SECURITIES EXCHANGE AGREEMENT
EXHIBIT
10.1
This
Securities Exchange Agreement (this “Agreement”) is dated as of July ___,
2007, among Oxford Media, Inc., a Nevada corporation (the “Company”) and
each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Holder” and collectively the
“Holders”).
ARTICLE
I
1.1 Definitions. In
addition to the terms defined elsewhere in this Agreement: (a) capitalized
terms
that are not otherwise defined herein have the meanings given to such terms
in
the Certificate of Designation (as defined herein), and (b) the following terms
have the meanings set forth in this Section 1.1:
“Action”
shall have the meaning ascribed to such term in Section 3.1(h).
“Affiliate”
means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
a
Person, as such terms are used in and construed under Rule 144 under the
Securities Act. With respect to a Holder, any investment fund or
managed account that is managed on a discretionary basis by the same investment
manager as such Holder will be deemed to be an Affiliate of such
Holder.
“Authorized
Shares Deficiency” shall have the meaning ascribed to such term in Section
4.10(b).
“Authorized
Share Reverse Action” shall have the meaning ascribed to such term in
Section 4.10(b).
“Business
Day” means any day except Saturday, Sunday, any day which shall be a federal
legal holiday in the United States or any day on which banking institutions
in
the State of New York are authorized or required by law or other governmental
action to close.
“Certificate
of Designation” means the Certificate of Designation to be filed prior to
the Closing by the Company with the Secretary of State of Nevada in the form
of
Exhibit B attached to the Purchase Agreement.
“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section
2.1.
“Closing
Date” means the Trading Day when all of the Transaction Documents have been
executed and delivered by the applicable parties thereto, and, subject to
Section 5.1, all conditions precedent set forth in Section 2.3 below have been
satisfied or waived.
“Commission”
means the Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, par value $0.001 per share,
and any other class of securities into which such securities may hereafter
be
reclassified or changed into.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries
which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or exercisable
or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
“Company
Counsel” means Spectrum Law Group, LLP, with offices at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
“Conversion
Price” shall have the meaning ascribed to such term in the Certificate of
Designation.
“Effective
Date”
means the date that the Registration Statement of the applicable Underlying
Shares is filed by the Company pursuant to the Registration Rights Agreement
is
first declared effective by the Commission.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
“Exchange
Amount” shall mean, as to each Holder as applicable, as of the Closing, the
aggregate outstanding amount of (i) all indebtedness (principal and interest
and
all other amounts due under each respective underlying obligation, including
but
not limited to dividends); (ii) all amounts due in the nature of liquidated
damages or any similar remedy or recovery; (iii) preferred stock; and (iv)
warrants, each as beneficially owned by such Holder and to be exchanged for
the
Preferred Stock purchased hereunder, in each case to the extent specified below
such Holder’s name on the signature page of this Agreement and next to the
heading “Exchange Amount”.
“FWS”
means ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP with offices located at ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
“Holder
Party” shall have the meaning ascribed to such term in Section
4.9.
2
“Legend
Removal Date” shall have the meaning ascribed to such term in Section
4.1(c).
“Liens”
means a lien, charge, security interest, encumbrance, right of first refusal,
preemptive right or other restriction.
“Material
Adverse Effect” shall have the meaning assigned to such term in Section
3.1(b).
“Material
Permits” shall have the meaning ascribed to such term in Section
3.1(m).
“Maximum
Rate” shall have the meaning ascribed to such term in Section
5.17.
“Person”
means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
“Preferred
Stock” means the 15,828.55 shares of the Company’s Series C Convertible
Preferred Stock issued hereunder, in addition to such shares issued as dividends
on such preferred stock, having the rights, preferences and privileges set
forth
in the Certificate of Designation, in the form of Exhibit B attached
hereto.
“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Purchase
Agreement” means that certain Securities Purchase Agreement, dated as of the
date hereof, by and among the Company and the purchasers signatory
thereto.
“Required
Approvals” shall have the meaning ascribed to such term in Section
3.1(e).
“Required
Minimum” means, as of any date, the maximum aggregate number of shares of
Common Stock then issued or potentially issuable in the future pursuant to
the
Transaction Documents, including any Underlying Shares issuable upon conversion
in full of all shares of Preferred Stock, ignoring any conversion limits set
forth therein.
“Registration
Rights Agreement” means the Registration Rights Agreement, dated the date
hereof, among the Company, the Holders and the signatories to the Purchase
Agreement.
“Registration
Statement” shall mean a registration statement registering for resale the
Underlying Shares as provided for in the Registration Rights
Agreement.
“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.
3
“Securities”
means thePreferred Stock and the Underlying Shares.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
“Senior
Lenders” means, collectively, Palisades Master Fund, LP; Longview Fund,
L.P.; Midsummer Investment Fund; Camofi Master LDC; Crescent International,
Ltd.; Plus Four Private Equities, L.P.; ▇▇▇ ▇▇▇▇▇; and, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇
“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock).
“Subsidiary”
means any subsidiary of the Company as identified in Section
3.1(a).
“SVI
Parties” means, collectively, SVI Healthcare, Inc. (formerly known as SVI
SYSTEMS, INC.), an Illinois corporation; ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇; ▇▇▇ ▇. ▇▇▇▇▇▇; The
Marital Trust Under The ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Trust Dated November 24, 1992; and,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇.
“Trading
Day” means a day on which the Common Stock is traded on a Trading Market;
provided that if the Company is not listed or quoted for trading on a Trading
Market, “Trading Day” shall mean “Business Day” unless the context otherwise
requires.
“Trading
Market” means the following markets or exchanges on which the Common Stock
is listed or quoted for trading on the date in question: the American Stock
Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market, the New York Stock Exchange or the OTC Bulletin
Board.
“Transaction
Documents” means this Agreement, the Certificate of Designation, the
Registration Rights Agreement and any other documents or agreements executed
in
connection with the transactions contemplated hereunder.
“Underlying
Shares” means the shares of Common Stock issued and issuable upon conversion
of the Preferred Stock.
“VWAP”
means, for any date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a Trading
Market, the daily volume weighted average price of the Common Stock for such
date (or the nearest preceding date) on the Trading Market on which the Common
Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time);
(b) if the Common Stock is not then quoted for trading on a Trading Market
and if prices for the Common Stock are then reported in the “Pink Sheets”
published by Pink Sheets, LLC (or a similar organization or agency succeeding
to
its functions of reporting prices), the most recent bid price per share of
the
Common Stock so reported; or (c) in all other cases, the fair market value
of a share of Common Stock as determined by an independent appraiser selected
in
good faith by the Holder and reasonably acceptable to the Company, the fees
and
expenses of which shall be paid by the Company.
