LENCO MOBILE INC. SECURITIES PURCHASE AND AMENDMENT AGREEMENT
This
Securities Purchase and Amendment Agreement (this "Agreement") is made as of
November 30, 2009 by and between (i) Lenco Mobile Inc., a Delaware
corporation (the "Company") and AdMax Media
Inc., a Nevada corporation wholly owned by the Company ("AdMax") and (ii) Agile
Opportunity Fund, LLC, a Delaware limited liability company (the "Investor").
WHEREAS,
the Investor and Superfly Advertising, Inc., a Delaware corporation, ("Superfly") entered into a
certain Securities Purchase Agreement dated as January 16, 2009 pursuant to
which, among other things, the Investor purchased from Superfly an Original
Issue Discount Secured Promissory Note in the face amount of $718,500.00 (the
"Superfly
Note");
WHEREAS,
a subsidiary of the Company purchased certain assets of Superfly pursuant to a
certain Asset Purchase Agreement dated as of February 28, 2009 (the "Superfly Purchase
Agreement");
WHEREAS,
in connection with the sale of assets under the Superfly Purchase Agreement, the
Company, Superfly and the Investor restructured the indebtedness of Superfly to
the Investor pursuant to a Securities Purchase and Restructuring Agreement dated
as of July 23, 2009 (the "Original Securities Purchase
Agreement");
WHEREAS,
pursuant to the Original Securities Purchase Agreement, the Company, among other
things, issued to the Investor, (i) a Secured Convertible Promissory Note
in the principal amount of $718,500.00 in exchange for the Superfly Note (the
"July 2009 Note"),
(ii) 25,000 shares of the common stock, par value $.001 (the "Common Stock"), of the Company
(the "July 2009 Incentive
Shares"), and (iii) warrants to purchase up to 600,000 shares of
Company Common Stock (the "July 2009
Warrant");
WHEREAS,
in connection with the Original Securities Purchase Agreement, and as security
for repayment of the July 2009 Note, Company executed a Stock Pledge
Agreement in favor of the Investor (the "Pledge Agreement") and AdMax
executed a Security Agreement in favor of the Investor (the "Security Agreement");
and
WHEREAS;
the Original Securities Purchase Agreement, the Pledge Agreement, the Security
Agreement, and the July 2009 Note are collectively referred to herein as
the "Existing Transaction
Documents" and together with this Agreement and all documents or
instruments executed in connection herewith, the "Loan Documents");
and
WHEREAS,
the Company desires to sell to the Investor, and the Investor desires to
purchase from the Company, an additional Original Issue Discount Convertible
Secured Promissory Note and make certain amendments to the Existing Transaction
Documents as set forth herein.
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In
consideration of the mutual covenants and agreements set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. PURCHASE
AND SALE OF SECURITIES.
1.1 Sale
and Issuance of Note, and Warrants; Amendment of Existing Transaction
Documents.
(a) Subject
to the terms and conditions of this Agreement and in reliance on the
representations and warranties set forth or referred to herein, the Company
hereby agrees to sell and issue to the Investor, and the Investor hereby agrees
to purchase from the Company, at the Closing (as hereinafter defined), an
Original Issue Discount Secured Promissory Note in the face amount of
$460,000.00 for a purchase price of $400,000.00 (the "Purchase Price"), such Secured
Promissory Note to be in the form attached hereto as Exhibit A (the
"New Note" and together
with the July 2009 Note, each a "Note" and collectively, the
"Notes") with a maturity
date of November 29, 2010 (the "Maturity
Date"). The New Note, including accrued but unpaid interest
thereon, will be convertible into shares of Common Stock at an initial
conversion price of $3.25 per share, subject to adjustment as provided therein,
at the option of the holder(s) of the New Note (the "New Note
Shares").
(b) In
connection with the purchase and sale of the Note hereunder and in addition
thereto, the Company shall issue to the Investor, as an additional incentive for
the purchase of the Note at Closing 20,000 shares of Company Common Stock (the
"New Incentive
Shares").
(c) In
connection with the purchase and sale of the Note hereunder and in addition
thereto, the Company further agrees to issue to the Investor as an additional
incentive for the purchase of the Note at Closing, (i) warrants to purchase
75,000 shares of Common Stock, at the initial exercise price of $3.25 per share
and in the form attached as Exhibit B-1
hereto (the "Series A
Warrants") and (ii) warrants to purchase 75,000 shares of Common
Stock at an initial exercise price of $3.40 per share and in the form attached
as Exhibit B-2
hereto (the "Series B
Warrants") (the Series A Warrants and Series B Warrants being
collectively referred to as the "New Warrants" and together
with the July 2009 Warrant, each a "Warrant" and collectively, the
"Warrants")), with the
initial exercise prices subject to adjustment as provided
therein. The New Note, the New Note Shares, the New Incentive Shares
and the New Warrants are collectively referred to herein as (the "New Securities").
