SECURITIES PURCHASE AGREEMENT
Exhibit 99.1
SECURITIES PURCHASE AGREEMENT
(the “Agreement”), dated
as of November 2, 2009, by and among Biostar Pharmaceuticals, Inc., a Maryland
corporation, with headquarters located at Xx. 000 Xxxxx Xxxxxx, Xxxxxxxxx Xxxx,
Xxxxxxx Xxxxxxxx, The People’s Republic of China 712046 (the “Company”), and the Buyers
listed on the Schedule of Buyers attached hereto (individually, a “Buyer” and collectively, the
“Buyers”). The
Company and the Buyers shall collectively be referred to as the “Parties” and individually, a
“Party”.
BACKGROUND
WHEREAS, the Company and each
Buyer is executing and delivering this Agreement in reliance upon the exemption
from securities registration afforded by Section 4(2) of the Securities Act of
1933, as amended (the “1933
Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated
by the United States Securities and Exchange SEC (the “SEC”) under the 1933
Act.
WHEREAS, the Buyers
collectively wish to purchase, and the Company wishes to sell, upon the terms
and conditions stated in this Agreement and in the amounts as set forth in
Schedule A annexed hereto, (i) up to an aggregate number of 2,060,000 shares of
Series B Convertible Preferred Stock, par value $0.001 per share (“Series B Preferred Stock”),
with each share of Series B Preferred Stock being initially convertible into one
(1) share of the common stock, par value $0.001 per share, of the Company
(the “Common Stock”),
subject to adjustment and (ii) attached warrants to purchase up to an aggregate
of 500,000 shares of Common Stock at $3.00 per share, substantially in the form
attached hereto as Exhibit B, subject to
adjustment (the Series B Preferred Stock and the Warrants shall collectively be
referred to as the “Securities”).
WHEREAS, contemporaneously
with the execution and delivery of this Agreement, the parties hereto, together
with Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP (“Escrow Agent”), are executing
and delivering a Closing Escrow Agreement, substantially in the form attached
hereto as Exhibit
C (the “Closing Escrow
Agreement”) pursuant to which the Buyers shall deposit their Purchase
Price (as defined below) with the Escrow Agent to be applied to the transactions
contemplated hereunder.
WHEREAS, contemporaneously
with the execution and delivery of this Agreement, the Company, the Buyers and
Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP (“Make Good Escrow Agent”), are executing
and delivering a Make Good Escrow Agreement, substantially in the form attached
hereto as Exhibit
D (the “Make Good Escrow
Agreement”).
WHEREAS, the parties intend to
memorialize the terms on which the Company will sell to the Buyers and the
Buyers will purchase the Securities;
NOW, THEREFORE, in
consideration of the mutual covenants and premises contained herein, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby conclusively acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
Article
1
INCORPORATION BY REFERENCE
AND DEFINITIONS
1.1 Incorporation
by Reference. The foregoing recitals and the Exhibits and Schedules
attached hereto and referred to herein, are hereby acknowledged to be true and
accurate, and are incorporated herein by this reference.
1.2 Supersedes
Other Agreements. This Agreement, to the extent that it is inconsistent
with any other instrument or understanding among the parties, shall supersede
such instrument or understanding to the fullest extent permitted by
law. A copy of this Agreement shall be filed at the Company’s
principal office.
1.3 Certain
Definitions. For purposes of this Agreement, the following capitalized
terms shall have the following meanings (all capitalized terms used in this
Agreement that are not defined in this Article 1 shall have the meanings set
forth elsewhere in this Agreement):
1.3.1 “9.9%
Limitation” has the meaning set forth in Section 2.1.3 of this
Agreement.
1.3.2 “1933
Act” means the Securities Act of 1933, as amended.
1.3.3 “1934
Act” means the Securities Exchange Act of 1934, as amended.
1.3.4 “Affiliate”
means a Person or Persons directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with the
Person(s) in question. The term “control,” as used in the immediately
preceding sentence, means, with respect to a Person that is a corporation, the
right to the exercise, directly or indirectly, of more than 50% of the voting
rights attributable to the shares of such controlled corporation and, with
respect to a Person that is not a corporation, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such controlled Person.
1.3.5 “Articles”
means the certificate of incorporation of the Company, as the same may be
amended from time to time.
1.3.6 “Bylaws”
means the bylaws of the Company, as the same may be amended from time to
time.
1.3.7 “Certificate
of Designation” means the means the
Certificate of Designation to be filed prior to the Closing by the Company with
the Secretary of State of Maryland, in the form of Exhibit A attached
hereto.
1.3.8 “Closing” means the consummation
of the transactions contemplated by this Agreement, all of which transactions
shall be consummated contemporaneously with the Closing.
1.3.9 “Closing
Date” means the date on which the Closing occurs.
1.3.10 “Company’s
Governing Documents” means the Articles and Bylaws.
1.3.11 “EBITDA”
means consolidated earnings before interest, taxes, depreciation and
amortization, determined in accordance with GAAP.
1.3.12 “Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to
employees, officers, directors of and consultants (other than consultants whose
services relate to the raising of funds) of the Company pursuant to any stock or
option plan that was or may be adopted by a majority of independent members of
the Board of Directors of the Company or a majority of the members of a
committee of independent directors established for such purpose, (b) securities
upon the exercise of or conversion of any securities issued hereunder, the
Series B Preferred Stock, the Warrants and any other options, warrants or
convertible securities which are outstanding on after completion of the Closing,
and (c) securities issued pursuant to acquisitions, licensing agreements, or
other strategic transactions, provided any such issuance shall only be to a
Person which is, itself or through its subsidiaries, an operating company in a
business which the Company’s board of directors believes is beneficial to the
Company and in which the Company receives benefits in addition to the investment
of funds, but shall not include a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to an entity whose
primary business is investing in securities.
1.3.13 “GAAP”
means United States generally accepted accounting principles consistently
applied.
1.3.14 “Maryland
Law” shall mean the Maryland General Corporation Law.
1.3.15 “Material
Adverse Effect” means any adverse effect on the business, operations,
properties or financial condition of the Company or any of its Subsidiaries that
is material and adverse to the Company and its Subsidiaries taken as a whole
and/or any condition, circumstance, or situation that would prohibit or
otherwise materially interfere with the ability of the Company or any Subsidiary
to perform any of its material obligations under the Transaction Documents or to
perform its obligations under any other material agreement.
1.3.16 “Person”
means an individual, partnership, firm, limited liability company, trust, joint
venture, association, corporation, or any other legal entity.
1.3.17 “Income
from Operations” means income from operations determined in accordance
with GAAP plus any charges relating to the transaction contemplated by this
Agreement and the other Transaction Documents, including the issuance of the
Series B Preferred Stock, Warrants and any other securities issuable pursuant to
this Agreement.
1.3.18 “Purchase
Price” means the $3,605,000 to be paid by the Buyers to the Company for
the Securities.
1.3.19 “Restriction
Termination Date” shall mean the date on which the Buyers shall have (a)
converted 90% of the shares of Series B Preferred Stock and exercised 90%
Warrants (other than Warrants that shall have expired unexercised) and (b) sold
90% of the underlying Shares in the public market.
1.3.20 “Securities”
means the shares of Series B Preferred Stock, the Warrants and the
Shares.
1.3.21 “SEC”
means the Securities and Exchange Commission.
1.3.22 “SEC
Documents” means, all reports, schedules, forms, statements and other
documents required to be filed with the SEC pursuant to the reporting
requirements under the 1934 Act.
1.3.23 “Series B
Preferred Stock” means the shares of Series B Preferred Stock having the
rights, preferences and privileges and subject to the limitations set forth in
the Certificate of Designation.
1.3.24 “Shares”
means, collectively, the shares of Common Stock issued or issuable (i) upon
conversion of the Series B Preferred Stock and (ii) upon exercise of the
Warrants.
1.3.25 “Subsidiary”
means an entity in which the Company and/or one or more other Subsidiaries
directly or indirectly own(s) either 50% of the voting rights or 50% of the
equity interests.
1.3.26 “Subsequent
Financing” means any offer and sale of shares of Preferred Stock or debt
that is initially convertible into shares of Common Stock or otherwise senior or
superior to the Series B Preferred Stock.
1.3.27 “Target
Number” has the meaning set forth in Section 6.10 of this
Agreement.
1.3.28 “Total
Shares” means the number of shares of Common Stock as have been or would
be issued upon conversion of the Series B Preferred Stock and
Warrants. The number of Total Shares shall be adjusted to reflect any
change in the conversion price of the Series B Preferred Stock and the
expiration of any Warrants.
1.3.29 “Transaction
Documents” means this Agreement, all Schedules and Exhibits attached
hereto, the Certificate of Designation, the Warrants, the Closing Escrow
Agreement, the Make Good Escrow Agreement and all other documents and
instruments to be executed and delivered by the parties in order to consummate
the transactions contemplated hereby.
