SECURITIES PURCHASE AGREEMENT
EXHIBIT
10.1
THIS
SECURITIES PURCHASE AGREEMENT is entered into as of April 13,
2006
(the “Agreement”),
by
and by and among Commerce Development Corporation, Ltd., a Delaware corporation
(the “Company”),
on
the one hand, and each of the undersigned buyers identified on the signature
pages hereto and on Schedule
A
attached
hereto (collectively, the “Buyers”).
Each
party to this Agreement is referred to herein as a “Party,”
and
they are all referred to collectively as “Parties.”
W
I T N E
S S E T H:
WHEREAS,
the board of directors of the Company has declared a 2,184-for-1 reverse
stock
split (“Reverse
Split”),
that
became effective on April 7, 2006 (“Reverse
Split Effective Date”);
WHEREAS,
immediately following the Reverse Split, the Company, formerly a Maryland
corporation, reincorporated into Delaware (“Reincorporation”);
WHEREAS,
the board of directors has approved the Reverse Split and Reincorporation,
and
the stockholders of the Company approved the Reverse Split and Reincorporation
at a special meeting held at 10:00 am on April 7, 2006;
WHEREAS,
in order to pay certain costs, expenses and fees of the Company, the Company
wishes to issue and sell and the Buyers wish to purchase up to 1,302,999
additional shares (the “Shares”)
of the
Company’s common stock par value $0.001 per share (the “Company
Common Stock”)
at
$0.0384
per
share; and
WHEREAS,
the board of directors of the Company have duly approved the foregoing
issuance
of Shares.
NOW,
THEREFORE, in consideration of the premises and of the mutual representations,
warranties and agreements set forth herein, the Parties hereto agree as
follows:
ARTICLE
I
PURCHASE
OF SECURITIES
1.1 Incorporation
of Recitals.
The
provisions and recitals set forth above are hereby referred to and incorporated
herein and made a part of this Agreement by reference.
1.2 Purchase
of Shares.
Subject
to the terms and conditions of this Agreement, on the Closing Date (as
hereinafter defined) the Company shall issue and each of the Buyers shall
purchase such amount of the Shares and for such consideration set forth
opposite
such Buyer’s name (the aggregate purchase price referred to herein as the
“Purchase
Price”)
as set
forth on Schedule
A
attached
hereto.
1.3 Closing.
The
Closing shall take place on April 13, 2006 (the “Closing
Date”),
or at
some other time and date as agreed by the parties. On the Closing Date,
the
Company shall (i) cause the transfer agent of the Company to reflect the
new
issuance of Shares on the stock ledger of the Company, and (ii) shall cause
the
transfer agent to promptly prepare and deliver to each of the Buyers, stock
certificate(s) evidencing the Shares to be purchased in the name of the
Buyers
and/or its designees (the “Share
Certificates”)
free
and clear of any Encumbrances (defined below). On the Closing Date, the
Buyers
shall pay (or cause to be paid) to the Company the aggregate Purchase Price
of
$50,000
(the
“Closing
Payment”)
for
the purchase of the Shares, such
Closing Payment to be paid at the Closing to the Company by delivering
to the
Company cash in such amount by cashier's check or by wire transfer of
immediately available funds to such account as the Company may specify
in
writing to Purchaser at least one (1) business day prior to the
Closing.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to Buyer that now and/or as of the
Closing:
2.1
Due
Organization and Qualification; Subsidiaries; Due Authorization.
(a) The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of formation, with full corporate
power and authority to own, lease and operate its respective business and
properties and to carry on its respective business in the places and in
the
manner as presently conducted. The Company is in good standing as a foreign
corporation in each jurisdiction in which the properties owned, leased
or
operated, or the business conducted, by it requires such qualification
except
for any failure, which when taken together with all other failures, is
not
likely to have a material adverse effect on the business of the Company,
taken
as a whole. For
purposes of this Agreement, a “material adverse effect” means any effect or
change that is or would be materially adverse to the business, operations,
assets, condition (financial or otherwise) or results of operations of
the
Company or the Shares or the consummation of the transactions contemplated
hereby.
