Exhibit 10.1
XA, INC.
SECURITIES PURCHASE AGREEMENT
Dated October 26, 2006, to be effective as of September 26, 2006
THIS SECURITIES PURCHASE AGREEMENT, dated as of this 26th day of October,
2006, to be effective as of September 26, 2006 (this "AGREEMENT"), between XA,
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INC., a Nevada corporation (the "COMPANY"), and Xxxxx X. Xxxxxxxx,
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Ltd. (the "PURCHASER") is meant to replace and supersede the prior Securities
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Purchaser Agreement entered into between the parties, which was dated September
26, 2006.
W I T N E S S E T H:
WHEREAS, the Company has previously entered into a Securities Purchase
Agreement on August 8, 2006 (the "PRIOR CLOSING" and the "PRIOR PURCHASE
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AGREEMENT"), whereby it sold an aggregate of $1,250,000 in 11% Senior Secured
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Convertible Promissory Notes (the "PRIOR NOTES") and 175,000 warrants to
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purchase shares of its common stock at an exercise price of $1.10 per share (the
"PRIOR WARRANTS"), to five entities (the "PRIOR PURCHASERS") which Prior Notes
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were secured by a Security Agreement (the "PRIOR SECURITY AGREEMENT"). The
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shares of common stock which the Prior Notes were convertible into and the
shares of common stock which the Prior Warrants were convertible into and an
aggregate of 1,000,000 additional warrants previously issued exercisable at
$0.30 per share,(collectively the "PRIOR UNDERLYING SHARES"), were granted
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registration rights pursuant to a Registration Rights Agreement (the "PRIOR
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REGISTRATION AGREEMENT");
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WHEREAS, the Company desires to issue to the Purchaser, and the Purchaser
desires to purchase from the Company, the Securities (as such term is defined
below) as set forth below (the "OFFERING"); and
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WHEREAS, certain capitalized terms used in this Agreement are defined in
Section 9.1 hereof;
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NOW, THEREFORE, in consideration of the promises and mutual covenants and
agreements hereinafter contained, and for good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. SALE AND PURCHASE OF SECURITIES.
1.1 Sale and Purchase of Securities. Subject to the terms and
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conditions of this Agreement, on the Closing Date (as defined in
Section 3.1 hereof), the Company shall issue, sell and deliver to the
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Purchaser, and the Purchaser shall purchase from the Company for the
Purchase Price (as defined in Section 2.1 hereof) (i) 11% Senior
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Subordinated Secured Convertible Promissory Notes in the aggregate
principal amount of $100,000 (the "NOTES") and (ii) warrants (a
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"WARRANT" and collectively the "WARRANTS") to purchase fifteen
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thousand (15,000) shares (subject to adjustment as described therein),
of the Company's common stock, par value $0.001 per share at an
exercise price of $1.10 (the "COMMON STOCK"). The Notes and Warrants
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shall hereinafter sometimes be collectively referred to as the
"SECURITIES." The names, addresses and principal amount of Notes
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purchased and Warrants received by the Purchaser shall be set forth on
Schedule 1.1 hereto.
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2. PURCHASE PRICE.
2.1 Purchase Price. The aggregate purchase price of the
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Securities to be purchased pursuant to Section 1.1 shall be $100,000,
(the "PURCHASE PRICE").
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2.2 Payment of the Purchase Price. At the Closing (as defined in
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Section 3.1 hereof), the Purchaser shall pay the Purchase Price by
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wire transfer of immediately available funds or by such other method
as may be reasonably acceptable to the Company and the Purchaser, to
such account of the Company as shall have been designated in advance
to the Purchaser by the Company. The Company at its sole discretion
may pay qualified Broker Dealers a selling concession of 10% and an
unaccountable expense allowance of 3% of gross proceeds received in
connection with this Offering.
3. CLOSING.
3.1 Closing Date. The closing of the sale and purchase of the
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Securities (the "CLOSING") has previously taken place on September 30,
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2006. The date on which the Closing is held is referred to in this
Agreement as the "CLOSING DATE." At the Closing (i) the Company shall
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deliver, or cause to be delivered, the Notes and Warrants, each
executed by the Company and (ii) the documents referred to in Section
8 hereof.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents, covenants and warrants as of the date hereof and as of the
Closing Date to the Purchaser, acknowledging that the Purchaser is relying
upon the accuracy and completeness of the representations and warranties
set forth herein to, among other things, ensure that registration under
Section 5 of the Securities Act is not required in connection with the sale
of the Securities hereby, as follows:
4.1 Organization and Good Standing; Capitalization.
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(a) The Company (and each Subsidiary) is duly organized,
validly existing and in good standing under the laws of the state
of Nevada and has the corporate power and authority to own, lease
and operate its properties and assets and to carry on its
business as now conducted and as it is proposed to be conducted.
The Company is in good standing under the laws of each
jurisdiction in which the conduct of its business or the
ownership of its properties or assets requires such qualification
or authorization.
(b) All the outstanding shares of capital stock of the
Company have been duly authorized, and are validly issued, fully
paid and non-assessable. Except as disclosed on Schedule 4.1(b)
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(i) there is no option, warrant, call, right, commitment or other
agreement of any character to which the Company is a party, (ii)
there are no securities of the Company outstanding which upon
conversion or exchange, and (iii) there are no share appreciation
rights, or other similar rights based on securities of the
Company which, in the case of clause (i), (ii) or (iii), would
require the issuance, sale or transfer of any additional shares
of capital stock or other equity securities of the Company or
other securities convertible into, exchangeable for or evidencing
the right to subscribe for or purchase share capital or other
equity securities of the Company. Other than as contemplated by
this Agreement or Transaction Documents (as defined in Section
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4.2), the Company is not a party to, nor is it aware of, any
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voting trust or other voting, stockholders or similar agreement
with respect to any of the securities of the Company or of any
agreement relating to the issuance, sale, redemption, transfer or
other disposition of the shares of capital stock on other
securities of the Company.
4.2 Authorization of Agreement; Enforceability. The Company has
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all requisite corporate power and authority to execute and deliver
this Agreement and each other agreement, document, instrument and
certificate, including, but not limited to, Waiver Agreements, the
Bank Consent, the Notes, Warrants, Registration Rights Agreement and
Security Agreement, to be executed by the Company in connection with
the consummation of the transactions contemplated by this Agreement
(collectively, the "TRANSACTION DOCUMENTS"), and to perform fully its
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obligations hereunder and thereunder. The execution, delivery and
performance by the Company of this Agreement and the Transaction
Documents have been duly authorized by all necessary corporate action
on the part of the Company and its stockholders. This Agreement and
each of the Transaction Documents have been duly and validly executed
and delivered by the Company and, assuming the due authorization,
execution and delivery thereof by the Purchaser, this Agreement and
each of the Transaction Documents constitutes the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with its respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
4.3 No Conflicts. The execution, delivery and performance of the
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Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated thereby, do not and will not
(i) conflict with or violate any provision of the Company's and/or any
Subsidiary's Articles of Incorporation or by-laws and any and all
amendments thereto (collectively, the "INTERNAL DOCUMENTS"), (ii)
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conflict with, or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any
agreement, credit facility, debt or other instrument (evidencing a
Company or Subsidiary debt or otherwise), or other understanding to
which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or
affected, or (iii) result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court
or governmental authority to which the Company or a Subsidiary is
subject (including federal and state securities laws and regulations),
or by which any property or asset of the Company or a Subsidiary is
bound or affected.
4.4 Subsidiaries, Joint Ventures, Partnerships, Etc.
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(a) As of the Closing (i) The Experiential Agency, Inc.,
(ii) XA Scenes, Inc., (iii) XA Interactive, Inc., and (iv) Fiori
XA, Inc. (collectively the "SUBSIDIARIES") are the only
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subsidiaries of the Company. Each Subsidiary is wholly owned by
the Company, is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation
with corporate power and corporate authority under such laws to
own, lease and operate its properties and conduct its business as
currently conducted; and is in good standing (if applicable) in
each other jurisdiction in which it owns or leases property of a
nature, or transacts business of a type, that would make such
qualification necessary other than such qualifications which the
failure to have would not reasonably be expected to have a
Material Adverse Effect.
(b) Neither the Company nor its Subsidiaries is a party to
any joint venture, partnership or similar arrangement or
agreement.
