to, calls or commitments of any character whatsoever relating to,
or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, or contracts, commitments, understandings
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 or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries, (ii) there are no outstanding debt securities and (iii) there
are
no agreements or arrangements under which the Company or any of its subsidiaries
is obligated to register the sale of any of their securities under the 1933
Act
(except pursuant to the Registration Rights Agreement) and (iv) there are no
outstanding registration statements and there are no outstanding comment letters
from the SEC or any other regulatory agency. There are no securities
or instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Secured Debentures as described in this
Agreement. The Company has furnished to the Buyer true and correct
copies of the Company’s Certificate of Incorporation, as amended and as in
effect on the date hereof (the “Certificate of Incorporation”), and the
Company’s By-laws, as in effect on the date hereof (the “By-laws”), and
the terms of all securities convertible into or exercisable for Common Stock
and
the material rights of the holders thereof in respect thereto other than stock
options issued to employees and consultants.
(d) Issuance
of Securities. The Secured Debentures and the Warrants are duly
authorized and, upon issuance in accordance with the terms hereof, shall be
duly
issued, fully paid and nonassessable, are free from all taxes, liens and charges
with respect to the issue thereof. The shares issuable upon exercise
of the Warrants have been duly authorized and reserved for issuance and upon
exercise in accordance with the Warrants, will be duly issued, fully paid and
nonassessable.
7
(e) No
Conflicts. The execution, delivery and performance of this
Agreement, the Security Agreement, the Investors Registration Rights Agreement,
the Escrow Agreement and the Irrevocable Transfer Agent Instructions by the
Company and the consummation by the Company of the transactions contemplated
hereby will not (i) result in a violation of the Certificate of Incorporation,
any certificate of designations of any outstanding series of preferred stock
of
the Company or the By-laws or (ii) conflict with or constitute a default (or
an
event which 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 of, any agreement, indenture or instrument to which the Company
or
any of its subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations and, once the Company’s common stock is quoted on the OTC
Bulletin Board, the rules and regulations of The National Association of
Securities Dealers Inc.’s OTC Bulletin Board) 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. Neither the Company nor its
subsidiaries is in violation of any term of or in default under its Certificate
of Incorporation or By-laws or their organizational charter or by-laws,
respectively, or any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries. The
business of the Company and its subsidiaries is not being conducted, and shall
not be conducted in violation of any material law, ordinance, or regulation
of
any governmental entity. Except as specifically contemplated by this
Agreement and as required under the 1933 Act and any applicable state securities
laws, the Company is not required to obtain any consent, authorization or order
of, or make any filing or registration with, any court or governmental agency
in
order for it to execute, deliver or perform any of its obligations under or
contemplated by this Agreement or the Registration Rights Agreement in
accordance with the terms hereof or thereof. 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 and its subsidiaries are
unaware of any facts or circumstance, which might give rise to any of the
foregoing.
(f) [reserved]
(g) None
of the
Company’s public statements and none of the information provided to the Buyers
include any untrue statements of material fact, nor do they omit to state any
material fact required to be stated therein necessary to make the statements
made, in light of the circumstances under which they were made, not
misleading.
(h) Absence
of
Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending against or affecting the Company,
the Common Stock or any of the Company’s subsidiaries, wherein an unfavorable
decision, ruling or finding would (i) have a material adverse effect on the
transactions contemplated hereby (ii) adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of the documents contemplated herein,
or (iii) except as expressly disclosed in the SEC Documents, have a material
adverse effect on the business, operations, properties, financial condition
or
results of operations of the Company and its subsidiaries taken as a
whole.
