GAMMA PHARMACEUTICALS INC. SECURITIES PURCHASE AGREEMENT
THIS
SECURITIES PURCHASE AGREEMENT (as amended, modified, supplemented or restated in
accordance with its terms from time to time, this “Agreement” or “SPA”) is
between GAMMA PHARMACEUTICALS INC., a Delaware corporation and its affiliates
(the “Company”), and KENRIDGE
HOLDINGS LLC (the “Purchaser”).
RECITALS
WHEREAS,
the Company has authorized the offering and sale of up to 1,333,333 (One Million
Three Hundred Thirty Three Thousand Three Hundred Thirty Three) common
restricted unencumbered shares. Additionally, Purchaser shall have the right to
purchase 1,333,333 in Warrant A at $0.75; 1,333,333 in Warrant B at $1.00; and
1,333,333 in Warrant C at $1.25. These Warrants all shall have a five year
exercise right.
WHEREAS,
The Purchaser has placed, through Escrow to the Company, One Million Dollars US
(One Million USD) as consideration for the Securities purchased
hereunder
WHEREAS,
the Company has the right to terminate the Offering early with a 15-day prior
written notice to the Purchaser (“Early Termination Date”). In the
event a Closing has already occurred, this early termination will not relieve
the Company of any other of its obligations contained in the Offering with
respect to such closing; and
WHEREAS,
the Shares will be offered and sold only to “accredited investors” within the
meaning of Rule 501(a) of Regulation D promulgated under the Securities Act
pursuant to this Agreement and that certain subscription agreement executed by
the Purchasers in connection with the Offering (the “Subscription Agreement”);
and
WHEREAS,
each Common UNIT consists of One Share of Common Stock and One Series A Investor
Warrant, One Series B Investor Warrant, and One Series C Investor Warrant. The
Warrants mentioned supra shall have the specified strike price: A, $0.75 each; B
$1.00 each, and C, $1.25., and all Warrants shall have a five year exercise
right
WHEREAS,
Purchasers desire to purchase the Shares on the terms and conditions set forth
herein and in the Subscription Agreement; and
WHEREAS,
the Company desires to sell the Shares to Purchasers on the terms and conditions
set forth herein.
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AGREEMENT
In
consideration of the recitals and the mutual promises, covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
AUTHORIZATION AND
SALE OF THE
SHARES
1.1 Authorization. The
Company has, prior to the date of this Agreement, (i) authorized the issuance
and sale of the Shares to the Purchasers and (ii) authorized issuance of and
reserved for issuance shares upon warrant exercise.
1.2 Sale of the Shares to the
Purchasers. Subject in all respects to the satisfaction of the terms and
conditions herein set forth, and in reliance upon the respective representations
and warranties of the parties set forth herein, in this SPA and in any document
delivered pursuant hereto or thereto, the Company agrees to sell to each
Purchaser (and such Purchaser agrees by executing and delivering the Execution
Documents and investment amount to purchase from the Company) the number of
Shares set forth in such Purchasers’ Subscription Agreement at the Offering
Price.
1.3 Offering Price and Share
Calculation. Each Share shall be priced at the $0.75 per share for a
total number of 1,333,333 shares.
1.4 Delivery of the Shares to
the Purchasers. Upon the execution and delivery by the Purchasers of the
Execution Documents and the investment amount, the Company will calculate the
number of Shares purchased by the Purchaser and express said funds to the Escrow
Agent. The Shares will be issued to the Purchaser when the
subscription has been accepted by the Company and the Company receives notice
that the funds have been cleared by the bank holding the funds. This
delivery in no way shall exceed 10 days from the Final Closing or Early
Termination date whichever is first.
1.5 Early
Termination. Notwithstanding anything contained herein to the
contrary, the Company has the right to terminate the Offering at any time upon
15 days’ written notice to Placement Agent (“Early Termination
Date”). In the event a Closing has already occurred, this early
termination will not relieve the Company of its obligations to register the
Shares and shares of Common Stock underlying the Warrant (the “Warrant Shares”)
sold at such Closing.
1.6 Terms of
Warrant. (a) The Warrants mentioned supra shall have the
specified strike price: A, $0.75 each; B $1.00 each, and C, $1.25., which shall
have a five year exercise right. The Warrants will be issued in unregistered
form.
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(b) The
Warrant Shares, when issued upon exercise of a Warrant, will
be fully
paid and non-assessable, and the Warrant Shares will be registered in the
Registration Statement mentioned elsewhere in this agreement. Company will pay
any transfer tax incurred as a result of the issuance of Common Stock to the
holder upon its exercise.