4.5 Consents of Third Parties. None of the execution and delivery
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by the Company of this Agreement and the Transaction Documents, the
consummation of the transactions contemplated hereby or thereby, or
compliance by the Company with any of the provisions hereof or thereof
will (a) conflict with, or result in the breach of, any provision of
the Certificate of Incorporation or Bylaws of the Company (or any
Subsidiary), (b) conflict with, violate, result in the breach or
termination of, or constitute a default or give rise to any right of
termination or acceleration or right to increase the obligations or
otherwise modify the terms thereof under any Permit or Order to which
the Company (or any Subsidiary) is a party or any Contract to which
the Company or its Subsidiaries is bound or by which the Company or
any of its properties or assets is bound, other than such conflicts,
violations, breaches, defaults, termination or accelerations that
would not reasonably be expected to have a Material Adverse Effect,
(c) constitute a violation of any Law applicable to the Company (or
any Subsidiary) or (d) result in the creation of any Lien upon the
properties or assets of the Company (or any Subsidiary). No consent,
waiver, approval, Order, Permit or authorization of, or declaration or
filing with, or notification to, any Person or Governmental Body is
required on the part of the Company and/or its Subsidiaries in
connection with the execution and delivery of this Agreement, and/or
the Transaction Documents, or the compliance by the Company with any
of the provisions hereof or thereof.
4.6 Authorization of Securities.
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(a) On the Closing Date, the issuance, sale, and delivery of
the Securities to be purchased pursuant to Section 1.1 will have
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been duly authorized by all requisite action of the Company, and,
when issued, sold, delivered and paid for in accordance with this
Agreement, the Securities will be validly issued and outstanding,
with no personal liability attaching to the ownership thereof.
(b) On the Closing Date, the issuance and delivery of the
shares of Common Stock to be delivered upon conversion of the
Notes (the "CONVERSION SHARES") and upon exercise of the Warrants
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(the "WARRANT SHARES") in accordance with the terms thereof
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(collectively, the Conversion Shares and the Warrants Shares, the
"UNDERLYING SHARES") will have been duly authorized by all
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requisite action of the Company and, when issued and delivered in
accordance with the terms of the Securities, the Underlying
Shares will be validly issued and outstanding, fully paid and
non-assessable, with no personal liability attaching to the
ownership thereof, and not subject to preemptive or any other
similar rights of the stockholders of the Company or others.
4.7 Certain Waivers.
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(a) The Waiver of Rights Agreement (the "WAIVER AGREEMENT")
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entered into as of July 17, 2006, effective as of June 30, 2006,
and extended via email on August 3, 2006, to August 9, 2006, by
Alpha Capital Aktiengesellschaft, Xxxxxxxxxxx Limited
Partnership, Whalehaven Funds Limited, Greenwich Growth Fund
Limited and Genesis Microcap Inc. (each a "PRIOR NOTE CREDITOR"
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and collectively the "PRIOR NOTE CREDITORS") in favor of the
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Company is a valid and binding agreement, duly executed,
enforceable against the Company and each Note Creditor in
accordance with its terms and is in full force and effect. To the
best of the Company's knowledge, no action has been brought or is
contemplated to be brought changing the enforcement of the Waiver
Agreement. The executed Waiver Agreement is attached hereto as
Schedule 4.7(a).
(b) The Waiver of Rights Agreement (the "SECOND WAIVER
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AGREEMENT") entered into as of September 13, 2006, by the Prior
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Note Creditors in favor of the Company is a valid and binding
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agreement, duly executed, enforceable against the Company and
each Note Creditor in accordance with its terms and is in full
force and effect. To the best of the Company's knowledge, no
action has been brought or is contemplated to be brought changing
the enforcement of the Second Waiver Agreement. The executed
Second Waiver Agreement is attached hereto as Schedule 4.78(b).
4.8 Capitalization. Schedule 4.8 hereto sets forth in detail all
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outstanding securities of the Company (including the terms, the
holders and the amounts thereof). Other than as disclosed in Schedule
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4.8, (i) there are no outstanding securities of the Company or any of
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its Subsidiaries which contain any preemptive, redemption or similar
provisions, nor is any holder of securities of the Company or any
Subsidiary entitled to preemptive or similar rights arising out of any
agreement or understanding with the Company or any Subsidiary by
virtue of any of the Transaction Documents, and there are no
contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to redeem a
security of the Company or any of its Subsidiaries; (ii) the Company
does not have any stock appreciation rights or "phantom stock" plans
or agreements or any similar plan or agreement; and (iii) there are no
outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities,
except as a result of the purchase and sale of the Transaction
Securities, or rights or obligations convertible into or exchangeable
for, or giving any Person any right to subscribe for or acquire, any
shares of Common Stock, or contracts, commitments, understandings, or
arrangements by which the Company or any Subsidiary is or may become
bound to issue additional shares of Common Stock, or secur-ities or
rights convertible or exchangeable into shares of Common Stock.
4.9 SEC Reports; Financial Statements. The Company has filed all
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reports required to be filed by it under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or Section 15(d) of
the Exchange Act, for the one (1) year preceding the date hereof (or
such shorter period as the Company was required by law to file such
material) (the foregoing materials, including the exhibits thereto,
being collectively referred to herein as the "SEC REPORTS"). As of
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their respective dates, the SEC Reports complied in all material
respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the Commission promulgated
thereunder, as applicable, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading. All material agreements to which the
Company is a party or to which the property or assets of the Company
are subject have been filed as exhibits to the SEC Reports to the
extent required. The financial statements of the Company included in
the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing.
Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
during the periods involved ("GAAP"), except as may be otherwise
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specified in such financial statements or the notes thereto and except
that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as
of and for 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, immaterial, year-end audit adjustments.
Additionally, since the adoption of the Xxxxxxxx-Xxxxx Act of 2002
(the "NEW ACT") and to the extent that the Company is subject to the
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New Act, the Company has complied in all material respects with the
laws, rules and regulation under the New Act.
4.10 Material Changes. Since December 31, 2005, (i) there has
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been no event, occurrence or development that has had or that could
reasonably be expected to result in a Material Adverse Effect, (ii)
the Company has not incurred any material liabilities (contingent or
otherwise) other than (A) trade payables and accrued expenses incurred
in the ordinary course of business consistent with past practice and
(B) liabilities not required to be reflected in the Company's
financial statements pursuant to GAAP or required to be disclosed in
filings made with the Commission, (iii) the Company has not altered
its method of accounting or the identity of its auditors, (iv) the
Company has not declared or made payment or distribution of any
dividend or distribution of cash or other property to its holders of
Common Stock or purchased, redeemed or made any agreements to purchase
or redeem any shares of its capital stock and (v) the Company has not
issued any equity securities to any officer, director or Affiliate,
except pursuant to existing Company stock option plans.
4.11 No Undisclosed Liabilities. Other than as disclosed in the
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SEC Reports, neither the Company nor its Subsidiaries has any
liabilities (whether accrued, absolute, contingent or otherwise, and
whether due or to become due or asserted or unasserted), except (a)
liabilities provided for in the Financial Statements (other than
liabilities which, in accordance with GAAP, need not be disclosed),
(b) liabilities disclosed on Schedule 4.11 hereto and (c) liabilities
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incurred in the ordinary course of business which do not materially
exceed historic levels.