1.3.30 “Underlying
Shares” means shares of Common Stock issuable upon conversion of the
Series B Preferred Stock and the shares of Common Stock issuable upon exercise
of the Warrants,.
1.3.31 “Warrants”
means the common stock purchase warrants in substantially the forms of Exhibit
C to this Agreement.
1.4 References. All
references in this Agreement to “herein” or words of like effect, when referring
to preamble, recitals, article and section numbers, schedules and exhibits shall
refer to this Agreement unless otherwise stated.
1.5 Value of
Series B Preferred Stock. Whereever this Agreement provides
for the delivery of shares of Series B Preferred Stock in satisfaction of an
obligation under this Agreement, a share of Series B Preferred Stock shall have
a value equal to its liquidation preference as set forth in the Certificate of
Designation.
Article
2
SALE
AND PURCHASE OF SECURITIES; PURCHASE PRICE
2.1 Sale of
Securities. Subject
to the satisfaction (or waiver) of the conditions set forth in Article 8 and 9,
the Company shall issue and sell to each Buyer, and each Buyer severally, but
not jointly, agrees to purchase from the Company on the Closing Date, such
number of shares of Series B Preferred Stock and such number of Warrants as is
set forth opposite such Buyer's name on the Schedule A annexed
hereto. On the Closing Date, (i) each Buyer shall pay its respective
portion of the Purchase Price to the Company for the Series B Preferred Stock
and the Warrants to be issued and sold to such Buyer at the Closing, by wire
transfer of immediately available funds in accordance with the Company's written
wire instructions, and (ii) the Company shall deliver to each Buyer one or
more stock certificates, evidencing the number of shares of Series B Preferred
Stock and such number of Warrants such Buyer is purchasing as is set forth on
Schedule A annexed hereto, duly executed on behalf of the Company and registered
in the name of such Buyer.
2.1.1 Purchase
Price. The purchase price for the Securities to be purchased
by each Buyer at the Closing shall be the amount set forth opposite such Buyer’s
on Schedule A annexed hereto (the “Purchase
Price”) which shall be equal to the amount of $1.75 per share of Series B
Preferred Stock times the number of shares of Series B Preferred Stock
purchased
2.1.2 Except as
expressly provided in the Certificate of Designation and the Warrants, a Buyer
shall not be entitled to convert the Series B Preferred Stock into shares of
Common Stock or to exercise the Warrants to the extent that such conversion or
exercise would result in beneficial ownership by the Buyers and their
Affiliates, as a group, owning more than 9.9% of the then outstanding number of
shares of Common Stock on such date after giving effect to such conversion or
exercise. For the purposes of this Agreement beneficial ownership
shall be determined in accordance with Section 13(d) of the 1934 Act, and
Regulation 13d-3 thereunder. The limitation set forth in this Section
2.1.2 is referred to as the “9.9%
Limitation.” As a result of the 9.9% Limitation, the Buyers
will not have more than 9.9% of the voting power of the Company; provided,
however, that this sentence shall not affect any of a Buyer’s rights under the
Certificate of Designation.
Article
3
CLOSING
DATE AND DELIVERIES AT CLOSING
3.1 Closing
Date. The Closing of
the transactions contemplated by this Agreement, unless expressly determined
herein, shall be held at the offices of the Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP,
00 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 2:00 P.M. local time, on the Closing
Date or on such other date and at such other place as may be mutually agreed by
the parties, including closing by facsimile with originals to
follow.
3.2 Deliveries
by the Company. In addition to
and without limiting any other provision of this Agreement, the Company agrees
to deliver, or cause to be delivered, to the escrow agent under the Escrow
Agreement, the following:
(a) At or
prior to Closing, an executed Agreement with all exhibits and schedules attached
hereto;
(b) At the
Closing, certificates representing such number of shares of Series B Preferred
Stock in the names of the Buyers and in the amounts set forth in Schedule A to
this Agreement;
(c) At the
Closing, certificates representing such Warrants to purchase such number of
shares of Common Stock in the names of the Buyers and in the amounts set forth
in Schedule A to this Agreement
(d) The
executed Closing Escrow Agreement;
(e) The
executed Make Good Escrow Agreement;
(f) Evidence
of approval of the Board of Directors of the Company of the Transaction
Documents and the transactions contemplated hereby and thereby;
(g) Good
standing certificate from the Secretary of State of the State of
Maryland;
(h) The
executed disbursement instructions pursuant to the Closing Escrow Agreement,
which shall provide that the Escrow Agent continue to hold $350,000 to pay the
Company’s anticipated obligations to for its future professional fees as set
forth in Section 6.9;
(i) Such
other documents or certificates as shall be reasonably requested by Buyers or
their counsel; and
3.3 Deliveries
by Buyers. In addition to
and without limiting any other provision of this Agreement, the Buyers agree to
deliver, or cause to be delivered, to the Escrow Agent under the Escrow
Agreement, the following:
(a) A deposit
from each Buyer as to the Buyer’s portion of the Purchase Price;
(b) The
executed Agreement with all Exhibits and Schedules attached hereto;
(c) The
executed Closing Escrow Agreement;
(d) The
executed Make Good Escrow Agreement;
(e) The
executed disbursement instructions pursuant to the Escrow Agreement;
and
(f) Such
other documents or certificates as shall be reasonably requested by the Company
or its counsel.
3.4 Delivery
of Original Documents. In the event any document provided to the other
party in Paragraphs 3.2 and 3.3 herein are provided by facsimile, the party
shall forward an original document to the other party within seven (7) business
days.
3.5 Further
Assurances. The Company and each Buyer shall, upon request, on
or after the Closing Date, cooperate with each other (specifically, the Company
shall cooperate with the Buyers, and each Buyer shall cooperate with the
Company) by furnishing any additional information, executing and delivering any
additional documents and/or other instruments and doing any and all such things
as may be reasonably required by the parties or their counsel to consummate or
otherwise implement the transactions contemplated by this
Agreement.
3.6 Waiver. A
Buyer may waive any of the requirements of Section 3.2 of this Agreement, and
the Company may waive any of the provisions of Section 3.3 of this
Agreement. The Buyers may also waive any of the requirements of the
Company under the Closing Escrow Agreement and the Make Good Escrow
Agreement.
Article
4
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to the Buyers as of the date hereof and as of
Closing Date (which warranties and representations shall survive the Closing
regardless of any examinations, inspections, audits and other investigations the
Buyers have heretofore made or may hereinafter make with respect to such
warranties and representations) as follows:
4.1 Organization
and Qualification. Each
of 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 and authorization to own
their properties and to carry on their business as now being
conducted. Each of the Company and its Subsidiaries is duly qualified
to do business and is in good standing in every jurisdiction in which its
ownership of property or the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse
Effect. The Company has no Subsidiaries except as set forth on Schedule
4.1
4.2 Authorization;
Enforcement; Validity. The Company has the requisite corporate
power and authority to enter into and perform its obligations under the
Transaction Documents and to issue the Securities in accordance with the terms
hereof and thereof. The execution and delivery of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby, including, without limitation, the issuance of
the Securities 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 except for any filings which may be required to be
made by the Company with the SEC or state securities administrators subsequent
to the Closing. This Agreement and the other Transaction Documents
have been duly executed and delivered by the Company, and constitute the legal,
valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights and
remedies.
4.3 Issuance
of Securities. The Securities are duly authorized and, upon
issuance in accordance with the terms hereof, shall be validly issued and free
from all taxes, liens and charges with respect to the issue thereof and the
Securities shall be fully paid and nonassessable with the holders being entitled
to all rights accorded to a holder of Series B Preferred Stock and/or Warrants,
as the case may be. The offer and issuance by the Company of the
Securities are exempt from registration under the 1933 Act.
4.4 No
Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Securities) will not (i) result in a violation of the Articles
or Bylaws of the Company or any of its Subsidiaries or (ii) conflict with, or
constitute a default (or an event that 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 (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to
which the Company or any Subsidiary is a party or by which any property or asset
of the Company or any Subsidiary is bound or affected, or (iii) result in a
violation of any U.S. law, rule, regulation, order, judgment, injunction, decree
or other restriction of any court or governmental authority to which the Company
or a Subsidiary is subject (including federal and state securities laws and
regulations and the rules and regulations of the OTCBB), or by which any
property or asset of the Company or a Subsidiary is bound or affected, except in
the case of clause (ii) such as could not, individually or in the aggregate,
have or reasonably be expected to have a Material Adverse Effect.