ARTICLE
II
REGISTRATION
RIGHTS
2.1 Registration of Shares by
Company. The Investor will receive “piggy back” registration rights
and will be included on the Company’s next registration statement covering the
Shares and Warrant Shares (the “Registration Statement”). Purchaser shall have
the right to require company to register said shares after six months from date
of sale.
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ARTICLE
III
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REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The
Company represents and warrants (such representations and warranties do not
lessen or obviate the representations and warranties of the Purchasers set forth
in this Agreement or the Subscription Agreement) that:
3.1 Organization and Existence,
Authority, Etc. The Company is a corporation duly organized and validly
existing and in good standing under the laws of the State of Nevada, and has all
requisite corporate power and authority to carry on its business as now
conducted and proposed to be conducted; the Company has all requisite corporate
power and authority to enter into this Agreement, to issue the Shares as
contemplated herein and to carry out the provisions and conditions of this
Agreement. This Agreement has been duly executed and delivered by, and
constitutes the valid and binding obligations of, the Company, enforceable in
accordance with their respective terms, subject to the effect of any applicable
bankruptcy, moratorium, insolvency, reorganization or other similar law
affecting the enforceability of creditors' rights generally and to the effect of
general principles of equity which may limit the availability of remedies
(whether in a proceeding at law or in equity). The Company is duly qualified and
is authorized to do business and is in good standing as a foreign corporation in
each jurisdiction in which the conduct of its business or ownership of its
properties would so require, except where the failure to be so qualified would
not have a material adverse effect on its business and financial condition,
taken as a whole. The Company will preserve, protect, and maintain,
(a) its corporate existence, and (b) all rights, franchises, accreditations,
privileges, and properties, the failure of which to preserve, protect, and
maintain might have a material adverse effect on the business, affairs, assets,
prospects, operations, employee relations, rights or condition, financial or
otherwise, of the Company taken as a whole.
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3.2 Litigation. Except as
disclosed in the Company Commission Filings (as hereinafter defined) and the
Private Placement Memorandum, to the knowledge of the Company, there is no
action, suit or proceeding pending, or threatened, against the Company before
any court, administrative agency or arbitrator which could reasonably be
expected to result in any material adverse change in the business, properties,
condition (financial or otherwise) of the Company, taken as a whole, or which
challenges the validity of any action taken or to be taken pursuant to or in
connection with this Agreement.
3.3 Charter Documents.
Neither the execution nor the delivery of this Agreement, nor the consummation
of the transactions contemplated hereby, nor compliance with the terms and
provisions hereof, will conflict with, or result in a breach of or creation of a
lien under, the terms, conditions or provisions of, or constitute a default
under, the charter or by-laws of the Company, as amended, copies of which are
available to the Purchasers in the Company Commission Filings.
3.4 Authorized and Outstanding
Capital Stock. As of February 13th, 2008,
there are outstanding and issued approximately 15,603,635 shares of Common
Stock. All of such outstanding shares of Common Stock have been validly issued
and are fully paid and non-assessable. The Company has authorized the issuance
of the number of Shares and Warrant Shares deliverable to the Purchasers under
this Offering calculated at the Offering Price, up to $1,000,000. The Shares
when issued as part of the Shares in accordance with the terms of this Agreement
will be validly issued, fully paid and non-assessable.
3.5 Commission Filings and
Financial Statements. True and complete copies of all reports,
registration statements, definitive proxy statements and other documents (in
each case together with all amendments and supplements thereto) filed by the
Company with the Securities and Exchange Commission (such reports, registration
statements, definitive proxy statements and other documents, together with any
amendments and supplements thereto, are sometimes collectively referred to as
the "Company Commission Filings") are available to the Purchasers at the
Commission’s website xxx.xxx.xxx. The Company Commission Filings constitute all
of the documents (other than preliminary materials) that the Company was
required to file with the Commission. As of their respective dates, each of the
Company Commission Filings complied in all material respects with the applicable
requirements of the Securities Act and the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), as applicable, and the rules and regulations under
each such act, and none of the Company Commission Filings contained as of such
date any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. When
filed with the Commission the financial statements included in the Company
Commission Filings complied as to form in all material respects with the
applicable rules and regulations of the Commission and were prepared in
accordance with generally accepted accounting principles (as in effect from time
to time) applied on a consistent basis (except as may be
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indicated
therein or in the notes or schedules thereto), and such financial statements
fairly present in accordance with generally accepted accounting principles in
all material respects the financial position of the Company as at the dates
thereof and the results of its operations and its cash flows for the periods
then ended, subject, in the case of the unaudited interim financial statements,
to normal, recurring year-end audit adjustments and the absence of
footnotes.