(d) The July
2009 Note is hereby amended by amending and extending the Maturity Date set
forth therein until July 16, 2010 (the "Extended Maturity Date");
provided, that the Company shall pay $43,500.00 in Original Issue Discount under
the July 2009 Note on the Extended Maturity Date. The July 2009 Note
is hereby further amended by deleting the existing Section 13 in its entirety
and replacing said Section 13 with the following:
"13. Governing
Law; Waiver of Jury Trial. This Note and the provisions hereof are to
be construed according to and are governed by the laws of the State of New York,
without regard to principles of conflicts of laws thereof. The
Company agrees that the New York State Supreme Court located in the County of
Nassau, State of New York shall have exclusive jurisdiction in connection with
any dispute concerning or arising out of this Note or otherwise relating to the
parties relationship. In any action, lawsuit or proceeding brought to
enforce or interpret the provisions of this Note and/or arising out of or
relating to any dispute between the parties, the Holder shall be entitled to
recover all of its costs and expenses relating collection and enforcement of
this Note (including without limitation, reasonable attorney’s fees and
disbursements) in addition to any other relief to which the Holder may be
entitled.
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THE
COMPANY HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF
OR IN ANY WAY RELATING TO THIS NOTE."
(e) The
Security Agreement and the Pledge Agreement are hereby amended by amending the
definition of the term "Obligations" to read in its entirety as
follows: "Obligations" shall mean all obligations of the Company to
the Secured Party under the July 2009 Note, the New Note and the other Loan
Documents executed in connection therewith, whether now existing or hereafter
arising and whether for principal, interest, costs, fees or
otherwise." The Security Agreement is further amended by amending
Section 21 thereof (Termination) to include and extend to the New
Note. Consequently, and upon the taking of all actions to be taken at
the Closing pursuant to Section 1.2 hereof, repayment of each of the
July 2009 Note and of the New Note and the performance by the Company of
all its obligations thereunder shall be secured by a first priority lien and
security interest in the collateral under the Security Agreement and the Pledged
Shares under the Pledge Agreement.
(f) The
Existing Transaction Documents are hereby further amended: (i) to include
the obligations of the Company under this Agreement as obligations of the
Company for all purposes under the Existing Transaction Documents and
(ii) as further necessary to conform them to any potentially conflicting
provisions contained in this Agreement, the provisions of this Agreement
prevailing in any such conflict. Except as specifically amended
hereby, all of the terms and provisions of the Existing Transaction Documents
are and shall remain and continue in full force and effect.
1.2 Closing. The closing of
the purchase, sale and issuance of the Securities shall take place at the
offices of Xxxxxxxxx Ball Xxxxxx Xxxxxx & Xxxxxxxxxx, LLP ("WBEMS"), 0000 XXX Xxxxx,
Xxxxxxxxx, Xxx Xxxx 00000, simultaneous with the execution hereof (the "Closing"). At the
Closing, (i) the Company shall deliver to the Investor the duly executed New
Note, the duly executed New Warrants and duly executed stock certificates
representing the New Incentive Shares against delivery by the Investor to the
Company of the Purchase Price by wire transfer of the amount thereof to the
Company’s account or by such other method agreed to between the Investor and the
Company.
1.3 Fees
and Expenses. At the Closing,
the Company shall pay all fees due to third party agents and expenses incurred
by the Investor in connection with the transaction hereunder, including, without
limitation (a) $20,000.00 to Agile Investments, LLC for due diligence
costs, structuring and monitoring fees; and (b) the legal fees of WBEMS
estimated at $7,500.00 (plus disbursements, if any).
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1.4 Defined
Terms Used in this Agreement. In addition to
the terms defined elsewhere in this Agreement, the following terms used in this
Agreement shall be construed to have the meanings set forth below.
"Approvals" means,
collectively, all actions, approvals, consents, waivers, exemptions, Orders,
authorizations, registrations, declarations, filings and
recordings.
"Business or Condition" of the
Company means the business, operations, assets, properties, earnings, prospects
or condition (financial or other) of the Company.
"Exchange Act" means the
Securities Exchange Act of 1934, as amended.
"Governmental Body" means any
federal, state, municipal, local or other governmental department, commission,
board, bureau, agency, instrumentality, political subdivision or taxing
authority, of any country.
"Intellectual Property" any
patents, patent applications, trademarks, trademark applications, service marks,
service xxxx applications, trade names, copyrights, manufacturing processes,
formulae, trade secrets and know-how of a Person.
