STOCK PURCHASE AGREEMENT
Exhibit
10.1
This
Stock Purchase Agreement (this “Agreement”) is made
as of January 22, 2008, by and between Tap It, Inc., a Delaware corporation
(the
“Company”), and
Winsonic Digital Media Group, Ltd., a Nevada corporation (the “Purchaser”). The
Company and the Purchaser are sometimes referred to herein as the “Parties”
or a “Party”.
THE
PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase
and Sale of Common
Stock.
1.1 Sale
and Issuance of Common
Stock.
(a) Subject
to the terms and conditions of this Agreement, the Purchaser agrees to purchase
at the Initial Closing (as defined below), and the Company agrees to sell
and
issue to Purchaser at the Initial Closing, 2,291,667 shares of the Company’s
common stock, par value $0.001 per share (the “Common Stock”), for
the total purchase price of $550,000 (the “Initial Purchase
Price”). The shares Common Stock sold to Purchaser at the
Initial Closing are hereinafter referred to as the “Initial
Shares.”
(b) At
any
time prior to February 28, 2008, the Purchaser shall have the option (the
“First Option”),
exercisable upon notice duly given to the Company, at the Second Closing
(as
defined below), to (i) purchase a number of shares of Common Stock not to
exceed
6,041,667 (the “Second
Shares”) for the purchase price of $0.24 per share and (ii) to receive
Default Shares (as defined below) pursuant to Section 1.6, if
applicable. The aggregate amount to be paid by the Purchaser for the
Second Shares is hereinafter referred to as the “Second Purchase
Price.” Any shares of Common Stock that the Purchaser has a
right to purchase pursuant to this Section 1.1(b) and that the Purchaser
does
not elect to purchase at the Second Closing are hereinafter referred to as
the
“Unexercised
Shares.”
(c) At
any time prior to May 1, 2008, the Purchaser shall have the option (the “Second Option”),
exercisable upon notice duly given to the Company, at the Third Closing (as
defined below), to (i) purchase a number of shares of Common Stock not to
exceed
the Unexercised Shares (the “Third Shares”) for
the purchase price of $0.24 per share and (ii) to receive Default Shares
pursuant to Section 1.6, if applicable. The aggregate amount to be
paid by the Purchaser for the Third Shares is hereinafter referred to as
the
“Third Purchase
Price.” Any shares of Common Stock that the Purchaser has a
right to purchase pursuant to this Section 1.1(c) and that the Purchaser
does
not elect to purchase at the Third Closing shall be deemed Unexercised
Shares.
(d) At
any
time prior to the later of August 1, 2008 or the date that is thirty (30)
days
after the delivery of the Audited Statements pursuant to Section 4.1 hereof,
the
Purchaser shall have the option (the “Third Option”),
exercisable upon notice duly given to the Company, at the Fourth Closing
(as
defined below), to (i) purchase a number of shares of Common Stock not to
exceed
the Unexercised Shares (the “Fourth Shares,”
and,
together with the
Initial Shares, the Second Shares and the Third Shares, the “Purchased Shares”)
for the
purchase
price of $0.24 per share and (ii) to receive Default Shares pursuant to Section
1.6, if applicable. The aggregate amount to be paid by the Purchaser
for the Fourth Shares is hereinafter referred to as the “Fourth Purchase
Price”, and, together with the Initial Purchase Price, the Second
Purchase Price and the Third Purchase Price, the “Aggregate Purchase
Price.”
1.2 Initial
Closing. The purchase and sale of the Initial Shares (the
“Initial
Closing”) shall take place on January 31, 2008 (or such later date as the
Company and the Purchaser mutually agree in writing) (the “Initial Closing
Date”). At the Initial Closing, the Company shall issue to the
Purchaser certificates for the Initial Shares registered in the Purchaser’s name
in the records of the Company, against payment by the Purchaser of the Initial
Purchase Price for such Initial Shares in immediately available funds,
including, without limitation, by offsetting such Initial Purchase Price
by
tendering to the Company for cancellation one or more promissory notes in
substantially the form attached hereto as Exhibit A (a “Promissory
Note”).
1.3 Exercise
of First Option;
Second Closing.
(a) In
the
event the Purchaser exercises the First Option upon notice duly given to
the
Company, and subject to the satisfaction (or waiver) of the terms and conditions
set forth in Sections 5.2 and 6.2 of this Agreement with respect to the Second
Closing, the Purchaser agrees to purchase at the Second Closing (as defined
below) and the Company agrees to issue and sell to the Purchaser at the Second
Closing, the Second Shares and issue Default Shares, if
applicable. Notwithstanding the foregoing, in the event the Purchaser
shall have exercised the First Option prior to the Initial Closing, the parties
may agree that the purchase and sale of the Second Shares shall take place
at
the Initial Closing.
(b) Subject
to the last sentence of the preceding paragraph, the closing of the purchase
and
sale of the Second Shares (the “Second Closing”)
shall take place at 10 a.m. Eastern Standard Time one (1) business day following
the satisfaction (or waiver) of the terms and conditions set forth in Sections
5.2 and 6.2 of this Agreement with respect to the Second Closing (or such
later
date as the Company and the Purchaser mutually agree in writing) (the “Second Closing
Date”). At the Second Closing, the Company shall issue to the
Purchaser certificates for the Default Shares, if applicable and the Second
Shares, in each case, registered in the Purchaser’s name in the records of the
Company, against payment by the Purchaser of the Second Purchase Price for
such
Second Shares in immediately available funds, including, without limitation,
by
offsetting such Second Purchase Price by tendering to the Company for
cancellation one or more Promissory Notes.
1.4 Exercise
of Second Option;
Third Closing
(a) In
the
event the Purchaser exercises the Second Option upon notice duly given to
the
Company, and subject to the satisfaction (or waiver) of the terms and conditions
set forth in Sections 5.3 and 6.3 of this Agreement with respect to the Third
Closing, the Purchaser agrees to purchase at the Third Closing (as defined
below) and the Company agrees to issue and sell to the Purchaser at the Third
Closing, the Third Shares and issue Default Shares,
if applicable. Notwithstanding the foregoing, in the event the
Purchaser shall have exercised the Second Option prior to the Initial Closing
or
the Second Closing, as the case may
be,
the
parties may agree that the purchase and sale of the Third Shares shall take
place at the Initial Closing or the Second Closing, as applicable.
(b) Subject
to the last sentence of the preceding paragraph, the closing of the purchase
and
sale of the Third Shares (the “Third Closing”) shall
take place at 10 a.m. Eastern Standard Time one (1) business day following
the
satisfaction (or waiver) of the terms and conditions set forth in Sections
5.3
and 6.3 of this Agreement with respect to the Third Closing (or such later
date
as the Company and the Purchaser mutually agree in writing) (the “Third Closing
Date”). At the Third Closing, the Company shall issue to the
Purchaser certificates for the Default Shares, if applicable and the Third
Shares, in each case, registered in the Purchaser’s name in the records of the
Company, against payment by the Purchaser of the Third Purchase Price for
such
Third Shares in immediately available funds including, without limitation,
by
offsetting such Third Purchase Price by tendering to the Company for
cancellation one or more Promissory Notes.