3.6 Intellectual
Property. The Company shall maintain in full force and affect its
corporate existence, rights and franchises and all licenses and other rights to
use Intellectual Property owned or possessed by it and reasonably deemed to be
necessary to the conduct of its business.
3.7 Tax Returns and
Payments. The Company has timely filed all tax returns (federal, state
and local) required to be filed by it. All taxes shown to be due and payable on
such returns, any assessments imposed, and to the Company's knowledge all other
taxes due and payable by the Company as of the date hereof, have been paid, are
being contested in good faith or will be paid prior to the time they become
delinquent. The Company has not been advised (a) that any of its returns,
federal, state or other, have been or are being audited as of the date hereof,
or (b) of any deficiency in assessment or proposed judgment to its federal,
state or other taxes. The Company has no knowledge of any liability of any tax
to be imposed upon its properties or assets as of the date of this Agreement
that is not adequately provided for.
3.8 Title to Properties.
The Company has good and marketable title to its properties and assets, and good
title to its leasehold estates, in each case subject to no mortgage, pledge,
lien, lease, encumbrance or charge, other than (a) those resulting from taxes
which have not yet become delinquent, (b) minor liens and encumbrances which do
not materially detract from the value of the property subject thereto or
materially impair the operations of the Company, and (c) those that have
otherwise arisen in the ordinary course of business. The Company is in
compliance with all material terms of each lease to which it is a party or is
otherwise bound.
3.9 Compliance with Other
Instruments, Etc. The Company is not in violation of any term of its
certificate or articles of incorporation or by-laws, and the Company is not in
material violation of any material term of any material agreement or instrument
to which it is a party or by which it is bound or any material term of any
applicable law, ordinance, rule or regulation of any governmental authority or
any material term of any applicable order, judgment or decree of any court,
arbitrator or governmental authority, the consequences of which violation might
have a materially adverse effect on the business, condition (financial or
other), operations, assets or properties of the Company; the execution, delivery
and performance of this Agreement and the Related Agreements will not result in
any material violation of or be in material conflict with or constitute a
material default under any such term; and there is no such term which
materially
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adversely
affects the business, condition (financial or other), operations, assets, or
properties of the Company, taken as a whole.
3.10
Governmental
Consent. No material consent, approval or authorization of, or
declaration or filing with, any governmental authority on the part of the
Company or any of its Subsidiaries is required for the valid execution and
delivery of this Agreement and the Related Agreements or the valid offer, issue,
sale and delivery of the Shares pursuant to this Agreement or the Related
Agreements, except where the failure to obtain such consent or make such filing
would not have a material adverse effect on the business, operations or assets
of the Company, and except for appropriate filings (i) with the Commission and
(ii) with such state securities commissions in respect of "blue sky" laws as may
be appropriate.
3.11
Use of
Proceeds. The Company and management will have full discretion on the use
the proceeds which may include but not limited to general working
capital.
3.12 Disclosure. To the
best of the Company's knowledge, there is no fact (other than matters of a
general economic or political nature which does not affect the Company uniquely)
known to the Company which materially adversely affects the business, condition
(financial or other), operations, assets or properties of the Company which has
not been set forth either in the Company Commission Filings or in this Agreement
or in the other documents, certificates and instruments delivered to the
Purchasers by or on behalf of the Company specifically for use in connection
with the transactions contemplated by this Agreement.
ARTICLE
IV
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASERS
Each
Purchaser hereby severally and not jointly represents and warrants to the
Company with respect to itself or himself as follows (such representations and
warranties do not lessen or obviate the representations and warranties of the
Company set forth in this Agreement):
4.1 Requisite Power and
Authority. Purchaser has all necessary power and authority under all
applicable governing documents and provisions of law to execute and deliver this
Agreement and the Related Agreements and to carry out their provisions. All
action on Purchaser's part required for the lawful execution and delivery of
this Agreement and the Related Agreements have been or will be taken prior to
the Closing Date. Upon their execution and delivery, this Agreement and the
Related Agreements will be valid and binding obligations of Purchaser,
enforceable in accordance with their terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights, and (b) as limited by
general principles of equity that restrict the availability of equitable
remedies.
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4.2 Investment
Representations. Purchaser understands that the Shares are being offered
and sold pursuant to an exemption from registration contained in the Securities
Act based in part upon Purchaser's representations contained in the
Agreement.
