WIRELESS RONIN® TECHNOLOGIES, INC. AMENDED AND RESTATED CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
EXHIBIT 10.16
WIRELESS RONIN® TECHNOLOGIES, INC.
AMENDED AND RESTATED
CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
SEPTEMBER 7, 2005
SPIRIT LAKE TRIBE
Spirit Lake Tribal Council ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Spirit Lake Tribal Council ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Convertible Debenture Purchase Agreement between Spirit Lake Tribe
(the “Purchaser”) and WIRELESS RONIN® TECHNOLOGIES, INC., a Minnesota corporation (the “Company”),
dated January 5, 2005 (the “Original Purchase Agreement”) pursuant to which Purchaser purchased $2,000,000 of 10% fixed rate Convertible Debentures due
2009 (the “$2M Debenture”). The Original Purchase Agreement is hereby amended and restated as of
the date set forth above, to set forth the terms of the Purchaser’s purchase of an additional
$1,000,000 of 10% fixed rate Convertible Debenture due 2009 (the “$1M Debenture”). In
consideration of the Purchaser’s purchase of the $1M Debenture, the Company hereby agrees with the
Purchaser as follows:
1. Authorization of Securities. The Company proposes to authorize, issue and sell an
aggregate additional of $1,000,000 principal amount of its convertible debentures, to be in
substantially the form set forth in Exhibit A to this Agreement (the “Form of Debenture”), which
also constitutes an amendment and restatement of the $2M Debenture. The term “Debenture” as used
herein shall mean the Debenture in aggregate of $3,000,000 principal amount of convertible
debentures in the Form of Debenture, which represents the $l M Debenture and the amendment and
restatement of the $2M Debenture.
The Debenture is convertible into fully paid and nonassessable shares of Common Stock of the
Company in whole or in part at any time prior to its payment at the option of the Holder on the
terms set forth in the Debenture.
The Debenture is convertible in whole at any time prior to its payment at the option of the
Purchaser into fully paid and nonassessable shares of Common Stock of the Company constituting
thirty percent (30%) of all classes of the Common Stock of the Company on a fully diluted basis, as
further
explained in paragraph 3(b) of the Debenture. In addition, as further explained in
paragraph 3(b) of the Debenture, the Debenture is convertible in part at any time prior to its
payment at the option of the Purchaser into fully paid and nonassessable shares of Common Stock of
the Company constituting a proportionate percentage of thirty percent (30%) of all classes of the
Common Stock of the Company on a fully diluted basis in the ratio that the amount of the Debenture
being converted bears to the total amount of the Debenture acquired by the Purchaser. Under no
circumstances shall paragraph 3(b) of the Debenture be read to entitle the Purchaser to shares of
Common Stock of the Company constituting less than 30% of all classes of the Common Stock of the
Company on a fully diluted basis upon conversion in full of the Debenture.
2. Sale and Purchase of Securities. Subject to the terms and conditions hereof, the
Company agrees to sell to the Purchaser, and the Purchaser agrees to purchase from the Company, an
additional aggregate principal amount of $1,000,000 convertible debentures.
3. Closing. The closing of the sale to, and purchase by, the Purchaser of the $1M
Debenture and amendment and restatement of the $2M Debenture in the Form of Debenture (the
“Closing”) shall occur at the offices of the ▇▇▇▇▇▇▇▇ Group, Inc. at the hour of 10:30 A.M.,
Central Daylight Time, on September 7, 2005 or on such other day or at such other time or place as
the Purchaser and the Company shall agree upon (the “Closing Date”).
At the Closing, the Company will deliver to the Purchaser the Debenture being purchased by the
Purchaser, registered in its name, against delivery to the Company of its funds in the amount of
$1,000,000 in payment of the total purchase price of the $1M Debenture being purchased by the
Purchaser. As of the Closing, upon delivery of the Debenture, the $2M
Debenture shall be cancelled and the Purchaser shall deliver the $2M Debenture to the Company
within ten (10) days of Closing.
4. Restriction on Transfer of Securities.
4.1 Restrictions. The Debenture is transferable only pursuant to (a) a public
offering registered under the Securities Act of 1933, as amended (the “Securities Act”), (b) Rule
144 (or any similar rule then in effect) adopted under the Securities Act, if such rule is
available, and (c) subject to the conditions elsewhere specified in this Section 4, any other
legally available means of transfer.
4.2(a) Legend. The Debenture shall be endorsed with the following
legend:
THIS CONVERTIBLE DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. NO SALE OR
DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL FOR THE
HOLDER, SATISFACTORY TO PAYOR, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE ACT.
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Upon the conversion of the Debenture, unless the Company receives an opinion of counsel from
the holder of such a security satisfactory to the Company to the effect that a sale, transfer,
assignment, pledge or distribution of the Conversion Stock issuable upon such conversion may be
made without registration, or unless such Conversion Stock is being disposed of pursuant to
registration under the Securities Act and any applicable state act, the same legend shall be
endorsed on the certificate evidencing such Conversion Stock.
The aforesaid legend shall be removed with respect to securities held for at least three years
(including, with respect to the Conversion Stock, the period during which the related converted
Debenture had been held) by a person who has not been an affiliate of the Company (as defined in
Rule 144 under the Securities Act) during the three months preceding the request for removal of
such legend. The foregoing legend removal requirement is based on Rule 144(k) under the Securities
Act as currently in force, and assumes that such Rule (or a successor thereto) in substantially its
current form shall be in effect at the time of any such request for legend removal.
(b) Stop Transfer Order. A stop transfer order shall be placed with the Company’s
transfer agent preventing transfer of any of the securities referred to in paragraph (a) above
pending compliance with the conditions set forth in any such legend (except as otherwise provided
in paragraph (a) above).
4.3 Removal of Legend. Any legend endorsed on a certificate or instrument evidencing
a security pursuant to Section 4.2 hereof shall be removed, and the Company shall issue a
certificate or instrument without such legend to the holder of such security, (a) in
accordance with Section 4.2(a) hereof, (b) if such security is being disposed of pursuant to
registration under the Securities Act and any applicable state acts or pursuant to Rule 144 or any
similar rule then in effect, or (c) if such holder provides the Company with an opinion of counsel
satisfactory to the Company to the effect that a sale, transfer, assignment, offer, pledge or
distribution for value of such security may be made without registration and that such legend is
not required to satisfy the applicable exemption from registration.
4.4 Register of Securities. The Company, or its duly appointed agent shall maintain a
separate register for the Debenture in which it shall register the issuance and transfer of the
Debenture. All transfers of the Debenture shall be recorded on the register maintained by the
Company or its agent, and the Company shall be entitled to regard the registered holder of such
securities as the actual owner of the securities so registered until the Company or its agent is
required to record a transfer of such securities on its register. The Company or its agent shall
be required to record any such transfer when it receives (a) the security to be transferred duly
and properly endorsed by the registered holder thereof or by its attorney duly authorized in
writing, and (b) the opinion of counsel referred to in Sections 4.2 and 4.3 hereof or evidence of
compliance with the registration provisions referred to in those Sections.