4
ARTICLE
II
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2.1
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(a) On
the Closing Date, upon the terms and subject to the conditions set forth herein,
substantially concurrent with the execution and delivery of this Agreement
by
the parties hereto, the Company agrees to issue to each Holder shares of
Preferred Stock, and each Holder agrees, severally and not jointly, to accept
the shares of Preferred Stock in exchange for such Holder’s Exchange Amount in
the following amounts set forth below and as further summarized on Exhibit
“A”, attached hereto and incorporated herein by reference:
(i) As
to any Senior Non-Convertible Notes (represented by eight (8) separate notes
in
the total original principal balance of $11,500,000 with said total outstanding
principal balance increased to $11,926,500 thereafter) comprising such Holder’s
Exchange Amount, for each $1,000 of all amounts due and payable under the Senior
Non-Convertible Notes exchanged hereunder, 1 share of Preferred
Stock;
(ii) As
to any Convertible Subordinated Notes (represented by three (3) separate notes
in the total original principal balance of $2,350,000 and issued in connection
with the Company’s acquisition of SVI Hotel Corporation) comprising such
Holder’s Exchange Amount, for each $1,000 due and payable under the Convertible
Subordinated Notes exchanged hereunder, 0.5 share of Preferred
Stock;
(iii) As
to any Series A Convertible Preferred Stock comprising such Holder’s Exchange
Amount, for each $1,000 due and payable under such preferred stock exchanged
hereunder (the outstanding stated value of which is $4,000,000), 0.25 share
of
Preferred Stock;
(iv) As
to any Series B Convertible Preferred Stock comprising such Holder’s Exchange
Amount, for each $1,000 due and payable under such preferred stock exchanged
hereunder (the outstanding stated value of which is $3,857,000), 0.25 share
of
Preferred Stock; and
5
(v) As
to any Subordinated Non-Convertible Debt comprising such Holder’s Exchange
Amount (comprised of (i) a note in favor of ▇▇▇▇▇▇ ▇▇▇▇▇ in the original
principal amount of $50,000; (ii) a note in favor of ▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
in the original principal amount of $50,000; (iii) a note in favor of ▇▇▇▇
▇▇▇▇▇
in the original principal amount of $247,000; and, (iv) three notes in the
total
principal amount of $100,000 issued to the sellers of SVI Hotel Corporation),
for each $1,000 due and payable under such debt exchanged hereunder, 0.125
share
of Preferred Stock.
(b) Each
Holder shall deliver to the Company the certificates representing their
respective Exchange Amount and the Company shall deliver to each Holder their
respective shares of Preferred Stock and the other items set forth in Section
2.2 issuable at the Closing. Upon satisfaction of the conditions set
forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of FWS,
or
such other location as the parties shall mutually agree.
(c) All
Common Stock purchase warrants or options held by each Holder shall hereby
terminate and be of no further force or effect.
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2.2
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(a) On
or prior to the Closing Date, the Company shall deliver or cause to be delivered
to each Holder the following:
(i) this
Agreement duly executed by the Company;
(ii) a
legal opinion of Company Counsel, in the form of Exhibit C attached
hereto;
(iii) the
Registration Rights Agreement duly executed by the Company; and
(iv) one
or more certificates evidencing the shares of Preferred Stock issuable to such
Holder pursuant to Section 2.1(a).
(b) On
the Closing Date, each Holder shall deliver or cause to be delivered to the
Company the following:
(i) this
Agreement duly executed by such Holder;
(ii) the
Registration Rights Agreement duly executed by such Purchaser; and
(iii) such
Holder’s certificate representing the securities comprising the Exchange
Amount.
6
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2.3
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(a) The
obligations of the Company hereunder in connection with the Closing are subject
to the following conditions being met (or waived by the Company in its sole
discretion):
(i) the
accuracy in all material respects when made and on the Closing Date of the
representations and warranties of each of the Holders contained
herein;
(ii) all
obligations, covenants and agreements of the Holders required to be performed
at
or prior to the Closing Date shall have been performed;
(iii) the
execution (by all appropriate parties) and delivery of the Purchase Agreement
and the Registration Rights Agreement; and
(iv) the
delivery by the Holders of the items set forth in Section 2.2(b) of this
Agreement.
(b) The
obligations of each Holder hereunder in connection with the Closing are subject
to the following conditions being met (or waived by such Holder in its sole
discretion):
(i) the
accuracy in all material respects when made and on the Closing Date of the
representations and warranties of the Company contained herein;
(ii) all
obligations, covenants and agreements of the Company required to be performed
at
or prior to the Closing Date shall have been performed;
(iii) the
delivery by the Company of the items set forth in Section 2.2(a) of this
Agreement;
(iv) ▇▇▇▇▇
▇▇▇▇▇▇ shall have tendered his resignation from the Board of Directors, with
an
effective date of July 16, 2007;
(v) ▇▇▇
▇▇▇▇▇ shall have agreed to a written restructuring of his employment agreement
which is reasonably acceptable to a majority of the Holders;
(vi) the
execution (by all appropriate parties) and delivery of the Settlement and
Amendment Agreement to be executed with the sellers of SVI Hotel
Corporation;
7
(vii) the
execution (by all appropriate parties) and delivery of the Purchase Agreement
and the closing of the transactions contemplated thereby, with the Company
receiving gross proceeds of at least $3,500,000 from the sale of the Company’s
senior secured debentures, the terms of which are set forth on Exhibit
2.1(g)(ii) attached hereto (the “Debentures”);
(viii) the
execution (by all appropriate parties) and delivery of the Registration Rights
Agreement;
(ix) the
execution and delivery by each other Holder with an entry set forth on Exhibit
A
hereto (Exchange Amounts) of all documents and instruments contemplated to
be
delivered hereunder; and
(x) there
shall have been no Material Adverse Effect with respect to the Company since
the
date hereof.
ARTICLE
III
3.1 Representations
and Warranties of the Company. The Company hereby makes the
following representations and warranties to each Holder:
(a) Subsidiaries. All
of the direct and indirect subsidiaries of the Company are set forth in the
Company’s Annual Report on Form 10-K for the year ended December 31, 2006, as
filed with the Commission. The Company owns, directly or indirectly, all of
the
capital stock or other equity interests of each Subsidiary free and clear of
any
Liens, and all of the issued and outstanding shares of capital stock of each
Subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights to subscribe for or purchase
securities.
(b) Organization
and Qualification. The Company and each of the Subsidiaries is an
entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation or
default of any of the provisions of its respective certificate or articles
of
incorporation, bylaws or other organizational or charter
documents. Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in (i) a material adverse effect on
the
legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a
“Material Adverse Effect”) and no Proceeding has been instituted in any
such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit
or curtail such power and authority or qualification.
8
(c) Authorization;
Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by
each
of the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further action is required
by
the Company, its board of directors or its stockholders in connection therewith
other than in connection with the Required Approvals. Each
Transaction Document has been (or upon delivery will have been) duly executed
by
the Company and, when delivered in accordance with the terms hereof and thereof,
will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms except (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may
be
limited by applicable law.
(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 do not and will not: (i) conflict
with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter
documents, or (ii) conflict with, or constitute a default (or an event that
with
notice or lapse of time or both would become a default) under, result in the
creation of any Lien upon any of the properties or assets of the Company or
any
Subsidiary, or give to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or both) of, any
agreement, credit facility, debt or other instrument (evidencing a Company
or
Subsidiary debt or otherwise) or other understanding to which the Company or
any
Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal
and
state securities laws and regulations), or by which any property or asset of
the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not have or reasonably be expected to
result in a Material Adverse Effect.
