Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of June 9, 2006,
by and among Sorell Inc., a Nevada corporation, with headquarters located at
Buk-ri 00, Xxxx-Xxxx, Xxxxxx Xxxx, Xxxxx Xxxxx (the "COMPANY"), and the
investors listed on the Schedule of Buyers attached hereto (individually, a
"BUYER" and collectively, the "BUYERS").
WHEREAS:
A. The Company and each Buyer is executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act of 1933, as amended (the "1933 ACT"), and
Rule 506 of Regulation D ("REGULATION D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the 1933 Act.
B. The Company has authorized a new series of 8% Senior Convertible
Notes (the "NOTES") of the Company, which Notes shall be convertible into the
Company's common stock, $0.001 par value per share (the "COMMON STOCK"), in
accordance with the terms of the Notes.
C. Each Buyer wishes to purchase, and the Company wishes to sell, upon the
terms and conditions stated in this Agreement, (i) that aggregate principal
amount of Notes, in substantially the form attached hereto as Exhibit A, set
forth opposite such Buyer's name in column (3) on the Schedule of Buyers (which
aggregate amount for all Buyers shall be up to a maximum of $1,000,000) (as
converted, collectively, the "CONVERSION SHARES") and (ii) Warrants, in
substantially the form attached hereto as Exhibit B (collectively, the
"WARRANTS"), to acquire that number of shares of Common Stock (as exercised,
collectively, the "WARRANT SHARES") set forth opposite such Buyer's name in
column (4) on the Schedule of Buyers.
D. The Notes bear interest, which, subject to certain conditions, may be
paid in Common Stock ("INTEREST SHARES").
E. Contemporaneously with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement,
substantially in the form attached hereto as Exhibit C (the "REGISTRATION RIGHTS
AGREEMENT"), pursuant to which the Company has agreed to provide certain
registration rights with respect to the Conversion Shares, Interest Shares and
Warrant Shares under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
F. The Notes, the Conversion Shares, the Interest Shares, the Warrants and
the Warrant Shares, are collectively are referred to herein as the "SECURITIES".
NOW, THEREFORE, the Company and each Buyer hereby agree as follows:
1. PURCHASE AND SALE OF NOTES AND WARRANTS.
(a) AMOUNT. Subject to the satisfaction (or waiver) of the conditions
set forth in Sections 6 and 7 below, the Company shall issue and sell to
each Buyer, and each Buyer
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severally, but not jointly, agrees to purchase from the Company on the
Closing Date (as defined below), a principal amount of Notes, as is set
forth opposite such Buyer's name in column (3) on the Schedule of Buyers,
along with Warrants to acquire that number of Warrant Shares as is set
forth opposite such Buyer's name in column (4) on the Schedule of Buyers.
(b) CLOSING. The closing (the "CLOSING") of the purchase of the Notes
and the Warrants by the Buyers shall occur at the offices of Sichenzia Xxxx
Xxxxxxxx Xxxxxxx LLP, 1065 Avenue of the Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000. The date and time of the Closing (the "CLOSING DATE") shall
be 10:00 a.m., New York City Time, on the date hereof, subject to
notification of satisfaction (or waiver) of the conditions to the Closing
set forth in Sections 6 and 7 below (or such later date as is mutually
agreed to by the Company and each Buyer).
(c) PURCHASE PRICE. The purchase price for each Buyer (the "PURCHASE
PRICE") of the Notes and related Warrants to be purchased by each Buyer at
the Closing shall be equal to $1.00 for each $1.00 of principal amount of
Notes being purchased by such Buyer at the Closing. The aggregate Purchase
Price to be paid by each Buyer at the Closing is as set forth opposite such
Buyer's name in column (3) on the Schedule of Buyers.
(d) FORM OF PAYMENT. On the Closing Date, (A) each Buyer shall pay its
aggregate Purchase Price to the Company for the Notes and the Warrants to
be issued and sold to such Buyer at the Closing, by wire transfer of
immediately available funds to the Company's escrow account (the "ESCROW
ACCOUNT") with Signature Bank as escrow agent in accordance with the below
written wire instructions, and (B) the Company shall deliver to each Buyer
the Notes (in such principal amount as is set forth opposite such Buyer's
name in column (3) on the Schedule of Buyers), along with the Warrants
(exercisable for the number of shares of Common Stock as is set forth
opposite such Buyer's name in column (4) on the Schedule of Buyers), each
duly executed on behalf of the Company and registered in the name of such
Buyer or its designee. Wire instructions for the Escrow Account are as
follows:
Name: Continental Stock Transfer & Trust Company AAF SORELL INC
CST&T AAF SORELL INC
Bank: XX Xxxxxx Xxxxx Bank
Account: 530-061627
ABA: 000000000
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself that:
(a) ORGANIZATION; AUTHORITY. Such Buyer, if an entity is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Buyer has the requisite power and
authority to enter into and to consummate the transactions contemplated by
the Transaction Documents (as defined below) to which it is a party and
otherwise to carry out its obligations hereunder and thereunder.
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(b) NO PUBLIC SALE OR DISTRIBUTION. Such Buyer is (i) acquiring the
Notes and the Warrants, (ii) upon conversion of the Notes will acquire the
Conversion Shares, and (iii) upon exercise of the Warrants will acquire the
Warrant Shares, in each case, for its own account and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under the 1933
Act; provided, however, that by making the representations herein, such
Buyer does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any
time in accordance with or pursuant to a registration statement or an
exemption under the 1933 Act. Such Buyer is acquiring the Securities
hereunder in the ordinary course of its business. Such Buyer does not
presently have any agreement or understanding, directly or indirectly, with
any Person to distribute any of the Securities.
(c) ACCREDITED INVESTOR STATUS. Such Buyer is an "accredited investor"
as that term is defined in Rule 501(a) of Regulation D.
(d) RELIANCE ON EXEMPTIONS. Such Buyer understands that the Securities
are being offered and sold to it in reliance on specific exemptions from
the registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy
of, and such Buyer's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of such Buyer set forth
herein in order to determine the availability of such exemptions and the
eligibility of such Buyer to acquire the Securities.
(e) INFORMATION. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of
the Securities which have been requested by such Buyer. Such Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of
the Company. Neither such inquiries nor any other due diligence
investigations conducted by such Buyer or its advisors, if any, or its
representatives shall modify, amend or affect such Buyer's right to rely on
the Company's representations and warranties contained herein. Such Buyer
understands that its investment in the Securities involves a high degree of
risk. Such Buyer has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect
to its acquisition of the Securities.
(f) NO GOVERNMENTAL REVIEW. Such Buyer understands that no United
States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the
Securities or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of
the offering of the Securities.
(g) TRANSFER OR RESALE. Such Buyer understands that except as provided
in the Registration Rights Agreement: (i) the Securities have not been and
are not being registered under the 1933 Act or any state securities laws,
and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) such Buyer shall have delivered to
the Company an opinion of counsel, by counsel reasonably acceptable to the
Company and in form and substance reasonably satisfactory to the Company,
to the effect that such Securities to
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be sold, assigned or transferred may be sold, assigned or transferred
pursuant to an exemption from such registration, or (C) such Buyer provides
the Company with reasonable assurance that such Securities can be sold,
assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under
the 1933 Act, as amended, (or a successor rule thereto) (collectively,
"RULE 144"); (ii) any sale of the Securities made in reliance on Rule 144
may be made only in accordance with the terms of Rule 144 and further, if
Rule 144 is not applicable, any resale of the Securities under
circumstances in which the seller (or the Person (as defined in Section
3(s)) through whom the sale is made) may be deemed to be an underwriter (as
that term is defined in the 0000 Xxx) may require compliance with some
other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (iii) neither the Company nor any other Person is under any
obligation to register the Securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder. The Securities may be pledged pursuant to an available
exemption from registration under the 1933 Act in connection with a bona
fide margin account or other loan or financing arrangement secured by the
Securities and such pledge of Securities shall not be deemed to be a
transfer, sale or assignment of the Securities hereunder, and no Buyer
effecting a pledge of Securities shall be required to provide the Company
with any notice thereof or otherwise make any delivery to the Company
pursuant to this Agreement or any other Transaction Document (as defined in
Section 3(b)), including, without limitation, this Section 2(g).
