STOCK PURCHASE AGREEMENT BY AND BETWEEN LOCATION BASED TECHNOLOGIES, INC. AND __ ORI Services Corp____ Dated May 27, 2009
Exhibit 10.42
BY AND
BETWEEN
AND
__ ORI
Services Corp____
Dated May
27, 2009
TABLE OF
CONTENTS
Page
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1.
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Agreement
to Sell and Agreement to Purchase
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1
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1.1
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Purchase
of Shares
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1
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1.2
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Closing
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1
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2.
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Consideration
to be Paid by Buyer
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1
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2.1
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Purchase
Price for Shares
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1
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2.2
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Payment
of Purchase Price
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2
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3.
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Representations
and Warranties of the Company
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2
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3.1
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Organization
and Good Standing
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2
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3.2
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Authorization
of Agreement
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2
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3.3
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Capitalization
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2
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3.4
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Financial
Condition
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2
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3.5
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Assets
of the Company
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3
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3.6
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Material
Contracts
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3
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3.7
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Labor
and Employment Matters
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4
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3.8
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Litigation
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4
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3.9
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No
Undisclosed Liabilities
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4
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3.10
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Compliance
with Law
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4
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4.
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Representations
and Warranties of Buyer
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4
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4.1
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Investment
Intent
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4
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4.2
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Review
of SEC Filings
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4
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5.
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Covenants
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4
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5.1
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Form
D
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4
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5.2
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Reporting
Status
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5
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5.3
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Schedule
13D
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5
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5.4
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Use
of Proceeds
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5
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5.5
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Financial
Information
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5
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5.6
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Disclosure
of Transaction
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5
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5.7
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Conduct
of the Business of the Company
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5
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6.
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Indemnification
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5
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6.1
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Claims
for Indemnification
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5
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6.2
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Manner
of Indemnification
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6
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6.3
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Limitations
on Indemnification
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6
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6.4
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Sole
Basis for Recovery
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6
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6.5
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Insurance
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6
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i
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7.
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Miscellaneous
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6
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7.1
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Notices
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6
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7.2
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Governing
Law
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6
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7.3
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Counterparts
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6
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7.4
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Indemnification
for Brokerage
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7
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7.5
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Complete
Agreement
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7
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7.6
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Interpretation
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7
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7.7
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Severability
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7
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7.8
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Knowledge;
Due Diligence Investigation
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7
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7.9
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Expenses
of Transactions
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7
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7.10
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Amendment
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7
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7.11
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Counterparts
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7
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SCHEDULES
Schedule
2.2 Instructions
for Payment of Purchase Price
Schedule
3.3 Obligations
of the Company
Schedule
3.4.1.1 Financial
Statements Delivered to Buyer
Schedule
3.4.2
Changes in Financial Condition of the Company
Schedule
3.4.3 Defaults
of the Company
Schedule
3.5 Liens
of the Company
Schedule
3.8 Current
Litigation
Schedule
3.9 Undisclosed
Liabilities
Schedule
4.1 Stock
Certificate Legend
Schedule
5.4 Use
of Proceeds
ii
This
STOCK PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of this
27th day of May, 2009 by and between the Location Based Technologies, Inc., a
Nevada corporation (the “Company”) and ORI Services Corp. of San Diego, CA
(“Buyer”).
R E C I T A L
S
A. The
Company is in the business of developing, marketing and selling high quality
personal location devices through its Anaheim, California facility (the
“Business”).
B.
The Company desires to sell to Buyer 91,743 shares of
its common restricted stock (the “Shares”), and Buyer desires to acquire the
Shares on the terms and conditions hereinafter set forth.
AGREEMENT
NOW,
THEREFORE, in consideration of the mutual covenants, agreements, representations
and warranties and subject to the conditions contained herein, the parties
hereto covenant and agree as follows:
1.
Agreement to
Sell and Agreement to Purchase.