1.5 Exercise
of Third Option;
Fourth Closing
(a) In
the
event the Purchaser exercises the Third Option upon notice duly given to
the
Company, and subject to the satisfaction (or waiver) of the terms and conditions
set forth in Sections 5.4 and 6.4 of this Agreement with respect to the Fourth
Closing, the Purchaser agrees to purchase at the Fourth Closing (as defined
below) and the Company agrees to issue and sell to the Purchaser at the Fourth
Closing, the Fourth Shares and issue Default Shares, if
applicable. Notwithstanding the foregoing, in the event the Purchaser
shall have exercised the Third Option prior to the Initial Closing, the Second
Closing, or the Third Closing as the case may be, the parties may agree that
the
purchase and sale of the Fourth Shares shall take place at the Initial Closing,
the Second Closing, or the Third Closing, as applicable.
(b) Subject
to the last sentence of the preceding paragraph, the closing of the purchase
and
sale of the Fourth Shares (the “Fourth Closing”)
shall take place at 10 a.m. Eastern Standard Time one (1) business day following
the satisfaction (or waiver) of the terms and conditions set forth in Sections
5.4 and 6.4 of this Agreement with respect to the Fourth Closing (or such
later
date as the Company and the Purchaser mutually agree in writing) (the “Fourth Closing
Date”). At the Fourth Closing, the Company shall issue to the
Purchaser certificates for the Default Shares, if applicable and the Fourth
Shares, in each case, registered in the Purchaser’s name in the records of the
Company, against payment by the Purchaser of the Fourth Purchase Price for
such
Fourth Shares in immediately available funds including, without limitation,
by
offsetting such Fourth Purchase Price by tendering to the Company for
cancellation one or more Promissory Notes.
1.6 Default
Shares. In the event that there exists an Event of Default (as
defined in the Promissory Note) with respect to any Promissory Note, the
Purchaser shall have the option, at the Second Closing, the Third Closing
or the
Fourth Closing, to receive an amount of shares of Common Stock equal to the
product of (a) the aggregate amount of Default Interest (as defined in such
Promissory Note) due and payable under such Promissory Note, multiplied by
(b) 0.24 (the “Default
Shares”). Purchaser’s receipt of such Default Shares shall be
deemed payment
of the Default Interest on such Promissory Note and shall be in addition
to, and
shall
not
limit
or reduce the amount of, any Purchased Shares that Purchaser is entitled
to
purchase pursuant to this Agreement.
2. Representations
and
Warranties of the Company. The Company hereby represents and
warrants to the Purchaser that:
2.1 Organization,
Good Standing
and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State
of
Delaware and has all requisite power and authority to carry on its business
as
now conducted and as proposed to be conducted and to enter into and perform
this
Agreement and the transactions contemplated hereby. The Company is
duly qualified to transact business and is in good standing in each jurisdiction
in which the failure so to qualify would have a material adverse effect on
its
business or properties.
2.2 Capitalization.
(a) Capital
Stock. The authorized capital stock of the Company is
comprised of: (i) 30,000,000 shares of Common Stock and (ii)
10,000,000 shares of preferred stock, par value $0.001 per share. On
the Initial Closing Date, before giving effect to the transactions contemplated
hereby, (i) the Company will have no outstanding capital stock other than
15,031,220 shares of Common Stock, (ii) the Company will have reserved 6,041,667
shares of Common Stock for issuance to the Purchaser upon the exercise of
the
First Option, the Second Option and the Third Option, and (iii) the Company
will
have reserved a sufficient number of shares of Common Stock for issuance
to the
Purchaser of Default Shares for the payment of any Default
Interest.
(b) Options,
Etc. Except for the First Option, the Second Option and the
Third Option and as set forth on Schedule 2.2(b) (the
“Options”),
there are no outstanding options, warrants, rights (including conversion
and
preemptive rights and rights of first refusal and similar rights) or agreements
(other than this Agreement) for the purchase or acquisition from or by the
Company of any shares of its capital stock. No outstanding options,
warrants or other securities exercisable for or convertible into Common Stock
or
any other equity securities of the Company provide for acceleration or vesting,
or require anti-dilution adjustments, by reason of the consummation of the
transactions contemplated hereby, or any change of control, merger, sale
of
assets or similar transaction.
(c) Voting
Agreements. The Company is not a party or subject to any
agreement or understanding and, to the best of the Company's knowledge, there
is
no agreement or understanding between any persons or entities that affects
or
relates to the voting or giving of written consent with respect to any security
of the Company or voting by a director of the Company.
2.3 Subsidiaries. The
Company does not own or control, directly or indirectly, any interest in
any
other corporation, association or other business entity.
2.4 Authorization. All
corporate action on the part of the Company, its officers, directors and
shareholders necessary for the authorization, execution and delivery of
this Agreement,
the performance of all obligations of the Company hereunder and the
authorization,
issuance
(or reservation for issuance) and delivery of the Purchased Shares has been
taken or will be taken prior to the closing of any sale of Purchased Shares,
and
the Agreement, upon execution by the Company, will constitute a valid and
legally binding obligation of the Company, enforceable in accordance with
its
terms, except (i) as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally and (ii) as enforceability
may be limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.
2.5 Valid
Issuance of Common
Stock.
(a) The
Purchased Shares, when issued, sold and delivered in accordance with the
terms
hereof for the consideration expressed herein, (i) will be duly and validly
issued, fully paid and nonassessable, (ii) will be free of any pledges, liens,
security interests, claims or other encumbrances of any kind, and (iii) shall
be
issued in compliance with all applicable federal and state securities
laws.
(b) The
outstanding shares of Common Stock are all duly and validly authorized and
issued, fully paid and nonassessable, and were issued in compliance with
all
applicable federal and state securities laws.
(c) The
aggregate number of persons in the State of Georgia who have purchased capital
stock of the Company during the twelve (12) month period ending on the date
of
the Initial Closing, the Second Closing, the Third Closing and the Fourth
Closing is less than 15, exclusive of (i) the Purchaser, and (ii) persons
who
acquired capital stock of the Company in transactions which were not subject
to,
or were exempt from registration under, the Georgia Securities Act of 1973,
as
amended.
(d) The
capital stock of the Company has not been offered for sale by means of any
form
of general or public solicitations or advertisements, including, but not
limited
to: (i) publicly disseminated advertisements or sales literature,
through the mails or otherwise; (ii) any advertisement, article, notice,
or
other communication published in any newspaper, magazine, or other similar
media, or broadcast over television or radio; or (iii) any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising.
2.6 Governmental
Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state, local or provincial governmental authority, domestic or foreign,
on the part of the Company is required in connection with the consummation
of
the transactions contemplated by the Agreement.