"Material Adverse Change; Material
Adverse Effect; Materially Adverse" in, on or with respect to, the
Company, shall mean a material adverse change in the Company's Business or
Condition, a material adverse effect on the Company's Business or Condition or
an event which is materially adverse to the Company's Business or
Condition.
"Order" means any order, writ,
injunction, decree, judgment, award, determination, direction or demand by a
Governmental Body, arbitrator or court.
"Person" means any individual,
corporation, association, partnership, joint venture, limited liability company,
trust or estate, organization, business, government or agency or political
subdivision thereof, or any other entity.
"Public Offering" means any
offering by the Company of its capital stock or equity securities to the public
pursuant to an effective registration statement under the Securities Act or any
comparable statement under any similar federal statute then in
force.
"Sale of the Company" means
either (i) the sale, lease, transfer, conveyance or other disposition, in
one or a series of related transactions, of all or substantially all of the
assets of the Company or (ii) a transaction or series of transactions
(including, without limitation, by way of merger, consolidation, or sale of
equity) the result of which is that the holders of the Company's outstanding
voting securities immediately prior to such transactions are after giving effect
to such transactions no longer, in the aggregate, the "beneficial owners" (as
such term is defined in Rule 13d-3 and Rule 13D-5 promulgated under the Exchange
Act), directly or indirectly through one or more intermediaries, of more than
50% of the voting power of the outstanding voting securities of the
Company.
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"Securities Act" means the
Securities Act of 1933, as amended.
1.5 Beneficial
Ownership Limitations.
(a) Notwithstanding
anything to the contrary contained herein, at no time shall the Investor
together with any "affiliates" of the Investor (as defined in the Exchange Act)
"beneficially own" in excess of 9.9% of the then issued and outstanding
shares. Accordingly, the Investor (and its affiliates) will not
exercise any portion of the Warrants issued to it in violation of the
foregoing.
(b) To the
extent that the limitation contained in this Section 1.5 applies, the
determination of whether a Warrant is exercisable (in relation to other
securities owned by the Investor) and which Warrant and which portion of the
Warrant is exercisable shall be in the sole discretion of the
Investor. To ensure compliance with this restriction, the Investor
will be deemed to represent to the Company each time it delivers a Notice of
Exercise under a Warrant that such Notice of Exercise does not violate the
restrictions set forth in this Section 1.5 and the Company shall have no
obligation to verify or confirm the accuracy of such
determination. For purposes of this Section 1.5, in determining
the number of outstanding shares of Common Stock, the Investor may rely on the
number of outstanding shares of Common Stock as reflected in (x) the
Company's most recent Form 10-Q or Form 10-K, as the case may be, (y) a
more recent public announcement by the Company or (z) any other notice by
the Company or the Company's Transfer Agent setting forth the number of shares
of Common Stock outstanding. Upon the written or oral request of an
Investor, the Company shall within two business days confirm orally and in
writing to an Investor the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or exercise of
securities of the Company by the Investor or its affiliates since the date as of
which such number of outstanding shares of Common Stock was
reported.
2. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
Except as
set forth on Schedule 2 to this Amendment, the Company hereby represents
and warrants to the Investor that the representations and warranties made by the
Company to Agile in the Existing Transaction Documents are true and correct as
of the date hereof as if made on and as of the date hereof and with respect to
this Amendment and the New Securities, except that representations with respect
to the capitalization of the Company are subject to the issuance of securities
pursuant to the Existing Transaction Documents, this Agreement and the New
Note.
3. REPRESENTATIONS
AND WARRANTIES OF THE INVESTOR.
The
Investor hereby represents and warrants to the Company that the representations
and warranties made by the Investor to the Company in the Original Securities
Purchase Agreement are true and correct as of the date hereof as if made on and
as of the date hereof and with respect to this Agreement and the New
Securities.
4. MISCELLANEOUS.
4.1 Put
Right for Series B Warrant. Commencing
on the earlier to occur of (a) the Maturity Date or (b) the payment in
full of the face amount of the Note, and continuing for a period of six
(6) months therefrom (the last day of such six (6) month period being
referred to herein as the "Option Expiration Date"), the
Investor shall have the right, at its sole option and demand, immediately upon
ten days prior written notice to the Company, to sell the Series B Warrant or
any portion thereof back to the Company for a total consideration equal to all
or a pro-rata portion of sixty thousand dollars ($60,000) if the Investor were
to "put" to the Company the entire Series B Warrant (the "Put Right").