(b) The
Company does not have, and has never had, any subsidiaries and does not
own,
directly or indirectly, any capital stock, equity or interest in any
corporation, firm, partnership, joint venture or other entity.
(c) The
Company has all requisite corporate power and authority to execute and
deliver
this Agreement, and to consummate the transactions contemplated hereby
and
thereby. The Company has taken all corporate action necessary for the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby, and this Agreement constitutes the legal, valid and
binding
obligation of the Company, enforceable against the Company in accordance
with
its respective terms, except as may be affected by bankruptcy, insolvency,
moratoria or other similar laws affecting the enforcement of creditors’ rights
generally and subject to the qualification that the availability of equitable
remedies is subject to the discretion of the court before which any proceeding
therefore may be brought. This
Agreement, the Actions, and the transactions contemplated hereby have been
unanimously approved by the Board of Directors of the Company and by the
holders
of a majority of the outstanding shares of Common Stock of the Company.
2.2
Articles
of Incorporation and By-laws; Minute Books.
Certified copies of the Company’s Articles of Incorporation and its by-laws have
been forwarded to the Buyer. Such copies of the Articles of Incorporation
and
By-laws (or similar governing documents) of the Company, and all amendments
to
each are true, correct and complete. The minute books of the Company as
forwarded to the Buyer contain true and complete records of all meetings
and
consents in lieu of meetings of their respective Board of Directors (and
any
committees thereof), or similar governing bodies, since the time of their
respective organization. The stock books of the Company as forwarded to
the
Buyer are true, correct and complete.
2.3
Listing
and Maintenance Requirements.
The
Company is currently quoted
on the
OTC Bulletin Board (“OTCBB”).
The
Company has not, in the twelve (12) months preceding the date hereof, received
any notice from the OTCBB or the National Association of Securities Dealers
(the
“NASD”)
or any
trading market on which the Company’s Common Stock is or has been listed or
quoted to the effect that the Company is not in compliance with the quoting,
listing or maintenance requirements of the OTCBB or such other trading
market.
The Company is, and has no reason to believe that it will not, in the
foreseeable future continue to be, in compliance with all such quoting,
listing
and maintenance requirements.
2
2.4
Consents.
No
consent or approval of any person, regulatory authority, governmental
organization or third party, and no approval, order, license, permit, franchise,
declaration or filing of any nature, is required as a result of or in connection
with the Seller’s execution, delivery and performance of its obligations under
this Agreement.
2.5
Capitalization.
The
authorized capital stock of the Company immediately prior to giving effect
to
the transactions contemplated hereby consists of 50,000,000 shares of the
Company common stock and as of the date hereof, and 5,000,000 shares of
preferred stock. Immediately prior to the Reverse Split, the Company had
a total
of 98,285,596 shares of common stock are issued and outstanding. As of
the date
hereof, there are no shares of Company preferred stock issued and outstanding.
All of the outstanding shares of Company Common Stock are duly authorized,
validly issued, fully paid and nonassessable, and have not been issued
in
violation of any preemptive right of shareholders. Immediately after the
Closing, the Shares will be duly authorized, validly issued and nonassessable
and free and clear of any Encumbrances and will have been issued and transferred
free and clear of any preemptive right of stockholders. Except for this
Agreement, there are no outstanding subscriptions, voting trust agreement
or
other contract, agreement, arrangement, option, warrant, call, commitment
or
other right of any character obligating or entitling the Company to issue,
sell,
redeem or repurchase any of its securities, and there is no outstanding
security
of any kind convertible into or exchangeable for Company Common Stock.
To the
Company’s knowledge, no shareholder currently holds registration rights.
2.6
Compliance
With Law.
The
Company and the Company’s officers and directors are in compliance with all
applicable federal, state, local and foreign laws and regulations which
are
applicable to the operation of the Company’s business. The Company and the
Company’s officers and directors have not received any written notice to the
effect that, or otherwise have been advised that the Company or its officers
or
directors are not in compliance with any of such laws or orders. To the
Company’s knowledge, the Company and its officers and directors are not
currently, or have been, the subject of any inquiries, investigations,
or
requests for documents or other information related to its compliance with
any
laws or orders. The Company is not, and to the Company’s knowledge has not been,
subject to any regulatory enforcement actions or consent decrees. None
of the
Company’s officers and directors have been convicted of a felony or
misdemeanor.
