SECURITIES PURCHASE AGREEMENT
Exhibit
10.1
SECURITIES
PURCHASE AGREEMENT
(the "Agreement"), dated
as of December 20, 2007, by and among EnterConnect Inc., a Nevada corporation,
with headquarters located at 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxx Xxxx,
Xxxxxxxxxx 00000-0000 (the "Company"), and the investors
listed on the Schedule of Buyers attached hereto (individually, a "Buyer" and collectively,
the
"Buyers").
WHEREAS:
A. The
Company and each Buyer is executing and delivering this Agreement in reliance
upon the exemption from securities registration afforded by Section 4(2) of
the
Securities Act of 1933, as amended (the "1933 Act"), and Rule 506 of
Regulation D ("Regulation
D") as promulgated by the United States Securities and Exchange
Commission (the "SEC")
under the 1933 Act.
B. The
Company has authorized a new series of senior convertible notes of the Company,
in the form attached hereto as Exhibit A (the "Notes"),
which Notes shall be
convertible into the Company's common stock, par value $0.001 per share (the
"Common Stock") (as
converted, the "Conversion
Shares"), in accordance with the terms of the Notes.
C. Each
Buyer wishes to purchase, and the Company wishes to sell, upon the terms and
conditions stated in this Agreement, (i) that aggregate principal amount of
the
Notes set forth opposite such Buyer's name in column (3) on the Schedule of
Buyers attached hereto (which aggregate amount for all Buyers shall be
$4,823,000 and (ii) warrants, in substantially the form attached hereto as
Exhibit B (the "Warrants"),
to acquire up to
that number of additional shares of Common Stock set forth opposite such Buyer's
name in column (4) of the Schedule of Buyers (as exercised, collectively, the
"Warrant
Shares").
D. Contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement, substantially in
the
form attached hereto as Exhibit C (the "Registration
Rights
Agreement"), pursuant to which the Company will agree to provide certain
registration rights with respect to the Registrable Securities (as defined
in
the Registration Rights Agreement) under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities
laws.
E. The
Notes, the Conversion Shares, the Warrants and the Warrant Shares collectively
are referred to herein as the "Securities".
F. The
Notes will rank senior to all outstanding and future indebtedness of the Company
and will be secured by a perfected security interest, in all of the assets
of
the Company, as evidenced by (i) a pledge and security agreement, in the form
attached hereto as Exhibit H (as amended
or modified from time to time in accordance with its terms, the "Pledge and Security
Agreement", and, together with any ancillary documents related thereto,
collectively the "Security
Documents").
G. The
Buyers desire to appoint The Bank of New York as collateral agent with respect
to the Collateral (as defined in the Security Agreement) (in such capacity,
the
"Collateral Agent")
pursuant to a Collateral Agency Agreement, in the form attached hereto as Exhibit I (as amended
or modified from time to time in accordance with its terms, the "Collateral Agency
Agreement").
NOW,
THEREFORE, the Company
and each Buyer hereby agree as follows:
1.
PURCHASE AND SALE
OF NOTES
AND WARRANTS.
(a) Purchase
of Notes and
Warrants.
(i)
Notes and
Warrants. Subject to
the
satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below,
the Company shall issue and sell to each Buyer, and each Buyer severally, but
not jointly, shall purchase from the Company on the Closing Date (as defined
below), (x) a principal amount of Notes as is set forth opposite such Buyer's
name in column (3) on the Schedule of Buyers and (y) Warrants to acquire up
to
that number of Warrant Shares as is set forth opposite such Buyer's name in
column (4) on the Schedule of Buyers, (the "Closing").
(ii)
Closing. The
date and time of the Closing (the "Closing Date") shall be 10:00
a.m., New York City time, on the date hereof (or such later date as is mutually
agreed to by the Company and each Buyer) after notification of satisfaction
(or
waiver) of the conditions to the Closing set forth in Sections 6 and 7 below
at
the offices of Xxxxxxx Xxxx & Xxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000.
(iii) Purchase
Price.
(1) The
aggregate purchase price for the Notes and the Warrants to be purchased by
each
such Buyer at the Closing (the "Purchase Price") shall be the
amount set forth opposite each Buyer's name in column (5) of the Schedule of
Buyers. Each Buyer shall pay $1,000 for each $1,000 of principal
amount of Notes and related Warrants to be purchased by such Buyer at the
Closing.
(2) The
Buyers and the Company agree that the Notes and the Warrants constitute an
"investment unit" for purposes of Section 1273(c)(2) of the Internal Revenue
Code of 1986, as amended (the "Code"). The Buyers
and the Company mutually agree that the allocation of the issue price of such
investment unit between the Notes and the Warrants in accordance with Section
1273(c)(2) of the Code and Treasury Regulation Section 1.1273-2(h) shall be
an
aggregate amount of $10,000 allocated to the Warrants and the balance of the
Purchase Price allocated to the Notes, and neither the Buyers nor the Company
shall take any position inconsistent with such allocation in any tax return
or
in any judicial or administrative proceeding in respect of taxes.
(b) Form
of
Payment. On the Closing Date, (i) each Buyer shall pay its
Purchase Price (less, in the case of Highbridge International LLC, the amounts
withheld pursuant to Section 4(g)) to the Company for the Notes and the Warrants
to be issued and sold to such Buyer at the Closing, by wire transfer of
immediately available funds in accordance with the Company's written wire
instructions or by surrender of such Buyer's Existing Debentures (as defined
in
the Exchange Agreement) as contemplated by that certain Exchange Agreement
by
and among the company and certain of the Buyers, dated as of even date herewith,
(the "Exchange
Agreement") and (ii) the Company shall deliver to each Buyer the Notes
(allocated in the principal amounts as such Buyer shall request) which such
Buyer is then purchasing hereunder along with the Warrants (allocated in the
amounts as such Buyer shall request) which such Buyer is purchasing, in each
case duly executed on behalf of the Company and registered in the name of such
Buyer or its designee.
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2.
BUYER'S
REPRESENTATIONS AND WARRANTIES. Each Buyer, severally and not
jointly, represents and warrants with respect to only itself that, as of the
date hereof and as of the Closing Date:
(a) No
Sale or
Distribution. Such Buyer is acquiring the Notes, and the
Warrants, and upon conversion of the Notes and exercise of the Warrants (other
than pursuant to a Cashless Exercise (as defined in the Warrants)) will acquire
the Conversion Shares issuable upon conversion of the Notes and the Warrant
Shares issuable upon exercise of the Warrants, for its own account and not
with
a view towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales registered or exempted under
the
1933 Act; provided, however, that by making the representations herein, such
Buyer does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time
in
accordance with or pursuant to a registration statement or an exemption under
the 1933 Act and pursuant to the applicable terms of the Transaction Documents
(as defined in Section 3(b)). Such Buyer is acquiring the Securities
hereunder in the ordinary course of its business. Such Buyer does not
presently have any agreement or understanding, directly or indirectly, with
any
Person to distribute any of the Securities.
(b) Accredited
Investor
Status. Such Buyer is an "accredited investor" as that term is
defined in Rule 501(a) of Regulation D.
(c) Reliance
on
Exemptions. Such Buyer understands that the Securities are
being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws
and
that the Company is relying in part upon the truth and accuracy of, and such
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order
to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire the Securities.
(d) Information. Such
Buyer and its advisors, if any, have been furnished with all materials relating
to the business, finances and operations of the Company and materials relating
to the offer and sale of the Securities that have been requested by such
Buyer. Such Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company. Neither such inquiries
nor any other due diligence investigations conducted by such Buyer or its
advisors, if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's representations and warranties contained
herein. Such Buyer understands that its investment in the Securities
involves a high degree of risk and is able to afford a complete loss of such
investment. Such Buyer has sought such accounting, legal and tax
advice as it has considered necessary to make an informed investment decision
with respect to its acquisition of the Securities.
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(e) No
Governmental
Review. Such Buyer understands that no United States federal
or state agency or any other government or governmental agency has passed on
or
made any recommendation or endorsement of the Securities or the fairness or
suitability of the investment in the Securities nor have such authorities passed
upon or endorsed the merits of the offering of the Securities.
(f) Transfer
or
Resale. Such Buyer understands that except as provided in the
Registration Rights Agreement: (i) the Securities have not been and are not
being registered under the 1933 Act or any state securities laws, and may not
be
offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) such Buyer shall have delivered to the Company an
opinion of counsel, in a generally acceptable form, to the effect that such
Securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, or (C) such Buyer
provides the Company with reasonable assurance that such Securities can be
sold,
assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under
the
1933 Act, as amended (or a successor rule thereto) (collectively, "Rule 144"); (ii) any sale
of
the Securities made in reliance on Rule 144 may be made only in accordance
with
the terms of Rule 144 and further, if Rule 144 is not applicable, any resale
of
the Securities under circumstances in which the seller (or the Person (as
defined in Section 3(s)) through whom the sale is made) may be deemed to be
an
underwriter (as that term is defined in the 0000 Xxx) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of
the
SEC thereunder; and (iii) neither the Company nor any other Person is under
any
obligation to register the Securities under the 1933 Act or any state securities
laws or to comply with the terms and conditions of any exemption
thereunder. The Securities may be pledged in connection with a bona
fide margin account or other loan or financing arrangement secured by the
Securities and such pledge of Securities shall not be deemed to be a transfer,
sale or assignment of the Securities hereunder, and no Buyer effecting a pledge
of Securities shall be required to provide the Company with any notice thereof
or otherwise make any delivery to the Company pursuant to this Agreement or
any
other Transaction Document (as defined in Section 3(b)), including, without
limitation, this Section 2(f).
(g) Legends. Such
Buyer understands that the certificates or other instruments representing the
Notes and the Warrants and, until such time as the resale of the Conversion
Shares and the Warrant Shares have been registered under the 1933 Act as
contemplated by the Registration Rights Agreement, the stock certificates
representing the Conversion Shares and the Warrant Shares, except as set forth
below, shall bear any legend as required by the "blue sky" laws of any state
and
a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of such stock certificates):
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[NEITHER
THE ISSUANCE
AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE][EXERCISABLE]
HAVE BEEN][THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED
UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF
1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
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The
legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which
it is
stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for resale under the 1933 Act, (ii) in connection
with
a sale, assignment or other transfer, such holder provides the Company with
an
opinion of a law firm reasonably acceptable to the Company (with Xxxxxxx Xxxx
& Xxxxx LLP being deemed acceptable), in a generally acceptable form, to the
effect that such sale, assignment or transfer of the Securities may be made
without registration under the applicable requirements of the 1933 Act, or
(iii)
such holder provides the Company with reasonable assurance that the Securities
can be sold, assigned or transferred pursuant to Rule 144 or Rule
144A.
(h) Validity;
Enforcement. This Agreement and the Registration Rights
Agreement to which such Buyer is a party have been duly and validly authorized,
executed and delivered on behalf of such Buyer and shall constitute the legal,
valid and binding obligations of such Buyer enforceable against such Buyer
in
accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to,
or
affecting generally, the enforcement of applicable creditors' rights and
remedies.