4.12 Absence of Certain Developments. In the ordinary course of
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business or in the context of the Transactions contemplated in this
Agreement and the Transaction Documents:
(a) there has not been any Material Adverse Change nor has
any event occurred which could result in any Material Adverse
Change;
(b) there has not been any declaration, setting a record
date, setting aside or authorizing the payment of, any dividend
or other distribution in respect of any shares of capital stock
of the Company or its Subsidiaries or any repurchase, redemption
or other acquisition by the Company or its Subsidiaries, of any
of the outstanding shares of capital stock or other securities
of, or other ownership interest in, the Company or its
Subsidiaries;
(c) there has not been any transfer, issue, sale or other
disposition by the Company of any shares of capital stock or
other securities of the Company or its Subsidiaries or any grant
of options, warrants, calls or other rights to purchase or
otherwise acquire shares of such capital stock or such other
securities;
(d) neither the Company nor its Subsidiaries has (i) awarded
or paid any bonuses to employees or representatives of the
Company, (ii) entered into any employment, deferred compensation,
severance or similar agreements (nor amended any such agreement),
other than in the ordinary course of business;
(e) neither the Company nor its Subsidiaries has made any
loans, advances (other than advances to officers and employees of
the Company or its Subsidiaries which advances are made in the
ordinary course of business), or capital contributions to, or
investments in, any Person or paid any fees or expenses to any
Affiliate of the Company other than its Subsidiaries;
(f) neither the Company nor its Subsidiaries has transferred
or granted any rights under any Contracts or licenses, used by
the Company in its business;
(g) there has not been any damage, destruction or loss,
whether or not covered by insurance, with respect to the property
or assets of the Company or its Subsidiaries having a replacement
cost of more than $10,000 for any single loss or $20,000 for all
such losses;
(h) neither the Company nor its Subsidiaries has mortgaged,
pledged or subjected to any Lien any of its assets, or acquired
any assets for a purchase price in excess of $10,000 in the
aggregate or sold, assigned, transferred, conveyed, leased or
otherwise disposed of any assets of the Company or its
Subsidiaries for a sale price in excess of $10,000 in the
aggregate except for assets acquired or sold, assigned,
transferred, conveyed, leased or otherwise disposed of in the
ordinary course of business;
(i) neither the Company nor its Subsidiaries has canceled or
compromised any debt or claim, or amended, canceled, terminated,
relinquished, waived or released any Contract or right, except in
the ordinary course of business consistent with past practice and
which, individually or in the aggregate, would not be material to
the Company or its Subsidiaries;
(j) neither the Company nor its Subsidiaries has made any
binding commitment to make any capital expenditures or capital
additions or betterments in excess of $20,000 individually or
$50,000 in the aggregate;
(k) neither the Company nor its Subsidiaries has incurred
any debts, obligations or liabilities, whether due or to become
due, except current liabilities incurred in the ordinary course
of business, none of which current liabilities (individually or
in the aggregate) could result in a Material Adverse Change;
(l) neither the Company nor its Subsidiaries has entered
into any transaction other than in the ordinary course of
business except for (in the case of the Company) this Agreement;
(m) neither the Company nor its Subsidiaries has encountered
any labor difficulties or labor union organizing activities;
(n) neither the Company nor its Subsidiaries has made any
change in the accounting principles, methods or practices
followed by it or depreciation or amortization policies or rates
theretofore adopted;
(o) neither the Company nor its Subsidiaries has disclosed
to any Person any material trade secrets except for disclosures
made to Persons subject to valid and enforceable confidentiality
agreements;
(p) neither the Company nor its Subsidiaries has suffered or
experienced any change in the relationship or course of dealings
between the Company and/or its Subsidiaries and any of their
suppliers or customers which supply goods or services to the
Company or its Subsidiaries or purchase goods or services from
the Company and or its Subsidiaries; and
(q) neither the Company nor its Subsidiaries has made any
payment to, or received any payment from, or made or received any
investment in, or entered into any transaction or series of
related transactions (including without limitation, the purchase,
sale, exchange or lease of assets, property or services, or the
making of a loan or guarantee) with any Affiliate in each case,
in excess of $10,000 or its equivalent (other than any
transactions between or among the Company and its Subsidiaries)
(each, an "AFFILIATE TRANSACTION").
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4.13 Taxes. The Company and its Subsidiaries have filed all Tax
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returns (including statements of estimated Taxes owed) and reports
required to be filed within the applicable periods (subject to
extensions) for such filings and have paid all Taxes required to be
paid, and has established adequate reserves (net of estimated Tax
payments already made) for the payment of all Taxes payable in respect
of the period subsequent to the last periods covered by such returns.
No deficiencies for any Tax are currently assessed against the Company
or any Subsidiary. There is no Tax Lien, whether imposed by any
federal, state or local taxing authority, outstanding against the
assets, properties or business of the Company or its Subsidiaries
other than Liens for Taxes which are not yet due. Neither the Company
nor its Subsidiaries has executed any waiver of the statute of
limitations on the assessment or collection of any Tax or governmental
charge. The Company and its Subsidiaries have properly charged,
collected and paid all applicable stamp, sales, use and other similar
Taxes on or before the Closing Date.
4.14 Real Property. The Company currently has (i) leased certain
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locations for office space and all material leases, and (ii) owns real
property, all of which leases and real property are listed (including
the terms of such leases) on Schedule 4.14.
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4.15 Tangible Personal Property; Assets. All material items of
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personal property and assets owned or leased by the Company and its
Subsidiaries are in good operating condition, normal wear and tear
excepted.
4.16 Intangible Property. The Company and its Subsidiaries own,
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or possess adequate rights or licenses to use all trademarks, trade
names, service marks, service xxxx registrations, service names,
patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and rights necessary to
conduct their respective businesses as now conducted, the lack of
which could reasonably be expected to have a Material Adverse Effect.
The Company and its Subsidiaries do not have any knowledge of any
infringement by the Company or its Subsidiaries of trademarks, trade
name rights, patents, patent rights, copyrights, inventions, licenses,
service names, service marks, service xxxx registrations, trade
secrets or other similar rights of others, or of any such development
of similar or identical trade secrets or technical information by
others and no claim, action or proceeding has been made or brought
against, or to the Company's knowledge, has been threatened against,
the Company or its Subsidiaries regarding trademarks, trade name
rights, patents, patent rights, inventions, copyrights, licenses,
service names, service marks, service xxxx registrations, trade
secrets or other infringement, except where such infringement, claim,
action or proceeding would not reasonably be expected to have either
individually or in the aggregate a Material Adverse Effect. None of
the Company's employees, officers, or consultants are 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
the use of such employee's, officer's, or consultant's commercially
reasonable efforts to promote the interests of the Company or that
would conflict with the Company's business as conducted. Neither the
execution nor delivery of the Transaction Documents, nor the carrying
on of the Company's business by the employees of the Company, nor the
conduct of the Company's business, will, to the Company's knowledge,
conflict with or result in a breach of the terms, conditions, or
provisions of, or constitute a default under, any contract, covenant,
or instrument under which any of such employees, officers or
consultants are now obligated.
4.17 Material Contracts.
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Other than as set forth on Schedule 4.17, or otherwise disclosed
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in the Company's Securities and Exchange Commission filings (a)
neither the Company nor its Subsidiaries nor any of their respective
properties or assets is a party to or bound by any (i) Contract not
made in the ordinary course of business, or involving a commitment or
payment by the Company or any Subsidiary in excess of $10,000 or, in
the Company's belief, otherwise material to the business of the
Company or its Subsidiaries, (ii) Contract among members or granting a
right of first refusal or for a partnership or a joint venture or for
the acquisition, sale or lease of any assets or share capital of the
Company or any other Person or involving a sharing of profits, (iii)
mortgage, pledge, conditional sales contract, security agreement,
factoring agreement or other similar Contract with respect to any real
or tangible personal property of the Company or its Subsidiaries, (iv)
loan agreement, credit agreement, promissory note, guarantee,
subordination agreement, letter of credit or any other similar type of
Contract, (v) Contract with any Governmental Body outside the ordinary
course of business, (vi) Contract with respect to the discharge,
storage or removal of hazardous materials or (vii) binding commitment
or agreement to enter into any of the foregoing.
(b) (i) Each of the Contracts listed on Schedule 4.17 is
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valid and enforceable against the Company or its Subsidiaries in
accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in
equity), and there is no default under any Contract listed on
Schedule 4.17 by the Company or any of its Subsidiaries or, to
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the knowledge of the Company, by any other party thereto, which
is likely to have a Material Adverse Effect, and no event has
occurred that with the lapse of time or the giving of notice or
both would constitute a default by the Company thereunder which
is likely to have a Material Adverse Effect.
(ii) No previous or current party to any Contract has
given written notice to the Company or any Subsidiary of, or
made a claim, verbal or written, with respect to any breach
or default thereunder and the Company has no knowledge of
any notice of or claim with respect to any such breach or
default other than such notices or claims with respect to
any such breaches or defaults that would not, either
individually or in the aggregate, be reasonably expected to
have a Material Adverse Effect.
(c) With respect to the Contracts listed on Schedule 4.17
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that were assigned to the Company or any Subsidiary by a third
party, all necessary consents to such assignment have been
obtained other than such contents which the failure to obtain
would not be reasonably expected to have a Material Adverse
Effect.
4.18 Employee Benefits. Except as set forth on Schedule 4.18,
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neither the Company nor any of its Subsidiaries has in effect any
employment agreements, consulting agreements, deferred compensation,
pension or retirement agreements or arrangements, bonus, incentive or
profit-sharing plans or arrangements, or labor or collective
bargaining agreements, written or oral. The Company and its
Subsidiaries are in compliance in all material respects with all
applicable Laws relating to labor, employment, fair employment
practices, terms and conditions of employment, and wages and hours.
4.19 Employees.
---------
(a) No key executive Employee, group of Employees nor
independent contractors of the Company or its Subsidiaries has
any plans to terminate his or her employment or relationship as
an Employee or independent contractor with the Company or its
Subsidiaries.
(b) To the best of the Company's knowledge, no key executive
Employee or any other Employee of the Company or its Subsidiaries
is a party to or is otherwise bound by any agreement or
arrangement (including, without limitation, confidentiality
agreements, non-competition agreements, licenses, covenants, or
commitments of any nature), or subject to any judgment, decree,
or Order of any court or Governmental Body, (i) that would
conflict with such employee's obligation diligently to promote
and further the interest of the Company or its Subsidiaries or
(ii) that would conflict with the Company's (or its Subsidiaries)
business as now conducted or as proposed to be conducted.
