**CONFIDENTIAL TREATMENT REQUESTED
INZON CORPORATION
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is made and
entered into as of March 27, 2006, by and between InZon Corporation, a Nevada
corporation (the "Company"), and MACENTA GROUP, LLC, a limited liability
company organized under the laws of the State of Missouri (the "Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale of shares of the Company's
common stock, par value $.001 per share (the "Common Stock") at a price per
share of Common Stock ("Share Price") more particularly described below;
WHEREAS, Purchaser desires to purchase the Common Stock on the terms and
conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Common Stock to
Purchaser on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises, representations, warranties and covenants hereinafter set
forth and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. AGREEMENT TO SELL AND PURCHASE. Pursuant to the terms and conditions
set forth in this Agreement, on each Closing Date (as defined in Section
2.1), the Company agrees to sell to the Purchaser, and the Purchaser hereby
agrees to purchase from the Company a quantity of Common Stock in accordance
with the terms of this Agreement. The Common Stock to be purchased hereunder
shall be known as the "Offering."
2. CLOSING, DELIVERY AND PAYMENT.
2.1 CLOSINGS. Subject to the terms and conditions herein, the
closing of the transactions contemplated hereby (each a "Closing"), shall
take place at such times and places as the Company and Purchaser may mutually
agree (each a "Closing Date"); provided, however, that the first such Closing
shall be no later than March 31, 2006, and the last such Closing shall be no
later than May 8, 2006.
2.2 DELIVERY. At each of the Closings, subject to the terms and
conditions hereof, the Company will deliver to the Purchaser, among other
things, the negotiated quantity of Common Stock (in the manner more
particularly described hereinafter), and the Purchaser will deliver to the
Company, among other things, the negotiated sum by wire transfer or ready
funds made payable to the order of the Company.
2.3 MINIMUM CONSIDERATION. At any Closing, the funds paid by
Purchaser for Common Stock shall not be less than One Million U.S. dollars
($1,000,000.00).
**CONFIDENTIAL TREATMENT REQUESTED
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Purchaser, as of the
date of this Agreement, as set forth below except as disclosed in the
Company's filings (collectively, the "SEC Reports") under the Securities
Exchange Act of 1934 (the "Exchange Act"), made by the Company on or before
the date of this Agreement.
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada. The Company has the corporate power and
authority to own and operate its properties and assets, to execute and
deliver this Agreement, to issue and sell the shares of Common Stock issuable
hereunder, and to carry out the provisions of this Agreement and to carry on
its business as presently conducted. The Company is duly qualified and is
authorized to do business and is in good standing as a foreign corporation in
all jurisdictions in which the nature of its activities and of its properties
(both owned and leased) makes such qualification necessary, except for those
jurisdictions in which failure to do so would not have a material adverse
effect on the Company or its business.
3.2 SUBSIDIARIES. The Company has no subsidiaries.
3.3 CAPITALIZATION; VOTING RIGHTS.
(a) The authorized capital stock of the Company, as of December
31, 2005, consisted of (i) 500,000,000 shares of stock, par value $.001 per
share, of which 34,649,150 shares of Common Stock and no shares of Preferred
Stock were issued and outstanding. The Company will at all times have
authorized and reserved a sufficient number of shares of Common Stock to
provide for the issuance of Common Stock to be sold to Purchaser hereunder.
(b) Except as disclosed in any SEC Reports, and except for the
shares of Common Stock to be issued to Purchaser pursuant to this Agreement,
there are no material outstanding options, warrants, rights (including
preemptive rights and rights of first refusal) to subscribe to, call or
commitment of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company. There exist no
proxy or stockholder agreements, or arrangements or agreements of any kind
for the purchase or acquisition from the Company of any of its securities.
None of the offer, issuance or sale of the Common Stock or the consummation
of any transaction contemplated hereby will result in a change in the price
or number of any securities of the Company outstanding, under anti-dilution
or other similar provisions contained in or affecting any such securities.
(c) All issued and outstanding shares of the Company's Common
Stock (i) have been duly authorized and validly issued and are fully paid and
non-assessable and (ii) were issued in compliance with all applicable state
and federal laws concerning the issuance of securities, and no stockholder
has a right of rescission or damages against the Company with respect
thereto.
(d) The rights, preferences, privileges and restrictions of
the shares of the Common Stock are as stated in the Articles of Incorporation
(the "CHARTER") of the Company. The shares of Common Stock to be issued to
Purchaser hereunder have been duly and validly reserved for issuance. When
issued in compliance with the provisions of this Agreement and the Company's
Charter, the
**CONFIDENTIAL TREATMENT REQUESTED
shares of Common Stock will be validly issued, fully paid and non-assessable,
will be free of any liens or encumbrances, but may be subject to restrictions
on transfer under state and/or federal securities laws.
(e) No stock plan, stock purchase, stock option or other
agreement or understanding between the Company and any holder of any equity
securities of the Company or rights to purchase equity securities of the
Company provides for acceleration or other changes in the vesting provisions
or other terms of such agreement or understanding as the result of any
merger, consolidated sale of stock or assets, change in control or any other
transaction(s) by the Company, including the transaction contemplated
hereunder.
3.4 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the
part of the Company necessary for the authorization of this Agreement, the
performance of all obligations of the Company hereunder at the Closing, and
the authorization, sale, issuance and delivery to Purchaser of the Common
Stock has been taken or will be taken prior to any Closing and no further
consent or authorization of the Company, its board of directors or
stockholders is required. This Agreement, when executed and delivered by the
Company, will represent the valid and binding obligation of the Company
enforceable in accordance with its terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights, and (b) general
principles of equity that restrict the availability of equitable or legal
remedies. The sale of the Common Stock is not and will not be subject to any
preemptive rights or rights of first refusal that have not been properly
waived or complied with.
3.5 LIABILITIES. Except as disclosed in its SEC Reports, the
Company has no material liabilities and, to the best of its knowledge, knows
of no material contingent liabilities, except current liabilities incurred in
the ordinary course of business.
3.6 AGREEMENTS; ACTION. Except as otherwise set forth herein:
(a) Except as otherwise disclosed in any SEC Reports, there
are no agreements, understandings, instruments, contracts, proposed
transactions, judgments, orders, writs or decrees to which the Company is a
party or to its knowledge by which it is bound which may involve (i)
obligations (contingent or otherwise) of, or payments to, the Company in
excess of $100,000 (other than obligations of, or payments to, the Company
arising from purchase or sale agreements entered into in the ordinary course
of business), or (ii) the transfer or license of any patent, copyright, trade
secret or other proprietary right to or from the Company, or (iii) provisions
restricting the development, manufacture or distribution of the Company's
services or products, or (iv) indemnification by the Company with respect to
infringements of proprietary rights.