(i) No
Conflicts. The execution, delivery and performance by such
Buyer of this Agreement and the Registration Rights Agreement and the
consummation by such Buyer of the transactions contemplated hereby and thereby
will not (i) result in a violation of the organizational documents of such
Buyer
or (ii) conflict with, or constitute a default (or an event which 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 of, any
agreement, indenture or instrument to which such Buyer is a party, or (iii)
result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws)
applicable to such Buyer, except in the case of clauses (ii) and (iii) above,
for such conflicts, defaults, rights or violations which would not, individually
or in the aggregate, reasonably be expected to have a material adverse effect
on
the ability of such Buyer to perform its obligations hereunder.
(j) Residency. Such
Buyer is a resident of that jurisdiction specified below its address on the
Schedule of Buyers.
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(k) Certain
Trading
Activities. Other than with respect to the transactions
contemplated herein, since the time that such Buyer was first contacted by
the
Company, the Agent (as defined below) or any other Person regarding this
investment in the Company neither the Buyer nor any Affiliate of such Buyer
which (x) had knowledge of the transactions contemplated hereby, (y) has or
shares discretion relating to such Buyer's investments or trading or information
concerning such Buyer's investments and (z) is subject to such Buyer's review
or
input concerning such Affiliate's investments or trading (collectively, "Trading Affiliates") has
directly or indirectly, nor has any Person acting on behalf of or pursuant
to
any understanding with such Buyer or Trading Affiliate, effected or agreed
to
effect any transactions in the securities of the Company. Such Buyer
hereby covenants and agrees not to, and shall cause its Trading Affiliates
not
to, engage, directly or indirectly, in any transactions in the securities of
the
Company or involving the Company's securities during the period from the date
hereof until such time as (i) the transactions contemplated by this Agreement
are first publicly announced as described in Section 4(i) hereof or (ii) this
Agreement is terminated in full pursuant to Section 8
hereof. Notwithstanding the foregoing, for avoidance of doubt,
nothing contained herein shall constitute a representation or warranty, or
preclude any actions, with respect to the identification of the availability
of,
or securing of, available shares to borrow in order to effect short sales or
similar transactions in the future.
3.
REPRESENTATIONS
AND
WARRANTIES OF THE COMPANY. The Company represents and warrants
to each of the Buyers that, as of the date hereof and as of the Closing
Date:
(a) Organization
and
Qualification. The Company and its "Subsidiaries" (which for
purposes of this Agreement means any joint venture or any entity in which the
Company, directly or indirectly, owns any of the capital stock or holds an
equity or similar interest) are entities duly organized and validly existing
and, to the extent legally applicable, in good standing under the laws of the
jurisdiction in which they are formed, and have the requisite power and
authorization to own their properties and to carry on their business as now
being conducted. Each of the Company and its Subsidiaries is duly
qualified as a foreign entity to do business and to the extent legally
applicable, is in good standing in every jurisdiction in which its ownership
of
property or the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing would not reasonably be expected to have a Material Adverse
Effect. As used in this Agreement, "Material Adverse Effect" means
any material adverse effect on the business, properties, assets, operations,
results of operations, condition (financial or otherwise) or prospects of the
Company and its Subsidiaries, individually or taken as a whole, or on the
transactions contemplated hereby or in the other Transaction Documents or by
the
agreements and instruments to be entered into in connection herewith or
therewith, or on the authority or ability of the Company to perform its
obligations under the Transaction Documents (as defined below). The
Company has no Subsidiaries.
(b) Authorization;
Enforcement;
Validity. The Company has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement, the
Notes, the Registration Rights Agreement, the Security Documents, the
Irrevocable Transfer Agent Instructions (as defined in Section 5(b)), the
Warrants and each of the other agreements entered into by the parties hereto
in
connection with the transactions contemplated by this Agreement (collectively,
the "Transaction
Documents") and to issue the Securities in accordance with the terms
hereof and thereof. The execution and delivery of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby, including, without limitation, the issuance
of
the Notes and the Warrants, the reservation for issuance and the issuance of
the
Conversion Shares issuable upon conversion
of the Notes and the reservation for issuance and issuance of Warrant Shares
issuable upon exercise of the Warrants have been duly authorized by the
Company's Board of Directors and no further filing, consent, or authorization
is
required by the Company, its Board of Directors or its
stockholders. This Agreement and the other Transaction Documents of
even date herewith have been duly executed and delivered by the Company, and
constitute the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws
relating to, or affecting generally, the enforcement of applicable creditors'
rights and remedies.
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(c) Issuance
of
Securities. The issuance of the Notes and the Warrants are
duly authorized and upon issuance in accordance with the terms of the
Transaction Documents shall be free from all taxes, liens and charges with
respect to the issue thereof. As of the Closing, a number of shares
of Common Stock shall have been duly authorized and reserved for issuance which
equals or exceeds 130% of the aggregate of the maximum number of shares of
Common Stock issuable (i) upon conversion of the Notes, and (ii) upon exercise
of the Warrants. Upon conversion or exercise in accordance with the
Notes or the Warrants, as the case may be, the Conversion Shares and the Warrant
Shares, respectively, will be validly issued, fully paid and nonassessable
and
free from all preemptive or similar rights, taxes, liens and charges with
respect to the issue thereof, with the holders being entitled to all rights
accorded to a holder of Common Stock. Assuming the accuracy of each
of the representations and warranties set forth in Section 2 of this Agreement,
the offer and issuance by the Company of the Securities is exempt from
registration under the 1933 Act.
(d) No
Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of
the
transactions contemplated hereby and thereby (including, without limitation,
the
issuance of the Notes and Warrants and reservation for issuance and issuance
of
the Conversion Shares and the Warrant Shares) will not (i) result in a violation
of any article of incorporation, certificate of formation, any certificate
of
designations or other constituent documents of the Company or any of its
Subsidiaries, any capital stock of the Company or any of its Subsidiaries or
bylaws of the Company or any of its Subsidiaries or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) in any respect under, or give to others any rights
of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is
a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree, including foreign, federal and state securities laws and
regulations and the rules and regulations of The OTC Bulletin Board (the "Principal Market") applicable
to the Company or any of its Subsidiaries or by which any property or asset
of
the Company or any of its Subsidiaries is bound or affected.
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(e) Consents. Neither
the Company nor any of its Subsidiaries is required to obtain any consent,
authorization or order of, or make any filing or registration with, any court,
governmental agency or any regulatory or self-regulatory agency or any other
Person in order for it to execute, deliver or perform any of its obligations
under or contemplated by the Transaction Documents, in each case in accordance
with the terms hereof or thereof, except for the following consents,
authorizations, orders, filings and registrations (none of which is required
to
be filed or obtained before the Closing): (i) the filing with the SEC of one
or
more Registration Statements in accordance with the requirements of the
Registration Rights Agreement and (ii) the filing of a listing application
for
the Conversion Shares and Warrant Shares with the Principal Market, which shall
be done pursuant to the rules of the Principal Market. The Company
and its Subsidiaries are unaware of any facts or circumstances that might
prevent the Company from obtaining or effecting any of the registration,
application or filings pursuant to the preceding sentence. The
Company is not in violation of the listing requirements of the Principal Market
and has no knowledge of any facts that would reasonably lead to delisting or
suspension of the Common Stock in the foreseeable future. The
issuance by the Company of the Securities shall not have the effect of delisting
or suspending the Common Stock from the Principal Market.
(f) Acknowledgment
Regarding
Buyer's Purchase of Securities. The Company acknowledges and
agrees that each Buyer is acting solely in the capacity of an arm's length
purchaser with respect to the Transaction Documents and the transactions
contemplated hereby and thereby and that no Buyer is (i) an officer or director
of the Company, (ii) an "affiliate" of the Company or any of its Subsidiaries
(as defined in Rule 144) or (iii) to the knowledge of the Company, a "beneficial
owner" of more than 10% of the shares of Common Stock (as defined for purposes
of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the "1934 Act")). The
Company further acknowledges that no Buyer is acting as a financial advisor
or
fiduciary of the Company or any of its Subsidiaries (or in any similar capacity)
with respect to the Transaction Documents and the transactions contemplated
hereby and thereby, and any advice given by a Buyer or any of its
representatives or agents in connection with the Transaction Documents and
the
transactions contemplated hereby and thereby is merely incidental to such
Buyer's purchase of the Securities. The Company further represents to
each Buyer that the Company's decision to enter into the Transaction Documents
has been based solely on the independent evaluation by the Company and its
representatives.
(g) No
General Solicitation;
Placement Agent's Fees. Neither the Company, nor any of its
Subsidiaries or affiliates, nor any Person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within
the
meaning of Regulation D) in connection with the offer or sale of the
Securities. The Company shall be responsible for the payment of any
placement agent's fees, financial advisory fees, or brokers' commissions (other
than for persons engaged by any Buyer or its investment advisor) relating to
or
arising out of the transactions contemplated hereby, which fees are set forth
on
Schedule
3(g). The Company acknowledges that it has engaged Worldwide
Gateway Co., Ltd. as placement agent (collectively, the "Agent") in connection with
the
sale of the Securities. Other than the Agent, neither the Company nor
any of its Subsidiaries has engaged any placement agent or other agent in
connection with the sale of the Securities.
(h) No
Integrated
Offering. None of the Company, its Subsidiaries, any of their
affiliates, and any Person acting on their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any
security, under circumstances that would require registration of any of the
Securities under the 1933 Act, or cause this offering of the Securities to
be
integrated with prior offerings by the Company for purposes of any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of any exchange or automated quotation system on which any
of
the securities of the Company are listed or designated. None of the
Company, its Subsidiaries, their affiliates and any Person acting on their
behalf will take any action or steps referred to in the preceding sentence
that
would require registration of any of the Securities under the 1933 Act or cause
the offering of the Securities to be integrated with other
offerings.
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(i) Dilutive
Effect. The Company understands and acknowledges that the
number of Conversion Shares issuable upon conversion of the Notes and the
Warrant Shares issuable upon exercise of the Warrants will increase in certain
circumstances. The Company further acknowledges that its obligation
to issue Conversion Shares upon conversion of the Notes in accordance with
this
Agreement and the Notes and its obligation
to
issue the Warrant Shares upon exercise of the Warrants in accordance with this
Agreement and the Warrants is, in each case, absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership
interests of other stockholders of the Company.
(j) Application
of Takeover
Protections; Rights Agreement. The Company and its board of
directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Articles of Incorporation (as defined in
Section 3(r)) or the laws of the state of its incorporation which is or could
become applicable to any Buyer as a result of the transactions contemplated
by
this Agreement, including, without limitation, the Company's issuance of the
Securities and any Buyer's ownership of the Securities. The Company
and its board of directors have taken all necessary action, if any, in order
to
render inapplicable any stockholder rights plan or similar arrangement relating
to accumulations of beneficial ownership of Common Stock or a change in control
of the Company.
(k) SEC
Documents; Financial
Statements. Since the effectiveness of the Company's
Registration Statement on the Form SB-2, the Company has filed all reports,
schedules, forms, statements and other documents required to be filed by it
with
the SEC pursuant to the reporting requirements of the 1934 Act (all of the
foregoing filed prior to the date hereof and all exhibits included therein
and
financial statements, notes and schedules thereto and documents incorporated
by
reference therein being hereinafter referred to as the "SEC
Documents"). The Company has delivered to the Buyers or their
respective representatives true, correct and complete copies of the SEC
Documents not available on the XXXXX system. As of their respective
filing dates, the SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, 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 the
light of the circumstances under which they were made, not
misleading. As of their respective filing dates, the financial
statements of the Company included in the SEC Documents complied as to form
in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as
may
be otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in
all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the
Company to the Buyers which is not included in the SEC Documents, including,
without limitation, information referred to in Section 2(d) of this Agreement
or
in any disclosure schedules, contains any untrue statement of a material fact
or
omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstance under which they are or were made
not
misleading.