8
(i) Acknowledgment
Regarding Buyer’s Purchase of the Secured Debentures. The Company
acknowledges and agrees that the Buyer(s) is acting solely in the capacity
of an
arm’s length purchaser with respect to this Agreement and the transactions
contemplated hereby. The Company further acknowledges that the
Buyer(s) is not acting as a financial advisor or fiduciary of the Company (or
in
any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by the Buyer(s) or any of their
respective representatives or agents in connection with this Agreement and
the
transactions contemplated hereby is merely incidental to such Buyer’s purchase
of the Secured Debentures. The Company further represents to the
Buyer that the Company’s decision to enter into this Agreement has been based
solely on the independent evaluation by the Company and its
representatives.
(j) No
General
Solicitation. Neither the Company, nor any of its affiliates, nor
any person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the ▇▇▇▇ ▇▇▇) in connection with the offer or sale of the Secured
Debentures.
(k) No
Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers
to
buy any security, under circumstances that would require registration of the
Secured Debentures under the 1933 Act or cause this offering of the Secured
Debentures to be integrated with prior offerings by the Company for purposes
of
the 1933 Act.
(l) Employee
Relations. Neither the Company nor any of its subsidiaries is
involved in any labor dispute nor, to the knowledge of the Company or any of
its
subsidiaries, is any such dispute threatened. None of the Company’s
or its subsidiaries’ employees is a member of a union and the Company and its
subsidiaries believe that their relations with their employees are
good.
(m) Intellectual
Property Rights. 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 Company and its subsidiaries do not have any knowledge
of any infringement by the Company or its subsidiaries of trademark, trade
name
rights, patents, patent rights, copyrights, inventions, licenses, service names,
service marks, service ▇▇▇▇ registrations, trade secret or other similar rights
of others, and, to the knowledge of the Company there is no claim, action or
proceeding being made or brought against, or to the Company’s knowledge, being
threatened against, the Company or its subsidiaries regarding trademark, trade
name, patents, patent rights, invention, copyright, license, service names,
service marks, service ▇▇▇▇ registrations, trade secret or other infringement;
and the Company and its subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing.
9
(n) Environmental
Laws. The Company and its subsidiaries are (i) in compliance with
any and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
(“Environmental Laws”), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval.
(o) Title. 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 are not material and do not interfere with the use
made
and proposed to be made of such property and buildings by the Company and its
subsidiaries.
(p) 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 been refused any insurance coverage sought
or applied for and 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 materially
and adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and its subsidiaries, taken as a
whole.
(q) Regulatory
Permits. The Company and its subsidiaries possess all material
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
(r) Internal
Accounting Controls. The Company and each of its subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
and (iii) the recorded amounts for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
(s) No
Material
Adverse Breaches, 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 on the business, properties, operations, financial condition, results
of
operations or prospects of the Company or its subsidiaries. Neither
the Company nor any of its subsidiaries is in breach of any contract or
agreement which breach, in the judgment of the Company’s officers, has or is
expected to have a material adverse effect on the business, properties,
operations, financial condition, results of operations or prospects of the
Company or its subsidiaries.
10
(t) Tax
Status. The Company and each of its subsidiaries has made and
filed all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject and (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) 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 provision reasonably adequate for the payment
of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know of no basis for any such claim.
(u) Certain
Transactions. Except for arm’s length transactions pursuant to
which the Company makes payments in the ordinary course of business upon terms
no less favorable than the Company could obtain from third parties and other
than the grant of stock options disclosed in the SEC Documents, none of the
officers, directors, or employees of the Company is presently a party to any
transaction with the Company (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.
(v) Fees
and
Rights of First Refusal. The Company is not obligated to offer
the securities offered hereunder on a right of first refusal basis or otherwise
to any third parties including, but not limited to, current or former
shareholders of the Company, underwriters, brokers, agents or other third
parties.
4. COVENANTS.
(a) Best
Efforts. Each party shall use its best efforts timely to satisfy
each of the conditions to be satisfied by it as provided in Sections 6 and
7 of
this Agreement.
(b) Form
D. The Company agrees to file a Form D with respect to the
Secured Debentures as required under Regulation D and to provide a copy thereof
to each Buyer promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Secured Debenture, or obtain an exemption
for the Secured Debenture 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, and shall provide evidence of any such action so taken to the
Buyers on or prior to the Closing Date.