(b) Except as otherwise disclosed in any SEC Reports, the
Company has not (i) declared or paid any dividends, or authorized or made any
distribution upon or with respect to any class or series of its capital
stock, (ii) incurred any indebtedness for money borrowed or any other
liabilities, individually or in the aggregate, exceeding $100,000, (iii)
made any loans or advances to any person not in excess, individually or in
the aggregate, of $10,000, other than ordinary advances for travel expenses,
or (iv) sold, exchanged or otherwise disposed of any of its assets or rights,
other than the
**CONFIDENTIAL TREATMENT REQUESTED
sale of its inventory in the ordinary course of business. Except as disclosed
in its SEC Reports, the Company is not in default with respect to any
indebtedness.
(c) For the purposes of subsections (a) and (b) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including
persons or entities the Company has reason to believe are affiliated
therewith) shall be aggregated for the purpose of meeting the individual
minimum dollar amounts of such subsections.
3.7 OBLIGATIONS TO RELATED PARTIES. Except as otherwise disclosed
in any SEC Reports, there are no obligations of the Company to officers,
directors, stockholders or employees of the Company other than (a) for
payment of salary for services rendered, (b) reimbursement for reasonable
expenses incurred on behalf of the Company, (c) for other standard employee
benefits made generally available to all employees, and (d) obligations
listed in the Company's financial statements or disclosed in any of its SEC
Reports. Except as described above, none of the officers, directors or, to
the best of the Company's knowledge, key employees or stockholders of the
Company or any members of their immediate families, are indebted to the
Company, individually or in the aggregate, in excess of $10,000 or have any
direct or indirect ownership interest in any firm or corporation with which
the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation which competes with the Company,
other than passive investments in publicly traded companies (representing
less than 1% of such company) which may compete with the Company. Except as
described above, no officer, director or stockholder, or any member of their
immediate families, is, directly or indirectly, interested in any material
contract with the Company and no agreements, understandings or proposed
transactions are contemplated between the Company and any such person. The
Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.
3.8 CHANGES. Since December 31, 2005, except as disclosed herein or
in the Company's SEC Reports, there has not been:
(a) Any change in the assets, liabilities, financial
condition, prospects or operations of the Company, other than changes in the
ordinary course of business, none of which individually or in the aggregate
has had or is reasonably expected to have a material adverse effect on such
assets, liabilities, financial condition, prospects or operations of the
Company;
(b) Except as disclosed in its SEC Reports, any resignation or
termination of any officer, key employee or group of employees of the
Company;
(c) Any material change, except in the ordinary course of
business, in the contingent obligations of the Company by way of guaranty,
endorsement, indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, business or
prospects or financial condition of the Company;
(e) Any waiver by the Company of a valuable right or of a
material debt owed to it;
**CONFIDENTIAL TREATMENT REQUESTED
(f) Any direct or indirect material loan made by the Company
to any stockholder, employee, officer or director of the Company, other than
advances made in the ordinary course of business;
(g) Any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder;
(h) Any declaration or payment of any dividend or other
distribution of the assets of the Company;
(i) Any labor organization activity related to the Company;
(j) Any debt, obligation or liability incurred, assumed or
guaranteed by the Company, except those for immaterial amounts and for
current liabilities incurred in the ordinary course of business;
(k) Any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;
(l) Any change in any material agreement to which the Company
is a party or by which it is bound which may materially and adversely affect
the business, assets, liabilities, financial condition, operations or
prospects of the Company;
(m) Any other event or condition of any character that, either
individually or cumulatively, has or may materially and adversely affect the
business, assets, liabilities, financial condition, prospects or operations
of the Company; or
(n) Any arrangement or commitment by the Company to do any of
the acts described in subsection (a) through (m) above.
3.9 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. Except as otherwise
disclosed in its SEC Reports, the Company has good and marketable title to
its assets, and good title to its leasehold estates, in each case subject to
no mortgage, pledge, lien, lease, encumbrance or charge, other than (a) those
resulting from taxes which have not yet become delinquent, (b) minor liens
and encumbrances which do not materially detract from the value of the
property subject thereto or materially impair the operations of the Company,
and (c) those that have otherwise arisen in the ordinary course of business.
All facilities, machinery, equipment, fixtures, vehicles and other properties
owned, leased or used by the Company are in good operating condition and
repair and are reasonably fit and usable for the purposes for which they are
being used. The Company is in compliance with all material terms of each
lease to which it is a party or is otherwise bound.
3.10 INTELLECTUAL PROPERTY.
(a) The Company owns or possesses sufficient legal rights to
all patents, trademarks, service marks, trade names, copyrights, trade
secrets, licenses, information and other proprietary rights and processes
necessary for its business as now conducted and to the Company's knowledge as
presently proposed to be conducted (the "INTELLECTUAL PROPERTY"), without any
known infringement of the rights of others. There are no outstanding options,
licenses or agreements of any kind relating to the foregoing proprietary
rights, nor is
**CONFIDENTIAL TREATMENT REQUESTED
the Company bound by or a party to any options, licenses or agreements of any
kind with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information and other proprietary rights
and processes of any other person or entity.
(b) The Company has not received any communications alleging
that the Company has violated any of the patents, trademarks, service marks,
trade names, copyrights or trade secrets or other proprietary rights of any
other person or entity, nor is the Company aware of any basis therefor.
(c) The Company does not believe it is or will be necessary to
utilize any inventions, trade secrets or proprietary information of any of
its employees made prior to their employment by the Company, except for
inventions, trade secrets or proprietary information that have been
rightfully assigned to the Company.
3.11 COMPLIANCE WITH OTHER INSTRUMENTS. Except as disclosed in its
SEC Reports, the Company is not in violation or default of any term of its
Charter or Bylaws, or of any material provision of any mortgage, indenture,
contract, agreement, instrument or contract to which it is party or by which
it is bound or of any judgment, decree, order or writ. The execution,
delivery and performance of and compliance with this Agreement to which it is
a party, and the issuance and sale of the Common Stock by the Company
pursuant hereto, will not, with or without the passage of time or giving of
notice, result in any such material violation, or be in conflict with or
constitute a default under any such term or provision, or result in the
creation of any mortgage, pledge, lien, encumbrance or charge upon any of the
properties or assets of the Company or the suspension, revocation,
impairment, forfeiture or non-renewal of any permit, license, authorization
or approval applicable to the Company, its business or operations or any of
its assets or properties.
3.12 LITIGATION. There is no action, suit, proceeding or
investigation pending or, to the Company's knowledge, currently threatened
against the Company that prevents the Company from entering into this
Agreement, or consummating the transaction contemplated hereby. There is no
action, suit, proceeding or investigation pending or, to the knowledge of the
Company, threatened, against or involving the Company or any of its
properties or assets which might result, either individually or in the
aggregate, in any material adverse change in the assets, condition, affairs
or prospects of the Company, financially or otherwise, or any change in the
current equity ownership of the Company, nor is the Company aware that there
is any basis for any of the foregoing. The Company is not a party or subject
to the provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality. Except as disclosed in its SEC
Reports, there is no action, suit, proceeding or investigation by the Company
currently pending or which the Company intends to initiate.
