EXHIBIT 10.1
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SECURITIES PURCHASE AGREEMENT
By and Among:
Diamond I, Inc., a Delaware corporation, Diamond I Technologies,
Inc., a Nevada corporation, NewMarket Technology, Inc., a Nevada
corporation, and NewMarket Technology Acquisition Subsidiary, a
Nevada corporation
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TABLE OF CONTENTS
Section Page
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I. DEFINITIONS 1
II. DISCLOSURES 2
III. PURCHASE AND SALE OF SECURITIES 2
IV. THE CLOSING 3
V. FURTHER AGREEMENTS 3
VI. REPRESENTATIONS OF DIAMOND 4
VII. REPRESENTATIONS OF DIAMOND TECH 7
VIII. REPRESENTATIONS OF NEW MARKET 9
IX. REPRESENTATIONS OF ACQUISITION SUB 12
X. INDEMNIFICATION 14
XI. CONDITIONS PRECEDENT TO OBLIGATIONS 15
XII. MISCELLANEOUS 17
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement is made as of the 8th day of March,
2007,
BY AND AMONG:
DIAMOND I, INC., a Delaware corporation with an office located at 0000
Xxxxxx Xxxx, Xxxxx 000, Xxxxx Xxxxx, Xxxxxxxxx 00000 ("Diamond");
DIAMOND I TECHNOLOGIES, INC., a Nevada corporation with an office
located at 0000 Xxxxxx Xxxx, Xxxxx 000, Xxxxx Xxxxx, Xxxxxxxxx 00000
("Diamond Tech");
NEWMARKET TECHNOLOGY, INC., a Nevada corporation with an office located
at 00000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx Xxxxx 00000 ("NewMarket");
and
NEWMARKET TECHNOLOGY ACQUISITION SUBSIDIARY, a corporation to be formed
under the laws of the State of Nevada and wholly owned by NewMarket
Technology, Inc., and to have an office located at 00000 Xxxxxxxx
Xxxxx, Xxxxx 000, Xxxxxx Xxxxx 00000 ("Acquisition Sub").
WHEREAS:
A. NewMarket owns 100% of the presently issued and outstanding
equity of Acquisition Sub; and
B. NewMarket, through Acquisition Sub, desires to acquire voting
control of Diamond; and
C. The respective Boards of Directors of Diamond, Diamond Tech,
NewMarket and Acquisition Sub deem it advisable and in the
best interests of each such corporation that the transactions
contemplated herein be consummated pursuant to the terms and
conditions set forth in this Agreement;
WITNESSETH, THEREFORE, in consideration of the premises and the mutual
covenants, agreements, representations and warranties contained herein, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:
I. DEFINITIONS
Whenever used in this Agreement, the following terms shall have the
meanings set forth below, including the exhibit hereto or amendments hereof.
(a) "Acquisition Sub" shall mean NewMarket Technology Acquisition
Subsidiary, a Nevada corporation.
(b) "Agreement" shall mean this Securities Purchase Agreement and all
scheduled and exhibits hereto or amendments hereof.
(c) "Closing" shall mean the completion, on the Closing Date, of the
transactions contemplated by this Agreement.
(d) "Closing Date" shall mean the day on which all conditions precedent to
the completion of the transaction as contemplated hereby have been satisfied or
waived, but, in any event, no later than June 7, 2007.
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SECURITIES PURCHASE AGREEMENT | PAGE 1
(e) "Diamond" shall mean Diamond I, Inc., a Delaware corporation.
(f) "Diamond Tech" shall mean Diamond I Technologies, Inc., a Nevada
corporation.
(g) "Knowledge of Diamond" or matters "known to Diamond" shall mean matters
actually known to the Board of Directors or officers of Diamond, or which
reasonably should be or should have been known by them upon reasonable
investigation.
(h) "Knowledge of Diamond Tech" or matters "known to Diamond Tech" shall
mean matters actually known to the Board of Directors or officers of Diamond
Tech, or which reasonably should be or should have been known by them upon
reasonable investigation.
(i) "Knowledge of Acquisition Sub" or matters "known to Acquisition Sub"
shall mean matters actually known to the Board of Directors or officers of
Acquisition Sub, or which reasonably should be or should have been known by them
upon reasonable investigation.
(j) "Knowledge of NewMarket" or matters "known to NewMarket" shall mean
matters actually known to the Board of Directors or officers of NewMarket, or
which reasonably should be or should have been known by them upon reasonable
investigation.
(k) "NewMarket" shall mean NewMarket Technology, Inc., a Nevada
corporation.
Any term used herein to which a special meaning has been ascribed shall be
construed in accordance with either (1) the context in which such term is used,
or (2) the definition provided for such term in the place in this Agreement at
which such term is first used.
II. DISCLOSURES
NewMarket and Acquisition Sub, and each of them, hereby acknowledge that
they have (a) received and reviewed copies of Diamond's periodic reports filed
with the Securities and Exchange Commission and (b) had the opportunity to ask
questions of, and receive answers from, the principals of Diamond and Diamond
Tech regarding their respective business plans and otherwise investigate the
matters contained therein. Specifically, NewMarket and Acquisition Sub, and each
of them, understand that Diamond and Diamond Tech are in the development-stage,
that they do not possess any working capital and that they are dependent upon
the consummation this Agreement in order to pursue their respective business
plans. Specifically, NewMarket and Acquisition Sub, and each of them,
acknowledge that neither Diamond nor Diamond Tech may ever earn a profit.
Diamond and Diamond Tech, and each of them, hereby acknowledge that they
have (a) received and reviewed copies of NewMarket's periodic reports filed with
the Securities and Exchange Commission and (b) had the opportunity to ask
questions of, and receive answers from, the principals of NewMarket and
Acquisition Sub regarding their business plans and otherwise investigate the
matters contained therein.
III. PURCHASE AND SALE OF SECURITIES
Diamond hereby sells to Acquisition Sub and Acquisition Sub hereby buys
from Diamond 2,000,000 shares of the Series B Preferred Stock of Diamond, which
shares shall have the rights and preferences set forth in Exhibit III attached
hereto and made a part hereof, in consideration of the following:
(a) the establishment of a line-of-credit (the "Diamond LOC") in favor of
Diamond in the principal amount of $250,000.00; and
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SECURITIES PURCHASE AGREEMENT | PAGE 2
(b) a promissory note, in the form of Exhibit III(b) attached hereto, in
the principal amount of $2,000,000.00 (the "Dividend Note"), payable to Diamond.
Acquisition Sub shall deliver the consideration set forth above pursuant to
the terms hereof.
Diamond shall cause the 2,000,000 shares of its Series B Preferred Stock
purchased and sold hereunder to be issued as provided hereunder and delivered at
the Closing hereunder.
IV. THE CLOSING
The Closing of the transactions contemplated by this Agreement shall take
place (a) at the offices of NewMarket at 2:00 p.m., local time, on the earlier
of (i) June 7, 2007, or (ii) the third business day immediately following the
date on which the last of the conditions set forth herein has been fulfilled or
waived, or (b) at such other time and place and on such other date as the
parties shall agree (the Closing Date).
V. FURTHER AGREEMENTS
(a) Beginning one year from the Closing Date, not less than bi-annually
following the Closing hereunder, Diamond shall distribute, as a dividend to the
shareholders of record of its common stock as of the Closing Date, all cash
received by it pursuant to the Dividend Note, until such time as the Dividend
Note shall have been paid in full.
(b) Upon the mutual execution of this Agreement, NewMarket and/or
Acquisition Sub shall deliver to Diamond $25,200.00 in cash, which amount shall
be shall constitute the first advance on the Diamond LOC. It is further agreed
by the parties that such funds shall be applied to the payment of accounting and
legal fees associated with the preparation and filing of Diamond's Annual Report
on Form 10-KSB for the year ended December 31, 2006.
(c) Upon the mutual execution of this Agreement, and every 30 days
thereafter and until August 2008, NewMarket and/or Acquisition Sub shall,
pursuant to the Diamond LOC, deliver to Diamond the sum of $5,200.00 in cash. It
is further agreed by the parties that such funds shall be applied to the payment
of employee and office-related expenses of Diamond.
(d) Prior to the Closing, Diamond shall have assigned to Diamond Tech all
gaming-related assets, including goodwill, and liabilities associated therewith.