2.7 Litigation. There
is no action, suit or proceeding pending or, to the knowledge of the Company,
threatened against the Company or any of the officers, directors or affiliates
of the Company, nor is the Company aware that there is any basis for the
foregoing. The Company is not a party or subject to the provisions of
any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality. There is no action, suit,
proceeding
or investigation by the Company currently pending or which the Company intends
to initiate.
2.8 Intellectual
Property. The Company owns 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 its business as now conducted or as proposed to be
conducted. The Company does not have any knowledge of any
infringement by the Company of any trademark, trade name right, patents,
patent
right, copyright, invention, license, service name, service xxxx, service
xxxx
registration, trade secret or other similar rights of others, and, to the
knowledge of the Company there is no claim, action or proceeding being made
or
brought against, or being threatened against, the Company regarding any
trademark, trade name, patent, patent right, invention, copyright, license,
service name, service xxxx, service xxxx registration, trade secret or other
infringement; and the Company is unaware of any facts or circumstances which
might give rise to any of the foregoing.
2.9 No
Conflicts. The Company is not in violation or default of any
provisions of its certificate of incorporation or bylaws (the “Charter Documents”),
or in any material respect of any instrument, judgment, order, writ, decree,
contract or agreement to which it is a party or by which it is bound or,
of any
provision of federal, state or local statute, rule or regulation applicable
to
the Company. The execution, delivery and performance of the Agreement
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, contract or agreement, or require
any
consent, waiver or approval thereunder, or constitute an event which results
in
the creation of any lien, charge or encumbrance upon either assets the
Company.
2.10 Title
to Property and
Assets. The Company owns its property and assets free and
clear of all mortgages, liens, loans and encumbrances, except such encumbrances
and liens which arise in the ordinary course of business and do not materially
impair the Company’s ownership or use of such property or
assets. With respect to the property and assets it leases, the
Company is in compliance with such leases and holds a valid leasehold interest
free of any liens, claims or encumbrances.
2.11 Use
of
Proceeds. The net proceeds from the sale of the Purchased
Shares to the Purchaser, after deducting any expenses and/or amounts paid
for
indemnification pursuant to Section 6 of this Agreement, shall be used
exclusively for the purposes set forth in Exhibit B
hereof.
2.12 Registration
Rights. The Company has not granted or agreed to grant any
registration rights, including piggyback and/or demand registration rights,
to
any person or entity.
2.13 Disclosure. The
Company has fully provided the Purchaser with all the information which the
Purchaser has requested in connection with its decision to purchase the
Purchased Shares and all information which the Company believes is reasonably
necessary to enable
such Purchaser to make such decision. Neither this Agreement nor any
other statements or certificates made or delivered in connection herewith
contains any untrue statement of a
material
fact or omits to state a material fact necessary to make the statements herein
or therein not misleading.
2.14 Financial
Statements.
(a) Schedule
2.14
contains true, correct and complete copies of the (i) the unaudited balance
sheet of the Company as of December 31, 2006, and the unaudited statements
of
income and cash flows of the Company for the period then ended, and (ii)
the
unaudited balance sheet of the Company and the Subsidiaries as of December
31,
2007, and the unaudited statements of income and cash flow of the for the
period
then ended (the “Financial
Statements”) The Financial Statements are in conformity with
generally accepted accounting principles (“GAAP”) and have
been
prepared from, and are in accordance with, the books and records of the Company,
which books and records have been maintained on a basis consistent with the
past
practices of the Company. Each balance sheet included in the
Financial Statements is true, correct and complete and fairly presents the
financial position of the Company as of the date of such balance sheet, and
each
statement of income and cash flows included in the Financial Statements is
true,
correct and complete and fairly presents the results of operations and changes
in cash flows, as the case may be, of the Company for the periods set forth
therein. Each balance sheet and each statement of income and cash
flows included in the Financial Statements shall not be materially adverse
from
the Purchaser’s standpoint, to the Audited Statements as of the same date,
delivered in accordance with Section 4.1.
(b) The
Audited Statements (as defined in Section 4.1) will be in conformity with
GAAP
and will be prepared from, and will be in accordance with, the books and
records
of the Company, which books and records have been maintained on a basis
consistent with the past practice of the Company. Each balance sheet
included in the Audited Financial Statements (including the related notes
and
schedules) will be true, correct and complete and fairly present the financial
position of the Company as of the date of such balance sheet, and each statement
of income and cash flows included in the Audited Statements (including the
related notes and schedules) will be true, correct and complete and will
fairly
present the results of operations and changes in cash flows, as the case
may be,
of the Company for the periods set forth therein.
(c)
The
Company maintains accurate books and records reflecting its assets, liabilities,
revenues and expenses and maintains proper and adequate internal accounting
controls which provide assurance that (i) transactions are executed in
accordance with management’s authorization, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity
with
GAAP, and (iii) accounts, notes and other receivables and inventory are
recorded accurately, and proper and adequate procedures are implemented to
effect the collection thereof on a current and timely basis.
2.15 Taxes,
Tax
Returns.
(a) Definitions. The
following terms, as used herein, have the following meanings:
(i) “Taxes”
means
all
taxes, assessments, charges, duties, fees, levies and other charges of a
governmental entity, including income, franchise, capital stock, real property,
personal property, tangible, withholding, employment, payroll, social security,
social contribution, unemployment compensation, disability, transfer, sales,
use, excise, gross receipts, value-added and all other taxes of any kind
for
which the Company may have any liability imposed by any governmental entity,
whether disputed or not, and any related charges, interest or penalties imposed
by any governmental entity.
(ii) “Tax
Return” means any
report, return, declaration or other information, in whatever form or medium,
required to be supplied to a governmental entity in connection with Taxes,
including estimated returns and reports of every kind with respect to
Taxes.
(b) All
Tax
Returns due to have been filed by the Company through the date hereof in
accordance with all applicable laws (pursuant to an extension of time or
otherwise) have been duly filed and are true, correct and complete in all
respects.
(c) All
Taxes, deposits and other payments for which the Company has liability (whether
or not shown on any Tax Return) have been paid in full or are accrued as
liabilities for Taxes on the books and records of the Company.
(d) The
amounts so paid, together with all amounts accrued as liabilities for Taxes
(including Taxes accrued as currently payable but excluding any accrual to
reflect timing differences between book and Tax income) on the books of the
Company, shall be adequate based on the tax rates and applicable laws in
effect
to satisfy all liabilities for Taxes of the Company in any jurisdiction,
including Taxes accruable upon income earned through the date
hereof.
(e) There
are
not now any extensions of time in effect with respect to the dates on which
any
Tax Returns were or are due to be filed by the Company. There are no
outstanding waivers or agreements between any governmental entity and the
Company for the extension of time for the assessment of any Taxes or deficiency
thereof, nor are there any requests for rulings, outstanding subpoenas or
requests for information, notice of proposed reassessment of any property
owned
or leased by the Company or any other matter pending between the Company
and any
governmental entity.
