SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"),
dated as of December ___, 2005, by and among ALFA INTERNATIONAL
HOLDINGS CORP., a Delaware corporation (the "Company"), and the
Buyers listed on Schedule I attached hereto (individually, a
"Buyer" or collectively "Buyers").
WITNESSETH
WHEREAS, the Company and the Buyer(s) are executing and
delivering this Agreement in reliance upon an exemption from
securities registration pursuant to Section 4(2) and/or Rule 506
of Regulation D ("Regulation D") as promulgated by the U.S.
Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act");
WHEREAS, the parties desire that, upon the terms and
subject to the conditions contained herein, the Company shall
issue and sell to the Buyer(s), as provided herein, and the
Buyer(s) shall purchase up to Five Hundred Thousand Dollars
($500,000) of secured convertible debentures (the "Convertible
Debentures"), which shall be convertible into shares of the
Company's common stock, par value $0.001 (the "Common Stock")
(as converted, the "Conversion Shares") of which Two Hundred
Fifty Thousand Dollars ($250,000) shall be funded on the fifth
(5th) business day following the date hereof (the "First
Closing") and Two Hundred Fifty Thousand Dollars ($250,000)
shall be funded two (2) business days prior to the date the
registration statement (the "Registration Statement") is filed,
pursuant to the Investor Registration Rights Agreement dated the
date hereof, with the United States Securities and Exchange
Commission (the "SEC") (the "Second Closing") (individually
referred to as a "Closing" collectively referred to as the
"Closings"), for a total purchase price of up to Five Hundred
Thousand Dollars ($500,000), (the "Purchase Price") in the
respective amounts set forth opposite each Buyer(s) name on
Schedule I (the "Subscription Amount");
WHEREAS, 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 A (the "Investor
Registration Rights Agreement") pursuant to which the Company
has agreed to provide certain registration rights under the
Securities Act and the rules and regulations promulgated there
under, and applicable state securities laws;
WHEREAS, the aggregate proceeds of the sale of the
Convertible Debentures contemplated hereby shall be held in
escrow pursuant to the terms of an escrow agreement
substantially in the form of the Escrow Agreement attached
hereto as Exhibit B;
WHEREAS, contemporaneously with the execution and delivery
of this Agreement, the parties hereto are executing and
delivering a Security Agreement substantially in the form
attached hereto as Exhibit C (the "Security Agreement") pursuant
to which the Company has agreed to provide the Buyer a security
interest in Pledged Collateral (as this term is defined in the
Security Agreement) to secure the Company's obligations under
this Agreement, the Convertible Debenture, the Investor
Registration Rights Agreement, the Irrevocable Transfer Agent
Instructions, the Security Agreement, the Subsidiary Security
Agreement, the Pledge and Escrow Agreement or any other
obligations of the Company to the Buyer;
WHEREAS, contemporaneously with the execution and delivery
of this Agreement, the parties hereto are executing and
delivering a Pledge and Escrow Agreement substantially in the
form attached hereto as Exhibit D (the "Pledge and Escrow
Agreement") pursuant to which the Company has agreed to provide
the Buyer a security interest in the Pledged Shares (as this
term is defined in the Pledge and Escrow Agreement) to secure
the Company's obligations under this Agreement, the Convertible
Debenture, the Investor Registration Rights Agreement, the
Irrevocable Transfer Agent Instructions, the Security Agreement,
the Subsidiary Security Agreement, the Pledge and Escrow
Agreement or any other obligations of the Company to the Buyer;
WHEREAS, contemporaneously with the execution and delivery
of this Agreement, the parties hereto and the following
subsidiaries of the Company: Contact Sports, Inc., a New York
corporation, and Ty-Breakers Corp., a New York corporation
(collectively the "Subsidiaries") are executing and delivering a
security agreements substantially in the form attached hereto as
Exhibit E (the "Subsidiary Security Agreement") pursuant to
which the Company and the Subsidiaries have agreed to provide
the Buyer a security interest in Pledged Collateral (as this
term is defined in the Subsidiary Security Agreements) to secure
the Company's obligations under this Agreement, the Convertible
Debenture, the Investor Registration Rights Agreement, the
Irrevocable Transfer Agent Instructions, the Security Agreement,
the Subsidiary Security Agreement, the Pledge and Escrow
Agreement or any other obligations of the Company to the Buyer;
WHEREAS, contemporaneously with the execution and delivery
of this Agreement, the parties hereto are executing and
delivering Irrevocable Transfer Agent Instructions substantially
in the form attached hereto as Exhibit F (the "Irrevocable
Transfer Agent Instructions")
NOW, THEREFORE, in consideration of the mutual covenants
and other agreements contained in this Agreement the Company and
the Buyer(s) hereby agree as follows:
1. PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.
(a) Purchase of Convertible Debentures. Subject to
the satisfaction (or waiver) of the terms and conditions of this
Agreement, each Buyer agrees, severally and not jointly, to
purchase at each Closing and the Company agrees to sell and
issue to each Buyer, severally and not jointly, at each Closing,
Convertible Debentures in amounts corresponding with the
Subscription Amount set forth opposite each Buyer's name on
Schedule I hereto. Upon execution hereof by a Buyer, the Buyer
shall wire transfer the Subscription Amount set forth opposite
his name on Schedule I in same-day funds or a check payable to
"Xxxxx Xxxxxxxx, Esq., as Escrow Agent for Alfa International
Holdings Corp./Cornell Capital Partners, LP", which Subscription
Amount shall be held in escrow pursuant to the terms of the
Escrow Agreement (as hereinafter defined) and disbursed in
accordance therewith. Notwithstanding the foregoing, a Buyer
may withdraw his Subscription Amount and terminate this
Agreement as to such Buyer at any time after the execution
hereof and prior to Closing (as hereinafter defined).