(e) Filings,
Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person (other than the Holders) in connection
with the execution, delivery and performance by the Company of the Transaction
Documents, other than (i) the Authorized Share Reverse Action, (ii) filings
required pursuant to Section 4.6, (iii) the filing of Form D with the Commission
and such filings as are required to be made under applicable state securities
laws, (iv) filing of the registration statement contemplated by the
Registration Rights Agreement or otherwise contemplated hereby and
(v) filing of any of the foregoing with the appropriate Trading
Market(s) (collectively, the “Required
Approvals”).
9
(f) Issuance
of the Securities. As of the Closing Date, the Securities will be
duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company or any other
Person other than restrictions on transfer provided for in the Transaction
Documents and, if applicable, pledges or other actions taken by any particular
Holder with respect to such Holder’s Securities. The Underlying
Shares, when issued in accordance with the terms of the Transaction Documents,
will be validly issued, fully paid and nonassessable, free and clear of all
Liens imposed by the Company.
(g) Capitalization. The
capitalization of the Company as of the date hereof, immediately prior to the
Closing, is as set forth on Schedule 3.1(g)(i), and the capitalization of
the Company immediately following the Closing, assuming consummation of the
transactions contemplated by this Agreement and the Purchase Agreement, will
be
as set forth on Schedule 3.1(g)(ii), each of which schedule shall include
the number of shares of Common Stock and all other equity securities or
convertible debt securities owned or to be owned beneficially, and of record,
by
each security holder of the Company (other than security holders who hold less
than 1% of the Common Stock as of the date hereof and are not Affiliates of
any
party to the Exchange or the Purchase Agreement, which security holders are
denominated as a group as Other Common Stockholders), together with the
outstanding options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights
or
obligations convertible into or exercisable or exchangeable for, or giving
any
Person any right to subscribe for or acquire, any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company
or
any Subsidiary is or may become bound to issue additional shares of Common
Stock
or Common Stock Equivalents. Except for the Authorized Shares
Increase Action, no further approval or authorization of any stockholder, the
Board of Directors of the Company or others is required for the issuance and
sale of the Securities. There are no stockholders agreements, voting
agreements or other similar agreements with respect to the Company’s capital
stock to which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s stockholders
(h) Litigation. There
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting
the
Company, any Subsidiary or any of their respective properties before or by
any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”)
which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii)
could, if there were an unfavorable decision, have or reasonably be expected
to
result in a Material Adverse Effect. Neither the Company nor any
Subsidiary, nor any director or officer thereof, is or has been the subject
of
any Action involving a claim of violation of or liability under federal or
state
securities laws or a claim of breach of fiduciary duty. The Commission has
not
issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.
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(i) Transactions
with Affiliates and Employees. None of the officers or directors
of the Company and, to the knowledge of the Company, none of the employees
of
the Company is presently a party to any transaction with the Company or any
Subsidiary, including any contract, agreement or other arrangement providing
for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest
or
is an officer, director, trustee or partner, in each case in excess of $60,000
other than for (i) payment of salary, consulting fees and directors’ fees for
services rendered in the ordinary course of business consistent with past
practices, (ii) reimbursement for expenses incurred on behalf of the Company
and
(iii) other employee benefits granted in the ordinary course of business,
including stock option agreements under any stock option plan of the Company
disclosed in filings with the Commission.
(j) Certain
Fees. (i) Except as otherwise disclosed on Schedule 3.1(j)
attached hereto and incorporated herein, no brokerage or finder’s fees or
commissions are or will be payable by the Company to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or
other
Person with respect to the transactions contemplated by the Transaction
Documents; and (ii) the Holders shall have no obligation with respect to any
fees or with respect to any claims made by or on behalf of other Persons for
fees of a type contemplated in this Section that may be due in connection with
the transactions contemplated by the Transaction Documents.
(k) Private
Placement. Assuming the accuracy of the Holders’ representations and
warranties set forth in Section 3.2, no registration under the Securities Act
is
required for the offer and sale of the Securities by the Company to the Holders
as contemplated hereby.
(l) Listing
and Maintenance Requirements. The Company’s Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act.
(m) Disclosure. All
disclosure furnished by or on behalf of the Company to the Holders regarding
the
Company, its business and the transactions contemplated hereby, including the
Disclosure Schedules to this Agreement, 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 light of the
circumstances under which they were made, not misleading. The
press releases disseminated by the Company during the twelve months preceding
the date of this Agreement taken as a whole do not 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, in light of the
circumstances under which they were made and when made, not
misleading. The Company acknowledges and agrees that no Holder makes
or has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 3.2
hereof.
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(n) No
Integrated Offering. Assuming the accuracy of the Holders’ representations
and warranties set forth in Section 3.2, neither the Company, nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers
to
buy any security, under circumstances that would cause this offering of the
Securities to be integrated with prior offerings by the Company for purposes
of
the Securities Act or any applicable shareholder approval provision of any
Trading Market on which any of the securities of the Company are listed or
designated.
(o) No
General Solicitation. Neither the Company nor any person acting
on behalf of the Company has offered or sold (i) any of the Securities by any
form of general solicitation or general advertising, or (ii) any other
securities of the Company with comparable rights and preferences by any form
of
general solicitation or general advertising within two months of the date
hereof. The Company has offered such Securities for sale only to the
Holders and certain other “accredited investors” within the meaning of Rule 501
under the Securities Act.
(p) Acknowledgment
Regarding Holders’ Purchase of Securities. The Company
acknowledges and agrees that, to the best of its knowledge, each of the Holders
is acting solely in the capacity of an arm’s length purchaser with respect to
the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that no Holder 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
thereby and any advice given by any Holder or any of their respective
representatives or agents in connection with the Transaction Documents and
the
transactions contemplated thereby is merely incidental to the Holders’ purchase
of the Securities. The Company further represents to each Holder that
the Company’s decision to enter into this Agreement and the other Transaction
Documents has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its
representatives.
(q) Acknowledgement
Regarding Holders’ Trading Activity. Anything in this Agreement
or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(f)
and 4.16 hereof), it is understood and acknowledged by the Company (i) that
none of the Holders have been asked to agree, nor has any Holder agreed, to
desist from purchasing or selling, long and/or short, securities of the Company,
or “derivative” securities based on securities issued by the Company or to hold
the Securities for any specified term; (ii) that past or future open market
or
other transactions by any Holder, including Short Sales, and specifically
including, without limitation, Short Sales or “derivative” transactions, before
or after the closing of this or future private placement transactions, may
negatively impact the market price of the Company’s publicly-traded securities;
(iii) that any Holder, and counter-parties in “derivative” transactions to which
any such Holder is a party, directly or indirectly, presently may have a “short”
position in the Common Stock; and (iv) that each Holder shall not be deemed
to
have any affiliation with or control over any arm’s length counter-party in any
“derivative” transaction. The Company further understands and acknowledges
that (a) one or more Holders may engage in hedging activities at various times
during the period that the Securities are outstanding, including, without
limitation, during the periods that the value of the Underlying Shares
deliverable with respect to Securities are being determined and (b) such hedging
activities (if any) could reduce the value of the existing stockholders' equity
interests in the Company at and after the time that the hedging activities
are
being conducted. The Company acknowledges that such aforementioned hedging
activities do not constitute a breach of any of the Transaction
Documents.