(c) Schedule 4.19(c) sets forth a list of each of the key
----------------
executive Employees of the Company who have entered into an
employment and/or confidentiality agreement with the Company.
4.20 Litigation. Other than is set forth on Schedule 4.20, there
---------- -------------
is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, currently
threatened against or affecting the Company, any Subsidiary or any of
their respective properties before or by any court, arbitrator,
governmental or administrative agency and/or regulatory authority
(federal, state, county, local or foreign), (collectively, an
"ACTION") which does and/or could (i) adversely affects or challenges
------
the legality, validity or enforceability of any of the Transaction
Documents and/or the Transaction Securities or to consummate the
transactions contemplated hereby or thereby or (ii) could, if there
were an unfavorable decision, have or reasonably be expected to result
in, either individually or in the aggregate, a Material Adverse
Effect. The Commission has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by
the Company or any Subsidiary under the Exchange Act or the Securities
Act. The foregoing includes, without limitation, actions, pending or
threatened (or any basis therefor known to the Company), involving the
prior employment of any of the Company's employees, their use in
connection with the Company's business of any information or
techniques allegedly proprietary to any of their former employers, or
their obligations under any agreements with prior employers. 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.
4.21 Compliance with Laws; Permits. Neither the Company nor any
------------------------------
Subsidiary (i) is in default under or in violation of (and no event
has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received
notice of a claim that it is in default under or that it is in
violation of, any indenture, mortgage, decree, lease, license, loan or
credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not
such default or violation has been waived), (ii) is in violation of
any order of any court, arbitrator or governmental body, or (iii) is
or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign,
federal, state and local laws applicable to its business, except in
the case of clauses (i), (ii) and (iii) as would not result in a
Material Adverse Effect. Neither the Company nor any of the
Subsidiaries has received any written notice of any violation of or
noncompliance with, any federal, state, local or foreign laws,
ordinances, regulations and orders (including, without limitation,
those relating to environmental protection, occupational safety and
health, federal securities laws, equal employment opportunity,
consumer protection, credit reporting, "truth-in-lending", and
warranties and trade practices) applicable to its business or to the
business of any Subsidiary, the violation of, or noncompliance with,
which would have a materially adverse effect on either the Company's
business or operations, or that of any Subsidiary, and the Company
knows of no facts or set of circumstances which would give rise to
such a notice. The execution, delivery, and performance of the
Transaction Documents and the consummation of the transactions
contemplated thereby will not result in any such violation or be in
conflict with or constitute, with or without the passage of time and
giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree or contract, or an event
which results in the creation of any lien, charge, or encumbrance upon
any assets of the Company or the suspension, revocation, impairment,
forfeiture, or nonrenewal of any material permit, license,
authorization, or approval applicable to the Company, its business or
operations, or any of its assets or properties, except as would not
reasonably be expected to have a Material Adverse Effect.
4.22 Environmental and Safety Laws. Neither the Company nor its
------------------------------
Subsidiaries are in violation of any applicable Laws relating to the
environment or occupational health and safety where the failure to so
comply could have a Material Adverse Effect and no material
expenditures are or will be required in order to comply with any such
existing Laws.
4.23 Investment Company Act. The Company is not, nor is it
------------------------
directly or indirectly controlled by or acting on behalf of, any
Person that is an investment company within the meaning of the
Investment Company Act of 1940, as amended.
4.24 Financial Advisors. Except for Xxxxxxx, no agent, broker,
-------------------
investment banker, finder, financial advisor or other Person is or
will be entitled to any broker's or finder's fee or any other
commission or similar fee from the Company, directly or indirectly, in
connection with the transactions contemplated by this Agreement or any
Transaction Document and no Person is entitled to any fee or
commission or like payment from the Company in respect thereof based
in any way on agreements, arrangements or understandings made by or on
behalf of the Company.
4.25 Condition of Properties. All facilities, machinery,
-------------------------
equipment, fixtures, vehicles and other properties owned, leased or
used by the Company and its Subsidiaries are in good operating
condition and repair, are reasonably fit and usable for the purposes
for which they are being used, are adequate and sufficient for the
Company and its Subsidiaries respective businesses and conform in all
material respects with all applicable Laws.
4.26 Pending Changes. The Company has no knowledge of any
----------------
development which might reasonably be expected to result in a material
adverse affect on the operations or financial condition of the Company
or its Subsidiaries.
4.27 Securities Laws. The Company has complied in all material
----------------
respects with all applicable U.S. federal and state securities laws in
connection with (i) all offers, issuances and sales of its securities
prior to the date hereof and (ii) the offer, issuance and sale of the
Securities. All sales and issuances of currently outstanding
securities by the Company have been to accredited investors within the
meaning of Rule 501 of Regulation D under the Securities Act. Prior to
the Closing, neither the Company nor anyone acting on its behalf has
sold, offered to sell or solicited offers to buy the Securities or
similar securities to, or solicit offers with respect thereto from, or
entered into any preliminary conversations or negotiations relating
thereto with, any Person, so as to bring the issuance and sale of the
Securities under the registration provisions of the Securities Act,
and applicable state securities laws. Neither the Company nor any
Person acting on its behalf has offered the Securities to any Person
by means of general or public solicitation or general or public
advertising, such as by newspaper or magazine advertisements, by
broadcast media, or at any seminar or meeting whose attendees were
solicited by such means.
4.28 Registration Rights. Except for any rights granted under the
-------------------
Transaction Documents and the Prior Registration Agreement, no Person
has demand or other rights to cause the Company to file any
registration statement under the Securities Act relating to any
securities of the Company or any right to participate in any such
registration statement.
4.29 Disclosure; Survival. There is no fact which has not been
---------------------
disclosed to the Purchaser of which the Company has knowledge and
which has had or could reasonably be anticipated to result in a
Material Adverse Change. All representations and warranties set forth
in this Agreement or in any of the Transaction Documents or in any
writing or certificate delivered in connection with this Agreement
shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby for a period of
two (2) years (the "SURVIVAL PERIOD") and shall not be affected by any
---------------
examination made for or on behalf of the Purchaser, the knowledge of
the Purchaser, or the acceptance by the Purchaser of any certificate
or opinion.
4.30 No General Solicitation. Neither the Company, its
-------------------------
Subsidiaries, any of their affiliates nor any person acting on 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 Notes and the
Warrants.
4.31 Insurance. The Company has in full force and effect fire and
---------
casualty insurance policies, with extended coverage, sufficient in
amount (subject to reasonable deductibles) to allow it to replace any
of its properties that might be damaged or destroyed, and the Company
has insurance against other hazards, risks, and liabilities to persons
and property to the extent and in the manner customary for companies
in similar businesses similarly situated.
4.32 Regulatory Permits. The Company and the Subsidiaries possess
------------------
all licenses, certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities
necessary to conduct their respective businesses, except where the
failure to possess such permits would not have or reasonably be
expected to result in a Material Adverse Effect ("MATERIAL PERMITS"),
----------------
and believes it can obtain, without undue burden or expense, any
similar authority for the conduct of its business as planned to be
conducted, and neither the Company nor any Subsidiary has received any
notice of proceedings relating to the revocation or modification of
any Material Permit.
4.33 Title to Property and Assets. The Company (and each
--------------------------------
Subsidiary) owns its property and assets free and clear of all
mortgages, liens, loans, pledges, security interests, claims,
equitable interests, charges, and encumbrances, except such
encumbrances and liens which arise in the ordinary course of business
and do not materially impair the Company's (and each Subsidiary's)
ownership or use of such property or assets and/or any such liens,
encumbrances and security interests which arose in connection with the
Prior Security Agreement. With respect to the property and assets it
leases, the Company (and each Subsidiary) is in compliance with such
leases and, to its knowledge, holds a valid leasehold interest free of
any liens, claims, or encumbrances.
4.34 Foreign Assets Control Legislation. Neither the sale of the
----------------------------------
Notes nor the Warrants by the Company hereunder nor its use of the
proceeds thereof will violate the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) or any enabling legislation or executive order relating
thereto. Without limiting the foregoing, neither the Company nor any
of its Subsidiaries (a) is a person whose property or interests in
property are blocked pursuant to Section 1 of Executive Order 13224 of
September 23, 2001 Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed.
Reg. 49079 (2001)) or (b) engages in any dealings or transactions, or
be otherwise associated, with any such person. The Company and its
Subsidiaries are in compliance with the USA Patriot Act of 2001
(signed into law October 26, 2001).