(h) LEGENDS. Such Buyer understands that the certificates or other
instruments representing the Notes and the Warrants and, until such time as
the resale of the Conversion Shares, the Warrant Shares and the Interest
Shares, if any, have been registered under the 1933 Act as contemplated by
the Registration Rights Agreement, the stock certificates representing the
Conversion Shares, the Warrant Shares and the Interest Shares, if any,
except as set forth below, shall bear any legend as required by the "blue
sky" laws of any state and a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of
such stock certificates):
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
[CONVERTIBLE][EXERCISABLE] HAVE BEEN][THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO RULE
144(K) UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES
MAY BE PLEDGED PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION
UNDER THE 1933 ACT IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
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The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which
it is stamped, if, unless otherwise required by state securities laws, (i)
such Securities are registered for resale under the 1933 Act, (ii) in
connection with a sale, assignment or other transfer, such holder provides
the Company with an opinion of counsel, by counsel reasonably acceptable to
the Company and in form and substance reasonably satisfactory to the
Company, to the effect that such sale, assignment or transfer of the
Securities may be made without registration under the applicable
requirements of the 1933 Act, or (iii) such holder provides the Company
with reasonable assurance that the Securities can be sold, assigned or
transferred pursuant to Rule 144(k).
(i) VALIDITY; ENFORCEMENT. This Agreement and the Registration Rights
Agreement to which such Buyer is a party have been duly and validly
authorized, executed and delivered on behalf of such Buyer and shall
constitute the legal, valid and binding obligations of such Buyer
enforceable against such Buyer in accordance with their respective terms,
except as such enforceability may be limited by general principles of
equity or to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies.
(j) NO CONFLICTS. The execution, delivery and performance by such
Buyer of this Agreement and the Registration Rights Agreement to which such
Buyer is a party and the consummation by such Buyer of the transactions
contemplated hereby and thereby will not (i) if Buyer is an entity, result
in a violation of the organizational documents of such Buyer or (ii)
conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which such Buyer is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment or
decree (including United States federal and state securities laws)
applicable to such Buyer, except in the case of clauses (ii) and (iii)
above, for such conflicts, defaults, rights or violations which would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of such Buyer to perform its obligations
hereunder.
(k) RESIDENCY. Such Buyer is a resident of that jurisdiction specified
below its address on the Schedule of Buyers.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that:
(a) ORGANIZATION AND QUALIFICATION. The Company and its "SUBSIDIARIES"
(which for purposes of this Agreement means any entity in which the
Company, directly or indirectly, owns capital stock or holds an equity or
similar interest) are entities duly organized and validly existing in good
standing under the laws of the jurisdiction in which they are formed, and
have the requisite power and authorization to own their properties and to
carry on their business as now being conducted. Each of the Company and its
Subsidiaries is duly qualified as a foreign entity to do business and is in
good standing in every jurisdiction in which its ownership of property or
the nature of the business conducted by it makes such qualification
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necessary, except to the extent that the failure to be so qualified or be
in good standing would not have a Material Adverse Effect. As used in this
Agreement, "MATERIAL ADVERSE EFFECT" means any material adverse effect on
the business, properties, assets, operations, results of operations,
condition (financial or otherwise) or prospects of the Company and its
Subsidiaries, taken as a whole, or on the transactions contemplated hereby
and by the other Transaction Documents or by the agreements and instruments
to be entered into in connection herewith or therewith, or on the authority
or ability of the Company to perform its obligations under the Transaction
Documents (as defined below). The Company has no Subsidiaries, except as
set forth on Schedule 3(a).
(b) AUTHORIZATION; ENFORCEMENT; VALIDITY. The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Notes, the Warrants, the Registration
Rights Agreement, and each of the other agreements entered into by the
parties hereto in connection with the transactions contemplated by this
Agreement (collectively, the "TRANSACTION DOCUMENTS") and to issue the
Securities in accordance with the terms hereof and thereof. The execution
and delivery of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and
thereby, including, without limitation, the issuance of the Notes, the
reservation for issuance and the issuance of the Conversion Shares issuable
upon conversion of the Notes, the issuance of the Warrants and the
reservation for issuance and issuance of the Warrant Shares issuable upon
exercise of the Warrants, have been duly authorized by the Company's Board
of Directors and (other than the filing with the SEC of one or more
Registration Statements in accordance with the requirements of the
Registration Rights Agreement and any other filings as may be required by
any state securities agencies) no further filing, consent, or authorization
is required by the Company, its Board of Directors or its stockholders.
This Agreement and the other Transaction Documents of even date herewith
have been duly executed and delivered by the Company, and constitute the
legal, valid and binding obligations of the Company, enforceable against
the Company in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.
(c) ISSUANCE OF SECURITIES. The issuance of the Notes and the Warrants
are duly authorized and upon issuance in accordance with the terms of the
Transaction Documents shall be free from all taxes, liens and charges with
respect to the issue thereof. As of the Closing, the Company shall have
reserved from its duly authorized capital stock not less than the sum of
(i) 100% of the maximum number of shares of Common Stock issuable upon
conversion of the Notes (assuming for purposes hereof, that the Notes are
convertible at the Conversion Price and without taking into account any
limitations on the conversion of the Notes set forth in the Notes) and (ii)
100% of the maximum number of shares of Common Stock issuable upon exercise
of the Warrants (without taking into account any limitations on the
exercise of the Warrants set forth in the Warrants). Upon issuance or
conversion in accordance with the Notes or exercise in accordance with the
Warrants, as the case may be, the Interest Shares, the Conversion Shares
and the Warrant Shares, respectively, will be validly issued, fully paid
and nonassessable and free from all preemptive or similar rights, taxes,
liens and charges with respect to the issue thereof, with the holders being
entitled to all rights accorded to a holder of Common Stock. Based on the
representations and warranties of the Buyers contained in Section 2 hereof,
the offer and issuance by the Company of the Securities is exempt from
registration under the 1933 Act.
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(d) NO CONFLICTS. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Notes, the Warrants, and reservation for
issuance of the Conversion Shares and the Warrant Shares and Interest
Shares, if any) will not (i) result in a violation of the Articles of
Incorporation (as defined in Section 3(r)) of the Company or any of its
Subsidiaries, any capital stock of the Company or Bylaws (as defined in
Section 3(r)) of the Company or any of its Subsidiaries or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is
a party, except to the extent such conflict, default or termination right
would not reasonably be expected to have a Material Adverse Effect, or
(iii) result in a violation of any law, rule, regulation, order, judgment
or decree (including United States federal and state securities laws or
regulations and the rules and regulations of the OTC Bulletin Board (the
"PRINCIPAL MARKET") applicable to the Company or any of its Subsidiaries or
by which any property or asset of the Company or any of its Subsidiaries is
bound or affected except to the extent such violation would not reasonably
be expected to have a Material Adverse Effect.
(e) CONSENTS. The Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any
court, governmental agency or any regulatory or self-regulatory agency or
any other Person in order for it to execute, deliver or perform any of its
obligations under or contemplated by the Transaction Documents, in each
case in accordance with the terms hereof or thereof. All consents,
authorizations, orders, filings and registrations which the Company is
required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the Closing Date, and the Company and its
Subsidiaries are unaware of any facts or circumstances which might prevent
the Company from obtaining or effecting any of the registration,
application or filings pursuant to the preceding sentence. The Company is
not in violation of the listing requirements of the Principal Market and
has no knowledge of any facts which would reasonably lead to delisting or
suspension of the Common Stock in the foreseeable future.
