EX-4.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT
Securities Purchase Agreement dated as of January 27, 2006 (this
"Agreement") by and between RMD Technologies, Inc., a California
corporation, with principal executive offices located at 000 Xxxx 0xx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000 (the "Company"), and La Jolla Cove
Investors, Inc. ("Holder").
WHEREAS, Holder desires to purchase from the Company, and the
Company desires to issue and sell to Holder, upon the terms and
subject to the conditions of this Agreement, a Convertible
Debenture of the Company in the aggregate principal amount of $100,000
(the "Debenture"); and
WHEREAS, in conjunction with the Debenture, the Company has
issued a Warrant to Purchase Common Stock to the Holder (the
"Warrant"); and
WHEREAS, upon the terms and subject to the conditions set forth
in the Debenture and the Warrant, the Debenture and Warrant are
convertible and exercisable, respectively, into shares of the
Company's Common Stock (the "Common Stock").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto, intending to be
legally bound, hereby agree as follows:
I. PURCHASE AND SALE OF DEBENTURE
A. Transaction. Holder hereby agrees to purchase from the
Company, and the Company has offered and hereby agrees to issue and
sell to Holder in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act of 1933, as
amended (the "Securities Act"), the Debenture.
B. Purchase Price; Form of Payment. The purchase price for the
Debenture to be purchased by Holder hereunder shall be $100,000 (the
"Purchase Price"). Simultaneously with the execution of this
Agreement, Holder shall pay the Purchase Price by wire transfer of
immediately available funds to the Company. Simultaneously with the
execution of this Agreement, the Company shall deliver the Convertible
Debenture and the Warrants (which shall have been duly authorized,
issued and executed I/N/O Holder or, if the Company otherwise has been
notified, I/N/O Holder's nominee).
II. HOLDER'S REPRESENTATIONS AND WARRANTIES
Holder represents and warrants to and covenants and agrees with
the Company as follows:
A. Holder is purchasing the Debenture and the Common Stock
issuable upon conversion or redemption of the Debenture (the
"Conversion Shares" and, collectively with the Debenture and the
Warrant Shares, the "Securities") for its own account, for investment
purposes only and not with a view towards or in connection with the
public sale or distribution thereof in violation of the Securities Act.
X. Xxxxxx is (i) an "accredited investor" within the meaning of
Rule 501 of Regulation D under the Securities Act, (ii) experienced in
making investments of the kind contemplated by this Agreement, (iii)
capable, by reason of its business and financial experience, of
evaluating the relative merits and risks of an investment in the
Securities, and (iv) able to afford the loss of its investment in the
Securities.
X. Xxxxxx understands that the Securities are being offered and
sold by the Company in reliance on an exemption from the registration
requirements of the Securities Act and equivalent state securities and
"blue sky" laws, and that the Company is relying upon the accuracy of,
and Holder's compliance with, Holder's representations, warranties and
covenants set forth in this Agreement to determine the availability of
such exemption and the eligibility of Holder to purchase the Securities;
X. Xxxxxx understands that the Securities have not been
approved or disapproved by the Securities and Exchange Commission (the
"Commission") or any state or provincial securities commission.
E. This Agreement has been duly and validly authorized,
executed and delivered by Holder and is a valid and binding agreement
of Holder enforceable against it in accordance with its terms, subject
to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and except as rights to indemnity and
contribution may be limited by federal or state securities laws or the
public policy underlying such laws.
III. THE COMPANY'S REPRESENTATIONS
The Company represents and warrants to Holder that:
A. Capitalization.
1. The authorized capital stock of the Company consists of
one hundred million (100,000,000) shares of Common Stock and zero (0)
shares of Series A Preferred Stock of which fifteen million two
thousand three hundred (15,002,300) shares are issued and outstanding
as of the date hereof and are fully paid and nonassessable. The
amount, exercise, conversion or subscription price and expiration date
for each outstanding option and other security or agreement to
purchase shares of Common Stock is accurately set forth on Schedule
II.A.1.
2. The Conversion Shares and the Warrant Shares have been
duly and validly authorized and reserved for issuance by the Company,
and, when issued by the Company upon conversion of the Debenture, will
be duly and validly issued, fully paid and nonassessable and will not
subject the holder thereof to personal liability by reason of being
such holder.
3. Except as disclosed on Schedule II.A.3., there are no
preemptive, subscription, "call," right of first refusal or other
similar rights to acquire any capital stock of the Company or other
voting securities of the Company that have been issued or granted to
any person and no other obligations of the Company to issue, grant,
extend or enter into any security, option, warrant, "call," right,
commitment, agreement, arrangement or undertaking with respect to any
of their respective capital stock.