4.3 Purchaser Bears Economic
Risk. Purchaser has substantial experience in evaluating and investing in
private placement transactions of securities in companies similar to the Company
so that it is capable of evaluating the merits and risks of its investment in
the Company and has the capacity to protect its own interests. Purchaser must
bear the economic risk of this investment for an indefinite period of
time.
4.4 Acquisition for Own
Account. Purchaser is acquiring the Shares for Purchaser's own account
for investment only, and not with a view towards their distribution or
resale.
4.5 Purchaser Can Protect Its
Interest. Purchaser represents that by reason of his/her/its, or of its
management's, business or financial experience, Purchaser has the capacity to
protect its own interests in connection with the transactions contemplated in
this Agreement, and the Related Agreements. Further, Purchaser is aware of no
publication or any advertisement in connection with the transactions
contemplated in the Agreement. In evaluating the suitability of an
investment in the Company, the Purchaser has not relied upon any representation
or other information (oral or written) other than as stated in this
Agreement.
4.6 Self-Reliance. The
Purchaser is not relying on the Company or any of its employees or agents or
Placement Agent with respect to the legal, tax, economic and related
considerations as to an investment in the Securities, and the Purchaser has
relied on the advice of, or has consulted with, only his own
advisors
4.7 Accredited Investor.
Each Purchaser acknowledges that a purchase of the Shares is only available to a
Purchaser who is an "accredited investor." In connection therewith, each
Purchaser represents and warrants to the Company and the Placement Agent that
he/she or it, as the case may be, qualifies as an "accredited investor" within
the meaning of Regulation D, since he/she or it meets one of the following
standards for determination of "accredited investor" status of Regulation D set
forth below:
(a) Any
broker or dealer registered pursuant to Section 15 of the Exchange
Act;
(b) Any
natural person whose individual net worth, or joint net worth with
that
person's spouse, at the time of his purchase exceeds $1,000,000;
(c) Any
natural person who had an individual income in excess of $200,000 in each of the
two most recent years or joint income with that person's spouse in excess of
$300,000 in each of those years and has a reasonable expectation of reaching the
same income level in the current year;
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(d) Any
trust, with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the securities offered, whose purchase is directed by a
sophisticated person as described in Rule 506(b)(2)(ii) of Regulation
D;
(e) Any
organization described in Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000; or
(f) Any
entity in which all of the equity owners are "accredited
investors".
4.8 Available
Information. Each Purchaser hereby represents that he/she/it (i) has
access to and has carefully reviewed the Company Commission Filings, and (ii)
has had the opportunity to ask questions and receive answers from the Company
concerning the Company Commission Filings and the terms and conditions of the
offering of the Shares and to obtain any documents relating to the Company which
are publicly available and any additional information or documents relating to
the Company which the Company possesses or can acquire without unreasonable
effort or expense.
4.9 Regulatory
Compliance. Purchaser agrees that Purchaser will comply with
all
relevant
rules and regulations of the Exchange Act, including the provisions of
Regulation M promulgated thereunder.
4.10
Legends. Purchaser
understands that a portion of the certificates representing the components of
the Shares may bear the following legend (or one substantially similar) until
the Shares and Warrant Shares are covered by an effective registration statement
filed with the Commission:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AS AMENDED (THE "ACT") OR, IF APPLICABLE, STATE
SECURITIES LAWS AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF A
CURRENT AND EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT WITH RESPECT TO SUCH
SECURITIES, OR AN OPINION OF THE COMPANY'S COUNSEL TO THE EFFECT THAT
REGISTRATION IS NOT REQUIRED UNDER THE ACT. ALTHOUGH THE COMPANY HAS AN
OBLIGATION TO REGISTER FOR RESALE THE SHARES AND THE WARRANT SHARES, THERE CAN
BE NO ASSURANCE THAT SUCH REGISTRATION WILL BE COMPLETED WITHIN THE TIME FRAMES
REQUIRED, OR AT ALL. THE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING
AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE
ACCURACY
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OR
ADEQUACY OF THE INFORMATION CONTAINED. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.”
4.11
Confidentiality. The
Purchaser agrees that he/she/it will not include in any public announcement, the
name of the Company, unless expressly agreed to by the Company or unless and
until such disclosure is required by law or applicable regulation, and then only
to the extent of such requirement.
4.12 Non-Manipulative
Practices. Under no circumstances is Placement Agent or Purchasers to
engage in any type of short selling in an attempt to hedge their positions or
manipulate the stock.
4.13
Financial Position /
Requisite Knowledge.