5. Representations and Warranties by Company. Except as disclosed in Exhibit C
hereto, the Company represents and warrants to the Purchaser that:
5.1 Organization, Standing, etc. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Minnesota, and
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has the requisite
corporate power and authority to own its properties and to carry on its business in all material
respects as it is now being conducted. The Company has the requisite corporate power and authority
to issue the Debenture and the Conversion Stock, and to otherwise perform its obligations under
this Agreement and the Debenture. The copies of the Articles of Incorporation and Bylaws (as such
Bylaws were amended on May 28, 2004) of the Company delivered to the Purchaser or their agents
prior to the execution of this Agreement are true and complete copies of the duly and legally
adopted Articles of Incorporation and Bylaws of the Company in effect as of the date of this
Agreement. The Company does not have any direct or indirect equity interest in any other firm,
corporation, partnership, joint venture association or other business organization.
5.2 Qualification. The Company is duly qualified or licensed as a foreign corporation
in good standing in each jurisdiction wherein the nature of its activities or of its properties
owned or leased makes such qualification or licensing necessary and failure to be so qualified or
licensed would have a material adverse impact on its business.
5.3 [Intentionally Omitted ]
5.4 Tax Returns and Audits. All required federal, state and local tax returns or
appropriate extension requests of the Company have been filed, and all federal, state and local
taxes required to be paid with respect to such returns have been paid or due provision for the
payment thereof has been made. The Company is not delinquent in the payment of any such tax or in
the payment of any assessment or governmental charge. The Company has not received notice of any
tax deficiency proposed or assessed against it, and has not executed any waiver of
any statute of limitations on the assessment or collection of any tax. None of the Company’s
tax returns have been audited by governmental authorities in a manner to bring such audits to the
Company’s attention. The Company does not have any tax liabilities except those incurred in the
ordinary course of business since July 31, 2005 (the “Balance Sheet Date”).
5.5 Changes, Dividends, etc. Except for the transactions contemplated by this
Agreement, since the Balance Sheet Date the Company has not: (a) incurred any debts, obligations or
liabilities, absolute, accrued or contingent and whether due or to become due, except current
liabilities incurred in the ordinary course of business, which (individually or in the aggregate)
will not materially and adversely affect the business, properties or prospects of the Company; (b)
paid any obligation or liability other than, or discharged or satisfied any liens or encumbrances
other than those securing, current liabilities, in each case in the ordinary course of business;
(c) declared or made any payment or distribution to its stockholders as such, or purchased or
redeemed any of its shares of capital stock or other securities, or obligated itself to do so; (d)
mortgaged, pledged or subjected to lien, charge, security interest or other encumbrance any of its
assets, tangible or intangible, except in the ordinary course of business; (e) sold, transferred or
leased any of its assets except in the ordinary course of business; (f) cancelled or compromised
any debt or claim, or waived or released any right of material value; (g) suffered any physical
damage, destruction or loss (whether or not covered by insurance) materially and adversely
affecting the properties, business or prospects of the Company; (h) entered into any transaction
other than in the ordinary course of business; (i) encountered any labor difficulties or labor
union organizing activities; (j) issued or sold any shares of capital stock or other securities or
granted any options, warrants or other purchase rights with respect thereto other than as
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contemplated by this Agreement; (k) made any acquisition or disposition of any material assets or
become involved in any other material transaction, other than for fair value in the ordinary course
of business; (1) increased the compensation payable, or to become payable, to any of its directors
or employees, or made any bonus payment or similar arrangement with any directors or employees or
increased the scope or nature of any fringe benefits provided for its employees or directors; or
(m) agreed to do any of the foregoing other than pursuant hereto. There has been no material
adverse change in the financial condition, operations, results of operations or business of the
Company since the Balance Sheet Date.
5.6 Title to Properties and Encumbrances. The Company has good and marketable title
to all of its owned properties and assets, and the properties and assets used in the conduct of its
business, except for property disposed of in the ordinary course of business since the Balance
Sheet Date, which properties and assets are not subject to any mortgage, pledge, lease, lien,
charge, security interest, encumbrance or restriction, except Permitted Liens (as hereinafter
defined). The plant, offices and equipment owned and leased by the Company have been kept in good
condition and repair in the ordinary course of business, and the Company has not been threatened
with any action or proceeding under any building or zoning ordinance, law or regulation.
5.7 Litigation; Governmental Proceedings. There are no legal actions, suits,
arbitrations or other legal, administrative or governmental proceedings or investigations pending
or, to the knowledge of the Company, threatened against the Company, its properties, assets or
business, and the Company is not aware of any facts which are likely to result in or form the basis
for any such action, suit or other proceeding. The Company is not in default with respect to
any judgment, order or decree of any court or any governmental agency or instrumentality. The
Company has not been threatened with any action or proceeding under any business or zoning
ordinance, law or regulation.
5.8 Compliance with Applicable Laws and Other Instruments. The business and
operations of the Company have been and are being conducted in accordance with all applicable laws,
rules and regulations of all governmental authorities. Neither the execution nor delivery of, nor
the performance of or compliance with, this Agreement or the Debenture nor the consummation of the
transactions contemplated hereby or thereby will conflict with, or, with or without the giving of
notice or passage of time, result in any breach of, or constitute a default under, or result in the
imposition of any lien or encumbrance upon any asset or property of the Company pursuant to, any
applicable law, administrative regulation or judgment, order or decree of any court or governmental
body, any agreement or other instrument to which the Company is a party or by which it or any of
its properties, assets or rights is bound or affected, and will not violate the Articles of
Incorporation or Bylaws of the Company. The Company is not in violation of its Articles of
Incorporation or its Bylaws nor in violation of, or in default under, any lien, indenture,
mortgage, lease, agreement, instrument, commitment or arrangement in any material respect.
5.9 Conversion Stock. The shares of Conversion Stock issuable upon conversion of the
Debenture have been reserved for issuance and when issued upon conversion will be duly authorized,
validly issued and outstanding, fully paid, nonassessable and free and clear of all pledges, liens,
encumbrances and restrictions, except as set forth in Section 4 hereof.
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The certificates
representing the Conversion Stock to be delivered upon the conversion of the Debenture will be
genuine, and the Company has no knowledge of any fact which would impair the validity thereof.