2.7
No
Conflicts.
The
execution and delivery by the Company of this Agreement does not, and the
performance by the Company of their obligations under this Agreement and
the
consummation of the transactions contemplated, including the Reverse Split,
hereby does not and will not conflict with or result in a violation or
breach of
any term or provision of any law, order, permit, statute, rule or regulation
applicable the Company, any of their affiliates, or any of the businesses,
or
assets or properties of the Company.
2.8
SEC
Documents.
As of
the Closing Date, except as set forth in Schedule 2.8 hereof, none of the
Company’s filings with the SEC are under review or are the subject of comment
letters which have not been resolved. As of their respective filing dates,
the
Company’s Annual Report on Form 10-KSB for the year ended December 31, 2004, and
all reports filed with the SEC subsequent thereto (the “SEC
Documents”),
have
complied in all material respects with the requirements of the Exchange
Act and
the rules and regulations of the SEC promulgated thereunder applicable
to the
SEC Documents. As of their respective filing dates, none of the SEC Documents
contained an untrue statement of a material fact or omitted to state a
material
fact required to be stated therein or necessary to make the statements
therein,
in light of the circumstances under which they were made, not misleading.
2.9
Material
Misstatements and Omissions.
As of
the Closing Date, the representations and warranties of the Company contained
in
this Agreement (including the exhibits and schedules hereto) do not contain
any
untrue statement of a material fact and do not omit to state a material
fact
necessary to make the statements or facts contained herein or therein,
in light
of the circumstances made, not misleading.
3
2.10
Reverse
Split.
The
Company and the Company’s officers and directors are in compliance with all
applicable federal, Maryland state laws and regulations which are applicable
to
effecting the Reverse Split.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE BUYERS
Each
of
the Buyers hereby severally and independently represents and warrants to
the
Company that now and/or as of the Closing:
3.1
Authority
Relative to this Agreement.
Such
Buyer has the requisite power and/or authority to enter into this Agreement
and
carry out his/her obligations hereunder. This Agreement has been duly and
validly executed and delivered by such Buyer and constitutes a valid and
binding
obligation of such Buyer, enforceable in accordance with its terms, except
as
such enforcement may be limited by bankruptcy, insolvency or other similar
laws
affecting the enforcement of creditors' rights generally or by general
principles of equity.
3.2
Buyer
Representation Regarding the Shares.
The
Buyer understands that the Shares are “restricted securities” and have not been
registered under the Shares Act or any applicable state securities law
and is
acquiring the Shares as principal for its own account and not with a view
to or
for distributing or reselling such Shares or any part thereof, has no present
intention of distributing any of such Shares and has no arrangement or
understanding with any other persons regarding the distribution of such
Shares
(this representation and warranty not limiting such Buyer’s right to sell the
Shares pursuant to the Registration Statement or otherwise in compliance
with
applicable federal and state securities laws). The Buyer is acquiring the
Shares
hereunder in the ordinary course of its business. The Buyer does not have
any
agreement or understanding, directly or indirectly, with any Person to
distribute any of the Shares.
3.3
Buyer
Status.
At the
time the Buyer receives any of the Shares, the Buyer will be an “accredited
investor” as defined in Rule 501 under the Securities Act.
3.4
Experience
of the Buyers.
The
Buyer, either alone or together with its representatives, has such knowledge,
sophistication and experience in business and financial matters so as to
be
capable of evaluating the merits and risks of the prospective investment
in the
Shares, and has so evaluated the merits and risks of such investment. The
Buyer
is able to bear the economic risk of an investment in the Shares and, at
the
present time, is able to afford a complete loss of such investment.
3.5
General
Solicitation.
The
Buyer is not receiving the Shares as a result of any advertisement, article,
notice or other communication regarding the Shares published in any newspaper,
magazine or similar media or broadcast over television or radio or presented
at
any seminar or any other general solicitation or general
advertisement.