4.5 Consents. The
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court, governmental agency or any
regulatory or self-regulatory agency or any other Person in order for it to
execute, deliver or perform any of its obligations under or contemplated by the
Transaction Documents, in each case in accordance with the terms hereof or
thereof (other than (x) any consent, authorization or order that has been
obtained as of the date hereof, (y) any filing or registration that has been
made as of the date hereof or (z) any filings which may be required to be made
by the Company with the SEC or state securities administrators subsequent to the
Closing; provided, that, for
purposes of the representation made in this sentence, the Company is assuming
and relying upon the accuracy of the relevant representations and agreements of
the Buyers herein). 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 Closing
Date. The Company and its Subsidiaries are unaware of any facts or
circumstances that might prevent the Company from obtaining or effecting any of
the registration, application or filings pursuant to the preceding
sentence. The Company is not in violation of any requirements of the
OTCBB and has no knowledge of any facts that would reasonably lead to the
cessation of quotations for the Common Stock on the OTCBB in the foreseeable
future.
4.6 No
General Solicitation; Placement Agent's Fees. 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) in connection with the offer or sale of the
Securities. The Company shall be responsible for the payment of any
placement agent's fees, financial advisory fees, or brokers' SECs (other than
for persons engaged by any Buyer or its investment advisor) relating to or
arising out of the transactions contemplated hereby. The Company
shall pay, and hold each Buyer harmless against, any liability, loss or expense
(including, without limitation, attorney's fees and out-of-pocket expenses)
arising in connection with any such claim.
4.7 No
Integrated Offering. None of the Company, its Subsidiaries,
any of their affiliates, and any Person acting on their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the 1933 Act or cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of the 1933 Act or
any applicable stockholder approval provisions, including, without limitation,
under the rules and regulations of any exchange or automated quotation system on
which any of the securities of the Company are listed or
designated. None of the Company, its Subsidiaries, their Affiliates
and any Person acting on their behalf will take any action or steps referred to
in the preceding sentence that would require registration of any of the
Securities under the 1933 Act or cause the offering of the Securities to be
integrated with other offerings.
4.8 SEC
Documents; Financial Statements. During the two (2) years
prior to the date hereof, the Company has timely filed its SEC
Documents. The Company has delivered to the Buyers or their
respective representatives true, correct and complete copies of the SEC
Documents not available on the XXXXX system. As of their respective
dates, the SEC Documents complied in all material respects with the requirements
of the 1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. As of their respective dates,
the financial statements of the Company included in the SEC Documents complied
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect
thereto. Such financial statements have been prepared in accordance
with generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Buyers which is not
included in the SEC Documents, including, without limitation, information
referred to in this Section 4.8 of 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 circumstance under which they
are or were made, not misleading.
4.9 Absence
of Certain Changes. Except as disclosed in Schedule 4.9, since
December 31, 2008, there has been no material adverse change and no material
adverse development in the business, properties, operations, condition
(financial or otherwise), results of operations or prospects of the Company or
its Subsidiaries. Except as disclosed in Schedule 4.9, since
December 31, 2008, the Company has not (i) declared or paid any dividends, (ii)
sold any assets, individually or in the aggregate, in excess of $25,000 outside
of the ordinary course of business or (iii) had capital expenditures,
individually or in the aggregate, in excess of $25,000. The Company
has not taken any steps to seek protection pursuant to any bankruptcy law nor
does the Company have any knowledge or reason to believe that its creditors
intend to initiate involuntary bankruptcy proceedings or any actual knowledge of
any fact which would reasonably lead a creditor to do so. The Company
is not as of the date hereof, and after giving effect to the transactions
contemplated hereby to occur at the Closing, will not be Insolvent (as defined
below). For purposes of this Section 4.9, “Insolvent” means, with
respect to any Person (i) the present fair saleable value of such
Person's assets is less than the amount required to pay such Person's total
Indebtedness (as defined in Section 4.16), (ii) such Person is unable to pay its
debts and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured, (iii) such Person intends to incur or
believes that it will incur debts that would be beyond its ability to pay as
such debts mature or (iv) such Person has unreasonably small capital with which
to conduct the business in which it is engaged as such business is now conducted
and is proposed to be conducted.
4.10 No
Undisclosed Events, Liabilities, Developments or
Circumstances. No event, liability, development or
circumstance has occurred or exists, or is contemplated to occur, with respect
to the Company or its Subsidiaries or their respective business, properties,
prospects, operations or financial condition, that would be required to be
disclosed by the Company under applicable securities laws on a registration
statement on Form S-1 filed with the SEC relating to an issuance and sale by the
Company of its Common Stock and which has not been publicly
announced.
4.11 Conduct
of Business; Regulatory Permits. Neither the Company nor its
Subsidiaries is in material violation of any term of or in default under the
Articles of Incorporation or Bylaws or their organizational charter or articles
of incorporation or bylaws, respectively. Neither the Company nor any
of its Subsidiaries is in violation of any judgment, decree or order or any
statute, ordinance, rule or regulation applicable to the Company or its
Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct
its business in violation of any of the foregoing, except for possible
violations which would not, individually or in the aggregate, have a Material
Adverse Effect. Without limiting the generality of the foregoing, the
Company is not in violation of any of the rules, regulations or requirements of
the OTCBB and has no knowledge of any facts or circumstances that would
reasonably lead to delisting or suspension of the Common Stock by the OTCBB in
the foreseeable future except for possible violations which would not,
individually or in the aggregate, have a Material Adverse Effect and would not,
individually or in the aggregate, reasonably lead to delisting or suspension
from trading of the Common Stock by the OTCBB, FINRA or the
SEC. During the one (1) years prior to the date hereof, (i) the
Common Stock has been quoted on the OTCBB, (ii) trading in the Common Stock has
not been suspended by the SEC or FINRA and (iii) the Company has received no
communication, written or oral, from the SEC or the OTCBB regarding the
suspension or cessation of quotation of the Common Stock on the
OTCBB. The Company and its Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses, except
where the failure to possess such certificates, authorizations or permits would
not have, individually or in the aggregate, a Material Adverse Effect, and
neither the Company nor any such Subsidiary has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit
4.12 Foreign
Corrupt Practices. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other Person acting
on behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.
4.13 Xxxxxxxx-Xxxxx
Act. The Company is in, and will be in continued compliance
with any and all applicable requirements of the Xxxxxxxx-Xxxxx Act of 2002 that
are effective as of the date hereof, and any and all applicable rules and
regulations promulgated by the SEC thereunder that are effective as of the date
hereof, except for possible violations which would not, individually or in the
aggregate, have a Material Adverse Effect.
4.14 Transactions
With Affiliates. Except as otherwise provided in the SEC Documents, none
of the officers, directors or employees of the Company is presently a party to
any transaction with the Company or any of its Subsidiaries (other than for
ordinary course services as employees, officers or directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any such officer, director or
employee or, to the knowledge of the Company, any corporation, partnership,
trust or other entity in which any such officer, director, or employee has a
substantial interest or is an officer, director, trustee or
partner.
4.15 Equity
Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of 100,000,000 shares of Common Stock, of which as
of the date hereof, 23,240,899 shares are issued and outstanding, 10,000,000
shares of preferred stock is authorized, 5,000,000 of which have been designated
as Series A Preferred Stock and none of which are issued and outstanding, , no
shares are reserved for issuance pursuant to options and warrants outstanding
and no shares are reserved for issuance pursuant to securities exercisable or
exchangeable for, or convertible into, shares of Common Stock except for shares
to be issued under the Company’s 2009 Incentive Stock Plan. All of
such outstanding shares have been, or upon issuance will be, validly issued and
are fully paid and nonassessable. Except as set forth on Schedule 4.15 and in
the SEC Documents: (i) no shares of the Company's capital stock are subject to
preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company; (ii) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or exercisable
or exchangeable for, any 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, or
exercisable or exchangeable for, any shares of capital stock of the Company or
any of its Subsidiaries; (iii) there are no outstanding debt securities, notes,
credit agreements, credit facilities or other agreements, documents or
instruments evidencing Indebtedness (as defined in Section 4.16) of the Company
or any of its Subsidiaries or by which the Company or any of its Subsidiaries is
or may become bound; (iv) there are no financing statements securing obligations
in any material amounts, either singly or in the aggregate, filed in connection
with the Company or any of its Subsidiaries; (v) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of their securities under the 1933 Act; (vi) there are
no outstanding securities or instruments of the Company or any of its
Subsidiaries which contain any redemption or similar provisions, and there are
no contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to redeem a security of the
Company or any of its Subsidiaries; (vii) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities; (viii) the Company does not have any stock
appreciation rights or “phantom stock” plans or agreements or any similar plan
or agreement; and (ix) the Company and its Subsidiaries have no liabilities or
obligations required to be disclosed in the SEC Documents but not so disclosed
in the SEC Documents, other than those incurred in the ordinary course of the
Company's or any Subsidiary's respective businesses and which, individually or
in the aggregate, do not or would not have a Material Adverse
Effect. The Company has furnished or made available to the Buyer upon
such Buyer's request, true, correct and complete copies of the Company's
Articles and the Company's Bylaws, as and the terms of all securities
convertible into, or exercisable or exchangeable for, shares of Common Stock and
the material rights of the holders thereof in respect thereto.