12
(r) Regulation
M Compliance. 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) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the securities of the Company, or (iii) paid
or
agreed to pay to any Person any compensation for soliciting another to purchase
any other securities of the Company, other than, in the case of clauses (ii)
and
(iii), compensation paid to the Company’s placement agent in connection with the
placement of the Securities.
(s) 3(a)(9)
Exchange. The exchange of securities comprising the Exchange Amounts is
being consummated pursuant to Sections 3(a)(9) and 18(b)(4)(C) of the Securities
Act. Accordingly, pursuant to Rule 144(d), the holding period of the
Underlying Shares shall tack back to the original issue date of the securities
comprising the Exchange Amount.
(t) Representations
and Warranties of the Purchase Agreement. The representations and
warranties of the Company made pursuant to the Purchase Agreement, as qualified
by the Disclosure Schedules attached thereto and hereto and delivered to the
Holders, are 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 light of the circumstances under which they were
made, not misleading.
3.2 Representations
and Warranties of the Holders. Each Holder hereby, for itself and
for no other Holder, represents and warrants as of the date hereof and as of
the
Closing Date to the Company as follows:
13
(a) Organization;
Authority. Such Holder is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with full right, corporate or partnership power and authority
to
enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder
(or, as appropriate, is an individual with full right, power and authority
to
enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out his obligations hereunder and thereunder).
The execution, delivery and performance by such Holder of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate or similar action on the part of such Holder. Each
Transaction Document to which it is a party has been duly executed by such
Holder, and when delivered by such Holder in accordance with the terms hereof,
will constitute the valid and legally binding obligation of such Holder,
enforceable against it in accordance with its terms, except (i) as limited
by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may
be
limited by applicable law.
(b) Own
Account. Such Holder understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Securities as principal
for its own account and not with a view to or for distributing or reselling
such
Securities or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any
of
such Securities in violation of the Securities Act or any applicable state
securities law and has no direct or indirect arrangement or understandings
with
any other persons to distribute or regarding the distribution of such Securities
in violation of the Securities Act or any applicable state securities law (this
representation and warranty not limiting such Holder’s right to sell the
Securities pursuant to the Registration Statement or otherwise in compliance
with applicable federal and state securities laws). Such Holder is acquiring
the
Securities hereunder in the ordinary course of its business.
(c) Holder
Status. At the time such Holder was offered the Securities, it
was, and at the date hereof it is, and on each date on which it converts any
shares of Preferred Stock, it will be either: (i) an “accredited investor” as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities
Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under
the Securities Act. Such Holder is not required to be registered as a
broker-dealer under Section 15 of the Exchange Act.
(d) Experience
of Such Holder. Such Holder, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks
of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment. Such Holder is able to bear the
economic risk of an investment in the Securities and, at the present time,
is
able to afford a complete loss of such investment.
14
(e) General
Solicitation. Such Holder is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
(f) Short
Sales and Confidentiality Prior To The Date Hereof. Other
than the transaction contemplated hereunder, such Holder has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with such Holder, executed any disposition, including Short
Sales, in the securities of the Company during the period commencing from
the time that such Holder first received a term sheet (written or oral) from
the
Company or any other Person setting forth the material terms of the transactions
contemplated hereunder until the date hereof (“Discussion
Time”). Notwithstanding the foregoing, in the case of a Holder
that is a multi-managed investment vehicle whereby separate portfolio managers
manage separate portions of such Holder's assets and the portfolio managers
have
no direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Holder's assets, the representation set forth
above shall only apply with respect to the portion of assets managed by the
portfolio manager that made the investment decision to purchase the Securities
covered by this Agreement. Other than to other Persons party to this
Agreement, such Holder has maintained the confidentiality of all disclosures
made to it in connection with this transaction (including the existence and
terms of this transaction).
(g) No
Commission or Other Recommendation for Solicitation of Exchange. The Holder
has not received any commission or other remuneration for the solicitation
of
any of the participants in, or recommendation with respect to, the share
exchange contemplated by this Agreement.
ARTICLE
IV
(a) The
Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Securities other
than pursuant to an effective registration statement or Rule 144, to the Company
or to an Affiliate of a Holder or in connection with a pledge as contemplated
in
Section 4.1(b), the Company may require the transferor thereof to provide to
the
Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Securities under the Securities
Act. As a condition of transfer, any such transferee shall agree in
writing to be bound by the terms of this Agreement and the Registration Rights
Agreement and shall have the rights of a Holder under this Agreement and the
Registration Rights Agreement.
(b) The
Holders agree to the imprinting, so long as is required by this Section 4.1,
of
a legend on any of the Securities in the following form:
15
[NEITHER]
THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE]
[CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON
[EXERCISE] [CONVERSION] OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH
A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
The
Company acknowledges and agrees that a Holder may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and the Registration Rights Agreement and, if required under the terms of such
arrangement, such Holder may transfer pledged or secured Securities to the
pledgees or secured parties. Such a pledge or transfer would not be
subject to approval of the Company and no legal opinion of legal counsel of
the
pledgee, secured party or pledgor shall be required in connection
therewith. Further, no notice shall be required of such
pledge. At the appropriate Holder’s expense, the Company will execute
and deliver such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or transfer of
the
Securities, including, if the Securities are subject to registration, the
preparation and filing of any required prospectus supplement under Rule
424(b)(3) under the Securities Act or other applicable provision of the
Securities Act to appropriately amend the list of Selling Stockholders
thereunder.
16
(c) Certificates
evidencing the Underlying Shares shall not contain any legend (including the
legend set forth in Section 4.1(b) hereof): (i) while a registration statement
covering the resale of such security is effective under the Securities Act,
or
(ii) following any sale of such Underlying Shares pursuant to Rule 144, or
(iii)
if such Underlying Shares are eligible for sale under Rule 144(k), or (iv)
if
such legend is not required under applicable requirements of the Securities
Act
(including judicial interpretations and pronouncements issued by the staff
of
the Commission). Upon a sale pursuant to a Registration Statement or pursuant
to
Rule 144, the Company shall cause its counsel to issue a legal opinion to the
Company’s transfer agent promptly upon any such request, so long as the Holder
provides the Company’s counsel with all such information counsel reasonably and
customarily requests to provide such opinion. If all or any shares of Preferred
Stock is converted at a time when there is an effective registration statement
to cover the resale of the Underlying Shares, or if such Underlying Shares
may
be sold under Rule 144(k) or if such legend is not otherwise required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission) then
such Underlying Shares shall be issued free of all legends. The
Company agrees that following the Effective Date or at such time as such legend
is no longer required under this Section 4.1(c), it will, no later than five
Trading Days following the delivery by a Holder to the Company or the Company’s
transfer agent of a certificate representing Underlying Shares, as applicable,
issued with a restrictive legend (such fifth Trading Day, the “Legend Removal
Date”), deliver or cause to be delivered to such Holder a certificate
representing such shares that is free from all restrictive and other legends;
provided however that the Company has been provided with such information as
is
reasonably and customarily required to make the determination that the legend
should be removed. The Company may not make any notation on its records or
give
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section. Certificates for Underlying
Shares subject to legend removal hereunder shall be transmitted by the transfer
agent of the Company to the Holders by crediting the account of the Holder’s
prime broker with the Depository Trust Company System.
