SECURITIES PURCHASE AGREEMENT
THIS
SECURITIES PURCHASE AGREEMENT,
dated
as of February 26, 2007 (this “Agreement”), is entered into by and between
SKYSTAR
BIO-PHARMACEUTICAL COMPANY,
a
Nevada corporation with headquarters located at Rm. 10601, Jiezuo Plaza, No.
4,
Fenghui Road South, Gaoxin District, Xian Province, P.R. China (the “Company”),
and each individual or entity named on an executed counterpart of the signature
page hereto (each such signatory is referred to as a “Buyer”) (each agreement
with a Buyer being deemed a separate and independent agreement between the
Company and such Buyer, except that each Buyer acknowledges and consents to
the
rights granted to each other Buyer [each, an “Other Buyer”] under such agreement
and the Transaction Agreements, as defined below, referred to
therein).
WITNESSETH:
WHEREAS,
the
Company and the Buyer are executing and delivering this Agreement in reliance
upon the exemption from securities registration for offers and sales to
accredited investors afforded, inter alia,
by Rule
506 under Regulation D (“Regulation D”) as promulgated by the United States
Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933,
as amended (the “1933 Act”), and/or Section 4(2) of the 1933 Act;
and
WHEREAS,
the
Buyer wishes to lend to the Company, subject to and upon the terms and
conditions of this Agreement and acceptance of this Agreement by the Company,
the Purchase Price (as defined below), the repayment of which will be
represented by 8% Convertible Debentures Series 07-01 of the Company (the
“Convertible Debentures”), which Convertible Debentures will be convertible into
shares of Common Stock, $0.001 par value per share, of the Company (the “Common
Stock”), upon the terms and subject to the conditions of such Convertible
Debentures, together with the Warrants (as defined below) exercisable for the
purchase of shares of Common Stock;
NOW
THEREFORE,
in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the parties agree as follows:
1. AGREEMENT
TO PURCHASE; PURCHASE PRICE.
a. Purchase.
(i) Subject
to the terms and conditions of this Agreement and the other Transaction
Agreements, the undersigned Buyer hereby agrees to loan to the Company the
principal amount set forth on the Buyer’s signature page of this Agreement (the
“Purchase Price”), out of the aggregate amount being loaned by all Buyers of
$4,075,000 (the “Aggregate Purchase Price”).
(ii) The
Purchaser’s signature page shall indicate whether the Debenture and Warrant to
be issued by the Company and to be purchased by the Purchaser are (i) both
the
Class A forms of those securities or (ii) both the Class B forms of those
securities. Unless specified as to Class or the context otherwise requires,
each
reference in the Transaction Agreements to (x) “Debentures” refers to both the
Class A and the Class B Debentures and (y) “Warrants’ refers to both the Class A
and the Class B Warrants.
(ii) The
obligation to repay the loan from the Buyer shall be evidenced by the Company’s
issuance of one or more Convertible Debentures to the Buyer in the aggregate
principal amount equal to the Purchase Price (the Convertible Debentures issued
to the Buyer, the “Debentures”). Each Debenture (i) shall provide for a
Conversion Price (as defined below), which price may be adjusted from time
to as
provided in the Debenture, and (ii) shall have the terms and conditions of,
and
be substantially in the form attached hereto as, Annex
I-A
or
Annex
I-B,
as the
case may be.
(iii) On
the
Closing Date (as defined below), the Purchase Price shall be paid by the Buyer
and the Company will deliver the relevant Certificates (as defined below) to
the
Escrow Agent, as provided in Section 1(c) hereof.
(v) The
loan
to be made by the Buyer and the issuance of the Debentures and the Warrants
(collectively, the “Purchased Securities”) to the Buyer are sometimes referred
to herein and in the other Transaction Agreements as the purchase and sale
of
the Debentures and the Warrants.
b. Certain
Definitions. As
used
herein, each of the following terms has the meaning set forth below, unless
the
context otherwise requires:
“Affiliate”
means, with respect to a specific Person referred to in the relevant provision,
another Person who or which controls or is controlled by or is under common
control with such specified Person.
“Payment
Conversion Price” means the lower of (i) the Prepayment Conversion Price or (ii)
the Lowest Fixed Conversion Price.
“Buyer
Control Person” means each director, executive officer, promoter, and such other
Persons as may be deemed in control of the Buyer pursuant to Rule 405 under
the
1933 Act or Section 20 of the 1934 Act (as defined below).
“Buyer’s
Allocable Share” means the fraction, of which (i) the numerator is the Buyer’s
Purchase Price and (ii) the denominator is the Aggregate Purchase
Price.
“Certificate
of Incorporation” means the certificate of incorporation, articles of
incorporation or other charter document (howsoever denominated) of the Company,
as amended to date.
“Certificates”
means the (x) the original ink-signed Debentures and (y) the original ink-signed
Warrants, each duly executed by the Company and issued in the name of the Buyer
on the Closing Date.
“Closing
Date” means the date of the closing of the purchase and sale of the Purchased
Securities.
“Closing
Price” means the 4:00 P.M. closing bid price of the Common Stock on the
Principal Trading Market on the relevant Trading Day(s), as reported by the
Reporting Service for the relevant date.
“Company
Control Person” means each director, executive officer, promoter, and such other
Persons as may be deemed in control of the Company pursuant to Rule 405 under
the 1933 Act or Section 20 of the 1934 Act.
“Company
Counsel” means Xxxxxxxxxx & Xxxxx LLP.
“Company
Principal’s Agreement” has the meaning ascribed to in Section 4(h).
“Company's
SEC Documents” means the Company’s filings on the SEC’s XXXXX system which are
listed on Annex
VI
annexed
hereto, to the extent available on XXXXX or otherwise provided to the Buyer
as
indicated on said Annex VI.
“Conversion
Certificates” means certificates representing the Conversion Shares or the
Warrant Shares, as the case may be.
“Conversion
Date” means the date a Holder submits a Notice of Conversion, as provided in the
Debentures.
“Conversion
Price” means, (i) with respect to a voluntary conversion by the Holder of the
Debenture or a Mandatory Conversion (as defined in the Debentures), the
Voluntary Conversion Price and (ii) with respect to all other conversions,
the
Payment Conversion Price.
“Conversion
Shares” means the shares of Common Stock issuable upon conversion of the
Debentures and/or in payment of accrued interest, as contemplated in the
Debentures.
“Converting
Holder” means the Holder of Debentures or Warrants, as the case may be, who or
which has submitted a Notice of Conversion (as contemplated by the Debentures)
or a Notice of Exercise (as contemplated by the Warrants).
“Delivery
Date” has the meaning ascribed to it, as may be relevant, (x) in the Debentures
(with respect to Conversion Shares), or (y) in the Warrants (with respect to
Warrant Shares).
"Disclosure
Annex" means Annex
VIII to
this
Agreement; provided, however, that the Disclosure Annex shall be arranged in
sections corresponding to the identified Sections of this Agreement, but the
disclosure in any such section of the Disclosure Annex shall qualify other
provisions in this Agreement to the extent that it would be readily apparent
to
an informed reader from a reading of such section of the Disclosure Annex that
it is also relevant to other provisions of this Agreement.
“Effective
Date” means the date the Registration Statement covering the Registrable
Securities is declared effective by the SEC.
“Escrow
Agent” means Xxxxxxx & Prager LLP, the escrow agent identified in the Joint
Escrow Instructions attached hereto as Annex
II
(the
“Joint Escrow Instructions”).
“Escrow
Funds” means the Purchase Price delivered to the Escrow Agent as contemplated by
Sections 1(c) and (d) hereof.
"Escrow
Property" means the Escrow Funds and the Certificates delivered to the Escrow
Agent, as contemplated by Section 1(c) hereof.
“Exercise
Price” means the per share exercise price of the relevant Warrant.
“Fixed
Conversion Price” means $1.00 (as such amount may be adjusted as provided herein
or in the Debentures).
“Holder”
means the Person holding the relevant Securities at the relevant
time.
“Issue
Date Conversion Share” means, with respect to the Closing Date, the number of
shares of Common Stock equal to (x) the Purchase Price paid by the Buyer on
the
Closing Date, divided by (y) the amount which would have been the Conversion
Price on such Closing Date, were such date a Conversion Date (without regard
to
whether or not the Debentures were convertible on such date in accordance with
their terms).
“Last
Audited Date” means December 31, 2005.
“Lowest
Fixed Conversion Price” means the lowest New Transaction Price (as defined
below; as that amount may subsequently be adjusted as provided in the Debentures
or herein).
“Majority
in Interest of the Holders” means one or more Holders whose respective
outstanding principal amounts of the Debentures held by each of them, as of
the
relevant date, aggregate more than seventy-five percent (75%) of the aggregate
outstanding principal amounts of the outstanding Debentures held by the Buyer
and all Other Buyers on that date.
“Material
Adverse Effect” means an event or combination of events, which individually or
in the aggregate, would reasonably be expected to (x) adversely affect the
legality, validity or enforceability of the Purchased Securities or any of
the
Transaction Agreements, (y) have or result in a material adverse effect on
the
results of operations, assets, or financial condition of the Company and its
subsidiaries, taken as a whole, or (z) adversely impair the Company's ability
to
perform fully on a timely basis its material obligations under any of the
Transaction Agreements or the transactions contemplated thereby.
“Material
Asset” means any asset of the Company and/or of one or more Subsidiaries which
alone or together with other assets of the Company and/or one or more
subsidiaries is material to the operations or business of the Company or such
Subsidiary, individually or in the aggregate; it being understood that any
proprietary intellectual property owned by the Company or any one or more
Subsidiaries and the license to the Company or any Subsidiary of any
intellectual property are conclusively considered to be a “Material Asset”;
provided, however, that the foregoing shall not be deemed to limit other any
other assets from being deemed a “Material Assets.”
“Material
Asset Security Interest” means a security interest in a Material Asset or any
other right (howsoever denominated) giving a third party an ownership or other
interest in, or a right to dispose of, such Material Asset.
“Maturity
Date” has the meaning ascribed to it in the Convertible Debentures.
“New
Common Stock” means shares of Common Stock and/or securities convertible into,
and/or other rights exercisable for, Common Stock, which are offered or sold
in
a New Transaction.
“New
Investor” means the third party investor, purchaser or lender (howsoever
denominated) in a New Transaction.
“New
Transaction” means, unless consented to by a Majority in Interest of the Holders
(which consent is in the sole discretion of the Holders and may be withheld
for
any reason or for no reason whatsoever),
(i)
the
offer or sale of New Common Stock by or on behalf of the Company to a New
Investor and/or
(ii)
the
grant of a security interest in, or the pledge of, shares of the Company’s
Common Stock or securities convertible into or exercisable for the Company’s
Common Stock to any other party, or the pledge of such shares or securities
to
any other party, whether such grant or pledge is made by the Company or any
other holder thereof, in connection with a transaction in which the Company
borrows or is otherwise obligated to pay funds to a third party,
in
a
transaction offered or consummated after the date hereof; provided, however,
that it is specifically understood that the term “New Transaction” (1) unless
consented to otherwise by a Majority in Interest of the Holders (which consent
is in the sole discretion of the Holders and may be withheld for any reason
or
for no reason whatsoever), includes, but is not limited to, a sale of Common
Stock or of a security convertible into Common Stock or an equity or credit
line
transaction, but (2) does not include (a) the sale of the Purchased Securities
to the Buyer and the Other Buyers, (b) the issuance of Common Stock upon the
exercise or conversion of options, warrants or convertible securities
outstanding on the date hereof, or in respect of any other financing agreements
as in effect on the date hereof and identified in the Disclosure Annex (provided
the same is not amended after the date hereof) or in the Company’s SEC Documents
(provided the same is not amended after the date hereof), (c) the issuance
of
New Common Stock pursuant to a non-employee director stock option plan of the
Company, duly adopted by the shareholders of the Company, the issuance of New
Common Stock pursuant to a consultants’ stock incentive plan of the Company,
duly adopted by the shareholders of the Company, provided such plan does not
contemplate the issuance, in the aggregate, of a number of shares in excess
of
five percent (5%) of the number of outstanding shares of Common Stock as of
the
date of adoption of such plan, (e) the issuance of Common Stock upon the
exercise of any options or warrants referred to in the preceding clauses of
this
paragraph (provided the same is not amended after the date hereof to an exercise
price below the highest Exercise Price of any Warrants issued pursuant to any
of
the Transaction Agreements), (f) the issuance of stock options or warrants
to
employees, officers or directors of the Company, provided that all such shares
are subject to a Company Principal’s Agreement; provided, however, that such
shares issued to employees who are not otherwise officers, directors or
beneficial owners of five percent (5%) or more of the Company’s Common Stock,
which shares, when added to the shares issued to all other such employees,
do
not exceed five percent (5%) of the number of outstanding shares of Common
Stock
as of the date of the issuance, do not need to be subject to a Company
Principal’s Agreement, or (g) the issuance of shares to a Strategic
Partner.