3.13 TAX RETURNS AND PAYMENTS. The Company has timely filed all tax
returns (federal, state and local) required to be filed by it of which the
failure to file would have a material adverse effect. All taxes shown to be
due and payable on such returns, any assessments imposed, and to the
Company's knowledge all other taxes due and payable by the Company on or
before the Closing, have been paid or will be paid prior to the time they
become delinquent. The Company has not been advised (a) that any of its
returns, federal, state or other, have been or are being audited as of the
date hereof,
**CONFIDENTIAL TREATMENT REQUESTED
or (b) of any deficiency in assessment or proposed judgment to its federal,
state or other taxes. The Company has no knowledge of any liability of any
tax to be imposed upon its properties or assets as of the date of this
Agreement that is not adequately provided for.
3.14 EMPLOYEES. The Company has no collective bargaining agreements
with any of its employees. There is no labor union organizing activity
pending or, to the Company's knowledge, threatened with respect to the
Company. The Company is not a party to or bound by any currently effective
employment contract, deferred compensation arrangement, bonus plan, incentive
plan, profit sharing plan, retirement agreement or other employee
compensation plan or agreement. To the Company's knowledge, no employee of
the Company, nor any consultant with whom the Company has contracted, is in
violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual
to be employed by, or to contract with, the Company because of the nature of
the business to be conducted by the Company; and to the Company's knowledge
the continued employment by the Company of its present employees, and the
performance of the Company's contracts with its independent contractors, will
not result in any such violation. The Company is not aware that any of its
employees is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere
with their duties to the Company. The Company has not received any notice
alleging that any such violation has occurred. Except for employees who have
a current effective employment agreement with the Company, no employee of the
Company has been granted the right to continued employment by the Company or
to any material compensation following termination of employment with the
Company. The Company is not aware that any officer, key employee or group of
employees intends to terminate his, her or their employment with the Company,
nor does the Company have a present intention to terminate the employment of
any officer, key employee or group of employees.
3.15 REGISTRATION RIGHTS AND VOTING RIGHTS. Except as disclosed in
its SEC Reports, the Company is presently not under any obligation, and has
not granted any rights, nor is it a party to any agreement, to register any
of the Company's presently outstanding securities or any of its securities
that may hereafter be issued. To the Company's knowledge, no stockholder of
the Company has entered into any agreement with respect to the voting or
transfer of any equity securities of the Company.
3.16 COMPLIANCE WITH LAWS; PERMITS. To its knowledge, the Company
is not in violation in any material respect of any applicable statute, rule,
or governmental regulation, order or restriction, or any instrumentality or
agency thereof in respect of the conduct of its business or the ownership of
its properties which violation would materially and adversely affect the
business, assets, liabilities, financial condition, operations or prospects
of the Company. No governmental orders, permissions, consents, approvals or
authorizations are required to be obtained and no registrations or
declarations are required to be filed in connection with the execution and
delivery of this Agreement and the issuance of any of the Securities, except
such as has been duly and validly obtained or filed, or with respect to any
filings that must be made in anticipation of the Closings, which will be
filed in a timely manner. The Company has all material franchises, permits,
licenses and any similar authority necessary for the conduct of its business
as now being conducted by
**CONFIDENTIAL TREATMENT REQUESTED
it, the lack of which would materially and adversely affect the business,
properties, prospects or financial condition of the Company.
3.17 ENVIRONMENTAL AND SAFETY LAWS. The Company is not in violation
of any applicable statute, law or regulation relating to the environment or
occupational health and safety, and to its knowledge, no material
expenditures are or will be required in order to comply with any such
existing statute, law or regulation. No Hazardous Materials (as defined
below) are used or have been used, stored, or disposed of by the Company or,
to the Company's knowledge, by any other person or entity on any property
owned, leased or used by the Company. For the purposes of the preceding
sentence, "HAZARDOUS MATERIALS" shall mean (a) materials which are listed or
otherwise defined as "HAZARDOUS" or "TOXIC" under any applicable local,
state, federal and/or foreign laws and regulations that govern the existence
and/or remedy of contamination on property, the protection of the environment
from contamination, the control of hazardous wastes, or other activities
involving hazardous substances, including building materials, or (b) any
petroleum products or nuclear materials.
3.18 VALID OFFERING. Assuming the accuracy of the representations
and warranties of the Purchaser contained in this Agreement, the offer, sale
and issuance of the Common Stock will be exempt from the registration
requirements of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), and will be exempt from registration and qualification under the
registration, permit or qualification requirements of all applicable state
securities laws. Neither the Company nor any of its affiliates, nor any
person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the Common Stock.
3.19 FULL DISCLOSURE. The Company has provided the Purchaser with
all information requested by the Purchaser in connection with Purchaser's
decision to purchase the Common Stock, including all information the Company
believes is reasonably necessary to make such investment decision. Neither
this Agreement nor any other document delivered by the Company to Purchaser
or Purchaser's attorneys or agents in connection herewith or therewith or
with the transaction contemplated hereby or thereby, contains any untrue
statement of a material fact nor omits to state a material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading. Any financial
projections and other estimates provided to the Purchaser by the Company were
based on the Company's experience in the industry and on assumptions of fact
and opinion as to future events which the Company, at the date of the
issuance of such projections or estimates, believed to be reasonable. As of
the date hereof, no facts have come to the attention of the Company that
would, in its opinion, require the Company to revise or amplify in any
material respect the assumptions underlying such projections and other
estimates or the conclusions derived therefrom.
3.20 INSURANCE. The Company has general commercial and casualty
insurance policies with coverage customary for companies similarly situated
to the Company in the same or similar business.
3.21 SEC REPORTS. The Common Stock of the Company is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act and the Company has
filed all proxy statements, reports, schedules, forms, statements and other
documents required to be filed by it under the Exchange Act. The Company has
furnished the
**CONFIDENTIAL TREATMENT REQUESTED
Purchaser with copies of its SEC Reports, including (i) its Annual Report on
Form 10-KSB for the fiscal year ended September 30, 2005, and (ii) its
Quarterly Reports on Form 10-QSB for the fiscal quarters ended December 31,
2005, and its latest Form 8-K current reports. Each such SEC Report was, at
the time of its filing, in substantial compliance with the requirements of
its respective form and none of the SEC Reports, nor the financial statements
(and the notes thereto) included in the SEC Reports, as of their respective
filing dates, contained any 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. The financial statements of the Company included in the SEC
Reports comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission or
other applicable rules and regulations with respect thereto. Such financial
statements have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed)
and fairly present in all material respects the financial position of the
Company as of the dates thereof and the results of operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments).
3.22 NO MARKET MANIPULATION. The Company has not taken, and will
not take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or manipulation
of the price of the issued and outstanding equity securities of the Company
to facilitate the sale or resale of any of the Common Stock being offered
hereby or affect the price at which any of the Common Stock being offered
hereby may be issued.