(d) In
addition to such Holder’s other available remedies, the Company shall pay to a
Holder, in cash, as partial liquidated damages and not as a penalty, for each
$1,000 of Underlying Shares (based on the VWAP of the Common Stock on the date
such Securities are submitted to the Company’s transfer agent) delivered for
removal of the restrictive legend and subject to Section 4.1(c), $10 per Trading
Day (increasing to $20 per Trading Day 10 Trading Days after such damages have
begun to accrue) for each Trading Day after the Legend Removal Date until such
certificate is delivered without a legend; provided however that if the Company
is not listed or quoted on a Trading Market, no such payment shall be required.
Nothing herein shall limit such Holder’s right to pursue actual damages for the
Company’s failure to deliver certificates representing any Securities as
required by the Transaction Documents, and such Holder shall have the right
to
pursue all remedies available to it at law or in equity including, without
limitation, a decree of specific performance and/or injunctive
relief.
(e)
Each Holder, severally and not jointly with the other Holders, agrees that
the
removal of the restrictive legend from certificates representing Securities
as
set forth in this Section 4.1 is predicated upon the Company’s reliance that the
Holder will sell any Securities pursuant to either the registration requirements
of the Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom, and that if Securities are sold
pursuant to a Registration Statement, they will be sold in compliance with
the
plan of distribution set forth therein.
17
4.2 Acknowledgment
of Dilution. The Company acknowledges that the issuance of the
Securities will result in substantial dilution of the outstanding shares of
Common Stock. The Company further acknowledges that its obligations
under the Transaction Documents, including without limitation its obligation
to
issue the Underlying Shares pursuant to the Transaction Documents, are
unconditional and absolute and not subject to any right of set off,
counterclaim, delay or reduction, regardless of the effect of any such dilution
or any claim the Company may have against any Holder and regardless of the
dilutive effect that such issuance may have on the ownership of the other
stockholders of the Company.
4.3 Furnishing
of Information. From and after the Effective Date and as long as
any Holder owns Securities, the Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period)
all
reports required to be filed by the Company after the date hereof pursuant
to
the Exchange Act. As long as any Holder owns Securities, if the
Company is not required to file reports pursuant to the Exchange Act, it will
prepare and furnish to the Holders and make publicly available in accordance
with Rule 144(c) such information as is required for the Holders to sell the
Securities under Rule 144. The Company further covenants that it will
take such further action as any holder of Securities may reasonably request,
to
the extent required from time to time to enable such Person to sell such
Securities without registration under the Securities Act within the requirements
of the exemption provided by Rule 144, including providing a legal opinion
of
counsel if required by the Transfer Agent to effect such transfer.
4.4 Integration. The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Securities in a
manner that would require the registration under the Securities Act of the
sale
of the Securities to the Holders or that would be integrated with the offer
or
sale of the Securities for purposes of the rules and regulations of any Trading
Market.
4.5 Conversion
and Exercise Procedures. The form of Notice of Conversion
included in the Certificate of Designation sets forth the totality of the
procedures required of the Holders in order to convert the Preferred
Stock. No additional legal opinion or other information or
instructions shall be required of the Holders to convert their Preferred
Stock. The Company shall honor conversions of the Preferred Stock and
shall deliver Underlying Shares in accordance with the terms, conditions and
time periods set forth in the Transaction Documents.
4.6 Securities
Laws Disclosure; Publicity. The Company shall, by the
fourth Business Day following the date hereof, issue a Current Report on Form
8-K, disclosing the material terms of the transactions contemplated hereby
and
including the Transaction Documents as exhibits thereto. The Company
and each Holder shall consult with each other in issuing any other press
releases with respect to the transactions contemplated hereby, and neither
the
Company nor any Holder shall issue any such press release or otherwise make
any
such public statement without the prior consent of the Company, with respect
to
any press release of any Holder, or without the prior consent of each Holder,
with respect to any press release of the Company, which consent shall not
unreasonably be withheld or delayed, except if such disclosure is required
by
law, in which case the disclosing party shall promptly provide the other party
with prior notice of such public statement or
communication. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Holder, or include the name of any Holder
in
any filing with the Commission or any regulatory agency or Trading Market,
without the prior written consent of such Holder, except (i) as required by
federal securities law in connection with (A) any registration statement
contemplated by the Registration Rights Agreement and (B) the filing of final
Transaction Documents (including signature pages thereto) with the Commission
and (ii) to the extent such disclosure is required by law or Trading Market
regulations, in which case the Company shall provide the Holders with prior
notice of such disclosure permitted under this subclause (ii).
18
4.7 Shareholder
Rights Plan. No claim will be made or enforced by the Company or,
with the consent of the Company, any other Person, that any Holder is an
“Acquiring Person” under any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or similar
anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that any Holder could be deemed to trigger the provisions of any such plan
or
arrangement, by virtue of receiving Securities under the Transaction Documents
or under any other agreement between the Company and the Holders.
4.8 Non-Public
Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company covenants and agrees that neither it nor any other Person acting on
its
behalf will provide any Holder or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto such Holder shall have executed a written agreement regarding
the
confidentiality and use of such information. The Company understands
and confirms that each Holder shall be relying on the foregoing representations
in effecting transactions in securities of the Company.
4.9 Indemnification
of Holders. Subject to the provisions of this Section 4.9,
the Company will indemnify and hold each Holder and its directors, officers,
shareholders, members, partners, employees and agents (and any other Persons
with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls such Holder (within the meaning of Section 15 of the Securities Act
and
Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding
a
lack of such title or any other title) of such controlling person (each, a
“Holder Party”) harmless from any and all losses, liabilities,
obligations, claims, contingencies, damages, costs and expenses, including
all
judgments, amounts paid in settlements, court costs and reasonable attorneys’
fees and costs of investigation that any such Holder Party may suffer or incur
as a result of or relating to (a) any material breach of any of the material
representations, warranties, covenants or agreements made by the Company in
this
Agreement or in the other Transaction Documents or (b) any action instituted
against a Holder, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of such Holder, with respect
to any of the transactions contemplated by the Transaction Documents (unless
such action is based upon a breach of such Holder’s representations, warranties
or covenants under the Transaction Documents or any agreements or understandings
such Holder may have with any such stockholder or any violations by the Holder
of state or federal securities laws or any conduct by such Holder which
constitutes fraud, gross negligence, willful misconduct or
malfeasance). If any action shall be brought against any Holder Party
in respect of which indemnity may be sought pursuant to this Agreement, such
Holder Party shall promptly notify the Company in writing, and the Company
shall
have the right to assume the defense thereof with counsel of its own choosing
reasonably acceptable to the Holder Party. Any Holder Party shall
have the right to employ separate counsel in any such action and participate
in
the defense thereof, but the fees and expenses of such counsel shall be at
the
expense of such Holder Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the
Company has failed after a reasonable period of time to assume such defense
and
to employ counsel or (iii) in such action there is, in the reasonable opinion
of
such separate counsel, a material conflict on any material issue between the
position of the Company and the position of such Holder Party, in which case
the
Company shall be responsible for the reasonable fees and expenses of no more
than one such separate counsel for each class of Holder Parties with
substantially identical interests in all pending issues. The Company
will not be liable to any Holder Party under this Agreement (i) for any
settlement by a Holder Party effected without the Company’s prior written
consent, which shall not be unreasonably withheld or delayed; or (ii) to the
extent, but only to the extent that a loss, claim, damage or liability is
attributable to any Holder Party’s breach of any of the representations,
warranties, covenants or agreements made by such Holder Party in this Agreement
or in the other Transaction Documents.