(f) The
Company has not, directly or indirectly, transferred property to or acquired
property from any individual, corporation, partnership, joint venture, limited
liability company, trust, unincorporated organization or governmental entity
with whom it was not dealing at arm's length for consideration other than
consideration equal to the fair market value of the property at the time
of the
disposition or acquisition thereof.
3. Representations
and
Warranties of the Purchaser. The Purchaser hereby represents
and warrants to the Company that:
3.1 Authorization. The
Purchaser has full corporate power and authority to enter into this Agreement,
which Agreement will constitute its valid and legally binding obligation,
enforceable in accordance with its terms, except (i) as enforceability may
be
limited
by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of
general application affecting enforcement of creditors’ rights generally and
(ii) as enforceability may be limited by laws relating to the availability
of
specific performance, injunctive relief or other equitable
remedies.
3.2 Purchase
Entirely for Own
Account. The Purchased Shares will be purchased for investment
for the Purchaser’s own account, and not with a view to the resale or
distribution of any part thereof in violation of applicable securities
laws. The Purchaser is not a party to any contract, undertaking,
agreement or arrangement with any person or entity to sell, transfer or grant
participations to such person, entity or any third party, with respect to
any of
the Purchased Shares.
3.3 Disclosure
of
Information. The Purchaser has received all the information it
considers necessary or appropriate for deciding whether to purchase the
Purchaser Shares. The Purchaser further represents that it has had an
opportunity to ask questions of and receive answers from the Company regarding
the terms and conditions of the offering of the Purchased Shares and the
business, properties, prospects and financial conditions of the
Company.
3.4 Investment
Experience. The Purchaser acknowledges that it is able to fend
for itself, can bear the economic risk of its investment in the Purchased
Shares
and has such knowledge and experience in financial or business matters that
it
is capable of evaluating the merits and risks of the investment in the Purchased
Shares.
3.5 Restricted
Securities. The Purchaser understands that the Purchased
Shares are characterized as “restricted securities” under the federal securities
laws inasmuch as they are being acquired from the Company in a transaction
not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act
of
1933, as amended (the “Act”), only
in
certain limited circumstances. The Purchaser is familiar with Rule
144 of the Securities and Exchange Commission (the “SEC”), as presently
in effect, and understands the resale limitations imposed thereby and by
the
Act.
3.6 Legends. It
is understood that the certificates evidencing the Purchased Shares will
bear a
legend substantially similar to the following legend, in addition to any
other
legend required by applicable state securities laws:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH
SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR
UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY
ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT. THESE
SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13) OF CODE
SECTION 10-5-9 OF THE ‘GEORGIA SECURITIES ACT OF 1973,’ AND MAY NOT BE SOLD
OR
TRANSFERRED
EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER SUCH ACT. COPIES OF THE AGREEMENT
COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY
BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE
OFFICES OF THE CORPORATION.”
Nothing
contained in this Section 3 shall in any respect limit or modify the
representations and warranties of the Company in Section 2 of this Agreement
or
the right of the Purchaser to rely thereon.
4. Certain
Covenants and
Agreements.
The
Company covenants that it will
comply with the following provisions:
4.1 Audited
Financial
Statements. As soon as possible following the date hereof, the
Company will deliver to the Purchaser balance sheets and statements of income
and stockholders equity and statements of cash flows of the Company audited
by
an independent public accounting firm selected by the Company, showing the
financial condition of the Company as of the close of each fiscal year since
the
Company’s inception and the results of the Company’s operations during each such
fiscal year (the “Audited
Statements”). The Company shall provide such accounting firm
and its accountants and other authorized representatives reasonable access,
during reasonable hours and with reasonable advance notice, to any and all
of
its premises, employees (including executive officers), properties, contracts,
commitments, books, records and other information as such accounting firm
deems
necessary to prepare the Audited Statements.
4.2 Quarterly
Statements. As soon as possible and in any event within
forty-five (45) days after the end of each fiscal quarter commencing with
the
first fiscal quarter of the Company ending after the Initial Closing Date,
the
Company will deliver to the Purchaser internal, unaudited balance sheets
and
statements of income, stockholders equity and cash flows of the Company as
of
the end of such fiscal quarter and for the year to date, certified by the
President (or other chief executive officer) and the Treasurer or chief
financial officer of the Company to be true and correct and to have been
prepared in accordance with GAAP consistently applied (subject to normal
year-end adjustments and the absence of footnotes).
4.3 Records
and
Accounts. The Company will keep records and books of account
which are true and correct in all material respects in which entries which
are
full, true and correct in all material respects will be made in accordance
with
GAAP. The Company shall (and shall cause its officers, directors,
employees, auditors and agents to) provide the Purchaser and its accountants,
investment bankers, counsel, environmental consultants and other authorized
representatives full access, during reasonable hours, to any and all of its
premises, employees (including executive officers), properties, contracts,
commitments, books, records and other information of the Company (including
Tax
Returns filed and those in preparation) and shall cause its officers to furnish
to the Purchaser and its authorized representatives, promptly upon
request
therefor, any and all financial, technical and operating data and other
information pertaining to the Company.
4.4 Legal
Existence; Maintenance
of Properties. The Company will preserve and keep in full
force and effect its legal existence and its material rights and properties
(including, without limitation, its intellectual property). The
Company will maintain its material properties that are used or useful in
the
conduct of its business in good operating condition.
4.5 Compliance
with Laws and
Contracts. The Company will comply with (a) the Charter
Documents and (b) all applicable laws and regulations, the failure to
comply with which would have a material adverse effect on the business, assets
or financial condition of the Company.
4.6 Repurchases. The
Company will not repurchase any capital stock of the Company from any
stockholder.
4.7 Transactions
with
Affiliates. The Company will not make any payment to, or sell,
lease, transfer or otherwise dispose of any of its properties or assets to,
or
purchase any property or assets from, or enter into or make or amend any
transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any individual, corporation, partnership, joint
venture, limited liability company, trust, or unincorporated organization
(a
“Person”)
directly controlling or controlled by or under direct or indirect common
control
with the Company (each such Person, an “Affiliate,”
and each
such transaction, an “Affiliate
Transaction”), unless (i) such Affiliate Transaction is on terms
that are no less favorable to the Company than those that would have been
obtained in a comparable transaction by the Company with an unrelated Person
and
(ii) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $1,000,
the Company delivers to the Purchaser a resolution of the Board of Directors
of
the Company set forth in an officer’s certificate certifying that such Affiliate
Transaction complies with clause (i) of this Section 4.7 and that such
Affiliate Transaction has been approved by (i) a majority of the disinterested
members of the Board of Directors of the Company, or (ii) a majority of the
disinterested members of a special committee of the Board of Directors of
the
Company.