3.6
Material
Misstatements of Omissions.
As
of the
Closing Date, the representations and warranties of such Buyer contained
in this
Agreement (including the exhibits and schedules hereto) does not contain
any
untrue statement of a material fact and do not omit to state a material
fact
necessary to make the statements or facts contained herein or therein,
in light
of the circumstances made, not misleading.
4
ARTICLE
IV
INDEMNIFICATION
4.1
By
the
Company.
The
Company shall indemnify, defend and hold harmless each Buyer, its affiliates
and
their respective officers, directors, members, shareholders, employees,
agents,
successors, assigns and affiliates from and against any and all costs,
Undisclosed Liabilities, liabilities, damages, lawsuits, deficiencies,
claims
and expenses, including without limitation, interest, penalties, costs
of
mitigation, attorneys’ fees and all amounts paid in investigation, defense or
settlement of any of the foregoing (collectively, the “Damages”),
incurred in connection with, arising out of, resulting from or incident
to any
breach of any covenant, representation, warranty or agreement or the inaccuracy
of any representation, made by the Company in or pursuant to this Agreement.
4.2
By
Buyer.
Each
Buyer shall indemnify, reimburse, defend and hold harmless the Company,
its
affiliates, officers, directors, employees, agents, successors and assigns
from
and against any and all Damages incurred in connection with, arising out
of,
resulting from or incident to (i) any breach of any covenant, representation,
warranty or agreement or the inaccuracy of any representation, made by
such
Buyer in or pursuant to this Agreement, or in the other documents delivered
in
connection with the transaction contemplated in this Agreement; and (ii)
the
business, operations, or conduct of the Company after the Closing; provided,
however, that Damages under this Section 4.2 shall be limited to the amount
of
the Closing Payment.
4.3
Defense
of Claims.
If any
action or proceeding is filed or initiated against any party entitled to
the
benefit of indemnity hereunder, written notice thereof shall be given to
the
indemnifying party as promptly as practicable (and in any event within
ten (10)
days after the service of the citation or summons); provided, however,
that the
failure of any indemnified party to give timely notice shall not affect
rights
to indemnification hereunder except to the extent that the indemnifying
party
demonstrates actual damage caused by such failure. After such notice, if
the
indemnifying party shall acknowledge in writing to the indemnified party
that
the indemnifying party shall be obligated under the terms of its indemnity
hereunder in connection with such action or proceeding, then the indemnifying
party shall be entitled, if it so elects, to take control of the defense
and
investigation of such action or proceeding and to employ and engage attorneys
of
its own choice to handle and defend the same, such attorneys to be reasonably
satisfactory to the indemnified party, at the indemnifying party’s cost, risk
and expense (unless (i) the indemnifying party has failed to assume the
defense
of such action or proceeding; or (ii) the named parties to such action
or
proceeding include both of the indemnifying party and the indemnified party,
and
the indemnified party and its counsel determine in good faith that there
may be
one or more legal defenses available to such indemnified party that are
different from or additional to those available to the indemnifying party
and
that joint representation would be inappropriate), and to compromise or
settle
such action or proceeding, which compromise or settlement shall be made
only
with the written consent of the indemnified party, such consent not to
be
unreasonably withheld. The indemnified party may withhold such consent
if such
compromise or settlement would adversely affect the conduct of its business
or
requires less than an unconditional release to be obtained. If (i) the
indemnifying party fails to assume the defense of such action or proceeding
within fifteen (15) days after receipt of notice thereof pursuant to this
Section 4.3; or (ii) the named parties to such action or proceeding include
both
the indemnifying party and the indemnified party and the indemnified party
and
its counsel determine in good faith that there may be one or more legal
defenses
available to such indemnified party that are different from or additional
to
those available to the indemnifying party and that joint representation
would be
inappropriate, the indemnified party against which such action or proceeding
has
been filed or initiated will (upon delivering notice to such effect to
the
indemnifying party) have the right to undertake, at the indemnifying party’s
cost and expense, the defense, compromise or settlement of such action
or
proceeding on behalf of and for the account and risk of the indemnifying
party;
provided, however, that such action or proceeding shall not be compromised
or
settled without the written consent of the indemnifying party, which consent
shall not be unreasonably withheld. In the event the indemnified party
assumes
defense of the action or proceeding, the indemnified party will keep the
indemnifying party reasonably informed of the progress of any such defense,
compromise or settlement and will consult with, when appropriate, and consider
any reasonable advice from, the indemnifying party regarding any such defense,
compromise or settlement. The indemnifying party shall be liable for any
settlement of any action effected pursuant to and in accordance with this
Section 4.3 and for any final judgment (subject to any right of
appeal).