(b) Closing Date. The First Closing of the purchase
and sale of the Convertible Debentures shall take place at 10:00
a.m. Eastern Standard Time on the fifth (5th) business day
following the date hereof, subject to notification of
satisfaction of the conditions to the First Closing set forth
herein and in Sections 6 and 7 below (or such later date as is
mutually agreed to by the Company and the Buyer(s)) (the "First
Closing Date") and the Second Closing of the purchase and sale
of the Convertible Debentures shall take place at 10:00 a.m.
Eastern Standard Time two (2) business days prior to the date
the Registration Statement is filed with the SEC, subject to
notification of satisfaction of the conditions to the Second
Closing set forth herein and in Sections 6 and 7 below (or such
later date as is mutually agreed to by the Company and the
Buyer(s)) (the "Second Closing Date") (collectively referred to
a the "Closing Dates"). The Closing shall occur on the
respective Closing Dates at the offices of Yorkville Advisors,
LLC, 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx Xxxx, Xxx Xxxxxx
00000 (or such other place as is mutually agreed to by the
Company and the Buyer(s)).
(c) Escrow Arrangements; Form of Payment. Upon
execution hereof by Buyer(s) and pending the Closings, the
aggregate proceeds of the sale of the Convertible Debentures to
Buyer(s) pursuant hereto shall be deposited in a non-interest
bearing escrow account with Xxxxx Xxxxxxxx, Esq., as escrow
agent (the "Escrow Agent"), pursuant to the terms of an escrow
agreement between the Company, the Buyer(s) and the Escrow Agent
in the form attached hereto as Exhibit B (the "Escrow
Agreement"). Subject to the satisfaction of the terms and
conditions of this Agreement, on the Closing Dates, (i) the
Escrow Agent shall deliver to the Company in accordance with the
terms of the Escrow Agreement such aggregate proceeds for the
Convertible Debentures to be issued and sold to such Buyer(s),
minus the unpaid structuring fees and expenses of Yorkville
Advisors Management, LLC of Ten Thousand Dollars ($10,000),
which shall be paid directly from the gross proceeds held in
escrow of the First Closing and (ii) the Company shall deliver
to each Buyer, Convertible Debentures which such Buyer(s) is
purchasing in amounts indicated opposite such Buyer's name on
Schedule I, duly executed on behalf of the Company.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants, severally and not
jointly, that:
(a) Investment Purpose. Each Buyer is acquiring the
Convertible Debentures and, upon conversion of Convertible
Debentures, the Buyer will acquire the Conversion Shares then
issuable, for its own account for investment only 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 Securities Act; provided, however, that by
making the representations herein, such Buyer reserves the right
to dispose of the Conversion Shares at any time in accordance
with or pursuant to an effective registration statement covering
such Conversion Shares or an available exemption under the
Securities Act.
(b) Accredited Investor Status. Each Buyer is an
"Accredited Investor" as that term is defined in Rule 501(a)(3)
of Regulation D.
(c) Reliance on Exemptions. Each Buyer understands
that the Convertible Debentures 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 such securities.
(d) Information. Each Buyer and its advisors (and
his or, its counsel), if any, have been furnished with all
materials relating to the business, finances and operations of
the Company and information he deemed material to making an
informed investment decision regarding his purchase of the
Convertible Debentures and the Conversion Shares, which have
been requested by such Buyer. Each Buyer and its advisors, if
any, have been afforded the opportunity to ask questions of the
Company and its management. 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 in Section 3 below.
Each Buyer understands that its investment in the Convertible
Debentures and the Conversion Shares involves a high degree of
risk. Each Buyer is in a position regarding the Company, which,
based upon employment, family relationship or economic
bargaining power, enabled and enables such Buyer to obtain
information from the Company in order to evaluate the merits and
risks of this investment. Each 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 Convertible Debentures and the Conversion
Shares.
(e) No Governmental Review. Each 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 Convertible Debentures or
the Conversion Shares, or the fairness or suitability of the
investment in the Convertible Debentures or the Conversion
Shares, nor have such authorities passed upon or endorsed the
merits of the offering of the Convertible Debentures or the
Conversion Shares.
(f) Transfer or Resale. Each Buyer understands that
except as provided in the Investor Registration Rights
Agreement: (i) the Convertible Debentures have not been and are
not being registered under the Securities Act or any state
securities laws, and may not be offered for sale, sold,
assigned or transferred unless (A) subsequently registered
thereunder, or (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 requirements; (ii) any sale of
such securities made in reliance on Rule 144 under the
Securities Act (or a successor rule thereto) ("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 such securities
under circumstances in which the seller (or the person through
whom the sale is made) may be deemed to be an underwriter (as
that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities 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 such securities under the Securities Act or any
state securities laws or to comply with the terms and
conditions of any exemption thereunder. The Company reserves
the right to place stop transfer instructions against the shares
and certificates for the Conversion Shares.
(g) Legends. Each Buyer understands that the
certificates or other instruments representing the Convertible
Debentures and or the Conversion Shares shall bear a restrictive
legend in substantially the following form (and a stop transfer
order may be placed against transfer of such stock
certificates):
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 HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL,
IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES
LAWS.
The legend set forth above shall be removed and the Company
within two (2) business days shall issue a certificate without
such legend to the holder of the Conversion Shares upon which it
is stamped, if, unless otherwise required by state securities
laws, (i) in connection with a sale transaction, provided the
Conversion Shares are registered under the Securities Act or
(ii) in connection with a sale transaction, after such holder
provides the Company with an opinion of counsel, which opinion
shall be in form, substance and scope customary for opinions of
counsel in comparable transactions, to the effect that a public
sale, assignment or transfer of the Conversion Shares may be
made without registration under the Securities Act.
(h) Authorization, Enforcement. This Agreement has
been duly and validly authorized, executed and delivered on
behalf of such Buyer and is a valid and binding agreement of
such Buyer enforceable in accordance with its terms, except as
such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors'
rights and remedies.