4.16 Indebtedness
and Other Contracts. Except as disclosed in Schedule 4.16 and the
SEC Documents, neither the Company nor any of its Subsidiaries (i) has any
outstanding Indebtedness (as defined below), (ii) is a party to any contract,
agreement or instrument, the material violation of which, or default under
which, by the other party(ies) to such contract, agreement or instrument, in the
judgment of the Company’s officers, would result in a Material Adverse Effect,
(iii) is in material violation of any term of or in default under any contract,
agreement or instrument relating to any Indebtedness, except where such
violations and defaults would not result, in the judgment of the
Company’s officers, individually or in the aggregate, in a Material
Adverse Effect, or (iv) is a party to any contract, agreement or instrument
relating to any Indebtedness, the performance of which, in the judgment of the
Company's officers, has or is expected to have a Material Adverse
Effect. For purposes of this Agreement: (x) “Indebtedness”
of any Person means, without duplication (A) all indebtedness for borrowed
money, (B) all obligations issued, undertaken or assumed as the deferred
purchase price of property or services (other than trade payables entered into
in the ordinary course of business), (C) all reimbursement or payment
obligations with respect to letters of credit, surety bonds and other similar
instruments, (D) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses, (E) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to any property
or assets acquired with the proceeds of such indebtedness (even though the
rights and remedies of the seller or bank under such agreement in the event of
default are limited to repossession or sale of such property), (F) all monetary
obligations under any leasing or similar arrangement which, in connection with
generally accepted accounting principles, consistently applied for the periods
covered thereby, is classified as a capital lease, (G) all indebtedness referred
to in clauses (A) through (F) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any mortgage, lien, pledge, charge, security interest or other encumbrance upon
or in any property or assets (including accounts and contract rights) owned by
any Person, even though the Person which owns such assets or property has not
assumed or become liable for the payment of such indebtedness, and (H) all
Contingent Obligations in respect of indebtedness or obligations of other kinds
referred to in clauses (A) through (G) above; (y) “Contingent Obligation” means,
as to any Person, any direct or indirect liability, contingent or otherwise, of
that Person with respect to any indebtedness, lease, dividend or other
obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against loss
with respect thereto.
4.17 Absence
of Litigation. Except as set forth in the SEC Documents, there
is no action, suit, proceeding, inquiry or investigation before the SEC, FINRA,
any court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company, threatened against or affecting the
Company, the Common Stock or any of its Subsidiaries or any of the Company's or
the Company's Subsidiaries' officers or directors, whether of a civil or
criminal nature or otherwise.
4.18 Employee
Relations. Neither the Company nor any of its Subsidiaries is
a party to any collective bargaining agreement or employs any member of a
union. The Company and its Subsidiaries believe that their relations
with their employees are good. No executive officer of the Company or
any of its Subsidiaries (as defined in Rule 501(f) of the 0000 Xxx) has notified
the Company or any such Subsidiary that such officer intends to leave the
Company or any such Subsidiary or otherwise terminate such officer's employment
with the Company or any such Subsidiary. No executive officer of the
Company, to the knowledge of the Company or any of its Subsidiaries, is, or is
now expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any liability with respect to
any of the foregoing matters. The Company and its Subsidiaries are in
compliance with all federal, state, local and foreign laws and regulations
respecting labor, employment and employment practices and benefits, terms and
conditions of employment and wages and hours, except where failure to be in
compliance would not, either individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.
4.19 Title. The
Company and its Subsidiaries have good and marketable title in fee simple to all
real property and good and marketable title to all personal property owned by
them which is material to the business of the Company and its Subsidiaries, in
each case free and clear of all liens, encumbrances and defects except such as
do not materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company and any of
its Subsidiaries. Any real property and facilities held under lease
by the Company and any of its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries.
4.20 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 other intellectual property rights (“Intellectual Property Rights”)
necessary to conduct their respective businesses as now conducted where the
failure to so comply could not be reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect. None of the Company's
Intellectual Property Rights have expired or terminated, or are expected to
expire or terminate within three years from the date of this
Agreement. The Company does not have any knowledge of any
infringement by the Company or its Subsidiaries of Intellectual Property Rights
of others. There is no claim, action or proceeding being made or
brought, or to the knowledge of the Company, being threatened, against the
Company or any of its Subsidiaries regarding its Intellectual Property
Rights. The Company is unaware of any facts or circumstances which
might give rise to any of the foregoing infringements or claims, actions or
proceedings. The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of all of
their Intellectual Property Rights where the failure to so comply could not be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect.
4.21 Environmental
Laws. The Company and its Subsidiaries (i) are in compliance
with any and all Environmental Laws (as hereinafter defined), (ii) have received
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses (iii) are in
compliance with all terms and conditions of any such permit, license or approval
and (iv) do not have any unresolved environmental complaints or issues in any of
the jurisdictions in which they operate where, in each of the foregoing clauses
(i), (ii), (iii) and (iv), the failure to so comply could be reasonably expected
to have, individually or in the aggregate, a Material Adverse
Effect. Further, to the knowledge of the Company, it and its
Subsidiaries are not in violation of any applicable anti-dumping laws in the
jurisdiction(s) in which it carries out business, where the failure to so comply
would reasonably have in the aggregate a Material Adverse Effect. The term
“Environmental Laws” means all federal, state, local or foreign laws relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants, contaminants, or toxic
or hazardous substances or wastes (collectively, “Hazardous Materials”) into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved
thereunder. The Company further undertakes that it shall notify the
Buyers promptly if it or any of its Subsidiaries were to receive an
environmental complaint.
4.22 Subsidiary
Rights. The Company, or one of its Subsidiaries, has the
unrestricted right to vote, and (subject to limitations imposed by applicable
law) to receive dividends and distributions on, all capital securities of its
Subsidiaries as owned by the Company or such Subsidiary.
4.23 Tax
Status. The Company and each of its Subsidiaries (i) has made
or filed all federal, foreign and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and (iii) has set aside
on its books provision reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be
due by the taxing authority of any jurisdiction, and the officers of the Company
know of no basis for any such claim.
4.24 Internal
Accounting and Disclosure Controls. The Company and each of
its Subsidiaries maintain a system of internal accounting controls sufficient,
in its reasonable belief, to provide reasonable assurance that (i) transactions
are executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset and liability accountability, (iii) access to assets or
incurrence of liabilities is permitted only in accordance with management's
general or specific authorization and (iv) the recorded accountability for
assets and liabilities is compared with the existing assets and liabilities at
reasonable intervals and appropriate action is taken with respect to any
difference. The Company maintains disclosure controls and procedures
(as such term is defined in Rule 13a-15 under the 0000 Xxx) that are effective
in ensuring that information required to be disclosed by the Company in the
reports that it files or submits under the 1934 Act is recorded, processed,
summarized and reported, within the time periods specified in the rules and
forms of the SEC, including, without limitation, controls and procedures
designed in to ensure that information required to be disclosed by the Company
in the reports that it files or submits under the 1934 Act is accumulated and
communicated to the Company’s management, including its principal executive
officer or officers and its principal financial officer or officers, as
appropriate, to allow timely decisions regarding required
disclosure. During the twelve months prior to the date hereof neither
the Company nor any of its Subsidiaries have received any notice or
correspondence from any accountant relating to any potential material weakness
in any part of the system of internal accounting controls of the Company or any
of its Subsidiaries.
4.25 Off
Balance Sheet Arrangements. Except as otherwise
provided in the SEC Documents, there is no transaction,
arrangement, or other relationship between the Company and an unconsolidated or
other off balance sheet entity that is required to be disclosed by the Company
in its Exchange Act filings and is not so disclosed or that otherwise would be
reasonably likely to have a Material Adverse Effect.
4.26 Transfer
Taxes. On the Closing Date, all stock transfer or other taxes
(other than income or similar taxes) which are required to be paid in connection
with the sale and transfer of the Securities to be sold to each Buyer hereunder
will be, or will have been, fully paid or provided for by the Company, and all
laws imposing such taxes will be or will have been complied with.
4.27 Investment
Company Status. The Company is not, and upon consummation of
the sale of the Securities will not be, an “investment company,” a company
controlled by an “investment company” or an “affiliated person” of, or
“promoter” or “principal underwriter” for, an “investment company” as such terms
are defined in the Investment Company Act of 1940, as
amended.