(e) Within one year of the Closing Date, NewMarket, Acquisition Sub and
Diamond Tech shall cause 100% of the then-outstanding shares of common stock of
Diamond Tech to be distributed to the shareholders of record of Diamond common
stock, as a property dividend, as of the Closing Date, pursuant to an effective
registration statement on file with the Securities Exchange Commission; it being
expressly agreed that there shall be only common stock of Diamond Tech
outstanding. NewMarket, Acquisition Sub and Diamond Tech agree that they shall
use commercially reasonable efforts to complete the distribution of the Diamond
Tech common stock prior to such one-year anniversary.
(f) Prior to or at the Closing, NewMarket shall have executed an employment
agreement with Xxxxx Xxxxxx (the "DL Employment Agreement"), the terms and
conditions of which shall be negotiated in good faith by Xx. Xxxxxx and
NewMarket.
(g) Prior to the Closing, the parties shall have negotiated in good faith a
$1,000,000 investment commitment on behalf of and for the benefit of Diamond,
which investment funds are to be applied to the then-business operations of
Diamond.
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SECURITIES PURCHASE AGREEMENT | PAGE 3
(h) Prior to the Closing, the parties shall have negotiated in good faith a
$750,000 investment commitment on behalf of and for the benefit of Diamond Tech,
which investment funds are to be applied to the then-business operations of
Diamond.
(i) From the date hereof to the Closing Date, Diamond and Diamond Tech, and
each of them, shall, and shall cause their respective affiliates, officers,
directors, employees, auditors and agents to afford the officers, employees and
agents of NewMarket and Acquisition Sub complete access at all reasonable times
to its officers, employees, agents, properties, offices, plants and other
facilities and to all books and records, and shall furnish NewMarket and
Acquisition Sub with all financial, operating and other data and information as
NewMarket and Acquisition Sub, through their respective officers, employees or
agents, may reasonably request.
(j) From the date hereof to the Closing Date, NewMarket and Acquisition
Sub, and each of them, shall, and shall cause their respective affiliates,
officers, directors, employees, auditors and agents to afford the officers,
employees and agents of Diamond and Diamond Tech complete access at all
reasonable times to its officers, employees, agents, properties, offices, plants
and other facilities and to all books and records, and shall furnish Diamond and
Diamond Tech with all financial, operating and other data and information as
Diamond and Diamond Tech, through their respective officers, employees or
agents, may reasonably request.
(k) In the event of the termination of this Agreement, NewMarket and
Acquisition Sub shall, and shall cause, their respective affiliates, officers,
directors, employees and agents to (i) return promptly every document furnished
to them by Diamond and Diamond Tech in connection with the transactions
contemplated hereby and any copies thereof, and (ii) shall cause others to whom
such documents may have been furnished promptly to return such documents and any
copies thereof any of them may have made. In the event of the termination of
this Agreement, Diamond and Diamond Tech shall, and shall cause, their
respective affiliates, officers, directors, employees and agents to (x) return
promptly every document furnished to them by NewMarket and Acquisition Sub in
connection with the transactions contemplated hereby and any copies thereof, and
(y) shall cause others to whom such documents may have been furnished promptly
to return such documents and any copies thereof any of them may have made.
(l) No investigation pursuant to this Agreement shall affect any
representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto.
(m) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use its best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement.
(n) No party shall issue a press release or otherwise make any public
statements with respect to the transactions contemplated herein, without the
prior consent of the other parties; provided, however, that NewM arket and
Diamond may, without the prior consent of the other, issue a press release or
otherwise make public statements with respect to the transactions contemplated
herein, should such press release or public statements be deemed, in good faith,
necessary by either of such parties to assure its compliance with applicable
securities laws.
VI. REPRESENTATIONS OF DIAMOND
Diamond hereby represents and warrants to NewMarket and Acquisition Sub
that:
(a) Organization, Qualification and Subsidiaries. Diamond is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite power and authority and is in possession
of all franchises, grants, authorizations, licenses, permits, easements,
consents, certificates, approvals and orders to own, operate or lease the
properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted, and is duly qualified as a foreign entity
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned, operated or leased or the nature of its
activities makes such
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SECURITIES PURCHASE AGREEMENT | PAGE 4
qualification necessary. Diamond has not received any notice of proceedings
relating to the revocation or modification of any such franchises, grants,
authorizations, licenses, permits, easements, consents, certificates, approvals
or orders. Diamond has three subsidiary corporations: (i) Diamond I
Technologies, Inc., a Nevada corporation; (ii) Touchdev Limited, a U.K.
corporation; and (iii) AirRover Networks, Inc., a Maryland corporation.
(b) Certificate of Incorportion and Bylaws. Diamond shall furnish, as
Schedule VI(b) attached hereto and made a part hereof, to NewMarket and
Acquisition Sub a complete and correct copy of its Certificate of Incorporation
and Bylaws, each as amended to date. Such Certificate of Incorporation and
Bylaws are in full force and effect.
(c) Capitalization. The authorized capital stock of Diamond consists of
700,000,000 shares of common stock, $.001 par value per share, and 50,000,000
shares of preferred stock, $.001 par value per share. As of the date hereof,
approximately 305,000,000 shares of common stock are issued and outstanding, all
of which are validly issued, fully paid and non-assessable. As of the date
hereof, 500,000 shares of Diamond's Series A preferred stock are issued and
outstanding. No shares of Diamond's common stock or preferred stock are held in
the treasury of Diamond or by the subsidiary of Diamond. Each of the outstanding
shares of capital stock of Diamond's subsidiaries is duly authorized, validly
issued, fully paid and non-assessable and such shares owned by Diamond are owned
free and clear of all security interests, liens, claims, pledges, agreements,
limitations on Diamond's voting rights, charges or other encumbrances of any
nature whatsoever.
(d) Options, etc. Except as set forth in Schedule VI(d) attached hereto and
made a part hereof, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of Diamond. There are no outstanding contractual obligations of
Diamond to repurchase, redeem or otherwise acquire any shares of the capital
stock of Diamond.
(e) Rights and Preferences of Series B Preferred Stock. The shares of
Series B Preferred Stock of Diamond to be issued and delivered hereunder shall
have the rights and preferences set forth in Exhibit III attached hereto and
made a part hereof.
(f) Issuance of the Series B Preferred Stock. The shares of Series B
Preferred Stock of Diamond, when issued and delivered in accordance with this
Agreement, will be duly and validly issued, fully paid and non-assessable, and
will be free and clear of any liens or encumbrances and, to the knowledge of
Diamond, will be issued in compliance with applicable state and federal laws.
(g) No Conflict; Required Filings and Consents.
(i) The execution and delivery of this Agreement by Diamond do not,
and the performance of this Agreement by Diamond shall not, (A) conflict with or
violate the Certificate of Incorporation or Bylaws of Diamond, (B) conflict with
or violate any law, rule, regulation, order, judgment or decree applicable to
Diamond or by which any of its properties are bound or affected, or (C) result
in any breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the respective properties or assets
of Diamond pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Diamond is a party or by which Diamond or its properties are bound or
affected.
(ii) The execution and delivery of this Agreement by Diamond does not,
and the performance of this Agreement shall not, require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, domestic or foreign.
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SECURITIES PURCHASE AGREEMENT | PAGE 5
(h) Compliance. Diamond is not in conflict with, or in default or violation
of, (i) its Certificate of Incorporation or Bylaws, (ii) any law, rule,
regulation, order, judgment or decree applicable to Diamond or by which its
properties are bound or affected, including, without limitation, health and
safety, environmental and civil rights laws and regulations and zoning
ordinances and building codes, or (iii) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise, easement, consent, order
or other instrument or obligation to which Diamond is a party or by which
Diamond or its properties are bound or affected.
(i) Absence of Certain Changes or Events. Since September 30, 2006, except
as contemplated by this Agreement, Diamond has conducted its business only in
the ordinary course and in a manner consistent with past practice and, since
such date, there has not been any adverse change in the business or prospects of
Diamond or any declaration, setting aside or payment of any dividends or
distributions in respect of ownership of the common stock of Diamond or any
redemption, purchase or other acquisition of any of the capital stock of
Diamond.
(j) Absence of Litigation. Except as disclosed in Schedule VI(j) attached
hereto and made a part hereof, there are no claims, actions, proceedings or
investigations pending or threatened against Diamond, or any properties or
rights of Diamond, before any court, arbitrator, or administrative, governmental
or regulatory authority or body. As of the date hereof, neither Diamond nor its
properties is subject to any order, writ, judgment, injunction, decree,
determination or award.