“Payment
Conversion Price” has the meaning ascribed to in the Debenture.
“Person”
means any living person or any entity, such as, but not necessarily limited
to,
a corporation, partnership or trust.
“Placement
Agent” means Pacific Ridge Capital, LLC.
“Prepayment
Conversion Price” means (i) the VWAP for the five (5) Regular Trading Days
ending on the Trading Day immediately before the Prepayment Date or the relevant
Conversion Date, as the case may be, multiplied by (ii) seventy percent
(70%).
“Prepayment
Date” has the meaning ascribed to it in the Debentures.
“Principal
Trading Market” means the Over the Counter Bulletin Board or such other market
on which the Common Stock is principally traded at the relevant time, but shall
not include the “pink sheets.”
“Registrable
Securities” has the meaning ascribed to it in the Registration Rights
Agreement.
“Registration
Rights Agreement” means the Registration Rights Agreement in the form annexed
hereto as Annex
IV
as
executed by the Buyer and the Company simultaneously with the execution of
this
Agreement.
“Registration
Statement” means an effective registration statement covering the Registrable
Securities.
“Regular
Trading Day” means the regular trading hours of a Trading Day on the Principal
Trading Market shall be open for business (as of the date of this Agreement,
such hours are, for most Trading Days, approximately 9:00 or 9:30AM to
approximately 4PM Eastern Time; provided, however, that certain Trading Days
may
have shorter regular trading hours; and provided, further, that the regular
trading hours may be subsequently changed for the Principal Trading
Market).
“Reporting
Service” means Bloomberg LP or if that service is not then reporting the
relevant information regarding the Common Stock, a comparable reporting service
of national reputation selected by a Majority in Interest of the Holders and
reasonably acceptable to the Company.
“Rule
144" means (i) Rule 144 promulgated under the 1933 Act or (ii) any other similar
rule or regulation of the SEC that may at any time permit Holder to sell
securities of the Company to the public without registration under the 1933
Act..
“Securities”
means the Purchased Securities and the Shares.
“Shares”
means the shares of Common Stock representing any or all of the Conversion
Shares and the Warrant Shares.
“Short
Sales” means short sales of or any hedging transactions with respect to, the
Common Stock or sales of put options or similar instruments with respect to
the
Common Stock; provided, however, that, for purposes of this Agreement, the
term
“Short Sale” shall not include sales of the Company’s Common Stock or the sales
of put option or similar instruments which are executed (i) after the Buyer
has
submitted a Notice of Conversion requesting conversion of the Debenture, for
up
to the number of shares of Common Stock anticipated to be issued to the Buyer
as
a result of such conversion, (ii) after the Buyer has submitted a Notice of
Exercise with respect to the Buyer’s Warrant or after an Automatic Exercise Date
(as defined in the Warrant), for up to the number of shares of Common Stock
anticipated to be issued to the Buyer upon such exercise of the Warrant, and/or
(iii) on or after a Required Payment Date (as defined in the Debenture), for
up
to the number of shares of Common Stock anticipated to be issued to the Buyer
in
payment of a Required Payment (as defined in the Debenture).
“State
of
Incorporation” means the State of Nevada.
“Strategic
Partner” means a third party, whether or not affiliated with the Company, as of
the date hereof, which party (i) is engaged in a business in which the Company
is or plans to be engaged or a similar or related business, and (ii)
subsequently purchases (or enters into an agreement to purchase) equity
securities of the Company (or securities convertible into equity securities
of
the Company), if (a) such purchase is made in connection with or accompanied
or
followed by one or more of the following: the licensing by the Company of all
or
any portion of its technology to such third party, the licensing by such third
party of all or any portion of its technology to the Company, or any other
coordination of all or a portion of their respective business activities or
operations by the Company and such third party or (b) no registration statement
is filed for such equity securities until after the Final Lock Up Date (as
defined in Section 4(g) below).
"Subsidiary"
means, as of the relevant date, any subsidiary of the Company (whether or not
included in the Company's SEC Documents) whether now existing or hereafter
acquired or created.
“Trading
Day” means any day during which the Principal Trading Market shall be open for
business.
“Transaction
Agreements” means this Agreement, the Debentures, the Joint Escrow Instructions,
the Registration Rights Agreement, the Warrants, each Company Principal’s
Agreement, and the Disclosure Annex and includes all ancillary documents
executed and delivered pursuant to those agreements.
“Transfer
Agent” means, at any time, the transfer agent for the Company’s Common
Stock.
“Voluntary
Conversion Price” means the lowest of (i) the Fixed Conversion Price, (ii) the
Lowest Fixed Conversion Price, if any, or (iii) during the pendency of an Event
of Default (as defined in the Debentures), the Prepayment Conversion
Price.
“VWAP”
means the volume weighted average price of the Common Stock on the Principal
Trading Market for the relevant Regular Trading Day(s), as reported by the
Reporting Service.
“Warrants”
means (i) the warrants referred to in Section 4 hereof and (ii) the Added
Warrants (as defined below), if any.
“Warrant
Shares” means the shares of Common Stock issuable upon exercise of the
Warrants.
“Wire
Instructions” means the Purchase Price Wire Instructions as provided in
Annex
X
annexed
hereto.
c. Form
of Payment; Delivery of Certificates.
(i) The
Buyer
shall pay the Purchase Price by delivering immediately available good funds
in
United States Dollars to the Escrow Agent no later than the date prior to the
Closing Date.
(ii) Within
two (2) Trading Days after the Company is notified that the Escrow Agent has
on
deposit cleared funds from or on behalf of one or more Buyers an aggregate
amount equal to the Aggregate Purchase Price and the Company shall have accepted
the Buyer’s subscription hereunder, but in no event later than the Closing Date,
the Company will deliver the relevant Certificates for the Debentures and the
Warrants to the Escrow Agent. Such Certificates shall be held in escrow by
the
Escrow Agent until released as provided in the Joint Escrow Instructions.
(iii) By
signing this Agreement, each of the Buyer and the Company, subject to acceptance
by the Escrow Agent, agrees to all of the terms and conditions of, and becomes
a
party to, the Joint Escrow Instructions, all of the provisions of which are
incorporated herein by this reference as if set forth in full.
d. Method
of Payment.
Payment
into escrow of the Purchase Price shall be made to the Escrow Agent as provided
in the Wire Instructions (see Annex X).
2. BUYER
REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION; INDEPENDENT
INVESTIGATION.
The
Buyer
represents and warrants to, and covenants and agrees with, the Company, as
of
the date hereof and as of the Closing Date, as follows:
a. Without
limiting Buyer's right to sell the Securities pursuant to an effective
registration statement or otherwise in compliance with the 1933 Act, the Buyer
is purchasing the Securities for its own account for investment only and not
with a view towards the public sale or distribution thereof and not with a
view
to or for sale in connection with any distribution thereof.
b. The
Buyer
is (i) an “accredited investor” as that term is defined in Rule 501 of the
General Rules and Regulations under the 1933 Act, (ii) experienced in making
investments of the kind described in this Agreement and the other Transaction
Agreements, (iii) able, by reason of the business and financial experience
of
its officers (if an entity) and professional advisors (who are not affiliated
with or compensated in any way by the Company or any of its Affiliates or
selling agents), to protect its own interests in connection with the
transactions described in this Agreement and the other Transaction Agreements,
and to evaluate the merits and risks of an investment in the Securities, and
(iv) able to afford the entire loss of its investment in the
Securities.
c. All
subsequent offers and sales of the Securities by the Buyer shall be made
pursuant to registration of the relevant Securities under the 1933 Act or
pursuant to an exemption from such registration.
d. The
Buyer
understands that the Securities are being offered and sold to it in reliance
on
specific exemptions from the registration requirements of the 1933 Act and
state
securities laws and that the Company is relying upon the truth and accuracy
of,
and the Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Securities.
e. The
Buyer
and its advisors, if any, have been furnished with or have been given access
to
all materials relating to the business, finances and operations of the Company
and materials relating to the offer and sale of the Purchased Securities which
have been requested by the Buyer, including those set forth in any annex
attached hereto. The Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and its management and have received
complete and satisfactory answers to any such inquiries. Without limiting the
generality of the foregoing, the Buyer has also had the opportunity to obtain
and to review the Company's SEC Documents.
f. The
Buyer
understands that its investment in the Securities involves a high degree of
risk.
g. If
the
Buyer is not a United States person (as defined by Section 7701(a)(30) of the
Internal Revenue Code, as currently in effect), such Buyer hereby represents
that it has satisfied itself as to the full observance of the laws of its
jurisdiction in connection with any invitation to subscribe for the Purchased
Securities or any use of this Agreement, including (i) the legal requirements
within its jurisdiction for the purchase of the Purchased Securities, (ii)
any
foreign exchange restrictions applicable to such purchase, (iii) any
governmental or other consents that may need to be obtained, and (iv) the income
tax and other tax consequences, if any, that may be relevant to the purchase,
holding, redemption, sale, or transfer of the Securities. The Buyer’s
subscription and payment for and continued beneficial ownership, if any, of
the
Securities will not violate any applicable securities or other laws of the
Buyer’s jurisdiction.
h. If
the
Buyer is an individual, then the Buyer resides in the state or province
identified in the address of the Buyer set forth on the Buyer’s signature page
to this Agreement. If the Buyer is a partnership, corporation, limited liability
company or other entity, then the office or offices of the Buyer in which its
principal place of business is the address or addresses of the Buyer set forth
on the Buyer’s signature page to this Agreement.
i. The
Buyer
hereby represents that, in connection with the Buyer’s investment or the Buyer’s
decision to purchase the Securities, the Buyer has not relied on any statement
or representation of any Person, including any such statement or representation
by the Company or the Placement Agent or any of their respective controlling
Persons, officers, directors, partners, agents and employees or any of their
respective attorneys, except as specifically set forth herein. The Buyer agrees
that none of (i) any Other Buyer, (ii) any controlling Persons, officers,
directors, partners, agents, or employees of each respective Other Buyer or
(iii) any of their respective attorneys shall be liable to the Buyer for any
action heretofore or hereafter taken or omitted to be taken by any of them
in
connection with the purchase of the Purchased Securities or in connection with
the Securities. Each of the Placement Agent, each Other Buyer and each of their
respective controlling Persons, officers, directors, partners, agents and
employees and each of their respective attorneys is a third party beneficiary
of
this provision.
j. The
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.
k. This
Agreement and each of the other Transaction Agreements to which the Buyer is
a
party, and the transactions contemplated hereby and thereby, have been duly
and
validly authorized by the Buyer. This Agreement has been executed and delivered
by the Buyer, and this
Agreement
is, and each of the other Transaction Agreements to which the Buyer is a party,
when executed and delivered by the Buyer (if necessary), will be valid and
binding obligations of the Buyer enforceable in accordance with their respective
terms, subject as to enforceability to general principles of equity and to
bankruptcy, insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally.
l. During
the thirty (30) days prior to the execution of this Agreement, neither the
Buyer
nor any of the Buyer’s Affiliates has engaged in any Short Sales; provided,
however, that unless and until the Company has affirmatively demonstrated by
the
use of specific clear and convincing evidence that Buyer engaged in Short Sales
during such period, the Buyer shall be assumed to be in compliance with the
provisions of this Section 2(l) and the Company shall remain obligated to
fulfill all of its obligations under the Transaction Agreements; and provided,
further, that the Company shall under no circumstances be entitled to request
or
demand that the Buyer affirmatively demonstrate that it has not engaged in
any
such Short Sales during such period as a condition to the Company’s fulfillment
of its obligations under any of the Transaction Agreements and shall not assert
the Buyer’s failure to demonstrate such absence of such Short Sales as a defense
to any breach of the Company’s obligations under any of the Transaction
Agreements.
m. The
Buyer
has taken no action which would give rise to any claim by any Person for
brokerage commission, placement agent or finder's fees or similar payments
by
Buyer relating to this Agreement or the transactions contemplated hereby. Except
for such fees arising as a result of any agreement or arrangement entered into
by the Company without the knowledge of the Buyer (a “Company Fee”) and fees to
the Placement Agent, the Company shall have no obligation with respect to such
fees or with respect to any claims made by or on behalf of other Persons for
fees of a type contemplated in this paragraph that may be due in connection
with
the transactions contemplated hereby. Buyer shall indemnify and hold harmless
the Company, its employees, officers, directors, agents, and partners, and
their
respective Affiliates, from and against all claims, losses, damages, costs
(including the costs of preparation and attorney's fees) and expenses suffered
in respect of any such claimed or existing fees (other than a Company
Fee).