5
Regardless
of whether the indemnifying party or the indemnified party takes up the
defense,
the indemnifying party will pay reasonable costs and expenses in connection
with
the defense, compromise or settlement for any action or proceeding under
this
Section 4.3.
The
indemnified party shall cooperate in all reasonable respects with the
indemnifying party and such attorneys in the investigation, trial and defense
of
such action or proceeding and any appeal arising therefrom; provided, however,
that the indemnified party may, at its own cost, participate in the
investigation, trial and defense of such action or proceeding and any appeal
arising therefrom. The indemnifying party shall pay all expenses due under
this
Section 4.3 as such expenses become due. In the event such expenses are
not so
paid, the indemnified party shall be entitled to settle any action or proceeding
under this Section 4.3 without the consent of the indemnifying party and
without
waiving any rights the indemnified party may have against the indemnifying
party.
4.4
Other
Claims.
A claim
for indemnification for any matter not involving a third-party claim may
be
asserted by notice to the party from whom indemnification is sought.
ARTICLE
V
DELIVERIES
& CONDITIONS
5.1
Items
to be delivered to the Buyers at the Closing by the Company.
The
Buyers’ obligation to purchase the Shares is conditioned on the following
closing conditions and deliveries:
(a) a
counterpart to this Agreement duly executed by the Company and delivered
to each
Buyer (or representative);
(b) a
copy of
a letter of instruction to the Company’s transfer agent, to issue the Share
Certificates in the name of each Buyer representing the Shares (or its
designee
or assignee);
(c) the
representations and warranties set forth in Article 2 of this Agreement
shall be
true and correct in all material respects; and
6
(d) an
officer’s certificate of the Company certifying that subparagraph (c) above is
true and correct as of the Closing Date; and
(e) any
other
document reasonably requested by Buyer that Buyer deems necessary for the
consummation of this transaction.
5.2
Items
to be delivered at Closing by Buyer.
The
Company’s obligation to issue and sell the Shares is conditioned on the
following closing conditions and deliveries by the Buyers:
(a)
all
applicable exhibits and schedules hereto;
(b) a
counterpart to this Agreement duly executed by each Buyer and delivered
to the
Company;
(c) any
other
document reasonably requested by the Company that it deems necessary for
the
consummation of this transaction; and
(d) the
Closing Payment.
5.2
Reverse
Split.
(a) The
Company shall take all necessary actions to effect the Reverse Split, and
the
Reverse Split shall have taken effect; and
(b) The
Company shall have delivered to the Buyers the amended and restated articles
of
incorporation of the Company and other documentation evidencing the Reverse
Split.
ARTICLE
VI
TERMINATION
6.1
Termination.
This
Agreement may be terminated:
(a) at
any
time before, or at, Closing by written notice of the Buyers;
(b) prior
to
the Closing by any Party at any time if any provision (including, but not
limited to, the representations and warranties) of this Agreement that
is
applicable to or required to be performed by the other Party shall be materially
untrue or fail to be accomplished or if any conditions set forth in Article
4
hereof have not been fully satisfied;
(c) Upon
termination of this Agreement for any reason, in accordance with the terms
and
conditions set forth in this paragraph, each Party shall bear all costs
and
expenses as that Party has incurred.
7
ARTICLE
VII
MISCELLANEOUS
7.1
Survival
of Representations, Warranties and Agreements.