4.28 No
Additional Agreements. The Company does not have any agreement or
understanding with any Buyer with respect to the transactions contemplated by
the Transaction Documents other than as specified in the Transaction
Documents.
Article
5
REPRESENTATIONS
AND WARRANTIES OF THE BUYERS
Each
Buyer severally and not jointly represents and warrants to the Company
that:
5.1 Concerning
the Buyers. The
state in which any offer to purchase shares hereunder was made or accepted by
such Buyer is the state shown as such Buyer’s address. The Buyer was not formed
for the purpose of investing solely in the Securities.
5.2 Authorization
and Power. The Buyer has the requisite power and authority to enter into
and perform this Agreement and to purchase the securities being sold to it
hereunder. The execution, delivery and performance of this Agreement by the
Buyer and the consummation by the Buyer of the transactions contemplated hereby
have been duly authorized by all necessary partnership action where appropriate.
The Transaction Documents have been duly executed and delivered by such Buyer
and at the Closing shall constitute valid and binding obligations of such Buyer
enforceable against the Buyer in accordance with their terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general
application.
5.3 No
Conflicts. The execution, delivery and performance of Transaction
Documents and the consummation by such Buyer of the transactions contemplated
hereby or relating hereto do not and will not (i) result in a violation of such
Buyer’s charter documents or bylaws where appropriate or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of any agreement, indenture or
instrument to which such Buyer is a party, or result in a violation of any law,
rule, or regulation, or any order, judgment or decree of any court or
governmental agency applicable to such Buyer or its properties (except for such
conflicts, defaults and violations as would not, individually or in the
aggregate, have a Material Adverse Effect on such Buyer). The Buyer 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 such Buyer’s obligations under this Agreement or to
purchase the Securities from the Company in accordance with the terms hereof,
provided that for purposes of the representation made in this sentence, the
Buyer is assuming and relying upon the accuracy of the relevant representations
and agreements of the Company herein.
5.4 Financial
Risks. Such Buyer acknowledges that such Buyer is able to bear the
financial risks associated with an investment in the Securities being purchased
by such Buyer from the Company and that it has been given full access to such
records of the Company and its Subsidiaries and to the officers of the Company
and its Subsidiaries as it has deemed necessary or appropriate to conduct its
due diligence investigation. Such Buyer is capable of evaluating the risks and
merits of an investment in the Securities being purchased by the Buyer from the
Company by virtue of its experience as a Buyer and its knowledge, experience,
and sophistication in financial and business matters and the Buyer is capable of
bearing the entire loss of its investment in the Securities being purchased by
the Buyer from the Company.
5.5 Accredited
Buyer. The Buyer is (i) an “accredited Buyer” as that term is defined in
Rule 501 of Regulation D promulgated under the 1933 Act by reason of Rule
501(a)(3) and (6), (ii) experienced in making investments of the kind described
in this Agreement and the related documents, (iii) able, by reason of the
business and financial experience of its officers (if an entity) and
professional advisors (who are not affiliated with or compensated in any way by
the Company or any of its affiliates or selling agents), to protect its own
interests in connection with the transactions described in this Agreement, and
the related documents, and (iv) able to afford the entire loss of its investment
in the Securities being purchased by the Buyer from the Company.
5.6 Brokers.
No broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or SEC in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of such
Buyer.
5.7 Knowledge
of Company. Such
Buyer and such Buyer’s advisors, if any, have been, upon request, furnished with
all materials relating to the business, finances and operations of the Company
and materials relating to the offer and sale of the Securities being purchased
by such Buyer from the Company. Such Buyer and such Buyer’s advisors,
if any, have been afforded the opportunity to ask questions of the Company and
have received complete and satisfactory answers to any such inquiries.
5.8 Risk
Factors. Each
Buyer understands that such Buyer’s investment in the Securities being purchased
by such Buyer from the Company involves a high degree of risk. Such
Buyer understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation or
endorsement of the Securities being purchased by the Buyer from the Company.
Such Buyer warrants that such Buyer is able to bear the complete loss of such
Buyer’s investment in the Securities being purchased by the Buyer from the
Company.
5.9 Full
Disclosure. No representation or warranty made by such Buyer in this
Agreement and no certificate or document furnished or to be furnished to the
Company pursuant to this Agreement contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements contained herein or therein not misleading. Except as set
forth or referred to in this Agreement, Buyer does not have any agreement or
understanding with any person relating to acquiring, holding, voting or
disposing of any equity Securities of the Company.
Article
6
COVENANTS OF THE
COMPANY
6.1 Reservation
of Common Stock. As of the date hereof, the Company has reserved and the
Company shall continue to reserve and keep available at all times, free of
preemptive rights, the maximum number of shares of Common Stock for the purpose
of enabling the Company to issue the Underlying Shares.
6.2 Compliance
with Laws. The Company hereby agrees to comply and to cause each
Subsidiary and each Related Party to comply in all respects with the Company’s
reporting, filing and other obligations under the Laws.
6.3 Exchange
Act Registration. The Company will continue its obligation to report to
the SEC under Section 15(d) of the 1934 Act, as applicable, and will use its
commercially reasonable efforts to comply in all respects with its reporting and
filing obligations under the 1934 Act, and will not take any action or file any
document (whether or not permitted by the 1934 Act or the rules thereunder) to
terminate or suspend any such registration or to terminate or suspend its
reporting and filing obligations under the 1934 until the Restriction
Termination Date.
6.4 Corporate
Existence; No Conflicting Agreements. The Company will take all steps
necessary to preserve and continue the corporate existence of the Company. The
Company shall not enter into any agreement, the terms of which agreement would
restrict or impair the right or ability of the Company to perform any of its
obligations under this Agreement or any of the other agreements attached as
exhibits hereto.
6.5 Listing,
Securities Exchange Act of 1934 and Rule 144 Requirements.
6.5.1 The
Company shall not take any action which would cause its Common Stock not to be
traded on the OTC Bulletin Board, except that the Company may list the Common
Stock on the Nasdaq Stock Market or the American or New York Stock Exchange if
it meets the applicable listing requirements. If, for any time after
the Closing, the Company is no longer in compliance with this Section 6.5.1,
then the Company shall pay to the Buyers as liquidated damages and not as a
penalty, an amount equal to eighteen percent (18%) per annum, based on the
lesser of (a) the Purchase Price or (b) that percentage of the Purchase Price
which the unsold or otherwise untransferred shares of Common Stock underlying
the Series B Preferred Stock and/or unconverted Series B Preferred Stock (the
“Unsold Purchase Price of
Shares”) bears to the number of shares of Common Stock initially sold
pursuant to this Agreement.
6.5.2 Commencing
not later than one hundred and forty-five (145) days from the Closing Date, the
Company shall have caused its Common Stock to be listed on the Nasdaq Global
Market or Nasdaq Capital Market or the New York or American Stock Exchange, and,
from and after the date of such listing, the Common stock shall continue to be
listed on one of such markets or exchanges until the Restriction Termination
Date, provided,
however, such payment of liquidated damages shall not accrue until the Company
fulfill all of its requirements for listing on a national securities
exchange. If, for any time after the Closing and prior to the
Restriction Termination Date, the Company is not in compliance with this Section
6.5.2, then the Company shall pay to the Buyers as liquidated damages and not as
a penalty, an amount equal to twelve percent (12%) per annum, based on the
lesser of (a) the Purchase Price or (b) that percentage of the Purchase Price
which the Underlying Shares bears to the number of shares of Common Stock
initially issuable upon conversion of the Series B Preferred
Stock. Notwithstanding the foregoing, no liquidated damages shall be
payable pursuant to this Section 6.5.2 during any period for which liquidated
damages are payable pursuant to Section 6.5.1.
6.6 No
Convertible Debt or Preferred Stock. On or prior to the Closing
Date, the Company will cause to be cancelled or paid all convertible debt in the
Company. Until the eighteen (18) month anniversary of the Closing Date, the
Company will not issue any convertible debt or any shares of any class or series
of Preferred Stock.
6.7 Debt
Limitation. The
Company agrees until the earlier of (a) three years after Closing Date or (b)
the Restriction Termination Date, it will not have outstanding any debt in an
amount greater than twice the sum of the EBITDA from continuing operations for
the past four quarters. Nothing in this Section 6.7 shall be
construed to prohibit the Company from borrowing from the Chinese government or
from Chinese banks as long as such loans do not result in the Company being in
default of any of its covenants set forth in this Section 6.7.
6.8 Reset
Equity Deals. On
or prior to the Closing Date, the Company will cause to be cancelled any and all
reset features related to any shares outstanding that could result in additional
shares being issued. Until the earlier of (a) five years from the Closing Date
or (b) the Restriction Termination Date, the Company will not enter into any
transactions that have any reset features that could result in additional shares
being issued.