(f) ACKNOWLEDGMENT REGARDING BUYER'S PURCHASE OF SECURITIES. The
Company acknowledges and agrees that each Buyer is acting solely in the
capacity of arm's length purchaser with respect to the Transaction
Documents and the transactions contemplated hereby and thereby and that no
Buyer is (i) an officer or director of the Company, (ii) an "affiliate" of
the Company (as defined in Rule 144) or (iii) to the knowledge of the
Company, a "beneficial owner" of more than 10% of the shares of Common
Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act
of 1934, as amended (the "1934 ACT")). The Company further acknowledges
that no Buyer is acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to the Transaction Documents and
the transactions contemplated hereby and thereby, and any advice given by a
Buyer or any of its representatives or agents in connection with the
Transaction Documents and the transactions contemplated hereby and thereby
is merely incidental to such Buyer's purchase of the Securities. The
Company further represents to each Buyer that the Company's decision to
enter into the Transaction Documents has been based solely on the
independent evaluation by the Company and its representatives.
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(g) NO GENERAL SOLICITATION; PLACEMENT AGENT'S FEES. Neither the
Company, nor any of its affiliates, nor any Person acting on its or their
behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with the
offer or sale of the Securities. The Company shall be responsible for the
payment of any placement agent's fees, financial advisory fees, or brokers'
commissions (other than for persons engaged by any Buyer or its investment
advisor) relating to or arising out of the transactions contemplated
hereby. The Company shall pay, and hold each Buyer harmless against, any
liability, loss or expense (including, without limitation, attorney's fees
and out-of-pocket expenses) arising in connection with any such claim. The
Company acknowledges that it has engaged New York Global Securities, Inc.
as placement agent (the "AGENT") in connection with the sale of the
Securities. Other than the Agent, the Company has not engaged any placement
agent or other agent in connection with the sale of the Securities.
(h) NO INTEGRATED OFFERING. None of the Company, its Subsidiaries, any
of their affiliates, and any Person acting on their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any
offers to buy any security, under circumstances that would require
registration of any of the Securities under the 1933 Act or cause this
offering of the Securities to be integrated with prior offerings by the
Company for purposes of the 1933 Act or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations
of any exchange or automated quotation system on which any of the
securities of the Company are listed or designated. None of the Company,
its Subsidiaries, their affiliates and any Person acting on their behalf
will take any action or steps referred to in the preceding sentence that
would require registration of any of the Securities under the 1933 Act or
cause the offering of the Securities to be integrated with other offerings.
(i) DILUTIVE EFFECT. The Company understands and acknowledges that the
number of Conversion Shares issuable upon conversion of the Notes, and, the
Warrant Shares issuable upon exercise of the Warrants, will increase in
certain circumstances. The Company further acknowledges that its obligation
to issue Conversion Shares upon conversion of the Notes in accordance with
this Agreement and the Notes and its obligation to issue the Warrant Shares
upon exercise of the Warrants in accordance with this Agreement and the
Warrants is, in each case, absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership interests of
other stockholders of the Company.
(j) APPLICATION OF TAKEOVER PROTECTIONS; RIGHTS AGREEMENT. The Company
and its Board of Directors have taken all necessary action, if any, in
order to render inapplicable any poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision which is
or could become applicable to any Buyer as a result of the transactions
contemplated by this Agreement, including, without limitation, the
Company's issuance of the Securities and any Buyer's ownership of the
Securities. The Company has not adopted a stockholder rights plan or
similar arrangement relating to accumulations of beneficial ownership of
Common Stock or a change in control of the Company.
(k) SEC DOCUMENTS; FINANCIAL STATEMENTS. During the two (2) years
prior to the date hereof, the Company has filed all reports, schedules,
forms, statements and other documents required to be filed by it with the
SEC pursuant to the reporting requirements of the
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1934 Act (all of the foregoing filed prior to the date hereof and all
exhibits included therein and financial statements, notes and schedules
thereto and documents incorporated by reference therein being hereinafter
referred to as the "SEC DOCUMENTS"). The Company has delivered to the
Buyers or their respective representatives true, correct and complete
copies of each of the SEC Documents not available on the XXXXX system that
have been requested by each Buyer. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time
they were filed with the SEC, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included in the
SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto as in effect as of the time of filing. Such financial
statements have been prepared in accordance with generally accepted
accounting principles, consistently applied, during the periods involved
(except (i) as may be otherwise indicated in such financial statements or
the notes thereto, or (ii) in the case of unaudited interim statements, to
the extent they may exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments).
(l) ABSENCE OF CERTAIN CHANGES. Except as disclosed in Schedule 3(l),
since the date of the Company's most recent audited financial statements
contained in a Form 10-KSB, there has been no material adverse change and
no material adverse development in the business, assets, properties,
operations, condition (financial or otherwise), results of operations or
prospects of the Company. Except as disclosed in Schedule 3(l), since the
date of the Company's most recent audited financials statements contained
in a Form 10-KSB, the Company has not (i) declared or paid any dividends,
(ii) sold any assets, individually or in the aggregate, in excess of
$50,000 outside of the ordinary course of business or (iii) had capital
expenditures, individually or in the aggregate, in excess of $50,000. The
Company has not taken any steps to seek protection pursuant to any
bankruptcy law nor does the Company have any knowledge or reason to believe
that its creditors intend to initiate involuntary bankruptcy proceedings or
any actual knowledge of any fact which would reasonably lead a creditor to
do so.
(m) NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES.
No event, liability, development or circumstance has occurred or exists, or
is contemplated to occur with respect to the Company, its Subsidiaries or
their respective business, properties, prospects, operations or financial
condition, that would be required to be disclosed by the Company under
applicable securities laws on a registration statement on Form S-1 filed
with the SEC relating to an issuance and sale by the Company of its Common
Stock and which has not been publicly announced.
(n) CONDUCT OF BUSINESS; REGULATORY PERMITS. Neither the Company nor
its Subsidiaries is in violation of any term of or in default under its
Articles of Incorporation or Bylaws or their organizational charter or
Articles of Incorporation or bylaws, respectively.
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Neither the Company nor any of its Subsidiaries is in violation of any
judgment, decree or order or any statute, ordinance, rule or regulation
applicable to the Company or its Subsidiaries, and neither the Company nor
any of its Subsidiaries will conduct its business in violation of any of
the foregoing, except in all cases for possible violations which would not,
individually or in the aggregate, have a Material Adverse Effect. Without
limiting the generality of the foregoing, the Company is not in violation
of any of the rules, regulations or requirements of the Principal Market
and has no knowledge of any facts or circumstances that would reasonably
lead to delisting or suspension of the Common Stock by the Principal Market
in the foreseeable future. During the two (2) years prior to the date
hereof, (i) the Common Stock has been designated for quotation on the
Principal Market, (ii) trading in the Common Stock has not been suspended
by the SEC or the Principal Market and (iii) the Company has received no
communication, written or oral, from the SEC or the Principal Market
regarding the suspension or delisting of the Common Stock from the
Principal Market. The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate
regulatory authorities necessary to conduct their respective businesses,
except where the failure to possess such certificates, authorizations or
permits would not have, individually or in the aggregate, a Material
Adverse Effect, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.
(o) FOREIGN CORRUPT PRACTICES. Neither the Company nor any of its
Subsidiaries nor any director, officer, agent, employee or other Person
acting on behalf of the Company or any of its Subsidiaries has, in the
course of its actions for, or on behalf of, the Company (i) used any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; (iii) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or
(iv) made any unlawful bribe, rebate, payoff, influence payment, kickback
or other unlawful payment to any foreign or domestic government official or
employee.