(k) Labor Matters. Except as set forth in the Schedule VI(k) attached
hereto and made a part hereof, (a) there are no controversies pending or
threatened, between Diamond and any of its employees; and (b) Diamond is not a
party to any collective bargaining agreement or other labor union contract.
(l) Contracts. Schedule VI(l) attached hereto and made a part hereof lists
or describes all contracts, authorizations, approvals or arrangements to which
Diamond is a party, or by which it is bound, as of the date hereof, and which
(i) obligates or may obligate Diamond to pay more than $500; or (ii) are
financing documents, loan agreements or agreements providing for the guarantee
of the obligations of any party in each case involving an obligation in excess
of $1,000.
(m) Title to Property and Leases.
(i) Each asset owned or leased by Diamond is owned or leased free and
clear of any mortgages, pledges, liens, security and installment sale
agreements, encumbrances, charges or other claims of third parties of any kind.
(ii) All leases of real property leased for the use or benefit of
Diamond to which it is a party, and all amendments and modifications thereof,
are in full force and effect and have not been modified or amended and there
exists no material default under the leases by Diamond, nor any event which,
with the giving of notice or lapse of time, or both, would constitute a material
default thereunder by Diamond.
(iii) A statement describing all assets of Diamond is included in
Schedule VI(m)(iii) attached hereto and made a part hereof.
(n) Intellectual Property. Schedule VI(n) attached hereto and made a part
hereof lists or describes every item of intellectual property of Diamond.
(o) Insurance. Schedule VI(o) attached hereto and made a part hereof
includes copies of every valid and currently effective insurance policies,
including key-man insurance policies, issued in favor of Diamond.
(p) Taxes. Diamond has not filed all federal and state tax returns and
reports.
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SECURITIES PURCHASE AGREEMENT | PAGE 6
(q) Brokers, Finders, and Agents. Diamond acknowledges that no broker,
finder or investment banker is, or will be, entitled to any brokerage, finder's
or other fee or commission in connection with the transactions contemplated by
this Agreement.
(r) Full Disclosure. No statement contained in any document, certificate or
other writing furnished or to be furnished by Diamond to NewMarket and
Acquisition Sub pursuant to the provisions of this Agreement contains or shall
contain any untrue statement of a material fact or omits or shall omit to state
any material fact necessary, in light of the circumstances under which it was or
may be made, in order to make the statements herein or therein not misleading.
(s) Corporate Authority. The execution and performance of this Agreement by
Diamond has been approved by the Board of Directors of Diamond.
(t) Representations Relating to the Promissory Notes. Diamond represents
and warrants to NewMarket and Acquisition Sub that the Promissory Notes being
acquired pursuant to this Agreement are being acquired for its own account and
for investment and not with a view to the public resale or distribution of such
securities and further acknowledges that the Promissory Notes being issued have
not been registered under the Securities Act of 1933, as amended, or any state
securities law and are "restricted securities", as that term is defined in Rule
144 promulgated by the Securities and Exchange Commission, and must be held
indefinitely, unless they are subsequently registered or an exemption from such
registration is available.
(u) Consent to Legend. Diamond consents to the placement of a legend
restricting future transfer on the Dividend Note delivered hereunder, which
legend shall be in the following, or similar, form:
"THESE SECURITIES HAVE BEEN ISSUED IN RELIANCE UPON THE EXEMPTION FROM
REGISTRATION AFFORDED BY SECTION 4(2) OF THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION, EXCEPT IN
TRANSACTIONS EXEMPT FROM SUCH REGISTRATION."
VII. REPRESENTATIONS OF DIAMOND TECH
Diamond Tech hereby represents and warrants to NewMarket and Acquisition
Sub that:
(a) Organization, Qualification and Subsidiaries. Diamond Tech is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada and has the requisite power and authority and is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders to own, operate or lease
the properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted, and is duly qualified as a foreign entity
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned, operated or leased or the nature of its
actiVIIties makes such qualification necessary. Diamond Tech has not received
any notice of proceedings relating to the revocation or modification of any such
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals or orders. Diamond Tech has no subsidiary corporation.
(b) Articles of Incorporation and Bylaws. Diamond Tech shall furnish, as
Schedule VII(b) attached hereto and made a part hereof, to NewMarket and
Acquisition Sub a complete and correct copy of its Articles of Incorporation and
Bylaws, each as amended to date. Such Articles of Incorporation and Bylaws are
in full force and effect.
(c) Capitalization. The authorized capital stock of Diamond Tech consists
of 100,000,000 shares of common stock, $.0001 par value per share. As of the
date hereof, 33,000,000 shares of common stock are issued and outstanding, all
of which are validly issued, fully paid and non-assessable. No shares of Diamond
Tech's common stock are held in the treasury of Diamond Tech.
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SECURITIES PURCHASE AGREEMENT | PAGE 7
(d) Options, etc. Except as set forth in Schedule VII(d) attached hereto
and made a part hereof, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of Diamond Tech. There are no outstanding contractual
obligations of Diamond Tech to repurchase, redeem or otherwise acquire any
shares of the capital stock of Diamond Tech.
(e) No Conflict; Required Filings and Consents.
(i) The execution and delivery of this Agreement by Diamond Tech do
not, and the performance of this Agreement by Diamond Tech shall not, (A)
conflict with or violate the Certificate of Incorporation or Bylaws of Diamond
Tech, (B) conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to Diamond Tech or by which any of its properties are bound or
affected, or (C) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the respective properties or assets of Diamond Tech pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Diamond Tech is a party or by which
Diamond Tech or its properties are bound or affected.
(ii) The execution and delivery of this Agreement by Diamond Tech does
not, and the performance of this Agreement shall not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign.
(f) Compliance. Diamond Tech is not in conflict with, or in default or
violation of, (i) its Articles of Incorporation or Bylaws, (ii) any law, rule,
regulation, order, judgment or decree applicable to Diamond Tech or by which its
properties are bound or affected, including, without limitation, health and
safety, environmental and civil rights laws and regulations and zoning
ordinances and building codes, or (iii) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise, easement, consent, order
or other instrument or obligation to which Diamond Tech is a party or by which
Diamond Tech or its properties are bound or affected.
(g) Absence of Litigation. Except as disclosed in Schedule VII(g) attached
hereto and made a part hereof, there are no claims, actions, proceedings or
investigations pending or threatened against Diamond Tech, or any properties or
rights of Diamond Tech, before any court, arbitrator, or administrative,
governmental or regulatory authority or body. As of the date hereof, neither
Diamond Tech nor its properties is subject to any order, writ, judgment,
injunction, decree, determination or award.
(h) Labor Matters. Except as set forth in the Schedule VII(h) attached
hereto and made a part hereof, (i) there are no controversies pending or
threatened, between Diamond Tech and any of its employees; and (ii) Diamond Tech
is not a party to any collective bargaining agreement or other labor union
contract.
(i) Contracts. Schedule VII(i) attached hereto and made a part hereof lists
or describes all contracts, authorizations, approvals or arrangements to which
Diamond Tech is a party, or by which it is bound, as of the date hereof, and
which (i) obligates or may obligate Diamond Tech to pay more than $500; or (ii)
are financing documents, loan agreements or agreements providing for the
guarantee of the obligations of any party in each case involving an obligation
in excess of $1,000.
(j) Title to Property and Leases.
(i) Each asset owned or leased by Diamond Tech is owned or leased free
and clear of any mortgages, pledges, liens, security and installment sale
agreements, encumbrances, charges or other claims of third parties of any kind.
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(ii) All leases of real property leased for the use or benefit of
Diamond Tech to which it is a party, and all amendments and modifications
thereof, are in full force and effect and have not been modified or amended and
there exists no material default under the leases by Diamond Tech, nor any event
which, with the giving of notice or lapse of time, or both, would constitute a
material default thereunder by Diamond Tech.
(iii) A statement describing all assets of Diamond Tech is included in
Schedule VII(j)(iii) attached hereto and made a part hereof.
(k) Intellectual Property. Schedule VII(k) attached hereto and made a part
hereof lists or describes every item of intellectual property of Diamond Tech.
(l) Insurance. Schedule VII(l) attached hereto and made a part hereof
includes copies of every valid and currently effective insurance policies,
including key-man insurance policies, issued in favor of Diamond Tech.