All
representations, warranties and statements made by a Party to in this Agreement
or in any document or certificate delivered pursuant hereto shall survive
the
Closing Date. Each of the Parties hereto is executing and carrying out
the
provisions of this Agreement in reliance upon the representations, warranties
and covenants and agreements contained in this agreement or at the closing
of
the transactions herein provided for and not upon any investigation which
it
might have made or any representations, warranty, agreement, promise or
information, written or oral, made by the other Party or any other person
other
than as specifically set forth herein.
7.2
Access
to Books and Records.
During
the course of this transaction through Closing, each Party agrees to make
available for inspection all corporate books, records and assets, and otherwise
afford to each other and their respective representatives, reasonable access
to
all documentation and other information concerning the business, financial
and
legal conditions of each other for the purpose of conducting a due diligence
investigation thereof. Such due diligence investigation shall be for the
purpose
of satisfying each Party as to the business, financial and legal condition
of
each other for the purpose of determining the desirability of consummating
the
proposed transaction. The Parties further agree to keep confidential and
not use
for their own benefit, except in accordance with this Agreement any information
or documentation obtained in connection with any such
investigation.
7.3
Further
Assurances.
If, at
any time after the Closing, the Parties hereby mutually agree
that any further deeds, assignments or assurances in law or that any other
things are necessary, desirable or proper to complete the transactions
contemplated hereby in accordance with the terms of this agreement or to
vest,
perfect or confirm, of record or otherwise, the title to any property or
rights
of the Parties hereto, the Parties agree that their proper officers and
directors shall execute and deliver all such proper deeds, assignments
and
assurances in law and do all things necessary, desirable or proper to vest,
perfect or confirm title to such property or rights and otherwise to carry
out
the purpose of this Agreement, and that the proper officers and directors
the
Parties are fully authorized to take any and all such action.
7.4
Notice.
All
communications, notices, requests, consents or demands given or required
under
this Agreement shall be in writing and shall be deemed to have been duly
given
when delivered to, or received by prepaid registered or certified mail
or
recognized overnight courier addressed to, or upon receipt of a facsimile
sent
to, the Party for whom intended, as follows, or to such other address or
facsimile number as may be furnished by that Party by notice in the manner
provided herein:
If
to
the Company:
Xxxxx
Xxxxx, Esq.
Xxxxxxxxxx
& Xxxxx LLP
00000
Xxxxxxxx Xxxx. Xxxxx 000
Xxx
Xxxxxxx, XX 00000
If
to
Buyer:
ARC
Investment Partners, LLC
0000
Xxxxxx Xxxxx Xxxxxx Xxxx., Xxxxx 000
Xxxxxxx
Xxxxx, XX 00000
Attn:
Xxxx Xxxxxxx
8
with
copies (which shall not constitute notice) to:
Xxxxxx
Xxxxxx Rosenman LLP
0000
Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
| Facsimile: |
(000)
000-0000
(000)
000-0000
|
| Attention: |
Xxxx
X. Xxxxx, Esq.
Xxxx X. Xxxxxx III, Esq.
|
7.5
Entire
Agreement.
This
Agreement, the Exhibits and Schedules hereto and any instruments and agreements
to be executed pursuant to this Agreement, set forth the entire understanding
of
the Parties hereto with respect to its subject matter, merges and supersedes
all
prior and contemporaneous understandings with respect to its subject matter
and
may not be waived or modified, in whole or in part, except by a writing
signed
by each of the Parties hereto. No waiver of any provision of this Agreement
in
any instance shall be deemed to be a waiver of the same or any other provision
in any other instance. Failure of any party to enforce any provision of
this
Agreement shall not be construed as a waiver of its rights under such
provision.
7.6
Successors
and Assigns.
This
Agreement shall be binding upon, enforceable against and inure to the benefit
of, the Parties hereto and their respective heirs, administrators, executors,
personal representatives, successors and assigns, and nothing herein is
intended
to confer any right, remedy or benefit upon any other person. This Agreement
may
not be assigned by the Corporation except with the prior written consent
of the
Buyer. This Agreement and all of the obligations of the Company may be
assigned
by the Buyer without the prior notice to the Company or written consent
of the
Company and upon assignment, all of the rights and obligations of Buyer
shall be
the rights and obligations of the Buyer’s designated assignee.