3. COMPANY
REPRESENTATIONS, ETC. The
Company represents and warrants to the Buyer as of the date hereof and as of
the
Closing Date that, except as otherwise provided in the Disclosure Annex or
in
the Company’s SEC Documents:
a. Rights
of Others Affecting the Transactions. There
are
no preemptive rights of any stockholder of the Company, as such, to acquire
the
Purchased Securities or the Shares. No other party has a currently exercisable
right of first refusal which would be applicable to any or all of the
transactions contemplated by the Transaction Agreements.
b. Status.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Incorporation and has the requisite corporate
power to own its properties and to carry on its business as now being conducted.
The Company is duly qualified as a foreign corporation to do business and is
in
good standing in each jurisdiction where the nature of the business conducted
or
property owned by it makes such qualification necessary, other than those
jurisdictions in which the failure to so qualify would not have or result in
a
Material Adverse Effect. The Company has registered its stock and is obligated
to file reports pursuant to Section 12 or Section 15(d) of the Securities and
Exchange Act of 1934, as amended (the “1934 Act”). The Common Stock is quoted on
the Principal Trading Market. The Company has received no notice, either oral
or
written, with respect to the continued eligibility of the Common Stock for
quotation on the Principal Trading Market, and the Company has maintained all
requirements on its part for the continuation of such quotation.
c. Authorized
Shares.
(i) The
authorized capital stock of the Company consists of (x) 50,000,000 shares of
Common Stock, $0.001 par value per share, of which approximately 12,795,549
are
outstanding as of the date hereof, and (y) 50,000,000 million shares of
preferred stock, $0.001 par value per share, consisting of (1) 2,000,000 Series
“A” shares, all of which are outstanding on the date hereof and (2) 48,000,000
Series “B” shares, all of which had been issued, but none of which are
outstanding on the date hereof. Of the outstanding shares of Common Stock,
approximately 7,894,598 shares are, to the best knowledge of the Company,
beneficially owned by Affiliates of the Company.
(ii) There
are
no outstanding securities which are convertible into shares of Common Stock,
whether such conversion is currently exercisable or exercisable only upon some
future date or the occurrence of some event in the future. If any such
securities are listed on the Disclosure Annex, the number or amount of each
such
outstanding convertible security and the conversion terms are set forth in
said
Disclosure Annex.
(iii) All
issued and outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable. The Company has sufficient
authorized and unissued shares of Common Stock as may be necessary to effect
the
issuance of the Shares on the Closing Date, were the Debentures fully converted
and were the Warrant fully exercised on that date.
(iv) The
Shares have been duly authorized by all necessary corporate action on the part
of the Company, and, when issued on conversion of, or in payment of interest
on,
the Debentures or upon exercise of the Warrants, in each case in accordance
with
their respective terms, will have been duly and validly issued, fully paid
and
non-assessable and will not subject the Holder thereof to personal liability
by
reason of being such Holder.
d. Transaction
Agreements and Stock.
This
Agreement and each of the other Transaction Agreements, and the transactions
contemplated hereby and thereby, have been duly and validly authorized by the
Company. This Agreement has been duly executed and delivered by the Company
and
this Agreement is, and the Debentures, the Warrants and each of the other
Transaction Agreements, when executed and delivered by the Company (if
necessary), will be, valid and binding obligations of the Company enforceable
in
accordance with their respective terms, subject as to enforceability to general
principles of equity and to bankruptcy, insolvency, moratorium, and other
similar laws affecting the enforcement of creditors' rights
generally.
e. Non-contravention.
The
execution and delivery of this Agreement and each of the other Transaction
Agreements by the Company, the issuance of the Securities in accordance with
the
terms hereof, and the consummation by the Company of the other transactions
contemplated by this Agreement, the Debentures, the Warrants and the other
Transaction Agreements do not and will not conflict with or result in a breach
by the Company of any of the terms or provisions of, or constitute a default
under (i) the certificate of incorporation or by-laws of the Company, each
as
currently in effect, (ii) any indenture, mortgage, deed of trust, or other
material agreement or instrument to which the Company is a party or by which
it
or any of its properties or assets are bound, including any listing agreement
for the Common Stock except as herein set forth, or (iii) to its knowledge,
any
existing applicable law, rule, or regulation or any applicable decree, judgment,
or order of any court, United States federal or state regulatory body,
administrative agency, or other governmental body having jurisdiction over
the
Company or any of its properties or assets, except such conflict, breach or
default which would not have or result in a Material Adverse
Effect.
f. Approvals.
No
authorization, approval or consent of any court, governmental body, regulatory
agency, self-regulatory organization, or stock exchange or market or the
stockholders of the Company is required to be obtained by the Company for the
issuance and sale of the Securities to the Buyer as contemplated by this
Agreement, except such authorizations, approvals and consents that have been
obtained.
g. Filings.
None of
the Company’s SEC Documents contained, at the time they were filed, any untrue
statement of a material fact or omitted to state any material fact required
to
be stated therein or necessary to make the statements made therein, in light
of
the circumstances under which they were made, not misleading. Since February
1,
2006, the Company has filed all annual and quarterly reports required to be
filed by the Company with the SEC under Section 13(a) or 15(d) of the 1934
Act.
h. Absence
of Certain Changes.
Since
the Last Audited Date, there has been no Material Adverse Effect, except as
disclosed in the Company’s SEC Documents. Since the Last Audited Date, except as
provided in the Company’s SEC Documents, the Company has not (i) incurred or
become subject to any material liabilities (absolute or contingent) except
liabilities incurred in the ordinary course of business consistent with past
practices; (ii) discharged or satisfied any material lien or encumbrance or
paid
any material obligation or liability (absolute or contingent), other than
current liabilities paid in the ordinary course of business consistent with
past
practices; (iii) declared or made any payment or distribution of cash or other
property to stockholders with respect to its capital stock, or purchased or
redeemed, or made any agreements to purchase or redeem, any shares of its
capital stock; (iv) sold, assigned or transferred any other material tangible
assets, or canceled any material debts owed to the Company by any third party
or
material claims of the Company against any third party, except in the ordinary
course of business consistent with past practices; (v) waived any rights of
material value, whether or not in the ordinary course of business, or suffered
the loss of any material amount of existing business; (vi) made any increases
in
employee compensation, except in the ordinary course of business consistent
with
past practices; or (vii) experienced any material problems with labor or
management in connection with the terms and conditions of their
employment.
i. Full
Disclosure.
There is
no fact known to the Company (other than conditions known to the public
generally or as disclosed in the Company’s SEC Documents) that has not been
disclosed in writing to the Buyer that would reasonably be expected to have
or
result in a Material Adverse Effect.
j. Absence
of Litigation.
There is
no action, suit, proceeding, inquiry or investigation before or by any court,
public board or body pending or, to the knowledge of the Company, threatened
against or affecting the Company before or by any governmental authority or
non-governmental department, commission, board, bureau, agency or
instrumentality or any other person, wherein an unfavorable decision, ruling
or
finding would have a Material Adverse Effect or which would adversely affect
the
validity or enforceability of, or the authority or ability of the Company to
perform its obligations under, any of the Transaction Agreements. There are
no
outstanding or unsatisfied judgments, orders, decrees, writs, injunctions or
stipulations to which the Company is a party or by which it or any of its
properties is bound, that involve the transaction contemplated herein or that,
alone or in the aggregate, could reasonably be expect to have a Material Adverse
Effect.
k. Absence
of Events of Default.
Except
as set forth in Section 3(e) hereof, no Event of Default (or its equivalent
term), as defined in the respective agreement to which the Company or its
Subsidiary is a party, and no event which, with the giving of notice or the
passage of time or both, would become an Event of Default (or its equivalent
term) (as so defined in such agreement), has occurred and is continuing, which
would have a Material Adverse Effect.
l. Absence
of Certain Company Control Person Actions or Events.
To the
Company’s knowledge, none of the following has occurred during the past five (5)
years with respect to a Company Control Person:
(1)
A
petition under the federal bankruptcy laws or any state insolvency law was
filed
by or against, or a receiver, fiscal agent or similar officer was appointed
by a
court for the business or property of such Company Control Person, or any
partnership in which he was a general partner at or within two years before
the
time of such filing, or any corporation or business association of which he
was
an executive officer at or within two years before the time of such
filing;
(2)
Such
Company Control Person was convicted in a criminal proceeding or is a named
subject of a pending criminal proceeding (excluding traffic violations and
other
minor offenses);
(3)
Such
Company Control Person was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him from, or otherwise
limiting, the following activities:
(i)
acting, as an investment advisor, underwriter, broker or dealer in securities,
or as an affiliated person, director or employee of any investment company,
bank, savings and loan association or insurance company, as a futures commission
merchant, introducing broker, commodity trading advisor, commodity pool
operator, floor broker, any other Person regulated by the Commodity Futures
Trading Commission (“CFTC”) or engaging in or continuing any conduct or practice
in connection with such activity;
(ii)
engaging in any type of business practice; or
(iii)
engaging in any activity in connection with the purchase or sale of any security
or commodity or in connection with any violation of federal or state securities
laws or federal commodities laws;
(4)
Such
Company Control Person was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any federal or state authority
barring, suspending or otherwise limiting for more than 60 days the right of
such Company Control Person to engage in any activity described in paragraph
(3)
of this item, or to be associated with Persons engaged in any such activity;
or
(5)
Such
Company Control Person was found by a court of competent jurisdiction in a
civil
action or by the CFTC or SEC to have violated any federal or state securities
law, and the judgment in such civil action or finding by the CFTC or SEC has
not
been subsequently reversed, suspended, or vacated.
m. No
Undisclosed Liabilities or Events.
The
Company has no liabilities or obligations other than those disclosed in the
Transaction Agreements or the Company's SEC Documents or those incurred in
the
ordinary course of the Company's business since the Last Audited Date, or which
individually or in the aggregate, do not or would not have a Material Adverse
Effect. No event or circumstance has occurred or exists with respect to the
Company or its properties, business, operations, condition (financial or
otherwise), or results of operations, which, under applicable law, rule or
regulation, requires public disclosure or announcement prior to the date hereof
by the Company but which has not been so publicly announced or disclosed. There
are no proposals currently under consideration or currently anticipated to
be
under consideration by the Board of Directors or the executive officers of
the
Company which proposal would (x) change the Certificate of Incorporation or
by-laws of the Company, each as currently in effect, with or without stockholder
approval, which change would reduce or otherwise adversely affect the rights
and
powers of the stockholders of the Common Stock or (y) materially or
substantially change the business, assets or capital of the Company, including
its interests in subsidiaries.
n. No
Integrated Offering.
Neither
the Company nor any of its Affiliates nor any Person acting on its or their
behalf has, directly or indirectly, at any time since August 1, 2006, made
any
offer or sales of any security or solicited any offers to buy any security
under
circumstances that would eliminate the availability of the exemption from
registration under Regulation D in connection with the offer and sale of the
Securities as contemplated hereby.
o. Dilution.