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(l) Absence
of Certain
Changes. Since December 31, 2006, there has been no material
adverse change and no material adverse development in the business, properties,
operations, condition (financial or otherwise), results of operations or
prospects of the Company or its Subsidiaries. Since December 31, 2006,
the
Company has not (i) declared or paid any dividends, (ii) sold any assets,
individually or in the aggregate, in excess of $50,000 outside of the ordinary
course of business or (iii) had capital expenditures, individually or in the
aggregate, in excess of $250,000. Neither the Company nor any of its
Subsidiaries has taken any steps to seek protection pursuant to any bankruptcy
law nor does the Company have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy proceedings or any actual
knowledge of any fact that would reasonably lead a creditor to do
so. The Company and its Subsidiaries, individually and on a
consolidated basis, are not as of the date hereof, and after giving effect
to
the transactions contemplated hereby to occur at the Closing, will not be
Insolvent (as defined below). For purposes of this Section 3(l),
"Insolvent" means, with
respect to any Person (as defined in Section 3(s)), (i) the present fair
saleable value of such Person's assets is less than the amount required to
pay
such Person's total Indebtedness (as defined in Section 3(s)), (ii) such Person
is unable to pay its debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured, (iii)
such
Person intends to incur or believes that it will incur debts that would be
beyond its ability to pay as such debts mature or (iv) such Person has
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be
conducted.
(m) No
Undisclosed Events,
Liabilities, Developments or Circumstances. No event,
liability, development or circumstance has occurred or exists, or is
contemplated to occur with respect to the Company, its Subsidiaries or their
respective business, properties, prospects, operations or financial condition,
that would be required to be disclosed by the Company under applicable
securities laws on a registration statement on Form S-1 filed with the SEC
relating to an issuance and sale by the Company of its Common Stock and which
has not been publicly announced.
(n) Conduct
of Business;
Regulatory Permits. Neither the Company nor any of its
Subsidiaries is in violation of any term of or in default under its Articles
of
Incorporation, any certificate of designations of any outstanding series of
preferred stock of the Company or the Bylaws or their organizational charter
or
bylaws, respectively. Neither the Company nor any of its Subsidiaries
is in violation of any judgment, decree or order or any statute, ordinance,
rule
or regulation applicable to the Company or its Subsidiaries, and neither the
Company nor any of its Subsidiaries will conduct its business in violation
of
any of the foregoing, except for possible violations which could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Without limiting the generality of the foregoing, the
Company is not in violation of any of the rules, regulations or requirements
of
the Principal Market and has no knowledge of any facts or circumstances that
would reasonably lead to delisting or suspension of the Common Stock by the
Principal Market in the foreseeable future. Since November 30, 2007
(i) the Common Stock has been designated for quotation on the Principal Market,
(ii) trading in the Common Stock has not been suspended by the SEC or the
Principal Market and (iii) the Company has received no communication, written
or
oral, from the SEC or the Principal Market regarding the suspension or delisting
of the Common Stock from the Principal Market. The Company and its
Subsidiaries possess all certificates, authorizations and permits issued by
the
appropriate regulatory authorities necessary to conduct their respective
businesses, except where the failure to possess such certificates,
authorizations or permits would not have, individually or in the aggregate,
a
Material Adverse Effect, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification
of
any such certificate, authorization or permit.
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(o) Foreign
Corrupt
Practices. Neither the Company nor any of its Subsidiaries nor
any director, officer, agent, employee or other Person acting on behalf of
the
Company or any of its Subsidiaries has, in the course of its actions for, or
on
behalf of, the Company or any of its Subsidiaries (i) used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the
U.S.
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment
to
any foreign or domestic government official or employee.
(p) Xxxxxxxx-Xxxxx
Act. The Company is in compliance with any and all applicable
requirements of the Xxxxxxxx-Xxxxx Act of 2002 that are effective as of the
date
hereof, and any and all applicable rules and regulations promulgated by the
SEC
thereunder that are effective as of the date hereof.
(q) Transactions
With
Affiliates. Except as set forth in the SEC Documents filed at
least ten (10) days prior to the date hereof and other than the grant of stock
options, none of the officers, directors or employees of the Company or any
of
its Subsidiaries is presently a party to any transaction with the Company or
any
of its Subsidiaries (other than for ordinary course services as employees,
officers or directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of
real
or personal property to or from, or otherwise requiring payments to or from
any
such officer, director or employee or, to the knowledge of the Company or any
of
its Subsidiaries, any corporation, partnership, trust or other entity in which
any such officer, director, or employee has a substantial interest or is an
officer, director, trustee or partner.
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(r) Equity
Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of (i) 1,000,000 shares of Preferred
Stock, $0.001 par value, of which as of the date hereof, none are issued and
outstanding, (ii) 100,000,000 shares of Common Stock, of which as of the date
hereof, 27,125,261 are issued and outstanding, 10,000,000 shares are reserved
for issuance pursuant to the Company's stock option and purchase plans and
4,571,225 shares are reserved for issuance pursuant to securities, which shares
are set forth in Schedule 3(r), (other
than the aforementioned options, the Notes and the Warrants) exercisable or
exchangeable for, or convertible into, shares of Common Stock. All of
such outstanding shares have been, or upon issuance will be, validly issued
and
are fully paid and nonassessable. Except as disclosed in Schedule 3(r): (i)
none of the Company's capital stock is subject to preemptive rights or any
other
similar rights or any liens or encumbrances suffered or permitted by the
Company; (ii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or
securities or rights convertible into, or exercisable or exchangeable for,
any
capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of
its
Subsidiaries is or may become bound to issue additional capital stock of the
Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or
securities or rights convertible into, or exercisable or exchangeable for,
any
capital stock of the Company or any of its Subsidiaries; (iii) there are no
outstanding debt securities, notes, credit agreements, credit facilities or
other agreements, documents or instruments evidencing Indebtedness of the
Company or any of its Subsidiaries or by which the Company or any of its
Subsidiaries is or may become bound; (iv) there are no financing statements
securing obligations in any material amounts, either singly or in the aggregate,
filed in connection with the Company or any of its Subsidiaries; (v) there
are
no agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of their securities under the 1933
Act
(except pursuant to the Registration Rights Agreement); (vi) there are no
outstanding securities or instruments of the Company or any of its Subsidiaries
which contain any redemption or similar provisions, 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; (vii) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance
of
the Securities; (viii) the Company does not have any stock appreciation rights
or "phantom stock" plans or agreements or any similar plan or agreement; and
(ix) the Company and its Subsidiaries have no liabilities or obligations
required to be disclosed in the SEC Documents but not so disclosed in the SEC
Documents, other than those incurred in the ordinary course of the Company's
or
its Subsidiaries' respective businesses and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect. The
Company has furnished to the Buyers true, correct and complete copies of the
Company's Articles of Incorporation, as amended and as in effect on the date
hereof (the "Articles of
Incorporation"), and the Company's Bylaws, as amended and as in effect on
the date hereof (the "Bylaws"), and the terms
of all
securities convertible into, or exercisable or exchangeable for, shares of
Common Stock and the material rights of the holders thereof in respect
thereto.
(s) Indebtedness
and Other
Contracts. As of the date hereof, other than the Existing
Debentures (as defined in the Exchange Agreement), and as of the Closing,
neither the Company nor any of its Subsidiaries (i) has any outstanding
Indebtedness (as defined below), (ii) is a party to any contract, agreement
or
instrument, the violation of which, or default under which, by the other
party(ies) to such contract, agreement or instrument could reasonably be
expected to result in a Material Adverse Effect, (iii) is in violation of any
term of or in default under any contract, agreement or instrument relating
to
any Indebtedness, except where such violations and defaults would not result,
individually or in the aggregate, in a Material Adverse Effect, or (iv) is
a
party to any contract, agreement or instrument relating to any Indebtedness,
the
performance of which, in the judgment of the Company's officers, has or is
expected to have a Material Adverse Effect. For purposes of this
Agreement: (x) "Indebtedness" of any Person
means, without duplication (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services, including (without limitation) "capital leases" in
accordance with generally accepted accounting principles (other than trade
payables entered into in the ordinary course of business), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and
other
similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect
to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in
the
event of default are limited to repossession or sale of such property), (F)
all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment
of
such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through (G)
above; (y) "Contingent
Obligation" means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any indebtedness, lease,
dividend or other obligation of another Person if the primary purpose or intent
of the Person incurring such liability, or the primary effect thereof, is to
provide assurance to the obligee of such liability that such liability will
be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such liability will be protected (in whole or
in
part) against loss with respect thereto; and (z) "Person" means an individual,
a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any department or
agency thereof.
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(t) Absence
of
Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by the Principal Market, any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
of
its Subsidiaries, the Common Stock or any of the Company's Subsidiaries or
any
of the Company's or its Subsidiaries' officers or directors.
(u) Insurance. The
Company and each of its Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged. Neither the
Company nor any such Subsidiary has been refused any insurance coverage sought
or applied for and neither the Company nor any such Subsidiary has any reason
to
believe that it will not be able to renew its existing insurance coverage as
and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not have
a
Material Adverse Effect.
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(v) Employee
Relations.
(i)
Neither the Company nor any of its Subsidiaries is
a party to any collective bargaining agreement or employs any member of a
union. The Company and its Subsidiaries believe that their relations
with their employees are good. No executive officer of the
Company or any of its Subsidiaries (as defined in Rule 501(f) of the
0000 Xxx) has notified the Company or any such Subsidiary that such officer
intends to leave the Company or any such Subsidiary or otherwise terminate
such
officer's employment with the Company or any such Subsidiary. No
executive officer of the Company or any of its Subsidiaries, is, or is now
expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does
not
subject the Company or any of its Subsidiaries to any liability with respect
to
any of the foregoing matters.
(ii) The
Company and its Subsidiaries are in compliance with all federal, state, local
and foreign laws and regulations respecting labor, employment and employment
practices and benefits, terms and conditions of employment and wages and hours,
except where failure to be in compliance would not, either individually or
in
the aggregate, reasonably be expected to result in a Material Adverse
Effect.
(w) Title.
The Company
and its Subsidiaries have good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by them
which is material to the business of the Company and its Subsidiaries, in each
case free and clear of all liens, encumbrances and defects except such as do
not
materially affect the value of such property and do not interfere with the
use
made and proposed to be made of such property by the Company and any of its
Subsidiaries. Any real property and facilities held under lease by
the Company or any of its Subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries.