5.10 Securities Laws. Based in part upon the representations and warranties contained
in Section 6 hereof, no consent, authorization, approval, permit or order of or filing with any
governmental or regulatory authority is required under current laws and regulations in connection
with the execution and delivery of this Agreement or the Debenture or the offer, issuance, sale or
delivery of the Debenture or the offer of the Conversion Stock other than the qualification
thereof, if required, under applicable state securities laws, which qualification has been or will
be effected as a condition of these sales. The Company has not, directly or through an agent,
offered the Debenture or the Conversion Stock or any similar securities for sale to, or solicited
any offers to acquire such securities from, persons other than the Purchaser and other accredited
investors. Under the circumstances contemplated hereby, the offer, issuance, sale and delivery of
the Debenture and the offer of the Conversion Stock will not under current laws and regulations
require compliance with the prospectus delivery or registration requirements of the Securities Act.
5.11 Patents and Other Intangible Rights. The Company (a) owns or has the exclusive
right to use, free and clear of all material liens, claims and restrictions, all patents,
trademarks, service marks, trade names, copyrights, licenses and rights with respect to the
foregoing, used in the conduct of its business as now conducted, (b) is not obligated or under any
liability whatsoever to make any payments of a material nature by way of royalties, fees or
otherwise to any owner of, licensor of, or other claimant to, any patent, trademark, trade name,
copyright or other intangible asset, with respect to the use thereof or in connection with the
conduct of its business or otherwise, (c) owns or has the unrestricted right to use all trade
secrets, including know-how, inventions, designs, processes, computer programs and technical data
necessary to the development, operation and sale of all products and services sold or proposed to
be sold by it, free and clear of any rights, liens or claims of others, and (d) is not using any
confidential information or trade secrets of others. The Company is not, nor has it received
notice with respect to, infringing upon or otherwise acting adversely to any known right or claimed
right of any person under or with respect to any patents, trademarks, service marks, trade names,
copyrights, licenses or rights with respect to the foregoing.
5.12 [Intentionally Omitted]
5.13 [Intentionally Omitted]
5.14 [Intentionally Omitted]
5.15 Corporate Acts and Proceedings. This Agreement has been duly authorized by all
necessary corporate action on behalf of the Company, and has been duly executed and delivered by
authorized officers of the Company. All corporate action necessary to the authorization, creation,
issuance and delivery of the Debenture and the Conversion Stock has been taken on the part of the
Company, or will be taken by the Company on or prior to the Closing Date.
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This Agreement is, and the Debenture when issued pursuant to the terms of this Agreement will be,
when executed and delivered pursuant to the terms of this Agreement, a valid and binding agreement
of the Company enforceable in accordance with its terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting
the enforcement of creditors’ rights generally, and except for judicial limitations on the
enforcement of the remedy of specific enforcement and other equitable remedies.
5.16 [Intentionally Omitted]
5.17 [Intentionally Omitted]
5.18 Purchase Commitments and Outstanding Bids. No purchase commitment of the Company
is in excess of normal, ordinary and usual requirements of its business, or was made at any price
in excess of the then current market price, or contains terms and conditions more onerous than
those usual and customary in the industry. There is no outstanding material bid, sales proposal,
contract or unfilled order of the Company which (a) will, or could if accepted, require the Company
to supply goods or services at a cost to the Company in excess of the revenues to be received
therefrom, or (b) quotes prices which do not include a ▇▇▇▇-up over reasonably estimated costs
consistent with past ▇▇▇▇-ups on similar business or market conditions current at the time.
5.19 Insurance Coverage. There are in full force policies of insurance issued by
insurers of recognized responsibility insuring the Company, its properties and business against
such losses and risks, and in such amounts, as in the Company’s best judgment, after
advice from its insurance broker, are acceptable for the nature and extent of its business and
the Company’s resources.
5.20 No Brokers or Finders. No person, firm or corporation has or will have, as a
result of any act or omission of the Company, any right, interest or valid claim against or upon
the Company or any Purchaser for any commission, fee or other compensation as a finder or broker,
or in any similar capacity, in connection with the transactions contemplated by this Agreement
except for the fees agreed to be paid by the Company to ▇▇▇▇▇▇▇▇ Investments Corporation. The
Company will indemnify and hold the Purchaser harmless against any and all liability with respect
to any such commission, fee or other compensation which may be payable or determined to be payable
in connection with the transactions contemplated by this Agreement.
5.21 Conflicts of Interest. No officer, director or stockholder of the Company or any
affiliate (as such term is defined in Rule 405 under the Securities Act) of any such person has any
direct or indirect interest (a) in any entity which does business with the Company, or (b) in any
property, asset or right which is used by the Company in the conduct of its business, or (c) in any
contractual relationship with the Company other than as an employee. For the purpose of this
Section 5.21, there shall be disregarded any interest which arises solely from the ownership of
less than a 1% equity interest in a corporation whose stock is regularly traded on any national
securities exchange or in the over-the-counter market.
5.22 Licenses. The Company possesses from the appropriate agency, commission, board
and government body and authority, whether state, local or federal, all
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licenses, permits,
authorizations, approvals, franchises and rights which (a) are necessary for it to engage in the
business currently conducted by it, and (b) if not possessed by the Company would have an adverse
impact on the Company’s business. The Company has no knowledge that would lead it to believe that
it will not be able to obtain all licenses, permits, authorizations, approvals, franchises and
rights that may be required for any business the Company proposes to conduct.
5.23 Registration Rights. The Company has not agreed to register any of its
authorized or outstanding securities under the Securities Act.
5.24 Retirement Plans. The Company does not have any retirement plans in which any
employees of the Company participate that is subject to any provisions of the Employee Retirement
Income Security Act of 1974 and of the regulations adopted pursuant thereto (“ERISA”).
5.25 Environmental and Safety Laws. To the best of its knowledge, the Company is not
in violation of any applicable statute, law or regulation relating to the environment or
occupational health and safety, and no material expenditures are or will be required in order to
comply with any such existing statute, law or regulation.
The operations of the Company do not involve any asbestos, urea-formaldehyde foamed-in-place
insulation, polyclorinated biphenyls (“PCBs”) or any other hazardous substances or materials
including, but not limited to, hazardous substances or materials under the Comprehensive
Environmental Response, Compensation and Liability Act, as amended by the Superfund Amendments and
Reauthorization Act, the Resource Conservation and Recovery Act,
the Minnesota Environmental Response and Liability Act, or any other federal, state or local
statute, regulation, code or ordinance.
5.26 Employees. To the best of the Company’s knowledge, no officer of the Company or
employee of the Company whose annual compensation is in excess of $50,000.00 has any plans to
terminate his or her employment with the Company. The Company has complied in all material
respects with all laws relating to the employment of labor, including provisions relating to wages,
hours, equal opportunity, collective bargaining and payment of Social Security and other taxes, and
the Company has not encountered any material labor difficulties. The Company does not have any
worker’s compensation liabilities, except those reflected in the Company’s financial statements
that have been provided to the Purchaser.
5.27 Absence of Restrictive Agreements. To the best of the Company’s knowledge, no
employee of the Company is subject to any secrecy or non-competition agreement or any agreement or
restriction of any kind that would impede in any way the ability of such employee to carry out
fully all activities of such employee in furtherance of the business of the Company. To the best
of the Company’s knowledge, no employer or former employer of any employee of the Company has any
claim of any kind whatsoever in respect of any of the rights described in Section 5.11 hereof.