(p) XXXXXXXX-XXXXX ACT. The Company is in compliance with any and all
applicable requirements of the Xxxxxxxx-Xxxxx Act of 2002 that are
effective as of the date hereof, and any and all applicable rules and
regulations promulgated by the SEC thereunder that are effective as of the
date hereof, except where such noncompliance would not have, individually
or in the aggregate, a Material Adverse Effect.
(q) TRANSACTIONS WITH AFFILIATES. Except as set forth in the SEC
Documents filed at least ten days prior to the date hereof and other than
the grant of stock options disclosed on Schedule 3(q), none of the
officers, directors or employees of the Company is presently a party to any
transaction with the Company or any of its Subsidiaries (other than for
ordinary course services as employees, officers or directors), including
any contract, agreement or other arrangement providing for the furnishing
of services to or by, providing for rental of real or personal property to
or from, or otherwise requiring payments to or from any such officer,
director or employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any such officer, director, or
employee has a substantial interest or is an officer, director, trustee or
partner.
10
(r) EQUITY CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Company consists of 100,000,000 shares of Common
Stock, of which as of the date hereof, 34,107,784 are issued and
outstanding, and no shares are reserved for issuance pursuant to securities
(other than the Notes and the Warrants) exercisable or exchangeable for, or
convertible into, shares of Common Stock. All of such outstanding shares
have been, or upon issuance will be, validly issued and are fully paid and
nonassessable. Except as disclosed in Schedule 3(r): (i) none of the
Company's share capital is subject to preemptive rights or any other
similar rights or any liens or encumbrances suffered or permitted by the
Company; (ii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into, or exercisable or exchangeable
for, any share capital of the Company or any of its Subsidiaries, or
contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to issue additional share
capital of the Company or any of its Subsidiaries or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any share capital of the Company or any of
its Subsidiaries; (iii) there are no outstanding debt securities, notes,
credit agreements, credit facilities or other agreements, documents or
instruments evidencing Indebtedness of the Company or any of its
Subsidiaries or by which the Company or any of its Subsidiaries is or may
become bound; (iv) there are no financing statements securing obligations
in any material amounts, either singly or in the aggregate, filed in
connection with the Company or any of its Subsidiaries; (v) there are no
agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities
under the 1933 Act (except the Registration Rights Agreement); (vi) there
are no outstanding securities or instruments of the Company or any of its
Subsidiaries which contain any redemption or similar provisions, and there
are no contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to redeem a
security of the Company or any of its Subsidiaries; (vii) there are no
securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities; (viii) the
Company does not have any stock appreciation rights or "phantom stock"
plans or agreements or any similar plan or agreement; and (ix) the Company
and its Subsidiaries have no liabilities or obligations required to be
disclosed in the SEC Documents but not so disclosed in the SEC Documents,
other than those incurred in the ordinary course of the Company's or its
Subsidiaries' respective businesses and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect. The Company
has furnished to the Buyer true, correct and complete copies of the
Company's Articles of Incorporation, as amended and as in effect on the
date hereof (the "ARTICLES OF INCORPORATION"), and the Company's Bylaws, as
amended and as in effect on the date hereof (the "BYLAWS"), and the terms
of all securities convertible into, or exercisable or exchangeable for,
shares of Common Stock and the material rights of the holders thereof in
respect thereto.
(s) INDEBTEDNESS AND OTHER CONTRACTS. Neither the Company nor any of
its Subsidiaries (i) has any outstanding Indebtedness (as defined below),
(ii) is in violation of any term of or in default under any contract,
agreement or instrument relating to any Indebtedness, except where such
violations and defaults would not result, individually or in the aggregate,
in a Material Adverse Effect, or (iii) is a party to any contract,
agreement or instrument relating to any Indebtedness, the performance of
which, in the judgment of the Company's officers, has or is
11
expected to have a Material Adverse Effect. Schedule 3(s) provides a
detailed description of the material terms of any such outstanding
Indebtedness. For purposes of this Agreement: (x) "INDEBTEDNESS" of any
Person means, without duplication (A) all indebtedness for borrowed money,
(B) all obligations issued, undertaken or assumed as the deferred purchase
price of property or services (including, without limitation, "capital
leases" in accordance with generally accepted accounting principals) (other
than trade payables entered into in the ordinary course of business), (C)
all reimbursement or payment obligations with respect to letters of credit,
surety bonds and other similar instruments, (D) all obligations evidenced
by notes, bonds, debentures or similar instruments, including obligations
so evidenced incurred in connection with the acquisition of property,
assets or businesses, (E) all indebtedness created or arising under any
conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired
with the proceeds of such indebtedness (even though the rights and remedies
of the seller or bank under such agreement in the event of default are
limited to repossession or sale of such property), (F) all monetary
obligations under any leasing or similar arrangement which, in connection
with generally accepted accounting principles, consistently applied for the
periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or
for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any mortgage, lien, pledge, charge,
security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by any Person, even though
the Person which owns such assets or property has not assumed or become
liable for the payment of such indebtedness, and (H) all Contingent
Obligations in respect of indebtedness or obligations of others of the
kinds referred to in clauses (A) through (G) above; (y) "CONTINGENT
OBLIGATION" means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any indebtedness,
lease, dividend or other obligation of another Person if the primary
purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability
that such liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such
liability will be protected (in whole or in part) against loss with respect
thereto; and (z) "PERSON" means an individual, a limited liability company,
a partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.
(t) ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation before or by the Principal Market, any court,
public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company, threatened against or
affecting the Company, the Common Stock or any of the Company's
Subsidiaries or any of the Company's or its Subsidiaries' officers or
directors, that could, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.
(u) INSURANCE. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has
been refused any insurance coverage sought or applied for and neither the
Company nor any such Subsidiary has any reason to believe that it will not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers
12
as may be necessary to continue its business at a cost that would not have
a Material Adverse Effect.
(v) EMPLOYEE RELATIONS. (i) Neither Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or employs
any member of a union. The Company and its Subsidiaries believe that their
relations with their employees are good. No executive officer of the
Company or any of its Subsidiaries (as defined in Rule 501(f) of the 0000
Xxx) has notified the Company or any such Subsidiary that such officer
intends to leave the Company or any such Subsidiary or otherwise terminate
such officer's employment with the Company or any such Subsidiary. No
executive officer of the Company or any of its Subsidiaries, to the
knowledge of the Company or any such Subsidiary, is, or is now expected to
be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any
restrictive covenant, and the continued employment of each such executive
officer does not subject the Company or any such Subsidiary to any
liability with respect to any of the foregoing matters.
(ii) The Company and its Subsidiaries are in compliance with all
applicable South Korean and United States federal, state, provincial,
local and foreign laws and regulations respecting labor, employment
and employment practices and benefits, terms and conditions of
employment and wages and hours, except where failure to be in
compliance would not, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
(w) TITLE. The Company and its Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to
all personal property owned by them which is material to the business of
the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as do not materially affect the value
of such property and do not interfere with the use made and proposed to be
made of such property by the Company and any of its Subsidiaries. Any real
property and facilities held under lease by the Company and any of its
Subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with
the use made and proposed to be made of such property and buildings by the
Company and its Subsidiaries.
(x) INTELLECTUAL PROPERTY RIGHTS. The Company and its Subsidiaries own
or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service xxxx registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and other intellectual property rights
("INTELLECTUAL PROPERTY RIGHTS") necessary to conduct their respective
businesses as now conducted except where the failure to so own or possess
would not reasonably be expected to result in a Material Adverse Effect.
None of the Company's Intellectual Property Rights have expired or
terminated, or are expected to expire or terminate, within three years from
the date of this Agreement. The Company does not have any knowledge of any
infringement by the Company or its Subsidiaries of Intellectual Property
Rights of others. There is no claim, action or proceeding being made or
brought, or to the knowledge of the Company, being threatened, against the
Company or its Subsidiaries regarding its Intellectual Property Rights. The
Company
13
is unaware of any facts or circumstances which might give rise to any of
the foregoing infringements or claims, actions or proceedings. The Company
and its Subsidiaries have taken reasonable security measures to protect the
secrecy, confidentiality and value of all of their intellectual properties.