4.8 Other
Protective
Provisions. The Company will not:
(a) (i) issue,
sell, give away, transfer, pledge, mortgage, assign or otherwise dispose
of,
(ii) grant any rights (either preemptive or other) or options to subscribe
for or purchase, or (iii) enter into any agreements, or issue any warrants,
providing for the issuance of any of, its capital stock, or any securities
convertible into or exchangeable for any of its capital stock; provided that
the
foregoing shall not restrict the Company from issuing capital stock in
satisfaction of the obligations contained in this Agreement (including, without
limitation, the options set forth on Schedule
2.2(b);
(b) increase
in any manner the compensation of, or enter into any new bonus or incentive
agreement or arrangement with, any of its employees, officers, directors
or
consultants, except in the ordinary course of business to the extent consistent
with past practice of the Company;
(c) amend
its
Charter Documents so as to adversely affect the rights and preferences of
the
Purchaser; or
(d) make
any
substantial change to the Company’s current operations or line of
business.
4.9 Sublease. As
soon as practical following the date hereof, the Company and Purchaser shall
enter into a sublease agreement mutually satisfactory to the Company and
Purchaser, regarding certain office space located at 000 Xxxxxxxx Xxxxxx,
X.X.,
Xxxxxxx, Xxxxxxx 00000.
5. Conditions
to the
Purchaser’s Obligations at Closing.
5.1 Initial
Closing. The obligations of the Purchaser under this Agreement
with respect to the purchase of the Initial Shares are subject to the
fulfillment on or before the Initial Closing of each of the following
conditions:
(a) Representations
and
Warranties. The representations and warranties of the Company
contained in Section 2 of this Agreement shall be true and correct in all
material respects (except to the extent that any of such representations
and
warranties is already qualified as to materiality in Section 2 above, in
which
case, such representations and warranties shall be true and correct in all
respects) as of the date when made and as of the Initial Closing Date as
though
made on the Initial Closing Date (except for representations and warranties
that
speak as of a specific date).
(b) Performance. The
Company shall have performed and complied with all agreements, obligations
and
conditions contained in this Agreement that are required to be performed
or
complied with by it on or before the Initial Closing.
(c) Consents
and
Authorizations. The Purchaser shall have received from the
Company copies, certified by a duly authorized officer thereof to be true
and
complete as of the Initial Closing Date, of the records of (a) all
corporate action taken by the Company to authorize the execution, delivery
and
performance of this Agreement (b) all consents and waivers from the
shareholders of the Company and any other third parties necessary, if any,
with
respect to the issuance and sale of the Initial Shares.
(d) Compliance
Certificate. The Chief Executive Officer of the Company shall
have delivered to the Purchaser a certificate certifying (i) that the conditions
specified in Sections 5.1(a), 5.1(b) and 5.1(c) of this Agreement have been
fulfilled and (ii) that there shall have been no material adverse change
in the
assets, condition, business, operations, affairs or prospects of the Company,
financially or otherwise (the “Condition”) since
June 30, 2007.
5.2 Second
Closing. The obligations of the Purchaser under this Agreement
with respect to the purchase of the Second Shares are subject to the fulfillment
on or before the Second Closing of each of the following
conditions:
(a) Representations
and
Warranties. The representations and warranties of the Company
contained in Section 2 of this Agreement shall be true and correct in all
material respects (except to the extent that any of such representations
and
warranties is already qualified as to materiality in Section 2 above, in
which
case, such representations and warranties shall be true and correct in all
respects) as of the date when made and as of the Second Closing Date as though
made on the Second Closing Date (except for representations and warranties
that
speak as of a specific date).
(b) Performance. The
Company shall have performed and complied with all agreements, obligations
and
conditions contained in this Agreement that are required to be performed
or
complied with by it on or before the Second Closing.
(c) Consents
and
Authorizations. The Purchaser shall have received from the
Company copies, certified by a duly authorized officer thereof to be true
and
complete as of the Second Closing Date, of the records of (a) all corporate
action taken by the Company to authorize the execution, delivery and performance
of this Agreement (b) all consents and waivers from the shareholders of the
Company and any other third parties necessary, if any, with respect to the
issuance and sale of the Second Shares.
(d) Compliance
Certificate. The Chief Executive Officer of the Company shall
have delivered to the Purchaser a certificate certifying (i) that the conditions
specified in Sections 5.2(a), 5.2(b) and 5.2(c) of this Agreement have been
fulfilled and (ii) that there shall have been no material adverse change
in the
Condition of the Company since June 30, 2007.
5.3 Third
Closing. The obligations of the Purchaser under this Agreement
with respect to the purchase of the Third Shares are subject to the fulfillment
on or before the Third Closing of each of the following conditions:
(a) Representations
and
Warranties. The representations and warranties of the Company
contained in Section 2 of this Agreement shall be true and correct in all
material respects (except to the extent that any of such representations
and
warranties is already qualified as to materiality in Section 2 above, in
which
case, such representations and warranties shall be true and correct in all
respects) as of the date when made and as of the Third Closing Date as though
made on the Third Closing Date (except for representations and warranties
that
speak as of a specific date).
(b) Performance. The
Company shall have performed and complied with all agreements, obligations
and
conditions contained in this Agreement that are required to be performed
or
complied with by it on or before the Third Closing.
(c) Consents
and
Authorizations. The Purchaser shall have received from the
Company copies, certified by a duly authorized officer thereof to be true
and
complete as of the Third Closing Date, of the records of (a) all corporate
action taken by the Company to authorize the execution, delivery and performance
of this Agreement (b) all consents and waivers from the shareholders of the
Company and any other third parties necessary, if any, with respect to the
issuance and sale of the Third Shares.
(d) Compliance
Certificate. The Chief Executive Officer of the Company shall
have delivered to the Purchaser a certificate certifying (i) that the conditions
specified in Sections 5.3(a), 5.3(b) and 5.3(c) of this Agreement have been
fulfilled and (ii) that there shall have been no material adverse change
in the
Condition of the Company since June 30, 2007.
5.4 Fourth
Closing. The obligations of the Purchaser under this Agreement
with respect to the purchase of the Fourth Shares are subject to the fulfillment
on or before the Fourth Closing of each of the following
conditions:
(a) Representations
and
Warranties. The representations and warranties of the Company
contained in Section 2 of this Agreement shall be true and correct in all
material respects (except to the extent that any of such representations
and
warranties is already qualified as to materiality in Section 2 above, in
which
case, such representations and warranties shall be true and correct in all
respects) as of the date when made and as of the Fourth Closing Date as though
made on the Fourth Closing Date (except for representations and warranties
that
speak as of a specific date).
(b) Performance. The
Company shall have performed and complied with all agreements, obligations
and
conditions contained in this Agreement that are required to be performed
or
complied with by it on or before the Fourth Closing.
(c) Consents
and
Authorizations. The Purchaser shall have received from the
Company copies, certified by a duly authorized officer thereof to be true
and
complete as of the Fourth Closing Date, of the records of (a) all corporate
action taken by the Company to authorize the execution, delivery and performance
of this Agreement (b) all consents and waivers from the shareholders of the
Company and any other third parties necessary, if any, with respect to the
issuance and sale of the Fourth Shares.