Each of
the Company and its executive officers and directors is aware that the number
of
shares issuable on conversion of the Debentures, upon exercise of the Warrants
or pursuant to the other terms of the Transaction Agreements may have a dilutive
effect on the ownership interests of the other stockholders (and Persons having
the right to become stockholders) of the Company. The Company specifically
acknowledges that its obligation to issue the Conversion Shares upon conversion
of the Debentures, the Warrant Shares upon exercise of the Warrants is binding
upon the Company and enforceable regardless of the dilution such issuance may
have on the ownership interests of other stockholders of the Company, and the
Company will honor such obligations, including honoring every Notice of
Conversion (as contemplated by the Debentures) and every Notice of Exercise
(as
contemplated by the Warrants), unless the Company is subject to an injunction
(which injunction was not sought by the Company) prohibiting the Company from
doing so.
p. No
Material Asset Security Interest.
There
are no Material Asset Security Interests.
q. Fees
to Brokers, Placement Agents and Others.
The
Company has taken no action which would give rise to any claim by any Person
for
brokerage commission, placement agent or finder's fees or similar payments
by
Buyer relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the foregoing, the Company acknowledges that it has agreed
to
pay the Placement Agent’s Compensation (as defined in the Joint Escrow
Instructions) to the Placement Agent in connection with the transactions
contemplated hereby. Except for such fees arising as a result of any agreement
or arrangement entered into by the Buyer without the knowledge of the Company
(a
“Buyer’s Fee”), Buyer shall have no obligation with respect to such fees or with
respect to any claims made by or on behalf of other Persons for fees of a type
contemplated in this paragraph that may be due in connection with the
transactions contemplated hereby. The Company shall indemnify and hold harmless
each of Buyer, its employees, officers, directors, agents, and partners, and
their respective Affiliates, from and against all claims, losses, damages,
costs
(including the costs of preparation and attorney's fees) and expenses suffered
in respect of any such claimed or existing fees (other than a Buyer’s
Fee).
r. Disclosure.
All
information relating to or concerning the Company set forth in the Transaction
Agreements or in the Company’s public filings with the SEC is true and correct
in all material respects and the Company has not omitted to state any material
fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading. No event or
circumstance has occurred or exists with respect to the Company or its business,
properties, prospects, operations or financial conditions, which under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company.
s. Confirmation.
The
Company agrees that, if, to the knowledge of the Company, any events occur
or
circumstances exist prior to the release of the Escrow Funds to the Company
which would make any of the Company’s representations or warranties set forth
herein materially untrue or materially inaccurate as of such date, the Company
shall immediately notify the Buyer (directly or through the Placement Agent)
and
the Escrow Agent in writing prior to such date of such fact, specifying which
representation, warranty or covenant is affected and the reasons
therefor.
4. CERTAIN
COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer
Restrictions.
(i) The
Buyer
acknowledges that (1) the Securities have not been and are not being registered
under the provisions of the 1933 Act and, except as provided in the Registration
Rights Agreement or otherwise included in an effective registration statement,
the Shares have not been and are not being registered under the 1933 Act, and
may not be transferred unless (A) subsequently registered thereunder or (B)
the
Buyer shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect that
the
Securities to be sold or transferred may be sold or transferred pursuant to
an
exemption from such registration; (2) any sale of the Securities made in
reliance on Rule 144 may be made only in accordance with the terms of said
Rule
and further, if said Rule is not applicable, any resale of such Securities
under
circumstances in which the seller, or the Person through whom the sale is made,
may be deemed to be an underwriter, as that term is used in the 1933 Act, may
require compliance with some other exemption under the 1933 Act or the rules
and
regulations of the SEC thereunder; and (3) neither the Company nor any other
Person is under any obligation to register the Securities (other than pursuant
to the Registration Rights Agreement) under the 1933 Act or to comply with
the
terms and conditions of any exemption thereunder.
(ii) In
addition to the foregoing, and not in lieu thereof, the Buyer agrees that,
without the express written consent of the Company in each instance, it will
not
transfer any of the Purchased Securities to any Person which is known to the
Buyer to be in substantially the same business as the Company or which is known
to be a subsidiary or affiliate of such a Person.
b. Restrictive
Legend.
The
Buyer acknowledges and agrees that, until such time as the relevant Shares
have
been registered under the 1933 Act, as contemplated by the Registration Rights
Agreement, and may be sold in accordance with an effective Registration
Statement or otherwise in accordance with another effective registration
statement, or until such Shares can otherwise be sold without restriction,
whichever is earlier, the certificates and other instruments representing any
of
the Securities shall bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of any such
Securities):
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED
FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
OR
AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
c. Filings.
The
Company undertakes and agrees to make all filings required to be made by it
in
connection with the sale of the Securities to the Buyer under the 1933 Act,
the
1934 Act or the securities laws and regulations of any of the United States
applicable to the Company or by the rules and regulations of the Principal
Trading Market, and, unless such filing is publicly available on the SEC’s XXXXX
system (via the SEC’s web site at no additional charge), to provide a copy
thereof to the Buyer promptly after such filing. Reference is made to the
Section titled “Publicity, Filings, Releases, Etc.” below.
d. Reporting
Status.
So long
as the Buyer beneficially owns any of the Purchased Securities and for at least
twenty (20) Trading Days thereafter, the Company shall file all reports required
to be filed with the SEC pursuant to Section 13 or 15(d) of the 1934 Act, shall
take all reasonable action under its control to ensure that adequate current
public information with respect to the Company, as required in accordance with
Rule 144(c)(2) of the 1933 Act, is publicly available, and 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 permit such termination.
The Company will take all reasonable action under its control to maintain the
continued listing and quotation and trading of its Common Stock (including,
without limitation, all Registrable Securities) on the Principal Trading Market
or a listing on the NASDAQ Capital or National Markets or AMEX and, to the
extent applicable to it, will comply in all material respects with the Company’s
reporting, filing and other obligations under the by-laws or rules of the
Principal Trading Market and/or the National Association of Securities Dealers,
Inc., as the case may be, applicable to it at least through the date which
is
sixty (60) days after the later of the date on which (x) all of the Debentures
have been converted or have been paid in full or (y) all of the Warrants have
been exercised or have expired.
e. Use
of Proceeds.
The
Company will use the net proceeds received hereunder (excluding amounts paid
as
contemplated by the Joint Escrow Instructions) as provided in Annex
IX
attached
hereto (the “Use of Proceeds”). The Use of Proceeds provides, among other
things, that such net proceeds on the Closing Date shall be used (i) first,
for
payment of certain fees and expenses; and (ii) then, for general corporate
purposes; provided however, the Company will not use such to pay fees payable
(x) to another broker or finder (other than the Placement Agent) relating to
the
offer and sale of the Purchased Securities or (y) to any other party relating
to
any financing transaction effected prior to the Closing Date.
f. Warrants.
(i) The
Company agrees to issue to the Buyer on the Closing Date one or more
transferable warrants (each, a "Warrant" and, collectively, the "Warrants"),
designated as its Series 2007-01 Warrants. The Warrants to be issued to the
Buyer shall be Class A or Class B Warrants,
as
indicated on the Buyer’s signature page.
(ii) The
Warrants issued to the Buyer shall be for the purchase of a number of shares
of
Common Stock equal to one hundred percent (100%) of the Issue Date Conversion
Shares.
(iii) Each
Warrant shall have an exercise price (each, an "Exercise Price") equal to $1.20;
such Exercise Price will be subject to adjustment as provided in the
Warrant.
(iv) Each
of
the Warrants shall be exercisable commencing on the Commencement Date specified
in the Warrants. Each of the Warrants shall expire at the close of business
on
the last day of the calendar month in which the third annual anniversary of
the
Effective Date occurs
(v) Each
Warrant shall have cashless exercise rights and automatic exercise provisions,
each as provided in the Warrant. Except as specified above, each Warrant shall
generally be in the form annexed hereto as Annex
V-A
or
Annex
V-B,
as the
case may be.
(vi) The
Warrant Shares shall be subject to the relevant provisions of the Registration
Rights Agreement.
g. Certain
Agreements.
(i) For
purposes of this Agreement, the following terms shall have meanings
indicated:
(A) “New
Transaction Period” means the period commencing on the Closing Date and
continuing through and including the Final Lock-up Date.
(B) “Final
Lock-up Date” means the date on which the aggregate principal amount of all
outstanding Debentures is twenty-five percent (25%) or less of the Aggregate
Purchase Price.
(C) “New
Transaction Price” means the Basic New Transaction Price (as defined below)
except that if the New Transaction Exercise Price is lower than the Basic New
Transaction Price, it means the New Transaction Exercise Price.
(D) “Basic
New Transaction Price” means, as may be applicable, on a per share basis, the
lower of (1) the lowest fixed purchase price of any shares of the New Common
Stock contemplated in the New Transaction, or (2) the lowest conversion price
or
put or call price which would be applicable under the terms of the New
Transaction; in each such case, whether such purchase or conversion price or
put
or call price is stated or otherwise specified or is determined on the closing
date of the New Transaction by the application of a formula set in the documents
reflecting the New Transaction or does result from adjustments or revisions
contemplated in the relevant agreements for the New Transaction (and the Company
hereby covenants that it will provide written notice to the Buyer of any such
adjustment or revision within five (5) Trading Days after an event reflecting
such adjustment or revision and, if there was a conversion of any portion of
the
Buyer’s Debenture after such adjustment or revision and before Buyer’s receipt
of such notice, the Company will issue additional shares to Buyer based on
such
adjusted conversion price) and whenever such adjustment or revision would be
applicable (and if no minimum purchase price, conversion price or put or call
price, as the case may be, is set, it shall be assumed that such minimum
purchase price or conversion price is $.01); and provided, further, that, if
the
securities issued in the New Transaction are issued at a Face Value Discount
(as
defined below), the New Transaction Price shall be adjusted to reflect such
discount.1
(E) “Exercise
Threshold Price” means the then applicable Exercise Price.
(F) “New
Transaction Exercise Price” means the lowest exercise price per share applicable
to the warrants, option or similar instrument (howsoever denominated;
collectively, “New Transaction Warrants”) included in such New Transaction,
whether such exercise price is stated or does result from adjustments or
revisions contemplated in the relevant agreements for the New Transaction (and
the Company hereby covenants that it will provide written notice to the Buyer
of
any such adjustment or revision within five (5) Trading Days after an event
reflecting such adjustment or revision and, if there was an exercise of any
portion of the Buyer’s Warrant after such adjustment or revision and before
Buyer’s receipt of such notice, the Company will issue additional shares to
Buyer based on such adjusted exercise price) and whenever such exercise price
would be applicable (and, if no minimum exercise price is set, it shall be
assumed that such minimum exercise price is $.01).
_________________
1By
way of
illustration, if convertible preferred shares having a stated value of $1
million and a fixed conversion price of $0.05 were sold for a purchase price
of
$800,000, the effective New Transaction Price would be $0.04.
(G) “Alternative
Warrant Percentage” means, with respect to the relevant New Transaction, (1) the
number of shares which are eligible to be purchased under the New Transaction
Warrants, divided by (2) the aggregate of the shares of New Common Stock issued
or issuable in such transaction (excluding the shares issuable on exercise
of
the New Transaction Warrants).
(H) “Current
Warrant Percentage” means, as of immediately before the consummation of the
relevant New Transaction, the higher of (1) one hundred percent (100%) or (2)
the highest Alternative Warrant Percentage of any preceding New
Transaction.
(I) “Outstanding
Warrant Shares” means, for the Warrants or for any previously issued Added
Warrants, the then outstanding number of Warrant Shares which would then be
issuable upon the exercise in full of such Warrants (without regard to any
limitations which may then restrict the Holder’s full exercise of such Warrant
at any time) or such Added Warrants, if any, as in effect immediately prior
to
the relevant New Transaction.
(J) “Original
Warrant Shares” means, for the Warrants or for any previously issued Added
Warrants, the original number of Warrant Shares issuable on exercise of such
Warrants on the relevant Closing Date or as Added Warrants, as the case may
be
(in each case without regard to any limitations which may then restrict the
Holder’s full exercise of such Warrant at any time).