19
(a) Subject
to Sections 4.10(b) and (c), the Company shall maintain a reserve from its
duly
authorized shares of Common Stock for issuance pursuant to the Transaction
Documents in such amount as may be required to fulfill its obligations in full
under the Transaction Documents.
(b) Subject
to Section 4.10(c), if, on any date, the number of authorized but unissued
(and
otherwise unreserved) shares of Common Stock is less than 100% of (i) the
Required Minimum on such date, minus (ii) the number of shares of Common Stock
previously issued pursuant to the Transaction Documents (an “Authorized Share
Deficiency”) then the Company shall immediately take commercially reasonable
efforts to provide the Company with authorized shares of Common Stock in an
amount sufficient to allow the Company to reserve the Required Minimum. Without
limiting the generality of the forgoing sentence, as soon as practicable after
the date of the occurrence of an Authorized Share Deficiency, but in no event
later than forty-five (45) days after the occurrence of such Authorized Share
Deficiency, the Company shall use its best efforts to either (i) obtain
stockholder approval of an increase in the number of authorized shares of Common
Stock or (ii) effect a properly authorized reverse stock split of its Common
Stock whereby all post-split shares of unissued Common Stock would be authorized
and available for issuance (each such action, an “Authorized Share Reverse
Action”); provided that the Company will not be required at any time to
authorize a number of shares of Common Stock greater than the maximum remaining
number of shares of Common Stock that could possibly be issued after such time
pursuant to the Transaction Documents and any other agreements binding on the
Company, including any Underlying Shares issuable upon conversion in full of
all
Preferred Stock, ignoring any conversion limits set forth therein.
20
(c) The
Holders acknowledge that the Company does not have sufficient Common Stock
authorized as of the Closing Date to reserve the Required Minimum and meet
its
other reserve requirements. Notwithstanding Section 4.10(a) and 4.10(b) to
the
contrary, the parties agree that: (i) such failure shall not be considered
an
Authorized Share Deficiency until September 30, 2007; (ii) prior to such date,
the Company shall use its best efforts to take an Authorized Share Reverse
Action; (iii) the Holders, to the extent each owns any Common Stock or Preferred
Stock, will vote in favor of the Authorized Share Reverse Action; and (iv)
pending such Authorized Share Reverse Action, the Company will reserve all
unreserved Common Stock with respect to the Securities.
(d) The
Company shall, if applicable: (i) in the time and manner required by the
principal Trading Market, prepare and file with such Trading Market an
additional shares listing application covering a number of shares of Common
Stock at least equal to the Required Minimum on the date of such application,
(ii) take all steps necessary to cause such shares of Common Stock to be
approved for listing on such Trading Market as soon as possible thereafter,
(iii) provide to the Holders evidence of such listing, and (iv) maintain the
listing of such Common Stock on any date at least equal to the Required Minimum
on such date on such Trading Market or another Trading Market.
4.11 Equal
Treatment of Holders. 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 is also
offered to all of the parties to the Transaction Documents. For
clarification purposes, this provision constitutes a separate right granted
to
each Holder by the Company and negotiated separately by each Holder, and is
intended for the Company to treat the Holders as a class and shall not in any
way be construed as the Holders acting in concert or as a group with respect
to
the purchase, disposition or voting of Securities or otherwise.
4.12 Short
Sales and Confidentiality After The Date Hereof. Each Holder
severally and not jointly with the other Holders covenants that neither it
nor
any Affiliate acting on its behalf or pursuant to any understanding with it
will
execute any Short Sales during the period commencing at the Discussion Time
and
ending at the time that the transactions contemplated by this Agreement are
first publicly announced as described in Section 4.6. Each Holder,
severally and not jointly with the other Holders, covenants that until such
time
as the transactions contemplated by this Agreement are publicly disclosed by
the
Company as described in Section 4.6, such Holder will maintain the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this
transaction). Each Holder understands and acknowledges, severally and
not jointly with any other Holder, that the Commission currently takes the
position that coverage of short sales of shares of the Common Stock “against the
box” prior to the Effective Date of the Registration Statement with the
Securities is a violation of Section 5 of the Securities Act, as set forth
in
Item 65, Section A, of the Manual of Publicly Available Telephone
Interpretations, dated July 1997, compiled by the Office of Chief Counsel,
Division of Corporation Finance. Notwithstanding the foregoing, no
Holder makes any representation, warranty or covenant hereby that it will not
engage in Short Sales in the securities of the Company after the time that
the
transactions contemplated by this Agreement are first publicly announced as
described in Section 4.6. Notwithstanding the foregoing, in the case
of a Holder that is a multi-managed investment vehicle whereby separate
portfolio managers manage separate portions of such Holder’s assets and the
portfolio managers have no direct knowledge of the investment decisions made
by
the portfolio managers managing other portions of such Holder’s assets, the
covenant set forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision to purchase
the Securities covered by this Agreement.
21
4.13 Form
D; Blue Sky Filings. The Company agrees to timely file, if
necessary, a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof, promptly upon request of any Holder. The
Company shall 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 Holders at the Closing under applicable securities or “Blue Sky”
laws of the states of the United States, and shall provide evidence of such
actions promptly upon request of any Holder.
4.14 Palisades
Board of Directors. At any time following the date hereof,
Palisades Master Fund, L.P. (“Palisades Board Appointer”) or its
designees shall have the right, in their sole discretion, to appoint 1 member
to
the Board of Directors of the Company. The Board of Directors of the
Company shall not exceed 9 members following any such
appointment. The Company agrees that it shall have its Board of
Directors or nominating committee, if it has one, to re-nominate the individuals
designated by Palisades Board Appointer or its designees, as directors pursuant
to this Section 4.14 or for re-election at each meeting of shareholders called
for such purpose, to recommend to the Company’s shareholders that that they vote
“for” such nominees, and that all proxies given to management are voted in favor
of such nominees. If Palisades Board Appointer shall exercise its
right to appoint a member to the Company’s Board of Directors, the Company shall
use best efforts to obtain and maintain directors and officers liability
insurance in such amounts as are customary for companies of the Company’s size
and market position; and shall enter into indemnification contracts with the
individuals designated by Palisades Board Appointer, or its designees, as
members of the Board of Directors, in form and substance customary under
comparable circumstances and reasonably satisfactory to such
individuals. The right of Palisades Board Appointer, its designees,
to appoint members of the Board of Directors pursuant to this Section 4.14
shall
terminate upon the earlier of (i) written notice of such termination by
Palisades Board Appointer to the Company or (ii) the Debentures are paid-in-full
and retired in their entirety.