4.35 Solvency. Based on the financial condition of the Company as
--------
of the Closing Date (after giving effect to the transactions
contemplated herein and in the other Transaction Documents), (i) the
Company's fair saleable value of its assets exceeds the amount that
will be required to be paid on or in respect of the Company's existing
debts and other liabilities (including known contingent liabilities)
as they mature; (ii) the Company's assets do not constitute
unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted including
its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected
capital requirements and capital availability thereof; and (iii) the
current cash flow of the Company, together with the proceeds the
Company would receive, were it to liquidate all of its assets, after
taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its debt when such
amounts are required to be paid. The Company does not intend to incur
debts beyond its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be payable on or in respect
to its debt).
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. Each Purchaser
hereby represents and warrants as of the date hereof and as of the Closing
Date to the Company, acknowledging that the Company is relying upon the
accuracy and completeness of the representations and warranties set forth
herein to, among other things, ensure that registration under Section 5 of
the Securities Act is not required in connection with the sale of the
Securities hereby, as follows
5.1 Organization; Authority. The Purchaser is an entity duly
------------------------
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with full right, corporate or limited
liability company power and authority to enter into and to consummate
the transactions contemplated by the Transaction Documents and
otherwise to carry out its obligations thereunder. The execution,
delivery and performance by such Purchaser of the transactions
contemplated by this Agreement has been duly authorized by all
necessary corporate or similar action on the part of such Purchaser.
Each Transaction Document to which it is a party has been duly
executed by such Purchaser, and when delivered by such Purchaser in
accordance with the terms hereof, will constitute the valid and
legally binding obligation of such Purchaser, enforceable against it
in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of
specific performance, injunctive relief, or other equitable remedies.
5.2 Investment Intent. The Purchaser represents and warrants to
------------------
the Company that it is (a) an "accredited investor" as defined in Rule
501 of Regulation D of the Securities Act; and (b) acquiring the
Purchased Securities to be purchased by it pursuant to this Agreement
for investment and not with a view to the distribution thereof.
5.3 Investment Purposes. (a) The Purchaser is acquiring the
--------------------
Securities for investment purposes only, for its own account, and not
as nominee or agent for any other Person, and not with a view to, or
for resale in connection with, any distribution thereof within the
meaning of the Securities Act, (b) it understands and acknowledges
that the Securities have not been registered under the Securities Act
or any other securities laws, (c) it is not an "affiliate" (as defined
in Rule 144 under the Securities Act) of the Company, (d) it has such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of its investment, (e) each
is an "accredited investor" within the meaning of Rule 501 of
Regulation D under the Securities Act, (f) the Company has made
available to it the opportunity to ask questions and to receive
answers, and to obtain information necessary to evaluate the merits
and risks of this investment, and (g) the Purchaser understands,
acknowledges and agrees that the Securities have not been registered
under (and that the Company has no present intention to register the
Securities under) the Securities Act or applicable state securities
laws, and may not be sold or otherwise transferred by the Purchaser to
a United States person unless the Securities have been registered
under the Securities Act and applicable U.S. state securities laws or
are sold or transferred in a transaction exempt therefrom.
5.4 Short Selling. The Purchaser hereby represents to the Company
-------------
that the Purchaser will not make or maintain a "short" position in the
Company's securities (i) until such date as the Registration Statement
is declared effective by the Commission, and (ii) during such portion
of the Mandatory Conversion Period (as defined in the Note) until the
Purchaser has delivered its Optional Conversion Election Form (as
defined in the Note).
6. FURTHER AGREEMENTS OF THE PARTIES.
6.1 Reserved Shares. For so long as the Securities are
----------------
outstanding, the Company shall reserve that number of shares of Common
Stock issuable upon conversion of the Notes and exercise of the
Warrants, which shares shall not be subject to any preemptive or other
similar rights.
6.2 Access to Information. The Purchaser and its representatives
---------------------
shall be entitled, upon reasonable notice, to make such investigation
of the properties, business and operations of the Company and such
examination of the books, records and financial condition of the
Company as it reasonably requests to make extracts and copies of such
books and records, upon reasonable notice during regular business
hours. Any such investigation and examination shall be conducted
during regular business hours and under reasonable circumstances
without material interference with the Company's normal business
operations, and the Company and its representatives shall cooperate
fully therein. No investigation by a Purchaser or its Representatives
prior to or after the date of this Agreement shall diminish or obviate
any of the representations, warranties, covenants or agreements of the
Company contained in this Agreement or the Transaction Documents. In
order for Purchaser to have full opportunity to make such physical,
business, accounting and legal review, examination of the affairs of
the Company and investigation as may be reasonably requested, the
Company shall cause its Representatives to cooperate fully with the
Representatives of the Purchaser in connection with such review and
examination.
6.3 Confidentiality. Except as may be required by applicable Law
---------------
or as otherwise agreed among the parties hereto, neither the Company,
the Purchaser nor any of its Affiliates shall at any time divulge,
disclose, disseminate, announce or release any information to any
Person concerning this Agreement, the Transaction Documents, the
transactions contemplated hereby or thereby, any trade secrets or
other confidential information of the Company or the Purchaser,
without first obtaining the prior written consent of the other parties
hereto.
6.4 Other Actions. The Company and the Purchaser agree to execute
-------------
and deliver such other documents and take such other actions as the
other parties may reasonably request for the purpose of carrying out
the intent of this Agreement and the Transaction Documents.
6.5 Indemnification. The Company shall indemnify and hold
---------------
harmless each Purchaser, the officers, directors, agents and employees
of each of them, each Person who controls any such Purchaser (within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, agents and employees of
each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable
attorneys' fees) and expenses (including the cost [including without
limitation, reasonable attorneys' fees] and expenses relating to an
Indemnified Party's (as defined below) actions to enforce the
provisions of this Section 6.5) (collectively, "LOSSES"), as incurred,
----------- ------
to the extent arising out of or relating to (i) any material
misrepresentation or breach of any representation or warranty made by
the Company in the Transaction Documents, or, (ii) any material breach
of any covenant, agreement or obligation of the Company contained in
the Transaction Documents, or (iii) any cause of action, suit or claim
brought or made against such Indemnified Party and arising out of or
resulting from the execution, delivery, performance or enforcement of
the Transaction Documents executed pursuant hereto by any of the
Indemnified Parties. If the indemnification provided for in this
Section 6.5 is held by a court of competent jurisdiction to be
------------
unavailable to an Indemnified Party with respect to any Losses, then
the Indemnifying Party (as defined below), in lieu of indemnifying
such Indemnified Party hereunder, shall contribute to the amount paid
or payable by such Indemnified Party as a result of Losses in such
proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the
other in connection with the actions or omissions that resulted in
such Losses as well as any other relevant equitable considerations.
The Company shall notify the Purchaser promptly of the institution,
threat or assertion of any proceeding of which the Company is aware in
connection with the transactions contemplated by this Agreement.
(b) Conduct of Indemnification Proceedings. If any
-----------------------------------------
proceeding shall be brought or asserted against any Person
entitled to indemnity hereunder (an "INDEMNIFIED PARTY"), such
-----------------
Indemnified Party shall promptly notify the other party (the
"INDEMNIFYING PARTY") in writing, and the Indemnifying Party
-------------------
shall have the right to assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, however, that the
-------- -------
failure of any Indemnified Party to give such notice shall not
relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that
such failure shall have materially and adversely prejudiced the
Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party or Parties unless: (1) the
Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly
to assume the defense of such proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such
proceeding; or (3) the named parties to any such proceeding
(including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that a conflict of interest is
likely to exist if the same counsel were to represent such
Indemnified Party and the Indemnifying Party (in which case, if
such Indemnified Party notifies the Indemnifying Party in writing
that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and the reasonable fees and
expenses of one separate counsel for all Indemnified Parties in
any matters related on a factual basis shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be
liable for any settlement of any such proceeding affected without
its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any
pending proceeding in respect of which any Indemnified Party is a
party, unless such settlement includes an unconditional release
of such Indemnified Party from all liability on claims that are
the subject matter of such proceeding.
The indemnification obligations under this Section 6.5 are
-----------
in addition to any indemnification or similar obligations under
any other Transaction Document.
(d) The provisions of this Section 6.5 shall survive the
-----------
termination of this Agreement for a period of three (3) years.
(e) All payments to be made to Purchaser pursuant to this
Section 6.5, shall be paid no later than five (5) business days
------------
after request for payment is sent to the Company.