1.1 Purchase of
Shares. Simultaneously with the execution of this Agreement,
on the terms and subject to the conditions set forth herein, the Company shall
issue and sell to Buyer and Buyer shall purchase, acquire and accept from the
Company, all the Shares. The Company shall deliver to Buyer
certificates representing the Shares against receipt of the Purchase Price
(hereafter defined).
1.2 Closing. The
closing of the transactions herein contemplated (the “Closing”) shall take place
at the offices of the Company in Anaheim, California, and be effective as of
5:00 p.m., local time, on the date hereof (the “Closing Date”). All
actions taken and all documents delivered at the Closing shall be deemed to have
occurred simultaneously.
2.
Consideration to
be Paid by Buyer.
2.1 Purchase Price for
Shares. The purchase price for the Shares (“Purchase Price”)
shall be $1.09 per share for an aggregate of $100,000.00. Warrant
coverage will cover 25% of the aggregate value of the Purchase Price based on
the closing day’s value of the market on the day good funds are received ($1.24
per share) with a three (3) year term.
1
2.2 Payment of Purchase
Price. At the Closing, Buyer shall pay to the Company in
immediately available funds by wire transfer (pursuant to the instructions set
forth on Schedule 2.2) the Purchase Price against receipt of the
Shares.
3.
Representations and
Warranties of the Company. The Company represents and warrants
to Buyer that:
3.1 Organization and Good
Standing. The Company is duly organized, validly existing and
in good standing under the laws of Nevada (the jurisdiction in which it was
formed) with full power to carry on its business as it is now and has since its
organization been conducted, and to own, lease or operate its
assets. The Company is duly authorized to do business and is in good
standing in such other jurisdictions in which the Company is required to be so
authorized.
3.2 Authorization of
Agreement. The Company has all requisite power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. This Agreement and all other agreements and instruments to be
executed by the Company has been duly executed and delivered by the Company, has
been effectively authorized by all necessary action, corporate or otherwise, and
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
3.3 Capitalization. The
authorized capital stock of the Company consists solely of (i) 300,000,000
shares of voting common stock, $0.001 par value, of which 88,244,270 shares are
issued and outstanding and (ii) 30,000,000 shares of preferred stock, $0.001 par
value, none of which shares are issued and outstanding. All of the
outstanding shares have been duly authorized, validly issued (free of all
preemptive rights), are fully paid and nonassessable. Any outstanding
or authorized options, warrants, subscriptions, calls, puts, conversion or other
rights, contracts, agreements, commitments or understandings of any kind
obligating the Company to issue, sell, purchase, return, redeem or pay any
distribution or dividend with respect to any shares of capital stock of the
Company or any other securities convertible into, exchangeable for or evidencing
the right to subscribe for any shares of capital stock of or other ownership
interest in the Company are listed on Schedule 3.3 hereof.
3.4 Financial
Condition.
3.4.1 Financial
Statements.
3.4.1.1 The
Company has made available (see ▇▇▇.▇▇▇.▇▇▇) to
Buyer the financial statements (collectively, the “Financial Statements”) listed
on Schedule 3.4.1.1, together with the report thereon of the Company’s
independent certified public accountants where applicable.
3.4.1.2 To
the Company’s best knowledge, the Financial Statements fairly present in all
respects the financial condition and the results of operations of the Company as
at the respective dates of and for the periods referred to in such financial
statements and reflect the consistent application of accounting principles
throughout the periods involved in accordance with generally accepted accounting
principles.