5.28 Disclosure. The Company has not knowingly withheld from the Purchaser any
material facts relating to the assets, business, operations, financial condition or prospects of
the Company. No representation or warranty in this Agreement or in any certificate, schedule,
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statement or other document furnished or to be furnished to any Purchaser pursuant hereto or in
connection with the transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state any material fact required to be stated herein or
therein or necessary to make the statements herein or therein not misleading.
6. Representations and Warranties of Purchaser. The Purchaser represents and warrants
that:
6.1 Purchaser. Purchaser is a federally recognized American Indian Tribe.
6.2 Investment Intent. The Debenture being acquired by the Purchaser hereunder is
being purchased and the Conversion Stock acquired by the Purchaser upon conversion of such
Debentures will be acquired, for such Purchaser’s own account and not with the view to, or for
resale in connection with, any distribution or public offering thereof within the meaning of the
Securities Act. The Purchaser understands that the Debenture and the Conversion Stock have not
been registered under the Securities Act or any applicable state laws by reason of their issuance
or contemplated issuance in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act and such laws, and that the reliance of the Company and others
upon this exemption is predicated in part upon this representation and warranty. The Purchaser
further understands that the Debenture and Conversion Stock may not be transferred or resold
without (a) registration under the Securities Act and any applicable state securities laws, or (b)
an exemption from the requirements of the Securities Act and applicable state securities laws.
The Purchaser understands that an exemption from such registration is not presently available
pursuant to Rule 144 promulgated under the Securities Act by the Securities and Exchange Commission
(the “Commission”) and that in any event the Purchaser may not sell any securities pursuant to Rule
144 prior to the expiration of a two-year period after the Purchaser has acquired the securities.
The Purchaser understands that any sales pursuant to Rule 144 may only be made in full compliance
with the provisions of Rule 144.
6.3 Qualification as Accredited Investor. The Purchaser qualifies as an accredited
investor within the meaning of Rule 501 under the Securities Act. The Purchaser has such knowledge
and experience in financial and business matters that the Purchaser is capable of evaluating the
merits and risks of the investment to be made hereunder by such Purchaser. The Purchaser has and
has had access to all of the Company’s material books and records and access to the Company’s
executive officers has been provided to the Purchaser or to the Purchaser’s qualified agents. The
state in which the Purchaser’s principal office is located is set forth in the Purchaser’s address
in Section 18(a) of this Agreement. The Purchaser’s principal office is located within the Spirit
Lake Reservation, which is located in the State of North Dakota.
6.4 Acts and Proceedings. This Agreement has been duly authorized by all necessary
action on the part of the Purchaser, has been duly executed and delivered by the Purchaser, and is
a valid and binding agreement upon the part of the Purchaser.
6.5 No Brokers or Finders. No person, firm or corporation has or will have, as a
result of any act or omission by such Purchaser, any right, interest or valid claim against the
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Company for any commission, fee or other compensation as a finder or broker, or in any similar
capacity, in connection with the transactions contemplated by this Agreement. Such Purchaser will
indemnify and hold the Company harmless against any and all liability with respect to any such
commission, fee or other compensation which may be payable or determined to be payable as a result
of the actions of such Purchaser in connection with the transactions contemplated by this
Agreement.
6.6 Sovereign Immunity. The Spirit Lake Tribe as Purchaser, being an American Indian
Tribe, is possessed with sovereign immunity. The Tribe hereby proclaims its sovereign immunity,
but does agree to a limited waiver of sovereign immunity pursuant to the terms set forth herein and
no expansion thereof. Purchaser agrees to be subject to suit in United States District Court for
the District of North Dakota for injunctive relief in respect to any claim, crossclaim, or
counterclaim associated with any responsibility set forth herein or associated with its status as
purchaser and/or holder of the Debentures of the Company. Should the United States District Court,
District of North Dakota not have jurisdiction, then Purchaser agrees to suit in the North Dakota
District Court for the County of ▇▇▇▇▇▇. No waiver of sovereign immunity is made as to Tribal
assets beyond those committed for the purchase of the Debenture of the Company. Specification of
jurisdiction wherein the Purchaser agrees to be sued as specified above does not limit the
jurisdictions in which Purchaser may initiate suit against the Company, should Purchaser believe
that such legal action may be warranted.
7. Conditions of the Purchaser’s Obligation. The obligation to purchase and pay for
the Debenture which the Purchaser has agreed to purchase on the Closing Date is subject to the
fulfillment prior to or on the Closing Date of the following conditions.
7.1 [Intentionally Omitted]
7.2 The Company shall have performed and complied with all agreements or conditions required
by this Agreement to be performed and complied with by it prior to or as of the Closing Date.
7.3 Certificate of Officers. The Company shall have delivered to the Purchaser a
certificate, dated the Closing Date, executed by the President and the senior financial officer of
the Company and certifying to the satisfaction of the conditions specified in Sections 7.2 and 7.5
hereof.
7.4 [Intentionally Omitted]
7.5 No Event of Default. There shall exist at the time of Closing no condition or
event which would constitute an Event of Default (as hereinafter defined) or which, after notice or
lapse of time or both, would constitute an Event of Default.
7.6 Qualification Under State Securities Laws. All registrations, qualifications,
permits and approvals required under applicable state securities laws for the lawful execution and
delivery of this Agreement and the offer, sale, issuance and delivery of the Debenture and the
offer of the Conversion Stock shall have been obtained.
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7.7 Proceedings and Documents. All corporate and other proceedings and actions taken
in connection with the transactions contemplated hereby and all certificates, opinions, agreements,
instruments and documents mentioned herein or incident to any such transaction shall be
satisfactory in form and substance to the Purchaser and their special counsel.
8. Affirmative Covenants. Subject to the provisions of Section 14 hereof, the Company
covenants and agrees that:
8.1 Corporate Existence. The Company will maintain its corporate existence in good
standing and comply with all applicable laws and regulations of the United States or of any state
or states thereof or of any political subdivision thereof and of any governmental authority where
failure to so comply would have a material adverse impact on the Company or its business or
operations.
8.2 Books of Account and Reserves. The Company will keep books of record and accounts
in which full, true and correct entries are made of all of its dealings, business and affairs, in
accordance with generally accepted accounting principles. The Company will employ certified public
accountants selected by the Board of Directors of the Company who are “independent” within the
meaning of the accounting regulations of the Commission and have annual audits made by such
independent public accountants in the course of which such accountants shall make such
examinations, in accordance with generally accepted auditing standards, as will enable them to give
such reports or opinions with respect to the financial statements of the Company as will satisfy
the requirements of the Commission in effect at such time with respect to certificates and opinions
of accountants.