(x) Intellectual
Property
Rights. The Company and its Subsidiaries own or possess
adequate rights or licenses to use all trademarks, service marks and all
applications and registrations therefor, trade names, patents, patent rights,
copyrights, original works of authorship, inventions, trade secrets and other
intellectual property rights ("Intellectual Property Rights")
necessary to conduct their respective businesses as now
conducted. None of the Company's registered, or applied for,
Intellectual Property Rights has expired or terminated or has been abandoned,
or
is expected to expire or terminate or expected to be abandoned, within three
years from the date of this Agreement. The Company does not have any
knowledge of any infringement by the Company or its Subsidiaries of Intellectual
Property Rights of others. There is no claim, action or proceeding being made
or
brought, or to the knowledge of the Company, being threatened, against the
Company or its Subsidiaries regarding its Intellectual Property
Rights. Neither the Company nor any of its Subsidiaries is aware of
any facts or circumstances which might give rise to any of the foregoing
infringements or claims, actions or proceedings. The Company and its
Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their Intellectual Property
Rights.
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(y) Environmental
Laws. The Company and its Subsidiaries (i) are in compliance
with any and all Environmental Laws (as hereinafter defined), (ii) have received
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or approval
where, in each of the foregoing clauses (i), (ii) and (iii), the failure to
so
comply could be reasonably expected to have, individually or in the aggregate,
a
Material Adverse Effect. The term "Environmental Laws" means all
federal, state, local or foreign laws relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, "Hazardous Materials") into
the environment, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials, as well as
all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.
(z) Subsidiary
Rights. The Company or one of its Subsidiaries has the
unrestricted right to vote, and (subject to limitations imposed by applicable
law) to receive dividends and distributions on, all capital securities of its
Subsidiaries as owned by the Company or such Subsidiary.
(aa) Tax
Status. The Company and each of its Subsidiaries (i) has made
or filed all foreign, federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and charges that
are
material in amount, shown or determined to be due on such returns, reports
and
declarations, except those being contested in good faith and (iii) has set
aside
on its books provision reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be
due by the taxing authority of any jurisdiction, and the officers of the Company
know of no basis for any such claim.
(bb) Internal
Accounting and
Disclosure Controls. The Company and each of its Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset and liability
accountability, (iii) access to assets or incurrence of liabilities is permitted
only in accordance with management's general or specific authorization and
(iv)
the recorded accountability for assets and liabilities is compared with the
existing assets and liabilities at reasonable intervals and appropriate action
is taken with respect to any difference. The Company maintains
disclosure controls and procedures (as such term is defined in Rule 13a-14
under
the 0000 Xxx) that are effective in ensuring that information required to be
disclosed by the Company in the reports that it files or submits under the
1934
Act is recorded, processed, summarized and reported, within the time periods
specified in the rules and forms of the SEC, including, without limitation,
controls and procedures designed in to ensure that information required to
be
disclosed by the Company in the reports that it files or submits under the
1934
Act is accumulated and communicated to the Company's management, including
its
principal executive officer or officers and its principal financial officer
or
officers, as appropriate, to allow timely decisions regarding required
disclosure. During the twelve months prior to the date hereof neither
the Company nor any of its Subsidiaries have received any notice or
correspondence from any accountant relating to any potential material weakness
in any part of the system of internal accounting controls of the Company or
any
of its Subsidiaries.
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(cc)
Ranking of
Notes. No Indebtedness of the Company is senior to or ranks
pari passu with the
Notes in right of payment, whether with respect of payment of redemptions,
interest, damages or upon liquidation or dissolution or otherwise.
(dd) Off
Balance Sheet
Arrangements. There is no transaction, arrangement, or other
relationship between the Company and an unconsolidated or other off balance
sheet entity that is required to be disclosed by the Company in its 1934 Act
filings and is not so disclosed or that otherwise would be reasonably likely
to
have a Material Adverse Effect.
(ee)
Investment Company
Status. The Company is not, and upon consummation of the sale
of the Securities will not be, an "investment company," a company controlled
by
an "investment company" or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company" as such terms are defined
in the Investment Company Act of 1940, as amended.
(ff)
Form SB-2
Eligibility. The Company is eligible to register the
Conversion Shares and the Warrant Shares for resale by the Buyers using Form
SB-2 promulgated under the 1933 Act.
(gg)
Transfer
Taxes. On the Closing Date, all stock transfer or other taxes
(other than income or similar taxes) which are required to be paid in connection
with the sale and transfer of the Securities to be sold to each Buyer hereunder
will be, or will have been, fully paid or provided for by the Company, and
all
laws imposing such taxes will be or will have been complied with.
(hh) Manipulation
of
Price. The Company has not, and to its knowledge no one acting
on its behalf has, (i) taken, directly or indirectly, any action designed to
cause or to result, or that could reasonably be expected to cause or result,
in
the stabilization or manipulation of the price of any security of the Company
to
facilitate the sale or resale of any of the Securities, (ii) other than the
Agent, sold, bid for, purchased, or paid any compensation for soliciting
purchases of, any of the Securities, or (iii) paid or agreed to pay to any
person any compensation for soliciting another to purchase any other securities
of the Company.
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(ii)
U.S. Real Property
Holding
Corporation. The Company is not, nor has it ever been, a U.S.
real property holding corporation within the meaning of Section 897 of the
Internal Revenue Code of 1986, as amended, and the Company shall so certify
upon
any Buyer's request.
(jj)
Bank Holding Company
Act. Neither the Company nor any of its Subsidiaries is
subject to the Bank Holding Company Act of 1956, as amended (the "BHCA") and to regulation
by
the Board of Governors of the Federal Reserve System (the "Federal
Reserve"). Neither the Company nor any of its Subsidiaries or
affiliates owns or controls, directly or indirectly, five percent (5%) or more
of the outstanding shares of any class of voting securities or twenty-five
(25%)
or more of the total equity of a bank or any equity that is subject
to the BHCA and to regulation by the Federal Reserve. Neither the
Company nor any of its Subsidiaries or affiliates exercises a controlling
influence over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve.
(kk) Disclosure. The
Company confirms that neither it nor any other Person acting on its behalf
has
provided any of the Buyers or their agents or counsel with any information
that
constitutes or could reasonably be expected to constitute material, nonpublic
information. The Company understands and confirms that each of the
Buyers will rely on the foregoing representations in effecting transactions
in
securities of the Company. All disclosure provided to the Buyers
regarding the Company or any of its Subsidiaries, their business and the
transactions contemplated hereby, including the Schedules to this Agreement,
furnished by or on behalf of the Company is true and correct and does not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of
the
circumstances under which they were made, not misleading. Each press
release issued by the Company or any of its Subsidiaries during the twelve
(12)
months preceding the date of this Agreement did not at the time of release
contain any untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. No event or circumstance has occurred or information
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, prospects, operations or financial conditions, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed.
(ll)
Acknowledgement
Regarding
Buyers' Trading Activity. Anything in this Agreement or
elsewhere herein to the contrary notwithstanding, but subject to compliance
by
the Buyers with applicable law and the provisions of Section 2(k) hereto, it
is
understood and acknowledged by the Company (i) that none of the Buyers have
been
asked by the Company or its Subsidiaries to agree, nor has any Buyer agreed
with
the Company or its Subsidiaries, to desist from purchasing or selling, long
and/or short, securities of the Company, or "derivative" securities based on
securities issued by the Company or to hold the Securities for any specified
term; (ii) that past or future open market or other transactions by any Buyer,
including, without limitation, short sales or "derivative" transactions, before
or after the closing of this or future private placement transactions, may
negatively impact the market price of the Company's publicly-traded securities;
(iii) that any Buyer, and counter parties in "derivative" transactions to which
any such Buyer is a party, directly or indirectly, presently may have a "short"
position in the Common Stock, and (iv) that each Buyer shall not be deemed
to
have any affiliation with or control over any arm's length counter-party in
any
"derivative" transaction. The Company further understands and
acknowledges that (a) one or more Buyers may engage in hedging and/or trading
activities at various times during the period that the Securities are
outstanding, including, without limitation, during the periods that the value
of
the Conversion Shares and the Warrant Shares
deliverable with respect to Securities are being determined and (b) such hedging
and/or trading activities (if any) can reduce the value of the existing
stockholders' equity interest in the Company at and after the time the hedging
and/or trading activities are being conducted. The Company
acknowledges that such aforementioned hedging and/or trading activities do
not
constitute a breach of this Agreement, the Notes, the Warrants or any of the
documents executed in connection herewith.
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4.
COVENANTS.
(a)
Best
Efforts. Each party shall use its best efforts timely to
satisfy each of the conditions to be satisfied by it as provided in Sections
6
and 7 of this Agreement.
(b)
Form D and Blue
Sky. The Company agrees to file a Form D, if required under
U.S. securities laws, with respect to the Securities as required under
Regulation D and to provide a copy thereof to each Buyer promptly after such
filing. The Company shall, on or before the Closing Date, take such
action as the Company shall reasonably determine is necessary in order to obtain
an exemption for or to qualify the Securities for sale to the Buyers at the
Closing pursuant to this Agreement under applicable securities or "Blue Sky"
laws of the states of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so taken to the
Buyers on or prior to the Closing Date. 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 Date.
(c)
Reporting
Status. Until the date on which the Investors (as defined in
the Registration Rights Agreement) shall have sold all the Conversion Shares
and
Warrant Shares and
none of the Notes or Warrants is
outstanding, (the "Reporting
Period"), the Company shall timely file all reports required to be filed
with the SEC pursuant to the 1934 Act, and the Company shall not terminate
its
status as an issuer required to file reports under the 1934 Act even if the
1934
Act or the rules and regulations thereunder would no longer require or otherwise
permit such termination, and the Company shall take all actions necessary to
maintain its eligibility to register the Conversion Shares and Warrant Shares
for resale by the Buyers on Form SB-2.
(d)
Use of
Proceeds. The Company will use the proceeds from the sale of
the Securities for general corporate purposes, including general and
administrative expenses and not for (i) the repayment of any outstanding
Indebtedness of the Company or any of its Subsidiaries or (ii) the redemption
or
repurchase of any of its or its Subsidiaries' equity securities.
(e)
Financial
Information. As long as any Notes or Warrants are outstanding,
the Company agrees to send the following to each Investor (as defined in the
Registration Rights Agreement) during the Reporting Period (i) unless the
following are filed with the SEC through XXXXX and are available to the public
through the XXXXX system, within one (1) Business Day after the filing thereof
with the SEC, a copy of its Annual Reports and Quarterly Reports on Form 10-K,
10-KSB, 10-Q or 10-QSB, any interim reports or any consolidated balance sheets,
income statements, stockholders' equity statements and/or cash flow statements
for any period other than annual, any Current Reports on Form 8-K and any
registration statements (other than on Form S-8) or amendments filed pursuant
to
the 1933 Act, (ii) on the same day as the release thereof, facsimile or e-mailed
copies of all press releases issued by the Company or any of its Subsidiaries,
and (iii) copies of any notices and other information made available or given
to
the stockholders of the Company generally, contemporaneously with the making
available or giving thereof to the stockholders. As used herein,
"Business Day" means any
day other than Saturday, Sunday or other day on which commercial banks in The
City of New York are authorized or required by law to remain
closed.