(d) Compliance
Certificate. The Chief Executive Officer of the Company shall
have delivered to the Purchaser a certificate certifying (i) that the conditions
specified in Sections 5.4(a), 5.4(b) and 5.4(c) of this Agreement have been
fulfilled and (ii) that there shall have been no material adverse change
in the
Condition of the Company since June 30, 2007.
6. Conditions
to the Company’s
Obligations at Closing.
6.1 Initial
Closing.
(a) Legality;
Governmental
Authorization. The issuance and sale of the Initial Shares to
the Purchaser shall not be prohibited by any law or governmental order or
regulation. All material consents, approvals, licenses, permits,
orders and authorizations of, or registrations, declarations and filings
with,
any governmental or administrative agency or of or with any third party,
with
respect to any of the transactions contemplated by this Agreement to be
performed at the Initial Closing which must be obtained by the Purchaser
shall
have been duly obtained or made and shall be in full force and
effect.
(b) Representations
and
Warranties. The representations and warranties of the
Purchaser contained in Section 3 of this Agreement shall be true and correct
in
all material respects (except to the extent that any of such representations
and
warranties is already qualified as to materiality in Section 3 above, in
which
case, such representations and warranties shall be true and correct in all
respects) as of the date when made and as of the Initial Closing Date as
though
made on the Initial Closing Date (except for representations and warranties
that
speak as of a specific date).
(c) Performance. The
Purchaser shall have performed and complied with all agreements, obligations
and
conditions contained in this Agreement that are required to be performed
or
complied with by it on or before the Initial Closing.
(d) Payment
of Purchase
Price. The Purchaser shall have delivered the Initial Purchase
Price.
6.2 Second
Closing.
(a) Legality;
Governmental
Authorization. The issuance and sale of the Second Shares to
the Purchaser shall not be prohibited by any law or governmental order or
regulation. All material consents, approvals, licenses, permits,
orders and authorizations of, or registrations, declarations and filings
with,
any governmental or administrative agency or of or with any third party,
with
respect to any of the transactions contemplated by this Agreement to be
performed at the Second Closing which must be obtained by the Purchaser shall
have been duly obtained or made and shall be in full force and
effect.
(b) Representations
and
Warranties. The representations and warranties of the
Purchaser contained in Section 3 of this Agreement shall be true and correct
in
all material respects (except to the extent that any of such representations
and
warranties is already qualified as to materiality in Section 3 above, in
which
case, such representations and warranties shall be true and correct in all
respects) as of the date when made and as of the Initial Closing Date as
though
made on the Second Closing Date (except for representations and warranties
that
speak as of a specific date).
(c) Performance. The
Purchaser shall have performed and complied with all agreements, obligations
and
conditions contained in this Agreement that are required to be performed
or
complied with by it on or before the Second Closing.
(d) Payment
of Purchase
Price. The Purchaser shall have delivered the Second Purchase
Price.
6.3 Third
Closing.
(a) Legality;
Governmental
Authorization. The issuance and sale of the Third Shares to
the Purchaser shall not be prohibited by any law or governmental order or
regulation. All material consents, approvals, licenses, permits,
orders and authorizations of, or registrations, declarations and filings
with,
any governmental or administrative agency or of or with any third party,
with
respect to any of the transactions contemplated by this Agreement
to
be
performed at the Third Closing which must be obtained by the Purchaser shall
have been duly obtained or made and shall be in full force and
effect.
(b) Representations
and
Warranties. The representations and warranties of the
Purchaser contained in Section 3 of this Agreement shall be true and correct
in
all material respects (except to the extent that any of such representations
and
warranties is already qualified as to materiality in Section 3 above, in
which
case, such representations and warranties shall be true and correct in all
respects) as of the date when made and as of the Initial Closing Date as
though
made on the Third Closing Date (except for representations and warranties
that
speak as of a specific date).
(c) Performance. The
Purchaser shall have performed and complied with all agreements, obligations
and
conditions contained in this Agreement that are required to be performed
or
complied with by it on or before the Third Closing.
(d) Payment
of Purchase
Price. The Purchaser shall have delivered the Third Purchase
Price.
6.4 Fourth
Closing.
(a) Legality;
Governmental
Authorization. The issuance and sale of the Fourth Shares to
the Purchaser shall not be prohibited by any law or governmental order or
regulation. All material consents, approvals, licenses, permits,
orders and authorizations of, or registrations, declarations and filings
with,
any governmental or administrative agency or of or with any third party,
with
respect to any of the transactions contemplated by this Agreement to be
performed at the Fourth Closing which must be obtained by the Purchaser shall
have been duly obtained or made and shall be in full force and
effect.
(b) Representations
and
Warranties. The representations and warranties of the
Purchaser contained in Section 3 of this Agreement shall be true and correct
in
all material respects (except to the extent that any of such representations
and
warranties is already qualified as to materiality in Section 3 above, in
which
case, such representations and warranties shall be true and correct in all
respects) as of the date when made and as of the Initial Closing Date as
though
made on the Fourth Closing Date (except for representations and warranties
that
speak as of a specific date).
(c) Performance. The
Purchaser shall have performed and complied with all agreements, obligations
and
conditions contained in this Agreement that are required to be performed
or
complied with by it on or before the Fourth Closing.
(d) Payment
of Purchase
Price. The Purchaser shall have delivered the Fourth Purchase
Price.
7. Expenses;
Indemnity.
(a) The
Company hereby agrees to pay on demand up to $50,000 of the reasonable
out-of-pocket expenses incurred by the Purchaser on or prior to the Initial
Closing Date in connection with the transactions contemplated by this Agreement,
including, without
limitation,
the fees and expenses of the Purchaser’s legal counsel, which amount may be
set-off against any amount owed by the Purchaser to the Company (including,
without limitation, the Aggregate Purchase Price).
(b) The
Company hereby agrees to indemnify and hold the Purchaser and its affiliates
and
their respective shareholders, officers, directors, employees and agents,
and
their successors and assigns, harmless from and against any and all actions,
causes of action, suits, losses, liabilities, damages and expenses (including,
without limitation, reasonable attorneys’ fees and disbursements), incurred by
any of the indemnitees as a result of or relating to the inaccuracy of any
of
the representations and warranties made by the Company in Section 2 hereof
in any material respect or any failure by the Company to comply in any material
respect with any of its covenants hereunder. For purposes of this
Section 7(b), (i) the representations and warranties made by the Company in
Section 2 hereof shall expire on the later of the two (2) year anniversary
of the Initial Closing Date, the Second Closing Date, the Third Closing Date
or
the Fourth Closing Date, except that the representations and warranties made
by
the Company in Sections 2.1, 2.2, 2.3, 2.4, 2.5, 2.10 and 2.12 shall survive
indefinitely, and (ii) the covenants made by the Company in Section 4 of
this
Agreement shall expire upon on the later of the two (2) year anniversary
of the
Initial Closing Date, the Second Closing Date, the Third Closing Date or
the
Fourth Closing Date, except that the covenants made by the Company in Sections
4.1 and 4.2 shall survive for so long as Purchased Shares are held by the
Purchaser or its successors.