B. Organization; Reporting Company Status.
1. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state or
jurisdiction in which it is incorporated and is duly qualified as a
foreign corporation in all jurisdictions in which the failure so to
qualify would reasonably be expected to have a material adverse effect
on the business, properties, prospects, condition (financial or
otherwise) or results of operations of the Company or on the
consummation of any of the transactions contemplated by this Agreement
(a "Material Adverse Effect").
2. The Company is subject to the reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
The Common Stock is traded on the OTC Bulletin Board service of the
National Association of Securities Dealers, Inc. ("OTCBB") and the
Company has not received any notice regarding, and to its knowledge
there is no threat of, the termination or discontinuance of the
eligibility of the Common Stock for such trading.
C. Authorization. The Company (i) has duly and validly
authorized and reserved for issuance shares of Common Stock, which is
a number sufficient for the conversion of the Debenture and the
exercise of the Warrant and (ii) at all times from and after the date
hereof shall have a sufficient number of shares of Common Stock duly
and validly authorized and reserved for issuance to satisfy the
conversion of the Debenture in full and the exercise of the Warrant.
The Company understands and acknowledges the potentially dilutive
effect on the Common Stock of the issuance of the Conversion Shares
and the Warrant Shares. The Company further acknowledges that its
obligation to issue Conversion Shares upon conversion of the Debenture
and the exercise of the Warrant in accordance with this Agreement is
absolute and unconditional regardless of the dilutive effect that such
issuance may have on the ownership interests of other stockholders of
the Company and notwithstanding the commencement of any case under 11
U.S.C. 101 et seq. (the "Bankruptcy Code"). In the event the
Company is a debtor under the Bankruptcy Code, the Company hereby
waives to the fullest extent permitted any rights to relief it may
have under 11 U.S.C. 362 in respect of the conversion of the
Debenture. The Company agrees, without cost or expense to Holder, to
take or consent to any and all action necessary to effectuate relief
under 11 U.S.C. 362.
D. Authority; Validity and Enforceability. The Company has the
requisite corporate power and authority to enter into the Documents
(as such term is hereinafter defined) and to perform all of its
obligations hereunder and thereunder (including the issuance, sale and
delivery to Holder of the Securities). The execution, delivery and
performance by the Company of the Documents and the consummation by
the Company of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Debenture and the
issuance and reservation for issuance of the Conversion Shares and the
Warrant Shares) have been duly and validly authorized by all necessary
corporate action on the part of the Company. Each of the Documents
has been duly and validly executed and delivered by the Company and
each Document constitutes a valid and binding obligation of the
Company enforceable against it in accordance with its terms, subject
to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and except as rights to indemnity and
contribution may be limited by federal or state securities laws or the
public policy underlying such laws. The Securities have been duly and
validly authorized for issuance by the Company and, when executed and
delivered by the Company, will be valid and binding obligations of the
Company enforceable against it in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally. For purposes of this
Agreement, the term "Documents" means (i) this Agreement; (ii) the
Registration Rights Agreement dated as of even date herewith between
the Company and Holder; (iii) the Debenture; and (iv) the Warrant.
E. Validity of Issuance of the Securities. The Debenture,
the Conversion Shares upon their issuance in accordance with the
Debenture, and the Warrant Shares will be validly issued and
outstanding, fully paid and nonassessable, and not subject to any
preemptive rights, rights of first refusal, tag-along rights, drag-
along rights or other similar rights.
F. Non-contravention. The execution and delivery by the
Company of the Documents, the issuance of the Securities, and the
consummation by the Company of the other transactions contemplated
hereby and thereby do not, and compliance with the provisions of this
Agreement and other Documents will not, conflict with, or result in
any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation
or acceleration of any obligation or loss of a material benefit under,
or result in the creation of any Lien (as such term is hereinafter
defined) upon any of the properties or assets of the Company or any of
its Subsidiaries under, or result in the termination of, or require
that any consent be obtained or any notice be given with respect to
(i) the Articles or Certificate of Incorporation or By-Laws of the
Company or the comparable charter or organizational documents of any
of its Subsidiaries, in each case as amended to the date of this
Agreement, (ii) any loan or credit agreement, Debenture, bond,
mortgage, indenture, lease, contract or other agreement, instrument or
permit applicable to the Company or any of its Subsidiaries or their
respective properties or assets or (iii) any Law (as such term is
hereinafter defined) applicable to, or any judgment, decree or order
of any court or government body having jurisdiction over, the Company
or any of its Subsidiaries or any of their respective properties or assets.