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(f)
Listing. The
Company shall promptly secure the listing of all of the Registrable Securities
(as defined in the Registration Rights Agreement) upon each national securities
exchange and automated quotation system, if any, upon which the Common Stock
is
then listed (subject to official notice of issuance) and shall maintain, in
accordance with the Notes and Warrants, such listing of all Registrable
Securities from time to time issuable under the terms of the Transaction
Documents. The Company shall maintain the Common Stocks'
authorization for quotation on the Principal Market. Neither the
Company nor any of its Subsidiaries shall take any action which would be
reasonably expected to result in the delisting or suspension of the Common
Stock
on the Principal Market. The Company shall pay all fees and expenses
in connection with satisfying its obligations under this Section
4(f).
(g)
Fees. Subject
to Section 8 below, at Closing, the Company shall pay an expense allowance
to
Highbridge International LLC (a Buyer) or its designee(s) (in addition to any
other expense amounts paid to any Buyer prior to the date of this Agreement)
for
all reasonable costs and expenses incurred in connection with the transactions
contemplated by the Transaction Documents (including all reasonable legal fees
and disbursements in connection therewith, documentation and implementation
of
the transactions contemplated by the Transaction Documents and due diligence
in
connection therewith), in the amount of $90,000, which amount shall be withheld
by such Buyer from its Purchase Price at the Closing. The Company
shall be responsible for the payment of any placement agent's fees, financial
advisory fees, or broker's commissions relating to or arising out of the
transactions contemplated hereby, including, without limitation, any fees
payable to the Agent. The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including, without limitation,
reasonable attorney's fees and out-of-pocket expenses) arising in connection
with any claim relating to any such payment.
(h)
Pledge of
Securities. The Company acknowledges and agrees that the
Securities may be pledged by an Investor (as defined in the Registration Rights
Agreement) in connection with a bona fide margin agreement or other loan or
financing arrangement that is secured by the Securities. The pledge
of Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and no Investor effecting a pledge of Securities shall
be
required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction
Document, including, without limitation, Section 2(f) hereof; provided that
an
Investor and its pledgee shall be required to comply with the provisions of
Section 2(f) hereof in order to effect a sale, transfer or assignment of
Securities to such pledgee. The Company hereby agrees to execute and
deliver such documentation as a pledgee of the Securities may reasonably request
in connection with a pledge of the Securities to such pledgee by an
Investor.
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(i)
Disclosure of Transactions
and Other Material Information. On or before 8:30 a.m., New
York City time, on the first Business Day following the date of this Agreement,
the Company shall issue a press release and file a Current Report on Form 8-K
describing the terms of the transactions contemplated by the Transaction
Documents in the form required by the 1934 Act and attaching the material
Transaction Documents (including, without limitation, this Agreement, the form
of the Notes, the form of Warrant and the form of the Registration Rights
Agreement) as exhibits to such filing (including all attachments, the "8-K Filing"). From
and after the filing of the 8-K Filing with the SEC, no Buyer shall be in
possession of any material, nonpublic information received from the Company,
any
of its Subsidiaries or any of their respective officers, directors, employees
or
agents, that is not disclosed in the 8-K Filing. The Company shall
not, and shall cause each of its Subsidiaries and its and each of their
respective officers, directors, employees and agents, not to, provide any Buyer
with any material, nonpublic information regarding the Company or any of its
Subsidiaries from and after the filing of the 8-K Filing with the SEC without
the express prior written consent of such Buyer. If a Buyer has, or
believes it has, received any such material, nonpublic information regarding
the
Company or any of its Subsidiaries, it shall provide the Company with written
notice thereof. The Company shall, within five (5) Trading Days (as
defined in the Notes) of receipt of such notice, make public disclosure of
such
material, nonpublic information. In the event of a breach of the
foregoing covenant by the Company, any of its Subsidiaries, or any of its or
their respective officers, directors, employees and agents, in addition to
any
other remedy provided herein or in the Transaction Documents, a Buyer shall
have
the right to make a public disclosure, in the form of a press release, public
advertisement or otherwise, of such material, nonpublic information without
the
prior approval by the Company, its Subsidiaries, or any of its or their
respective officers, directors, employees or agents. No Buyer shall
have any liability to the Company, its Subsidiaries, or any of its or their
respective officers, directors, employees, stockholders or agents for any such
disclosure. Subject to the foregoing, neither the Company, its
Subsidiaries nor any Buyer shall issue any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval of
any
Buyer, to make any press release or other public disclosure with respect to
such
transactions (i) in substantial conformity with the 8-K Filing and
contemporaneously therewith and (ii) as is required by applicable law and
regulations (provided that in the case of clause (i) each Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release). Without the prior written
consent of any applicable Buyer, neither the Company nor any of its Subsidiaries
or affiliates shall disclose the name of such Buyer in any filing, announcement,
release or otherwise.
(j)
Restriction on Redemption
and Cash Dividends. So long as any Notes are outstanding, the
Company shall not, directly or indirectly, redeem, or declare or pay any cash
dividend or distribution on, the Common Stock without the prior express written
consent of the holders of Notes representing not less than a majority of the
aggregate principal amount of the then outstanding Notes.
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(k)
Additional Notes;
Variable
Securities; Dilutive Issuances. So long as any Buyer
beneficially owns any Securities, the Company will not issue any Notes other
than to the Buyers as contemplated hereby and the Company shall not issue any
other securities that would cause a breach or default under the
Notes. For so long as any Notes or Warrants remain outstanding, the
Company shall not, in any manner, issue or sell any rights, warrants or options
to subscribe for or purchase Common Stock or directly or indirectly convertible
into or exchangeable or exercisable for Common Stock at a price which varies
or
may vary with the market price of the Common Stock, including by way of one
or
more reset(s) to any fixed price unless the conversion, exchange or exercise
price of any such security cannot be less than the then applicable Conversion
Price (as defined in the Notes)with respect to the Common Stock into which
any
Note is convertible or the then applicable Exercise Price (as defined in the
Warrants) with respect to the Common Stock into which any Warrant is
exercisable. For so long as any Notes or Warrants remain outstanding,
the Company shall not, in any manner, enter into or affect any Dilutive Issuance
(as defined in the Notes) if the effect of such Dilutive Issuance is to cause
the Company to be required to issue upon conversion of any Note or exercise
of
any Warrant any shares of Common Stock in excess of that number of shares of
Common Stock which the Company may issue upon conversion of the Notes and
exercise of the Warrants without breaching the Company's obligations under
the
rules or regulations of the Principal Market.
(l)
Corporate
Existence. So long as any Buyer beneficially owns any
Securities, the Company shall not be party to any Fundamental Transaction (as
defined in the Notes) unless the Company is in compliance with the applicable
provisions governing Fundamental Transactions set forth in the Notes and the
Warrants.
(m) Reservation
of Shares. The Company shall
take all action necessary to at all times have authorized, and reserved for
the
purpose of issuance, no less than 130% of the sum of the number of
shares of Common Stock issuable (i) upon conversion of the Notes issued at
the
Closing and (ii) upon exercise of the Warrants issued at the Closing (without
taking into account any limitations on the Conversion of the Notes or exercise
of the Warrants set forth in the Notes and Warrants, respectively).
(n)
Conduct of
Business. The business of the Company and its Subsidiaries
shall not be conducted in violation of any law, ordinance or regulation of
any
governmental entity, except where such violations would not result, either
individually or in the aggregate, in a Material Adverse Effect.
(o)
Additional Issuances
of
Securities.
(i) For
purposes of this Section 4(o), the following definitions shall
apply.
(1) "Convertible
Securities" means
any stock or securities (other than Options) convertible into or exercisable
or
exchangeable for shares of Common Stock.
(2) "Options"
means any rights,
warrants or options to subscribe for or purchase shares of Common Stock or Convertible
Securities.
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(3) "Common
Stock Equivalents"
means, collectively, Options and Convertible Securities.
(ii) From
the date hereof until the date that is thirty (30) Trading Days (as defined
in
the Notes) following the Effective Date (as defined in the Registration Rights
Agreement) (the "Trigger
Date"), the Company will not, directly or indirectly, file any
registration statement with the SEC other than the Registration Statement (as
defined in the Registration Rights Agreement). From the date hereof
until the Trigger Date, the Company will not, directly or indirectly, offer,
sell, grant any option to purchase, or otherwise dispose of (or announce any
offer, sale, grant or any option to purchase or other disposition of) any of
its
or its Subsidiaries' equity or equity equivalent securities, including without
limitation any debt, preferred stock or other instrument or security that is,
at
any time during its life and under any circumstances, convertible into or
exchangeable or exercisable for shares of Common Stock or Common Stock
Equivalents (any such offer, sale, grant, disposition or announcement being
referred to as a "Subsequent
Placement").
(iii) From
the Trigger Date until the later of (x) the second anniversary of the Closing
Date, and (y) such time as there no longer any Notes, the Company will not,
directly or indirectly, effect any Subsequent Placement unless the Company
shall
have first complied with this Section 4(o)(iii).
(1) The
Company shall deliver to each Buyer an irrevocable written notice (the "Offer Notice") of any proposed
or intended issuance or sale or exchange (the "Offer") of the securities
being offered (the "Offered
Securities") in a Subsequent Placement, which Offer Notice shall (w)
identify and describe the Offered Securities, (x) describe the price and other
terms upon which they are to be issued, sold or exchanged, and the number or
amount of the Offered Securities to be issued, sold or exchanged, (y) identify
the persons or entities (if known) to which or with which the Offered Securities
are to be offered, issued, sold or exchanged and (z) offer to issue and sell
to
or exchange with such Buyers at least fifty percent (50%) of the Offered
Securities, allocated among such Buyers (a) based on such Buyer's pro rata
portion of the aggregate principal amount of Notes purchased hereunder (the
"Basic Amount"), and (b)
with respect to each Buyer that elects to purchase its Basic Amount, any
additional portion of the Offered Securities attributable to the Basic Amounts
of other Buyers as such Buyer shall indicate it will purchase or acquire should
the other Buyers subscribe for less than their Basic Amounts (the "Undersubscription Amount"),
which process shall be repeated until the Buyers shall have an opportunity
to
subscribe for any remaining Undersubscription Amount.
(2) To
accept an Offer, in whole or in part, such Buyer must deliver a written notice
to the Company prior to the end of the tenth (10th)
Business Day after such Buyer's receipt of the Offer Notice (the "Offer Period"), setting forth
the portion of such Buyer's Basic Amount that such Buyer elects to purchase
and,
if such Buyer shall elect to purchase all of its Basic Amount, the
Undersubscription Amount, if any, that such Buyer elects to purchase (in either
case, the "Notice of
Acceptance"). If the Basic Amounts subscribed for by all
Buyers are less than the total of all of the Basic Amounts, then each Buyer
who
has set forth an Undersubscription Amount in its Notice of Acceptance shall
be
entitled to purchase, in addition to the Basic Amounts subscribed for, the
Undersubscription Amount it has subscribed for; provided, however,
that if the
Undersubscription Amounts subscribed for exceed the difference between the
total
of all the Basic Amounts and the Basic Amounts subscribed for (the "Available Undersubscription
Amount"), each Buyer who has subscribed for any Undersubscription Amount
shall be entitled to purchase only that portion of the Available
Undersubscription Amount as the Basic Amount of such Buyer bears to the total
Basic Amounts of all Buyers that have subscribed for Undersubscription Amounts,
subject to rounding by the Company to the extent it deems reasonably necessary.