(a) That
the undersigned is in a financial position to hold the Securities for an
indefinite period of time and is able to bear the economic risk and withstand a
complete loss of the undersigned's investment in the Securities. Additionally,
the undersigned's proposed investment in the Securities does not exceed 20% of
the undersigned's net worth exclusive of home, home furnishings and
automobiles;
(b) That
the undersigned, either alone or with the assistance of the undersigned's own
professional advisor, has such knowledge and experience in financial and
business matters that the undersigned is capable of evaluating the merits and
risks of an investment in the Securities, has the capacity to protect the
undersigned's own interests in connection with an investment in the Notes and
has the net worth to undertake such risks;
(c) That
the undersigned has obtained, to the extent the undersigned deems necessary, the
undersigned's own personal professional advice with respect to the risks
inherent in the investment in the Securities, and the suitability of an
investment in the Securities in light of the undersigned's financial condition
and investment needs
(d) That
the undersigned believes that an investment in the Securities is suitable for
the undersigned based upon their investment objectives and financial needs, and
the undersigned has adequate means for providing for the their current financial
needs and personal contingencies and has no need for liquidity of investment
with respect to the Securities;
(e) That
the undersigned recognizes that the Securities as an investment involves a high
degree of risk, including, but not limited to, the risk of loss of 100% of the
undersigned's investment in the Securities;
4.14
Purchaser Bears
Economic Risk. Purchaser has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company so that it is capable of evaluating the merits and risks of its
investment in the Company and has the capacity to protect its
own
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interests.
Purchaser must bear the economic risk of this investment until the Securities
are registered pursuant to the Securities Act, or an exemption from registration
is available. That the undersigned realizes that (i) the purchase of the
Securities is a long-term investment; (ii) the purchaser of the Securities must
bear the economic risk of investment for an indefinite period of time because
the Securities have not been registered under the Act, or under the securities
laws of any state and, therefore, the Securities cannot be resold unless they
are subsequently registered under said laws or exemptions from such
registrations are available; (iii) there is presently no public market for the
Securities and the undersigned may be unable to liquidate the undersigned's
investment in the event of an emergency, or pledge the Securities as collateral
for a loan; and (iv) the transferability of the Securities is restricted and
requires conformity with the restrictions contained in Section 3.3 and legends
will be placed on the certificate(s) representing the Securities referring to
the applicable restrictions on transferability; and
4.15
OFAC Statement.
The Purchaser should check the
Office of Foreign Assets Control (“OFAC”) website at
<xxxx://xxx.xxxxx.xxx/xxxx> before making the following
representations. The Purchaser represents that the amounts invested by it
in the Company in the Offering were not and are not directly or indirectly
derived from activities that contravene federal, state or international laws and
regulations, including anti-money laundering laws and regulations. Federal
regulations and Executive Orders administered by OFAC prohibit, among other
things, the engagement in transactions with, and the provision of services to,
certain foreign countries, territories, entities and individuals. The
lists of OFAC prohibited countries, territories, persons and entities can be
found on the OFAC website at <xxxx://xxx.xxxxx.xxx/xxxx>. In
addition, the programs administered by OFAC (the “OFAC Programs”)
prohibit dealing with individuals1 or entities in certain countries regardless of
whether such individuals or entities appear on the OFAC lists.
4.16
Use of
Information. Any information which the undersigned has heretofore
furnished or furnishes herewith to the Company is complete and accurate and may
be relied upon by the Company in determining the availability of an exemption
from registration under Federal and state securities laws in connection with the
offering of Securities as described herein. The Purchaser further represents and
warrants that it will notify and supply corrective information to the Company
immediately upon the occurrence of any change therein occurring prior to the
Company's issuance of the Securities
1 These individuals include
specially designated nationals, specially designated narcotics traffickers and
other parties subject to OFAC sanctions and embargo
programs.
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ARTICLE
V
COVENANTS OF THE
COMPANY
5.1 Insurance. The
Company will maintain or cause to be maintained with financially sound and
reputable insurers, insurance with respect to its assets and business against
loss or damage covering risks of such types and in such amounts which are
customary for similarly situated corporations of established reputation engaged
in the same or similar businesses, in adequate amounts.
5.2 Payment of Taxes and Other
Obligations. The Company will pay or cause to be paid all material taxes,
assessments and other governmental charges levied upon any of its assets or in
respect of its franchises, businesses, income or profits, all trade accounts
payable in accordance with usual and customary business terms, and all claims
for work, labor or materials, which if unpaid might become a Lien upon any asset
of the Company before the same become delinquent, except that (unless and until
foreclosure, restraint, sale or other similar proceedings shall have been
commenced) no such charge need be paid if being contested in good faith and by
appropriate measures promptly initiated and diligently conducted if (a) such
reserve or other appropriate provision, if any, as shall be required by sound
accounting practice consistent with GAAP shall have been made therefor, and (b)
such contest does not have a material adverse effect on the financial condition
of the Company or the ability of the Company to pay any Indebtedness and no
assets are in imminent danger of forfeiture.