G. Approvals. No authorization, approval or consent of any
court or public or governmental authority is required to be obtained
by the Company for the issuance and sale of the Securities to Holder
as contemplated by this Agreement, except such authorizations,
approvals and consents as have been obtained by the Company prior to
the date hereof.
H. Commission Filings. The Company has properly and timely
filed with the Commission all reports, proxy statements, forms and
other documents required to be filed with the Commission under the
Securities Act and the Exchange Act since becoming subject to such
Acts (the "Commission Filings"). As of their respective dates, (i)
the Commission Filings complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case
may be, and the rules and regulations of the Commission promulgated
thereunder applicable to such Commission Filings and (ii) none of the
Commission Filings contained at the time of its filing 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 light of the circumstances under which they
were made, not misleading. The financial statements of the Company
included in the Commission Filings, as of the dates of such documents,
were true and complete in all material respects and complied with
applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto, were prepared in
accordance with generally accepted accounting principles in the United
States ("GAAP") (except in the case of unaudited statements permitted
by Form 10-Q under the Exchange Act) applied on a consistent basis
during the periods involved (except as may be indicated in the notes
thereto) and fairly presented the consolidated financial position of
the Company and its Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments that in the aggregate are not
material and to any other adjustment described therein).
I. Full Disclosure. There is no fact known to the Company
(other than general economic or industry conditions known to the
public generally) that has not been fully disclosed in the Commission
Filings that (i) reasonably could be expected to have a Material
Adverse Effect or (ii) reasonably could be expected to materially and
adversely affect the ability of the Company to perform its obligations
pursuant to the Documents.
J. Absence of Events of Default. No "Event of Default" (as
defined in any agreement or instrument to which the Company is a
party) and no event which, with notice, lapse of time or both, would
constitute an Event of Default (as so defined), has occurred and is
continuing.
K. Securities Law Matters. Assuming the accuracy of the
representations and warranties of Holder set forth in Article I.C, the
offer and sale by the Company of the Securities is exempt from (i) the
registration and prospectus delivery requirements of the Securities
Act and the rules and regulations of the Commission thereunder and
(ii) the registration and/or qualification provisions of all
applicable state and provincial securities and "blue sky" laws. The
Company shall not directly or indirectly take, and shall not permit
any of its directors, officers or Affiliates directly or indirectly to
take, any action (including, without limitation, any offering or sale
to any person or entity of any security similar to the Debenture)
which will make unavailable the exemption from Securities Act
registration being relied upon by the Company for the offer and sale
to Holder of the Debenture, the Conversion Shares and the Warrant
Shares as contemplated by this Agreement. No form of general
solicitation or advertising has been used or authorized by the Company
or any of its officers, directors or Affiliates in connection with the
offer or sale of the Debenture (and the Conversion Shares) as
contemplated by this Agreement or any other agreement to which the
Company is a party.
L. Registration Rights. Except as set forth on
Schedule II.L., no Person has, and as of the Closing (as such term is
hereinafter defined), no Person shall have, any demand, "piggy-back"
or other rights to cause the Company to file any registration
statement under the Securities Act relating to any of its securities
or to participate in any such registration statement.
M. Interest. The timely payment of interest on the Debenture
is not prohibited by the Articles or Certificate of Incorporation or
By-Laws of the Company, in each case as amended to the date of this
Agreement, or any agreement, contract, document or other undertaking
to which the Company is a party.
N. No Misrepresentation. No representation or warranty of
the Company contained in this Agreement or any of the other Documents,
any schedule, annex or exhibit hereto or thereto or any agreement,
instrument or certificate furnished by the Company to Holder pursuant
to this Agreement contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
O. Finder's Fee. There is no finder's fee, brokerage
commission or like payment in connection with the transactions
contemplated by this Agreement for which Holder is liable or
responsible.
IV. CERTAIN COVENANTS AND ACKNOWLEDGMENTS
A. Filings. The Company shall make all necessary Commission
Filings and "blue sky" filings required to be made by the Company in
connection with the sale of the Securities to Holder as required by
all applicable laws, and shall provide a copy thereof to Holder
promptly after such filing.
B. Reporting Status. So long as Holder beneficially owns any
of the Securities, the Company shall timely file all reports required
to be filed by it with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act.
C. Listing. Except to the extent the Company lists its
Common Stock on The New York Stock Exchange, The American Stock
Exchange or The Nasdaq Stock Market, the Company shall use its best
efforts to maintain its listing of the Common Stock on OTCBB. If the
Common Stock is delisted from OTCBB, the Company will use its best
efforts to list the Common Stock on the most liquid national
securities exchange or quotation system that the Common Stock is
qualified to be listed on.