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4.2 Registration
Rights. Each
time the Company proposes to register any of its securities under the Securities
Act whether for its own account or for the account of holders of its securities
or both (except with respect to registration statements on Forms X-0, X-0 or any
successor or similar form or "Rule 145" transactions), it shall include in the
registration initiated by the Company all of the shares of Common Stock issued
or issuable to the Investor hereunder or under the other Loan Documents,
(collectively, "Registrable
Stock"). If any particular registration to be effected
pursuant to this Section 4.2
shall be, in whole or in part, an underwritten public offering of Common
Stock for the account of the Company, the number of shares of Registrable Stock
to be included in such an underwriting on behalf of the Investor may be reduced
if, and to the extent that, the managing underwriter shall be of the opinion (a
written copy of which shall be delivered to the Investor) that the inclusion of
all of the shares of Registrable Stock requested to be included in such
underwriting by the Investor would materially and adversely affect the marketing
of the Common Stock to be sold by the Company under such registration
statement. The Company shall comply with all legal requirements to
maintain "evergreen" any registration statement that includes any Registrable
Stock for so long as any Warrants are outstanding or any Registrable Stock is
outstanding that has not yet been sold thereunder.
4.3 Use
of Proceeds. The parties agree
that the net proceeds from the sale of the New Note shall be used to pay the
Original Issue Discount of $93,750.00 payable under the Existing Transaction
Documents and the remainder shall be used for working capital
purposes.
4.4 Successors
and Assigns. This Agreement
may not be assigned by the Company without the prior written consent of
Investor. The terms and conditions of this Agreement shall inure to
the benefit of and be binding upon the respective successors and permitted
assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
4.5 Governing
Law. This Agreement
and all acts and transactions pursuant hereto and the rights and obligations of
the parties hereto shall be governed, construed and interpreted in accordance
with the laws of the State of New York, without giving effect to principles of
conflicts of law. Each of the parties hereto submits to the personal
jurisdiction of and each agrees that all proceedings relating hereto shall be
brought in state courts located within Nassau County in the State of New
York.
4.6 Counterparts. This Agreement
may be executed in any number of counterparts, each of which shall be deemed an
original and all of which together shall constitute one instrument.
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4.7 Titles
and Subtitles. The titles and
subtitles used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
4.8 Notices. Any notice
required or permitted by this Agreement shall be in writing and shall be deemed
sufficient upon delivery, when delivered personally or by overnight courier or
sent by fax (upon customary confirmation of receipt), or 48 hours after being
deposited in the U.S. mail, as certified mail, with postage prepaid, addressed
to the party to be notified at such party's address as set forth on the
signature page hereto, or as subsequently modified by written notice, and if to
the Investor, with a copy to Xxxxxxxxx Ball Xxxxxx Xxxxxx and Xxxxxxxxxx, LLP,
0000 XXX Xxxxx, Xxxxxxxxx, Xxx Xxxx 00000, Attn: Xxxx X. Xxxxxx,
Esq.
4.9 Entire
Agreement. This Agreement
and all references herein constitutes the entire agreement between the parties
hereto pertaining to the subject matter hereof, and any and all other written or
oral agreements relating to the subject matter hereof existing between the
parties hereto are expressly canceled. This Agreement may be modified
or amended only with the written consent of all of the parties
hereto.
4.10 Reimbursement
of Expenses. In any action or
proceeding relating to this Agreement, the prevailing party shall be entitled to
reimbursement from the non-prevailing party for any reasonable legal fees and
disbursements incurred by the prevailing party in connection with such action or
proceeding in enforcement of or protection of any of its rights under this
Agreement, the Note or any other Loan Document
4.11 Facsimile
Signature. In
the event that any signature is delivered by facsimile transmission, PDF,
electronic signature or other similar electronic means, such signature shall
create a valid and binding obligation of the party executing (or on whose behalf
such signature is executed) with the same force and effect as if such signature
page were an original thereof.
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IN
WITNESS WHEREOF, the parties have duly executed this Securities Purchase
Agreement as of the date first written above.
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By: /s/ Xxxxxxx
Xxxxxxxxx
Name:
Xxxxxxx Xxxxxxxxx
Title:
Chief Executive Officer
Address:
000
Xxxxxxx Xx.
Xxxxx
Xxxxxxx, XX 00000
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ADMAX
MEDIA INC.
By: /s/ Xxxxxx
Xxxxx
Name:
Xxxxxx Xxxxx
Title:
Chief Financial Officer
Address:
000
Xxxxxxx Xx.
Xxxxx
Xxxxxxx, XX 00000
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AGILE
OPPORTUNITY FUND, LLC
By: AGILE
INVESTMENTS, LLC, Managing Member
By: /s/ Xxxxx X.
Xxxxxx
Name: Xxxxx
X. Xxxxxx
Title: Managing
Member
Address:
0000
Xxxx Xxxxxxx Xxxx, Xxxxx 000X
Xxxxxxxx,
XX 00000
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