4.15 Midsummer
Board of Directors. At any time following the date hereof,
Midsummer Investment Limited (“Midsummer Board Appointer”) or its
designees shall have the right, in their sole discretion, to appoint 2 members
to the Board of Directors of the Company. The Board of Directors of
the Company shall not exceed 9 members following any such
appointment. The Company agrees that it shall have its Board of
Directors or nominating committee, if it has one, to re-nominate the individuals
designated by Midsummer Board Appointer or its designees, as directors pursuant
to this Section 4.15 or for re-election at each meeting of shareholders called
for such purpose, to recommend to the Company’s shareholders that that they vote
“for” such nominees, and that all proxies given to management are voted in favor
of such nominees. If Midsummer Board Appointer shall exercise its
right to appoint a member to the Company’s Board of Directors, the Company shall
use best efforts to obtain and maintain directors and officers liability
insurance in such amounts as are customary for companies of the Company’s size
and market position; and shall enter into indemnification contracts with the
individuals designated by Midsummer Board Appointer, or its designees, as
members of the Board of Directors, in form and substance customary under
comparable circumstances and reasonably satisfactory to such
individuals. The right of Midsummer Board Appointer, its designees,
to appoint members of the Board of Directors pursuant to this Section 4.15
shall
terminate upon the earlier of (i) written notice of such termination by the
Midsummer Board Appointer to the Company or (ii) the Debentures are paid-in-full
and retired in their entirety.
22
4.16 Release.
In consideration of the execution of this Agreement, the satisfaction of the
terms and conditions of this Agreement, and other good and valuable
consideration, the receipt and value of which is hereby confirmed, effective
as
of the Closing, the Senior Lenders on the one hand, and each of them, and the
SVI Parties on the other hand, and each of them, hereby fully, finally, and
forever settle and release each other from any and all claims, losses, fines,
penalties, damages, demands, judgments, debts, obligations, interests,
liabilities, causes of action, breaches of duty, costs, expenses, judgments
and
injunctions of any nature whatsoever, whether known or unknown, from all
relationships between them as of the Closing (cumulatively referred to as the
“Released Claims”). The Released Claims shall expressly not include any
matters arising out of facts and circumstances arising or accruing after the
Closing, and shall not include any matters arising out of this
Agreement.
4.17 Director
Compensation. Any compensation paid to members of the Board of
Directors shall be reasonable and commensurate with what is customary in the
industry.
ARTICLE
V
5.1 Termination.
This Agreement may be terminated by any Holder, as to such Holder’s obligations
hereunder only and without any effect whatsoever on the obligations between
the
Company and the other Holders, by written notice to the other parties, if the
Closing has not been consummated on or before July 13, 2007; provided,
however, that such termination will not affect the right of any party
to
▇▇▇ for any breach by the other party (or parties).
5.2 Fees
and Expenses. At the Closing, the Company has agreed to reimburse
Midsummer Capital, LLC (“Midsummer”) and the SVI Parties for their
reasonable legal fees and expenses incurred in connection with the transactions
contemplated herein. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all
transfer agent fees, stamp taxes and other taxes and duties levied in connection
with the delivery of any Securities to the Holders.
5.3 Entire
Agreement. The Transaction Documents, together with the exhibits
and schedules thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and
schedules.
23
5.4 Notices. Any
and all notices or other communications or deliveries required or permitted
to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth
on
the signature pages attached hereto prior to 5:30 p.m. (New York City time)
on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
set
forth on the signature pages attached hereto on a day that is not a Trading
Day
or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the 2nd Trading
Day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (d) upon actual receipt by the party to whom such notice
is
required to be given. The address for such notices and communications
shall be as set forth on the signature pages attached hereto.
5.5 Amendments;
Waivers. No provision of this Agreement may be waived, modified,
supplemented or amended except in a written instrument signed, in the case
of an
amendment prior to the Automatic Conversion Date (as defined in the Certificate
of Designation), by the Company and all holders of Preferred Stock then
outstanding, in the case of an amendment after the Automatic Conversion Date,
by
the Company and Holders holding at least 67% of the shares of Preferred Stock
then outstanding or, in the case of a waiver, by the party against whom
enforcement of any such waived provision is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver
of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise
any
right hereunder in any manner impair the exercise of any such
right.
5.6 Headings. The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
5.7 Successors
and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of each Holder (provided
that nothing herein shall prevent the Company from assigning the remaining
obligations after the Closing Date through merger or comparable corporate
transactions consummated in accordance with applicable law). Any
Holder may assign any or all of its rights under this Agreement to any Person
to
whom such Holder assigns or transfers any Securities, provided such transferee
agrees in writing to be bound, with respect to the transferred Securities,
by
the provisions of the Transaction Documents that apply to the
“Holders”.
5.8 No
Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.9.
24
5.9 Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed
by
and construed and enforced in accordance with the internal laws of the State
of
New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against
a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and 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 (including with respect to the enforcement of any of the
Transaction Documents), 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
improper or is an inconvenient venue for such
proceeding. 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 via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address
in
effect for 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 other manner permitted by law. The
parties hereby waive all rights to a trial by jury. If either party
shall commence an action or proceeding to enforce any provisions of the
Transaction Documents, then the prevailing party in such action or proceeding
shall be reimbursed by the other party for its reasonable attorneys’ fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.
5.10 Survival. The
representations and warranties shall survive the Closing and the delivery of
Securities for the applicable statue of limitations.
5.11 Execution. This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered
hereunder, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing
(or
on whose behalf such signature is executed) with the same force and effect
as if
such facsimile or “.pdf” signature page were an original thereof.
5.12 Severability. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction.
25
5.13 Rescission
and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) any of the other
Transaction Documents, whenever any Holder exercises a right, election, demand
or option under a Transaction Document and the Company does not timely perform
its related obligations within the periods therein provided, then such Holder
may rescind or withdraw, in its sole discretion from time to time upon written
notice to the Company, any relevant notice, demand or election in whole or
in
part without prejudice to its future actions and rights.
5.14 Replacement
of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue
or
cause to be issued in exchange and substitution for and upon cancellation
thereof (in the case of mutilation), or in lieu of and substitution therefor,
a
new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction. The
applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity)
associated with the issuance of such replacement Securities.
5.15 Remedies. In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, each of the Holders and the Company will
be
entitled to specific performance under the Transaction Documents. The
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agrees to waive and not to assert in any action
for specific performance of any such obligation the defense that a remedy at
law
would be adequate.
5.16 Payment
Set Aside. To the extent that the Company makes a payment or payments to any
Holder pursuant to any Transaction Document or a Holder enforces or exercises
its rights 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, state or 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.