8.3 Furnishing, of Financial Statements and Corporate Information. The Company will
deliver to the Purchaser:
(a) as soon as practicable, but in any
event within 30 days after the close of each month, unaudited
balance sheets of the Company as of the end of such month,
together with the related statements of operations and a
statement of sources and uses of cash for such month, setting
forth the budgeted figures for such month prepared and
submitted in connection with the Company’s annual plan as
required under Section 8.5 hereof and in comparative form
figures for the corresponding month of the previous fiscal
year, all in reasonable detail and certified by the Chief
Financial Officer of the Company, subject to year-end
adjustments;
(b) as soon as practicable, but in any
event within 120 days after the end of each fiscal year, a
balance sheet of the Company, as of the end of such fiscal
year, together with the related statements of operations,
stockholders’ equity and a statement of sources and uses of
cash for such fiscal year, setting forth in comparative form
figures for the previous fiscal year, all in reasonable detail
and duly certified by the Company’s independent Certified
Public Accountants, which accountants shall have given the
Company an opinion, unqualified as to the scope of the audit,
regarding such financial statements;
11
(c) concurrently with the delivery of any
financial statements referred to in paragraphs (a) and (b) of
this Section 8.3, current schedules of Indebtedness for
Borrowed Money and Senior Indebtedness, as these terms are
hereinafter defined, together with a certificate of the Chief
Executive Officer and Chief Financial Officer of the Company to
the effect that such schedules are accurate and correct and
that there exists no condition or event which constitutes an
event of default with respect to any indebtedness of the
Company, or, if any such condition or event exists, specify the
nature and period of existence thereof and what action the
Company is taking or proposes to take with respect thereto;
(d) within 90 days after the end of each
fiscal year, and promptly upon request of the Purchaser at any
time during the fiscal year up to four times per fiscal year,
written notice of the current number of shares that would be
issued to the Purchaser if the Purchaser elected at the last
business day of the fiscal year or as of the date of the
request, as the case may be, to convert the entire Debenture
into fully paid and nonassessable shares of Common Stock of the Company that
represent thirty percent (30%) of the Fully Diluted
Outstanding Shares of Common Stock of the Company After
Conversion as that term is defined in the Debenture;
(e) concurrently with the delivery in each
year of the financial statements referred to in paragraph (b)
of this Section 8.3, a statement and report signed by the
independent Certified Public Accountants who certified such
financial statements to the effect that they have read this
Agreement and that in the course of the audit upon which their
certificate was based they became aware of no condition or
event which constituted an Event of Default or which, after
notice or lapse of time or both, would constitute an Event of
Default or if such accountants did become aware of any such
condition or event, specifying the nature and period of
existence thereof;
(f) promptly after the submission thereof
to the Company, copies of all reports and recommendations
submitted by independent Certified Public Accountants in
connection with any annual or interim audit of the accounts of
the Company made by such accountants;
(g) promptly upon transmission thereof,
copies of all reports, proxy statements, registration
statements and notifications filed by the Company with the
Commission pursuant to any act administered by the Commission
or furnished to stockholders of the Company or to any national
securities exchange;
(h) with reasonable promptness, such other
financial data relating to the business, affairs and financial
condition of the Company as is available to the Company and as
from time to time the Purchaser may reasonably request;
(i) at least 30 days prior to the earlier
of (i) the execution of any agreement relating to any merger or
consolidation of the Company with another corporation, or a
plan of exchange involving the outstanding capital stock of the
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Company, or the sale, transfer or other disposition of all or
substantially all of the property, assets or business of the
Company to another corporation, or (ii) the holding of any
meeting of the stockholders of the Company for the purpose of
approving such action, written notice of the terms and
conditions of such proposed merger,
consolidation, plan of exchange, sale, transfer or other
disposition;
(j) within 15 days after the Company learns
in writing of the commencement or threatened commencement of
any material suit, legal or equitable, or of any material
administrative, arbitration or other proceeding against the
Company or its businesses, assets or properties, written notice
of the nature and extent of such suit or proceeding; and
(k) with reasonable promptness, copies of
all minutes of meetings of the Company’s Shareholders and/or
its Board of Directors, along with documentation of all
Corporate actions of the Company.
8.4 Inspection. The Company will permit the Purchaser and any of its partners,
officers or employees, or any outside representatives designated by the Purchaser and reasonably
satisfactory to the Company, to visit and inspect at the Purchaser’s expense the business offices
of the Company and any of the properties of the Company, including their books and records (and to
make photocopies thereof or make extracts therefrom), and to discuss their affairs, finances, and
accounts with their officers, lawyers and accountants, except with respect to trade secrets and
similar confidential information, all to such reasonable extent and at such reasonable times and
intervals as such Purchaser may reasonably request during normal business hours. Except as
otherwise required by laws or regulations applicable to a Purchaser, the Purchaser shall maintain,
and shall require its representatives to maintain, all information obtained pursuant to Section 8.3
hereof, this Section 8.4 and Section 8.5 hereof on a confidential basis.
8.5 Preparation of Budgets. Whenever the Company shall prepare and submit to its
Board of Directors for review and approval any budget, such as a capital or operating expense
budget, the Company will, simultaneously with the submission thereof to the Board of Directors,
deliver a copy of each such budget and any modification thereof that is provided to the Board of
Directors to the Purchaser.
8.6 Payment of Taxes and Maintenance of Properties. The Company will:
(a) pay and discharge promptly, or cause to
be paid and discharged promptly when due and payable, all
taxes, assessments and governmental charges or levies imposed
upon it or upon its income or upon any of its properties, as
well as all material claims of any kind (including claims for
labor, material and supplies) which, if unpaid, might by law
become a lien or charge upon its property; provided, however,
that the Company shall not be required to pay any such tax,
assessment, charge, levy or claim if the amount, applicability
or validity thereof shall currently be contested
in good faith by appropriate proceedings and if the Company
shall have set aside on its books reserves (segregated to the
extent
13
required by generally accepted accounting principles)
deemed adequate by it with respect thereto; and
(b) maintain and keep, or cause to be
maintained and kept, its properties in good repair, working
order and condition, and from time to time make, or cause to be
made, all repairs and renewals and replacements which in the
opinion of the Company are necessary and proper so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times; the Company will
maintain or cause to be maintained back-up copies of all
valuable papers and software.
8.7 Insurance. The Company will obtain and maintain in force such property damage,
public liability, business interruption, worker’s compensation, indemnity bonds and other types of
insurance as the Company’s executive officers, after consultation with an accredited insurance
broker, shall determine to be necessary or appropriate to protect the Company from the insurable
hazards or risks associated with the conduct of the Company’s business. The Company’s executive
officers shall periodically report to the Board of Directors on the status of such insurance
coverage.