(m) Taxes. Diamond Tech has not filed all federal and state tax returns and
reports.
(n) Brokers, Finders, and Agents. Diamond Tech acknowledges that no broker,
finder or investment banker is, or will be, entitled to any brokerage, finder's
or other fee or commission in connection with the transactions contemplated by
this Agreement.
(o) Full Disclosure. No statement contained in any document, certificate or
other writing furnished or to be furnished by Diamond Tech to NewMarket and
Acquisition Sub pursuant to the provisions of this Agreement contains or shall
contain any untrue statement of a material fact or omits or shall omit to state
any material fact necessary, in light of the circumstances under which it was or
may be made, in order to make the statements herein or therein not misleading.
(p) Corporate Authority. The execution and performance of this Agreement by
Diamond Tech has been approved by the Board of Directors of Diamond Tech.
(q) Representations Relating to the Promissory Notes. Diamond Tech
represents and warrants to NewMarket and Acquisition Sub that the Promissory
Note being acquired pursuant to this Agreement are being acquired for its own
account and for investment and not with a view to the public resale or
distribution of such securities and further acknowledges that the Promissory
Note being issued has not been registered under the Securities Act of 1933, as
amended, or any state securities law and are "restricted securities", as that
term is defined in Rule 144 promulgated by the Securities and Exchange
Commission, and must be held indefinitely, unless they are subsequently
registered or an exemption from such registration is available.
VIII. REPRESENTATIONS OF NEWMARKET
NewMarket hereby represents and warrants to Diamond and Diamond Tech that:
(a) Organization, Qualification and Subsidiaries. NewMarket is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada and has the requisite power and authority and is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders to own, operate or lease
the properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted, and is duly qualified as a foreign entity
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned, operated or leased or the nature of its
activities makes such qualification necessary. NewMarket has not received any
notice of proceedings relating to the revocation or modification of any such
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals or orders.
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SECURITIES PURCHASE AGREEMENT | PAGE 9
(b) Articles of Incorporation and Bylaws. NewMarket shall furnish, as
Schedule VIII(b) attached hereto and made a part hereof, to NewMarket and
Acquisition Sub a complete and correct copy of its Articles of Incorporation and
Bylaws, each as amended to date. Such Articles of Incorporation and Bylaws are
in full force and effect.
(c) Capitalization. The authorized capital stock of NewMarket consists of
300,000,000 shares of common stock, $.001 par value per share, and 10,000,000
shares of preferred stock, $.001 par value per share. As of the date hereof,
183,866,820 shares of common stock are issued and outstanding, all of which are
validly issued, fully paid and non-assessable. As of the date hereof, the
following shares of NewMarket's preferred stock are issued and outstanding: 100
shares of Series A, zero shares of Series B, 925 shares of Series C, zero shares
of Series D, 267 shares of Series E, 1,800 shares of Series F, zero shares of
Series G, 1,035 shares of Series H and 758 shares of Series I. No shares of
NewMarket's common stock or preferred stock are held in the treasury of
NewMarket or by the subsidiary of NewMarket. Each of the outstanding shares of
capital stock of NewMarket's subsidiaries is duly authorized, validly issued,
fully paid and non-assessable and such shares owned by NewMarket are owned free
and clear of all security interests, liens, claims, pledges, agreements,
limitations on NewMarket's voting rights, charges or other encumbrances of any
nature whatsoever.
(d) Options, etc. Except as set forth in Schedule VIII(d) attached hereto
and made a part hereof, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of NewMarket. There are no outstanding contractual
obligations of NewMarket to repurchase, redeem or otherwise acquire any shares
of the capital stock of NewMarket.
(e) No Conflict; Required Filings and Consents.
(i) The execution and delivery of this Agreement by NewMarket do not,
and the performance of this Agreement by NewMarket shall not, (A) conflict with
or violate the Certificate of Incorporation or Bylaws of NewMarket, (B) conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to NewMarket or by which any of its properties are bound or affected, or (C)
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or encumbrance on any of the respective properties or
assets of NewMarket pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which NewMarket is a party or by which NewMarket or its properties are bound
or affected.
(ii) The execution and delivery of this Agreement by NewMarket does
not, and the performance of this Agreement shall not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign.
(f) Compliance. NewMarket is not in conflict with, or in default or
violation of, (ia) its Articles of Incorporation or Bylaws, (ii) any law, rule,
regulation, order, judgment or decree applicable to NewMarket or by which its
properties are bound or affected, including, without limitation, health and
safety, environmental and civil rights laws and regulations and zoning
ordinances and building codes, or (iii) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise, easement, consent, order
or other instrument or obligation to which NewMarket is a party or by which
NewMarket or its properties are bound or affected.
(g) Absence of Certain Changes or Events. Since September 30, 2006, except
as contemplated by this Agreement, NewMarket has conducted its business only in
the ordinary course and in a manner consistent with past practice and, since
such date, there has not been any adverse change in the business or prospects of
NewMarket or any declaration, setting aside or payment of any dividends or
distributions in respect of ownership of the common stock of NewMarket or any
redemption, purchase or other acquisition of any of the capital stock of
NewMarket.
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SECURITIES PURCHASE AGREEMENT | PAGE 10
(h) Absence of Litigation. Except as disclosed in Schedule VIII(h) attached
hereto and made a part hereof, there are no claims, actions, proceedings or
investigations pending or threatened against NewMarket, or any properties or
rights of NewMarket, before any court, arbitrator, or administrative,
governmental or regulatory authority or body. As of the date hereof, neither
NewMarket nor its properties is subject to any order, writ, judgment,
injunction, decree, determination or award.
(i) Labor Matters. Except as set forth in the Schedule VIII(i) attached
hereto and made a part hereof, (i) there are no controversies pending or
threatened, between NewMarket and any of its employees; and (ii) NewMarket is
not a party to any collective bargaining agreement or other labor union
contract.
(j) Contracts. Schedule VIII(j) attached hereto and made a part hereof
lists or describes all contracts, authorizations, approvals or arrangements to
which NewMarket is a party, or by which it is bound, as of the date hereof, and
which (i) obligates or may obligate NewMarket to pay more than $500; or (ii) are
financing documents, loan agreements or agreements providing for the guarantee
of the obligations of any party in each case involving an obligation in excess
of $1,000.
(k) Title to Property and Leases.
(i) Each asset owned or leased by NewMarket is owned or leased free
and clear of any mortgages, pledges, liens, security and installment sale
agreements, encumbrances, charges or other claims of third parties of any kind.
(ii) All leases of real property leased for the use or benefit of
NewMarket to which it is a party, and all amendments and modifications thereof,
are in full force and effect and have not been modified or amended and there
exists no material default under the leases by NewMarket, nor any event which,
with the giving of notice or lapse of time, or both, would constitute a material
default thereunder by NewMarket.
(iii) A statement describing all assets of NewMarket is included in
Schedule VIII(k)(iii) attached hereto and made a part hereof.
(l) Intellectual Property. Schedule VIII(l) attached hereto and made a part
hereof lists or describes every item of intellectual property of NewMarket.
(m) Insurance. Schedule VIII(m) attached hereto and made a part hereof
includes copies of every valid and currently effective insurance policies,
including key-man insurance policies, issued in favor of NewMarket.
(n) Taxes. NewMarket has filed all federal and state tax returns and
reports and does not owe any taxes to any taxing authority.
(o) Brokers, Finders, and Agents. NewMarket acknowledgeds that no broker,
finder or investment banker is, or will be, entitled to any brokerage, finder's
or other fee or commission in connection with the transactions contemplated by
this Agreement.
(p) Full Disclosure. No statement contained in any document, certificate or
other writing furnished or to be furnished by NewMarket to NewMarket and
Acquisition Sub pursuant to the provisions of this Agreement contains or shall
contain any untrue statement of a material fact or omits or shall omit to state
any material fact necessary, in light of the circumstances under which it was or
may be made, in order to make the statements herein or therein not misleading.
(q) Corporate Authority. The execution and performance of this Agreement by
NewMarket has been approved by the Board of Directors of NewMarket.