2
3.4.2 Absence of Certain
Changes. Except as disclosed on Schedule 3.4.2, since November
30, 2008 (the “Balance Sheet Date”) there has not been (i) any change in the
financial condition, results of operations, assets, business, or prospects of
the Company as described in its filings with the Securities and Exchange
Commission (“SEC Filings”) or otherwise that could have a material adverse
effect on the assets, results (financial or otherwise), business or prospects of
the Company (a “Material Adverse Effect”); (ii) any damage, destruction or loss,
whether or not covered by insurance, that could have a Material Adverse Effect;
(iii) any sale or transfer of any of the assets of the Company, except sales in
the ordinary course of the business of inventory or immaterial amounts of other
tangible personal property; (iv) any commitment by the Company to any capital
expenditure to be paid after the Closing in excess of $100,000 for any
individual commitment or $500,000 in the aggregate; (v) any incurrence of
additional indebtedness for borrowed money or entering into long term contracts
or commitments by the Company to be performed after the Closing Date; (vi) any
alteration in any respect of the Company’s practices and policies relating to
the payment and collection of accounts receivable; (vii) any failure to operate
the Company in the ordinary course of business consistent with past practice;
(viii) any increase in, or commitment to increase, the compensation payable or
to become payable to any of the Company’s executive employees or any bonus
payment (other than as included as an accrued liability on the Company’s balance
sheet) or similar arrangement made to or with any of the Company’s executive
employees; (ix) any adoption of a plan or agreement or amendment to any plan or
agreement providing any new or additional fringe benefits; (x) any material
alteration in the manner of keeping the Company’s books, accounts or records,
(xi) any transaction with any affiliate of the Company; (xii) any material tax
election or establishment or increase in a reserve for taxes or other
liabilities on its books or otherwise provided therefore, except for taxes or
other liabilities relating to the ordinary course operations of the Company
since the Balance Sheet Date; (xiii) any liens claims or encumbrances placed
upon the Company’s assets; or (xiv) any material transaction entered into by the
Company not in the ordinary course of business.
3.4.3 No
Default. Except as disclosed in the Company’s balance sheet as
of the Balance Sheet Date, or on Schedule 3.4.3, the Company is not in default
with respect to any liabilities or obligations, and all such liabilities or
obligations shown and reflected in such balance sheet and such liabilities
incurred or accrued subsequent to such Balance Sheet Date have been, or are
being, paid or discharged as they become due, and all such liabilities and
obligations were incurred in the ordinary course of business.
3.5 Assets of the
Company. The Company owns, or has valid leasehold interests
in, or licenses to, all of the assets required or necessary to operate the
Business of the Company as it is now being conducted. Except for
liens reflected on the May 31, 2008 balance sheet, or on Schedule 3.5 hereof,
the Company’s assets are free and clear of all liens.
3.6 Material
Contracts. The Company’s SEC Filings contain copies of all
material contracts to which the Company is a party, and the Company has made
copies of such contracts available to Buyer as requested by Buyer.
3
3.7 Labor and Employment
Matters. No collective bargaining agreement exists that is
binding on the Company and no proceedings have been instituted by an employee or
group of employees seeking recognition of a bargaining
representative. No organizational effort currently is being made or
threatened by or on behalf of any labor union to organize any employees of the
Company. The employment arrangements for executive management of the
Company are set forth in the material contracts included with the Company’s SEC
Filings.
3.8 Litigation. Except
as set forth in the Company’s SEC Filings or on Schedule 3.8 hereof, there are
no material claims or litigation pending against the company.
3.9 No Undisclosed
Liabilities. Except as and to the extent specifically
reflected or reserved against in the Company’s balance sheet as of the Balance
Sheet Date or on Schedule 3.9 hereof, the Company has no liabilities or
obligations of any kind, including, without limitation, environmental,
employment, ERISA or income tax obligations, whether absolute, accrued,
contingent or otherwise.
3.10 Compliance with
Law. To the Company’s knowledge it has not violated and its
business as presently conducted does not violate, in any material respect any
Federal, state, local or foreign laws, regulations, permits, licenses,
governmental authorizations or orders, and the Company has not received any
notice of any such violation.
4.
Representations and
Warranties of Buyer. Buyer represents and warrants to the
Company that:
4.1 Investment
Intent. Buyer is acquiring the Shares with the intention as of
the date hereof of holding the Shares for purposes of
investment. Buyer acknowledges that the Shares have not been, and
will not be, registered under the Securities Act of 1933, as amended (the
“Act”), or any state securities laws, and Buyer has no intention as of the date
hereof of selling the Shares in a public distribution in violation of Federal
securities laws or any applicable state securities laws. Buyer is an
Accredited Investor (as defined in Rule 501 promulgated under the Act) and is
able to bear the risk of an investment in the Shares including risks associated
with holding the Shares for an extended period of time. Buyer
understands that the certificates representing the Shares will bear the legend
set forth on Schedule 4.1 hereof.