(i) Receipt of Documents. Each Buyer and his or its
counsel has received and read in their entirety: (i) this
Agreement and each representation, warranty and covenant set
forth herein, the Security Agreement, the Subsidiary Security
Agreement, the Investor Registration Rights Agreement, the
Escrow Agreement, the Irrevocable Transfer Agent Agreement, and
the Pledge and Escrow Agreement; (ii) all due diligence and
other information necessary to verify the accuracy and
completeness of such representations, warranties and covenants;
(iii) the Company's Form 10-KSB for the fiscal year ended
December 31, 2004; (iv) the Company's Form 10QSB for the fiscal
quarter ended September 30, 2005 and (v) answers to all
questions each Buyer submitted to the Company regarding an
investment in the Company; and each Buyer has relied on the
information contained therein and has not been furnished any
other documents, literature, memorandum or prospectus.
(j) Due Formation of Corporate and Other Buyers. If
the Buyer(s) is a corporation, trust, partnership or other
entity that is not an individual person, it has been formed and
validly exists and has not been organized for the specific
purpose of purchasing the Convertible Debentures and is not
prohibited from doing so.
(k) No Legal Advice From the Company. Each Buyer
acknowledges, that it had the opportunity to review this
Agreement and the transactions contemplated by this Agreement
with his or its own legal counsel and investment and tax
advisors. Each Buyer is relying solely on such counsel and
advisors and not on any statements or representations of the
Company or any of its representatives or agents for legal, tax
or investment advice with respect to this investment, the
transactions contemplated by this Agreement or the securities
laws of any jurisdiction.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers
that, except as set forth in the SEC Documents (as defined
herein):
(a) Organization and Qualification. The Company and
its subsidiaries are corporations duly organized and validly
existing in good standing under the laws of the jurisdiction in
which they are incorporated, and have the requisite corporate
power 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 corporation to do business and is
in good standing in every jurisdiction in which 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 have a material adverse effect on the
Company and its subsidiaries taken as a whole.
(b) Authorization, Enforcement, Compliance with Other
Instruments. (i) The Company has the requisite corporate power
and authority to enter into and perform this Agreement, the
Security Agreement, the Subsidiary Security Agreement, the
Investor Registration Rights Agreement, the Irrevocable Transfer
Agent Agreement, the Escrow Agreement, the Pledge and Escrow
Agreement, and any related agreements (collectively the
"Transaction Documents") and to issue the Convertible Debentures
and the Conversion Shares in accordance with the terms hereof
and thereof, (ii) the execution and delivery of the Transaction
Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including, without
limitation, the issuance of the Convertible Debentures the
Conversion Shares and the reservation for issuance and the
issuance of the Conversion Shares issuable upon conversion or
exercise thereof, have been duly authorized by the Company's
Board of Directors and no further consent or authorization is
required by the Company, its Board of Directors or its
stockholders, (iii) the Transaction Documents have been duly
executed and delivered by the Company, (iv) the Transaction
Documents constitute the valid and binding obligations of the
Company enforceable against the Company in accordance with their
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 creditors' rights
and remedies. The authorized officer of the Company executing
the Transaction Documents knows of no reason why the Company
cannot file the registration statement as required under the
Investor Registration Rights Agreement or perform any of the
Company's other obligations under such documents.
(c) Capitalization. As of the date hereof the
authorized capital stock of the Company consists of 50,000,000
shares of Common Stock, par value $0.001 and 1,000,000 shares of
Series B Preferred Stock, par value $0.001 ("Preferred Stock")
of which 28,337,843 shares of Common Stock and 108,350 shares of
Preferred Stock, designated as Series B Preferred Stock, are
issued and outstanding. All of such outstanding shares have
been validly issued and are fully paid and nonassessable.
Except as disclosed in the SEC Documents (as defined in Section
3(f)), no shares of Common Stock are subject to preemptive
rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company. Except as disclosed in
the SEC Documents, as of the date of this Agreement, (i) 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, any shares of
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 shares of 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, any
shares of capital stock of the Company or any of its
subsidiaries, (ii) there are no outstanding debt securities and
(iii) 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 Securities Act
(except pursuant to the Registration Rights Agreement) and (iv)
there are no outstanding registration statements and there are
no outstanding comment letters from the SEC or any other
regulatory agency. There are no securities or instruments
containing anti-dilution or similar provisions that will be
triggered by the issuance of the Convertible Debentures as
described in this Agreement. The Company has furnished to the
Buyer true and correct 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 By-laws, as
in effect on the date hereof (the "Bylaws"), and the terms of
all securities convertible into or exercisable for Common Stock
and the material rights of the holders thereof in respect
thereto other than stock options issued to employees and
consultants.
(d) Issuance of Securities. The Convertible
Debentures are duly authorized and, upon issuance in accordance
with the terms hereof, shall be duly issued, fully paid and
nonassessable, are free from all taxes, liens and charges with
respect to the issue thereof. The Conversion Shares issuable
upon conversion of the Convertible Debentures have been duly
authorized and reserved for issuance. Upon conversion or
exercise in accordance with the Convertible Debentures the
Conversion Shares will be duly issued, fully paid and
nonassessable.
(e) 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 will not (i) result in a violation of the Articles of
Incorporation, any certificate of designations of any
outstanding series of preferred stock of the Company or the By-
laws 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 the Company or any of its
subsidiaries is a party, or result in a violation of any law,
rule, regulation, order, judgment or decree (including federal
and state securities laws and regulations and the rules and
regulations of The National Association of Securities Dealers
Inc.'s OTC Bulletin Board on which the Common Stock is quoted)
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. Neither the Company nor its subsidiaries
is in violation of any term of or in default under its Articles
of Incorporation or By-laws or their organizational charter or
by-laws, respectively, or any material contract, agreement,
mortgage, indebtedness, (other than accounts payable acquired in
the normal course of business) indenture, instrument, judgment,
decree or order or any statute, rule or regulation applicable to
the Company or its subsidiaries. The business of the Company
and its subsidiaries is not being conducted, and shall not be
conducted in violation of any material law, ordinance, or
regulation of any governmental entity. Except as specifically
contemplated by this Agreement and as required under the
Securities Act and any applicable state securities laws, the
Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or
perform any of its obligations under or contemplated by this
Agreement or the Registration Rights Agreement in accordance
with the terms hereof or thereof. All consents, authorizations,
orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained
or effected on or prior to the date hereof. The Company and its
subsidiaries are unaware of any facts or circumstance, which
might give rise to any of the foregoing.