(c) Reporting
Status. Until the earlier of (i) the date as of which the
Buyer(s) may sell all of the shares underlying the Warrants without restriction
pursuant to Rule 144(k) promulgated under the 1933 Act (or successor thereto),
or (ii) the date on which (A) the Buyer(s) shall have sold all the shares
underlying the Warrants and (B) none of the Secured Debentures or shares
underlying the Warrants are outstanding (the “Registration Period”), the
Company shall file in a timely manner all reports required to be filed with
the
SEC pursuant to the 1934 Act and the regulations of the SEC thereunder, and
the
Company shall not terminate its status as an issuer required to file reports
under the 1934 Act even if the 1934 Act or the rules and regulations thereunder
would otherwise permit such termination.
11
(d) Use
of
Proceeds. The Company will use the proceeds from the sale of the
Secured Debentures for the Company to complete specific Jobs identified to
and
agreed to by the Holder.
(e) Reservation
of
Shares. The Company shall take all action reasonably necessary to
at all times have authorized, and reserved for the purpose of issuance, such
number of shares of Common Stock as shall be necessary to effect the issuance
of
the shares underlying the Warrants. If at any time the Company does
not have available such shares of Common Stock as shall from time to time be
sufficient to effect the issuance of all of the shares underlying the Warrants
of the Company, the Company shall call and hold a special meeting of the
shareholders within thirty (30) days of such occurrence, for the sole purpose
of
increasing the number of shares authorized. The Company’s management
shall recommend to the shareholders to vote in favor of increasing the number
of
shares of Common Stock authorized. Management shall also vote all of
its shares in favor of increasing the number of authorized shares of Common
Stock.
(f) Listings
or Quotation. The Company shall promptly secure the listing or
quotation of the shares underlying the Warrants upon each national securities
exchange, automated quotation system or The National Association of Securities
Dealers Inc.’s Over-The-Counter Bulletin Board (“OTCBB”) or other market,
if any, upon which shares of Common Stock are then listed or quoted (subject
to
official notice of issuance) and shall use its best efforts to maintain, so
long
as any other shares of Common Stock shall be so listed, such listing of all
shares underlying the Warrants from time to time issuable under the terms of
this Agreement. The Company shall maintain the Common Stock’s
authorization for quotation on the OTCBB.
(g) Fees
and
Expenses.
(i) Each
of the
Company and the Buyer(s) shall pay all costs and expenses incurred by such
party
in connection with the negotiation, investigation, preparation, execution and
delivery of this Agreement, the Escrow Agreement, the Investor Registration
Rights Agreement, the Security Agreement and the Irrevocable Transfer Agent
Instructions. The Company shall pay the Buyer a loan commitment fee
of three percent (%) of the Purchase Price, which shall be paid directly from
the proceeds of and proportionally upon each Closing.
(ii) The
Company
has agreed to pay legal fees to Buyer of Fifteen Thousand Dollars ($15,000),
to
cover legal fees and processes and administrative costs for the First Closing,
which shall be paid directly from the proceeds of the First
Closing.
(iii) The
Company
has agreed to pay legal fees of Three Thousand Seven Hundred Fifty Dollars
($3,750) for each additional Secured Debenture (and corresponding Transaction
Agreements) issued subsequent to the First Closing
12
(iv) The
Company
shall issue to the Buyer a warrant to purchase one million five hundred thousand
(1,500,000) shares of the Company’s Common Stock for a period of five
(5) years at an exercise price equal to $.0001 (“Warrant 1”). The
Company shall also issue to the Buyer for each one hundred thousand dollars
($100,000) of Secured Debentures purchased by the Buyer(s), an additional
warrant to purchase fifty thousand (50,000) shares of the Company’s Common Stock
for a period of five (5) years from such date at an exercise price equal to
$0.075 per share (“Warrant 2”). (collectively Warrant 1 and Warrant 2
shall be referred to as the “Warrants”) The Warrants shall be exercised
on a cash basis provided that the Company is not in Default and the shares
underlying the Warrants are subject to an effective registration
statement.