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SECURITIES PURCHASE AGREEMENT | PAGE 11
(r) Representations Relating to the Promissory Notes. NewMarket represents
and warrants to Diamond and Diamond Tech that the shares of Series B Preferred
Stock being acquired pursuant to this Agreement are being acquired for its own
account and for investment and not with a view to the public resale or
distribution of such securities and further acknowledges that the shares of
Series B Preferred Stock being issued have not been registered under the
Securities Act of 1933, as amended, or any state securities law and are
"restricted securities", as that term is defined in Rule 144 promulgated by the
Securities and Exchange Commission, and must be held indefinitely, unless they
are subsequently registered or an exemption from such registration is available.
(s) Consent to Legend. NewMarket consents to the placement of a legend
restricting future transfer on the shares of Series B Preferred Stock delivered
hereunder, which legend shall be in the following, or similar, form:
"THESE SECURITIES HAVE BEEN ISSUED IN RELIANCE UPON THE EXEMPTION FROM
REGISTRATION AFFORDED BY SECTION 4(2) OF THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION, EXCEPT IN
TRANSACTIONS EXEMPT FROM SUCH REGISTRATION."
IX. REPRESENTATIONS OF ACQUISITION SUB
Acquisition Sub hereby represents and warrants to Diamond and Diamond Tech
that:
(a) Organization and Qualification. Acquisition Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and has the requisite power and authority and is in possession of all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders to own, operate or lease the properties that
it purports to own, operate or lease and to carry on its business as it is now
being conducted, and is duly qualified as a foreign entity to do business, and
is in good standing, in each jurisdiction where the character of its properties
owned, operated or leased or the nature of its activities makes such
qualification necessary. Acquisition Sub has not received any notice of
proceedings relating to the revocation or modification of any such franchises,
grants, authorizations, licenses, permits, easements, consents, certificates,
approvals or orders.
(b) Articles of Incorporation and Bylaws. Acquisition Sub shall furnish, as
Schedule IX(b) attached hereto and made a part hereof, to Acquisition Sub and
Acquisition Sub a complete and correct copy of its Articles of Incorporation and
Bylaws, each as amended to date. Such Articles of Incorporation and Bylaws are
in full force and effect.
(c) Capitalization. The authorized capital stock of Acquisition Sub
consists of____________ shares of common stock, $.____ par value per share,
and_____________shares of preferred stock, $.____ par value per share. As of the
date hereof,_____________shares of common stock are issued and outstanding, all
of which are validly issued, fully paid and non-assessable. As of the date
hereof, no shares of Acquisition Sub's preferred stock are issued and
outstanding. No shares of Acquisition Sub's common stock or preferred stock are
held in the treasury of Acquisition Sub or by the subsidiary of Acquisition Sub.
Each of the outstanding shares of capital stock of Acquisition Sub's
subsidiaries is duly authorized, validly issued, fully paid and non-assessable
and such shares owned by Acquisition Sub are owned free and clear of all
security interests, liens, claims, pledges, agreements, limitations on
Acquisition Sub's voting rights, charges or other encumbrances of any nature
whatsoever.
(d) Options, etc. Except as set forth in Schedule IX(d) attached hereto and
made a part hereof, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of Acquisition Sub. There are no outstanding contractual
obligations of Acquisition Sub to repurchase, redeem or otherwise acquire any
shares of the capital stock of Acquisition Sub.
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SECURITIES PURCHASE AGREEMENT | PAGE 12
(e) No Conflict; Required Filings and Consents.
(i) The execution and delivery of this Agreement by Acquisition Sub do
not, and the performance of this Agreement by Acquisition Sub shall not, (A)
conflict with or violate the Certificate of Incorporation or Bylaws of
Acquisition Sub, (B) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Acquisition Sub or by which any of its
properties are bound or affected, or (C) result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the respective properties or assets of Acquisition Sub
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which
Acquisition Sub is a party or by which Acquisition Sub or its properties are
bound or affected.
(ii) The execution and delivery of this Agreement by Acquisition Sub
does not, and the performance of this Agreement shall not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign.
(f) Compliance. Acquisition Sub is not in conflict with, or in default or
violation of, (i) its Certificate of Incorporation or Bylaws, (ii) any law,
rule, regulation, order, judgment or decree applicable to Acquisition Sub or by
which its properties are bound or affected, including, without limitation,
health and safety, environmental and civil rights laws and regulations and
zoning ordinances and building codes, or (iii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise, easement,
consent, order or other instrument or obligation to which Acquisition Sub is a
party or by which Acquisition Sub or its properties are bound or affected.
(g) Absence of Certain Changes or Events. Since September 30, 2006, except
as contemplated by this Agreement, Acquisition Sub has conducted its business
only in the ordinary course and in a manner consistent with past practice and,
since such date, there has not been any adverse change in the business or
prospects of Acquisition Sub or any declaration, setting aside or payment of any
dividends or distributions in respect of ownership of the common stock of
Acquisition Sub or any redemption, purchase or other acquisition of any of the
capital stock of Acquisition Sub.
(h) Absence of Litigation. Except as disclosed in Schedule IX(h) attached
hereto and made a part hereof, there are no claims, actions, proceedings or
investigations pending or threatened against Acquisition Sub, or any properties
or rights of Acquisition Sub, before any court, arbitrator, or administrative,
governmental or regulatory authority or body. As of the date hereof, neither
Acquisition Sub nor its properties is subject to any order, writ, judgment,
injunction, decree, determination or award.
(i) Labor Matters. Except as set forth in the Schedule IX(i) attached
hereto and made a part hereof, (i) there are no controversies pending or
threatened, between Acquisition Sub and any of its employees; and (ii)
Acquisition Sub is not a party to any collective bargaining agreement or other
labor union contract.
(j) Contracts. Schedule IX(j) attached hereto and made a part hereof lists
or describes all contracts, authorizations, approvals or arrangements to which
Acquisition Sub is a party, or by which it is bound, as of the date hereof, and
which (i) obligates or may obligate Acquisition Sub to pay more than $500; or
(ii) are financing documents, loan agreements or agreements providing for the
guarantee of the obligations of any party in each case involving an obligation
in excess of $1,000.
(k) Title to Property and Leases.
(i) Each asset owned or leased by Acquisition Sub is owned or leased
free and clear of any mortgages, pledges, liens, security and installment sale
agreements, encumbrances, charges or other claims of third parties of any kind.
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SECURITIES PURCHASE AGREEMENT | PAGE 13
(ii) All leases of real property leased for the use or benefit of
Acquisition Sub to which it is a party, and all amendments and modifications
thereof, are in full force and effect and have not been modified or amended and
there exists no material default under the leases by Acquisition Sub, nor any
event which, with the giving of notice or lapse of time, or both, would
constitute a material default thereunder by Acquisition Sub.
(iii) A statement describing all assets of Acquisition Sub is included
in Schedule IX(k)(iii) attached hereto and made a part hereof.
(l) Intellectual Property. Schedule IX(l) attached hereto and made a part
hereof lists or describes every item of intellectual property of Acquisition
Sub.
(m) Insurance. Schedule IX(m) attached hereto and made a part hereof
includes copies of every valid and currently effective insurance policies,
including key-man insurance policies, issued in favor of Acquisition Sub.
(n) Taxes. Acquisition Sub has not filed all federal and state tax returns
and reports.
(o) Brokers, Finders, and Agents. Acquisition Sub acknowledgeds that no
broker, finder or investment banker is, or will be, entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement.
(p) Full Disclosure. No statement contained in any document, certificate or
other writing furnished or to be furnished by Acquisition Sub to Acquisition Sub
and Acquisition Sub pursuant to the provisions of this Agreement contains or
shall contain any untrue statement of a material fact or omits or shall omit to
state any material fact necessary, in light of the circumstances under which it
was or may be made, in order to make the statements herein or therein not
misleading.
(q) Corporate Authority. The execution and performance of this Agreement by
Acquisition Sub has been approved by the Board of Directors of Acquisition Sub.
(r) Representations Relating to the Promissory Notes. Acquisition Sub
represents and warrants to Diamond and Diamond Tech that the shares of Series B
Preferred Stock being acquired pursuant to this Agreement are being acquired for
its own account and for investment and not with a view to the public resale or
distribution of such securities and further acknowledges that the shares of
Series B Preferred Stock being issued have not been registered under the
Securities Act of 1933, as amended, or any state securities law and are
"restricted securities", as that term is defined in Rule 144 promulgated by the
Securities and Exchange Commission, and must be held indefinitely, unless they
are subsequently registered or an exemption from such registration is available.