5.3 Compliance With Laws.
The Company will comply, and will cause each of its
Subsidiaries
to comply, with all material laws (including, but not limited to, Environmental
Laws), rules, regulations, judgments, orders and decrees of any governmental or
regulatory authority applicable to its and their respective assets.
5.4 Corporate Existence;
Property. The Company will preserve, protect and maintain (a) its
corporate existence, and (b) all rights, franchises, accreditations, privileges,
and properties, the failure of which to preserve, protect, and maintain might
have a material adverse effect on the business, affairs, assets, prospects,
operations, employee relations, rights or condition, financial or otherwise, of
the Company taken as a whole.
5.5 Maintenance. The
Company will maintain and keep its properties in good repair, working order and
condition, subject to normal wear and tear, and from time to time make all
necessary repairs, renewals and replacements so that its businesses may be
properly and advantageously conducted at all times.
5.6 Other Obligations.
The Company will comply with all obligations which it incurs pursuant to any
contract or agreement, whether oral or written, express or implied, as such
obligations become due to the extent to which the failure to so comply could be
expected to have a material adverse effect upon the business, affairs, assets,
prospects, operations, employee relations, rights or condition, financial or
otherwise, of the
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Company,
unless and to the extent that the same are being contested in good faith and by
appropriate proceedings and adequate reserves (as determined in accordance with
GAAP) have been established on its books with respect thereto.
5.7 No Restrictions. The
Company will not enter into or become subject to any agreement or instrument,
which by its terms would (under any circumstances) restrict the
Company’s
right to perform the provisions of this Agreement or the Related
Agreements.
5.8 Public Disclosures.
The Company will not disclose the Purchaser’s name or identity as an investor in
the Company in any press release or other public announcement or in any document
or material filed with any governmental entity, without the prior written
consent of the Purchaser and Placement Agent, unless such disclosure is required
by applicable law or governmental or Commission regulations or by order of a
court of competent jurisdiction.
5.9 No Violation. None of
the execution and delivery of this Agreement and any Related Agreements, the
consummation of the transactions provided for herein and therein or contemplated
hereby and thereby, the fulfillment by the Company of the terms hereof or
thereof, will (a) conflict with or result in a breach of any provision of the
Articles of Incorporation or By-Laws of the Company, (b) result in a default or
breach, give rise to any right of termination, cancellation or acceleration, or
require any consent or approval, under any of the terms, conditions or
provisions of any material stock, bond, mortgage, indenture, loan, factoring
arrangement, license, agreement, lease or other instrument or obligation to
which the Company is a party or by which it or any of its respective assets may
be bound or (c) to the knowledge of the Company, violate any material law
(including, but not limited to, any Environmental Law), judgment, order, writ,
injunction, decree, statute, rule or regulation of any court, administrative
agency, bureau, board, commission, office, authority, department or other
governmental entity applicable to the Company or any of its assets.
5.10
Use of
Proceeds. The Company will use the proceeds from the sale of the Shares
as specified herein.
5.11
Fees and
Expenses.
(a) The
Company will bear all of its own expenses in connection with the preparation,
execution and negotiation of this Agreement and the Related Agreements, and the
transactions contemplated hereby and thereby. Additionally, company is
responsible for up to $3,500.00 for legal fees in this matter, Purchaser is
responsible for any fees above this amount.
(b)
It is the Company’s obligation to file appropriate federal and
state
forms regarding this
Offering.
|
|
5.12
Non-Manipulative
Practices. Company shall under no circumstances
engage
|
in any
activities that could be construed as price manipulation.
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ARTICLE
VI
DEFINITIONS
6.1 Definitions. In
addition to the capitalized terms defined elsewhere in this
Agreement,
the following capitalized terms shall have the following meanings when used in
this Agreement:
(a)
“Common Stock” means the shares of common stock, $.001 par value per share, of
the Company.