(c) The
Company hereby agrees to indemnify and hold the Purchaser and its affiliates
and
their respective shareholders, officers, directors, employees and agents,
and
their successors and assigns, harmless from any claim, demand or liability
for
any broker’s, finder’s or placement fees or lender’s incentive fees alleged to
have been incurred by the Company in connection with the transactions
contemplated by this Agreement.
(d) Any
payments made by the Company pursuant to Section 7(b) and 7(c) shall be paid
in
immediately available funds in an amount equal to such claim as the Parties
determine by mutual agreement, or in the event that the Parties cannot reach
such agreement, then as determined by the final, non-appealable decision
of a
court of competent jurisdiction; provided, however,
that the Company may, at the Purchaser’s option, pay to the Purchaser, in
satisfaction of such claim, a number of shares of Common Stock equal to the
quotient of (i) the amount of such claim divided by (ii)
0.24. Notwithstanding the foregoing, any payments made by the Company
pursuant to this Section 7(d) shall, in the aggregate, not exceed the Aggregate
Purchase Price.
(e) The
Purchaser hereby agrees to indemnify and hold the Company and its respective
shareholders, officers, directors, employees and agents, and their successors
and assigns, harmless from and against any and all actions, causes of action,
suits, losses, liabilities, damages and expenses (including, without limitation,
reasonable attorneys’ fees and disbursements), incurred in any capacity by any
of the indemnitees (i) as a result of or relating to the inaccuracy of any
of the representations and warranties made by the Purchaser pursuant to
Section 3 hereof in any material respect or any failure by the Purchaser to
comply in any material respect with any of its covenants hereunder and
(ii) for any broker’s, finder’s or placement fees or lender’s incentive
fees alleged to have been incurred by the Purchaser in connection with the
transactions contemplated by this Agreement. For purposes of this
Section 7(e), the
representations
and warranties made by the Purchaser in Section 3 hereof shall expire on
the later of the two (2) year anniversary of the Initial Closing Date, the
Second Closing Date, the Third Closing Date or the Fourth Closing Date, except
that the representations and warranties made by the Purchaser in Sections
3.1
and 3.2 shall survive indefinitely.
(f) The
obligations of the Company and the Purchaser under this Section 7 shall
survive redemption or retirement of the Purchased Shares and the termination
of
this Agreement.
8. Miscellaneous.
8.1 Governing
Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Georgia, without reference to its choice
of
law rules.
8.2 Consent
to Jurisdiction,
Etc.. Each Party irrevocably and unconditionally (a) consents
to submit to the exclusive jurisdiction of the Business Case Division of
the
Xxxxxx County Superior Court located in the State of Georgia (the “Business Court”), and
in the event the Business Court does not have jurisdiction over such dispute,
then of the courts of the State of Georgia and of the United States District
Court for the Northern District of Georgia for any action, dispute, suit
or
proceeding arising out of or relating to this Agreement (and each party
irrevocably and unconditionally agrees not to commence any such action, dispute,
suit or proceeding except in such courts), (b) waives any objection to the
laying of venue of any such action, dispute, suit or proceeding in any such
courts and (c) waives and agrees not to plead or claim that any such action,
dispute, suit or proceeding brought in any such court has been brought in
an
inconvenient forum. Each Party hereby irrevocably waives any and all
rights to trial by jury in any legal proceeding arising out of or related
to
this Agreement.
8.3 No
Fractional
Shares. In the event any calculation of shares of Common Stock
pursuant to any section of this Agreement yields a decimal number, such amount
shall be rounded to the nearest whole number.
8.4 Counterparts. This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective
when
counterparts have been signed by each party and delivered to the other
party. In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause two (2)
additional original executed signature pages to be physically delivered to
the
other party within five (5) days of the execution and delivery
hereof.
8.5 Headings. The
headings of this Agreement are for convenience of reference and shall not
form
part of, or affect the interpretation of, this Agreement.
8.6 Severability. If
any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction
or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
8.7 Entire
Agreement,
Amendments. This Agreement supersedes all other prior oral or
written agreements between the Parties, their affiliates and persons acting
on
their
behalf
with respect to the matters discussed herein, and this Agreement and the
instruments referenced herein contain the entire understanding of the Parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Purchaser
makes any representation, warranty, covenant or undertaking with respect
to such
matters. No provision of this Agreement may be waived or amended
other than by an instrument in writing signed by the party to be charged
with
enforcement.
8.8 Notices. Any
notices, consents, waivers, or other communications required or permitted
to be
given under the terms of this Agreement (including, without limitation, the
Purchaser’s exercise of the First Option, the Second Option and the Third
Option) must be in writing and will be deemed to have been duly given (i)
upon
receipt, when delivered personally; (ii) upon confirmation of receipt, when
sent
by facsimile; (iii) three (3) business days after being sent by U.S. certified
mail, return receipt requested, or (iv) one (1) business day after deposit
with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:
If
to the Company, to:
|
Tap
It, Inc.
|
|
000
Xxxxxxxx Xx., XX, 00xx Xxxxx
|
||
Xxxxxxx,
XX 00000
|
||
Attention: |
Xxxxxxxx
Xxxxxxxxx
|
|
Facsimile: |
678.954.8019
|
|
If
to the Purchaser, to:
|
Winsonic
Digital Media Group, Ltd.
|
|
000
Xxxxxxxx Xx., XX, Xxxxx 0000
|
||
Xxxxxxx,
XX 00000
|
||
Attention: |
Xxxxxxx
Xxxxxxx
|
|
Facsimile: |
(000)
000-0000
|
|
Each
party shall provide five (5) days’ prior written notice to the other party of
any change in address or facsimile number.
8.9 Successors
and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and
assigns. Neither Party shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other
Party.
8.10 No
Third Party
Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns,
and is
not for the benefit of, nor may any provision hereof be enforced by, any
other
person.
8.11 Further
Assurances. Each Party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents,
as
the other Party may reasonably request in
order
to carry out the intent and accomplish the purposes of this Agreement and
the
consummation of the transactions contemplated hereby.
IN
WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed,
as
of the date first above written.
PURCHASER:
WINSONIC
DIGITAL MEDIA GROUP, LTD.
By:
/s/
Xxxxxxx
Xxxxxxx
Name: Xxxxxxx
Xxxxxxx
Title: Chairman
and Chief Executive Officer
COMPANY:
TAP
IT, INC.