(s) Consent to Legend. Acquisition Sub consents to the placement of a
legend restricting future transfer on the shares of Series B Preferred Stock
delivered hereunder, which legend shall be in the following, or similar, form:
"THESE SECURITIES HAVE BEEN ISSUED IN RELIANCE UPON THE EXEMPTION FROM
REGISTRATION AFFORDED BY SECTION 4(2) OF THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION, EXCEPT IN
TRANSACTIONS EXEMPT FROM SUCH REGISTRATION."
X. INDEMNIFICATION
(a) General Indemnification Covenants - Diamond and Diamond Tech. Diamond
and Diamond Tech, and each of them, shall indemnify, save and keep NewMarket and
Acquisition Sub and their respective affiliates, agents, attorneys, successors
and permitted assigns (collectively, the "NewMarket Indemnitees"), harmless
against and from all liability, demands, claims, actions or causes of action,
assessments, losses, fines, penalties, costs, damages and expenses,
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SECURITIES PURCHASE AGREEMENT | PAGE 14
including reasonable attorneys' fees, disbursements and expenses (collectively,
the "Damages"), sustained or incurred by any of the NewMarket Indemnitees as a
result of, arising out of or by virtue of any misrepresentation, breach of any
warranty or representation or non-fulfillment of any agreement or covenant on
the part of Diamond or Diamond Tech, whether contained in this Agreement or any
exhibit or schedule hereto or any written statement or certificate furnished or
to be furnished to NewMarket and Acquisition Sub pursuant hereto or in any
closing document delivered by Diamond or Diamond Tech to NewMarket and
Acquisition Sub in connection herewith.
(b) General Indemnification Covenants - NewMarket and Acquisition Sub.
NewMarket and Acquisition Sub, and each of them, shall indemnify, save and keep
Diamond and Diamond Tech and their respective affiliates, agents, attorneys,
successors and permitted assigns (collectively, the "Diamond Indemnitees"),
harmless against and from all liability, demands, claims, actions or causes of
action, assessments, losses, fines, penalties, costs, damages and expenses,
including reasonable attorneys' fees, disbursements and expenses (collectively,
the "Damages"), sustained or incurred by any of the Diamond Indemnitees as a
result of, arising out of or by virtue of any misrepresentation, breach of any
warranty or representation or non-fulfillment of any agreement or covenant on
the part of NewMarket or Acquisition Tech, whether contained in this Agreement
or any exhibit or schedule hereto or any written statement or certificate
furnished or to be furnished to Diamond and Diamond Tech pursuant hereto or in
any closing document delivered by NewMarket or Acquisition Sub to Diamond and
Diamond Tech in connection herewith.
XI. CONDITIONS PRECEDENT TO OBLIGATIONS
(a) Conditions to Obligation of Each Party to Effect the Closing. The
respective obligations of each party to effect the Closing shall be subject to
the fulfillment of all of the following conditions precedent at or prior to the
Closing:
(i) Shareholder Approval. This Agreement shall have been approved and
adopted by holders of a majority of the outstanding common stock of Diamond.
(ii) No Order. No United States or state governmental authority or
other agency or commission or United States or state court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and has the effect of making the
transactions contemplated herein illegal or otherwise prohibiting consummation
of the transactions contemplated by this Agreement.
(iii) No Challenge. There shall not be pending or threatened any
action, proceeding or investigation before any court or administrative agency by
any government agency or any other person challenging, or seeking material
damages in connection with the transactions contemplated herein or otherwise
materially adversely affecting the business, assets, prospects, financial
condition or results of operations of Diamond or Diamond Tech.
(b) Additional Conditions to Obligations of Diamond and Diamond Tech. The
obligations of Diamond and Diamond Tech to effect the Closing are also subject
to the fulfillment of all of the following conditions precedent at or prior to
the Closing:
(i) Representations and Warranties. The representations and warranties
of NewMarket and Acquisition Sub, and each of them, contained in this Agreement
shall be true and correct in all material respects on and as of the Closing,
except for changes contemplated by this Agreement and except for those
representations and warranties which address matters only as of a particular
date (which shall remain true and correct as of such date), with the same force
and effect as if made on and as of the Closing, and Diamond and Diamond Tech
shall have received a Certificate of President of each of NewMarket and
Acquisition Sub which is to that effect, which certificates shall be in the
forms of Exhibit XI(b)(i)-1 and Exhibit XI(b)(i)-2, respectively, attached
hereto.
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SECURITIES PURCHASE AGREEMENT | PAGE 15
(ii) Agreements and Covenants. NewMarket and Acquisition Sub, and each
of them, shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or complied
with by them on or prior to the Closing Date, and Diamond and Diamond Tech shall
have received a Certificate of President of each of NewMarket and Acquisition
Sub which is to that effect, which certificates shall be in the forms of Exhibit
XI(b)(ii)-1 and Exhibit XI(b)(ii)-2, respectively, attached hereto.
(iii) Consents Obtained. All consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made, by NewMarket and Acquisition Sub for the authorization, execution and
delivery of this Agreement and the consummation by it of the transactions
contemplated hereby shall have been obtained and made by NewMarket and
Acquisition Sub, and each of them.
(iv) DL Employment Agreement. NewMarket and Acquisition Sub shall have
executed and delivered the DL Employment Agreement.
(v) No Material Adverse Change. There shall have been no material
adverse change in the condition, financial or otherwise, of NewMarket and
Acquisition Sub.
(c) Additional Conditions to Obligations of NewMarket and Acquisition Sub.
The obligations of NewMarket and Acquisition Sub to effect the Closing are also
subject to the fulfillment of all of the following conditions precedent at or
prior to the Closing:
(i) Representations and Warranties. The representations and warranties
of Diamond and Diamond Tech, and each of them, contained in this Agreement shall
be true and correct in all material respects on and as of the Closing, except
for changes contemplated by this Agreement and except for those representations
and warranties which address matters only as of a particular date (which shall
remain true and correct as of such date), with the same force and effect as if
made on and as of the Closing, and NewMarket and Acquisition Sub shall have
received a Certificate of President of each of Diamond and Diamond Tech which is
to that effect, which certificates shall be in the forms of Exhibit XI(c)(i)-1
and Exhibit XI(c)(i)-2, respectively, attached hereto.
(ii) Agreements and Covenants. Diamond and Diamond Tech, and each of
them, shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or complied
with by them on or prior to the Closing Date, and NewMarket and Acquisition Sub
shall have received a Certificate of President of each of Diamond and Diamond
Tech which is to that effect, which certificates shall be in the forms of
Exhibit XI(c)(ii)-1 and Exhibit XI(c)(ii)-2, respectively, attached hereto.
(iii) Consents Obtained. All consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made, by Diamond and Diamond Tech for the authorization, execution and delivery
of this Agreement and the consummation by it of the transactions contemplated
hereby shall have been obtained and made by Diamond and Diamond Tech, and each
of them.
(iv) DL Employment Agreement. Xxxxx Xxxxxx shall have executed and
delivered the DL Employment Agreement.
(v) Investment Commitment - Diamond. The parties shall have negotiated
in good faith a $1,000,000 investment commitment on behalf of and for the
benefit of Diamond.
(vi) Investment Commitment - Diamond Tech. The parties shall have
negotiated in good faith a $750,000 investment commitment on behalf of and for
the benefit of Diamond Tech.
(vii) No Material Adverse Change. There shall have been no material
adverse change in the condition, financial or otherwise, of Diamond and Diamond
Tech.
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SECURITIES PURCHASE AGREEMENT | PAGE 16
XII. MISCELLANEOUS
(a) Captions and Section Numbers. The headings and section references in
this Agreement are for convenience of reference only and do not form a part of
this Agreement and are not intended to interpret, define or limit the scope,
extent or intent of this Agreement or any provision thereof.
(b) Section References and Schedules. Any reference to a particular
"Article", "section", "paragraph", "clause" or other subdivision is to the
particular Article, section, clause or other subdivision of this Agreement and
any reference to a Schedule by letter will mean the appropriate Schedule
attached to this Agreement and by such reference the appropriate Schedule is
incorporated into and made part of this Agreement. The Schedules to this
Agreement are as follows:
(c) Severability of Clauses. If any part of this Agreement is declared or
held to be invalid for any reason, such invalidity will not affect the validity
of the remainder which will continue in full force and effect and be construed
as if this Agreement had been executed without the invalid portion, and it is
hereby declared the intention of the parties that this Agreement would have been
executed without reference to any portion which may, for any reason, be
hereafter declared or held to be invalid.