6.6 Co-Investment Rights. Each Purchaser hereby shall have the
---------------------
right of first refusal (which right shall be shared with the Prior
Purchasers) to invest (in such amounts that all of such Purchasers
(including the Prior Purchasers and other Purchasers who invest during
the offering to which this Agreement is a part) shall so elect) in any
and all future financings ("FUTURE FINANCINGS") of the Company for
-----------------
thirty-six (36) months from the date of this Agreement on the
identical terms offered to other Investors. The Company shall provide
each Purchaser with (i) express prior written notice of a Future
Financing, and (ii) all required documentation requested by the
Purchaser related to any Future Financing all no later than ten (10)
business days prior to the final date of the offering period (or other
applicable investment period) for any such Future Financings. Such
Co-Investment rights shall continue even if a Purchaser elects not to
invest in one or more Future Financing.
6.7 Elimination of the Preferred Stock. The Company agrees that
-----------------------------------
it shall retire all of its Series A Preferred Stock (the "SUPER
-----
PREFERRED") for $1.00 in the aggregate, upon the earlier to occur of
---------
(i) the sale of an aggregate of $2,500,000 in additional identical
promissory notes (of which $1,250,000 in notes were previously sold in
August 2006) to the Notes following the Closing of the Bridge
Financing (as defined in the Note) and/or other securities, to repay
the remaining 6% Convertible Notes (the "6% NOTES") currently held by
--------
the Prior Note Creditors, and (ii) upon any default of the Notes or
other outstanding debt/securities.
6.8 Board Representation. The Company, effective on the Closing,
--------------------
hereby grants Purchaser, which right shall be shared with all of the
Purchasers (including the Prior Purchasers and other Purchasers who
invest during the offering to which this Agreement is a part), the
right to appoint one Director, or if it so elects, a Board Advisory
Seat (with both the Prior Purchasers and current Purchaser electing as
a group, one Director or Board Advisory Seat), and to receive all
financial and other information provided to board members and to
observe at all board meetings. The Purchaser nominee shall be
immediately included and maintained in the Company's Director and
Officer insurance coverage. In the event Purchaser exercises its right
to appoint a board member, the Company shall nominate an additional
board member so that the total number of board members will be five
(5). The Company shall provide to the Purchaser and any then
designated observer, concurrently with, and by the same method of,
transmission to the Board or any committee thereof, any notice of
meeting, agenda and other materials.
6.9 Bank Consent. The Company, prior to the Closing Date shall
-------------
obtain the express written consent and/or necessary waivers from
LaSalle Bank Nation Association (the "BANK") and any other person, so
----
as to approve and/or waive, as the case may be (i) this Agreement;
(ii) the Notes and Warrants; (iii) the Bridge Financing; (iv) any
defaults or event of default that may have or will have occurred; and
(v) all other such Transaction Documents as may be deemed necessary
(the "BANK CONSENT").
-------------
7. OTHER OBLIGATIONS OF THE PARTIES.
7.1 Public Announcements. The Company hereby agrees not to, and
---------------------
not to permit its Subsidiaries to, issue any press release, or
otherwise make any public statements (collectively, "PRESS RELEASES")
--------------
with respect to the transactions contemplated hereby without the prior
written consent of the Purchaser, except as may be required by law.
Furthermore, where the Company desires to issue any such Press
Release, the parties agree to cooperate in good faith in order to
prepare such Press Release in such form and substance as is agreeable
to both parties.
7.2 Furnishing Information. Each of the parties hereto will, as
-----------------------
soon as practicable after reasonable request therefor, furnish all the
information concerning it required for inclusion in any statement or
application made by any of them to any governmental or regulatory body
in connection with the transactions contemplated by this Agreement.
7.3 Transfer Restrictions.
----------------------
(a) The Underlying Shares may only be disposed of in
compliance with state and federal securities laws. In connection
with any transfer of the Underlying Shares other than pursuant to
an effective registration statement, or in connection with a
pledge, as contemplated in Section 7.3(b) hereof, the Company may
-------------
require the transferor thereof to provide to the Company an
opinion of counsel selected by the transferor, the form and
substance of which opinion shall be reasonably satisfactory to
the Company, to the effect that such transfer does not require
registration of such transferred Underlying Shares under the
Securities Act. As a condition of transfer, any such transferee
shall agree in writing to be bound by the terms of this Agreement
and shall have the rights of a Purchaser under this Agreement and
the Registration Rights Agreement.
(b) The Purchaser agrees to the imprinting, so long as is
required by this Section 7.3(b), of a legend on any of the
Underlying Shares in the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED
--------------
OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.
(c) Certificates evidencing the Underlying Shares shall not
contain any legend (including the legend set forth in Section
-------
7.3(b) (i) subsequent to the date the Commission declares
-----
effective a registration statement covering the resale of the
Underlying Shares, (ii) following any sale of the Underlying
Shares pursuant to Rule 144, or (iii) if such Underlying Shares
are eligible for sale under Rule 144(k). The Company agrees that
at such time as such legend is no longer required under and
pursuant to this Section 7.3(c), it will, no later than two (2)
-------------
Trading Days following the delivery by a Purchaser to the Company
or the Company's transfer agent of a Note for conversion, a
Warrant for exercise, a restricted stock certificate or a lost
securities affidavit, if any, of such securities are lost, as the
case may be, deliver to such Purchaser a certificate representing
Underlying Shares that is free from all restrictive and other
legends (the "DEADLINE"). The Company may not make any notation
--------
on its records or give instructions to any transfer agent of the
Company that enlarge the restrictions on transfer set forth in
this Section.
7.4 Underlying Share Delivery Damages. In the event that a
------------------------------------
non-legended certificate for Underlying Shares is not received by a
Purchaser by the Deadline, as partial compensation to the Purchaser
for such loss as a result of such delivery delay, the Company shall
pay (as liquidated damages and not a penalty) to the Purchaser for
late issuance of the Underlying Shares an amount of $100 per business
day after the Deadline for each $10,000 of principal amount of the
Note being converted, and/or or $10,000 of market value (based upon
the then stock price of the Company) of Underlying Shares of the
Warrant being exercised for as the case may be, which are not timely
delivered. The penalties in this Section 7.4 are in addition to any
-----------
shall not limit any other penalty provisions in the Transaction
Documents and shall not limit the Purchaser's right to collect other
damages and/or remedies.
7.5 Integration. The Company shall not sell, offer for sale or
-----------
solicit offers to buy or otherwise negotiate in respect of any
security (as defined in Section 2 of the Securities Act) that would be
integrated with the offer or sale of any of the Securities in a manner
that would require the registration under the Securities Act of the
sale of the Securities to the Purchaser or that would be integrated
with the offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market.
7.6 Use of Proceeds. The Company covenants and agrees that all of
---------------
the net proceeds that it receives from the sale of the Notes and
Warrants pursuant to this Agreement, shall be used solely to repay
and/or retire the 6% Notes currently held by the Prior Note Creditors
in the aggregate principal amount of $1,012,434 as of the date hereof
with the balance to be utilized for working capital.
7.7 Form D and Blue Sky. The Company shall file a Form D with
----------------------
respect to the Securities as required under Regulation D under the
Securities Act and, upon written request, provide a copy thereof to
each Purchaser promptly after such filing. The Company shall, on or
before the Closing, take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for or to
qualify any Securities for sale to the Purchaser pursuant to this
Agreement under applicable securities or "Blue Sky" laws of the states
of the United States, and shall provide evidence of any such action so
taken to the Purchaser on or prior to the Closing. The Company shall
make all filings and reports relating to the offer and sale of the
Securities required under applicable securities or "Blue Sky" laws of
the states of the United States following the Closing.
7.8 Reservation of Common Stock. As of the date hereof, the
------------------------------
Company has reserved and the Company shall continue to reserve and
keep available at all times, free of preemptive rights, a sufficient
number of shares of Common Stock for the purpose of enabling the
Company to issue the Conversion Shares and the Warrant Shares.
7.9 Securities Laws Disclosure. The Company shall, by the end of
--------------------------
business on the fourth (4th) Business Day following the Closing, issue
a press release or file a Current Report on Form 8-K, disclosing the
transactions contemplated hereby and make such other filings and
notices in the manner and time required by the Commission.
8. CONDITIONS TO CLOSING.
8.1 Conditions of Obligations of the Purchaser. The obligation of
------------------------------------------
the Purchaser to purchase and pay for the Securities is subject to the
fulfillment prior to or on the Closing Date of the following
conditions, any of which may be waived in whole or in part by the
Purchaser:
(a) Representations, Warranties and Covenants. The
--------------------------------------------
representations and warranties of the Company under this
Agreement shall be deemed to have been made again on the Closing
Date (other than those representations and warranties made
expressly as of a date prior to the Closing Date) and shall then
be true and correct. The Company shall represent to the Purchaser
that all of the information contained herein does not contain any
untrue statement of a material fact, or contain any omission of a
material fact relating to such information that is necessary in
order to make the information, in light of the circumstances
under which the information is provided, not misleading.