6.9 Use of
Proceeds. The Company will use the net proceeds from the sale of the
Securities and the exercise of the Warrants, after payment of legal fees and
other closing costs, for the purchase of assets through its wholly-owned
subsidiary, Shaanxi Biostar Biotech Ltd. The Company shall also
allocate $350,000 which will be retained in escrow and maintained by the Escrow
Agent pursuant to the Closing Escrow Agreement for the payment of professional
fees, including audit, legal, investor relations and expenses related to listing
on a national securities exchange, which are payable subsequent to the
Closing.
6.10 Make Good Shares Based on
Income from Operations.
6.10.1 Pursuant
to the Make Good Escrow Agreement, the Company shall deliver to the Escrow Agent
(i) resolutions executed by the Board of Directors of the Company and (ii)
irrevocable instructions to the transfer agent executed by the Company for the
issuance of up to an additional 2,000,000 shares of Common Stock and/or Series B
Preferred Stock to be issued at the option of the Buyer in accordance with this
Section 6.10 (the “Make Good
Shares”).
6.10.2 For
purposes of this Section 6.10, the Company’s Income from Operations for the
years ended December 31, 2009 and/or 2010 is less than $15,900,000.00 (the
“2009
Target Number”), and $21,100,000.00 (the “2010
Target Number”), respectively.
6.10.3 If the
percentage shortfall for the 2009 Target Number is between one percent (1%) and
ten percent (10%), then for every one percent (1%) of shortfall, the Company
shall instruct the Escrow Agent to deliver such number of Make Good Shares which
is equal to the percentage shortfall multiplied by the total number of Make Good
Shares in the ratio of their initial purchase of Securities.
6.10.4 If the
percentage shortfall for the 2009 Target Number is between ten percent (10%) and
twenty-five percent (25%), then for every one percent (1%) of shortfall between
one percent (1%) and ten percent (10%), the Company shall deliver to the Buyers
or the Company shall instruct the Escrow Agent to deliver such number of Make
Good Shares to the Buyers which is equal to the percentage shortfall multiplied
by the total number of Make Good Shares in the ratio of their initial purchase
of Securities and for every one percent (1%) of shortfall between ten percent
(10%) and twenty-five percent (25%), the Company shall deliver to the Buyers or
the Company shall instruct the Escrow Agent to deliver such number of Make Good
Shares to the Buyers which is equal to the two times the percentage shortfall
multiplied by the total number of Make Good Shares in the ratio of their initial
purchase of Securities.
6.10.5 If the
percentage shortfall for the 2009 Target Number is equal to or greater than
twenty-five percent (25%), then the Escrow Agent shall deliver all of the Make
Good Shares then held by the Escrow Agent to the Buyers in the ratio of their
initial purchase of Securities.
6.10.6 If the
percentage shortfall for the 2010 Target Number is between one percent (1%) and
ten percent (10%), then for every one percent (1%) of shortfall, the Company
shall deliver to the Buyers or the Company shall instruct the Escrow Agent to
deliver such number of Make Good Shares to the Buyers which is equal to the
percentage shortfall multiplied by the total number of Make Good Shares in the
ratio of their initial purchase of Securities.
6.10.7 If the
percentage shortfall for the 2010 Target Number is between ten percent (10%) and
twenty-five percent (25%), then for every one percent (1%) of shortfall between
one percent (1%) and ten percent (10%), the Company shall deliver to the Buyers
or the Company shall instruct the Escrow Agent to deliver such number of Make
Good Shares to the Buyers which is equal to the percentage shortfall multiplied
by the total number of Make Good Shares in the ratio of their initial purchase
of Securities and for every one percent (1%) of shortfall between ten percent
(10%) and twenty-five percent (25%), the Company shall deliver to the Buyers or
the Company shall instruct the Escrow Agent to deliver such number of Make Good
Shares to the Buyers which is equal to the two times the percentage shortfall
multiplied by the total number of Make Good Shares in the ratio of their initial
purchase of Securities.
6.10.8 If the
percentage shortfall for the 2010 Target Number is equal to or greater than
twenty-five percent (25%), then the Escrow Agent shall deliver all of the Make
Good Shares then held by the Escrow Agent to the Buyers in the ratio of their
initial purchase of Securities.
6.10.9 The
distribution of Make Good Shares pursuant to this Section 6.11 shall be made
within five (5) business days after the Company files its Form 10-K with the SEC
for the applicable year. In the event that the Company does not file
its Form 10-K for the year ended December 31, 2009 or 2010 with the SEC within
thirty (30) days after the date that filing was required, after giving effect to
any extension pursuant to Rule 12b-25 of the Exchange Act, all of the Make Good
Shares shall be delivered to the Buyers.
6.10.10 The
parties understand that, pursuant to the Make Good Escrow Agreement, the Escrow
Agent will not make any deliveries of shares without the signed written
instructions from the Company and the Buyers.
6.11 Insider
Selling. No Restricted
Stockholders may sell any shares of Common Stock in the public market prior to
the earlier of 18 months from the Closing Date or the Restriction Termination
Date; provided, however, that if any Restricted Stockholder who is director and
not an executive officer of the Company shall cease to be a director, such
Person may sell not more than a total of 50,000 shares of Common Stock in the
public market during the period set forth in this
sentence. Restricted Stockholders shall mean any Person who is an
officer, director or Affiliate of the Company or who becomes an officer or
director of the Company subsequent to the Closing Date. Without
limiting the generality of the foregoing, the Restricted Stockholders shall not
to directly or indirectly offer to sell, grant an option for the purchase or
sale of, transfer, pledge assign, hypothecate, distribute or otherwise encumber
or dispose of any securities in the Company in a transaction which is not in the
public market unless the transferee agrees to be bound by the provisions of this
Section 6.11. The
Company shall require any newly elected officer or director to agree to the
restriction set forth in this Section 6.11. Xxxxxx Xxxxxx Xxxxxx and
the Buyers shall not be considered Restricted Stockholders. The
restrictions in this Section 6.12 shall not apply to shares issued pursuant to a
stock option or long-term incentive plans which may be approved by the
Compensation Committee provided that such committee is comprised of a majority
of independent directors.
6.12 Employment
and Consulting Contracts. For three years after the
Closing, the Company shall have a unanimous approval from the Compensation
Committee that any awards other than salary are usual, appropriate and
reasonable for any officer, director or consultants whose compensation is more
than $100,000 per annum. This Section 6.12 does not apply to
attorneys, accountants and other persons who provide professional services to
the Company.
6.13 Subsequent
Equity Sales. From the date
hereof until the Restriction Termination Date, the Company shall be not effect
or enter into an agreement to effect any Subsequent Financing involving a “Variable Rate
Transaction” or an “MFN Transaction”
(each as defined below). The term “Variable Rate
Transaction” shall mean a transaction in which the Company issues or
sells (i) any debt or equity securities that are convertible into, exchangeable
or exercisable for, or include the right to receive additional shares of Common
Stock either (A) at a conversion, exercise or exchange rate or other price that
is based upon and/or varies with the trading prices of or quotations for the
shares of Common Stock at any time after the initial issuance of such debt or
equity securities, or (B) with a conversion, exercise or exchange price that is
subject to being reset at some future date after the initial issuance of such
debt or equity security or upon the occurrence of specified or contingent events
directly or indirectly related to the business of the Company or the market for
the Common Stock. The term “MFN Transaction”
shall mean a transaction in which the Company issues or sells any securities in
a capital raising transaction or series of related transactions which grants to
a Buyer the right to receive additional shares based upon future transactions of
the Company on terms more favorable than those granted to such Buyer in such
offering. Any Buyer shall be entitled to obtain injunctive relief
against the Company to preclude any such issuance, which remedy shall be in
addition to any right to collect damages. Notwithstanding the foregoing, this
Section 6.13 shall not apply in respect of an Exempt Issuance, except that no
Variable Rate Transaction or MFN Transaction shall be an Exempt
Issuance.
6.14 Stock
Splits. All forward and reverse stock splits shall effect all equity and
derivative holders proportionately.
6.15 Retention
of Top 10 Audit Firm. Within 60 days after Closing, the Company shall
retain a top 10 audit firm that is mutually acceptable to the Company and the
Buyers.
6.16 Payment
of Due Diligence Expenses. At Closing the Escrow Agent shall disperse to
Xxxxxx the sum of $25,000.00 for its due diligence expenses.
6.17 No
Outside Interests. Until the Restriction Termination Date, the
Company’s chairman and chief executive officer will devote their full time and
attention to the business of the Company and shall not have any business
interests or activities other than as chairman or chief executive officer,
as the case may be, except that he or she may devote time, which shall not
be material and which shall not interfere with his or her duties as the
Company’s chairman or chief executive officer, as the case may be, to personal
passive investments and charitable and community activities.