(d) Arbitration. The parties agree that any dispute arising out of this
Agreement shall be submitted to arbitration with the American Arbitration
Association at its Dallas, Texas, office. Such arbitration shall be governed by
the Rules of Commercial Arbitration of the American Arbitration Association then
in effect. Any award by the arbitrator or arbitrators shall be enforceable by
any court of competent jurisdiction.
(e) Notice. Any notice required or permitted to be given by any party will
be deemed to be given when in writing and delivered to the address for notice of
the intended recipient by personal delivery, prepaid single certified or
registered mail, or telecopier. Any notice delivered by mail shall be deemed to
have been received on the fourth business day after and excluding the date of
mailing, except in the event of a disruption in regular postal service in which
event such notice shall be deemed to be delivered on the actual date of receipt.
Any notice delivered personally or by telecopier shall be deemed to have been
received on the actual date of delivery.
(f) Addresses for Service. The address for service of notice of each of the
parties hereto is as follows:
(i) Diamond and Diamond Tech:
0000 Xxxxxx Xxxx, Xxxxx 000,
Xxxxx Xxxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Telephone:
---------------------
Facsimile:
---------------------
(ii) NewMarket and Acquisition Sub:
00000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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SECURITIES PURCHASE AGREEMENT | PAGE 17
With a copy to:
Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Faxsimile: (000) 000-0000
(g) Change of Address. Any party may, by notice to the other parties change
its address for notice to some other address in North America and will so change
its address for notice whenever the existing address or notice ceases to be
adequate for delivery by hand. A post office box may not be used as an address
for service.
(h) Further Assurances. Each of the parties will execute and deliver such
further and other documents and do and perform such further and other acts as
any other party may reasonably require to carry out and give effect to the terms
and intention of this Agreement.
(i) Time of the Essence. Time is expressly declared to be the essence of
this Agreement.
(j) Entire Agreement. The provisions contained herein constitute the entire
agreement among and between the parties respecting the subject matter hereof and
supersede all previous communications, representations and agreements, whether
verbal or written, among and between the parties with respect to the subject
matter hereof.
(k) Enurement. This Agreement will enure to the benefit of and be binding
upon the parties hereto and their respective heirs, executors, administrators,
successors and permitted assigns.
(l) Assignment. This Agreement is not assignable without the prior written
consent of the parties hereto.
(m) Counterparts. This Agreement may be executed in counterparts, each of
which when executed by any party will be deemed to be an original and all of
which counterparts will together constitute one and the same Agreement. Delivery
of executed copies of this Agreement by telecopier will constitute proper
delivery, provided that originally executed counterparts are delivered to the
parties within a reasonable time thereafter.
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SECURITIES PURCHASE AGREEMENT | PAGE 18
(n) Applicable Law. This Agreement shall be enforced, governed by and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such state, without regard
to the principles of conflict of laws
IN WITNESS WHEREOF, the parties have signed this Agreement as of the day
and year first above written.
DIAMOND I, INC.
By:
----------------------
Name:
--------------------
Title:
-------------------
DIAMOND I TECHNOLOGIES, INC.
By:
----------------------
Name:
--------------------
Title:
-------------------
NEWMARKET TECHNOLOGY, INC.
By:
----------------------
Name:
--------------------
Title:
-------------------
NEWMARKET TECHNOLOGY ACQUISITION SUBSIDIARY
By:
----------------------
Name:
--------------------
Title:
-------------------
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SECURITIES PURCHASE AGREEMENT | PAGE 19
CERTIFICATE OF DESIGNATION, VOTING POWERS, PREFERENCES
AND RIGHTS OF THE SERIES OF THE PREFERRED STOCK
OF DIAMOND I, INC. TO BE DESIGNATED
SERIES "B" PREFERRED STOCK
Diamond I, Inc., a Delaware corporation (the "Corporation"), pursuant to
Section 151 of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Amended and Restated Certificate of Incorporation of the Corporation, the Board
of Directors of the Corporation, acting by unanimous written consent in lieu of
a meeting, duly adopted the following resolutions creating a series of 2,000,000
shares of Preferred Stock of the par value of $.001 each to be designated
"Series B Preferred Stock":
"RESOLVED, that the Corporation be and it hereby is authorized to issue up
to 2,000,000 shares of a series of shares of Preferred Stock, designated as
Series "B", (the "Series B Preferred Stock"), and having the following
characteristics:
Section 1. Designation and Amount. The shares of such series shall have
$.001 par value per share and shall be designated as Series B Preferred Stock
(the "Series B Preferred Stock") and the number of shares constituting the
Series B Preferred Stock shall be Two Million (2,000,000).
Section 2. Rank. Except for the voting rights specifically granted herein
which shall have priority over all other outstanding securities of the
Corporation, the Series B Preferred Stock shall rank: (i) senior to any other
class or series of outstanding Preferred Shares or series of capital stock of
the Corporation; (ii) prior to all of the Corporation's Common Stock, $0.001 par
value per share ("Common Stock"); (iii) prior to any class or series of capital
stock of the Corporation hereafter created not specifically ranking by its terms
senior to or on parity with any Series B Preferred Stock of whatever subdivision
(collectively, with the Common Stock and the Existing Preferred Stock, "Junior
Securities"); and (iv) on parity with any class or series of capital stock of
the Corporation hereafter created specifically ranking by its terms on parity
with the Series B Preferred Stock ("Parity Securities") in each case as to
distributions of assets upon liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary (all such distributions being
referred to collectively as "Distributions").
Section 3. Dividends. The Series B Preferred Stock shall bear no dividend
and shall have no right to receive any portion of cash to be received by the
Corporation under that certain promissory note described in Section 7(a) and
distributed by the Corporation pursuant to that certain Securities Purchase
Agreement (the "Purchase Agreement") dated March 8, 2007, by and among the
Corporation, Diamond I Technologies, Inc., a Nevada corporation, NewMarket
Technology, Inc., a Nevada corporation, and NewMarket Technology Acquisition
Subsidiary, a Nevada corporation.
Section 4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, the Holders of shares of Series B
Preferred Stock shall be entitled to receive, immediately after any
distributions to Senior Securities required by the Corporation's Certificate of
Incorporation or any certificate of designation, and prior in preference to any
distribution to Junior Securities but in parity with any distribution to Parity
Securities, an amount per share equal to $1.00 per share. If upon the occurrence
of such event, and after payment in full of the preferential amounts with
respect to the Senior Securities, the assets and funds available to be
distributed among the Holders of the Series B Preferred Stock and Parity
Securities shall be insufficient to permit the payment to such Holders of the
full preferential amounts due to the Holders of the Series B Preferred Stock and
the Parity Securities, respectively, then the entire assets and funds of the
Corporation legally available for distribution shall be distributed among the
Holders of the Series B Preferred Stock and the Parity Securities, pro rata,
based on the respective liquidation amounts to which each such series of stock
is entitled by the Corporation's Certificate of Incorporation and any
certificate(s) of designation relating thereto.
(b) Upon the completion of the distribution required by subsection
4(a), if assets remain in the Corporation, they shall be distributed to holders
of Junior Securities in accordance with the Corporation's Certificate of
Incorporation including any duly adopted certificate(s) of designation.
Section 5. Redemption by Corporation. The Corporation has no redemption
right.
Section 6. Voting Rights. The Record Holders of the Series B Preferred
Shares shall have the right to vote on any matter with holders of common stock
voting together as one (1) class. The Record Holders of the 2,000,000 Series B
Preferred Shares shall have that number of votes (identical in every other
respect to the voting rights of the holders of other Series of voting preferred
shares and the holders of common stock entitled to vote at any Regular or
Special Meeting of the Shareholders) equal to that number of common shares which
is not less than 60% of the vote required to approve any action, which Delaware
law provides may or must be approved by vote or consent of the holders of other
series of voting preferred shares and the holders of common shares or the
holders of other securities entitled to vote, if any.
The Record Holders of the Series B Preferred Shares shall be entitled to
the same notice of any Regular or Special Meeting of the Shareholders as may or
shall be given to holders of any other series of preferred shares and the
holders of common shares entitled to vote at such meetings. No corporate actions
requiring majority shareholder approval or consent may be submitted to a vote of
preferred and common shareholders which in any way precludes the Series B
Preferred Stock from exercising its voting or consent rights as though it is or
was a common shareholder.