(h) Corporate
Existence. So long as any of the Secured Debentures remain
outstanding, the Company shall not directly or indirectly consummate any merger,
reorganization, restructuring, reverse stock split consolidation, sale of all
or
substantially all of the Company’s assets or any similar transaction or related
transactions (each such transaction, an “Organizational Change”) unless,
prior to the consummation an Organizational Change, the Company obtains the
written consent of each Buyer. In any such case, the Company will
make appropriate provision with respect to such holders’ rights and interests to
insure that the provisions of this Section 4(h) will thereafter be applicable
to
the Secured Debentures.
(i) Transactions
With
Affiliates. So long as any Secured Debentures are outstanding,
the Company shall not, and shall cause each of its subsidiaries not to, enter
into, amend, modify or supplement, or permit any subsidiary to enter into,
amend, modify or supplement any agreement, transaction, commitment, or
arrangement with any of its or any subsidiary’s officers, directors, person who
were officers or directors at any time during the previous two (2) years,
stockholders who beneficially own five percent (5%) or more of the Common Stock,
or Affiliates (as defined below) or with any individual related by blood,
marriage, or adoption to any such individual or with any entity in which any
such entity or individual owns a five percent (5%) or more beneficial interest
(each a “Related Party”), except for (a) customary employment
arrangements and benefit programs on reasonable terms, (b) any investment in
an
Affiliate of the Company, (c) any agreement, transaction, commitment,
or arrangement on an arms-length basis on terms no less favorable than terms
which would have been obtainable from a person other than such Related Party,
(d) any agreement transaction, commitment, or arrangement which is approved
by a
majority of the disinterested directors of the Company, for purposes hereof,
any
director who is also an officer of the Company or any subsidiary of the Company
shall not be a disinterested director with respect to any such agreement,
transaction, commitment, or arrangement. “Affiliate” for
purposes hereof means, with respect to any person or entity, another person
or
entity that, directly or indirectly, (i) has a ten percent (10%) or more equity
interest in that person or entity, (ii) has ten percent (10%) or more common
ownership with that person or entity, (iii) controls that person or entity,
or
(iv) shares common control with that person or
entity. “Control” or “controls” for purposes hereof
means that a person or entity has the power, direct or indirect, to conduct
or
govern the policies of another person or entity.
13
(j) Transfer
Agent. The Company covenants and agrees that, in the event that
the Company’s agency relationship with the transfer agent should be terminated
for any reason prior to a date which is two (2) years after the Closing Date,
the Company shall immediately appoint a new transfer agent and shall require
that the new transfer agent execute and agree to be bound by the terms of the
Irrevocable Transfer Agent Instructions (as defined herein).
(k) Restriction
on
Issuance of the Capital Stock. So long as any Secured Debentures are
outstanding, the Company shall not, without the prior written consent of the
Buyer(s), (i) issue or sell shares of Common Stock or Preferred Stock without
consideration or for a consideration per share less than the bid price of the
Common Stock determined immediately prior to its issuance, (ii) issue any
preferred stock, warrant, option, right, contract, call, or other security
instrument granting the holder thereof, the right to acquire Common Stock
without consideration or for a consideration less than such Common Stock’s bid
price value determined immediately prior to it’s issuance, (iii) enter into any
security instrument granting the holder a security interest in any and all
assets of the Company, or (iv) file any registration statement on Form
S-8.
(l) Restriction
on
“Short” Position. Neither the Buyer nor any of its affiliates
have an open short position in the Common Stock of the Company, and the Buyer
agrees that it shall not, and that it will cause its affiliates not to, engage
in any short sales with respect to the Common Stock as long as any Secured
Debentures shall remain outstanding.