6.18 Buyers
Requirement to Convert. The Buyers joint and severally
undertake that they shall convert the Series B Preferred Stock or exercise their
Warrants so that at all times after the Closing Date they shall collectively own
9.9% of the Company’s outstanding voting securities, provided, that the
provisions of this Section 6.18 shall not be applied if, in the aggregate, the
Buyers collectively hold less that 9.9% of the Company’s outstanding voting
securities after conversion of all the Series B Preferred Stock and upon
exercise of the Warrants.
6.19 Retention
of Transfer Agent. Upon the Company’s listing of its Common
Stock on the NYSE Amex, the Company shall appoint StockTrans or any other
transfer agent acceptable to the NYSE Amex as the Company’s transfer
agent.
Article
7
COVENANTS
OF THE BUYER
Each
Buyer, severally and not jointly, covenants and agrees with the Company as
follows:
7.1 Compliance
with Law. Each Buyer’s trading activities with respect to shares of the
Company’s Common Stock will be in compliance with all applicable state and
federal securities laws, rules and regulations and rules and regulations of any
public market on which the Company’s Common Stock is listed.
7.2 Transfer
Restrictions. The Buyers acknowledge
that (a) the Series B Preferred Stock, Warrants and Underlying Shares have not
been registered under the provisions of the 1933 Act, and may not be transferred
unless (i) subsequently registered thereunder or (ii) the Buyer shall have
delivered to the Company an opinion of counsel, reasonably satisfactory in form,
scope and substance to the Company, to the effect that the Series B Preferred
Stock, Warrants and Underlying Shares to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration; and (b) any sale of
the Underlying Shares made in reliance on Rule 144 promulgated under the 1933
Act may be made only in accordance with the terms of said Rule and further, if
said Rule 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 used in the 1933 Act, may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder. Each Buyer agrees that until the
Restriction Termination Date it will not sell the Common Stock short or effect
any sales based upon market-based metrics.
7.3 Restrictive
Legend. Each
Buyer acknowledges and agrees that the Securities and the Underlying Shares
shall bear a restrictive legend and a stop-transfer order may be placed against
transfer of any such Securities except that the requirement for a restrictive
legend shall not apply to Shares sold pursuant to a current and effective
registration statement or a sale pursuant Rule 144 or any successor
rule.
Article
8
CONDITIONS
PRECEDENT TO THE COMPANY’S OBLIGATIONS
The obligation of the Company to
consummate the transactions contemplated hereby shall be subject to the
fulfillment, on or prior to Closing Date, of the following
conditions:
8.1 No
Termination. This Agreement shall not have been terminated pursuant to
Article 10 hereof.
8.2 Representations
True and Correct. The representations and warranties of the Buyers
contained in this Agreement shall be true and correct in all material respects
on and as of the Closing Date with the same force and effect as if made on as of
the Closing Date.
8.3 Compliance
with Covenants. The Buyers shall have performed and complied in all
material respects with all covenants, agreements, and conditions required by
this Agreement to be performed or complied by it prior to or at the Closing
Date.
8.4 No
Adverse Proceedings. On the Closing Date, no action or proceeding shall
be pending by any public authority or individual or entity before any court or
administrative body to restrain, enjoin, or otherwise prevent the consummation
of this Agreement or the transactions contemplated hereby or to recover any
damages or obtain other relief as a result of the transactions proposed
hereby.
Article
9
CONDITIONS
PRECEDENT TO BUYER’S OBLIGATIONS
The obligation of the Buyers to
consummate the transactions contemplated hereby shall be subject to the
fulfillment, on or prior to Closing Date unless specified otherwise, of the
following conditions:
9.1 No
Termination. This Agreement shall not have been terminated pursuant to
Article 10 hereof.
9.2 Representations
True and Correct. The representations and warranties of the Company
contained in this Agreement shall be true and correct in all material respects
on and as of the Closing Date with the same force and effect as if made on as of
the Closing Date.
9.3 Compliance
with Covenants . The Company
shall have performed and complied in all material respects with all covenants,
agreements, and conditions required by this Agreement to be performed or
complied by it prior to or at the Closing Date.
9.4 No
Adverse Proceedings. On the Closing Date, no action or proceeding shall
be pending by any public authority or individual or entity before any court or
administrative body to restrain, enjoin, or otherwise prevent the consummation
of this Agreement or the transactions contemplated hereby or to recover any
damages or obtain other relief as a result of the transactions proposed
hereby.
9.5 Company’s
Status. The Company shall be current in its filing with the
SEC and the Company’s Common Stock must be trading on the OTC Bulletin
Board.
Article
10
TERMINATION,
AMENDMENT AND WAIVER
10.1 Termination.
This Agreement may be terminated at any time prior to the Closing
Date
10.1.1 by mutual
written consent of the Buyer and the Company;
10.1.2 by the
Company upon a material breach of any representation, warranty, covenant or
agreement on the part of any Buyer set forth in this Agreement, or any Buyer
upon a material breach of any representation, warranty, covenant or agreement on
the part of the Company set forth in this Agreement, or if any representation or
warranty of the Company or the Buyer, respectively, shall have become untrue, in
either case such that any of the conditions set forth in Article 8 or Article 9
hereof would not be satisfied (a “Terminating Breach”), and such
breach shall, if capable of cure, not have been cured within five (5) business
days after receipt by the party in breach of a notice from the non-breaching
party setting forth in detail the nature of such breach.
10.2 Effect of
Termination. Except as otherwise provided herein, in the event of the
termination of this Agreement pursuant to Section 10.1 hereof, there shall be no
liability on the part of the Company or any Buyer or any of their respective
officers, directors, agents or other representatives and all rights and
obligations of any party hereto shall cease.
10.3 Amendment
and Waiver.
10.3.1 This
Agreement may be amended by the parties hereto any time prior to the Closing
Date by an instrument in writing signed by the parties hereto, subject to the
provisions of Section 10.3.3; provided, however that the 9.9% Limitation may not
be amended or waived.
10.3.2 At any
time prior to the Closing Date, the Company or the Buyers, as appropriate, may:
(a) extend the time for the performance of any of the obligations or other acts
of other party or; (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto which
have been made to it or them; or (c) waive compliance with any of the agreements
or conditions contained herein for its or their benefit other than the 9.9%
Limitation which may not be waived. Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the party
or parties to be bound thereby, subject to Section 10.3.3 of this
Agreement.
10.3.3 Any
amendment or waiver signed by 75% of the holders of the then outstanding shares
of Series B Preferred Stock, or, after the conversion of all shares of Series B
Preferred Stock, the holders of Warrants to purchase a majority of the shares of
Common Stock then issuable upon exercise of the Warrants, shall be deemed to be
approval of the Buyers; provided, that any amendment or waiver which changes the
conversion rate or conversion price of the Series B Preferred Stock or the
exercise price of the Warrants shall require the approval of all of the holders
of the Warrants.
Article
11
GENERAL
PROVISIONS
11.1 Transaction
Costs Except as otherwise provided herein, each of the parties shall pay
all of his or its costs and expenses (including attorney fees and other legal
costs and expenses and accountants’ fees and other accounting costs and
expenses) incurred by that party in connection with this Agreement; provided,
the Company shall pay Buyer such due diligence expenses as described in Section
6.22.
11.2 Indemnification.
The Buyer agrees to indemnify, defend and hold the Company (following the
Closing Date) and its officers and directors harmless against and in respect of
any and all claims, demands, losses, costs, expenses, obligations, liabilities
or damages, including interest, penalties and reasonable attorney’s fees, that
it shall incur or suffer, which arise out of or result from any breach of this
Agreement by the Buyers or failure by the Buyers to perform with respect to the
representations, warranties or covenants contained in this Agreement or in any
exhibit or other instrument furnished or to be furnished under this
Agreement. The Company agrees to indemnify, defend and hold the
Buyers (following the Closing Date) harmless against and in respect of any and
all claims, demands, losses, costs, expenses, obligations, liabilities or
damages, including interest, penalties and reasonable attorney’s fees, that it
shall incur or suffer, which arise out of, result from or relate to any breach
of this Agreement or failure by the Company to perform with respect to the
representations, warranties or covenants contained in this Agreement or in any
exhibit or other instrument furnished or to be furnished under this
Agreement. In no event shall the Company or the Buyers be entitled to
recover consequential or punitive damages resulting from a breach or violation
of this Agreement nor shall any party have any liability hereunder in the event
of gross negligence or willful misconduct of the indemnified
party. In the event of the failure of the Company to issue the Series
B Preferred Stock and Warrants in violation of the provisions of this Agreement,
the Buyers, as their sole remedy, shall be entitled to pursue a remedy of
specific performance upon tender into the Court an amount equal to the Purchase
Price hereunder. The indemnification by the Buyers shall be limited to the
amount of the Purchase Price.