For purposes of determining a quorum for any Regular or Special Meeting of
the Shareholders, the 2,000,000 Series B Preferred Shares shall be included and
shall be deemed as the equivalent of 60% of all common shares represented at and
entitled to vote at such meetings.
For period of one year immediately following the issuance of the shares of
the Series B Preferred Stock, the Record Holders of the Series B Preferred Stock
shall be forbidden from effecting a reverse split of the outstanding shares of
the Corporation's common stock, without the affirmative vote of not less than
66.67% of the then-outstanding shares of the Corporation's common stock.
Section 7. Suspension of Voting Rights. If, at any time during which any
shares of the Series B Preferred Stock are outstanding, any payment owing to the
Corporation under the Dividend Note, as that term is defined in the Purchase
Agreement, in favor of the Corporation shall not be current, the Series B
Preferred Stock shall possess none of the voting rights otherwise granted
herein.
The Dividend Note referred to in the foregoing paragraph are described as
follows: Promissory note, dated March 8, 2007, face amount $2,000,000.00, with
NewMarket Technology Acquisition Subsidiary, a Nevada corporation, as maker, and
Diamond I, Inc., a Delaware corporation, as payee.
Section 8. Protective Provision. So long as shares of Series B Preferred
Stock are outstanding, the Corporation shall not, without first obtaining the
approval (by vote or written consent, as provided by Delaware Law) of the
Holders of at least seventy-five percent (75%) of the then outstanding shares of
Series B Preferred Stock:
(a) alter or change the rights, preferences or privileges of the
Series B Preferred Stock so as to affect adversely the Series B Preferred Stock.
(b) create any new class or series of stock having a preference over
the Series B Preferred Stock with respect to Distributions (as defined in
Section 2 above) or increase the size of the authorized number of Series B
Preferred.
In the event Holders of at least seventy-five percent (75%) of the then
outstanding shares of Series B Preferred Stock agree to allow the Corporation to
alter or change the rights, preferences or privileges of the shares of Series B
Preferred Stock, pursuant to subsection (a) above, so as to affect the Series B
Preferred Stock, then the Corporation will deliver notice of such approved
change to the Holders of the Series B Preferred Stock that did not agree to such
alteration or change.
Section 9. Preference Rights. Nothing contained herein shall be construed
to prevent the Board of Directors of the Corporation from issuing one (1) or
more series of Preferred Stock with dividend and/or liquidation preferences
junior to the dividend and liquidation preferences of the Series B Preferred
Stock.
Section 10. General Provisions.
(a) General Definition. Except as otherwise defined for purposes of
particular sections hereinabove, the term "outstanding" when used with reference
to shares of stock shall mean issued shares, excluding shares held by the
Corporation or a subsidiary.
(b) Accounting Terms. All accounting terms used herein and not
expressly defined herein shall have the meaning as given to them in accordance
with generally accepted accounting principles.
(c) Headings. The headings of the paragraphs, subparagraphs, clauses
and subclauses hereof are for convenience of reference only and shall not
define, limit or affect any of the provisions hereof."
IN WITNESS WHEREOF, said Diamond I, Inc. has caused this certificate to be
signed by its duly authorized officers this ____ day
of____________, 2007.
DIAMOND I, INC.
ATTEST:
By:
---------------------------------
--------------------------------- Xxxxx Xxxxxx
Xxxxxxx X. Xxxxxx President
Secretary
THESE SECURITIES HAVE BEEN ISSUED IN RELIANCE UPON THE EXEMPTION FROM
REGISTRATION AFFORDED BY SECTION 4(2) OF THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION, EXCEPT IN TRANSACTIONS EXEMPT
FROM SUCH REGISTRATION.
PROMISSORY NOTE
$2,000,000.00 ___________, 2007
FOR VALUE RECEIVED, with reference being made hereby to that certain
Securities Purchase Agreement, by and among Diamond I, Inc., a Delaware
corporation ("Payee"), Diamond I Technologies, Inc., a Nevada corporation,
NewMarket Technology, Inc., a Nevada corporation ("Guarantor"), and NewMarket
Technology Acquisition Subsidiary, a Nevada corporation ("Maker"), dated as of
March 8, 2007, the undersigned, Maker, promises, pursuant to the terms of this
Promissory Note (the "Note"), to pay to Payee (Payee and any subsequent holders
hereof are hereinafter referred to collectively as "Holder"), at 0000 Xxxxxx
Xxxx, Xxxxx 000, Xxxxx Xxxxx, XX 00000, or at such other place as Holder may
designate to Maker in writing from time to time, the amount of TWO MILLION AND
NO/100 DOLLARS ($2,000,000.00), together with interest thereon at the rate of
eight percent (8%) per annum until paid, which shall be due and payable as
follows:
From the date of closing under the Purchase Agreement and continuing
for a period of five years, Maker shall, on a quarterly basis, deliver
to Holder equal payments of principal, plus all accrued and unpaid
interest, until paid. In the event of default in payment in any amount
due hereunder when due, Payee may declare this Note to be in default
and all sums then unpaid shall be immediately due and payable.
The indebtedness evidenced hereby may be prepaid in whole or in part, at
any time and from time to time, without premium or penalty.
All payments due pursuant to this Note shall be made in lawful money of the
United States of America in immediately available funds, at the address of Payee
indicated above, or such other place as Holder shall designate in writing to
Maker. If any payment on this Note shall become due on a day which is not a
Business Day (as hereinafter defined), such payment shall be made on the next
succeeding Business Day and any payment made pursuant to the foregoing shall not
be deemed late for purposes of assessing interest pursuant to the preceding
paragraph. As used herein, the term "Business Day" shall mean any day other than
a Saturday, Sunday or any other day on which national banking associations are
authorized to be closed.
As used herein, the terms "Maker" and "Payee" shall be deemed to include
their respective successors, legal representatives, and assigns, whether by
voluntary action of the parties or by operation of law.
In the event this Note is placed in the hands of an attorney for
collection, or if Holder incurs any costs incident to the collection of the
indebtedness evidenced hereby, Maker and any endorsers hereof agree to pay to
Holder an amount equal to all such costs, including without limitation all
reasonable attorneys' fees and all court costs.
This Note shall be the joint and several obligation of all Makers,
endorsers, guarantors, and sureties, if any, as may exist now or hereafter in
addition to Maker, and shall be binding upon them and their respective heirs,
administrators, executors, legal representatives, successors, and assigns and
shall inure to the benefit of Payee and its successors and assigns.
Notwithstanding any provision to the contrary contained herein or in any
other document, it is expressly provided that in no case or event shall the
aggregate of any amounts accrued or paid pursuant to this Note or any other
document which under applicable laws are or may be deemed to constitute interest
ever exceed the maximum non-usurious interest rate permitted by applicable Texas
or federal laws, whichever permit the higher rate. In this connection, Maker and
Payee stipulate and agree that it is their common and overriding intent to
contract in strict compliance with applicable usury laws. In furtherance
thereof, none of the terms of this Note shall ever be construed to create a
contract to pay, as consideration for the use, forbearance or detention of
money, interest at a rate in excess of the maximum rate permitted by applicable
laws. Maker shall never be liable for interest in excess of the maximum rate
permitted by
applicable laws. If, for any reason whatever, such interest paid or received
during the full term of the applicable indebtedness produces a rate which
exceeds the maximum rate permitted by applicable laws, Holder shall credit
against the principal of such indebtedness (or, if such indebtedness shall have
been paid in full, shall refund to the payor of such interest) such portion of
said interest as shall be necessary to cause the interest paid to produce a rate
equal to the maximum rate permitted by applicable laws. All sums paid or agreed
to be paid to Payee for the use, forbearance, or detention of money shall, to
the extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full term of the applicable indebtedness. The provisions
of this paragraph shall control all agreements, whether now or hereafter
existing and whether written or oral, between Maker and Payee.
THIS PROMISSORY NOTE AND ALL OTHER WRITTEN AGREEMENTS EXECUTED IN CONNECTION
HERE WITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
MAKER:
NEWMARKET TECHNOLOGY ACQUISITION SUBSIDIARY
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
GUARANTY
FOR VALUE RECEIVED, the undersigned does hereby guarantee prompt and timely
payment of all sums due on the above Note and agrees to remain fully bound until
fully paid.
NEWMARKET TECHNOLOGY, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