(b)
“Environmental Laws” means all federal, state and local laws, ordinances and
rules of common law relating to environmental, safety, or health matters,
including those relating to fines, orders, injunctions, penalties, damages,
contribution, cost recovery compensation, losses, or injuries resulting from the
release or threatened release of Hazardous Substances and the generation, use,
storage, transportation, or disposal of Hazardous Substances in any manner
applicable to the Company or its assets, including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. §§
9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. §§ 1801 et
seq the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §§6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et seq.), the
Clean air Act (42 U.S.C. §§ 7401 et seq.), the Toxic Substances
Control Act of 1976 (15 U.S.C. §§ 2601 et seq.), the Safe Drinking Water Act (42
U.S.C. §§ 300f- §§ 300j-11 et seq, the Occupational Safety and Health Act of
1970 (29 U.S.C. §§ 651 et seq.), and the Emergency Planning and Community
Right-to-Know Act (42 U.S.C. §§ 11001 et seq.), each as heretofore and hereafter
amended or supplemented, and any analogous present or future federal, state, or
local statutes, rules, and regulations promulgated thereunder or pursuant
thereto, and any other present or future law, ordinance, rule, regulation,
permit, order, or directive addressing environmental, safety or health issues,
of or by the federal government, any state or political subdivision thereof, or
any agency, court, or body of the federal government or any state or political
subdivision thereof.
(c)
“Execution Documents” means this Agreement and the Subscription
Agreement.
(d)
“GAAP” means United States generally accepted accounting principles,
consistently applied.
(e)
“Indebtedness” of any Person means the principal of, premium, if any, and unpaid
interest on (a) indebtedness for borrowed money, (b) indebtedness guaranteed,
directly or indirectly, in any manner by such Person, or in effect guaranteed,
directly or indirectly, in any manner by such Person through an agreement,
contingent or otherwise, to supply funds to, or in any other manner invest in,
the debtor, or to purchase indebtedness, or to purchase and pay for property if
not delivered or pay for services if not performed, primarily for
the
13
purpose
of enabling the debtor to make payment of the indebtedness or to assure the
owners of the indebtedness against loss, (c) all indebtedness secured by any
mortgage, lien, pledge, charge or other encumbrance upon property owned by such
Person, even though such Person has not in any manner become liable for the
payment of such indebtedness, (d) all indebtedness of such Person created or
arising under any conditional sale, lease (intended primarily as a financing
device) or other title retention or security agreement with respect to property
acquired by such Person even though the rights and remedies of the seller,
lessor or lender under such agreement or lease in the event of default may be
limited to repossession or sale of such property, and (e) renewals, extensions
and refunding of any such indebtedness.
(f)
“Lien” means any mortgage, deed of trust, lien, security interest, pledge,
lease, conditional sale contract, claim, charge, easement, right of way,
assessment, restriction and other encumbrance of every kind.
(g)
“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a governmental entity or any department, agency
or political subdivision thereof.
(h)
“Placement Agent” means Westcap Securities, Inc., an NASD registered
broker/dealer.
(i)
“Related Agreement” means the Subscription Agreement.
(j)
“Securities Act” means the Securities Act of 1933, as amended.
6.2 Rules of
Construction. The following provisions shall be applied wherever
appropriate herein:
(a)
“herein,” ”hereby,” “hereunder,” ”hereof” and other equivalent words shall refer
to this Agreement as an entirety and not solely to the particular portion of
this Agreement in which any such word is used;
(b) all
definitions set forth herein shall be deemed applicable whether the words
defined are used herein in the singular or the plural;
(c)
wherever used herein, any pronoun or pronouns shall be deemed to include both
the singular and plural and to cover all genders;
(d) all
accounting terms not specifically defined herein shall be construed in
accordance with GAAP;
(e)
neither this Agreement nor any other agreement, document or instrument referred
to herein or executed and delivered in connection herewith
14
shall be
construed against either party as the principal draftsperson hereof or
thereof;
(f) all
references or citations in this Agreement to statutes or regulations
or
statutory
or regulatory provisions shall generally be considered citations to such
statutes, regulations or provisions as in effect on the date hereof, except that
when the context otherwise requires, such references shall be considered
citations to such statutes, regulations or provisions as in effect from time to
time, including any successor statutes, regulations or provisions directly or
indirectly superseding such statutes, regulations or provisions;
(g) any
references herein to a particular Section, Article, Exhibit or Schedule means a
Section or Article of, or an Exhibit or Schedule to, this Agreement unless
another agreement is specified; and
(h) the
Exhibits and Schedules attached hereto are incorporated herein by reference and
shall be considered part of this Agreement.
ARTICLE
VII
MISCELLANEOUS
7.1 Consent to Amendments;
Waivers. The provisions of this Agreement may be amended, and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company has obtained the written
consent of a majority in interest of the Purchasers in the Offering, such
consent not to be unreasonably withheld, delayed or conditioned. No
other course of dealing between the Company and any Purchaser or any delay in
exercising any rights hereunder or under any of the Related Agreements shall
operate as a waiver of any rights of any such Purchaser. If the Company pays any
consideration to any Person for such consent to any amendment, modification or
waiver hereunder or under any of the Related Agreements, the Company shall also
pay each Purchaser granting its consent equivalent consideration computed on a
pro rata basis. Any waiver, permit, consent or approval of any kind or character
on the part of any party of any provisions or conditions of this Agreement or
any Related Agreement must be made in writing and shall be effective only to the
extent specifically set forth in such writing.