(y) ENVIRONMENTAL LAWS. The Company and its Subsidiaries (i) are in
compliance with any and all applicable Environmental Laws (as hereinafter
defined), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval where, in each of the
foregoing clauses (i), (ii) and (iii), the failure to so comply could be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect. The term "ENVIRONMENTAL LAWS" means all applicable South
Korean and United States federal, state, provincial, local or foreign laws
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater,
land surface or subsurface strata), including, without limitation, laws
relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous substances or
wastes (collectively, "HAZARDOUS MATERIALS") into the environment, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders,
permits, plans or regulations issued, entered, promulgated or approved
thereunder.
(z) SUBSIDIARY RIGHTS. The Company or one of its Subsidiaries has the
unrestricted right to vote, and (subject to limitations imposed by
applicable law) to receive dividends and distributions on, all capital
securities of its Subsidiaries as owned by the Company or such Subsidiary.
(aa) INVESTMENT COMPANY. The Company is not, and is not an affiliate
of, an "investment company" within the meaning of the Investment Company
Act of 1940, as amended. (bb) TAX STATUS. The Company and each of its
Subsidiaries (i) has made or filed all foreign, South Korean, United States
federal, state and provincial income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject, (ii) has
paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports
and declarations, except those being contested in good faith and (iii) has
set aside on its books provision reasonably adequate for the payment of all
taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know of no basis for any such claim.
(cc) INTERNAL ACCOUNTING AND DISCLOSURE CONTROLS. The Company
maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
14
conformity with generally accepted accounting principles and to maintain
asset and liability accountability, (iii) access to assets or incurrence of
liabilities is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at
reasonable intervals and appropriate action is taken with respect to any
difference. The Company maintains disclosure controls and procedures (as
such term is defined in Rule 13a-14 under the 0000 Xxx) that are designed
to ensure that information required to be disclosed by the Company in the
reports that it files or submits under the 1934 Act is recorded, processed,
summarized and reported, within the time periods specified in the rules and
forms of the SEC, including, without limitation, controls and procedures
designed in to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the 1934 Act is
accumulated and communicated to the Company's management, including its
principal executive officer or officers and its principal financial officer
or officers, as appropriate, to allow timely decisions regarding required
disclosure. During the twelve months prior to the date hereof neither the
Company nor any of its Subsidiaries have received any notice or
correspondence from any accountant relating to any potential material
weakness in any part of the system of internal accounting controls of the
Company or any of its Subsidiaries.
(dd) OFF BALANCE SHEET ARRANGEMENTS. There is no transaction,
arrangement, or other relationship between the Company and an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its Exchange Act filings and is not so
disclosed or that otherwise would be reasonably likely to have a Material
Adverse Effect.
(ee) RANKING OF NOTES. No Indebtedness of the Company is senior to or
ranks pari passu with the Notes in right of payment, whether with respect
of payment of redemptions, interest, damages or upon liquidation or
dissolution or otherwise.
(ff) REGISTRATION ELIGIBILITY. The Company is eligible to register the
Conversion Shares, the Warrant Shares and the Interest Shares for resale by
the Buyers using Form SB-2 promulgated under the 1933 Act.
(gg) MANIPULATION OF PRICE. The Company has not, and to its knowledge
no one acting on its behalf has, (i) taken, directly or indirectly, any
action designed to cause or to result in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or
resale of any of the Securities, (ii) other than the Agent, sold, bid for,
purchased, or paid any compensation for soliciting purchases of, any of the
Securities, or (iii) other than the Agent, paid or agreed to pay to any
person any compensation for soliciting another to purchase any other
securities of the Company.
(hh) DISCLOSURE. The Company confirms that neither it nor any other
Person acting on its behalf has provided any of the Buyers or their agents
or counsel with any information that constitutes or could reasonably be
expected to constitute material, nonpublic information other than as set
forth in the following sentence. The Company understands and confirms that
each of the Buyers will rely on the foregoing representations in effecting
transactions in securities of the Company. All disclosure provided to the
Buyers regarding the Company, its business and the transactions
contemplated hereby, including the Schedules to this
15
Agreement, furnished by or on behalf of the Company is true and correct and
does not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not
misleading. Each press release issued by the Company during the twelve (12)
months preceding the date of this Agreement did not at the time of release
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are
made, not misleading. No event or circumstance has occurred or information
exists with respect to the Company or any of its Subsidiaries or its or
their business, properties, prospects, operations or financial conditions,
which, under applicable law, rule or regulation, requires public disclosure
or announcement by the Company but which has not been so publicly announced
or disclosed.
4. COVENANTS.
(a) BEST EFFORTS. Each party shall use its best efforts timely to
satisfy each of the conditions to be satisfied by it as provided in
Sections 6 and 7 of this Agreement.
(b) FORM D AND BLUE SKY. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to provide a
copy thereof to each Buyer promptly after such filing. The Company shall,
on or before the Closing Date, take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for or to
qualify the Securities for sale to the Buyers at the Closing pursuant to
this Agreement under applicable securities or "Blue Sky" laws of the states
of the United States (or to obtain an exemption from such qualification),
and shall provide evidence of any such action so taken to the Buyers on or
prior to the Closing Date. The Company shall make all filings and reports
relating to the offer and sale of the Securities required under applicable
securities or "Blue Sky" laws of the states of the United States following
the Closing Date.
(c) REPORTING STATUS. Until the later of the date on which the
Investors (as defined in the Registration Rights Agreement) shall have sold
all the Conversion Shares, Warrant Shares and Interest Shares, if any, and
none of the Notes or Warrants is outstanding or the date which is four
years from the date hereof (the "REPORTING PERIOD"), the Company shall file
all reports required to be filed pursuant to the 1934 Act, and the Company
shall not terminate its status as an issuer required to file reports under
the 1934 Act even if the 1934 Act or the rules and regulations thereunder
would otherwise permit such termination.
(d) USE OF PROCEEDS. The Company will use the proceeds from the sale
of the Securities for raw materials and general working capital, and not
for (A) repayment of any outstanding Indebtedness of the Company or any of
its Subsidiaries or (B) redemption or repurchase of any of its or its
Subsidiaries equity securities.
(e) FINANCIAL INFORMATION. The Company agrees to send the following to
each Investor (as defined in the Registration Rights Agreement) during the
Reporting Period (i) unless the following are filed with the SEC through
XXXXX and are available to the public through the XXXXX system, within one
(1) Business Day after the filing thereof with the SEC, a
16
copy of its Annual Reports on Form 10-K or 10-KSB, any interim reports or
any consolidated balance sheets, income statements, stockholders' equity
statements and/or cash flow statements for any period other than annual,
any Current Reports on Form 8-K and any registration statements (other than
on Form S-8) or amendments filed pursuant to the 1933 Act, and (ii) copies
of any notices and other information made available or given to the
stockholders of the Company generally, contemporaneously with the making
available or giving thereof to the stockholders.
(f) LISTING. The Company shall promptly secure the listing of all of
the Registrable Securities (as defined in the Registration Rights
Agreement) upon each national securities exchange and automated quotation
system, if any, upon which the Common Stock is then listed (subject to
official notice of issuance) and shall maintain such listing of all
Registrable Securities from time to time issuable under the terms of the
Transaction Documents. The Company shall maintain the Common Stocks'
authorization for quotation on the Principal Market. Neither the Company
nor any of its Subsidiaries shall take any action which would be reasonably
expected to result in the delisting or suspension of the Common Stock on
the Principal Market. The Company shall pay all fees and expenses in
connection with satisfying its obligations under this Section 4(f).