(f) SEC Documents: Financial Statements. Since
January 1, 2003, the Company has filed all reports, schedules,
forms, statements and other documents required to be filed by it
with the SEC under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (all of the foregoing filed prior
to the date hereof or amended after the date hereof and all
exhibits included therein and financial statements 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 representatives, or made
available through the SEC's website at xxxx://xxx.xxx.xxx., true
and complete copies of the SEC Documents. As of their
respective dates, the financial statements of the Company
disclosed in the SEC Documents (the "Financial Statements")
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 Buyer which is not included in the SEC
Documents, including, without limitation, information referred
to in this Agreement, 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
circumstances under which they were made, not misleading.
(g) 10(b)-5. The SEC Documents do not include any
untrue statements of material fact, nor do they omit to state
any material fact required to be stated therein necessary to
make the statements made, in light of the circumstances under
which they were made, not misleading.
(h) Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or
body pending against or affecting the Company, the Common Stock
or any of the Company's subsidiaries, wherein an unfavorable
decision, ruling or finding would (i) have a material adverse
effect on the transactions contemplated hereby (ii) adversely
affect the validity or enforceability of, or the authority or
ability of the Company to perform its obligations under, this
Agreement or any of the documents contemplated herein, or (iii)
have a material adverse effect on the business, operations,
properties, financial condition or results of operations of the
Company and its subsidiaries taken as a whole.
(i) Acknowledgment Regarding Buyer's Purchase of the
Convertible Debentures. The Company acknowledges and agrees
that the Buyer(s) is acting solely in the capacity of an arm's
length purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company further
acknowledges that the Buyer(s) is not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement and the transactions contemplated
hereby and any advice given by the Buyer(s) or any of their
respective representatives or agents in connection with this
Agreement and the transactions contemplated hereby is merely
incidental to such Buyer's purchase of the Convertible
Debentures or the Conversion Shares. The Company further
represents to the Buyer that the Company's decision to enter
into this Agreement has been based solely on the independent
evaluation by the Company and its representatives.
(j) No General Solicitation. Neither the Company,
nor any of its affiliates, nor any person acting on its or their
behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the
Convertible Debentures or the Conversion Shares.
(k) No Integrated Offering. Neither the Company, nor
any of its affiliates, nor any person acting on its or their
behalf has, directly or indirectly, made any offers or sales of
any security or solicited any offers to buy any security, under
circumstances that would require registration of the Convertible
Debentures or the Conversion Shares under the Securities Act or
cause this offering of the Convertible Debentures or the
Conversion Shares to be integrated with prior offerings by the
Company for purposes of the Securities Act.
(l) Employee Relations. Neither the Company nor any
of its subsidiaries is involved in any labor dispute nor, to the
knowledge of the Company or any of its subsidiaries, is any such
dispute threatened. None of the Company's or its subsidiaries'
employees is a member of a union and the Company and its
subsidiaries believe that their relations with their employees
are good.
(m) Intellectual Property Rights. The Company and
its subsidiaries own or possess adequate rights or licenses to
use all trademarks, trade names, service marks, service xxxx
registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct
their respective businesses as now conducted. The Company and
its subsidiaries do not have any knowledge of any infringement
by the Company or its subsidiaries of trademark, trade name
rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service xxxx
registrations, trade secret or other similar rights of others,
and, to the knowledge of the Company there is no claim, action
or proceeding being made or brought against, or to the Company's
knowledge, being threatened against, the Company or its
subsidiaries regarding trademark, trade name, patents, patent
rights, invention, copyright, license, service names, service
marks, service xxxx registrations, trade secret or other
infringement; and the Company and its subsidiaries are unaware
of any facts or circumstances which might give rise to any of
the foregoing.
(n) Environmental Laws. The Company and its subsidiaries are
(i) in compliance with any and all applicable foreign, federal,
state and local laws and regulations relating to the protection
of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (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.
(o) Title. Any real property and facilities held
under lease by the Company and 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.
(p) Insurance. The Company and each of its
subsidiaries are not insured.
(q) Regulatory Permits. The Company and its
subsidiaries possess all material certificates, authorizations
and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective
businesses, 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.
(r) Internal Accounting 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 accountability, and
(iii) the recorded amounts for assets is compared with the
existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(s) No Material Adverse Breaches, etc. Neither the
Company nor any of its subsidiaries is subject to any charter,
corporate or other legal restriction, or any judgment, decree,
order, rule or regulation which in the judgment of the Company's
officers has or is expected in the future to have a material
adverse effect on the business, properties, operations,
financial condition, results of operations or prospects of the
Company or its subsidiaries. Neither the Company nor any of its
subsidiaries is in breach of any contract or agreement which
breach, in the judgment of the Company's officers, has or is
expected to have a material adverse effect on the business,
properties, operations, financial condition, results of
operations or prospects of the Company or its subsidiaries.
(t) Tax Status. The Company and each of its
subsidiaries has made and filed all federal and state income and
all other tax returns, reports and declarations required by any
jurisdiction to which it is subject and (unless and only to the
extent that the Company and each of its subsidiaries has set
aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes) 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 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.
(u) Certain Transactions. Except for (i) arm's
length transactions pursuant to which the Company makes payments
in the ordinary course of business upon terms no less favorable
than the Company could obtain from third parties; (ii) certain
transactions with Journey of Light, Inc., of which Xxxxx Xxxxxx,
the Company's President and CEO, is a principal stockholder; and
(iii) other than the grant of stock options disclosed in the SEC
Documents, none of the officers, directors, or employees of the
Company is presently a party to any transaction with the Company
(other than for services as employees, officers and 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 officer, director or such employee or,
to the knowledge of the Company, any corporation, partnership,
trust or other entity in which any officer, director, or any
such employee has a substantial interest or is an officer,
director, trustee or partner.