(K) “Face
Value Discount” means consideration less than, as the case may be, (x) the
number of shares being issued multiplied by the stated purchase price, (y)
the
stated principal amount of a debenture, note or similar instrument or (z) the
stated value of the shares of convertible stock.
(ii)
The
Company covenants and agrees that, if, during the New Transaction Period,
without the prior written consent of a Majority in Interest of the Holders
in
each instance (which consent is in the sole discretion of the Holders and may
be
withheld for any reason or for no reason whatsoever), the Company enters into
a
New Transaction, then
(A) the
New
Transaction Price shall be deemed to be the “Lowest Fixed Conversion Price” for
purposes of clause (y) of the definition of “Conversion Price” in the Debentures
for all Unconverted Debentures; provided, however, if there was one or more
previous New Transactions, the Lowest Fixed Conversion Price shall be the lowest
New Transaction Price2
of
all
New Transactions; and
(B) if
the
New Transaction Exercise Price of any of the New Transaction Warrants is lower
than the Exercise Threshold Price of the Warrants, then the Exercise Price
of
the then outstanding Warrants shall be adjusted to be equal to the New
Transaction Exercise Price of such New Transaction Warrants; and
(C) if
the
provisions applicable to the convertible preferred stock, convertible debenture
or similar instrument (howsoever denominated), if any, of the New Transaction
are more beneficial to the holder of such instrument than the corresponding
terms applicable to the Debentures or in or to the Warrants, as the case may
be,
or if the terms which are beneficial to the Company in the relevant Transaction
Agreements are not included in the corresponding instrument in the New
Transaction, then, unless waived by a Majority in Interest of the Holders,
the
terms of the Transaction Agreements applying to the then outstanding Debentures
or the Warrants or to the other Transaction Agreements, as the case may be,
shall be modified to reflect similar terms (based, if relevant, on the Closing
Date); provided, however, that nothing in this provision shall be read to mean
that the Purchased Securities shall be changed to any other form of
security;
_________________
2Any New Transaction Price shall be adjusted for subsequent events as contemplated by the Debentures.
2Any New Transaction Price shall be adjusted for subsequent events as contemplated by the Debentures.
(D) if
either
(1) the Conversion Price is adjusted as contemplated by clause (A) above, and/or
(2) the Alternative Warrant Percentage is greater than the Current Warrant
Percentage (whether or not the Conversion Price has been adjusted as a result
of
the New Transaction), the Company shall issue to the Holder additional warrants
(“Added Warrants”) for the purchase of the number of shares equal to the excess,
if any, of
(x)
(I)
the higher of (a) the Alternative Warrant Percentage or (b) the Current Warrant
Percentage, multiplied by (II) (a) the Purchase Price, divided by (b) the
Conversion Price as determined on the Closing Date, multiplied by (III) a
fraction, of which the numerator is the Outstanding Warrant Shares for all
Warrants (including previously issued Added Warrants) and the denominator is
Original Warrant Shares for all Warrants (including previously issued Added
Warrants); over
(y)
the
aggregate Outstanding Warrant Shares for all Warrants (including previously
issued Added Warrants);
the
terms
of such Added Warrants (including, but not limited, to term of exercisability,
exercise price, manner and limitations, if any, on exercise, registration
rights) shall be the same as the shall be the same as the applicable New
Transaction Warrants issued in such New Transaction.
(iii) The
Company covenants and agrees that, any of the foregoing provisions of this
Section 4(g) or any other provision of this Agreement or any of the other
Transaction Agreements to the contrary notwithstanding, the Company will not,
without the prior written consent of a Majority in Interest of the Holders
in
each instance (which consent is in the sole discretion of the Holders and may
be
withheld for any reason or for no reason whatsoever),
(A) during
the New Transaction Period, enter into any New Transaction where such
transaction provides for a variable conversion price or a variable exercise
price; provided, however, that this Section 4(g)(iii)(A) shall not apply
to
(1)
a
provision in a debenture, preferred equity security or similar instrument-based
financing (howsoever denominated; a “New Debenture”) representing an obligation
to repay the amount loaned or advanced by a New Investor to the Company in
a New
Transaction and represented by the New Debenture (the “New Debenture Original
Principal”) which provides that (i) the Company shall be obligated to repay on a
monthly or less frequent basis, beginning no earlier than three months after
the
issuance of the New Debenture, a fixed amount of the New Debenture Original
Principal (not to exceed 4.77% per month of such New Debenture Original
Principal), together with all accrued interest due and payable thereon and
(ii)
if such required periodic payment may be paid in shares of Common Stock, the
number of shares to be issued pursuant to such provision shall be based on
(x)
the VWAP for at least the five (5) Regular Trading Days prior to the relevant
scheduled payment date, multiplied by (y) a percentage no lower than seventy
percent (70%); or
(2)
a New
Transaction which meets all of the following conditions: (i) the New Transaction
is not entered into prior to date which is thirty (30) days after the earlier
of
(x) the Effective Date covering all of the Registrable Securities or (y) the
Initial Default Effective Date (as defined in the Debenture), (ii) no later
than
the Trading Day after the execution of the New Transaction, the Company gives
a
Voluntary Prepayment Notice (as defined in the Debenture) for all, and not
less
than all, of the outstanding Debentures of all Buyers and all of the other
terms
and conditions of such prepayment of the Debentures, as provided in Section
4(F)
of the Debenture,3
are
satisfied, and (iii) the documents reflecting such New Transaction specify
that
consummation of the transaction contemplated by such documents is expressly
conditioned on the completion of the prepayment on all outstanding
Debentures,
(B) during
the period commencing on the Closing Date and continuing through the Effective
Date, enter into any New Transaction whatsoever, and
(C) during
the period commencing on the Effective Date and continuing through the date
which is the six month anniversary of the Effective Date, enter into any New
Transaction where such New Transaction provides for any registration rights
(including, but not limited to demand or piggy-back registration rights) to
any
one or more of the New Investors in such New Transaction.
The
Company acknowledges that each of the foregoing provisions is independent of
the
others and that a breach of any of the foregoing provisions might result in
adjustments referred to in other provisions of this Section 4(g) and, in
addition (and not in lieu of such adjustments, if any) shall constitute an
event
of default under the Debenture and the other Transaction Agreements. The Company
is aware that if such event of default occurs, a Holder of a Debenture will
have
certain redemption rights contemplated by the Debenture.
(iv) Nothing
in the foregoing provisions reflects either an obligation on the part of any
Buyer to participate in any New Transaction or a limitation on any Buyer from
participating in any New Transaction.
(v) Any
of
the foregoing provisions of this Section 4(g) or any other provision of this
Agreement or any of the other Transaction Agreements to the contrary
notwithstanding, the Company shall not engage in any offers, sales or other
transactions of its securities which would adversely affect the exemption from
registration available for the transactions contemplated by the Transaction
Agreements.
(vi) The
Company agrees that, prior to the Effective Date, it will not file any
registration statement for the sale of shares by the Company or any other
stockholder other than the Registration Statement contemplated by the
Registration Rights Agreement (or amendments to such Registration Statement)
and
other than (x) a registration statement on Form S-8 (and any post-effective
amendments thereto) and (y) a post-effective registration statement with respect
to any registration statement which was declared effective prior to the Closing
Date.
h. Company
Principal’s Agreements.
_________________
3Such
terms and conditions include, but are not necessarily limited to: the conditions
which must be satisfied for the Company to give a Voluntary Prepayment Notice;
the terms of the Voluntary Prepayment Notice; the satisfaction of all conditions
through and including the Voluntary Prepayment Date (as defined in the
Debenture); the rights of the Holder of a Debenture during the Prepayment
Conversion Period (as defined in the Debenture); and the payment in full
of the
relevant Voluntary Prepayment Amount, as defined in and subject to the terms
of
the Debenture, to all Holders of Debentures on the Voluntary Prepayment
Date.)
(i) The
Company hereby agrees that, no later than the Closing Date, the Company will
cause each of its principal officers and all of its directors and certain
persons set forth on Schedule 4(h) of the Company Disclosure (each, a “Company
Principal”), and certain Persons who are related to or controlled by such
Company Principal, to execute and deliver an agreement (each, a “Company
Principal’s Agreement”) regarding limitations on the sale or other disposition
of the shares of the Company’s Common Stock (or instruments convertible into or
exercisable for such shares) held by such Company Principal or other Principal
(as defined in the Company Principal’s Agreement), except that, notwithstanding
its terms, the Company Principal’s Agreement will be deemed not apply to the
sale of shares of Common Stock acquired by a Principal in open market
transactions or from any other Person who was not bound by a Company Principal’s
Agreement at the time of such acquisition by such Principal. Subject to the
foregoing, each Company Principal’s Agreement shall be substantially in the form
set forth in Annex
VII
attached
hereto.
(ii) In
addition, under certain circumstances as contemplated by the definition of
“New
Transaction” in this Agreement, certain future issuances by the Company to
persons identified in clause (f) of such definition are conditioned on such
shares being subject to a Company Principal’s Agreement being executed by the
relevant party (who, whether or not included in the definition of Company
Principal in the preceding subparagraph (i), shall, for purposes of this Section
4(h), be deemed to be a “Company Principal” identified in such definition). The
Company covenants that it will obtain such executed Company Principal’s
Agreement from the relevant party no later than the issuance of the relevant
security to such party and that it will promptly provide a copy thereof to
the
Escrow Agent on behalf of the Buyer and the Other Buyers.
i. Available
Shares.
(i) The
Company shall have at all times authorized and reserved for issuance, free
from
preemptive rights, a number of shares (the “Reserved Amount”) at least equal to
one hundred percent (100%) of the sum of (x) the number of shares of Common
Stock issuable as may be required, at any time, to satisfy the conversion rights
of the Holders of principal on all outstanding Convertible Debentures plus
interest thereon through the Maturity Date (assuming for such purposes that
interest is paid in shares at the Conversion Price), plus (y) the number of
shares issuable upon exercise of all outstanding Warrants held by all Holders
(in each case, whether any of such outstanding Convertible Debentures or
Warrants were originally issued to the Holder, the Buyer or to any other party
and without regard to any restrictions which might limit any Holder’s right to
convert any of the Debentures or to exercise any of the Warrants held by any
Holder).
(ii) The
Reserved Amount shall be determined on the Closing Date and after each New
Transaction Closing Date, and thereafter on the first Trading Day after the
end
of each subsequent calendar quarter, and the number of shares to be reserved
shall be based on (q) all outstanding Debentures and the Conversion Price which
would have been applicable as of such date and (r) all unexercised Warrants
as
of such date. The Reserved Amount determined on such date shall remain the
Reserved Amount until the next New Transaction Closing Date or quarterly
determination, as the case may be. The Company shall give written instructions
to the Transfer Agent to reserve for issuance to the Buyer the number of shares
equal to the Reserved Amount. The Company will, at the request of the Buyer
(which request shall not be made more frequently than twice a year), provide
written confirmation, certified by an executive officer of the Company, of
the
number of shares then reserved for the Buyer and that the instructions referred
to in the preceding sentence have been given to the Transfer Agent.
j. Publicity,
Filings, Releases, Etc.
Each of
the parties agrees that it will not disseminate any information relating to
the
Transaction Agreements or the transactions contemplated thereby, including
issuing any press releases, holding any press conferences or other forums,
or
filing any reports (collectively, “Publicity”), without giving the other party
reasonable advance notice and an opportunity to comment on the contents thereof.
Neither party will include in any such Publicity any statement or statements
or
other material to which the other party reasonably objects, unless in the
reasonable opinion of counsel to the party proposing such statement, such
statement is legally required to be included. In furtherance of the foregoing,
the Company will provide to the Investor’s Counsel (as defined in the
Registration Rights Agreement) drafts of the applicable text the first or
initial filing of a Current Report on Form 8-K or a Quarterly or Annual Report
on Form 10-Q or 10-K (or equivalent SB forms), as the case may be, intended
to
be made with the SEC which refers to the Transaction Agreements or the
transactions contemplated thereby as soon as practicable (but at least two
(2)
Trading Days before such filing will be made) and will not include in such
filing (or any other filing filed before then) any statement or statements
or
other material to which the other party reasonably objects, unless in the
reasonable opinion of counsel to the party proposing such statement, such
statement is legally required to be included. Notwithstanding the foregoing,
each of the parties hereby consents to the inclusion of the text of the
Transaction Agreements in filings made with the SEC (but any descriptive text
accompanying or part of such filing shall be subject to the other provisions
of
this paragraph). Notwithstanding, but subject to, the foregoing provisions
of
this Section 4(j), the Company will, after the Closing Date, promptly issue
a
press release and file a Current Report on Form 8-K or, if appropriate, a
quarterly or annual report on the appropriate form, referring to the
transactions contemplated by the Transaction Agreements.
k. Independent
Nature of Buyers' Obligations and Rights.