(m) Due
Diligence and Monitoring. The Company shall provide the Buyer
with all materials relating to the contracts awarded as well as supply lists
for
materials and labor in connection with the projects to date of purchase of
each.
5. TRANSFER
AGENT INSTRUCTIONS.
The
Company shall issue the Irrevocable Transfer Agent Instructions to its transfer
agent irrevocably appointing ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇, P.A. as its agent for purpose
of having certificates issued, registered in the name of the Buyer(s) or its
respective nominee(s), for the shares to be issued upon exercise of the Warrants
as specified from time to time by the Buyer(s) to the Company. ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ ▇▇, P.A. shall be paid a cash fee of Fifty Dollars ($50) for every
occasion they act pursuant to the Irrevocable Transfer Agent
Instructions. The Company shall not change its transfer agent without
the express written consent of the Buyer(s), which may be withheld by the
Buyer(s) in its sole discretion. Prior to registration of the shares
to be issued upon exercise of the Warrants under the 1933 Act, all such
certificates shall bear the restrictive legend specified in Section 2(g) of
this
Agreement. The Company warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this Section 5, and
stop
transfer instructions to give effect to Section 2(g) hereof (in the case of
the
shares to be issued upon exercise of the Warrants prior to registration of
such
shares under the ▇▇▇▇ ▇▇▇) will be given by the Company to its transfer agent
and that the shares to be issued upon exercise of the Warrants shall otherwise
be freely transferable on the books and records of the Company as and to the
extent provided in this Agreement and the Investor Registration Rights
Agreement. Nothing in this Section 5 shall affect in any way the
Buyer’s obligations and agreement to comply with all applicable securities laws
upon resale of shares to be issued upon exercise of the Warrants. If
the Buyer(s) provides the Company with an opinion of counsel, in form, scope
and
substance customary for opinions of counsel in comparable transactions to the
effect that registration of a resale by the Buyer(s) of any of the shares to
be
issued upon exercise of the Warrants is not required under the 1933 Act, the
Company shall within two (2) business days instruct its transfer agent to issue
one or more certificates in such name and in such denominations as specified
by
the Buyer. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Buyer by vitiating
the
intent and purpose of the transaction contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law
for a breach of its obligations under this Section 5 will be inadequate and
agrees, in the event of a breach or threatened breach by the Company of the
provisions of this Section 5, that the Buyer(s) shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach and requiring immediate issuance and transfer, without the necessity
of
showing economic loss and without any bond or other security being
required.
14
6. CONDITIONS
TO THE COMPANY’S OBLIGATION TO SELL.
The
obligation of the Company hereunder to issue and sell the Secured Debentures
to
the Buyer(s) at the Closing is subject to the satisfaction, at or before the
Closing Dates, 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) Each
Buyer
shall have executed this Agreement, the Security Agreement, the Escrow Agreement
and the Investor Registration Rights Agreement and the Irrevocable Transfer
Agent Instructions and delivered the same to the Company.
(b) The
Buyer(s)
shall have delivered to the Escrow Agent the Purchase Price for Secured
Debentures in respective amounts as set forth next to each Buyer as outlined
on
Schedule I attached hereto and the Escrow Agent shall have delivered the net
proceeds to the Company by wire transfer of immediately available U.S. funds
pursuant to the wire instructions provided by the Company.
(c) The
representations and warranties of the Buyer(s) shall be true and correct in
all
material respects as of the date when made and as of the Closing Dates as though
made at that time (except for representations and warranties that speak as
of a
specific date), and the Buyer(s) 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 Buyer(s)
at or
prior to the Closing Dates.
(d) The
Company
shall have filed a form UCC-1 with regard to the Pledged Property and Pledged
Collateral as detailed in the Security Agreement dated the date hereof and
provided proof of such filing to the Buyer(s).
7. CONDITIONS
TO THE BUYER’S OBLIGATION TO PURCHASE.