11.3 Headings.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
11.4 Entire
Agreement. This Agreement (together with the Schedule, Exhibits, Warrants
and documents referred to herein) constitute the entire agreement of the parties
and supersede all prior agreements and undertakings, both written and oral,
between the parties, or any of them, with respect to the subject matter
hereof.
11.5 Notices.
All notices and other communications hereunder shall be in writing and shall be
deemed to have been given (i) on the date they are delivered if delivered in
person; (ii) on the date initially received if delivered by facsimile
transmission followed by registered or certified mail confirmation; (iii) on the
date delivered by an overnight courier service; or (iv) on the third business
day after it is mailed by registered or certified mail, return receipt requested
with postage and other fees prepaid as follows:
If to the
Company:
Xx. 000 Xxxxx Xxxxxx, Xxxxxxxxx
Xxxx,
Xxxxxxx
Xxxxxxxx, The People’s Republic of China 712046
Attention:
Xx. Xxxxxxx Xxxx
E-mail: xxxxxx@xxxxxx-xxxxx.xxx
Fax:
With a copy
to:
Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxx,
Esq.
E-mail: xxxx@xxxx.xxx
Fax: (000) 000-0000
If to
Xxxxxx:
Xxxxxx Partners L.P.
c/x Xxxxxx Capital Advisors,
LLC
000 Xxxxx Xxxxxx, 00xx
Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx
Xxxxxx
E-mail: xxx@xxxxxxxxxxxxxx.xxx
and xxx@xxxxxxxxxxxxxx.xxx
Fax: (000) 000-0000
If to the other Buyers, at their
addresses set forth on Appendix A.
11.6 Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any such term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent
possible.
11.7 Binding
Effect. All the terms and provisions of this Agreement whether so
expressed or not, shall be binding upon, inure to the benefit of, and be
enforceable by the parties and their respective administrators, executors, legal
representatives, heirs, successors and assignees.
11.8 Preparation
of Agreement. This Agreement shall not be construed more strongly against
any party regardless of who is responsible for its preparation. The
parties acknowledge each contributed and is equally responsible for its
preparation. In resolving any dispute regarding, or construing any
provision in, this Agreement, there shall be no presumption made or inference
drawn because of the drafting history of the Agreement, or because of the
inclusion of a provision not contained in a prior draft or the deletion or
modification of a provision contained in a prior draft.
11.9 Governing
Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, without giving effect to applicable
principles of conflicts of law.
11.10 Jurisdiction; Waiver of Jury
Trial. If any action is brought among the parties with respect to this
Agreement or otherwise, by way of a claim or counterclaim, the parties agree
that in any such action, and on all issues, the parties irrevocably waive their
right to a trial by jury. Exclusive jurisdiction and venue for any such action
shall be the federal and state courts situated in the City, County and State of
New York. In the event suit or action is brought by any party under this
Agreement to enforce any of its terms, or in any appeal therefrom, it is agreed
that the prevailing party shall be entitled to reasonable attorneys fees to be
fixed by the arbitrator, trial court, and/or appellate court if such party
prevails on substantially all issues in dispute.
11.11
Preparation
and Filing of Securities and Exchange SEC filings. The Buyers shall reasonably
assist and cooperate with the Company in the preparation of all filings with the
SEC after the Closing Date due after the Closing Date.
11.12 Further
Assurances, Cooperation. Each party shall, upon reasonable request by the
other party, execute and deliver any additional documents necessary or desirable
to complete the transactions herein pursuant to and in the manner contemplated
by this Agreement. The parties hereto agree to cooperate and use
their respective best efforts to consummate the transactions contemplated by
this Agreement.
11.13
Survival.
The representations, warranties, covenants and agreements made herein shall
survive the Closing of the transaction contemplated hereby.
11.14 Third
Parties. Except
as disclosed in this Agreement, nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties hereto and their respective
administrators, executors, legal representatives, heirs, successors and
assignees. Nothing in this Agreement is intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action over or against any party to this Agreement.
11.15
Failure
or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the
part of any party hereto in the exercise of any right hereunder shall impair
such right or be construed to be a waiver of, or acquiescence in, any breach of
any representation, warranty, covenant or agreement herein, nor shall nay single
or partial exercise of any such right preclude other or further exercise thereof
or of any other right. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
11.16Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original, but
all of which taken together shall constitute one and the same agreement. A
facsimile transmission of this signed Agreement shall be legal and binding on
all parties hereto.
[SIGNATURES
ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the Buyers
and the Company have as of the date first written above executed this
Agreement.
THE
COMPANY:
By:/s/ Xxxxxxx
Xxxx
Name:
Xxxxxxx Xxxx
Title:
Chief Executive Officer
BUYERS:
Xxxxxx
Partners L.P.
By:
Xxxxxx Capital Advisors LLC, its General Partner
By: /s/ Xxxxxx Xxxxxx
Xxxxxx
Name: Xxxxxx
Xxxxxx Xxxxxx
Title:
Managing Member
/s/ Xxxxxxxx Xxxxx
Xxx
Xxxxxxxx
Xxxxx Xxx
/s/ Xxxx
Xxxxxxxxx
Xxxx
Xxxxxxxxx
/s/ Xxxxxx Xxxxxx
Xxxxxx
Xxxxxx
Xxxxxx Xxxxxx
/s/ Xxxxxx
Xxxxx
Xxxxxx
Xxxxx
XWRT2
LP
By: /s/ Xxxxxx
Xxxxxx
Name: Xxxxxx
Xxxxxx
Title: General
Partner
SBMT2
LP
By:
Xxxxxxx Xxxx Family Trust FBO Xxxxxxx Xxxx, its General Partner
By: /s/ Xxxxxxx
Xxxx
Name: Xxxxxxx
Xxxx
Title:
Trustee
Godfrey2468
LP
By: /s/ Xxxxx
Xxxxxxx
Name: Xxxxx
Xxxxxxx
Title:
General Partner
LeeMadison9189
LP
BY: Xxxxxx
X. Xxxxx and Xxxxx X. Xxxxx Living Trust, its General Partner
By: /s/ Xxxxxx
Xxxxx
Name: Xxxxxx
Xxxxx
Title:
Manager
RossPlan
LP
By:
Santee River Pension Plan, its General Partner
By: /s/ Xxxx
Xxxxxxxx
Name: Xxxx
Xxxxxxxx
Title:
Manager
Golden1177
LP
By:
Golden Properties Ltd., its General Partner
By: /s/ Xxxx
Xxx
Name: Xxxx
Xxx
Title:
Manager
JBWA2
LP
By: /s/ C. Xxxxx
Xxxxxx
Name: C.
Xxxxx Xxxxxx
Title:
General Partner
TIBERO2
LP
By: /s/ Xxx
Xxxxxxxx
Name: Xxx
Xxxxxxxx
Title:
General Partner
KAUFMAN2
LP
By: /s/ Xxxxxx
Xxxxxxx
Name:
Xxxxxx Xxxxxxx
Title:
General Partner
Schedule
A
|
Name and Address
|
Amount of Investment
|
Number of Shares
of Preferred Stock
|
Number of Shares
Underlying Warrants
|
|||||||||
|
Xxxxxx
Partners L.P.
|
$ | 875,000 | 500,000 | 121,359 | ||||||||
|
Xxxxxxxx
Xxxxx Xxx
|
$ | 17,500 | 10,000 | 2,427 | ||||||||
|
Xxxx
Xxxxxxxxx
|
$ | 10,500 | 6,000 | 1,456 | ||||||||
|
Xxxxxx
Xxxxxx Xxxxxx
|
$ | 315,000 | 180,000 | 43,689 | ||||||||
|
Golden1177
LP
|
$ | 1,253,000 | 716,000 | 173,786 | ||||||||
|
RossPlan
LP
|
$ | 420,000 | 240,000 | 58,252 | ||||||||
|
JBWA2
LP
|
$ | 105,000 | 60,000 | 14,563 | ||||||||
|
LEEMADISON9189
|
$ | 59,500 | 34,000 | 8,252 | ||||||||
|
XWRT2
LP
|
$ | 59,500 | 34,000 | 8,252 | ||||||||
|
GODFREY2468
LP
|
$ | 70,000 | 40,000 | 9,709 | ||||||||
|
SBMT2
LP
|
$ | 52,500 | 30,000 | 7,282 | ||||||||
|
TIBERO2
LP
|
$ | 87,500 | 50,000 | 12,136 | ||||||||
|
KAUFMAN2
LP
|
$ | 175,000 | 100,000 | 24,272 | ||||||||
|
Xxxxx
Xxxxx
|
$ | 105,000 | 60,000 | 14,563 | ||||||||
|
TOTAL
|
$ | 3,605,000 | 2,060,000 | 500,000 | ||||||||