3.23 LISTING. The Company's Common Stock is listed for trading on
the NASD OTC Bulletin Board Market and satisfies all requirements for the
continuation of such listing. The Company has not received any notice that
its Common Stock does not meet all requirements for the continuation of such
listing.
3.24 NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers
to buy any security under circumstances that would cause the offering of the
Common Stock pursuant to this Agreement to be integrated with prior offerings
by the Company for purposes of the Securities Act, or which would prevent the
Company from selling the Common Stock pursuant to Rule 506 under the
Securities Act, or any applicable exchange-related stockholder approval
provisions. Nor will the Company or any of its affiliates or subsidiaries
take any action or steps that would cause the offering of the Securities to
be integrated with other offerings.
3.25 STOP TRANSFER. The Company will not issue any stop transfer
order or other order impeding the sale and delivery of any of the shares of
Common Stock at such time as the shares of Common Stock are registered for
public sale or an exemption from registration is available.
3.26 DILUTION. The Company understands the nature of the Common
Stock being sold hereby and recognizes that they may have a potential
dilutive effect.
**CONFIDENTIAL TREATMENT REQUESTED
The Company specifically acknowledges that its obligation hereunder to issue
the shares of Common Stock to Purchaser is binding upon the Company and
enforceable regardless of the dilution such issuance may have on the
ownership interests of other shareholders of the Company.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby represents and warrants to the Company as
follows:
4.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary
power and authority under all applicable provisions of law to execute and
deliver this Agreement and to carry out its provisions. All action on
Purchaser's part required for the lawful execution and delivery of this
Agreement have been or will be effectively taken prior to the Closing. Upon
its execution and delivery, this Agreement will be valid and binding
obligations of Purchaser, enforceable in accordance with its terms, except
(a) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights, and (b) as limited by general principles of equity that
restrict the availability of equitable and legal remedies.
4.2 INVESTMENT REPRESENTATIONS. Purchaser understands that the
Common Stock is being offered and sold pursuant to an exemption from
registration. The Purchaser has received or has had full access to all the
information Purchaser necessary or appropriate to make an informed investment
decision with respect to the Common Stock to be purchased by under this
Agreement. The Purchaser further has had an opportunity to ask questions and
receive answers from the Company regarding the Company's business, management
and financial affairs and the terms and conditions of the Offering and the
Common Stock, and to obtain additional information (to the extent the Company
possessed such information or could acquire it without unreasonable effort or
expense) necessary to verify any information furnished to the Purchaser or to
which the Purchaser had access.
4.3 PURCHASER BEARS ECONOMIC RISK. Purchaser has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that Purchaser is capable
of evaluating the merits and risks of an investment in the Company and has
the capacity to protect Purchaser's own interests.
4.4 ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring the Common
Stock for Purchaser's own account for investment only, and not as a nominee
or agent and not with a view towards or for resale in connection with their
distribution.
4.5 PURCHASER CAN PROTECT OWN INTEREST. Purchaser represents that
by reason of Purchaser's business and financial experience, Purchaser has the
capacity to evaluate the merits and risks of an investment in the Common
Stock and to protect Purchaser's own interests in connection with the
transaction contemplated in this Agreement. Further, Purchaser is aware of no
publication of any advertisement in connection with the transaction
contemplated in this Agreement.
4.6 ACCREDITED INVESTOR. Purchaser represents that Purchaser is an
accredited investor within the meaning of Regulation D under the Securities
Act.
**CONFIDENTIAL TREATMENT REQUESTED
4.7 LEGEND.
(a) The Common Stock shall bear a legend which shall be in
substantially the following form:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 (the
"Act") and are `restricted securities' as that term
is defined in Rule 144 under the Act. The shares may
not be offered for sale, sold or otherwise
transferred except pursuant to an exemption from
registration under the Act, the availability of which
is to be established to the satisfaction of the
Company."
4.8 NO SHORTING. The Purchaser has not and will not, and will not
cause, advise, ask or assist any person or entity, directly or indirectly, to
engage in "short sales" of the Company's Common Stock.
5. COVENANTS OF THE COMPANY. The Company covenants and agrees with the
Purchaser as follows:
5.1 STOP-ORDERS. The Company will advise the Purchaser, promptly
after it receives notice of issuance by the Securities and Exchange
Commission (the "SEC"), any state securities commission or any other
regulatory authority of any stop order or of any order preventing or
suspending any offering of any securities of the Company, or of the
suspension of the qualification of the Common Stock of the Company for
offering or sale in any jurisdiction, or the initiation of any proceeding for
any such purpose.
5.2 LISTING. The Company will maintain the listing of its Common
Stock on the NASD OTC Bulletin Board, the NASDAQ National Market, the
American Stock Exchange, or the New York Stock Exchange (a "PRINCIPAL
MARKET"), and will comply in all material respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the
National Association of Securities Dealers ("NASD") and such exchanges, as
applicable. The Company will provide the Purchaser copies of all notices it
receives notifying the Company of the threatened and/or actual delisting of
the Common Stock from any Principal Market.
5.3 MARKET REGULATIONS. If and when required (but only if and when
required), the Company shall notify the SEC, NASD and applicable state
authorities, in accordance with their requirements, of the transactions
contemplated by this Agreement, and shall take all other necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation, for the legal and valid issuance of the Common Stock to Purchaser
and promptly provide copies thereof to Purchaser.
5.4 REPORTING REQUIREMENTS. The Company will timely file with the
SEC all reports required to be filed pursuant to the Exchange Act and refrain
from terminating its status as an issuer required by the Exchange Act to file
reports thereunder, even if the Exchange Act or the rules or regulations
thereunder would permit such termination.
5.5 USE OF FUNDS. The Company agrees that it will use the proceeds
of the sale of the Common Stock for general corporate purposes only.
**CONFIDENTIAL TREATMENT REQUESTED
5.6 ACCESS TO FACILITIES. The Company will permit any
representatives designated by the Purchaser (or any transferee of the
Purchaser), upon reasonable notice and during normal business hours, at such
person's expense and accompanied by a representative of the Company, to (a)
visit and inspect any of the properties of the Company, (b) examine the
corporate and financial records of the Company (unless such examination is
not permitted by federal, state or local law or by contract) and make copies
thereof or extracts therefrom, and (c) discuss the affairs, finances and
accounts of the Company with the directors, officers and independent
accountants of the Company.
5.7 TAXES. The Company will promptly pay and discharge, or cause to
be paid and discharged, when due and payable, all lawful taxes, assessments
and governmental charges or levies imposed upon the income, profits, property
or business of the Company; provided, however, that any such tax, assessment,
charge or levy need not be paid if the validity thereof shall currently be
contested in good faith by appropriate proceedings and if the Company shall
have set aside on its books adequate reserves with respect thereto, and
provided, further, that the Company will pay all such taxes, assessments,
charges or levies forthwith upon the commencement of proceedings to foreclose
any lien which may have attached as security therefor.