The
obligation of the Buyer(s) hereunder to purchase the Secured Debentures at
the
Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions:
15
(a) The
Company
shall have executed this Agreement, the Security Agreement, the Secured
Debenture, the Escrow Agreement, the Irrevocable Transfer Instructions and
the
Investor Registration Rights Agreement, and delivered the same to the
Buyer(s).
(b) The
Common
Stock shall be authorized for quotation on the OTCBB within one hundred fifty
(150) days from the date of the Closing.
(c) The
representations and warranties of the Company shall be true and correct in
all
material respects (except to the extent that any of such representations and
warranties is already qualified as to materiality in Section 3 above, in which
case, such representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the Closing Dates
as
though made at that 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 Dates. If requested by the Buyer,
the Buyer shall have received a certificate, executed by the President of the
Company, dated as of the Closing Dates, to the foregoing effect and as to such
other matters as may be reasonably requested by the Buyer including, without
limitation an update as of the Closing Dates regarding the representation
contained in Section 3(c) above.
(d) The
Company
shall have executed and delivered to the Buyer(s) the Secured Debentures in
the
respective amounts set forth opposite each Buyer(s) name on Schedule I attached
hereto.
(e) The
Buyer(s)
shall have received an opinion of counsel from counsel to the Company in a
form
satisfactory to the Buyer(s).
(f) The
Company
shall have provided to the Buyer(s) a certificate of good standing from the
secretary of state from the state in which the company is
incorporated.
(g) As
of the
Closing Date, the Company shall have reserved out of its authorized and unissued
Common Stock, solely for the purpose of effecting the exercise of the Warrants,
shares of Common Stock to effect the exercise of all of the Warrants then
outstanding.
(h) The
Irrevocable Transfer Agent Instructions, in form and substance satisfactory
to
the Buyer, shall have been delivered to and acknowledged in writing by the
Company’s transfer agent.
(i) The
Company
shall have provided to the Buyer an acknowledgement, to the satisfaction of
the
Buyer, from the Company’s independent certified public accountants as to its
ability to provide all consents required in order to file a registration
statement in connection with this transaction.
(j) The
Company
shall have filed a form UCC-1 or such other forms as may be required to perfect
the Buyer’s interest in the Pledged Property and Pledged Collateral as detailed
in the Security Agreement dated the date hereof and provided proof of such
filing to the Buyer(s).
16
(k) The
Company
shall provide the Buyer a near term projection of the Company’s cash flow that
brings its burn rate to zero and demonstrates the Company’s ability to fund its
deficit until such time as this occurs.
8.
INDEMNIFICATION.
(a) In
consideration of the Buyer’s execution and delivery of this Agreement and
acquiring the Secured Debentures and the Warrants hereunder, and in addition
to
all of the Company’s other obligations under this
Agreement, the Company shall defend, protect, indemnify and hold harmless
the
Buyer(s) and each other holder of the Secured Debentures and Warrants, and
all
of their officers, directors, employees and agents (including, without
limitation, those retained in connection with the transactions contemplated
by
this Agreement) (collectively, the “Buyer Indemnitees”) from and against
any and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Buyer Indemnitee is a party to the action
for
which indemnification hereunder is sought), and including reasonable attorneys’
fees and disbursements (the “Indemnified Liabilities”), incurred by the
Buyer Indemnitees or any of them as a result of, or arising out of, or relating
to (a) any misrepresentation or breach of any representation or warranty
made by
the Company in this Agreement, the Secured Debentures or the Investor
Registration Rights Agreement or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement
or
obligation of the Company contained in this Agreement, or the Investor
Registration Rights Agreement or any other certificate, instrument or document
contemplated hereby or thereby, or (c) any cause of action, suit or claim
brought or made against such Indemnitee and arising out of or resulting from
the
execution, delivery, performance or enforcement of this Agreement or any
other
instrument, document or agreement executed pursuant hereto by any of the
Indemnities, any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the Secured
Debentures or the status of the Buyer or holder of the Secured
Debentures the Warrants or the shares underlying the Warrants, as a
Buyer of Secured Debentures in the Company. To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason,
the
Company shall make the maximum contribution to the payment and satisfaction
of
each of the Indemnified Liabilities, which is permissible under applicable
law.