7.7
Governing
Law.
This
Agreement shall in all respects be governed by and construed in accordance
with
the laws of the State of California, USA that are applicable to agreements
made
and fully to be performed in such state, without giving effect to conflicts
of
law principles.
7.8
Counterparts.
This
Agreement may be executed in multiple counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and
the same
instrument.
7.9
Construction.
Headings contained in this Agreement are for convenience only and shall
not be
used in the interpretation of this Agreement. References herein to Articles,
Sections and Exhibits are to the articles, sections and exhibits, respectively,
of this Agreement. The Schedules hereto are hereby incorporated herein
by
reference and made a part of this Agreement. As used herein, the singular
includes the plural, and the masculine, feminine and neuter gender each
includes
the others where the context so indicates.
7.10
Severability.
If any
provision of this Agreement is held to be invalid or unenforceable by a
court of
competent jurisdiction, this Agreement shall be interpreted and enforceable
as
if such provision were severed or limited, but only to the extent necessary
to
render such provision and this Agreement enforceable.
9
7.11
Arbitration.
Any
controversy arising out of, connected to, or relating to any matters herein
of
the transactions with the Parties hereto on behalf of the undersigned,
or this
Agreement, or the breach thereof, including, but not limited to any claims
of
violations of federal and/or state securities laws, banking statutes, consumer
protection statutes, federal and/or state anti-racketeering (e.g. RICO)
claims
as well as any common law claims and any state law claims of fraud, negligence,
negligent misrepresentations, and/or conversion, or the laws of any territory,
country or jurisdiction, shall be settled by arbitration; and in accordance
with
this paragraph any judgment on the arbitrator’s award may be entered in any
court having jurisdiction thereof. In the event of such a dispute, each
party
agrees to arbitration conducted through the auspices of American Arbitration
Association. Venue for any action shall be in Los Angeles,
California.
7.12
Confidentiality;
Public Disclosure.
Each of
the parties hereto hereby agrees that the information obtained pursuant
to the
negotiation and execution of this Agreement shall be treated as confidential
and
not be disclosed to third parties who are not agents of one of the Parties
to
this Agreement.
7.13
Notification
of Certain Matters.
Each
Party shall give prompt notice to the other of (i) the occurrence or
non-occurrence of any event, the occurrence or non-occurrence of which
is likely
to cause any representation or warranty of such party contained in this
Agreement to be untrue or inaccurate and (ii) any failure of such party
to
comply with or satisfy any covenant, condition or agreement to be complied
with
or satisfied by it hereunder; provided,
however,
that
the delivery of any notice pursuant to this Section shall not limit or
otherwise affect any remedies available to the party receiving such notice.
Further, disclosure pursuant to this Section shall not be deemed to amend
or supplement the Schedules hereto or prevent or cure any
misrepresentations, breach of warranty or breach of covenant.
7.14
Currency.
The
parties hereto agree that all monetary amounts set forth herein are referenced
in United States dollars, unless otherwise stated.
7.15
Rules
of Construction. The
parties hereto agree that they have been represented by counsel during
the
negotiation and execution of this Agreement and, therefore, waive the
application of any law, regulation, holding or rule of construction providing
that ambiguities in an agreement or other document will be construed against
the
party drafting such agreement or document.
7.16
Counterparts.
This
Agreement may be executed in counterparts and by facsimile signatures.
In the
event that any signature is delivered by facsimile transmission, such signature
shall create a valid and binding obligation of the party executing (or
on whose
behalf such signature is executed) with the same force and effect as if
such
facsimile signature page were an original thereof. All such counterparts
shall
together constitute one and the same instrument.