(v) Fees and Rights of First Refusal. The Company is
not obligated to offer the securities offered hereunder on a
right of first refusal basis or otherwise to any third parties
including, but not limited to, current or former shareholders of
the Company, underwriters, brokers, agents or other third
parties.
4. COVENANTS.
(a) Best Efforts. Each party shall use its best
efforts to timely satisfy each of the conditions to be satisfied
by it as provided in Sections 6 and 7 of this Agreement.
(b) Form D. The Company agrees to file a Form D with
respect to the Conversion Shares 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 to qualify the Conversion Shares, or obtain an
exemption for the Conversion Shares 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, and shall provide evidence of any such action so taken
to the Buyers on or prior to the Closing Date.
(c) Reporting Status. Until the earlier of (i) the
date as of which the Buyer(s) may sell all of the Conversion
Shares without restriction pursuant to Rule 144(k) promulgated
under the Securities Act (or successor thereto), or (ii) the
date on which (A) the Buyer(s) shall have sold all the
Conversion Shares and (B) none of the Convertible Debentures are
outstanding (the "Registration Period"), the Company shall file
in a timely manner all reports required to be filed with the SEC
pursuant to the Exchange Act and the regulations of the SEC
thereunder, and the Company shall not terminate its status as an
issuer required to file reports under the Exchange Act even if
the Exchange Act or the rules and regulations thereunder would
otherwise permit such termination.
(d) Use of Proceeds. The Company will use the
proceeds from the sale of the Convertible Debentures for general
corporate and working capital purposes.
(e) Reservation of Shares. The Company shall take
all action reasonably necessary to at all times have authorized,
and reserved for the purpose of issuance, such number of shares
of Common Stock as shall be necessary to effect the issuance of
the Conversion Shares. If at any time the Company does not have
available such shares of Common Stock as shall from time to time
be sufficient to effect the conversion of all of the Conversion
Shares, the Company shall call and hold a special meeting of the
shareholders within thirty (30) days of such occurrence, for the
sole purpose of increasing the number of shares authorized. The
Company's management shall recommend to the shareholders to vote
in favor of increasing the number of shares of Common Stock
authorized. Management shall also vote all of its shares in
favor of increasing the number of authorized shares of Common
Stock.
(f) Listings or Quotation. The Company shall
promptly secure the listing or quotation of the Conversion
Shares upon each national securities exchange, automated
quotation system or The National Association of Securities
Dealers Inc.'s Over-The Counter Bulletin Board ("OTCBB") or
other market, if any, upon which shares of Common Stock are then
listed or quoted (subject to official notice of issuance) and
shall use its best efforts to maintain, so long as any other
shares of Common Stock shall be so listed, such listing of all
Conversion Shares from time to time issuable under the terms of
this Agreement. The Company shall maintain the Common Stock's
authorization for quotation on the OTCBB.
(g) Fees and Expenses.
(i) Each of the Company and the Buyer(s) shall
pay all costs and expenses incurred by such party in connection
with the negotiation, investigation, preparation, execution and
delivery of the Transaction Documents. The Company shall pay
Yorkville Advisors Management LLC a fee equal to ten percent
(10%) of the Purchase Price.
(ii) The Company shall pay a structuring fee to
Yorkville Advisors Management, LLC of Ten Thousand Dollars
($10,000), which shall be paid directly from the proceeds of the
First Closing.
(iii) The Company shall pay the Buyers a non-
refundable due diligence fee of Two Thousand Five Hundred
Dollars ($2,500) which has previously been paid.
(iv) The Company shall issue to the Buyer a
warrant to purchase Two Hundred Fifty Seven Thousand Seven
Hundred Thirty Two (257,732) shares of the Company's Common
Stock (the "Warrant Shares") for a period of five (5) years at
an exercise price of $0.97 per share. The Warrant Shares shall
have "piggy-back" and demand registration rights.
(h) Corporate Existence. So long as any of the
Convertible Debentures remain outstanding, the Company shall not
directly or indirectly consummate any merger, reorganization,
restructuring, reverse stock split consolidation, sale of all or
substantially all of the Company's assets or any similar
transaction or related transactions (each such transaction, an
"Organizational Change") unless, prior to the consummation an
Organizational Change, the Company obtains the written consent
of each Buyer. In any such case, the Company will make
appropriate provision with respect to such holders' rights and
interests to insure that the provisions of this Section 4(h)
will thereafter be applicable to the Convertible Debentures.
(i) Transactions With Affiliates. So long as any
Convertible Debentures are outstanding, the Company shall not,
and shall cause each of its subsidiaries not to, enter into,
amend, modify or supplement, or permit any subsidiary to enter
into, amend, modify or supplement any agreement, transaction,
commitment, or arrangement with any of its or any subsidiary's
officers, directors, person who were officers or directors at
any time during the previous two (2) years, stockholders who
beneficially own five percent (5%) or more of the Common Stock,
or Affiliates (as defined below) or with any individual related
by blood, marriage, or adoption to any such individual or with
any entity in which any such entity or individual owns a five
percent (5%) or more beneficial interest (each a "Related
Party"), except for (a) customary employment arrangements and
benefit programs on reasonable terms, (b) any investment in an
Affiliate of the Company, (c) any agreement, transaction,
commitment, or arrangement on an arms-length basis on terms no
less favorable than terms which would have been obtainable from
a person other than such Related Party, (d) any agreement,
transaction, commitment, or arrangement which is approved by a
majority of the disinterested directors of the Company; for
purposes hereof, any director who is also an officer of the
Company or any subsidiary of the Company shall not be a
disinterested director with respect to any such agreement,
transaction, commitment, or arrangement. "Affiliate" for
purposes hereof means, with respect to any person or entity,
another person or entity that, directly or indirectly, (i) has a
ten percent (10%) or more equity interest in that person or
entity, (ii) has ten percent (10%) or more common ownership with
that person or entity, (iii) controls that person or entity, or
(iv) shares common control with that person or entity. "Control"
or "controls" for purposes hereof means that a person or entity
has the power, direct or indirect, to conduct or govern the
policies of another person or entity.