Notwithstanding the foregoing, if the Company desires to modify or amend the
terms and conditions of the Offer prior to the expiration of the Offer Period,
the Company may deliver to the Buyers a new Offer Notice and the Offer Period
shall expire on the third Business Day after such Buyer’s receipt of such new
Offer Notice.
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(3) The
Company shall have fifteen (15) Business Days from the expiration of the Offer
Period above to offer, issue, sell or exchange all or any part of such Offered
Securities as to which a Notice of Acceptance has not been given by the Buyers
(the "Refused
Securities"), but only to the offerees described in the Offer Notice (if
so described therein) and only upon terms and conditions (including, without
limitation, unit prices and interest rates) that are not more favorable to
the
acquiring person or persons or less favorable to the Company than those set
forth in the Offer Notice and (ii) to publicly announce (a) the execution of
such Subsequent Placement Agreement, and (b) either (x) the consummation of
the
transactions contemplated by such Subsequent Placement Agreement or (y) the
termination of such Subsequent Placement Agreement, which shall be filed with
the SEC on a Current Report on Form 8-K with such Subsequent Placement Agreement
and any documents contemplated therein filed as exhibits thereto.
(4) In
the event the Company shall propose to sell less than all the Refused Securities
(any such sale to be in the manner and on the terms specified in Section
4(o)(iii)(3) above), then each Buyer may, at its sole option and in its sole
discretion, reduce the number or amount of the Offered Securities specified
in
its Notice of Acceptance to an amount that shall be not less than the number
or
amount of the Offered Securities that such Buyer elected to purchase pursuant
to
Section 4(o)(iii)(2) above multiplied by a fraction, (i) the numerator of which
shall be the number or amount of Offered Securities the Company actually
proposes to issue, sell or exchange (including Offered Securities to be issued
or sold to Buyers pursuant to Section 4(o)(iii)(3) above prior to such
reduction) and (ii) the denominator of which shall be the original amount of
the
Offered Securities. In the event that any Buyer so elects to reduce
the number or amount of Offered Securities specified in its Notice of
Acceptance, the Company may not issue, sell or exchange more than the reduced
number or amount of the Offered Securities unless and until such securities
have
again been offered to the Buyers in accordance with Section 4(o)(iii)(1)
above.
(5) Upon
the closing of the issuance, sale or exchange of all or less than all of the
Refused Securities, the Buyers shall acquire from the Company, and the Company
shall issue to the Buyers, the number or amount of Offered Securities specified
in the Notices of Acceptance, as reduced pursuant to Section 4(o)(iii)(4) above
if the Buyers have so elected, upon the terms and conditions specified in the
Offer. Notwithstanding anything to the contrary contained in this
Agreement, if the Company does not consummate the closing of the issuance,
sale
or exchange of all or less than all of the Refused Securities within fifteen
(15) Business Days of the expiration of the Offer Period, the Company shall
issue to the Buyers the number or amount of Offered Securities specified in
the
Notices of Acceptance, as reduced pursuant to Section 4(o)(iii)(4) above if
the
Buyers have so elected, upon the terms and conditions specified in the
Offer. The purchase by the Buyers of any Offered Securities is
subject in all cases to the preparation, execution and delivery by the Company
and the Buyers of a purchase agreement relating to such Offered Securities
reasonably satisfactory in form and substance to the Buyers and their respective
counsel.
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(6) Any
Offered Securities not acquired by the Buyers or other persons in accordance
with Section 4(o)(iii)(3) above may not be issued, sold or exchanged until
they
are again offered to the Buyers under the procedures specified in this
Agreement.
(7) The
Company and the Buyers agree that if any Buyer elects to participate in the
Offer, (x) neither the agreement regarding the Subsequent Placement (the "Subsequent Placement
Agreement") with respect to such Offer nor any other transaction
documents related thereto (collectively, the "Subsequent Placement
Documents") shall include any term or provisions whereby any Buyer shall
be required to agree to any restrictions in trading as to any securities of
the
Company owned by such Buyer prior to such Subsequent Placement, and (y) any
registration rights set forth in such Subsequent Placement Documents shall
be
similar in all material respects to the registration rights contained in the
Registration Rights Agreement.
(8) Notwithstanding
anything to the contrary in this Section 4(o) and unless otherwise agreed to
by
the Buyers, the Company shall either confirm in writing to the Buyers that
the
transaction with respect to the Subsequent Placement has been abandoned or
shall
publicly disclose its intention to issue the Offered Securities, in either
case
in such a manner such that the Buyers will not be in possession of material
non-public information, by the fifteen (15th)
Business Day following delivery of the Offer Notice. If by the
fifteen (15th)
Business Day following delivery of the Offer Notice no public disclosure
regarding a transaction with respect to the Offered Securities has been made,
and no notice regarding the abandonment of such transaction has been received
by
the Buyers, such transaction shall be deemed to have been abandoned and the
Buyers shall not be deemed to be in possession of any material, non-public
information with respect to the Company. Should the Company decide to
pursue such transaction with respect to the Offered Securities, the Company
shall provide each Buyer with another Offer Notice and each Buyer will again
have the right of participation set forth in this Section
4(o)(iii). The Company shall not be permitted to deliver more than
one such Offer Notice to the Buyers in any 60 day period.
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(iv) The
restrictions contained in subsections (ii) and (iii) of this Section 4(o) shall
not apply in connection with the issuance of any Excluded Securities (as defined
in the Notes).
(p) Closing
Documents. On or prior to fourteen (14) calendar days after
the Closing Date, the Company agrees to deliver, or cause to be delivered,
to
each Buyer and Xxxxxxx Xxxx & Xxxxx LLP executed copies of the Transaction
Documents, Securities and other document required to be delivered to any party
pursuant to Section 7 hereof.
(q) Lock-Up. The
Company shall not amend or waive any provision of any of the Lock-Up Agreements
(as defined below) except to extend the term of the lock-up period.
(r)
No Reverse
Split. For so long as any Securities remain outstanding the
Company shall not effect any reverse stock split, stock combination or other
similar reclassification of any class of the Company's Common
Stock.
5.
REGISTER; TRANSFER
AGENT
INSTRUCTIONS.
(a)
Register. The
Company shall maintain at its principal executive offices (or such other office
or agency of the Company as it may designate by notice to each holder of
Securities), a register for the Notes and the Warrants in which the Company
shall record the name and address of the Person in whose name the Notes and the Warrants have
been
issued (including the name and address of each transferee), the principal amount
of Notes held by such Person, the number of Conversion Shares issuable upon
conversion of the Notes and the number of Warrant Shares issuable upon exercise
of the Warrants held by such Person. The Company shall keep the
register open and available at all times during business hours for inspection
of
any Buyer or its legal representatives.
(b)
Transfer Agent
Instructions. The Company shall issue irrevocable instructions
to its transfer agent, and any subsequent transfer agent, to issue certificates
or credit shares to the applicable balance accounts at The Depository Trust
Company ("DTC"),
registered in the name of each Buyer or its respective nominee(s), for the
Conversion Shares and the Warrant Shares issued at the Closing or upon
conversion of the Notes or exercise of the Warrants in such amounts as specified
from time to time by each Buyer to the Company upon conversion of the Notes
or
exercise of the Warrants in the form of Exhibit D attached
hereto (the "Irrevocable
Transfer Agent Instructions"). The Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred
to
in this Section 5(b), and stop transfer instructions to give effect to Section
2(g) hereof, will be given by the Company to its transfer agent, and that the
Securities shall otherwise be freely transferable on the books and records
of
the Company as and to the extent provided in this Agreement and the other
Transaction Documents. If a Buyer effects a sale, assignment or
transfer of the Securities in accordance with Section 2(f), the Company shall
permit the transfer and shall promptly instruct its transfer agent to issue
one
or more certificates or credit shares to the applicable balance accounts at
DTC
in such name and in such denominations as specified by such Buyer to effect
such
sale, transfer or assignment. In the event that such sale, assignment
or transfer involves Conversion Shares or Warrant Shares sold, assigned or
transferred pursuant to an effective registration statement or pursuant to
Rule
144, the transfer agent shall issue such Securities to the Buyer, assignee
or
transferee, as the case may be, without any restrictive legend. The
Company acknowledges that a breach by it of its obligations hereunder will
cause
irreparable harm to a Buyer. Accordingly, the Company acknowledges
that the remedy at law for a breach of its obligations under this Section 5(b)
will be inadequate and agrees, in the event of a breach or threatened breach
by
the Company of the provisions of this Section 5(b), that a Buyer shall be
entitled to seek, in addition to all other available remedies, an order and/or
injunction restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or other
security being required.
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6.
CONDITIONS TO
THE COMPANY'S OBLIGATION TO SELL.
The
obligation of the Company hereunder to issue and sell the Notes and the related
Warrants to each Buyer at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion by providing each Buyer with prior
written notice thereof:
(i) Such
Buyer shall have executed each of the Transaction Documents to which it is
a
party and delivered the same to the Company.
(ii)
Such Buyer and each other Buyer shall have
delivered to the Company the Purchase Price (less, in the case of Highbridge
International LLC, the amounts withheld pursuant to Section 4(g)) for the Notes
and the related Warrants being purchased by such Buyer at the Closing by wire
transfer of immediately available funds pursuant to the wire instructions
provided by the Company or by surrender of such Buyer's Existing Debentures
as
contemplated by the Exchange Agreement.
(iii) The
representations and warranties of such Buyer shall be true and correct in all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects) as of the date when made and as of the Closing Date
as
though made at that time (except for representations and warranties that speak
as of a specific date, which shall be true and correct as of such specified
date), and such Buyer shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by
this
Agreement to be performed, satisfied or complied with by such Buyer at or prior
to the Closing Date.
7.
CONDITIONS TO EACH
BUYER'S
OBLIGATION TO PURCHASE.
The
obligation of each Buyer hereunder to purchase the Notes and the related Warrants
at the Closing is subject to the satisfaction, at or before the Closing Date,
of
each of the following conditions, provided that these conditions are for each
Buyer's sole benefit and may be waived by such Buyer at any time in its sole
discretion by providing the Company with prior written notice
thereof:
(i) The
Company shall have duly executed and delivered to such Buyer (i) each of the
Transaction Documents and (ii) the Notes (allocated in such principal amounts
as
such Buyer shall request), being purchased by such Buyer at the Closing pursuant
to this Agreement, and (iii) the related Warrants (allocated in such amounts
as
such Buyer shall request) being purchased by such Buyer at the Closing pursuant
to this Agreement.
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(ii) Such
Buyer shall have received the opinion of Xxxxxx X. Xxxxxxxxx, P.C., the
Company's outside counsel, dated as of the Closing Date, in substantially the
form of Exhibit
E attached hereto.
(iii) The
Company shall have delivered to such Buyer a copy of the Irrevocable Transfer
Agent Instructions, in the form of Exhibit D attached
hereto, which instructions shall have been delivered to and acknowledged in
writing by the Company's transfer agent.
(iv) The
Company shall have delivered to such Buyer a certificate evidencing
the formation and good standing of the Company and each of its Subsidiaries
in
such entity's jurisdiction of formation issued by the Secretary of State (or
comparable office) of such jurisdiction, as of a date within ten (10) days
of
the Closing Date.
(v) The
Company shall have delivered to such Buyer a certificate evidencing
the Company's qualification as a foreign corporation and good standing issued
by
the Secretary of State (or comparable office) of each jurisdiction in which
the
Company conducts business, as of a date within ten (10) days of the Closing
Date.