(b) In
consideration of the Company’s execution and delivery of this Agreement, and in
addition to all of the Buyer’s other obligations under this Agreement, the Buyer
shall defend, protect, indemnify and hold harmless the Company and all of its
officers, directors, employees and agents (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the “Company Indemnitees”) from and against any and all
Indemnified Liabilities incurred by the Indemnitees or any of them as a result
of, or arising out of, or relating to (a) any misrepresentation or breach of
any
representation or warranty made by the Buyer(s) in this Agreement, , instrument
or document contemplated hereby or thereby executed by the Buyer, (b) any breach
of any covenant, agreement or obligation of the Buyer(s) contained in this
Agreement, the Investor Registration Rights Agreement or any other
certificate, instrument or document contemplated hereby or thereby executed
by
the Buyer, or (c) any cause of action, suit or claim brought or made against
such Company Indemnitee based on material misrepresentations or due to a
material breach and arising out of or resulting from the execution, delivery,
performance or enforcement of this Agreement, the Investor Registration Rights
Agreement or any other instrument, document or agreement executed pursuant
hereto by any of the Company Indemnities. To the extent that the
foregoing undertaking by each Buyer may be unenforceable for any reason, each
Buyer shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities, which is permissible under applicable
law.
17
9. GOVERNING
LAW: MISCELLANEOUS.
(a) Governing
Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Florida without regard to the
principles of conflict of laws. The parties further agree that any
action between them shall be heard in Broward County, Florida and expressly
consent to the jurisdiction and venue of the State Court sitting in Broward
County, Florida and the United States District Court for the Southern District
of Florida for the adjudication of any civil action asserted pursuant to this
Paragraph.
(b) Counterparts. This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other
party. In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause four (4)
additional original executed signature pages to be physically delivered to
the
other party within five (5) days of the execution and delivery
hereof.
(c) Headings. The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
(d) Severability. If
any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or
the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
(e) Entire
Agreement, Amendments. This Agreement supersedes all other prior
oral or written agreements between the Buyer(s), the Company, their affiliates
and persons acting on their behalf with respect to the matters discussed herein,
and 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 any 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, consents, waivers, or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered (i) upon receipt, when delivered personally; (ii) upon
confirmation of receipt, when sent by facsimile; (iii) three (3) days after
being sent by U.S. certified mail, return receipt requested, or (iv) one (1)
day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
18
|
If
to the Company, to:
|
C-▇▇▇▇
International, Inc.
|
|
▇▇▇▇
▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
|
|
|
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
|
|
Attn:
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇, CEO
|
|
|
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
|
|
|
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
|
|
|
With
a copy to:
|
The
▇’▇▇▇▇ Law Firm, P.C.
|
|
▇▇▇▇▇
▇. ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇-▇
|
|
|
▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
|
|
|
Attention: ▇▇▇▇▇▇▇
▇. ▇’▇▇▇▇, Esq.
|
|
|
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
|
|
|
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
|
|
|
If
to the Transfer Agent, to:
|
First
American Stock Transfer
|
|
▇▇▇
▇. ▇▇▇▇ ▇▇▇▇
|
|
|
▇▇▇▇▇
▇▇▇
|
|
|
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
|
|
Attention:
▇▇▇▇▇ ▇▇▇▇▇▇▇
|
|
|
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
|
|
|
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
|
|
|
With
Copy to:
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ ▇▇, P.A.
|
|
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇
|
|
|
▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
|
|
|
Attention: ▇▇▇
▇▇▇▇▇▇▇, Esq.
|
|
|
Telephone: (▇▇▇)
▇▇▇-▇▇▇▇
|
|
|
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
|
|
If
to the
Buyer(s), to its address and facsimile number on Schedule I, with copies to
the
Buyer’s counsel as set forth on Schedule I. Each party shall provide
five (5) days’ prior written notice to the other party of any change in address
or facsimile number.