The
obligations of each Buyer under the Transaction Agreements 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
one or more of the Transaction Agreements. The decision of each Buyer or Other
Buyer to purchase Purchased Securities pursuant to the Transaction Agreements
has been made by such Buyer independently of any Other Buyer and independently
of any information, materials, statements or opinions as to the business,
affairs, operations, assets, properties, liabilities, results of operations,
condition (financial or otherwise) or prospects of the Company or of its
subsidiaries, if any, which may been made or given by any Other Buyer or any
of
their respective officers, directors, principals, employees, agents, counsel
or
representatives (collectively, including the Buyer, the “Buyer
Representatives”). No Buyer Representative shall have any liability to any Other
Buyer or the Company relating to or arising from any such information,
materials, statements or opinions, if any. Each Buyer acknowledges that no
Other
Buyer has acted as agent for such Buyer in connection with making its investment
hereunder and that no Buyer will be acting as agent of such Other Buyer in
connection with monitoring its investment in the Purchased Securities or
enforcing its rights under the Transaction Agreements. 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 the other
Transaction Agreements, and it shall not be necessary for any Other Buyer to
be
joined as an additional party in any proceeding for such purpose. The Company
acknowledges that, for reasons of administrative convenience, (x) the
Transaction Agreements have been prepared by counsel for one of the Buyers
and
such counsel does not represent all of the Buyers with respect to the
transactions contemplated hereby, and each other Buyer has retained its own
counsel (or had the opportunity to do so) with respect to such transactions,
and
(y) the Company has elected to provide each of the Buyers with the same
Transaction Agreements for the purpose of closing a transaction with multiple
Buyers and not because it was required or requested to do so by any Buyer.
In
furtherance of the foregoing, and not in limitation thereof, the Company
acknowledges that nothing contained in this Agreement or in any Transaction
Agreement, and no action taken by any Buyer pursuant thereto, shall be deemed
to
constitute any two or more 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 Agreements.
l. Equal
Treatment of Buyers.
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 Agreements
unless the same consideration is also offered to all of the parties to the
Transaction Agreements.
m. Trading
Provisions.
The
Buyer agrees that, during the period from the date hereof until the date the
Buyer’s own Debenture is fully paid or converted and the Buyer’s own Warrants
have been exercised in full or have expired, neither the Buyer nor any of the
Buyer’s Affiliates shall engage in any Short Sales of the Common Stock;
provided, however, that unless and until the Company has (x) affirmatively
demonstrated by the use of specific clear and convincing evidence that Buyer
is
engaging in Short Sales and (y) obtained an injunction to that effect against
the Buyer from a court of competent jurisdiction, the Buyer shall be assumed
to
be in compliance with the provisions of this Section 4(m) and the Company shall
remain obligated to fulfill all of its obligations under the Transaction
Agreements; and provided, further, that the Company shall under no circumstances
be entitled to request or demand that the Buyer affirmatively demonstrate that
it has not engaged in any such Short Sales as a condition to the Company’s
fulfillment of its obligations under any of the Transaction Agreements and
shall
not assert the Buyer’s failure to demonstrate such absence of such Short Sales
as a defense to any breach of the Company’s obligations under any of the
Transaction Agreements.
n. Independent
Investment Decision.
No Buyer
has agreed to act with any Other Buyer for the purpose of acquiring, holding,
voting or disposing of the Securities purchased hereunder for purposes of
Section 13(d) under the Exchange Act, and each Buyer is acting independently
with respect to its investment in the Securities. The decision of each Buyer
to
purchase Purchased Securities pursuant to this Agreement has been made by such
Buyer independently of any other purchase and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial
or
otherwise) or prospects of the Company or its subsidiaries which may have made
or given by any Other Buyer or by any agent or employee of any Other Buyer,
and
no Buyer or any of its agents or employees shall have any liability to any
Other
Buyer (or any other person) relating to or arising from any such information,
materials, statements or opinions.
o.
NASD
Rule 2710.
The
Company is aware that the Corporate Financing Rule 2710 (“NASD Rule 2710") of
the National Association of Securities Dealers (“NASD”) is or may become
applicable to the transactions contemplated by the Transaction Agreements or
to
the sale by a Holder of any of the Securities. If NASD Rule 2710 is so
applicable, the Company shall, to the extent required by such rule, timely
make
any filings and cooperate with any broker or selling stockholder in respect
of
any consents, authorizations or approvals that may be necessary for the NASD
to
timely and expeditiously permit the stockholder to sell the
securities.
p. Keeping
of Records and Books of Account.
The
Company shall keep and cause each Subsidiary, if any, to keep adequate records
and books of account, in which complete entries will be made in accordance
with
GAAP consistently applied, reflecting all financial transactions of the Company
and such subsidiaries, and in which, for each fiscal year, all proper reserves
for depreciation, depletion, obsolescence, amortization, taxes, bad debts and
other purposes in connection with its business shall be made.
q. Covenant
Not to Grant Material Asset Security Interests.
The
Company agrees, for itself and for each Subsidiary, that, as long as any of
the
Debentures are outstanding, without the prior written consent of a Majority
in
Interest of the Holders in each instance (which consent is in the sole
discretion of the Holders and may be withheld for any reason or for no reason
whatsoever), no Material Asset Security Interest will be granted by the Company
or any Subsidiary or permitted to exist.
5. TRANSFER
AGENT INSTRUCTIONS.
a. The
Company warrants that, with respect to the Securities, other than the stop
transfer instructions to give effect to Section 4(a) hereof, it will give the
Transfer Agent no instructions inconsistent with instructions to issue Common
Stock from time to time upon conversion of the Debentures or exercise of the
Warrants, as may be applicable from time to time, in such amounts as specified
from time to time by the Company to the Transfer Agent, bearing the restrictive
legend specified in Section 4(b) of this Agreement prior to registration of
the
Shares under the 1933 Act, registered in the name of the Buyer or its nominee
and in such denominations to be specified by the Holder in connection therewith.
Except as so provided, the Shares shall otherwise be freely transferable on
the
books and records of the Company as and to the extent provided in this Agreement
and the other Transaction Agreements. Nothing in this Section shall affect
in
any way the Buyer's obligations and agreement to comply with all applicable
securities laws upon resale of the Securities. If the Buyer provides the Company
with an opinion of counsel reasonably satisfactory to the Company that
registration of a resale by the Buyer of any of the Securities in accordance
with clause (1)(B) of Section 4(a) of this Agreement is not required under
the
1933 Act or upon request from a Holder while the Registration Statement is
effective, the Company shall (except as provided in clause (2) of Section 4(a)
of this Agreement) permit the transfer of the Securities and, in the case of
the
Conversion Shares or the Warrant Shares, as may be applicable, promptly instruct
the Transfer Agent to issue one or more certificates for Common Stock without
legend in such name and in such denominations as specified by the
Buyer.
b. (i) The
Company understands that a delay in the delivery of Conversion Certificates,
whether on conversion of the Debenture and/or in payment of accrued interest
or
on exercise of the Warrants, beyond the relevant Delivery Date (as defined
in
the Debenture or Warrant, as the case may be) could result in economic loss
to
the Holder. As compensation to the Holder for such loss, in addition to any
other available remedies at law, the Company agrees to pay late payments to
the
Holder for late issuance of the Conversion Certificates in accordance with
the
following schedule (where “No. Business Days Late” is defined as the number of
Trading Days beyond two (2) Trading Days after the Delivery Date):
| Late Payment For Each $10,000 | |||||||
| of Principal or Interest Being Converted or | |||||||
|
No.
Business Days Late
|
of Exercise Price of Warrant Being Exercised | ||||||
|
|
1
|
$
|
100
|
||||
|
2
|
$
|
200
|
|||||
|
3
|
$
|
300
|
|||||
|
4
|
$
|
400
|
|||||
|
5
|
$
|
500
|
|||||
|
6
|
$
|
600
|
|||||
|
7
|
$
|
700
|
|||||
|
8
|
$
|
800
|
|||||
|
9
|
$
|
900
|
|||||
|
10
|
$
|
1,000
|
|||||
|
|
>10
|
$
|
1,000
+ $200 for each Business Day Late beyond 10 days
|
||||
The
Company shall pay any payments incurred under this Section in immediately
available funds upon demand. Nothing herein shall limit the Holder’s right to
pursue actual damages for the Company’s failure to issue and deliver the
Conversion Certificates to the Holder within a reasonable time. Furthermore,
in
addition to any other remedies which may be available to a Holder, in the event
that the Company fails for any reason to effect delivery of such Conversion
Certificates within two (2) Trading Days after the Delivery Date, the Converting
Holder will be entitled to revoke the relevant Notice of Conversion or Notice
of
Exercise by delivering a notice to such effect to the Company prior to the
Converting Holder’s receipt of the relevant Conversion Certificates, whereupon
the Company and the Converting Holder shall each be restored to their respective
positions immediately prior to delivery of such Notice of Conversion or Notice
of Exercise, as the case may be; provided,
however,
that
any payments contemplated by this Section 5(b) of this Agreement which have
accrued through the date of such revocation notice shall remain due and owing
to
the Converting Holder notwithstanding such revocation.
________________________
4 Example:
Notice of Conversion or Notice of Exercise is delivered on Monday, December
3,
2007. The Delivery Date would be Thursday, December 6 (the third Trading Day
after such delivery). If the certificate is delivered by Monday, December 10
(2
Trading Days after the Delivery Date), no payment under this provision is due.
If the certificates are delivered on December 11, that is 1 “Trading Day Late”
in the table below; if delivered on December 18, that is 6 “Trading Days Late”
in the table.
(ii) If,
by
the tenth Trading Day after the relevant Delivery Date, the Company fails for
any reason to deliver the Conversion Certificates, but at any time after the
Delivery Date, the Converting Holder purchases, in an arm’s-length open market
transaction or otherwise, shares of Common Stock (the “Covering Shares”) in
order to make delivery in satisfaction of a sale of Common Stock by the
Converting Holder (the “Sold Shares”), which delivery such Converting Holder
anticipated to make using the shares to be issued upon such conversion (a
“Buy-In”), the Converting Holder shall have the right to require the Company to
pay to the Converting Holder, in addition to and not in lieu of the amounts
contemplated in other provisions of the Transaction Agreements, including,
but
not limited to, the provisions of the immediately preceding Section 5(b)(i)),
the Buy-In Adjustment Amount (as defined below). The “Buy-In Adjustment Amount”
is the amount equal to the number of Sold Shares multiplied by the excess,
if
any, of (x) the Holder's total purchase price per share (including brokerage
commissions, if any) for the Covering Shares over (y) the net proceeds per
share
(after brokerage commissions, if any) received by the Holder from the sale
of
the Sold Shares. The Company shall pay the Buy-In Adjustment Amount to the
Holder in immediately available funds immediately upon demand by the Converting
Holder. By way of illustration and not in limitation of the foregoing, if the
Holder purchases shares of Common Stock having a total purchase price (including
brokerage commissions) of $11,000 to cover a Buy-In with respect to shares
of
Common Stock it sold for net proceeds of $10,000, the Buy-In Adjustment Amount
which Company will be required to pay to the Holder will be $1,000.
c. The
provisions of this paragraph apply on or after the Effective Date and only
so
long as the effectiveness of the applicable registration has not been suspected
or withdrawn or if the provisions of Rule 144(k) would then be applicable to
the
sale of the relevant Shares by the Holder (collectively, the “Effective
Period”). During the Effective Period, the Company will issue Shares without
legend and without transfer restrictions on the books of the Transfer Agent,
and, at the request of the Holder, will use it best efforts to have previously
issued certificates representing the Shares re-issued without legend and without
transfer restrictions on the books of the Transfer Agent. In lieu of delivering
physical certificates representing the Common Stock issuable upon conversion
of
the Debenture or exercise of a Warrant or at the request of the Holder with
respect to any Shares previously issued, provided the Transfer Agent is
participating in the Depository Trust Company (“DTC”) Fast Automated Securities
Transfer program, upon request of the Holder and the Holder’s compliance with
the provisions contained in this paragraph, so long as the certificates therefor
do not bear a legend and the Holder thereof is not obligated to return such
certificate for the placement of a legend thereon, the Company shall use its
best efforts to cause the Transfer Agent to electronically transmit to the
Holder the Common Stock issuable upon conversion of the Debenture or exercise
of
the Warrant or in replacement of any Shares previously issued by crediting
the
account of Holder’s Prime Broker with DTC through its Deposit Withdrawal Agent
Commission system. The Company specifically acknowledges that, as of the date
hereof and as of the Closing Date, the Transfer Agent is participating in the
DTC program and the Company is not aware of any plans of the Transfer Agent
to
terminate such participation. While any Holder holds Registrable Securities,
the
Company will not appoint any transfer agent which does not participate in the
DTC program.
d.