(b) Compliance with Agreement. The Company shall have
---------------------------
performed and complied with all covenants, agreements and
conditions required by this Agreement to be performed or complied
with by the Company on or before the Closing Date.
(c) Approvals. The Company shall have obtained any and all
---------
consents, waivers, approvals or authorizations, with or by any
Governmental Body or any other Person required for the valid
execution of this Agreement and the transactions contemplated
hereby.
(d) No Injunction. No Governmental Body or any other Person
-------------
shall have issued an Order which shall then be in effect
restraining or prohibiting the completion of the transactions
contemplated hereby, nor shall any such Order be threatened or
pending.
(e) No Material Adverse Change. Since June 30, 2006, there
---------------------------
shall not have been a Material Adverse Change.
(f) Certificate of Officer. The Company shall have delivered
----------------------
to the Purchaser a certificate dated the Closing Date, executed
by its Chief Executive Officer and Chief Financial Officer,
certifying the satisfaction of the conditions specified in
paragraphs (a), (b), (c), (d) and (e) of this Section 8.1.
-----------
(g) Opinion of the Company's Counsel. The Purchaser shall
----------------------------------
have received from Company counsel, in a form satisfactory to the
Purchaser and its counsel, an opinion dated the Closing Date.
(h) Certificate of Incorporation and By-Laws. The
--------------------------------------------
Certificate of Incorporation, as amended, and the By-Laws, shall
be in full force and effect as of the Closing under the laws of
the State of Nevada and shall not have been further amended or
modified. A certified copy of the Certificate of Incorporation,
as so amended, shall have been delivered to counsel for the
Purchaser.
(i) Closing Documents Provided By Company. The Purchaser (or
such other person as referred to herein) shall have received the
following:
(i) a Note in favor of each Purchaser, duly executed by
the Company, entitling the Purchaser to payment in the
amount as stated in Schedule 1.1 herein;
-------------
(ii) a Warrant in the name of the Purchaser, duly
executed by the Company, entitling the Purchaser to purchase
such amount of Warrant Shares as stated in Schedule 1.1
------------
herein;
(iii) the Registration Rights Agreement duly executed
by the Company;
(v) the Security Agreement duly executed by the Company
and all documents necessary to perfect the security interest
of the Purchaser;
(vi) this Agreement duly executed by the Company;
(vii) Secretary's Certificate in a form reasonably
acceptable to Purchaser, with good standing certificates of
the Company and each Subsidiary as of a recent date;
(viii) Legal Opinion;
(ix) Copy of the Bank Consent for the Company to enter
into this new debt and all necessary waivers of Bank
covenants prohibiting such action;
(ix) such other documents as the Purchaser and/or its
legal counsel may request and/or deem necessary (including,
but not limited to, a Good Standing Certificate of recent
date from the Secretary of State of the State of
incorporation).
8.2 Conditions of Company's Obligations. The Company's obligation
-----------------------------------
to issue and sell the Securities to the Purchaser on the Closing Date
is subject to the fulfillment prior to or on the Closing Date of the
following conditions, any of which may be waived in whole or in part
by the Company:
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Purchaser under this Agreement shall be deemed
to have been made again on the Closing Date and shall then be
true and correct in all material respects.
(b) Compliance with Agreement. The Purchaser shall have
---------------------------
performed and complied with all agreements and conditions
required by this Agreement to be performed or complied with by
such Purchaser on or before the Closing.
(c) Approvals. The Purchaser shall have obtained any and all
---------
consents, waivers, approvals, Permits or authorizations, with or
by any Governmental Body or any other Person required for the
valid execution of this Agreement and the transactions
contemplated hereby including, but not limited to the approval
by.
(d) Payment of Purchase Price. The Purchaser shall have
----------------------------
delivered to the Company the Purchase Price specified in Section
-------
2.1 hereof (less commissions and all fees and expenses of
---
Purchaser counsel).
(e) No Injunction. No Governmental Body or any other Person
-------------
shall have issued an Order which shall then be in effect
restraining or prohibiting the completion of the transactions
contemplated hereby including, but not limited to, the,
Acquisition nor shall any such Order be threatened or pending.
(f) Closing Documents Provided By Purchaser. The Company
------------------------------------------
shall have received the following:
(i) this Agreement duly executed by the Purchaser;
(ii) the Registration Rights Agreement duly executed by
the Purchaser.
(iii) the Security Agreement executed by the Purchaser
8.3 Post Closing Obligations. Following the Closing Date:
--------------------------
(i) the Company shall file all necessary documents in
accordance with their obligations under the Security
Agreement;
(ii) Purchaser Counsel shall file all post closing Blue
Sky filings in the necessary jurisdictions.
9. MISCELLANEOUS.
9.1 Certain Definitions.
--------------------
"ACTION" shall have the meaning ascribed to such term in Section
------
4.20.
"AFFILIATE" of any Person means any Person that directly or
----------
indirectly controls, or is under control with, or is controlled by,
such Person. As used in this definition, "CONTROL" (including with its
-------
correlative meanings, "CONTROLLED BY" and "UNDER CONTROL WITH") shall
------------- ------------------
mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person (whether
through ownership of securities or partnership or other ownership
interests, by contract or otherwise).
"BUSINESS DAY" means any day except Saturday, Sunday and any day
-------------
which shall be a federal legal holiday or a day on which banking
institutions in the State of New York are authorized or required by
law or other governmental action to close.
"CLOSING" means the closing of the purchase and sale of the Notes
-------
and the Warrants pursuant to Section 3.1 on September 26, 2006, or
-----------
such other date as mutually agreed to by the parties.
"CLOSING DATE" means the date of the Closing.
-------------
"CODE" means the Internal Revenue Code of 1986, as amended, and
----
the rules and regulations promulgated thereunder.
"COMMISSION" means the Securities and Exchange Commission.
----------
"COMMON STOCK" means the shares of common stock, par value $0.001
------------
per share, of the Company.
"COMPANY COUNSEL" means Xxxxx X. Xxxx, Esq.
----------------
"CONTRACT" means any contract, agreement, indenture, note, bond,
--------
loan, instrument, lease, conditional sales contract, mortgage,
license, franchise, insurance policy, commitment or other arrangement
or agreement, whether written or oral.
"CONVERSION SHARES" means all shares of Common Stock issuable
------------------
upon conversion of the Notes.
"EMPLOYEE" means any current employee, office consultant, agent,
--------
officer or director of the Company.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
-------------
amended.
"EXHIBITS" shall mean the following exhibits attached hereto and
--------
made a part of this Agreement:
Exhibit A - Registration Rights Agreement
----------
Exhibit B - Form of Warrants
----------
Exhibit C - Form of Note
----------
Exhibit D - Security Agreement
----------
"GOVERNMENTAL BODY" means any government or governmental or
------------------
regulatory body thereof, or political subdivision thereof, whether
federal, state, local or foreign, or any agency, instrumentality or
authority thereof, or any court or arbitrator (public or private).
"LAW" means any federal, state, local or foreign law (including
----
law), statute, code, ordinance, rule, regulation or other requirement
or guideline.
"LEGAL PROCEEDING" means any judicial, administrative or arbitral
----------------
actions, suits, proceedings (public or private), claims or
governmental proceedings.
"LIEN" means any mortgage, pledge, security interest,
----
encumbrance, lien or charge of any kind, including, without
limitation, any conditional sale or other title retention agreement,
any lease in the nature thereof and the filing of or agreement to give
any financing statement under the Uniform Commercial Code (or similar
laws) of any jurisdiction and including any lien or charge arising by
statute or other law.
"MATERIAL ADVERSE CHANGE" means any material adverse change in
-------------------------
the business, assets, liabilities, prospects, properties, results of
operations or condition (financial or otherwise) of the Company and
its Subsidiaries, taken as a whole.
"MATERIAL ADVERSE EFFECT" means any event, circumstance,
-------------------------
condition, fact, effect, or other matter which has had or could
reasonably be expected to have a material adverse effect (i) on the
business, assets, liabilities, prospects, properties, results of
operations or condition (financial or otherwise) of the Company and
its Subsidiaries taken as a whole or (ii) on the ability of the
Company or its Subsidiaries to perform on a timely basis any material
obligation under this Agreement or to consummate the transactions
contemplated hereby.
"NOTES" shall have the meaning ascribed to such term in Section
-----
1.1.
"ORDER" means any order, injunction, judgment, decree, ruling,
-----
writ, assessment or arbitration award.
"PERMITS" means any approvals, authorizations, consents,
-------
licenses, permits or certificates by or of any Governmental Body.
"PERSON" means any individual, corporation, partnership, firm,
------
joint venture, association, joint-stock company, trust, unincorporated
organization, Governmental Body or other entity.