All insurance shall be maintained in at least such amounts and to such extent as shall be
determined to be reasonable by the Board of Directors; and all such insurance shall be effected and
maintained in force under a policy or policies issued by insurers of recognized responsibility,
except that the Company may effect worker’s compensation or similar insurance in respect of
operations in any state or other jurisdiction either through an insurance fund operated by such
state or other jurisdiction or by causing to be maintained a system or systems of self-insurance
which is in accord with applicable laws.
8.8 Payment of Indebtedness and Discharge of Obligations. The Company will pay or
cause to be paid the principal of and interest and premium, if any, on all Indebtedness for
Borrowed Money heretofore or hereafter incurred or assumed by it when and as the same shall become
due and payable, unless such Indebtedness for Borrowed Money is renewed or extended. The Company
will faithfully observe, perform and discharge all of the material covenants, conditions and
obligations which are imposed on it by any and all indentures and other agreements securing or
evidencing such Indebtedness for Borrowed Money or pursuant to which such Indebtedness for Borrowed
Money is issued, and will not permit the continuance of any act or omission which is or under the
provisions thereof may be declared to be a material default thereunder, unless such default is
waived pursuant to the provisions thereof. The Company shall not be required to make any payment
or to take any other action by reason of this Section 8.8 at any time while it shall be currently
contesting in good faith by appropriate proceedings its obligations to make such payment or to take
such action provided that the Company shall have set aside on its books reserves (segregated to the
extent required by generally accepted accounting principles) deemed adequate by it with respect
thereto.
8.9 Directors’ and Stockholders’ Meetings. The Company agrees, as a general practice,
to hold a meeting of its Board of Directors at least once a year, and during each year to hold its
annual meeting of stockholders on or approximately on the date provided in its Bylaws.
14
8.10 Replacement of Debenture or Certificates Representing Conversion Stock. Upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of the Debenture or certificates representing Conversion Stock, and, in the case of any
such loss, theft or destruction, upon delivery of a bond of indemnity satisfactory to the Company,
or, in the case of any such mutilation, upon surrender and cancellation of the Debenture or
certificates representing Conversion Stock, as the case may be, the Company will issue a new
Debenture or certificates representing Conversion Stock, as the case may be, of like tenor, in lieu
of such lost, stolen, destroyed or mutilated Debenture or certificates representing Conversion
Stock, as the case may be.
8.11 Application of Proceeds. Unless otherwise approved by the Purchaser, the net
proceeds received by the Company from the sale of the Debenture shall be used substantially for
working capital purposes.
8.12 Retirement Plans. The Company will cause each retirement plan of the Company in
which any employees of the Company participate that is subject to the provisions of ERISA and the
documents and instruments governing each such plan to be conformed to when necessary, and to be
administered in a manner consistent with, those provisions of ERISA which may, from time to time,
become effective and operative with respect to such plans; if requested by the Purchaser in writing
from time to time, furnish to the Purchaser a copy of any annual report with respect to each such
plan that the Company files with the Secretary of Labor pursuant to ERISA; and at such time as such
insurance shall be available at rates deemed commercially reasonable by the Company, maintain
insurance against the contingent liability against the net worth of the Company imposed in respect
of each such plan by the provisions of ERISA.
8.13 Filing of Reports. The Company will, from and after such time as it has
securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, or
has securities registered pursuant to the Securities Act, make timely filing of such reports as are
required to be filed by it with the Commission so that Rule 144 under the Securities Act or any
successor provision thereto will be available to the security holders of the Company who are
otherwise able to take advantage of the provisions of such Rule.
8.14 Patents and Other Intangible Rights. The Company will apply for, or obtain
assignments of, or licenses to use, all patents, trademarks, trademark rights, trade names, trade
name rights and copyrights which in the opinion of a prudent and experienced businessman operating
in the industry in which the Company is operating are desirable or necessary for the conduct and
protection of the business of the Company.
8.15 Exchange of Debenture. The Company will at any time, at the Company’s expense
(except for any transfer tax payable), at the written request of the Holder of the Debenture and
upon surrender of such Debenture for such purpose, issue new Debentures in exchange therefor in the
denomination of $5,000, or any multiple thereof specified by the Purchaser, in an aggregate
principal amount equal to the then unpaid principal amount of the
Debenture surrendered and substantially in the form of Exhibit A to this Agreement with
appropriate insertions and variations.
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9. Negative Covenants. The Company will be limited and restricted as follows:
9.1 Dividends on or Redemption of Capital Stock. Without the prior approval of the
Holder of the Debenture, the Company will not declare or pay any dividend or make any other
distribution on any shares of capital stock or purchase, redeem or otherwise acquire for any
consideration, or set aside a sinking fund or other fund for the redemption or repurchase of any
shares of capital stock or any warrants, rights or options to purchase shares of capital stock.
9.2 Other Restrictions. The Company will not without the prior approval of the Holder
of the Debenture:
(a) guarantee, endorse or otherwise be or
become contingently liable in connection with the obligations,
securities or dividends of any person, firm, association or
corporation, other than the Company, except that the Company
may endorse negotiable instruments for collection in the
ordinary course of business; or
(b) make loans or advances to any person
(including without limitation to any officer, director or
stockholder of the Company), firm, association or corporation
in excess of $10,000, except advances to suppliers and
employees made in the ordinary course of business; or
(c) purchase or invest in the stock or
obligations of any other person, firm or corporation; or
(d) make any material change in the nature
of its business as carried on at the date of this Agreement.
9.3 Limitations Upon Capital Reorganization of Common Stock, Consolidation, or Merger.
No merger or acquisition of the Company, or substantially all of its assets, or capital
reorganization or reclassification of the capital stock of the Company or voluntary dissolution,
liquidation, or in bankruptcy filing shall occur absent the written concurrence of the Purchaser.
10. The Debenture.
10.1 Conversion of Debenture. The Holder of the Debenture may, at its option, at any
time and from time to time, convert such Debenture, or any part thereof, into Conversion Stock upon
the terms and conditions set forth in the Form of Debenture.
10.2 Stock Fully Paid; Reservation of Shares. The Company covenants and agrees that
all Conversion Stock that may be issued upon conversion of the Debenture will, upon issuance in
accordance with the terms of the Debenture, be fully paid and nonassessable, and
shall, at the time of issuance, not be diluted, and that the issuance thereof shall not give
rise to any preemptive rights on the part of any person. The Company further covenants and agrees
that the Company will at all times have authorized and reserved a sufficient number of shares of
its Common Stock for the purpose of issue upon the conversion of the Debenture.