5.8 INSURANCE. To the extent practical, the Company will keep its
assets which are of an insurable character insured by financially sound and
reputable insurers against loss or damage by fire, explosion and other risks
customarily insured against by companies in similar business similarly
situated as the Company, and the Company will maintain, with financially
sound and reputable insurers, insurance against other hazards and risks and
liability to persons and property to the extent and in the manner customary
for companies in similar business similarly situated as the Company and to
the extent available on commercially reasonable terms.
5.9 INTELLECTUAL PROPERTY. The Company shall maintain, in full
force and effect, its corporate existence in the State of Nevada, its rights
and franchises, and all licenses and other rights to use Intellectual
Property owned or possessed by it and reasonably deemed to be necessary to
the conduct of its business.
5.10 PROPERTIES. The Company will keep its properties in good
repair, working order and condition, reasonable wear and tear excepted, and
from time to time make all needful and proper repairs, renewals,
replacements, additions and improvements thereto; and the Company will at all
times comply with each provision of all leases to which it is a party or
under which it occupies property if the breach of such provision could
reasonably be expected to have a material adverse effect.
5.11 CONFIDENTIALITY. The Company agrees that it will not disclose,
and will not include in any public announcement, the name of the Purchaser,
unless expressly agreed to by the Purchaser or unless and until such
disclosure is required by law or applicable regulation, and then only to the
extent of such requirement.
5.12 CORPORATE EXISTENCE. The Company shall maintain its corporate
existence, and will not liquidate, dissolve or effect a recapitalization,
reclassification or reorganization in any form of transaction except as
currently contemplated on the date of this Agreement. In addition, the
Company
**CONFIDENTIAL TREATMENT REQUESTED
shall not sell all or substantially all of the Company's assets, except in
the event of a merger or consolidation or sale or transfer of all or
substantially all of the Company's assets, where the surviving or successor
entity in such transaction (i) assumes the Company's obligations hereunder,
and (ii) is a publicly traded company whose common stock is quoted or listed
on a Principal Market.
5.13 REGISTRATION RIGHTS. The Company agrees to, within twenty-four
(24) months after the Closing Date, prepare and file with the SEC, as and if
necessary, a registration statement for the purpose of registering
Purchaser's Common Stock under the Securities Act for resale, and to use its
best efforts to cause such registration statement to be declared effective as
soon as possible.
6. COVENANTS OF THE COMPANY AND PURCHASER REGARDING INDEMNIFICATION.
6.1 COMPANY INDEMNIFICATION. The Company agrees to indemnify, hold
harmless, reimburse and defend Purchaser against any claim, cost, expense,
liability, obligation, loss or damage (including reasonable legal fees) of
any nature, incurred by or imposed upon the Purchaser which results, arises
out of or is based upon (a) any misrepresentation by Company or breach of any
warranty by Company in this Agreement, or (b) any breach or default in
performance by Company of any covenant or undertaking to be performed by
Company hereunder, or any other agreement entered into by the Company and
Purchaser relating hereto.
6.2 PURCHASER'S INDEMNIFICATION. Purchaser agrees to indemnify,
hold harmless, reimburse and defend the Company and each of the Company's
officers, directors, agents, affiliates, control persons and principal
shareholders, at all times against any claim, cost, expense, liability,
obligation, loss or damage (including reasonable legal fees) of any nature,
incurred by or imposed upon the Company which results, arises out of or is
based upon (i) any misrepresentation by Purchaser or breach of any warranty
by Purchaser in this Agreement or in any exhibit attached hereto; or (ii) any
breach or default in performance by Purchaser of any covenant or undertaking
to be performed by Purchaser hereunder, or any other agreement entered into
by the Company and Purchaser relating hereto.
6.3 PROCEDURES. The procedures and limitations set forth in Section
8.4 shall apply to the indemnifications set forth in Sections 6.1 and 6.2
above.
7. CLOSINGS.
7.1 MECHANICS OF CLOSING.
(a) Provided the shares of Common Stock are exempt from
registration when sold as herein contemplated: (i) the Company shall, at its
own cost and expense, on each of the Closing Dates take all necessary action
(including, if necessary, the issuance of an opinion of counsel) to assure
that the Company's transfer agent shall issue shares of the Company's Common
Stock in the name of the Purchaser (or its nominee) and in a quantity to be
mutually agreed by the parties prior to each such Closing; and (ii) the
Company warrants that no instructions other than these instructions have been
or will be given to the transfer agent of the Company's Common Stock.
**CONFIDENTIAL TREATMENT REQUESTED
(b) On each such Closing Date, Purchaser shall immediately
send the negotiated sum by wire transfer or ready funds made payable to the
order of the Company, without offset, demand or notice of any kind.
7.2 PURCHASE PRICE OF SHARES. The per-share purchase price for the
shares of Common Stock to be issued to Purchaser at Closing shall be as set
forth on the signature page of this Agreement.
8. MISCELLANEOUS.
8.1 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
regard to principles of conflicts of laws. Any action brought by either party
against the other concerning the transactions contemplated by this Agreement
shall be brought only in the state courts of New York or in the federal
courts located in the state of New York; provided, however that the Purchaser
may choose to waive this provision and bring an action outside the state of
New York. Both parties executing this Agreement agree to submit to the
jurisdiction of such courts and waive trial by jury. In the event that any
provision of this Agreement or any other agreement delivered in connection
herewith is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it
may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability
of any other provision of any agreement.
8.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by the Purchaser
and the closing of the transaction contemplated hereby to the extent provided
therein. All statements as to factual matters contained in any certificate or
other instrument delivered by or on behalf of the Company pursuant hereto in
connection with the transaction contemplated hereby shall be deemed to be
representations and warranties by the Company hereunder solely as of the date
of such certificate or instrument.
8.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Securities from time to time.
8.4 ENTIRE AGREEMENT. This Agreement and any other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof, including,
but not limited to, the purchase and sale of the Common Stock. No party shall
be liable or bound to any other in any manner by any representations,
warranties, covenants and agreements except as specifically set forth herein
and therein. The Purchaser shall not be deemed to have made any
representation or warranty to the Company other than as expressly made by the
Purchaser in Section 4 hereof. Without limiting the generality of the
foregoing, and notwithstanding any otherwise express representations and
warranties made by the Purchaser in Section 4 hereof, the Purchaser makes no
representation or warranty to the Company with respect to the timing or the
manner in which the Common Stock will be sold.
**CONFIDENTIAL TREATMENT REQUESTED
8.5 SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
8.6 TERMINATION. This Agreement may be terminated at any time prior
to the Closing, by mutual written consent of the Company and Purchaser, by
either party if a material adverse change shall have occurred relative to the
other party or if the other party willfully fails to perform in any material
respect any of its material obligations under this Agreement. In the event of
any such termination of this Agreement as provided in this Section 8.6, this
Agreement shall forthwith become void and have no effect, without any
liability or further obligation on the part of the Company or the Purchaser;
provided, however, that nothing contained in this Section shall relieve any
party for any breach of the representations, warranties, covenants or
agreements set forth elsewhere in this Agreement.