(vi) The
Company shall have delivered to such Buyer a certified copy of the Articles
of
Incorporation as certified by the Secretary of State of the State of
Nevada within ten (10) days of the Closing Date.
(vii) The
Company shall have delivered to such Buyer a certificate, executed by the
Secretary of the Company and dated as of the Closing Date, as to (i) the
resolutions consistent with Section 3(b) as adopted by the Company's Board
of
Directors in a form reasonably acceptable to such Buyer, (ii) the Articles
of
Incorporation and (iii) the Bylaws, each as in effect at the Closing, in the
form attached hereto as Exhibit
F.
(viii) The
representations and warranties of the Company shall be true and correct in
all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects) as of the date when made and as of the Closing Date
as
though made at that time (except for representations and warranties that speak
as of a specific date, which shall be true and correct as of such specified
date) and the Company shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by
the
Transaction Documents to be performed, satisfied or complied with by the Company
at or prior to the Closing Date. Such Buyer shall have received a
certificate, executed by the Chief Executive Officer of the Company, dated
as of
the Closing Date, to the foregoing effect and as to such other matters as may
be
reasonably requested by such Buyer in the form attached hereto as Exhibit
G.
(ix) The
Company shall have delivered to such Buyer a letter from the Company's transfer
agent certifying the number of shares of Common Stock outstanding as of a date
within five days of the Closing Date.
-
27
-
(x)
The Common Stock (I) shall be designated for
quotation or listed on the Principal Market and (II) shall not have been
suspended, as of the Closing Date, by the SEC or the Principal Market from
trading on the Principal Market nor shall suspension by the SEC or the Principal
Market have been threatened, as of the Closing Date, either (A) in writing
by
the SEC or the Principal Market or (B) by falling below the minimum listing
maintenance requirements of the Principal Market.
(xi) The
Company shall have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the sale of the Securities.
(xii) In
accordance with the terms of the Security Documents, the Company shall have
delivered to the Collateral Agent (i) certificates representing the
Subsidiaries' shares of capital stock to the extent such subsidiary is a
corporation or otherwise has certificated capital stock, along with duly
executed blank stock powers and (ii) appropriate financing statements on Form
UCC-1 to be duly filed in such office or offices as may be necessary or, in
the
opinion of the Collateral Agent, desirable to perfect the security interests
purported to be created by each Security Document.
(xiii) Within
two (2) Business Days prior to the Closing, the Company shall have delivered
or
caused to be delivered to each Buyer (i) true copies of UCC search results,
listing all effective financing statements which name as debtor the Company
or
any of its Subsidiaries filed in the prior five years to perfect an interest
in
any assets thereof, together with copies of such financing statements, none
of
which, except as otherwise agreed in writing by the Buyers, shall cover any
of
the Collateral (as defined in the Security Documents) and the results of
searches for any tax lien and judgment lien filed against such Person or its
property, which results, except as otherwise agreed to in writing by the Buyers
shall not show any such Liens (as defined in the Security Documents); and (ii)
a
perfection certificate, duly completed and executed by the Company and each
of
its Subsidiaries, in form and substance satisfactory to the Buyers.
(xiv) Xxx
Xxxxxxxxx, Private Capital Group LLC and Xxxx Xxxxxxx shall have entered into
a
Lock-Up Agreement in the form attached hereto as Exhibit J (the "Lock-Up
Agreement").
(xv) The
Collateral Agent and each other Buyer shall have duly executed and delivered
to
such Buyer the Collateral Agency Agreement.
(xvi) The
Company shall have delivered to such Buyer such other documents relating to
the
transactions contemplated by this Agreement as such Buyer or its counsel may
reasonably request.
8.
TERMINATION. In
the event that the Closing shall not have occurred with respect to a Buyer
on or
before five (5) Business Days from the date hereof due to the Company's or
such
Buyer's failure to satisfy the conditions set forth in Sections 6 and 7 above
(and the nonbreaching party's failure to waive such unsatisfied condition(s)),
the nonbreaching party shall have the option to terminate this Agreement with
respect to such breaching party at the close of business on such date without
liability of any party to any other party; provided, however,
that if this
Agreement is terminated pursuant to this Section 8, the Company shall remain
obligated to reimburse the non-breaching Buyers for the expenses described
in
Section 4(g) above.
-
28
-
9.
MISCELLANEOUS.
(a) Governing
Law; Jurisdiction;
Jury Trial. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed
by
the internal laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New York
or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that
the
venue of such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
to
such party at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by
law. EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST,
A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH
OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
(b) 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;
provided that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if
the
signature were an original, not a facsimile signature.
(c) Headings. The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
(d) Severability. If
any provision of this Agreement is prohibited by law or otherwise determined
to
be invalid or unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable,
and the invalidity or unenforceability of such provision shall not affect the
validity of the remaining provisions of this Agreement so long as this Agreement
as so modified continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does
not
substantially impair the respective expectations or reciprocal obligations
of
the parties or the practical realization of the benefits that would otherwise
be
conferred upon the parties. The parties will endeavor in good faith
negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to
that of the prohibited, invalid or unenforceable provision(s).
-
29
-
(e) Entire
Agreement;
Amendments. This Agreement and the other Transaction Documents
supersede all other prior oral or written agreements between the Buyers, the
Company, their affiliates and Persons acting on their behalf with respect to
the
matters discussed herein, and this Agreement, the other Transaction Documents
and the instruments referenced herein and therein 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 any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and the holders of at least a majority of the aggregate number of
Registrable Securities issued and issuable hereunder and under the Notes, and
any amendment to this Agreement made in conformity with the provisions of this
Section 9(e) shall be binding on all Buyers and holders of Securities as
applicable. No provision hereof may be waived other than by an
instrument in writing signed by the party against whom enforcement is
sought. No such amendment shall be effective to the extent that it
applies to less than all of the holders of the applicable Securities then
outstanding. No consideration shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of any of
the
Transaction Documents unless the same consideration also is offered to all
of
the parties to the Transaction Documents, holders of Notes or holders of the
Warrants, as the case may be. The Company has not, directly or
indirectly, made any agreements with any Buyers relating to the terms or
conditions of the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents. Without limiting the
foregoing, the Company confirms that, except as set forth in this Agreement,
no
Buyer has made any commitment or promise or has any other obligation to provide
any financing to the Company or otherwise.
(f) Notices. Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally;
(ii) upon receipt, when sent by facsimile (provided confirmation of transmission
is mechanically or electronically generated and kept on file by the sending
party); or (iii) one Business Day after deposit with an overnight courier
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:
000
Xxxxxxx Xxxxxx Xxxxx
Xxxxx
000
Xxx
Xxxx,
Xxxxxxxxxx 00000-0000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attention:
Xxx Xxxxxxxxx
-
30
-
Copy
to:
Xxxxxx
X.
Xxxxxxxxx, P.C.
0000
XXX
Xxxxxxx, Xxxxx 000
Xxxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile
No.: (000) 000-0000
Telephone
No.: (000) 000-0000
Attn.:
Xxxxxx X. Xxxxxxxxx, Esq.
If
to the
Transfer Agent:
Interwest
Transfer Co., Inc.
0000
Xxxx
0000 Xxxxx, Xxxxx 000
XX
Xxx
00000
Xxxx
Xxxx
Xxxx, XX 00000
Telephone: 000-000-0000
Facsimile:
801-277-3147
Attention: Xxxx
Xxxxxx
If
to a
Buyer, to its address and facsimile number set forth on the Schedule of Buyers,
with copies to such Buyer's representatives as set forth on the Schedule of
Buyers,
with
a
copy (for informational purposes only) to:
Xxxxxxx
Xxxx & Xxxxx LLP
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attention:
Xxxxxxx X. Xxxxx, Esq.
or
to
such other address and/or facsimile number and/or to the attention of such
other
Person as the recipient party has specified by written notice given to each
other party five (5) days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of
such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by an overnight courier service shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from an overnight
courier service in accordance with clause (i), (ii) or (iii) above,
respectively.
(g) Successors
and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns, including
any purchasers of the Notes or the Warrants. The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the holders of at least a majority of the aggregate number
of
Registrable Securities issued and issuable hereunder and under the Notes,
including by way of a Fundamental Transaction (unless the Company is in
compliance with the applicable provisions governing Fundamental Transactions
set
forth in the Notes and the Warrants). A Buyer may assign some or all
of its rights hereunder without the consent of the Company, in which event
such
assignee shall be deemed to be a Buyer hereunder with respect to such assigned
rights
-
31
-
(h) 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.
(i) Survival. Unless
this Agreement is terminated under Section 8, the representations and warranties
of the Company and the Buyers contained in Sections 2 and 3, and the agreements
and covenants set forth in Sections 4, 5 and 9 shall survive the Closing and
the
delivery and exercise of Securities, as applicable. Each Buyer shall
be responsible only for its own representations, warranties, agreements and
covenants hereunder.
(j) 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
any 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.
(k) Indemnification. In
consideration of each Buyer's execution and delivery of the Transaction
Documents and acquiring the Securities thereunder and in addition to all of
the
Company's other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless each Buyer and each other holder
of
the Securities and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing
Persons' agents or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees") from and against
any and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "Indemnified Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to
(a)
any misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents
or
any other certificate, instrument or document contemplated hereby or thereby
or
(c) any cause of action, suit or claim brought or made against such Indemnitee
by a third party (including for these purposes a derivative action brought
on
behalf of the Company) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (ii) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, (iii) any
disclosure made by such Buyer pursuant to Section 4(i), or (iv) the status
of
such Buyer or holder of the Securities as an investor in the Company pursuant
to
the transactions contemplated by the Transaction Documents. To the
extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment
and
satisfaction of each of the Indemnified Liabilities that is permissible under
applicable law. Except as otherwise set forth herein, the mechanics
and procedures with respect to the rights and obligations under this Section
9(k) shall be the same as those set forth in Section 6 of the Registration
Rights Agreement.
-
32
-
(l) No
Strict
Construction. 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.
(m) Remedies. Each
Buyer and each holder of the Securities shall have all rights and remedies
set
forth in the Transaction Documents and all rights and remedies which such
holders have been granted at any time under any other agreement or contract
and
all of the rights which such holders have under any law. Any Person
having any rights under any provision of this Agreement shall be entitled to
enforce such rights specifically (without posting a bond or other security),
to
recover damages by reason of any breach of any provision of this Agreement
and
to exercise all other rights granted by law. Furthermore, the Company
recognizes that in the event that it fails to perform, observe, or discharge
any
or all of its obligations under the Transaction Documents, any remedy at law
may
prove to be inadequate relief to the Buyers. The Company therefore
agrees that the Buyers shall be entitled to seek temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages and without posting a bond or other security.
(n) Rescission
and Withdrawal
Right. Notwithstanding anything to the contrary contained in
(and without limiting any similar provisions of) the Transaction Documents,
whenever any Buyer exercises a right, election, demand or option under a
Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then such Buyer may rescind
or
withdraw, in its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.