"REGISTRATION STATEMENT" means a registration statement meeting
-----------------------
the requirements set forth in the Registration Rights Agreement and
covering, among other items, the resale by the Purchaser of the
Underlying Shares.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
-------------------------------
Agreement, dated as of the date of this Agreement, among the Company
and the Purchaser, in the form of EXHIBIT A hereto.
----------
"RULE 144" means Rule 144 promulgated by the Commission pursuant
---------
to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission
having substantially the same effect as such Rule.
"SEC REPORTS" shall have the meaning ascribed to such term in
------------
Section 4.9.
------------
"SECURITIES ACT" means the Securities Act of 1933, as amended, or
--------------
any similar federal statute, and the rules and regulations of the
Securities and Exchange Commission thereunder, all as the same shall
be in effect at the time.
"SUBSIDIARY" shall have the meaning ascribed to such term in
----------
Section 4.4.
------------
"TAXES" means any federal, state, local or foreign income, gross
-----
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes
under Section 59A of the Code), customs duties, share capital,
franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales,
use, transfer, registration, value-added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"TRADING DAY" means (a) a day on which the Common Stock is traded
-----------
on a Trading Market, or (b) if the Common Stock is not quoted on a
Trading Market, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding to its
functions of reporting price); provided, that in the event that the
Common Stock is not listed or quoted as set forth in (a), and (b)
hereof, then Trading Day shall mean a Business Day;
"TRADING MARKET" means the following markets or exchanges on
---------------
which the Common Stock is listed or quoted for trading on the date in
question: the OTC Bulletin Board, the American Stock Exchange, the New
York Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap
Market.
"WARRANT SHARES" means all shares of Common Stock issuable upon
---------------
exercise of the Warrants.
"WARRANTS" shall have the meaning ascribed to such term in
--------
Section 1.1.
------------
9.2 Further Assurances. The Company and the Purchaser agree to
-------------------
execute and deliver such other documents or agreements as may be
necessary or desirable for the implementation of this Agreement and
the consummation of the transactions contemplated hereby.
9.3 Entire Agreement; Amendments and Waivers. This Agreement
--------------------------------------------
(including the schedules and exhibits hereto) represents the entire
understanding and agreement among the parties hereto with respect to
the subject matter hereof and can be amended, supplemented or changed,
and any provision hereof can be waived, only by written instrument
making specific reference to this Agreement signed by the parties
hereto. No action taken pursuant to this Agreement, including without
limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of
compliance with any representation, warranty, covenant or agreement
contained herein. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a
further or continuing waiver of such breach or as a waiver of any
other or subsequent breach. No failure on the part of any party to
exercise, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or remedy by such party preclude
any other or further exercise thereof or the exercise of any other
right, power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.
9.4 Construction. The headings herein are for convenience only,
------------
do not constitute a part of this Agreement and shall not be deemed to
limit or affect any of the provisions hereof. The language used in
this Agreement will be deemed to be the language chosen by the parties
to express their mutual intent, and no rules of strict construction
will be applied against any party.
9.5 Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the parties and their successors and
permitted assigns. The Company may not assign this Agreement or any
rights or obligations hereunder without the prior written consent of
each Purchaser. Any Purchaser, however, may assign any or all of its
Securities and/or rights under any of the Transaction Documents to any
Person, provided such transferee agrees in writing to be bound, with
respect to the transferred Securities and otherwise, by the provisions
hereof that apply to the "Purchaser."
9.6 No Third-Party Beneficiaries. This Agreement is intended for
----------------------------
the benefit of the parties hereto and their respective successors and
permitted assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other Person.
9.7 Governing Law. This Agreement shall be governed by and
--------------
construed exclusively in accordance with the internal laws of the
State of New York without regard to the conflicts of laws principles
thereof. The parties hereto hereby irrevocably agree that any suit or
proceeding arising directly and/or indirectly pursuant to or under
this Agreement, shall be brought solely in a federal or state court
located in the City, County and State of New York. By its execution
hereof, the parties hereby covenant and irrevocably submit to the in
--
personam jurisdiction of the federal and state courts located in the
--------
City, County and State of New York and agree that any process in any
such action may be served upon any of them personally, or by certified
mail or registered mail upon them or their agent, return receipt
requested, with the same full force and effect as if personally served
upon them in New York City. The parties hereto waive any claim that
any such jurisdiction is not a convenient forum for any such suit or
proceeding and any defense or lack of in personam jurisdiction with
-----------
respect thereto. In the event of any such action or proceeding, the
party prevailing therein shall be entitled to payment from the other
party hereto of all of its reasonable legal fees and expenses.
9.8 Headings; Interpretive Matters. The section headings of this
------------------------------
Agreement are for reference purposes only and are to be given no
effect in the construction or interpretation of this Agreement. No
provision of this Agreement will be interpreted in favor of, or
against, any of the parties hereto by reason of the extent to which
any such party or its counsel participated in the drafting thereof or
by reason of the extent to which any such provision is inconsistent
with any prior draft hereof or thereof.
9.9 Confidentiality. Each party hereto covenants and agrees to
---------------
treat any non-public information provided to it by the Company
concerning the business and finances of the Company ("CORPORATE
---------
INFORMATION") as confidential and agrees further that it will not use,
-----------
exploit, reproduce, disclose or provide Corporate Information to any
third-party (other than any agents of the parties who are bound by
substantially similar obligations of confidentiality) on its own
behalf or otherwise, except with the consent of the Company or as
required by law, legal process or any federal or state regulatory body
having jurisdiction over such party. The provisions of this Section
-------
9.9 shall not apply to any information which:
---
(a) was within the public domain prior to the time of
disclosure of Corporate Information to the receiving party or
which comes into the public domain other than as a result of a
breach by the party of this Section 9.9;
------------
(b) was rightfully acquired by the receiving party from a
third party without, to the knowledge of the receiving party, any
restriction or any obligation of confidentiality; or
(c) was independently developed by the receiving party
without any use or reference to the Corporate Information.
The provisions of this Section 9.9 shall survive the termination
-----------
of this Agreement, either in whole or as to any party, for a period of
two (2) years.
9.10 Notices. Any and all notices or other communications or
-------
deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on (a) the next
Business Day, if sent by U.S. nationally recognized overnight courier
service, or (b) upon actual receipt by the party to whom such notice
is required to be given. The address for such notices and
communications to the Company shall be as set forth below and for each
Purchaser shall be as set forth on the signature pages attached
hereto.
If to the Company:
XA, Inc.
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, President
Telephone: 000-000-0000
With a copy to:
Xxxxx X. Xxxx
Attorney at Law
0000 Xxxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: 000-000-0000
If to the Purchaser:
_____________________________
_____________________________
_____________________________
_____________________________
Telephone: ______________
With a copy to:
_____________________________
_____________________________
_____________________________
_____________________________
Telephone: ______________
All notices are effective upon receipt or upon refusal if properly
delivered.
9.11 Severability. If any provision of this Agreement is invalid
------------
or unenforceable, the balance of this Agreement shall remain in
effect.
9.12 Binding Effect; Assignment. This Agreement shall be binding
--------------------------
upon and insure to the benefit of the parties and their respective
successors and permitted assigns. No assignment of this Agreement or
of any rights or obligations hereunder may be made by the Company or
the Purchaser (by operation of law or otherwise) without the prior
written consent of the other parties hereto and any attempted
assignment without the required consents shall be void.
9.13 Counterparts. This Agreement may be executed simultaneously
------------
in two or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same
instrument.
9.14 Incorporation by Reference; Breach of Security Agreement.
----------------------------------------------------------
Any default and/or breach of the Security Agreement shall be
considered a breach and/or default of this Agreement. All covenants,
agreements and obligations of the Company in the Security Agreement
shall be expressly incorporated by reference herein as if made
directly herein and shall survive termination of this Agreement.
[The rest of this page has been intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have executed or have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first written above.
XA, INC.
By: /s/ Xxxxxx Xxxxxx
-----------------------------------
Xxxxxx Xxxxxx
Chief Executive Officer
PURCHASER'S SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT
By:/s/ G. Xxxxx Xxxxxxxx
-----------------------------------
Name:
Title:
0000 Xxxxx Xxx. 0-X Xxx Xxxx XX 00000
--------------------------------------
Address
000-000-0000
--------------------------------------
Facsimile Number
$100,000
-------------------------------------
Amount Invested
SCHEDULE 1.1
------------
PURCHASER
NAME AND ADDRESS PRINCIPAL NOTE WARRANT SHARES
OF EACH PURCHASER AMOUNT PURCHASED TO BE RECEIVED
----------------- ---------------- --------------
G. Xxxxx Xxxxxxxx $100,000 15,000
0000 Xxxxx Xxx. 0-X
Xxx Xxxx, XX 00000