5.17 Usury. To
the extent it may lawfully do so, the Company hereby agrees not to insist upon
or plead or in any manner whatsoever claim, and will resist any and all efforts
to be compelled to take the benefit or advantage of, usury laws wherever
enacted, now or at any time hereafter in force, in connection with any claim,
action or proceeding that may be brought by any Holder in order to enforce
any
right or remedy under any Transaction Document. Notwithstanding any
provision to the contrary contained in any Transaction Document, it is expressly
agreed and provided that the total liability of the Company under the
Transaction Documents for payments in the nature of interest shall not exceed
the maximum lawful rate authorized under applicable law (the “Maximum
Rate”), and, without limiting the foregoing, in no event shall any rate of
interest or default interest, or both of them, when aggregated with any other
sums in the nature of interest that the Company may be obligated to pay under
the Transaction Documents exceed such Maximum Rate. It is agreed that
if the maximum contract rate of interest allowed by law and applicable to the
Transaction Documents is increased or decreased by statute or any official
governmental action subsequent to the date hereof, the new maximum contract
rate
of interest allowed by law will be the Maximum Rate applicable to the
Transaction Documents from the effective date forward, unless such application
is precluded by applicable law. If under any circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the Company to
any
Holder with respect to indebtedness evidenced by the Transaction Documents,
such
excess shall be applied by such Holder to the unpaid principal balance of any
such indebtedness or be refunded to the Company, the manner of handling such
excess to be at such Holder’s election.
26
5.18 Independent
Nature of Holders’ Obligations and Rights. The obligations of
each Holder under any Transaction Document are several and not joint with the
obligations of any other Holder, and no Holder shall be responsible in any
way
for the performance or non-performance of the obligations of any other Holder
under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Holder pursuant thereto,
shall be deemed to constitute the Holders as a partnership, an association,
a
joint venture or any other kind of entity, or create a presumption that the
Holders are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction
Documents. Each Holder shall be entitled to independently protect and
enforce its rights, including without limitation, the rights arising out of
this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Holder to be joined as an additional party in any
proceeding for such purpose. Each Holder has been represented by its
own separate legal counsel in their review and negotiation of the Transaction
Documents. For reasons of administrative convenience only, Holders
and their respective counsel have chosen to communicate with the Company through
FWS. FWS does not represent all of the Holders but only
Midsummer. The Company has elected to provide all Holders with the
same terms and Transaction Documents for the convenience of the Company and
not
because it was required or requested to do so by the Holders.
5.19 Liquidated
Damages. The Company’s obligations to pay any partial liquidated
damages or other amounts owing under the Transaction Documents is a continuing
obligation of the Company and shall not terminate until all unpaid partial
liquidated damages and other amounts have been paid notwithstanding the fact
that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been
canceled.
5.20 Construction.
The parties agree that each of them and/or their respective counsel has reviewed
and had an opportunity to revise the Transaction Documents and, therefore,
the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments hereto.
[Signature
Page Follows]
27
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Exchange
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
|
Address/Facsimile
Number/E-mail
Address
for Notice:
|
|
|
By:__________________________________________
Name:
Title:
|
|
|
With
a copy to (which shall not constitute notice):
|
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR PURCHASER FOLLOWS]
28
[PURCHASER
SIGNATURE PAGES TO OXMI SECURITIES EXCHANGE AGREEMENT]
IN
WITNESS WHEREOF, the undersigned have caused this Securities Exchange Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.
Name
of
Holder: ____________________________________________________
Signature
of Authorized Signatory of Holder: __________________________
Name
of
Authorized Signatory: ____________________________________
Title
of
Authorized Signatory: _____________________________________
Email
Address of Authorized Signatory:
___________________________________________
Fax
Number of Authorized Signatory:
_________________________________________
Address
for Notice of Holder:
Address
for Delivery of Securities for Holder (if not same as above):
Exchange
Amount:
Senior
Non-Convertible Debt (including accrued and unpaid interest):
Convertible
Subordinated Debt (including accrued and unpaid interest):
Series
A
Convertible Preferred Stock (including accrued and unpaid
dividends):
Series
B
Convertible Preferred Stock (including accrued and unpaid
dividends):
Subordinated
Non-Convertible debt (including accrued and unpaid interest):
Shares
of
Preferred Stock: ____________
[SIGNATURE
PAGES CONTINUE]
29
EXHIBIT
“A”
Summary
of Exchange Amounts
|
Holder
|
Total
Amount
|
Preferred
Shares
|
Common
Shares
|
|||
|
Palisades
|
$
5,373,527
|
5,373.527
|
n/a
|
|||
|
Longview
|
$
2,652,766
|
2,652.766
|
n/a
|
|||
|
Midsummer
|
$
2,096,986
|
2,096.986
|
n/a
|
|||
|
Camofi
|
$
1,048,493
|
1,048.493
|
n/a
|
|||
|
Cresent
|
$
524,247
|
524.2466
|
n/a
|
|||
|
Plus
Four
|
$
524,247
|
524.2466
|
n/a
|
|||
|
▇▇▇▇▇▇
|
$
104,849
|
104.8493
|
n/a
|
|||
|
▇▇▇▇▇
|
$
104,849
|
104.8493
|
n/a
|
|
▇▇▇▇▇
Trust
|
$
1,278,542
|
639.271
|
n/a
|
|||
|
Glazers
|
$
1,278,542
|
639.271
|
n/a
|
|||
|
▇▇▇▇▇▇▇▇▇▇
|
$
52,185
|
26.092
|
n/a
|
Section
2.1(a)(iii); Series A Convertible Preferred Stock:
|
Palisades
|
4,134,040
|
1,033.51
|
n/a
|
Section
2.1(a)(iv); Series B Convertible Preferred Stock
|
Midsummer
|
3,985,179
|
996.295
|
n/a
|
Section
2.1(a)(v); Subordinated Non-Convertible Debt
|
▇▇▇▇▇
|
$
297,839
|
37.229
|
n/a
|
|||
|
▇▇▇▇▇
Trust
|
$
54,406
|
6.800
|
n/a
|
|||
|
Glazers
|
$
54,406
|
|
6.800
|
n/a
|
||
|
▇.
▇▇▇▇▇
|
$
52,144
|
6.518
|
n/a
|
|||
|
▇.
▇▇▇▇▇
|
$
52,144
|
6.518
|
n/a
|
|||
|
▇▇▇▇▇▇▇▇▇▇
|
$
2,221
|
0.277
|
n/a
|
30
EXHIBIT
“B”
Certificate
of Designation
31
EXHIBIT
“C”
Legal
Opinion of Company Counsel
32
EXHIBIT
2.1(g)(ii)
Terms
of the Company’s Senior Secured Debentures
12%
interest; senior security interest
in all assets of the Company; interest payable quarterly within 3
Business Days of January 1, April 1, July 1 and October 1; principal paid in
eight (8) equal installments at the same time interest payments are due
hereunder commencing on September 30, 2009, with all remaining amounts due
hereunder to be paid in full on the fourth anniversary of the
Debentures.
33
SCHEDULE
3.1(g)(i)
AND
SCHEDULE
3.1(g)(ii)
Company
Capitalization; Pre & Post Closing
34
SCHEDULE
3.1(j)
Certain
Fees
1. In
the event ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or any affiliated or related entity executes the
Purchase Agreement and invests in the Company, a fee equal to one percent (1%)
of said investment will be due and payable to ▇▇▇▇▇ ▇▇▇▇▇▇
Associates.
2. In
the event ▇▇▇▇ ▇▇▇▇▇▇▇ or any affiliated or related entity executes the Purchase
Agreement and invests in the Company, a fee equal to eight percent (8%) of
said
investment will be due and payable to Early Bird Capital.
35