7.2 Representations and
Warranties: Indemnification.
(a) All
representations and warranties contained herein or in any Related Agreement or
made in writing by any party in connection herewith or therewith will survive
the execution and delivery of this Agreement and any investigation made at any
time by or on behalf of the Purchasers.
15
(b) The
Company will defend, indemnify and hold the Purchasers harmless from and against
any and all actions, suits, losses, damages, liabilities, claims, obligations
and expenses (including, but not limited to, legal fees and court costs)
(“Losses”), whether or not resulting from judgments or arbitration awards, that
shall be suffered or incurred by such Purchasers resulting from or arising out
of any breach of any of the representations, warranties or covenants of the
Company contained in this Agreement or in any Related Agreement or in any
schedule, certificate, exhibit or other instrument furnished or to be furnished
by the Company hereunder or thereunder.
(c) Each
Purchaser will, jointly and severally, defend, indemnify and hold the Company
harmless from and against any and all losses, whether or not resulting from
judgment or arbitration awards, that shall be suffered or incurred by the
Company resulting from or arising out of any breach of any of the
representations, warranties or covenants of the Purchasers contained in this
Agreement or in any Related Agreement or in any schedule, certificate, exhibit
or other instrument furnished or to be furnished by the Purchasers hereunder or
thereunder.
7.3 Successors and
Assigns. Except as otherwise expressly provided herein, all covenants and
agreements contained in this Agreement by or on behalf of any of the parties
hereto will bind and inure to the benefit of the respective successors and
assigns of the parties hereto, whether so expressed or not, provided, however,
that neither party shall assign (by operation of law or otherwise) this
Agreement or any part hereof or any obligation hereunder without the prior
written consent of the Company or the Purchaser. In addition, and whether or not
any express assignment has been made, the provisions of this Agreement which are
for the benefit of the Purchasers are also for the benefit of, and enforceable
by, any subsequent holders of all or any part of the Shares. The Shares may not
be transferred unless such transfer is registered under the Securities Act or
unless an exemption from such registration is available, which exemption shall
be established either by an opinion of counsel delivered by the holder of the
Shares being transferred or by other customary means.
7.4 Descriptive Headings.
The descriptive headings of this Agreement are inserted for convenience of
reference only and do not constitute a part of and shall not be utilized in
interpreting this Agreement.
7.5 Notices. Any notices
required or permitted to be sent hereunder shall be delivered personally or
mailed, by certified mail, return receipt requested, or delivered by overnight
courier service to the following addresses, or such other address as any party
hereto designates by written notice to the Company, and shall be deemed to have
been given upon delivery, if delivered personally, five days after mailing, if
mailed, or one business day after delivery to the courier, if delivered by
overnight courier service.
16
If to the
Company:
0000 X.
Xxxx Xxxx Xxxx.
Xxx
Xxxxx, XX 00000-0000
If to the Purchasers:
Kenridge Holdings LLC
0000 Xxxxxxxxx 00xx
Xxxxxx
Xxxx Xxxxx, Xxx 00000
7.6 Governing Law. This
Agreement and the rights and duties of the parties hereto shall be governed by
the laws of the State of Nevada (without regard to principles of conflicts of
law).
7.7 Execution in
Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute one
instrument.
7.8 Consent to
Jurisdiction. The Company and the Purchasers hereby irrevocably agree
that any suit, action, proceeding or claim against it arising out of or in any
way relating to this agreement or any of the related agreements, or any judgment
entered by any court in respect thereof, may be brought or enforced in the state
or federal courts located in Las Vegas, Nevada and hereby irrevocably waives, to
the fullest extent permitted by law, any objection which they may now or
hereafter have to the venue of any proceeding brought in said jurisdiction, and
further irrevocably waives any claims that any such proceeding has been brought
in an inconvenient forum.
17
SECURITIES
PURCHASE AGREEMENT - SIGNATURE PAGE
The
parties hereto have executed this Securities Purchase Agreement as of the date
set
forth
below.
COMPANY:
PURCHASER:
By:
/s/Xxxxxx
Xxxxx-Xxxx
Xxxxxx Xxxxx-Xxxx, on behalf of Kenridge
LLC
Date:
June 17, 2008
- -
18