(j) Transfer Agent. The Company covenants and agrees
that, in the event that the Company's agency relationship with
the transfer agent should be terminated for any reason prior to
date which is two (2) years after the Closing Date, the Company
shall immediately appoint a new transfer agent and shall require
that the new transfer agent execute and agree to be bound by the
terms of the Irrevocable Transfer Agent Instructions (as defined
herein).
(k) Restriction on Issuance of the Capital Stock. So
long as any Convertible Debentures are outstanding, except for
shares of common stock issuable upon exercise of presently
outstanding warrants, set forth on the attached Schedule 4(k) or
upon conversion of presently outstanding Series B Preferred
Stock, set forth on the attached Schedule 4(k), or any dividends
payable thereon, the Company shall not, without the prior
written consent of the Buyer(s), (i) issue or sell shares of
Common Stock or Preferred Stock without consideration or for a
consideration per share less than the bid price of the Common
Stock, as quoted by Bloomberg, LP (the "Bid Price") determined
immediately prior to its issuance, (ii) issue any warrant,
option, right, contract, call, or other security instrument
granting the holder thereof, the right to acquire Common Stock
without consideration or for a consideration less than such
Common Stock's Bid Price value determined immediately prior to
it's issuance, (iii) enter into any security instrument granting
the holder a security interest in any and all assets of the
Company, or (iv) file any registration statement on Form S-8
except in connection with the Company's existing Stock Option
Plan (the "Plan") of no more than 10% of the Company's
outstanding shares of Common Stock as of the date hereof.
(l) Neither the Buyer(s) nor any of its affiliates
have an open short position in the Common Stock of the Company,
and the Buyer(s) agrees that it shall not, and that it will
cause its affiliates not to, engage in any short sales of or
hedging transactions with respect to the Common Stock as long as
any Convertible Debenture or warrants to purchase the Warrant
Shares shall remain outstanding.
(m) Rights of First Refusal. So long as any portion
of Convertible Debentures are outstanding, if the Company
intends to raise additional capital by the issuance or sale of
capital stock of the Company, including without limitation
shares of any class of common stock, any class of preferred
stock, options, warrants or any other securities convertible or
exercisable into shares of common stock (whether the offering
is conducted by the Company, underwriter, placement agent or any
third party) the Company shall be obligated to offer to the
Buyers such issuance or sale of capital stock, by providing in
writing the principal amount of capital it intends to raise and
outline of the material terms of such capital raise, prior to
the offering such issuance or sale of capital stock to any third
parties including, but not limited to, current or former
officers or directors, current or former shareholders and/or
investors of the obligor, underwriters, brokers, agents or other
third parties. The Buyers shall have ten (10) business days
from receipt of such notice of the sale or issuance of capital
stock to accept or reject all or a portion of such capital
raising offer.
5. TRANSFER AGENT INSTRUCTIONS.
(a) The Company shall issue the Irrevocable Transfer
Agent Instructions to its transfer agent irrevocably appointing
Xxxxx Xxxxxxxx, Esq. as the Company's agent for purpose of
having certificates issued, registered in the name of the
Buyer(s) or its respective nominee(s), for the Conversion Shares
representing such amounts of Convertible Debentures as specified
from time to time by the Buyer(s) to the Company upon conversion
of the Convertible Debentures, for interest owed pursuant to the
Convertible Debenture, and for any and all Liquidated Damages
(as this term is defined in the Investor Registration Rights
Agreement). Xxxxx Xxxxxxxx, Esq. shall be paid a cash fee of
Fifty Dollars ($50) for every occasion they act pursuant to the
Irrevocable Transfer Agent Instructions. The Company shall not
change its transfer agent without the express written consent of
the Buyer(s), which may be withheld by the Buyer(s) in its sole
discretion. Prior to registration of the Conversion Shares
under the Securities Act, all such certificates shall bear the
restrictive legend specified in Section 2(g) of this Agreement.
The Company warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this
Section 5, and stop transfer instructions to give effect to
Section 2(g) hereof (in the case of the Conversion Shares prior
to registration of such shares under the Securities Act) will be
given by the Company to its transfer agent and that the
Conversion Shares shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided
in this Agreement and the Investor Registration Rights
Agreement. Nothing in this Section 5 shall affect in any way
the Buyer's obligations and agreement to comply with all
applicable securities laws upon resale of Conversion Shares. If
the Buyer(s) provides the Company with an opinion of counsel, in
form, scope and substance customary for opinions of counsel in
comparable transactions to the effect that registration of
a resale by the Buyer(s) of any of the Conversion Shares is not
required under the Securities Act, the Company shall within two
(2) business days instruct its transfer agent to issue one or
more certificates in such name and in such denominations as
specified by the Buyer. The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm
to the Buyer by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its
obligations under this Section 5 will be inadequate and agrees,
in the event of a breach or threatened breach by the Company of
the provisions of this Section 5, that the Buyer(s) shall be
entitled, in addition to all other available remedies, to an
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.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell
the Convertible Debentures to the Buyer(s) at the Closings is
subject to the satisfaction, at or before the Closing Dates, 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:
(a) Each Buyer shall have executed the Transaction
Documents and delivered them to the Company.
(b) The Buyer(s) shall have delivered to the Escrow
Agent the Purchase Price for Convertible Debentures in
respective amounts as set forth next to each Buyer as outlined
on Schedule I attached hereto and the Escrow Agent shall have
delivered the net proceeds to the Company by wire transfer of
immediately available U.S. funds pursuant to the wire
instructions provided by the Company.
(c) The representations and warranties of the
Buyer(s) shall be true and correct in all material respects as
of the date when made and as of the Closing Dates as though made
at that time (except for representations and warranties that
speak as of a specific date), and the Buyer(s) 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 the
Buyer(s) at or prior to the Closing Dates.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
(a) The obligation of the Buyer(s) hereunder to
purchase the Convertible Debentures at the First Closing is
subject to the satisfaction, at or before the First Closing
Date, of each of the following conditions:
(i) The Company shall have executed the
Transaction Documents and delivered the same to the Buyer(s).