(g) FEES. The Company shall be responsible for the payment of any
placement agent's fees, financial advisory fees, or broker's commissions
(other than for Persons engaged by any Buyer) relating to or arising out of
the transactions contemplated hereby, including, without limitation, any
fees payable to the Agent. The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including, without
limitation, reasonable attorney's fees and out-of-pocket expenses) arising
in connection with any claim relating to any such payment.
(h) PLEDGE OF SECURITIES. The Company acknowledges and agrees that the
Securities may be pledged pursuant to an available exemption from
registration under the 1933 Act by an Investor (as defined in the
Registration Rights Agreement) in connection with a bona fide margin
agreement or other loan or financing arrangement that is secured by the
Securities. The pledge of Securities shall not be deemed to be a transfer,
sale or assignment of the Securities hereunder, and no Investor effecting a
pledge of Securities shall be required to provide the Company with any
notice thereof or otherwise make any delivery to the Company pursuant to
this Agreement or any other Transaction Document, including, without
limitation, Section 2(g) hereof; provided that an Investor and its pledgee
shall be required to comply with the provisions of Section 2(g) hereof in
order to effect a sale, transfer or assignment of Securities to such
pledgee. The Company hereby agrees to execute and deliver such
documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by an Investor.
(i) DISCLOSURE OF TRANSACTIONS AND OTHER MATERIAL INFORMATION. The
Company shall file a Current Report on Form 8-K describing the terms of the
transactions contemplated by the Transaction Documents in the form required
by the 1934 Act and attaching the material Transaction Documents
(including, without limitation, this Agreement (and all schedules to this
Agreement), the form of Notes, the form of Warrant and the Registration
Rights
17
Agreement) (including all attachments, the "8-K FILING"). From and after
the filing of the 8-K Filing with the SEC, the Company shall have disclosed
any material nonpublic information delivered to the Buyers by the Company
or any of its Subsidiaries, or any of their respective officers, directors,
employees or agents. The Company shall not, and shall cause each of its
Subsidiaries and its and each of their respective officers, directors,
employees and agents, not to, provide any Buyer with any material,
nonpublic information regarding the Company or any of its Subsidiaries from
and after the filing of the 8-K Filing with the SEC without the express
written consent of such Buyer.
(j) ADDITIONAL NOTES. So long as any Buyer beneficially owns any
Securities, the Company will not, without the prior written consent of
Buyers holding a majority of the principal amount of the Notes, issue any
Notes (other than to the Buyers as contemplated hereby) and the Company
shall not issue any other securities that would cause a breach or default
under the Notes.
(k) CONDUCT OF BUSINESS. The business of the Company and its
Subsidiaries shall not be conducted in violation of any law, ordinance or
regulation of any governmental entity, except where such violations would
not result, either individually or in the aggregate, in a Material Adverse
Effect.
(l) ADDITIONAL ISSUANCES OF SECURITIES.
(i) For purposes of this Section 4(l), the following definitions
shall apply.
(A) "CONVERTIBLE SECURITIES" means any stock or securities
(other than Options) convertible into or exercisable or
exchangeable for shares of Common Stock.
(B) "OPTIONS" means any rights, warrants or options to
subscribe for or purchase shares of Common Stock or Convertible
Securities.
(C) "COMMON STOCK EQUIVALENTS" means, collectively, Options
and Convertible Securities.
(ii) From the date hereof until one hundred eighty (180) days
after the Effective Date (as defined in the Registration Rights
Agreement) the Company will not, directly or indirectly, file any
registration statement with the SEC other than the Registration
Statement (as defined in the Registration Rights Agreement) or a
registration statement on Form S-8 pursuant to the 1933 Act.
(iii) From the Closing Date until the date twelve months after
the Effective Date, the Company will not, directly or indirectly,
offer, sell, grant any option to purchase, or otherwise dispose of (or
announce any offer, sale, grant or any option to purchase or other
disposition of) any of its or its Subsidiaries' equity or equity
equivalent securities, including without limitation any debt,
preferred stock or other instrument or security that is, at any time
during its life and under any circumstances, convertible into or
exchangeable or exercisable for
18
shares of Common Stock or Common Stock Equivalents (any such offer,
sale, grant, disposition or announcement being referred to as a
"SUBSEQUENT PLACEMENT") unless the Company shall have first complied
with this Section 4(l).
(A) The Company shall deliver to each Buyer a written notice
(the "OFFER NOTICE") of any proposed or intended issuance or sale
or exchange (the "OFFER") of the securities being offered (the
"OFFERED SECURITIES") in a Subsequent Placement, which Offer
Notice shall (w) identify and describe the Offered Securities,
(x) describe the price and other terms upon which they are to be
issued, sold or exchanged, and the number or amount of the
Offered Securities to be issued, sold or exchanged, and (y)
identify the persons or entities (if known) to which or with
which the Offered Securities are to be offered, issued, sold or
exchanged and (z) offer to issue and sell to such Buyers at least
80% of the Offered Securities, allocated among such Buyers (a)
based on such Buyer's pro rata portion of the aggregate principal
amount of Notes purchased hereunder (the "BASIC AMOUNT"), and (b)
with respect to each Buyer that elects to purchase its Basic
Amount, any additional portion of the Offered Securities
attributable to the Basic Amounts of other Buyers as such Buyer
shall indicate it will purchase or acquire should the other
Buyers subscribe for less than their Basic Amounts (the
"UNDERSUBSCRIPTION AMOUNT").
(B) To accept an Offer, in whole or in part, such Buyer must
deliver a written notice to the Company prior to the end of the
fifth (5th) Business Day after such Buyer's receipt of the Offer
Notice (the "OFFER PERIOD"), setting forth the portion of such
Buyer's Basic Amount that such Buyer elects to purchase and, if
such Buyer shall elect to purchase all of its Basic Amount, the
Undersubscription Amount, if any, that such Buyer elects to
purchase (in either case, the "NOTICE OF ACCEPTANCE"). If the
Basic Amounts subscribed for by all Buyers are less than the
total of all of the Basic Amounts, then each Buyer who has set
forth an Undersubscription Amount in its Notice of Acceptance
shall be entitled to purchase, in addition to the Basic Amounts
subscribed for, the Undersubscription Amount it has subscribed
for; PROVIDED, HOWEVER, that if the Undersubscription Amounts
subscribed for exceed the difference between the total of all the
Basic Amounts and the Basic Amounts subscribed for (the
"AVAILABLE UNDERSUBSCRIPTION AMOUNT"), each Buyer who has
subscribed for any Undersubscription Amount shall be entitled to
purchase only that portion of the Available Undersubscription
Amount as the Basic Amount of such Buyer bears to the total Basic
Amounts of all Buyers that have subscribed for Undersubscription
Amounts, subject to rounding by the Company to the extent its
deems reasonably necessary.
(C) The Company shall have ten (10) Business Days from the
expiration of the Offer Period above to offer, issue, sell or
exchange all or any part of such Offered Securities as to which a
Notice of Acceptance has not been given by the Buyers (the
"REFUSED SECURITIES").
(D) In the event the Company shall propose to sell less than
all the Refused Securities (any such sale to be in the manner and
on the terms specified in Section 4(l)(iii)(C) above), then each
Buyer may, at its sole option and in its sole
19
discretion, reduce the number or amount of the Offered Securities
specified in its Notice of Acceptance to an amount that shall be
not less than the number or amount of the Offered Securities that
such Buyer elected to purchase pursuant to Section 4(l)(iii)(B)
above multiplied by a fraction, (1) the numerator of which shall
be the number or amount of Offered Securities the Company
actually proposes to issue, sell or exchange (including Offered
Securities to be issued or sold to Buyers pursuant to Section
4(l)(iii)(C) above prior to such reduction) and (2) the
denominator of which shall be the original amount of the Offered
Securities.