16
The Debenture is convertible in whole at any time prior to its payment at the option of the
Purchaser into fully paid and nonassessable shares of Common Stock of the Company constituting
thirty percent (30%) of all classes of the Common Stock of the Company on a fully diluted basis, as
further explained in paragraph 3(b) of the Debenture. In addition, as further explained in
paragraph 3(b) of the Debenture, the Debenture is convertible in part at any time prior to its
payment at the option of the Purchaser into fully paid and nonassessable shares of Common Stock of
the Company constituting a proportionate percentage of thirty percent (30%) of all classes of the
Common Stock of the Company on a fully diluted basis in the ratio that the amount of the Debenture
being converted bears to the total amount of the Debenture acquired by the Purchaser. Under no
circumstances shall paragraph 3(b) of the Debenture be read to entitle the Purchaser to shares of
Common Stock of the Company constituting less than 30% of all classes of the Common Stock of the
Company on a fully diluted basis upon conversion in full of the Debenture.
10.3 Number of Shares to be Issued Upon Conversion. The number of shares of Common
Stock issuable upon full conversion of the Debenture; will be as set forth in the Form of
Debenture, which is equal to thirty percent (30%) of all classes of the Common Stock of the Company
on a fully diluted basis. The number of shares of the Common Stock of the Company issuable upon
partial conversion shall be equivalent to the ratio that the amount of the Debenture being
converted bears to $3,000,000, said sum being the total of the $2M Debenture and the $1M Debenture
acquired by the Purchaser.
11. [Intentionally Omitted]
12. [Intentionally Omitted]
13. Default.
13.1 Events of Default. Each of the following events shall be an event of default (an
“Event of Default”) for purposes of this Agreement:
(a) if default shall be made in the
punctual payment of interest on the Debenture, and such default
shall have continued for a period of 15 days after written
notice thereof to the Company by the Holder of the Debenture;
or
(b) if default shall be made in the
punctual payment of the principal of the Debenture; or
(c) if the Company becomes insolvent or
bankrupt, or admits in writing its inability to pay its debts
as they mature, or makes an assignment for the benefit of
creditors, or ceases doing business as a going concern, or the
Company applies
for or consents to the appointment of a trustee or receiver
for the Company, or for the major part of its property; or
(d) if a trustee or receiver is appointed
for the Company or for the major part of its property and the
order of such appointment is not discharged, vacated or stayed
within 30 days after such appointment; or
17
(e) if any judgment, writ or warrant of
attachment or of any similar process in an amount in excess of
$50,000 shall be entered or filed against the Company or
against any of the property or assets of the Company and
remains unpaid, unvacated, unbonded or unstayed for a period of
120 days; or
(f) if an order for relief shall be entered
in any Federal bankruptcy proceeding in which the Company is
the debtor; or if bankruptcy, reorganization, arrangement,
insolvency, or liquidation proceedings, or other proceedings
for relief under any bankruptcy or similar law or laws for the
relief of debtors, are instituted by or against the Company
and, if instituted against the Company, are consented to or, if
contested by the Company, are not dismissed by the adverse
parties or by an order, decree or judgment within 120 days
after such institution; or
(g) if the Company shall default in any
material respect in the due and punctual performance of any
covenant or agreement in any debenture (including without
limitation the Debenture which is the subject of this
Agreement), bond, indenture, loan agreement, debenture
agreement, mortgage, security agreement or other instrument
evidencing or related to Indebtedness for Borrowed Money, and
such default shall continue for more than the period of notice
and/or grace, if any, therein specified and shall not have been
waived (any default in any material respect in the due and
punctual performance of any covenant or agreement in this
Agreement or the Debenture shall not constitute an Event of
Default unless such default continues for a period of 15 days
after written notice thereof to the Company); or
(h) if any representation or warranty made
by or on behalf of the Company in this Agreement or in any
certificate, report or other instrument delivered under or
pursuant to any term hereof or thereof shall prove to have been
untrue or incorrect in any material respect as of the date of
this Agreement or as of the Closing Date, or (ii) if any report,
certificate, financial statement or financial schedule or
other instrument prepared or purported to be prepared by the
Company or any officer of the Company furnished or delivered
under or pursuant to this Agreement after the Closing Date
shall prove to be untrue or incorrect in any material respect
as of the date it was made, furnished or delivered; or
(i) if the Company undertakes any action
designed to diminish the conversion rights of Purchaser in the
absence of advance written permission of Purchaser; or
(j) if default shall be made in the due and
punctual performance or observance of any other term contained
in this Agreement, and such default shall have continued for a
period of 15 days after written notice thereof to the Company
by the Holder of the Debenture.
13.2 Remedies Upon Events of Default. Upon the occurrence of an Event of Default as
herein defined, and so long as such Event of Default continues unremedied, then,
18
unless such Event
of Default shall have been waived by the Holder of the Debenture, then the Holder of the Debenture
shall be entitled by notice to declare the principal of and any accrued interest on the Debenture
to be immediately due and payable, and thereupon the Debenture, including both principal and
interest shall become immediately due and payable (provided, however, that when any Event of
Default described in Section 13.1(f) hereof has occurred, the Debenture shall immediately become
due and payable without presentment, demand or notice of any kind and (b) the Purchaser of the
Debenture shall be entitled to designate such number of members to the Board of Directors of the
Company as constitutes 30% of the total number of members of the Board of Directors as provided
herein.
13.3 Designation of Directors. In the event the Purchaser of the Debenture is
entitled to designate members constituting 30% of the total number of members of the Board of
Directors of the Company pursuant to Section 13.2 hereof, the Company shall, immediately upon
receiving written notice from the Holder of the Debenture, call a special stockholders’ meeting to
be held as soon as possible, but in any event within fifteen days of the date of the notice of such
meeting. At such special stockholders’ meeting, 30% of the directors of the Company shall be
elected from designees nominated by the Holder of the Debenture. Any right of the Holder of the
Debenture to continue to designate 30% of the Board of Directors of the Company shall expire, and a
stockholders’ meeting to elect new directors shall be called, six months after the later of (a) the
curing of the Event Default upon which the right was exercised, or (b) the curing of any Event of
Default occurring after the Event of Default upon which such right was exercised.
13.4 Notice of Defaults. When, to its knowledge, any Event of Default has occurred or
exists, the Company agrees to give written notice within three business days of such Event of
Default to the Holder of the Debenture.
13.5 Suits for Enforcement. In case any one or more Events of Default shall have
occurred and be continuing, unless such Events of Default shall have been waived in the manner
provided in Section 13.2 hereof, the Holder of the Debenture may proceed to protect and enforce its
rights under this Section 13 by suit in equity or action at law. It is agreed that in the event of
such action the Holder of the Debenture shall be entitled to receive all reasonable fees, costs and
expenses incurred, including without limitation such reasonable fees and expenses of attorneys
(whether or not litigation is commenced) and reasonable fees, costs and expenses of appeals.
13.6 Remedies Cumulative. No right, power or remedy conferred upon the Holder of the
Debenture shall be exclusive, and each such right, power or remedy shall be cumulative and in
addition to every other right, power or remedy, whether conferred hereby or by any such security or
now or hereafter available at law or in equity or by statute or otherwise.