4.2 Investigation. Buyer,
or its representatives, have reviewed the Company’s SEC Filings and other
business records or information deemed necessary and have had an opportunity to
ask questions of, and receive answers or requested documentation from, such
officers of the Company as it deems necessary to undertake the investment in the
Company contemplated by this Agreement.
5.
Covenants.
5.1 Form
D. The Company shall make its best efforts to timely file a
Form D to the Shares as required under Regulation D promulgated by the
Securities and Exchange Commission (“SEC”) and provide a copy thereof to
Buyer. The Company shall also make all filings and reports relating
to the offer and sale of the Shares acquired under applicable securities laws of
the United States following the Closing Date.
4
5.2 Reporting
Status. The Company shall use its commercially reasonable best
efforts to timely file all reports required to be filed by the SEC pursuant to
the Securities Exchange Act of 1934, as amended (“34 Act”), and the Company
shall not terminate its status as an issuer required to file reports under the
34 Act even if the 34 Act or the rules and regulations thereunder would
otherwise permit such termination.
5.3 Schedule
13D. Buyer agrees to file a Schedule 13D, if applicable, with
the SEC in a timely manner, and agrees to keep it current.
5.4 Use of
Proceeds. The Company will use the proceeds from the sale of
the Shares for working capital purposes as more particularly described and in
the amounts indicated in Schedule 5.4 attached hereto and incorporated herein by
this reference.
5.5 Disclosure of
Transaction. As soon as reasonably possible following the
Closing Date, the Company shall file a Form 8-K with the SEC describing the
terms of the transactions contemplated herein.
5.6 Conduct of the Business of
the Company. After the Closing Date, the Company will continue
to conduct the operations of the business of the Company in the ordinary course
and will maintain the assets, properties and rights of the Company in at least
as good order and condition as exists on the date hereof, subject to ordinary
wear and tear.
6. Indemnification. In
consideration of Buyer’s execution and delivery of this Agreement and acquiring
the Shares thereunder, and in addition to all of the Company’s other obligations
under the Agreement, the Company shall defend, protect, indemnify and hold
harmless Buyer 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 Buyer is a party to the action for
which indemnification hereunder is sought), and including reasonable attorneys’
fees and disbursements (the “Indemnified Liabilities”), incurred by Buyer 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 the Agreement or any
other certificate, instrument or document contemplated hereby, (b) any breach of
any covenant, agreement or obligation of the Company contained in this Agreement
or any other certificate, instrument or document contemplated hereby, (c) any
cause of action, suit or claim brought or made against Buyer and arising out of
or resulting from the execution, delivery, performance or enforcement of the
Agreement in accordance with the terms hereof or any other certificate,
instrument or document contemplated hereby, or (d) any transaction financed or
to be financed in whole or in part, directly or indirectly, with the proceeds of
the issuance of the Shares. 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 that is permissible under applicable
law.
6.1 Claims for
Indemnification. Whenever any claim shall arise for
indemnification hereunder, Buyer shall promptly notify the Company of the claim
and, when known, the facts constituting the basis for such claim; provided
however, that a failure to provide such notice will not reduce the
indemnification obligation hereunder unless, and only to the extent that, such
failure to deliver notice materially prejudices the Company. In the
event of any claim for indemnification hereunder resulting from or in connection
with any claim or legal proceedings by a third party, the notice to the Company
shall specify, if known, the amount or an estimate of the amount of the
liability potentially arising therefrom. The Buyer shall not settle
or compromise any claim by a third party for which it is entitled to
indemnification hereunder, without the prior written consent of the Company,
which will not be unreasonably withheld.
5
6.2 Manner of
Indemnification. Any indemnification by the Company of the
Buyer shall be effected by payment of cash, wire transfer or delivery of a
certified or official bank check in immediately available funds in the amount of
the Indemnification Liability.