(ii) The Common Stock shall be authorized for
quotation on the OTCBB, trading in the Common Stock shall not
have been suspended for any reason, and all the Conversion
Shares issuable upon the conversion of the Convertible
Debentures shall be approved by the OTCBB.
(iii) The representations and warranties of the
Company shall be true and correct in all material respects
(except to the extent that any of such representations and
warranties is already qualified as to materiality in Section 3
above, in which case, such representations and warranties shall
be true and correct without further qualification) as of the date
when made and as of the First Closing Date as though made at that
time (except for representations and warranties that speak as of
a specific date) and the Company 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 the Company at or prior
to the First Closing Date. If requested by the Buyer, the Buyer
shall have received a certificate, executed by the President of
the Company, dated as of the First Closing Date, to the foregoing
effect and as to such other matters as may be reasonably
requested by the Buyer including, without limitation an update as
of the First Closing Date regarding the representation contained
in Section 3(c) above.
(iv) The Company shall have executed and
delivered to the Buyer(s) the Convertible Debentures in the
respective amounts set forth opposite each Buyer(s) name on
Schedule I attached hereto.
(v) The Buyer(s) shall have received an opinion
of counsel from Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP in a form
satisfactory to the Buyer(s).
(vi) The Company shall have provided to the
Buyer(s) a certificate of good standing from the secretary of
state from the state in which the company is incorporated.
(vii) The Company shall have filed a form UCC-1
or such other forms as may be required to perfect the Buyer's
interest in the Pledged Property as detailed in the Security
Agreement dated the date hereof and provided proof of such
filing to the Buyer(s).
(viii) The Company shall have delivered to the
Escrow Agent the Pledged Shares as well as executed and
medallion guaranteed stock powers as required pursuant to the
Pledge and Escrow Agreement.
(ix) The Company shall have provided to the Buyer
an acknowledgement, to the satisfaction of the Buyer, from the
Company's independent certified public accountants as to its
ability to provide all consents required in order to file a
registration statement in connection with this transaction.
(x) The Company shall have reserved out of its
authorized and unissued Common Stock, solely for the purpose of
effecting the conversion of the Convertible Debentures, shares
of Common Stock to effect the conversion of all of the
Conversion Shares then outstanding.
(xi) The Irrevocable Transfer Agent Instructions,
in form and substance satisfactory to the Buyer, shall have been
delivered to and acknowledged in writing by the Company's
transfer agent.
(b) The obligation of the Buyer(s) hereunder to accept the
Convertible Debentures at the Second Closing is subject to the
satisfaction, at or before the Second Closing Date, of each of
the following conditions:
(i) The Common Stock shall be authorized for
quotation on the OTCBB, trading in the Common Stock shall not
have been suspended for any reason, and all the Conversion
Shares issuable upon the conversion of the Convertible
Debentures shall be approved by the OTCBB.
(ii) The representations and warranties of the
Company shall be true and correct in all material respects
(except to the extent that any of such representations and
warranties is already qualified as to materiality in Section 3
above, in which case, such representations and warranties shall
be true and correct without further qualification) as of the
date when made and as of the Second Closing Date as though made
at that time (except for representations and warranties that
speak as of a specific date) and the Company 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 the
Company at or prior to the Second Closing Date. If requested by
the Buyer, the Buyer shall have received a certificate, executed
by two officers of the Company, dated as of the Second Closing
Date, to the foregoing effect and as to such other matters as
may be reasonably requested by the Buyer including, without
limitation an update as of the Second Closing Date regarding the
representation contained in Section 3(c) above.
(iii) The Company shall have executed and
delivered to the Buyer(s) the Convertible Debentures in the
respective amounts set forth opposite each Buyer(s) name on
Schedule I attached hereto.
(iv) The Company shall have certified that all
conditions to the Second Closing have been satisfied and that
the Company will file the Registration Statement with the SEC in
compliance with the rules and regulations promulgated by the SEC
for filing thereof two (2) business days after the Second
Closing. If requested by the Buyer, the Buyer shall have
received a certificate, executed by the two officers of the
Company, dated as of the Second Closing Date, to the foregoing
effect. The Buyers have no obligation to fund at the Second
Closing if the Company has filed the Registration Statement.
8. INDEMNIFICATION.
(a) In consideration of the Buyer's execution and
delivery of this Agreement and acquiring the Convertible
Debentures and the Conversion Shares hereunder, and in addition
to all of the Company's other obligations under this Agreement,
the Company shall defend, protect, indemnify and hold harmless
the Buyer(s) and each other holder of the Convertible Debentures
and the Conversion Shares, and all of their officers, directors,
employees and agents (including, without limitation, those
retained in connection with the transactions contemplated by
this Agreement) (collectively, the "Buyer 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 Buyer 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 the Buyer Indemnitees or any of them
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 this Agreement, the Convertible
Debentures or the Investor Registration Rights Agreement 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 this Agreement, or the Investor
Registration Rights Agreement 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 and arising out of or resulting from the execution,
delivery, performance or enforcement of this Agreement or any
other instrument, document or agreement executed pursuant hereto
by any of the parties hereto, any transaction financed or to be
financed in whole or in part, directly or indirectly, with the
proceeds of the issuance of the Convertible Debentures or the
status of the Buyer or holder of the Convertible Debentures the
Conversion Shares, as a Buyer of Convertible Debentures in the
Company. 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, which is permissible under
applicable law.