The
Company shall assume any fees or charges of the Transfer Agent or Company
counsel regarding (i) the removal of a legend or stop transfer instructions
with
respect to Registrable Securities, and (ii) the issuance of certificates or
DTC
registration to or in the name of the Holder or the Holder’s designee or to a
transferee as contemplated by an effective Registration Statement.
Notwithstanding the foregoing, it shall be the Holder’s responsibility to obtain
all needed formal requirements (specifically: medallion guarantee and prospectus
delivery compliance) in connection with any electronic issuance of shares of
Common Stock.
e. The
Holder of a Debenture or a Warrant shall be entitled to exercise its conversion
or exercise privilege with respect to the Debenture or the Warrant, as the
case
may be, notwithstanding the commencement of any case under 11 U.S.C. Sec.101
et seq.
(the
“Bankruptcy Code”). In the event the Company is a debtor under the Bankruptcy
Code, the Company hereby waives, to the fullest extent permitted, any rights
to
relief it may have under 11 U.S.C. Sec.362 in respect of such holder’s exercise
privilege. The Company hereby waives, to the fullest extent permitted, any
rights to relief it may have under 11 U.S.C. Sec.362 in respect of the
conversion of the Debenture or the exercise of the Warrant. The Company agrees,
without cost or expense to such Holder, to take or to consent to any and all
action necessary to effectuate relief under 11 U.S.C. Sec.362.
f. The
Company will authorize the Transfer Agent to give information relating to the
Company directly to the Holder or the Holder’s representatives upon the request
of the Buyer or any such representative, to the extent such information relates
to (i) the status of shares of Common Stock issued or claimed to be issued
to
the Holder in connection with a Notice of Conversion or a Notice of Exercise,
or
(ii) the aggregate number of outstanding shares of Common Stock of all
stockholders (as a group and not individually) as of a current or other
specified date. At the request of the Holder, the Company will provide the
Holder with a copy of the authorization so given to the Transfer
Agent.
6. CLOSING
DATE.
a.
The
Closing Date shall occur on the date which is the first Trading Day after each
of the conditions contemplated by Sections 7 and 8 hereof shall have either
been
satisfied or been waived by the party in whose favor such conditions
run.
b. The
closing of the purchase and issuance of Debentures and Warrants shall occur
on
the Closing Date at the offices of the Escrow Agent.
c. Notwithstanding
anything to the contrary contained herein, on the Closing Date, the Escrow
Agent
will be authorized to release the Escrow Agent will be authorized to release
the
Escrow Property on the Closing Date as provided in the Joint Escrow
Instructions.
7. CONDITIONS
TO THE COMPANY'S OBLIGATION TO SELL.
The
Buyer
understands that the Company's obligation to sell the Purchased Securities
to
the Buyer pursuant to this Agreement on the Closing Date is conditioned
upon:
a. The
execution and delivery of this Agreement and the other Transaction Agreements
by
the Buyer on or before such Closing Date;
b. Delivery
by the Buyer to the Escrow Agent by the Closing Date of good funds as payment
in
full of an amount equal to the Purchase Price in accordance with this
Agreement;
c. The
accuracy on such Closing Date of the representations and warranties of the
Buyer
contained in this Agreement, each as if made on such date, and the performance
by the Buyer on or before such date of all covenants and agreements of the
Buyer
required to be performed on or before such date; and
d. There
shall not be in effect any law, rule or regulation prohibiting or restricting
the transactions contemplated hereby, or requiring any consent or approval
which
shall not have been obtained.
8. CONDITIONS
TO THE BUYER'S OBLIGATION TO PURCHASE.
The
Company understands that the Buyer's obligation to purchase the Purchased
Securities on the Closing Date is conditioned upon:
a. The
execution and delivery of this Agreement and the other Transaction Agreements
by
the Company on or before such Closing Date;
b. The
delivery by the Company to the Escrow Agent of the Certificates in accordance
with this Agreement;
c. The
delivery by the Company to the Escrow Agent on or before the Closing Date of
the
executed Company Principal’s Agreements from each Company Principal and the
related Principals (as defined in each Company Principal’s Agreement) of such
Company Principal;
d. The
Company shall have delivered to the Buyer copies of all requisite third party
consents and/or waivers described in the Disclosure Annex;
e. On
such
Closing Date, each of the Transaction Agreements executed by the Company on
or
before such date shall be in full force and effect and the Company shall not
be
in default thereunder;
f. The
accuracy in all material respects on such Closing Date of the representations
and warranties of the Company contained in this Agreement, each as if made
on
such date, and the performance by the Company on or before such date of all
covenants and agreements of the Company required to be performed on or before
such date;
g. The
delivery to the Escrow Agent of an opinion of counsel for the Company, dated
such Closing Date, addressed to the Buyer and the Other Buyers and to the
Placement Agent, in form, scope and substance reasonably satisfactory to the
Buyer and the Placement Agent, substantially to the effect set forth in
Annex
III
attached
hereto;
h. There
shall not be in effect any law, rule or regulation prohibiting or restricting
the transactions contemplated hereby, or requiring any consent or approval
which
shall not have been obtained; and
i. From
and
after the date hereof to and including such Closing Date, each of the following
conditions will remain in effect: (i) the trading of the Common Stock shall
not
have been suspended by the SEC or on the Principal Trading Market; (ii) trading
in securities generally on the Principal Trading Market shall not have been
suspended or limited; (iii), no minimum prices shall been established for
securities traded on the Principal Trading Market; and (iv) there shall not
have
been any material adverse change in any financial market.
9. INDEMNIFICATION
AND REIMBURSEMENT.
a.
(i)
The
Company agrees to indemnify and hold harmless the Buyer and its officers,
directors, employees, and agents, and each Buyer Control Person from and against
any losses, claims, damages, liabilities or expenses incurred (collectively,
“Damages”), joint or several, and any action in respect thereof to which the
Buyer, its partners, Affiliates, officers, directors, employees, and duly
authorized agents, and any such Buyer Control Person becomes subject to,
resulting from, arising out of or relating to any misrepresentation, breach
of
warranty or nonfulfillment of or failure to perform any covenant or agreement
on
the part of Company contained in this Agreement, as such Damages are incurred,
except to the extent such Damages result primarily from Buyer's failure to
perform any covenant or agreement contained in this Agreement or the Buyer's
or
its officer’s, director’s, employee’s, agent’s or Buyer Control Person’s illegal
or willful misconduct, gross negligence, recklessness or bad faith (in each
case, as determined by a non-appealable judgment to such effect) in performing
its obligations under this Agreement.
(ii) The
Company hereby agrees that, if the Buyer, other than by reason of its gross
negligence or willful misconduct or by reason of its trading of the Common
Stock
in a manner that is illegal under the United States federal securities laws
(in
each case, as determined by a non-appealable judgment to such effect), (x)
becomes involved in any capacity in any action, proceeding or investigation
brought by any stockholder of the Company, in connection with or as a result
of
the consummation of the transactions contemplated by this Agreement or the
other
Transaction Agreements, or if the Buyer is impleaded in any such action,
proceeding or investigation by any Person, or (y) becomes involved in any
capacity in any action, proceeding or investigation brought by the SEC, any
self-regulatory organization or other body having jurisdiction, against or
involving the Company or in connection with or as a result of the consummation
of the transactions contemplated by this Agreement or the other Transaction
Agreements, or (z) is impleaded in any such action, proceeding or investigation
by any Person, then in any such case, the Company shall indemnify, defend and
hold harmless the Buyer from and against and in respect of all losses, claims,
liabilities, damages or expenses resulting from, imposed upon or incurred by
the
Buyer, directly or indirectly, and reimburse such Buyer for its reasonable
legal
and other expenses (including the cost of any investigation and preparation)
incurred in connection therewith, as such expenses are incurred. The
indemnification and reimbursement obligations of the Company under this
paragraph shall be in addition to any liability which the Company may otherwise
have, shall extend upon the same terms and conditions to any Affiliates of
the
Buyer who are actually named in such action, proceeding or investigation, and
partners, directors, agents, employees and Buyer Control Persons (if any),
as
the case may be, of the Buyer and any such Affiliate, and shall be binding
upon
and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the Buyer, any such Affiliate and any such
Person.
b. All
claims for indemnification by any Indemnified Party (as defined below) under
this Section shall be asserted and resolved as follows. In the event any claim
or demand in respect of which any Person claiming indemnification under any
provision of this Section (an “Indemnified Party”) might seek indemnity under
paragraph (a) of this Section is asserted against or sought to be collected
from
such Indemnified Party by a Person other than a party hereto or an Affiliate
thereof (a “Third Party Claim”), the Indemnified Party shall deliver a written
notification, enclosing a copy of all papers served, if any, and specifying
the
nature of and basis for such Third Party Claim and for the Indemnified Party's
claim for indemnification that is being asserted under any provision of this
Section against any Person (the “Indemnifying Party”), together with the amount
or, if not then reasonably ascertainable, the estimated amount, determined
in
good faith, of such Third Party Claim (a “Claim Notice”) with reasonable
promptness to the Indemnifying Party. If the Indemnified Party fails to provide
the Claim Notice with reasonable promptness after the Indemnified Party receives
notice of such Third Party Claim, the Indemnifying Party shall not be obligated
to indemnify the Indemnified Party with respect to such Third Party Claim to
the
extent that the Indemnifying Party's ability to defend has been prejudiced
by
such failure of the Indemnified Party. The Indemnifying Party shall notify
the
Indemnified Party as soon as practicable within the period ending thirty (30)
calendar days following receipt by the Indemnifying Party of either a Claim
Notice or an Indemnity Notice (as defined below) (the “Dispute Period”) whether
the Indemnifying Party disputes its liability or the amount of its liability
to
the Indemnified Party under this Section and whether the Indemnifying Party
desires, at its sole cost and expense, to defend the Indemnified Party against
such Third Party Claim. The following provisions shall also apply.
(i)
If
the Indemnifying Party notifies the Indemnified Party within the Dispute Period
that the Indemnifying Party desires to defend the Indemnified Party with respect
to the Third Party Claim pursuant to this paragraph (b) of this Section, then
the Indemnifying Party shall have the right to defend, with counsel reasonably
satisfactory to the Indemnified Party, at the sole cost and expense of the
Indemnifying Party, such Third Party Claim by all appropriate proceedings,
which
proceedings shall be vigorously and diligently prosecuted by the Indemnifying
Party to a final conclusion or will be settled at the discretion of the
Indemnifying Party (but only with the consent of the Indemnified Party, which
consent shall not be unreasonably withheld [it being understood that the
withholding of consent to any such settlement which contemplates a payment
by
the Indemnified Party, the admission of any liability by the Indemnified Party
or any future restrictions or limitations on the Indemnified Party will be
considered reasonable], in the case of any settlement that provides for any
relief other than the payment of monetary damages or that provides for the
payment of monetary damages as to which the Indemnified Party shall not be
indemnified in full pursuant to paragraph (a) of this Section). The Indemnifying
Party shall have full control of such defense and proceedings, including any
compromise or settlement thereof; provided, however, that the Indemnified Party
may, at the sole cost and expense of the Indemnified Party, at any time prior
to
the Indemnifying Party's delivery of the notice referred to in the first
sentence of this subparagraph (x), file any motion, answer or other pleadings
or
take any other action that the Indemnified Party reasonably believes to be
necessary or appropriate protect its interests; and provided further, that
if
requested by the Indemnifying Party, the Indemnified Party will, at the sole
cost and expense of the Indemnifying Party, provide reasonable cooperation
to
the Indemnifying Party in contesting any Third Party Claim that the Indemnifying
Party elects to contest. The Indemnified Party may participate in, but not
control, any defense or settlement of any Third Party Claim controlled by the
Indemnifying Party pursuant to this subparagraph (i), and except as provided
in
the preceding sentence, the Indemnified Party shall bear its own costs and
expenses with respect to such participation. Notwithstanding the foregoing,
the
Indemnified Party may take over the control of the defense or settlement of
a
Third Party Claim at any time if it irrevocably waives its right to indemnity
under paragraph (a) of this Section with respect to such Third Party Claim.