6.3 Limitations on
Indemnification. All representations and warranties made by
the Company herein or in any instrument or document furnished in connection
herewith shall survive the Closing only for a period of 12 months, except for
the representations and warranties contained in Sections 3.2 and 3.3, which
shall not expire. Buyer shall not be entitled to assert a claim for
indemnification under this Section 6 unless (i) such claim is asserted in
writing prior to 12 months following the Closing Date, or (ii) such claim
relates to any of the matters set forth in the first sentence of this Section
6.3, which may be asserted at any time prior to the expiration of such
representations.
6.4 Sole Basis for
Recovery. The parties intend Article 6 to be the exclusive
method for compensating Buyer for claims relating to the Company and the
transactions contemplated by this Agreement.
6.5 Insurance. With
respect to any matter covered by this Article 6, the Company shall use
reasonable efforts to assert a claim under any applicable insurance policy and
any indemnification claim shall be net of any insurance proceeds received by the
Buyer.
7.
Miscellaneous.
7.1 Notices. All
notices, requests, demands, and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or sent by fax during
normal business hours of the recipient, the next business day if sent by a
national overnight delivery service, charges prepaid, or three days after mailed
by certified or registered mail, postage prepaid, return receipt requested, to
the parties, their successors in interest or their assignees at the following
addresses, or at such other addresses as the parties may designate by written
notice in the manner aforesaid.
7.2 Governing
Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THAT STATE.
7.3 Counterparts. This
Agreement may be executed simultaneously in one or more counterparts, each of
which shall be deemed an original, but all of which shall constitute but one and
the same instrument.
6
7.4 Indemnification for
Brokerage. Buyer and the Company each represent and warrant
that no broker or finder has acted on its behalf in connection with this
Agreement or the transactions contemplated hereby. In addition to the
indemnification obligations contained in Section 6, each party hereto agrees to
indemnify and hold harmless the others from any claim or demand for commissions
or other compensation by any broker, finder or similar agent who is or claims to
have been employed by or on behalf of such ply.
7.5 Complete
Agreement. This Agreement, the Schedules hereto and the
documents delivered pursuant to this Agreement form or will form the entire
agreement between the parties hereto with respect to the transactions
contemplated herein and shall supersede all previous oral and written and all
contemporaneous oral negotiations, commitments, and understandings.
7.6 Interpretation. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
Agreement.
7.7 Severability. Any
provision of this Agreement which is invalid, illegal, or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity, illegality, or unenforceability, without affecting in any way
the remaining provisions hereof in such jurisdiction or rendering that or any
other provision of this Agreement invalid, illegal, or unenforceable in any
other jurisdiction.
7.8 Knowledge; Due Diligence
Investigation. All representations and warranties contained
herein which are made to the knowledge of the Company shall mean to the
knowledge of ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ (“Executive
Officers”). The Executive Officers shall be deemed to have
“knowledge” of a matter for purposes of the warranties and representations
contained herein if such matter has come, or should reasonably be expected to
have come, to the attention of the Executive Officers of the Company after
conducting a reasonable investigation.
7.9 Expenses of
Transactions. All fees, costs and expenses incurred by Buyer
or the Company in connection with the transactions contemplated by this
Agreement shall be borne by the party incurring the same.
7.10 Amendment. The
terms of this Agreement can be amended only by a written agreement of the Buyer
and the Company.
7.11 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 each other party;
provided that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if the
signature were an original, not a facsimile signature.
7
IN
WITNESS WHEREOF, the undersigned duly execute this Agreement as of the date
first written above.
COMPANY:
a
Nevada corporation
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By:
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▇▇▇▇▇
▇. ▇▇▇▇▇, Chief Executive Officer
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By:
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▇▇▇▇▇▇▇
▇▇▇▇▇, Secretary
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BUYER:
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ORI
Services Corp.
▇▇▇▇
▇▇▇▇▇▇ ▇▇., ▇▇▇. ▇▇▇
▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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8