(g) Successors
and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective 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 party hereto.
(h) No
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. Unless
this Agreement is terminated under Section 9(l), the representations and
warranties of the Company and the Buyer(s) contained in Sections 2 and 3, the
agreements and covenants set forth in Sections 4, 5 and 9, and the
indemnification provisions set forth in Section 8, shall survive the Closing
for
a period of two (2) years following the date on which the Secured Debentures
are
converted in full. The Buyer(s) shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
19
(j) Publicity. The
Company and the Buyer(s) shall have the right to approve, before issuance any
press release or any other public statement with respect to the transactions
contemplated hereby made by any party; provided, however, that the Company
shall
be entitled, without the prior approval of the Buyer(s), to issue any press
release or other public disclosure with respect to such transactions required
under applicable securities or other laws or regulations (the Company shall
use
its best efforts to consult the Buyer(s) in connection with any such press
release or other public disclosure prior to its release and Buyer(s) shall
be
provided with a copy thereof upon release thereof).
(k) 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.
(l) Termination. In
the event that the Closing shall not have occurred with respect to the Buyers
on
or before five (5) business days from the date hereof due to the Company’s or
the Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7
above (and the non-breaching party’s failure to waive such unsatisfied
condition(s)), the non-breaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business on
such
date without liability of any party to any other party; provided, however,
that
if this Agreement is terminated by the Company pursuant to this Section 9(l),
the Company shall remain obligated to pay the Buyer(s) for the structuring
fee
described in Section 4(g) above.
(m) 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.
[REMAINDER
PAGE INTENTIONALLY LEFT BLANK]
20
IN
WITNESS WHEREOF, the Buyers and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
|
COMPANY:
|
|
|
CMARK
INTERNATIONAL, INC.
|
|
|
By: /s/
▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇.
|
|
|
Name:
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
|
|
|
Title: President/CEO
|
|
|
BUYER:
|
|
|
TRAFALGAR
CAPITAL SPECIALIZED
|
|
|
INVESTMENT
FUND, LUXEMBOURG
|
|
|
By: Trafalgar
Capital Sarl
|
|
|
Its: General
Partner
|
|
|
By: /s/
▇▇▇▇▇▇
▇▇▇▇▇
|
|
|
Name: ▇▇▇▇▇▇
▇▇▇▇▇
|
|
|
Title: Chairman
of the Board
|
21
EXHIBIT
A
FORM
OF INVESTOR REGISTRATION RIGHTS AGREEMENT
A-1
EXHIBIT
B
FORM
OF ESCROW AGREEMENT
B-1
EXHIBIT
C
TRANSFER
AGENT INSTRUCTIONS
C-1
SCHEDULE
I
SCHEDULE
OF BUYERS
|
Name
|
Signature
|
Address/Facsimile
Number
of Buyer
|
Amount
of Subscription
|
|
▇-▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
|
|||
|
Trafalgar
Capital Specialized
|
By: Trafalgar
Capital Sarl
|
BP
3023
|
$ 1,000,000
|
|
Investment
Fund, Luxembourg
|
Its: General
Partner
|
▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
|
|
|
Facsimile:
|
|||
|
011-44-207-405-0161
|
|||
|
By: /s/
▇▇▇▇▇▇
▇▇▇▇▇
|
and
|
||
|
Name: ▇▇▇▇▇▇
▇▇▇▇▇
|
001-786-323-1651
|
||
|
Its: Chairman
of the Board
|
Buyer’s
Counsel:
▇▇▇▇▇
▇.
▇▇▇▇▇▇▇ ▇▇, P.A.
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
D-1