8.7 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon the
written consent of the Company and the Purchaser.
(b) The obligations of the Company and the rights of the
Purchaser under this Agreement may be waived only with the written consent of
the Purchaser.
8.8 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement, shall impair
any such right, power or remedy, nor shall it be construed to be a waiver of
any such breach, default or noncompliance, or any acquiescence therein, or of
or in any similar breach, default or noncompliance thereafter occurring. All
remedies, either under this Agreement, by law or otherwise afforded to any
party, shall be cumulative and not alternative.
8.9 NOTICES. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (a) upon personal delivery
to the party to be notified, (b) when sent by confirmed facsimile if sent
during normal business hours of the recipient, if not, then on the next
business day, (c) five days after having been sent by registered or certified
mail, return receipt requested, postage prepaid, or (d) one day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
Company at the address as set forth on the signature page hereof, and to the
Purchaser at the address set forth on the signature page hereto for
Purchaser, or at such other address as the Company or the Purchaser may
designate by ten days' advance written notice to the other party hereto.
8.10 ATTORNEYS' FEES. In the event that any suit or action is
instituted with respect to this Agreement, the prevailing party in such
dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including, without limitation, such reasonable
fees and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
**CONFIDENTIAL TREATMENT REQUESTED
8.11 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
8.12 FACSIMILE SIGNATURES; COUNTERPARTS. This Agreement may be
executed by facsimile signatures and in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
8.13 BROKER'S FEES. Each party hereto represents and warrants that,
except as each party may have notified the other in writing on or prior to
the date hereof, no agent, broker, investment banker, person or firm acting
on behalf of or under the authority of such party hereto is or will be
entitled to any broker's or finder's fee or any other commission directly or
indirectly in connection with the transaction contemplated herein. Each party
hereto further agrees to indemnify each other party for any claims, losses or
expenses incurred by such other party as a result of the representation in
this Section 8.13 being untrue.
8.14 CONSTRUCTION. Each party acknowledges that their legal counsel
participated in the preparation of this Agreement and, therefore, stipulates
that the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Agreement
to favor any party against the other.
IN WITNESS WHEREOF, the parties hereto have executed this SECURITIES
PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.
THE COMPANY: PURCHASER:
INZON CORPORATION, A MACENTA GROUP, LLC, A Missouri
Nevada Corporation Limited Liability Company
By:_____________________________
By:______________________________
Name: Xxxxx X. Xxxx Name: Xxxx X. Xxxxxx
Title: C.E.O. and President Title: Manager
Address: 000 XX Xxxxx Xxx Address: **
Xxxxxx Xxxxx XX 00000
Facsimile: (000) 000-0000 No. Shares ___(see below)(2)(3)___
Per Share Price (see below) (1) _
Total $_______(see below)(2)(1)___
1 The Share Price shall be determined by reference to the moving average
closing price of the Company's trading common shares for the 15 trading
days prior to the Closing Date, discounted by a factor of **.
2 The number of Common Shares due Purchaser at any Closing shall be determined
by dividing the funds paid over to the Company by Purchaser at such Closing
by the Share Price enumerated in the immediately preceding footnote.
3 In addition to the Common Shares, Purchaser shall be entitled to receive
warrants, substantially in the form attached hereto and by this reference
incorporated herein, as follows: Expiration - **
anniversary of Closing; Quantity - 1 Warrant for each ** Common Shares
purchased at a Closing; Type - European Style Call Warrant; Strike Price -
$**; Restrictions on Exercise - No warrants may be exercised by Purchaser
until the Company's trading common shares have traded for at least 15
consecutive trading days at a closing price of not less than $**, and
fifty percent of the warrants may not be exercised by Purchaser until the
Company's trading common shares have traded
for at least 15 consecutive trading days at a closing price of not less than
$**
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK
ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
AS TO THIS WARRANT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO INZON CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED.
Right to Purchase up to __________ Shares of Common Stock of
INZON CORPORATION
(subject to adjustment as provided herein)
COMMON STOCK PURCHASE WARRANT
No.
Issue Date: April , 2006
INZON CORPORATION, a corporation organized under the laws of the State
of Nevada (the "Company"), hereby certifies that, for value received, MACENTA
GROUP, LLC., or assigns (the "Holder"), is entitled, subject to the terms set
forth below, to purchase from the Company (as defined herein) from and after
the Issue Date of this Warrant and at any time or from time to time before
5:00 p.m., New York time, through the close of business on April __, 200_
(the "Expiration Date"), up to _____________ fully paid and non-assessable
shares of Common Stock (as hereinafter defined), $0.001 par value per share,
at the applicable Exercise Price per share (as defined below). The number
and character of such shares of Common Stock and the applicable Exercise
Price per share are subject to adjustment as provided herein.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Common Stock" includes (i) the Company's Common
Stock, par value $0.001 per share; and (ii) any other securities into
which or for which any of the securities described in the preceding
clause (i) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.
(b) The term "Company" shall include InZon Corporation and any
person or entity which shall succeed, or assume the obligations of,
InZon Corporation hereunder.
(c) The term "Exercise Price" means a price of $** per share of
Common Stock.
(d) The term "Other Securities" refers to any stock (other than
Common Stock) and other securities of the Company or any other person
(corporate or otherwise) which the holder of the Warrant at any time
shall be entitled to receive, or shall have received, on the exercise
of the Warrant, in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in exchange for or
in replacement of Common Stock or Other Securities pursuant to
Section 4 or otherwise.
1. Exercise of Warrant.
1.1. Number of Shares Issuable upon Exercise. From and after the
date hereof through and including the Expiration Date, the Holder shall be
entitled to receive, upon exercise of this Warrant in whole or in part, by
delivery of an original or fax copy of an exercise notice in the form
attached hereto as Exhibit A (the "Exercise Notice"), shares of Common Stock
of the Company, subject to adjustment pursuant to Section 4.
1.2. Fair Market Value. For purposes hereof, the "Fair Market
Value" of a share of Common Stock as of a particular date (the "Determination
Date") shall mean:
(a) If the Company's Common Stock is traded on the American Stock
Exchange or another national exchange or is quoted on the National or
SmallCap Market of The Nasdaq Stock Market, Inc. ("Nasdaq"), then the
closing or last sale price, respectively, reported for the last
business day immediately preceding the Determination Date.
(b) If the Company's Common Stock is not traded on the American
Stock Exchange or another national exchange or on the Nasdaq but is
traded on the NASD Over the Counter Bulletin Board, then the mean of
the average of the closing bid and asked prices reported for the last
business day immediately preceding the Determination Date.
(c) Except as provided in clause (d) below, if the Company's
Common Stock is not publicly traded, then as the Holder and the Company
agree or in the absence of agreement by arbitration in accordance with
the rules then in effect of the American Arbitration Association,
before a single arbitrator to be chosen from a panel of persons
qualified by education and training to pass on the matter to be
decided.