(ii)
If
the Indemnifying Party fails to notify the Indemnified Party within the Dispute
Period that the Indemnifying Party desires to defend the Third Party Claim
pursuant to paragraph (b) of this Section, or if the Indemnifying Party gives
such notice but fails to prosecute vigorously and diligently or settle the
Third
Party Claim, each in a reasonable manner, or if the Indemnifying Party fails
to
give any notice whatsoever within the Dispute Period, then the Indemnified
Party
shall have the right to defend, at the sole cost and expense of the Indemnifying
Party, the Third Party Claim by all appropriate proceedings, which proceedings
shall be prosecuted by the Indemnified Party in a reasonable manner and in
good
faith or will be settled at the discretion of the Indemnified Party (with the
consent of the Indemnifying Party, which consent will not be unreasonably
withheld). The Indemnified Party will have full control of such defense and
proceedings, including any compromise or settlement thereof; provided, however,
that if requested by the Indemnified Party, the Indemnifying Party will, at
the
sole cost and expense of the Indemnifying Party, provide reasonable cooperation
to the Indemnified Party and its counsel in contesting any Third Party Claim
which the Indemnified Party is contesting. Notwithstanding the foregoing
provisions of this subparagraph (ii), if the Indemnifying Party has notified
the
Indemnified Party within the Dispute Period that the Indemnifying Party disputes
its liability or the amount of its liability hereunder to the Indemnified Party
with respect to such Third Party Claim and if such dispute is resolved in favor
of the Indemnifying Party in the manner provided in subparagraph (iii) below,
the Indemnifying Party will not be required to bear the costs and expenses
of
the Indemnified Party's defense pursuant to this subparagraph (ii) or of the
Indemnifying Party's participation therein at the Indemnified Party's request,
and the Indemnified Party shall reimburse the Indemnifying Party in full for
all
reasonable costs and expenses incurred by the Indemnifying Party in connection
with such litigation. The Indemnifying Party may participate in, but not
control, any defense or settlement controlled by the Indemnified Party pursuant
to this subparagraph (ii), and the Indemnifying Party shall bear its own costs
and expenses with respect to such participation.
(iii)
If
the Indemnifying Party notifies the Indemnified Party that it does not dispute
its liability or the amount of its liability to the Indemnified Party with
respect to the Third Party Claim under paragraph (a) of this Section or fails
to
notify the Indemnified Party within the Dispute Period whether the Indemnifying
Party disputes its liability or the amount of its liability to the Indemnified
Party with respect to such Third Party Claim, the amount of Damages specified
in
the Claim Notice shall be conclusively deemed a liability of the Indemnifying
Party under paragraph (a) of this Section and the Indemnifying Party shall
pay
the amount of such Damages to the Indemnified Party on demand. If the
Indemnifying Party has timely disputed its liability or the amount of its
liability with respect to such claim, the Indemnifying Party and the Indemnified
Party shall proceed in good faith to negotiate a resolution of such dispute;
provided, however, that if the dispute is not resolved within thirty (30) days
after the Claim Notice, the Indemnifying Party shall be entitled to institute
such legal action as it deems appropriate.
c. The
indemnity agreements contained herein shall be in addition to (i) any cause
of
action or similar rights of the indemnified party against the indemnifying
party
or others, and (ii) any liabilities the indemnifying party may be subject
to.
10. JURY
TRIAL WAIVER. The
Company and the Buyer hereby waive a trial by jury in any action, proceeding
or
counterclaim brought by either of the Parties hereto against the other in
respect of any matter arising out or in connection with the Transaction
Agreements.
11. SPECIFIC
PERFORMANCE.
The
Company and the Buyer acknowledge and agree that irreparable damage would occur
in the event that any provision of this Agreement or any of the other
Transaction Agreements were not performed in accordance with its specific terms
or were otherwise breached. It is accordingly agreed that the parties (including
any Holder) shall be entitled to an injunction or injunctions, without (except
as specified below) the necessity to post a bond, to prevent or cure breaches
of
the provisions of this Agreement or such other Transaction Agreement and to
enforce specifically the terms and provisions hereof or thereof, this being
in
addition to any other remedy to which any of them may be entitled by law or
equity; provided, however that the Company, upon receipt of a Notice of
Conversion or a Notice of Exercise, may not fail or refuse to deliver the stock
certificates and the related legal opinions, if any, or if there is a claim
for
a breach by the Company of any other provision of this Agreement or any of
the
other Transaction Agreements, the Company shall not raise as a legal defense,
based on any claim that the Holder or anyone associated or affiliated with
the
Holder has violated any provision hereof or any other Transaction Agreement,
has
engaged in any violation of law or for any other reason, unless the Company
has
first posted a bond for one hundred fifty percent (150%) of the principal amount
and, if relevant, then obtained a court order specifically directing it not
to
deliver said stock certificates to the Holder. The proceeds of such bond shall
be payable to the Holder to the extent that the Holder obtains judgment or
its
defense is recognized. Such bond shall remain in effect until the completion
of
the relevant proceeding and, if the Holder appeals therefrom, until all such
appeals are exhausted. This provision is deemed incorporated by reference into
each of the Transaction Agreements as if set forth therein in full.
12. GOVERNING
LAW: MISCELLANEOUS.
a. This
Agreement shall be governed by and interpreted in accordance with the laws
of
the State of New York for contracts to be wholly performed in such state and
without giving effect to the principles thereof regarding the conflict of laws.
Each of the parties consents to the exclusive jurisdiction of the federal courts
whose districts encompass any part of the County of New York or the state courts
of the State of New York sitting in the County of New York in connection with
any dispute arising under this Agreement or any of the other Transaction
Agreements and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on
forum non conveniens,
to the
bringing of any such proceeding in such jurisdictions or to any claim that
such
venue of the suit, action or proceeding is improper. To the extent determined
by
such court, the Company shall reimburse the Buyer for any reasonable legal
fees
and disbursements incurred by the Buyer in enforcement of or protection of
any
of its rights under any of the Transaction Agreements. Nothing in this Section
shall affect or limit any right to serve process in any other manner permitted
by law.
b. Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as
a
waiver thereof.
c. This
Agreement shall inure to the benefit of and be binding upon the successors
and
assigns of each of the parties hereto.
d. All
pronouns and any variations thereof refer to the masculine, feminine or neuter,
singular or plural, as the context may require.
e. A
facsimile transmission of this signed Agreement shall be legal and binding
on
all parties hereto.
f. This
Agreement may be signed in one or more counterparts, each of which shall be
deemed an original.
g. The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
h. 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 or the validity or
enforceability of this Agreement in any other jurisdiction.
i. This
Agreement may be amended only by an instrument in writing signed by the party
to
be charged with enforcement thereof.
j. This
Agreement supersedes all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof.
k. All
dollar amounts referred to or contemplated by this Agreement or any other
Transaction Agreement shall be deemed to refer to US Dollars, unless otherwise
explicitly stated to the contrary.
13. NOTICES.
Any
notice required or permitted hereunder shall be given in writing (unless
otherwise specified herein) and shall be deemed effectively given on the
earliest of
(a)
the
date delivered, if delivered by personal delivery as against written receipt
therefor or by confirmed facsimile transmission,
(b)
the
fifth Trading Day after deposit, postage prepaid, in the United States Postal
Service by registered or certified mail, or
(c)
the
third Trading Day after mailing by domestic or international express courier,
with delivery costs and fees prepaid,
in
each
case, addressed to each of the other parties thereunto entitled at the following
addresses (or at such other addresses as such party may designate by ten (10)
days’ advance written notice similarly given to each of the other parties
hereto):
| COMPANY: |
At
the address set forth at the head of this
Agreement.
|
Attn:
CEO/Chairman
Telephone
No.: (000-00-00) 0000-0000
Telecopier
No.: (000-00-00) 0000-0000
with
a
copy to:
Xxxxxxxxxx
& Xxxxx LLP
Attn:
Xxxxx X. Xxxxx, Esq.
00000
Xxxxxxxx Xxxx., Xxxxx 000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Telephone
No.: (000) 000-0000
Telecopier
No.: (000) 000-0000
| BUYER: |
At
the address set forth on the signature page of this
Agreement.
|
with
a
copy to:
Xxxxxxx
& Xxxxxx llp,
Esqs.
00
Xxxxxxxx
Xxxxx
0000
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxx X. Xxxxxxxx, Esq.
Telephone
No.: (000) 000-0000
Telecopier
No. (000) 000-0000
| ESCROW AGENT: |
Xxxxxxx
& Xxxxxx llp,
Esqs.
|
00
Xxxxxxxx
Xxxxx
0000
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxx Xxxxxxx, Esq.
Telephone
No.: (000) 000-0000
Telecopier
No. (000) 000-0000
14. SURVIVAL
OF REPRESENTATIONS AND WARRANTIES.
The
Company’s and the Buyer’s representations and warranties herein shall survive
the execution and delivery of this Agreement and the delivery of the
Certificates and the payment of the Purchase Price, for a period of two (2)
years after the Closing Date and shall inure to the benefit of the Buyer and
the
Company and their respective successors and assigns.
[BALANCE
OF PAGE INTENTIONALLY LEFT BLANK.]
[SECURITIES
PURCHASE AGREEMENT SIGNATURE PAGE]
IN
WITNESS WHEREOF,
with
respect to the Purchase Price specified below for the Class of Debentures and
Warrants specified below, each the undersigned represents that the foregoing
statements made by it above are true and correct and that it has caused this
Agreement to be duly executed on its behalf (if an entity, by one of its
officers thereunto duly authorized) as of the date first above written.
| PURCHASE PRICE: | $________________________ |
|
for
the purchase of [check
one:]
|
|
| o Class A Debentures and Class A Warrants | o Class B Debentures and Class B Warrants |
BUYER:
| Address | Printed Name of Buyer | |||
| By: | ||||
| Telecopier No. | (Signature of Authorized Person) | |||
| Printed Name and Title | ||||
| Jurisdiction of Incorporation or Organization | ||||
| If the above Notice Address is not the Residence (for individual Buyer) or Principal Place of Business (for Buyer which is not an individual), such Residence or Principal Place of Business is: | ||||
COMPANY:
| By: | |||
| Title: |
|
ANNEX
I
|
FORM OF DEBENTURE | ||
|
-A
|
Class
A
|
||
|
-B
|
Class B
|
||
| ANNEX II | JOINT ESCROW INSTRUCTIONS | ||
| ANNEX III | OPINION OF COUNSEL | ||
| ANNEX IV | REGISTRATION RIGHTS AGREEMENT | ||
| ANNEX V | FORM OF WARRANT | ||
|
-A
|
Class
A
|
||
|
-B
|
Class B
|
||
| ANNEX VI | COMPANY’S SEC DOCUMENTS AVAILABLE ON XXXXX | ||
| ANNEX VII | COMPANY PRINCIPAL’S AGREEMENT | ||
| ANNEX VIII | COMPANY DISCLOSURE | ||
| ANNEX IX | USE OF PROCEEDS | ||
| ANNEX X | PURCHASE PRICE WIRE INSTRUCTIONS | ||