(E) Upon the closing of the issuance, sale or exchange of
all or less than all of the Refused Securities, the Buyers shall
acquire from the Company, and the Company shall issue to the
Buyers, the number or amount of Offered Securities specified in
the Notices of Acceptance, as reduced pursuant to Section
4(l)(iii)(C) above if the Buyers have so elected, upon the terms
and conditions specified in the Offer. The purchase by the Buyers
of any Offered Securities is subject in all cases to the
preparation, execution and delivery by the Company and the Buyers
of a purchase agreement relating to such Offered Securities
reasonably satisfactory in form and substance to the Buyers and
their respective counsel.
(iv) The restrictions contained in subsections (ii) and (iii) of
this Section 4(l) shall not apply in connection with the issuance of
any Excluded Securities (as defined in the Notes) or any security
issued in a bona fide underwritten public offering by the Company or
any of its Subsidiaries.
5. REGISTER. The Company shall maintain at its principal executive
offices (or such other office or agency of the Company as it may designate by
notice to each holder of Securities), a register for the Notes and the Warrants
in which the Company shall record the name and address of the Person in whose
name the Notes and the Warrants have been issued (including the name and address
of each transferee), the principal amount of Notes held by such Person, the
number of Conversion Shares issuable upon conversion of the Notes and Warrant
Shares issuable upon exercise of the Warrants held by such Person. The Company
shall keep the register open and available at all times during business hours
for inspection of any Buyer or its legal representatives.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of
the Company hereunder to issue and sell the Notes and the related Warrants to
each Buyer at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion by providing each Buyer with prior written
notice thereof:
(a) Such Buyer shall have executed each of the Transaction Documents
to which it is a party and delivered the same to the Company.
(b) Such Buyer and each other Buyer shall have delivered to the
Company the Purchase Price for the Notes and the related Warrants being
purchased by such Buyer at the
20
Closing by wire transfer of immediately available funds pursuant to the
wire instructions provided in Section 1(d) hereof.
(c) The representations and warranties of such Buyer shall be true and
correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and such Buyer shall have
performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by such Buyer at or prior to the
Closing Date.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE. The obligation
of each Buyer hereunder to purchase the Notes and the related Warrants at the
Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for each Buyer's
sole benefit and may be waived by such Buyer at any time in its sole discretion
by providing the Company with prior written notice thereof:
(a) The Company shall have executed and delivered to such Buyer (i)
each of the Transaction Documents and (ii) the Notes (in such principal
amounts as is set forth across from such Buyer's name in column (3) of the
Schedule of Buyers and the related Warrants (in such principal amounts as
is set forth across from such Buyer's name in column (4) of the Schedule of
Buyers) being purchased by such Buyer at the Closing pursuant to this
Agreement.
(b) The Company shall have delivered to such Buyer a certificate,
executed by the Secretary of the Company and dated as of the Closing Date,
as to (i) the resolutions consistent with Section 3(b) as adopted by the
Company's Board of Directors in a form reasonably acceptable to such Buyer,
(ii) the Articles of Incorporation and (iii) the Bylaws, each as in effect
at the Closing, in the form attached hereto as Exhibit D.
(c) The representations and warranties of the Company shall be true
and correct as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as
of a specific date) and the Company shall have performed, satisfied and
complied in all respects with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or
complied with by the Company at or prior to the Closing Date. Such Buyer
shall have received a certificate, executed by the Chief Executive Officer
of the Company, dated as of the Closing Date, to the foregoing effect and
as to such other matters as may be reasonably requested by such Buyer in
the form attached hereto as Exhibit E.
(d) Each officer and director of the Company shall have delivered to
such Buyer a signed Lock-Up Agreement in the form attached hereto as
Exhibit F.
(e) The Common Stock (i) shall be designated for quotation or listed
on the Principal Market and (ii) shall not have been suspended, as of the
Closing Date, by the SEC or the Principal Market from trading on the
Principal Market nor shall suspension by the SEC or the Principal Market
have been threatened, as of the Closing Date, either (A) in writing by the
SEC
21
or the Principal Market or (B) by falling below the minimum listing
maintenance requirements of the Principal Market.
(f) The Company shall have obtained all governmental, regulatory or
third party consents and approvals, if any, necessary for the sale of the
Securities.
(g) The Company shall have delivered to such Buyer such other
documents relating to the transactions contemplated by this Agreement as
such Buyer or its counsel may reasonably request.
8. TERMINATION. In the event that the Closing shall not have occurred
with respect to a Buyer on or before ten (10) Business Days from the date hereof
due to the Company's or such Buyer's failure to satisfy the conditions set forth
in Sections 6 and 7 above (and the nonbreaching party's failure to waive such
unsatisfied condition(s)), the nonbreaching party shall have the option to
terminate this Agreement with respect to such breaching party at the close of
business on such date without liability of any party to any other party.
9. MISCELLANEOUS.
(a) GOVERNING LAW; JURISDICTION; JURY TRIAL. All questions concerning
the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New York or any other jurisdictions) that
would cause the application of the laws of any jurisdictions other than the
State of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and United States federal courts sitting in The
City of New York, Borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not
to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is brought in an inconvenient forum or that the venue
of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address for such notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner
permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY.
(b) COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party; provided that a facsimile
signature shall be considered due execution and shall be binding upon
22
the signatory thereto with the same force and effect as if the signature
were an original, not a facsimile signature.
(c) HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
(d) SEVERABILITY. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability
shall not affect the validity or enforceability of the remainder of this
Agreement in that jurisdiction or the validity or enforceability of any
provision of this Agreement in any other jurisdiction.
(e) ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the other
Transaction Documents supersede all other prior oral or written agreements
between the Buyers, the Company, their Affiliates and Persons acting on
their behalf with respect to the matters discussed herein, and this
Agreement, the other Transaction Documents and the instruments referenced
herein and therein contain the entire understanding of the parties with
respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor any Buyer
makes any representation, warranty, covenant or undertaking with respect to
such matters. No provision of this Agreement may be amended other than by
an instrument in writing signed by the Company and the holders of at least
a majority of the aggregate number of Registrable Securities issued and
issuable hereunder, and any amendment to this Agreement made in conformity
with the provisions of this Section 9(e) shall be binding on all Buyers and
holders of Securities, as applicable. No provision hereof may be waived
other than by an instrument in writing signed by the party against whom
enforcement is sought. No such amendment shall be effective to the extent
that it applies to less than all of the holders of the applicable
Securities then outstanding. No consideration shall be offered or paid to
any Person to amend or consent to a waiver or modification of any provision
of any of the Transaction Documents unless the same consideration also is
offered to all of the parties to the Transaction Documents, holders of
Notes or holders of the Warrants, as the case may be. The Company has not,
directly or indirectly, made any agreements with any Buyers relating to the
terms or conditions of the transactions contemplated by the Transaction
Documents except as set forth in the Transaction Documents. Without
limiting the foregoing, the Company confirms that, except as set forth in
this Agreement, no Buyer has made any commitment or promise or has any
other obligation to provide any financing to the Company or otherwise.
(f) NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be
in writing and will be deemed to have been delivered: (i) upon receipt,
when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one Business Day
after deposit with an overnight courier service, in each case properly
addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be:
23
If to the Company:
Sorell Inc.
Buk-ri 00
Xxxx-Xxxx
Xxxxxx Xxxx, Xxxxx Xxxxx
Telephone: x00000000000
Facsimile: x00000000000
Attention: Bon Xxxx Xx, Chief Executive
Officer
With a copy (for informational purposes only) to:
Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
1065 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxx, Esq.