By: /s/
Xxxxxxxx
Xxxxxxxxx
Name:
Xxxxxxxx Xxxxxxxxx
Title:
President/CEO
Signature
Page to Stock Purchase Agreement
Exhibit
A
FORM
OF
DEMAND
PROMISSORY NOTE
$ ______________ |
Atlanta,
Georgia
|
__________
__, 2008
TAP
IT, INC. a Delaware corporation
(the “Company”), for
value
received hereby promises to pay to the order of Winsonic Digital Media Group,
Ltd. a Nevada corporation (the “Holder”), without
any
abatement, reduction, diminution, setoff, defense, counterclaim or recoupment
whatsoever, the sum of __________________________________
DOLLARS ($________) and any unpaid accrued interest (including
Default Interest, as defined below) hereon, on the Maturity Date, as defined
below, or sooner should this Note be declared immediately due and payable
as
hereafter provided. Payment for all amounts due hereunder shall be made by
wire
transfer in accordance with the Holder’s instructions, or at the Holder’s
option, by shares of the Company’s Common Stock pursuant to the terms and
conditions of that certain Stock Purchase Agreement, dated as of January
22,
2008, by and between the Company and the Holder (the “Purchase
Agreement”). Capitalized terms used but not otherwise defined
herein shall have the meanings given to such terms in the Purchase
Agreement.
The
following is a statement of the
rights of the Holder and the conditions to which this Note is
subject.
1.
Principal and
Interest. Unless this Note is sooner paid, the principal of
and all accrued and unpaid interest on this Note shall be paid in full on
the
fifth (5th)
day
following written notice of demand from the Holder to the Company (the “Maturity
Date”). This Note may be prepaid at any time. All
payments under this Note will be made without setoff, counterclaim or other
defense.
The
Company agrees to pay interest on the unpaid principal amount of this Note
from
the date hereof until the earlier of the Maturity Date or the date of an
Event
of Default, as defined below, at a simple interest rate of six percent (6%)
per
annum, subject to Section 2(d)(ii) hereof.
2.
Events of
Default.
(a)
Events of Default
Defined. The following specified events constitute an event of
default hereunder (each an “Event of
Default”):
(i)
the Company shall default in the payment upon demand of the principal or
interest on this Note or any other amounts owing hereunder and the continuance
thereof for five (5) Business Days after written notice;
(ii)
the Company shall breach any of the covenants set forth in Section 4.1
of
the Purchase Agreement and the continuance thereof for five (5) Business
Days
after written notice; or
(iii)
the Company’s representations and warranties set forth in Section 2.14 of the
Purchase Agreement, or any certificate delivered to Holder pursuant to Sections
5.1(d), 5.2(d), 5.3(d) or 5.4(d) of the Purchase Agreement with respect to
the
representations and warranties set forth in Section 2.14 of the Purchase
Agreement, shall contain any inaccuracy when made or delivered, as the case
may
be. An Event of Default under this Section 2(a)(iii) shall be deemed
to have commenced upon the earliest date that such representation and warranty
or such certificate was made or delivered, as the case may be, to the
Holder.
(b)
Notice of the
Events
of Default. The Company covenants that it will give notice to
the Holder of the occurrence of any Event of Default within five (5) business
days after the discovery of such an event by an officer of the Company,
specifying the nature thereof, the period of existence thereof and what action
it proposes to take with respect thereto.
(c)
Default Rate of
Interest. If the Company defaults in the payment of the amounts hereunder
on the Maturity Date or an Event of Default occurs, the Company shall pay
a
default interest rate equal to twelve percent (12%) in excess of the interest
rate otherwise applicable hereunder (the “Default
Rate”).
(d)
Consequences of
Event
of Default. Upon the occurrence of an Event of Default and at
any time thereafter so long as any Event of Default shall then be continuing,
the Holder may, by written notice to the Company, take any or all of the
following actions without prejudice to the rights of the Holder to enforce
its
claim against the Company and to pursue any remedies against the
Company: (i) declare the principal and any accrued interest in
respect of this Note and all obligations owing hereunder to be, whereupon
the
same shall become, forthwith due and payable without presentment, demand,
protest, or other notice of any kind, all of which are hereby waived by the
Company, and (ii) declare that the total amount owed (including principal,
accrued interest and other amounts to the extent permitted by law), shall
bear
interest, and shall be deemed to have born interest as of the date of this
Note,
at the Default Rate (such interest, “Default
Interest”).
4.
Waiver of
Demand. The Company waives demand for payment, presentment,
protest, notice of protest and non-payment, or other notice of default, notice
of acceleration and intention to accelerate, and agrees that its liability
under
this Note shall not be affected by any renewal or extension in the time of
payment hereof, or in any indulgences, or by any release or change in any
security for the payment of this Note, and hereby consents to any and all
renewals, extensions, indulgences, releases or changes, regardless of the
number
of such renewals, extensions, indulgences, releases or changes.
5.
Successors and
Assigns. The rights and obligations of the Company and the
Holder under this Note shall be binding upon and inure to the benefit of
the
parties and their respective successors and assigns. Neither Party
shall assign this Note or any rights or obligations hereunder without the
prior
written consent of the other Party.
6.
Remedies
Cumulative. The remedies of the Holder as provided herein, in
the Purchase Agreement, and in any other documents governing or securing
repayment hereof shall be cumulative and concurrent and may be pursued singly,
successively, or together, at the sole discretion of the Holder to the extent
provided in the Purchase Agreement and may be exercised as often as occasion
therefore shall arise. No act or omission of the Holder, including specifically,
but without limitation, any failure to exercise any right, remedy or recourse,
shall be effective as a waiver of any right of the Holder hereunder, unless
set
forth in a written document executed by the Holder, and then only to the
extent
specifically recited therein. A waiver or release with reference to one event
shall not be construed as continuing, as a bar to, or as a wavier or release
of
any subsequent right, remedy or recourse as to any subsequent
event.
If
this
Note is collected with the assistance of an attorney, or if it is collected
through any legal proceedings at law or in equity or in bankruptcy, receivership
or other court proceedings, the Company agrees to pay all reasonable costs
and
expenses of collection including, but not limited to, court costs and the
reasonable fees and expenses of any attorney employed by the Holder
hereof.
7.
Notices. All
notices and other communications hereunder shall be in writing and shall
be
deemed sufficiently given and served for all purposes when personally delivered
or given by e-mail, telex or machine-confirmed facsimile or three business
days
after a writing is deposited in the United States mail, first class postage
or
other charges prepaid and certified, return receipt requested, addressed
to the
address set forth below for the Company and to the address of the Holder
set
forth in the records of the Company (or at such other address for a party
as
shall be specified by like notice).
8.
Governing Law;
Venue. This Note shall be governed by and construed in
accordance with the laws of the State of Georgia without regard to its conflict
of laws provisions. the Company and the Holder each irrevocably and
unconditionally agree that the terms and conditions of Section 8.2 of the
Purchase Agreement shall be incorporated by reference herein.
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IN
WITNESS WHEREOF, the undersigned has executed this Note on the date first
above
written.
TAP
IT, INC.
By: __________________________________
Name: _______________________________
Title: ________________________________
ACKNOWLEDGED:
WINSONIC
DIGITAL MEDIA GROUP,
LTD.
By: __________________________________
Name: _______________________________
Title: ________________________________
Signature
Page to Promissory Note Dated ___________ __, 2008