(d) If the Determination Date is the date of a liquidation,
dissolution or winding up, or any event deemed to be a liquidation,
dissolution or winding up pursuant to the Company's charter, then all
amounts to be payable per share to holders of the Common Stock pursuant
to the charter in the event of such liquidation, dissolution or winding
up, plus all other amounts to be payable per share in respect of the
Common Stock in liquidation under the charter, assuming for the
purposes of this clause (d) that all of the shares of Common Stock then
issuable upon exercise of the Warrant are outstanding at the
Determination Date.
1.3. Company Acknowledgment. The Company will, at the time of
the exercise of this Warrant, upon the request of the Holder hereof
acknowledge in writing its continuing obligation to afford to such Holder any
rights to which such Holder shall continue to be entitled after such exercise
in accordance with the provisions of this Warrant. If the Holder shall fail
to make any such request, such failure shall not affect the continuing
obligation of the Company to afford to such Holder any such rights.
1.4. Trustee for Warrant Holders. In the event that a bank or
trust company shall have been appointed as trustee for the Holder of this
Warrant pursuant to Subsection 3.2, such bank or trust company shall have all
the powers and duties of a warrant agent (as hereinafter described) and shall
accept, in its own name for the account of the Company or such successor
person as may be entitled thereto, all amounts otherwise payable to the
Company or such successor, as the case may be, on exercise of this Warrant
pursuant to this Section 1.
2. Procedure for Exercise.
2.1. Delivery of Stock Certificates, Etc., on Exercise. The
Company agrees that the shares of Common Stock purchased upon exercise of
this Warrant shall be deemed to be issued to the Holder as the record owner
of such shares as of the close of business on the date on which this Warrant
shall have been surrendered and payment shall have been made for such shares
in accordance herewith so long as such surrender and payment has been made no
later than 12:00 noon (New York time) on such business day and if received
after 12:01 noon (New York time) on a business day the shares of Common Stock
shall be deemed issued on the next business day. As soon as practicable
after the exercise of this Warrant in full or in part, and in any event
within three (3) business days thereafter, the Company at its expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Holder, or as such Holder (upon
payment by such Holder of any applicable transfer taxes) may direct in
compliance with applicable securities laws, a certificate or certificates for
the number of duly and validly issued, fully paid and non-assessable shares
of Common Stock (or Other Securities) to which such Holder shall be entitled
on such exercise, plus, in lieu of any fractional share to which such Holder
would otherwise be entitled, cash equal to such fraction multiplied by the
then Fair Market Value of one full share, together with any other stock or
other securities and property (including cash, where applicable) to which
such Holder is entitled upon such exercise pursuant to Section 1 or
otherwise.
2.2. Exercise. Payment shall be made either in cash or by
certified or official bank check payable to the order of the Company equal to
the applicable aggregate Exercise Price for the number of Common Shares
specified in such Exercise Notice (as such exercise number shall be adjusted
to reflect any adjustment in the total number of shares of Common Stock
issuable to the Holder per the terms of this Warrant) and the Holder shall
thereupon be entitled to receive the number of duly authorized, validly
issued, fully-paid and non-assessable shares of Common Stock (or Other
Securities) determined as provided herein.
3. Effect of Reorganization, Etc.; Adjustment of Exercise Price.
3.1. Reorganization, Consolidation, Merger, Etc. In case at any
time or from time to time the Company shall (a) effect a reorganization,
(b) consolidate with or merge into any other person, or (c) transfer all or
substantially all of its properties or assets to any other person under any
plan or arrangement contemplating the dissolution of the Company, then, in
each such case, as a condition to the consummation of such a transaction,
proper and adequate provision shall be made by the Company whereby the
Holder, on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and
property (including cash) to which such Holder would have been entitled upon
such consummation or in connection with such dissolution, as the case may be,
if such Holder had so exercised this Warrant, immediately prior thereto, all
subject to further adjustment thereafter as provided in Section 4.
3.2. Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or
assets, the Company, concurrently with any distributions made to holders of
its Common Stock, shall at its expense deliver or cause to be delivered to
the Holder the stock and other securities and property (including cash, where
applicable) receivable by the Holder pursuant to Section 3.1, or, if the
Holder shall so instruct the Company, to a bank or trust company specified by
the Holder and having its principal office in New York, NY as trustee for the
Holder (the "Trustee").
3.3. Continuation of Terms. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any
transfer) referred to in this Section 3, this Warrant shall continue in full
force and effect and the terms hereof shall be applicable to the shares of
stock and other securities and property receivable on the exercise of this
Warrant after the consummation of such reorganization, consolidation or
merger or the effective date of dissolution following any such transfer, as
the case may be, and shall be binding upon the issuer of any such stock or
other securities, including, in the case of any such transfer, the person
acquiring all or substantially all of the properties or assets of the
Company, whether or not such person shall have expressly assumed the terms of
this Warrant as provided in Section 4. In the event this Warrant does not
continue in full force and effect after the consummation of the transactions
described in this Section 3, then the Company's securities and property
(including cash, where applicable) receivable by the Holder will be delivered
to the Holder or the Trustee as contemplated by Section 3.2.
4. Extraordinary Events Regarding Common Stock. In the event that the
Company shall (a) issue additional shares of the Common Stock as a dividend
or other distribution on outstanding Common Stock or any preferred stock
issued by the Company, (b) subdivide its outstanding shares of Common Stock,
or (c) combine its outstanding shares of the Common Stock into a smaller
number of shares of the Common Stock, then, in each such event, the Exercise
Price shall, simultaneously with the happening of such event, be adjusted by
multiplying the then Exercise Price by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding immediately prior
to such event and the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such event, and the product so
obtained shall thereafter be the Exercise Price then in effect. The Exercise
Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this
Section 4. The number of shares of Common Stock that the Holder shall
thereafter, on the exercise hereof as provided in Section 1, be entitled to
receive shall be adjusted to a number determined by multiplying the number of
shares of Common Stock that would otherwise (but for the provisions of this
Section 4) be issuable on such exercise by a fraction of which (a) the
numerator is the Exercise Price that would otherwise (but for the provisions
of this Section 4) be in effect, and (b) the denominator is the Exercise
Price in effect on the date of such exercise (taking into account the
provisions of this Section 4).
5. Certificate as to Adjustments. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on
the exercise of this Warrant, the Company at its expense will promptly cause
its Chief Financial Officer or other appropriate designee to compute such
adjustment or readjustment in accordance with the terms of this Warrant and
prepare a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is
based, including a statement of (a) the consideration received or receivable
by the Company for any additional shares of Common Stock (or Other
Securities) issued or sold or deemed to have been issued or sold, (b) the
number of shares of Common Stock (or Other Securities) outstanding or deemed
to be outstanding, and (c) the Exercise Price and the number of shares of
Common Stock to be received upon exercise of this Warrant, in effect
immediately prior to such adjustment or readjustment and as adjusted or
readjusted as provided in this Warrant. The Company will forthwith mail a
copy of each such certificate to the Holder and any Warrant agent of the
Company (appointed pursuant to Section 10 hereof).