And to:
Xxxxxx Law Group
0000 Xxxx Xxxxxxxxx Xx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: M. Xxxxxxx Xxxxxx
If to a Buyer, to its address and facsimile number set forth
on the Schedule of Buyers, with copies to such Buyer's
representatives as set forth on the Schedule of Buyers,
or to such other address and/or facsimile number and/or to the
attention of such other Person as the recipient party has specified by
written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by
the recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the
first page of such transmission or (C) provided by an overnight courier
service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from an overnight courier service in accordance with
clause (i), (ii) or (iii) above, respectively.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Notes or the Warrants. The Company
shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the holders of at least a majority of
the aggregate number of Registrable Securities issued and issuable
hereunder, including by way of a
24
Fundamental Transaction (unless the Company is in compliance with the
applicable provisions governing Fundamental Transactions set forth in the
Notes and the Warrants). A Buyer may assign some or all of its rights
hereunder in connection with transfer of any of its Securities without the
consent of the Company, in which event such assignee shall be deemed to be
a Buyer hereunder with respect to such assigned rights.
(h) NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other Person.
(i) SURVIVAL. Unless this Agreement is terminated under Section 8, the
representations and warranties of the Company and the Buyers contained in
Sections 2 and 3 and the agreements and covenants set forth in Sections 4,
5 and 9 shall survive the Closing. Each Buyer shall be responsible only for
its own representations, warranties, agreements and covenants hereunder.
(j) FURTHER ASSURANCES. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and
documents, as any other party may reasonably request in order to carry out
the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
(k) INDEMNIFICATION. In consideration of each Buyer's execution and
delivery of the Transaction Documents and acquiring the Securities
thereunder and in addition to all of the Company's other obligations under
the Transaction Documents, the Company shall defend, protect, indemnify and
hold harmless each Buyer and each other holder of the Securities and all of
their stockholders, partners, members, officers, directors, employees and
direct or indirect investors and any of the foregoing Persons' agents or
other representatives (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement)
(collectively, the "INDEMNITEES") from and against any and all actions,
causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective
of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys'
fees and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by any
Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument
or document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction
Documents or any other certificate, instrument or document contemplated
hereby or thereby or (c) any cause of action, suit or claim brought or made
against such Indemnitee by a third party (including for these purposes a
derivative action brought on behalf of the Company) and arising out of or
resulting from (i) the execution, delivery, performance or enforcement of
the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (ii) any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of
the issuance of the Securities, or (iii) the status of such Buyer or holder
of the Securities as an investor in the Company pursuant to the
transactions contemplated by the Transaction Documents. To the
25
extent that the foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. Except as otherwise set forth herein, the
mechanics and procedures with respect to the rights and obligations under
this Section 9(k) shall be the same as those set forth in Section 6 of the
Registration Rights Agreement.
(l) NO STRICT CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any
party.
(m) REMEDIES. Each Buyer and each holder of the Securities shall have
all rights and remedies set forth in the Transaction Documents and all
rights and remedies which such holders have been granted at any time under
any other agreement or contract and all of the rights which such holders
have under any law. Any Person having any rights under any provision of
this Agreement shall be entitled to enforce such rights specifically
(without posting a bond or other security), to recover damages by reason of
any breach of any provision of this Agreement and to exercise all other
rights granted by law. Furthermore, the Company recognizes that in the
event that it fails to perform, observe, or discharge any or all of its
obligations under the Transaction Documents, any remedy at law may prove to
be inadequate relief to the Buyers. The Company therefore agrees that the
Buyers shall be entitled to seek temporary and permanent injunctive relief
in any such case without the necessity of proving actual damages and
without posting a bond or other security.
(n) PAYMENT SET ASIDE. To the extent that the Company makes a payment
or payments to the Buyers hereunder or pursuant to any of the other
Transaction Documents or the Buyers enforce or exercise their rights
hereunder or thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or
otherwise restored to the Company, a trustee, receiver or any other Person
under any law (including, without limitation, any bankruptcy law, foreign,
provincial, state or United States federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation
or part thereof originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.
(o) CURRENCY. Unless otherwise indicated, all dollar amounts referred
to in this Agreement are in United States Dollars ("US DOLLARS"). All
amounts owing under this Agreement or any Transaction Document shall be
paid in US Dollars. All amounts denominated in other currencies shall be
converted in the US Dollar equivalent amount in accordance with the
Exchange Rate on the date of calculation. "EXCHANGE RATE" means, in
relation to any amount of currency to be converted into US Dollars pursuant
to this Agreement, the US Dollar exchange rate as published in the Wall
Street Journal on the relevant date of calculation.
26
(p) JUDGMENT CURRENCY.
(i) If for the purpose of obtaining or enforcing judgment against
the Company or any Subsidiary, in any court in any jurisdiction it
becomes necessary to convert into any other currency (such other
currency being hereinafter in this Section 9(p) referred to as the
"JUDGMENT CURRENCY") an amount due in US Dollars under this Agreement,
the conversion shall be made at the Exchange Rate prevailing on the
Business Day immediately preceding:
(A) the date of actual payment of the amount due, in the
case of any proceeding in the courts of New York or in the courts
of any other jurisdiction that will give effect to such
conversion being made on such date: or
(B) the date on which the foreign court determines, in the
case of any proceeding in the courts of any other jurisdiction
(the date as of which such conversion is made pursuant to this
Section 9(p) being hereinafter referred to as the "JUDGMENT
CONVERSION DATE").
(ii) If in the case of any proceeding in the court of any
jurisdiction referred to in Section 9(p)(i)(B) above, there is a
change in the Exchange Rate prevailing between the Judgment Conversion
Date and the date of actual payment of the amount due, the applicable
party shall pay such adjusted amount as may be necessary to ensure
that the amount paid in the Judgment Currency, when converted at the
Exchange Rate prevailing on the date of payment, will produce the
amount of US Dollars which could have been purchased with the amount
of Judgment Currency stipulated in the judgment or judicial order at
the Exchange Rate prevailing on the Judgment Conversion Date.
(iii) Any amount due from the Company or any Subsidiary, under
this provision shall be due as a separate debt and shall not be
affected by judgment being obtained for any other amounts due under or
in respect of this Agreement.
(q) INDEPENDENT NATURE OF BUYERS' OBLIGATIONS AND RIGHTS. The
obligations of each Buyer under any Transaction Document are several and
not joint with the obligations of any other Buyer, and no Buyer shall be
responsible in any way for the performance of the obligations of any other
Buyer under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Buyer pursuant
hereto or thereto, shall be deemed to constitute the Buyers as a
partnership, an association, a joint venture or any other kind of entity,
or create a presumption that the Buyers are in any way acting in concert or
as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents and the Company acknowledges that
the Buyers are not acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents.
Each Buyer confirms that it has independently participated in the
negotiation of the transaction contemplated hereby with the advice of its
own counsel and advisors. Each Buyer shall be entitled to independently
protect and enforce its rights, including, without limitation, the rights
arising out of this Agreement or out of any other Transaction Documents,
and it shall not be necessary for any other Buyer to be joined as an
additional party in any proceeding for such purpose.
[Signature Pages Follow]
27
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Securities Purchase Agreement to be duly executed as of
the date first written above.
COMPANY:
SORELL INC.
By:
Name: Bon Xxxx Xxx
Title: Chief Executive Officer
28
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Securities Purchase Agreement to be duly executed as of
the date first written above.
BUYERS:
By:
Name:
Title:
29
SCHEDULE OF BUYERS
(1) (2) (3) (4) (5)
AGGREGATE AGGREGATE LEGAL
ADDRESS AND PRINCIPAL NUMBER REPRESENTATIVE'S ADDRESS
BUYER FACSIMILE NUMBER AMOUNT OF NOTES OF WARRANTS AND FACSIMILE NUMBER
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30
EXHIBITS
--------
Exhibit A Form of Notes
Exhibit B Form of Warrants
Exhibit C Registration Rights Agreement
Exhibit D Secretary's Certificate
Exhibit E Officer's Certificate
Exhibit F Form of Lock-Up Agreement
31