(b) In consideration of the Company's execution and
delivery of this Agreement, and in addition to all of the
Buyer's other obligations under this Agreement, the Buyer shall
defend, protect, indemnify and hold harmless the Company and all
of its officers, directors, employees and agents (including,
without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the
"Company Indemnitees") from and against any and all Indemnified
Liabilities incurred by the Indemnitees or any of them as a
result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty
made by the Buyer(s) in this Agreement, instrument or document
contemplated hereby or thereby executed by the Buyer, (b) any
breach of any covenant, agreement or obligation of the Buyer(s)
contained in this Agreement, the Investor Registration Rights
Agreement or any other certificate, instrument or document
contemplated hereby or thereby executed by the Buyer, or (c) any
cause of action, suit or claim brought or made against such
Company Indemnitee based on material misrepresentations or due
to a material breach and arising out of or resulting from the
execution, delivery, performance or enforcement of this
Agreement, the Investor Registration Rights Agreement or any
other instrument, document or agreement executed pursuant hereto
by any of the parties hereto. To the extent that the foregoing
undertaking by each Buyer may be unenforceable for any reason,
each Buyer shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities, which
is permissible under applicable law.
9. GOVERNING LAW: MISCELLANEOUS.
(a) Governing Law. This Agreement shall be governed
by and interpreted in accordance with the laws of the State of
New Jersey without regard to the principles of conflict of laws.
The parties further agree that any action between them shall be
heard in Xxxxxx County, New Jersey, and expressly consent to the
jurisdiction and venue of the Superior Court of New Jersey,
sitting in Xxxxxx County and the United States District Court
for the District of New Jersey sitting in Newark, New Jersey for
the adjudication of any civil action asserted pursuant to this
Paragraph.
(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. In the event any signature page is
delivered by facsimile transmission, the party using such means
of delivery shall cause four (4) additional original executed
signature pages to be physically delivered to the other party
within five (5) days of the execution and delivery hereof.
(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
shall be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or
enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision
of this Agreement in any other jurisdiction.
(e) Entire Agreement, Amendments. This Agreement
supersedes all other prior oral or written agreements between
the Buyer(s), the Company, their affiliates and persons acting
on their behalf with respect to the matters discussed herein,
and this Agreement and the instruments referenced herein contain
the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically
set forth herein or therein, neither the Company nor any Buyer
makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be
waived or amended other than by an instrument in writing signed
by the party to be charged with enforcement.
(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 confirmation of receipt, when sent by facsimile; (iii)
three (3) days after being sent by U.S. certified mail, return
receipt requested, or (iv) one (1) day after deposit with a
nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall
be:
If to the Company, to: Alfa International Holdings Corp.
Empire State Building - Suite 1103
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx-00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Buyer(s), to its address and facsimile number on
Schedule I, with copies to the Buyer's counsel as set forth on
Schedule I. Each party shall provide five (5) days' prior
written notice to the other party of any change in address or
facsimile number.
(g) Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their
respective successors and assigns. Neither the Company nor any
Buyer shall assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other party
hereto.
(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 9(l), the representations and warranties of the
Company and the Buyer(s) contained in Sections 2 and 3, the
agreements and covenants set forth in Sections 4, 5 and 9, and
the indemnification provisions set forth in Section 8, shall
survive the Closing for a period of two (2) years following the
date on which the Convertible Debentures are converted in
full. The Buyer(s) shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
(j) Publicity. The Company and the Buyer(s) shall
have the right to approve, before issuance any press release or
any other public statement with respect to the transactions
contemplated hereby made by any party; provided, however, that
the Company shall be entitled, without the prior approval of the
Buyer(s), to issue any press release or other public disclosure
with respect to such transactions required under applicable
securities or other laws or regulations (the Company shall use
its best efforts to consult the Buyer(s) in connection with any
such press release or other public disclosure prior to its
release and Buyer(s) shall be provided with a copy thereof upon
release thereof).
(k) Further Assurances. Each party shall do and
perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the
other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
(l) Termination. In the event that the Closing shall
not have occurred with respect to the Buyers on or before five
(5) business days from the date hereof due to the Company's or
the Buyer's failure to satisfy the conditions set forth in
Sections 6 and 7 above (and the non-breaching party's failure to
waive such unsatisfied condition(s)), the non-breaching 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 by the Company
pursuant to this Section 9(l), the Company shall remain
obligated to reimburse the Buyer(s) for the fees and expenses of
Yorkville Advisors Management, LLC described in Section 4(g)
above.
(m) 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.
[REMAINDER PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Buyers and the Company have caused
this Securities Purchase Agreement to be duly executed as of the
date first written above.
COMPANY:
ALFA INTERNATIONAL HOLDINGS CORP.
By: /s/ Xxxxx X. Xxxxxx
-----------------------
Name: Xxxxx X. Xxxxxx
Title: President & CEO
SCHEDULE 4(k)
OUTSTANDING WARRANTS
Number Exercise Price Expiration Date
4,100,500 $0.75 9/30/06
500,000 $0.14 4/29/06
250,000 $0.14 5/31/06
20,000 $0.20 12/19/07
62,235 $1.00 6/8/07
922,000 $8.00 **
** Various dates ranging from 3/21/06 through 12/2/06
PREFERRED STOCK
There are 108,350 shares of Series B Preferred Stock
outstanding. Each share of Series B Preferred Stock is
convertible into forty (40) shares of Common Stock.
EXHIBIT A
FORM OF INVESTOR REGISTRATION RIGHTS AGREEMENT
EXHIBIT B
FORM OF ESCROW AGREEMENT
EXHIBIT C
SECURITY AGREEMENT
EXHIBIT D
PLEDGE AND ESCROW AGREEMENT
EXHIBIT E
IRREVOCABLE TRANSFER AGENT INSTRUCTION
SCHEDULE I
SCHEDULE OF BUYERS
Name Signature Address/Facsimile Amount of
Number of Buyer Subscription
Cornell Capital By: Yorkville Advisors, LLC 000 Xxxxxx Xxxxxx $500,000
Partners, LP Its: General Partner Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Facsimile: (000)000-0000
By: /s/ Xxxx Xxxxxx
--------------------
Name: Xxxx Xxxxxx
Its: Portfolio Manager
With a copy to: Xxxxx Xxxxxxxx, Esq. 000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