[Signatures
to Follow]
10
IN
WITNESS WHEREOF, each of the Parties hereto has executed this Agreement
as of
the date first set forth above.
| COMPANY: | ||
|
|
Commerce
Development Corporation, Ltd.
a
Delaware corporation
|
|
|
|
By:
|
/s/
Xxxxx Xxxxxxxx
|
|
|
|
Xxxxx
Xxxxxxxx,
Chief
Executive Officer
|
11
| BUYERS: | ||
|
|
ARC
HOLDINGS, LLC
|
|
|
|
By:
|
ARC
INVESTMENT PARTNERS, LLC, its manager
|
| /s/ Xxxx Xxxxxxx | ||
|
|
|
Xxxx
Xxxxxxx
Managing
Director
|
| RP CAPITAL, LLC | ||
| /s/ Xxxxxx Xxxxx | ||
|
Xxxxxx
Xxxxx
Manager
|
||
| /s/ Xxxxxx Xxxxxxxx | ||
|
Xxxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx,
trustees of the
Younes & Xxxxxx Xxxxxxxx Revocable
Trust
|
||
| /s/ Xxxxx Xxxxxxxx | ||
|
Xxxxx Xxxxxxxx and Xxxxxxx Xxxxxxxx,
trustees of the
Xxxxx & Xxxxxxx Xxxxxxxx Family
Trust
|
||
| /s/ Xxx Xxxxxxxx | ||
| Xxx Xxxxxxxx | ||
12
SCHEDULE
A
BUYERS
|
Buyer
|
Shares
|
Consideration
|
|||||
|
ARC
INVESTMENT PARTNERS, LLC
|
1,037,960
|
$
|
39,829.70
|
||||
|
RP
CAPITAL, LLC
|
36,396
|
$
|
1,396.62
|
||||
|
XXXXXX
XXXXXXXX AND XXXXXX XXXXXXXX, trustees as the Younes & Soraya
Revocable Trust
|
76,214
|
$
|
2,924.56
|
||||
|
XXXXX
XXXXXXXX AND XXXXXXX XXXXXXXX, trustees of the Xxxxx & Xxxxxxx
Xxxxxxxx Family Trust
|
76,214
|
$
|
2,924.56
|
||||
|
XXX
XXXXXXXX
|
76,214
|
$
|
2,924.56
|
||||
|
TOTAL:
|
1,302,998
|
$
|
50,000.00
|
||||
SCHEDULE
2.8
SEC
DOCUMENTS
The
Company received comments by telephone from the Securities and Exchange
Commission (“SEC”) staff regarding the Company’s Amended Form 10-KSB Annual
Report (the “Form 10-KSB/A”) that was filed with the SEC on January 4, 2006. The
Company is in the process of responding to these comments, which include
the
following:
(1)
the
Independent Auditors’ Report shall be revised to include time periods that were
in fact covered in the audit of the Company’s balance sheets and in the audit of
the Company’s related statements of operations, stockholders equity (deficit)
and cash flows but which were inadvertently left out in the description
of such
audit in the Independent Auditors’ Report;
(2)
the
opinion of the auditors regarding the financial statements in the Independent
Auditors’ Report shall be revised to include additional time periods that were
inadvertently omitted, such as (a) that the opinion covered the Company’s
financial statements for the periods ending December 31, 2003 in addition
to the
periods referenced; and (b) that the periods covered by the opinion regarding
the Company’s related statements of operations, stockholders equity (deficit)
and cash flows include the twelve months ended December 31, 2003, and the
period
from May 31, 1998 (Date of Inception) to December 31, 2004, in addition
to the
periods referenced; and
(3)
the
Company’s Condensed Consolidated Balance Sheet shall be revised to correct an
inadvertent calculation error as to the Company’s Total Liabilities and
(Deficiency in) Stockholders’ Equity (“Total Liabilities”) as of December 31,
2004 and 2003, such that it correctly reflects Total Liabilities and Total
Assets in the balance sheets dated as of December 31, 2004 and
2003.
The
Company’s auditors have furnished a revised Independent Auditors’ Report
reflecting the revisions described above. The Company intends to promptly
file
this revised report along with the revised Condensed Consolidated Balance
Sheet
referenced in (3) above, in an Amended Form 10-KSB/A, upon receipt of the
final
version of the Company’s revised balance sheet from the Company’s auditors.