(o) Payment
Set
Aside. To the extent that the Company makes a payment or
payments to the Buyers hereunder or pursuant to any of the other Transaction
Documents or the Buyers enforce or exercise their rights hereunder or
thereunder, and such payment or payments or the proceeds of such enforcement
or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other Person under any law (including, without limitation,
any
bankruptcy law, foreign, state or federal law, common law or equitable cause
of
action), then to the extent of any such restoration the obligation or part
thereof originally intended to be satisfied shall be revived and continued
in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.
-
33
-
(p) Independent
Nature of
Buyers' Obligations and Rights. The obligations of each Buyer
under any Transaction Document are several and not joint with the obligations
of
any other Buyer, and no Buyer shall be responsible in any way for the
performance of the obligations of any other Buyer under any Transaction
Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Buyer pursuant hereto or thereto, shall
be
deemed to constitute the Buyers as, and the Company acknowledges that the Buyers
do not so constitute, a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Buyers are in any way
acting in concert or as a group, and the Company will not assert any such claim
with respect to such obligations or the transactions contemplated by the
Transaction Documents and the Company acknowledges that the Buyers are not
acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. The Company
acknowledges and each Buyer confirms that it has independently participated
in
the negotiation of the transaction contemplated hereby with the advice of its
own counsel and advisors. Each Buyer shall be entitled to
independently protect and enforce its rights, including, without limitation,
the
rights arising out of this Agreement or out of any other Transaction Documents,
and it shall not be necessary for any other Buyer to be joined as an additional
party in any proceeding for such purpose.
[Signature
Page Follows]
-
34
-
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
COMPANY:
|
|||
|
By:
|
|||
|
Name: Xxx
Xxxxxxxxx
|
|||
|
Title: Chairman
& Chief Executive
|
|||
|
Officer
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
BUYERS:
|
|||
|
HIGHBRIDGE
INTERNATIONAL LLC
|
|||
|
By:
Highbridge Capital Management LLC
|
|||
|
Its
Trading Manager
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
|||
|
XXXX
XXXX XXXXXX
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
|||
|
XXXX
XXXXXXXXX SERIKAWA
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
|||
|
XXXXX
L, XXXXXXXX, SR.
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
|||
|
XXXXXXX
XXXXXXXXX
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
|||
|
XXXXXXXXXXX
X. XXXXX
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
|||
|
XXXXX
X. XXXXXXX
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
|||
|
XXXXXXXX
XXXXX XXXXX
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
|||
|
XXXXX
XXX
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
|||
|
XXX
XXXXXX
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
|||
|
XXXXXXXX
XXXXX XXXXX III, MD
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
|||
|
XXXX
X. XXXX
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
|||
|
XXXXX
XXXXXXX
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
|||
|
XXXXXXXXX
FAMILY TRUST
|
|||
|
By:
Xxxxxxx X. XxxXxxxxx, as Trustee
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
|||
|
XXXXXX
X. XXXXXXX
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
|||
|
XXXXX
X. XXXXXX, MD
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
|||
|
XXXXXXX
X. XXXXXXXX TRUST
|
|||
|
By:
Xxxxxxx X. Xxxxxxxx, as Trustee
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
|||
|
XXXX
XXXXXX XXXXXX
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
|||
|
XXXX
X. POWER
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
|||
|
XXXXXX
XXXXXX
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
|||
|
IROQUOIS
MASTER FUND LTD.
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
|||
|
CRANSHIRE
CAPITAL, LP
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
IN
WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
OTHER
BUYERS:
|
|||
|
PROFESSIONAL
OFFSHORE OPPORTUNITY FUND, LTD.
|
|||
|
By:
Xxxx X. Xxxxxxx, as Manager
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
SCHEDULE
OF BUYERS
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
|||||
|
Buyer
|
Address
and Facsimile
Number
|
Aggregate
Principal Amount of
Notes
|
Number
of Warrant
Shares
|
Purchase
Price
|
Legal
Representative's Address and Facsimile
Number
|
|||||
|
Highbridge
International
|
c/o
Highbridge Capital
|
$2,500,000
|
4,166,667
|
2,500,000
|
Xxxxxxx
Xxxx & Xxxxx LLP
|
|||||
| LLC |
Management,
LLC
|
000
Xxxxx Xxxxxx
|
||||||||
|
0
Xxxx 00xx Xx, 00xx Xxxxx
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|||||||||
|
Xxx
Xxxx, XX 00000
|
Attention: Xxxxxxx
Xxxxx, Esq.
|
|||||||||
|
Attn:
Xxx X. Xxxxxx / Xxxx X. Chill
|
Facsimile:
(000) 000-0000
|
|||||||||
|
Tel:
000-000-0000
|
Telephone: (000)
000-0000
|
|||||||||
|
Fax:
000-000-0000
|
||||||||||
|
Residence:
Cayman Islands
|
||||||||||
|
Professional
Offshore
|
0000
Xxx Xxxxxxx Xxxx, Xxxxx 000
|
$1,000,000
|
1,666,667
|
$1,000,000
|
N/A
|
|||||
|
Opportunity
Fund, Ltd.
|
Xxxxxxxx,
Xxx Xxxx 00000
|
|||||||||
|
Cranshire
Capital, LP
|
0000
Xxxxxx Xx., Xxxxx 000
|
$250,000
|
416,667
|
$250,000
|
X/X
|
|||||
|
Xxxxxxxxxx,
XX 00000
|
||||||||||
|
Iroquois
Master Fund Ltd.
|
000
Xxxxxxxxx Xxx.
|
$250,000
|
416,667
|
$250,000
|
X/X
|
|||||
|
00xx
Xxxxx
|
||||||||||
|
Xxx
Xxxx, Xxx Xxxx 00000
|
||||||||||
|
Xxxxx,
Xxxxxxxx Xxxxx
|
134
Canteen
|
$25,000
|
41,667
|
$25,000
|
X/X
|
|||||
|
Xxxxxx
Xxxx, XX 00000
|
||||||||||
|
Xxxx,
Xxxx X.
|
0000
Xxxxxxxx Xxxxxx
|
$25,000
|
41,667
|
$25,000
|
N/A
|
|||||
|
Xxxxxxx,
XX 00000
|
||||||||||
|
Xxxxxxx,
Xxxxx
|
00000
Xxxxxx Xxxxx
|
$25,000
|
41,667
|
$25,000
|
X/X
|
|||||
|
Xxxxxxxx,
XX 00000
|
|
Xxxxxxxxx,
Xxxxxxx
|
000
Xxxxx 000 Xxxx #H
|
$23,000
|
38,333
|
$23,000
|
X/X
|
|||||
|
Xxxxx
Xxxx, XX 00000
|
||||||||||
|
Xxxxxxxx,
Xxxxxxx X.,
|
0000
Xxxxxxx Xxx
|
$25,000
|
41,667
|
$25,000
|
X/X
|
|||||
|
Xxxxxxx
|
Xxxxxxxxxxx,
XX 00000
|
|||||||||
|
Xxxxxxx,
Xxxxxx X.,
Xx.
|
00
Xxxxxxxxxx Xxxx
|
$50,000
|
83,333
|
$50,000
|
X/X
|
|||||
|
Xxxxxxxxx,
XX 00000
|
||||||||||
|
Xxxxx,
Xxxxxxxxxxx X.
|
000
Xxxxxxxx Xxxxx
|
$25,000
|
41,667
|
$25,000
|
X/X
|
|||||
|
Xxxxxxxx,
XX 00000
|
||||||||||
|
Xxxxxxxx,
Xxxxx X.,
Xx.
|
Winter:
000 Xxxxxxxxx Xxxxx
|
$50,000
|
83,333
|
$50,000
|
X/X
|
|||||
|
Xxxxxxx,
XX 00000
|
||||||||||
|
Xxxxxx,
Xxxxx X.,
M.D.
|
000
Xxxx Xxxxxxxx
|
$25,000
|
41,667
|
$25,000
|
X/X
|
|||||
|
Xxx
Xxxx, XX 00000
|
||||||||||
|
Xxxxxx,
Xxxxxx
|
1214
Xxxxxx #202
|
$250,000
|
416,667
|
$250,000
|
X/X
|
|||||
|
Xxxxx,
XX 00000
|
||||||||||
|
Xxx,
Xxxxx
|
000
Xxxx Xxxxxx Xxxxxx
|
$25,000
|
41,667
|
$25,000
|
X/X
|
|||||
| Xxxx Xxxxxxx, XX 00000 | ||||||||||
|
XxxXxxxxx,
Xxxxxxx X.
|
000
Xxxx Xxxxxx Xxxx Xxxx
|
$25,000
|
41,667
|
$25,000
|
N/A
|
|||||
|
Xxxxxxx,
XX 00000
|
||||||||||
|
XxXxx,
LawrenceStone
III,
MD
|
000
Xxxx Xxxxx Xxxxx
|
$62,500
|
104,167
|
$62,500
|
X/X
|
|||||
|
Xxxxxxxxxxx,
XX 00000
|
||||||||||
|
Xxxxxx,
Xxxx Xxxx
|
0000
Xxxxxxxxx Xxxx
|
$25,000
|
41,667
|
$25,000
|
N/A
|
|||||
|
Xxxxxxxxxx,
XX 00000
|
|
Xxxxx,
Xxxx
|
0000
Xxxxxxxx Xxxxxx
|
$25,000
|
41,667
|
$25,000
|
X/X
|
|||||
|
Xxxxxx,
XX 00000
|
||||||||||
|
Xxxxxx,
Xxxxx X.
|
0000
Xxxx Xxxxx Xxxxx
|
$50,000
|
83,333
|
$50,000
|
X/X
|
|||||
|
Xxxxxxx,
XX 00000
|
||||||||||
|
Serikawa,
Yoshihara
|
0000
Xxx Xxxxxxxx Xxxxxx
|
$50,000
|
83,333
|
$50,000
|
X/X
|
|||||
|
Xxxxxxxx,
XX 00000
|
||||||||||
|
Xxxxxxx,
Xxxxx X.
|
0000
Xxxxx Xxxxxxxxxx Xxxx
|
$25,000
|
41,667
|
$25,000
|
N/A
|
|||||
|
Xxxxxxxx
Xxxx, XX 00000
|
||||||||||
|
Xxxxxx,
Xxxxxx X.
|
00
Xxxxxxx Xxxx
|
$12,500
|
20,833
|
$12,500
|
N/A
|
|||||
|
Xxxxxxxxxx,
XX 00000
|
||||||||||
|
$4,823,000.00
|
8,038,337
|
$4,823,000.00
|
EXHIBITS
|
Exhibit
A
|
Form
of Notes
|
|
Exhibit
B
|
Form
of Warrant
|
|
Exhibit
C
|
Form
of Registration Rights Agreement
|
|
Exhibit
D
|
Form
of Irrevocable Transfer Agent Instructions
|
|
Exhibit
E
|
Form
of Opinion of Company’s Counsel
|
|
Exhibit
F
|
Form
of Secretary's Certificate
|
|
Exhibit
G
|
Form
of Officers Certificate
|
|
Exhibit
H
|
Form
of Pledge and Security Agreement
|
|
Exhibit
I
|
Form
of Collateral Agency Agreement
|
|
Exhibit
J
|
Form
of Lock-Up Agreement
|
SCHEDULES
|
Schedule
3(g)
|
Placement
Agent's Fees
|
|
Schedule
3(r)
|
Equity
capitalization
|