13.7 Remedies not Waived. No course of dealing between the Company and the Holder of
the Debenture, and no delay in exercising any right, power or remedy conferred hereby or by any
such security or now or hereafter existing at law or in equity or by statute or otherwise, shall
operate as a waiver of or otherwise prejudice any such right, power or remedy; provided, however,
that this Section 13.7 shall not be construed or applied so as to negate the provisions and intent
of any statute which is otherwise applicable.
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14. Definitions. Unless the context otherwise requires, the terms defined in this
Section 14 shall have the meanings herein specified for all purposes of this Agreement, applicable
to both the singular and plural forms of any of the terms herein defined. All accounting terms
defined below shall, except as otherwise expressly provided, be determined by reference to the
Company’s books of account and in conformity with generally accepted accounting principles as
applied to such books of account in the opinion of the independent Certified Public Accountants
selected by the Board of Directors of the Company as required under the provisions of Section 8.3
hereof.
14.1 “Common Stock” shall mean the Company’s authorized common shares, any additional common
shares which may be authorized in the future by the Company, and any stock into which such common
shares may hereafter be changed, and shall also include stock of the Company of any other class
which is not preferred as to dividends or as to distributions of assets on liquidation, dissolution
or winding up of the Company over any other class of stock of the Company, and which is not subject
to redemption.
14.2 “Convertible Securities” shall mean evidences of indebtedness, shares of stock or other
securities which are at any time directly or indirectly, convertible into or exchangeable for
shares of Common Stock.
14.3 “Indebtedness for Borrowed Money” shall include only indebtedness of the Company incurred
as the result of a direct borrowing of money and shall not include any other indebtedness
including, but not limited to, indebtedness incurred with respect to trade accounts.
14.4 “Permitted Liens” shall mean (a) liens for taxes and assessments or governmental charges
or levies not at the time due or in respect of which the validity thereof shall currently be
contested in good faith by appropriate proceedings, (b) liens existing as of the date of this
Agreement, (c) liens arising in connection with purchase money security interests; and (d) liens in
respect of pledges or deposits under worker’s compensation laws or similar legislation, carriers’,
warehousemen’s, mechanics’, laborers’ and materialmen’s, landlord’s and statutory and similar
liens, if the obligations secured by such liens are not then delinquent or are being contested in
good faith, and liens and encumbrances incidental to the conduct of the business of the Company
which were not incurred in connection with the borrowing of money or the obtaining of advances or
credits and which do not in the aggregate materially detract from the value of its property or
materially impair the use thereof in the operation of its business.
14.5 “Senior Indebtedness” shall mean (a) the principal of all Indebtedness for Borrowed Money
of the Company to banks, insurance companies or other financial institutions, (b) the present value
of net minimum lease payments of all leases under which the Company is the lessee and which are
required to be capitalized under generally accepted accounting principles, (c) the principal of all
indebtedness of the Company under installment purchase agreements, and (d) the principal of all
indebtedness of the Company to the owners of any real property leased by the Company for leasehold
improvements financed by such owners.
15. Consents; Waivers and Amendments. Except as otherwise specifically provided
herein, in each case in which approval of the Holder of the Debenture is required by the terms of
20
this Agreement, such requirement shall be satisfied by the written consent of the Holder of the
Debenture. With the written consent of the Holder of the Debenture, the obligations of the Company
under this Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), and with the same approval the Company may enter into a
supplementary agreement for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of any supplemental agreement or modifying
in any manner the rights and obligations of the Holder of the Debenture. The Holder of Debenture
shall respond promptly to any request by the Company with respect to a proposed amendment, consent
or waiver and will not unreasonably withhold its approval or consent thereto.
16. Changes, Waivers, etc. Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, but only by a statement in writing signed by the
party against which enforcement of the change, waiver, discharge or termination is sought, except
to the extent provided in Section 15 hereof.
17. Payment of Fees and Expenses of Purchaser. The Company will pay all fees and
expenses incurred by the Purchaser with respect to the enforcement of the rights granted under this
Agreement or the agreements contemplated hereby.
18. Notices. All notices, requests, consents and other communications required or
permitted hereunder shall be in writing and shall be delivered, or mailed first-class postage
prepaid, registered or certified mail,
| (a) | if to the Holder of the Debenture: |
| To: | ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Chairman | ||||
| Spirit Lake Sioux Tribe | ||||
| Spirit Lake Tribal Council ▇▇▇▇▇▇ | ||||
| ▇.▇. ▇▇▇ ▇▇▇ | ||||
| ▇▇▇▇ ▇▇▇▇▇▇ | ||||
| ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||||
| With Copy To: | ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq. | |||
| ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & Associates | ||||
| ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||||
| ▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇ |
| (b) | if to the Company: |
| To: | ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ | |||
| President & CEO | ||||
| Wireless Ronin® Technologies, Inc. | ||||
| ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ | ||||
| ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ |
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| With Copy To: | ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Esq. | |||
| Vice President Corporate Counsel | ||||
| Wireless Ronin® Technologies, Inc. | ||||
| ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ | ||||
| ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ |
and such notices and other communications shall for all purposes of this Agreement be treated as
being effective or having been given if delivered personally, or, if sent by mail, when received.
19. Survival of Representations and Warranties, etc. All representations and
warranties contained herein shall survive the execution and delivery of this Agreement, any
investigation at any time made by the Purchaser or on its behalf, and the sale and purchase of the
Debenture and payment therefor and shall terminate upon payment or conversion in full of all
amounts due under the Debenture. All statements contained in any certificate, instrument or other
writing delivered by or on behalf of the Company pursuant hereto or in connection with or
contemplation of the transactions herein contemplated (other than legal opinions) shall constitute
representations and warranties by the Company hereunder.
20. Parties in Interest. All the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto, whether so expressed or not, and, in particular, shall inure to the
benefit of and be enforceable by the Holder of the Debenture.
21. Headings. The headings of the Sections and paragraphs of this Agreement have been
inserted for convenience of reference only and do not constitute a part of this Agreement.
22. Choice of Law. It is the intention of the parties that the laws of Minnesota
shall govern the validity of this Agreement, the construction of its terms and the interpretation
of the rights and duties of the parties.
23. Counterparts. This Agreement may be executed concurrently in two or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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If you are in agreement with the foregoing, please sign the form of acceptance on the enclosed
counterpart of this letter and return the same to the undersigned, whereupon this letter shall
become a binding contract between you and the undersigned.
| Very truly yours, | ||||||||
| WIRELESS RONIN® TECHNOLOGIES, INC. | ||||||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
|
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| President & CEO | ||||||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||||||
| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||||||
| Executive Vice President & CFO | ||||||||
| The foregoing Agreement is hereby accepted as | ||||||||
| of the date first above written. | ||||||||
| SPIRIT LAKE SIOUX TRIBE | ||||||||
By:
|
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇ | |||||||
| Print Name: ▇▇▇▇ ▇▇▇▇▇▇▇ | ||||||||
| Its: Tribal Chairman | ||||||||
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