6. Reservation of Stock, Etc., Issuable on Exercise of Warrant. The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of this Warrant, shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of this Warrant.
7. Assignment; Exchange of Warrant. Subject to compliance with
applicable securities laws, this Warrant, and the rights evidenced hereby,
may be transferred by any registered holder hereof (a "Transferor") in whole
or in part. On the surrender for exchange of this Warrant, with the
Transferor's endorsement in the form of Exhibit B attached hereto (the
"Transferor Endorsement Form") and together with evidence reasonably
satisfactory to the Company demonstrating compliance with applicable
securities laws, which shall include, without limitation, the provision of a
legal opinion from the Transferor's counsel that such transfer is exempt from
the registration requirements of applicable securities laws, the Company at
its expense (but with payment by the Transferor of any applicable transfer
taxes) will issue and deliver to or on the order of the Transferor thereof a
new Warrant of like tenor, in the name of the Transferor and/or the
transferee(s) specified in such Transferor Endorsement Form (each a
"Transferee"), calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock called for on the face or faces of the
Warrant so surrendered by the Transferor.
8. Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like
tenor.
9. Maximum Exercise. Notwithstanding anything contained herein to the
contrary, the Holder shall not be entitled to exercise this Warrant in
connection with that number of shares of Common Stock which would exceed the
difference between (i) 4.99% of the issued and outstanding shares of Common
Stock and (ii) the number of shares of Common Stock beneficially owned by the
Holder. For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and Regulation 13d-3
thereunder. The limitation described in the first sentence of this Section 9
shall automatically become null and void following 120 days' prior notice to
the Company except that at no time shall the number of shares of Common Stock
beneficially owned by the Holder exceed 19.99% of the outstanding Common
Stock. Notwithstanding anything contained herein to the contrary, the total
number of shares of Common Stock issuable by the Company and acquirable by
the Holder pursuant to the terms of this Warrant, when combined with the
shares of Common Stock then held by the Holder, shall not exceed fifty
percent of the total issued and outstanding shares of Common Stock (subject
to appropriate adjustment for stock splits, stock dividends, or other similar
recapitalizations affecting the Common Stock) (the "Maximum Common Stock
Issuance"), unless the issuance of Common Stock hereunder in excess of the
Maximum Common Stock Issuance shall first be approved by the Company's
shareholders. If at any point in time and from time to time the number of
shares of Common Stock issued pursuant to the terms of this Warrant, together
with the number of shares of Common Stock that would then be issuable by the
Company to the Holder in the event of a conversion or exercise pursuant to
the terms of this Warrant, would exceed the Maximum Common Stock Issuance but
for this Section 9, the Company shall promptly call a shareholders meeting to
solicit shareholder approval for the issuance of the shares of Common Stock
hereunder in excess of the Maximum Common Stock Issuance.
10. Warrant Agent. The Company may, by written notice to the Holder of
the Warrant, appoint an agent for the purpose of issuing Common Stock (or
Other Securities) on the exercise of this Warrant pursuant to Section 1,
exchanging this Warrant pursuant to Section 7, and replacing this Warrant
pursuant to Section 8, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such agent.
12. Transfer on the Company's Books. Until this Warrant is transferred
on the books of the Company, the Company may treat the registered Holder
hereof as the absolute owner hereof for all purposes, notwithstanding any
notice to the contrary.
13. Notices, Etc. All notices and other communications from the
Company to the Holder shall be mailed by first class registered or certified
mail, postage prepaid, at such address as may have been furnished to the
Company in writing by such Holder or, until any such Holder furnishes to the
Company an address, then to, and at the address of, the last Holder who has
so furnished an address to the Company.
14. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by
the party against which enforcement of such change, waiver, discharge or
termination is sought. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS. ANY ACTION BROUGHT CONCERNING THE TRANSACTIONS
CONTEMPLATED BY THIS WARRANT SHALL BE BROUGHT ONLY IN THE STATE COURTS OF NEW
YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK; PROVIDED,
HOWEVER, THAT THE HOLDER MAY CHOOSE TO WAIVE THIS PROVISION AND BRING AN
ACTION OUTSIDE THE STATE OF NEW YORK. The individuals executing this Warrant
on behalf of the Company agree to submit to the jurisdiction of such courts
and waive trial by jury. The prevailing party shall be entitled to recover
from the other party its reasonable attorneys' fees and costs. In the event
that any provision of this Warrant is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision
which may prove invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision of this Warrant. The
headings in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof. The Company acknowledges
that legal counsel participated in the preparation of this Warrant and,
therefore, stipulates that the rule of construction that ambiguities are to
be resolved against the drafting party shall not be applied in the
interpretation of this Warrant to favor any party against the other party.
IN WITNESS WHEREOF, the Company has executed this Warrant as of the
date first written above.
INZON CORPORATION
WITNESS:
By:
Name:
Title:
Exhibit A
FORM OF
NOTICE OF EXERCISE
(To Be Signed Only On Exercise of Warrant)
TO: InZon Corporation
000 XX Xxxxx Xxxxxx
Xxxxxx Xxxxx XX 00000
Attention: Chief Financial Officer
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No. ), hereby irrevocably elects to purchase __________ shares
of the Common Stock covered by such Warrant.
The undersigned herewith makes payment of the full Exercise Price for
such shares at the price per share provided for in such Warrant, which is
$______. Such payment takes the form of lawful money of the United States.
The undersigned requests that the certificates for such shares be
issued in the name of, and delivered to
_________________________________________, whose address is
__________________________________________________________.
The undersigned represents and warrants that all offers and sales by
the undersigned of the securities issuable upon exercise of the within
Warrant shall be made pursuant to registration of the Common Stock under the
Securities Act of 1933, as amended (the "Securities Act") or pursuant to an
exemption from registration under the Securities Act.
Dated:
(Signature must conform to name
of holder as
specified on the face of the
Warrant)
Address:
Exhibit B
FORM OF
TRANSFEROR ENDORSEMENT
(To Be Signed Only On Transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and
transfers unto the person(s) named below under the heading "Transferees" the
right represented by the within Warrant to purchase the percentage and number
of shares of Common Stock of InZon Corporation into which the within Warrant
relates specified under the headings "Percentage Transferred" and "Number
Transferred," respectively, opposite the name(s) of such person(s) and
appoints each such person attorney to transfer its respective right on the
books of InZon Corporation with full power of substitution in the premises.
Transferee
Address
Percentage
Transferred
Number
Transferred
Dated:
(Signature must conform to name
of holder as specified on the
face of the Warrant)
Address:
SIGNED IN THE PRESENCE OF:
(Name)
ACCEPTED AND AGREED:
[TRANSFEREE]
(Name)