D. Reserved Conversion Common Stock. The Company at all
times from and after the date hereof shall have such number of shares
of Common Stock duly and validly authorized and reserved for issuance
as shall be sufficient for the conversion in full of the Debenture and
the exercise of the Warrant.
E. Information. Each of the parties hereto acknowledges and
agrees that Holder shall not be provided with, nor be given access to,
any material non-public information relating to the Company.
F. Accounting and Reserves. The Company shall maintain a
standard and uniform system of accounting and shall keep proper books
and records and accounts in which full, true, and correct entries
shall be made of its transactions, all in accordance with GAAP applied
on consistent basis through all periods, and shall set aside on such
books for each fiscal year all such reserves for depreciation,
obsolescence, amortization, bad debts and other purposes in connection
with its operations as are required by such principles so applied.
G. Transactions with Affiliates. So long as the Debenture is
outstanding, neither the Company nor any of its Subsidiaries shall,
directly or indirectly, enter into any material transaction or
agreement with any stockholder, officer, director or Affiliate of the
Company or family member of any officer, director or Affiliate of the
Company, unless the transaction or agreement is (i) reviewed and
approved by a majority of Disinterested Directors (as such term is
hereinafter defined) and (ii) on terms no less favorable to the
Company or the applicable Subsidiary than those obtainable from a
nonaffiliated person. A "Disinterested Director" shall mean a
director of the Company who is not and has not been an officer or
employee of the Company and who is not a member of the family of,
controlled by or under common control with, any such officer or employee.
H. Certain Restrictions. So long as the Debenture is
outstanding, no dividends shall be declared or paid or set apart for
payment nor shall any other distribution be declared or made upon any
capital stock of the Company, nor shall any capital stock of the
Company be redeemed, purchased or otherwise acquired (other than a
redemption, purchase or other acquisition of shares of Common Stock
made for purposes of an employee incentive or benefit plan (including
a stock option plan) of the Company or pursuant to any of the security
agreements listed on Schedule III.H) for any consideration by the
Company, directly or indirectly, nor shall any moneys be paid to or
made available for a sinking fund for the redemption of any Common Stock.
I. Short Selling. So long as the Debenture is outstanding,
Holder agrees and covenants on its behalf and on behalf of its
affiliates that neither Holder nor its affiliates shall at any time
engage in any short sales with respect to the Company's Common Stock,
or sell put options or similar instruments with respect to the
Company's Common Stock. The parties acknowledge that Holder shall be
entitled to sell the Common Stock from each Debenture conversion and
Warrant exercise immediately upon submission of the applicable
Debenture Conversion Notice and Warrant Notice of Exercise, and
payment of the purchase price, to the Company, for such Common Stock.
V. ISSUANCE OF COMMON STOCK
A. The Company undertakes and agrees that no instruction other
than the instructions referred to in this Article V and customary stop
transfer instructions prior to the registration and sale of the Common
Stock pursuant to an effective Securities Act registration statement
shall be given to its transfer agent for the Conversion Shares and the
Warrant Shares and that the Conversion Shares and the Warrant Shares
shall otherwise be freely transferable on the books and records of the
Company as and to the extent provided in this Agreement, the
Registration Rights Agreement and applicable law. Nothing contained
in this Section V.A. shall affect in any way Holder's obligations and
agreement to comply with all applicable securities laws upon resale of
such Common Stock.
X. Xxxxxx shall have the right to convert the Debenture and
exercise the Warrant by telecopying an executed and completed
Conversion Notice (as such term is defined in the Debenture) or
Warrant Notice of Exercise (as such term is defined in the Warrant) to
the Company. Each date on which a Conversion Notice or Warrant Notice
of Exercise is telecopied to and received by the Company in accordance
with the provisions hereof shall be deemed a Conversion Date (as such
term is defined in the Debenture). The Company shall cause the
transfer agent to transmit the certificates evidencing the Common
Stock issuable upon conversion of the Debenture (together with a new
debenture, if any, representing the principal amount of the Debenture
not being so converted) or exercise of the Warrant (together with a
new Warrant, if any, representing the amount of the Warrant not being
so exercised) to Holder via express courier, or if a Registration
Statement covering the Common Stock has been declared effective by the
SEC by electronic transfer, within two (2) business days after receipt
by the Company of the Conversion Notice or Warrant Notice of Exercise
(the "Delivery Date").
C. Upon the conversion of the Debenture or exercise of the
Warrant or part thereof, the Company shall, at its own cost and
expense, take all necessary action (including the issuance of an
opinion of counsel) to assure that the Company's transfer agent shall
issue stock certificates in the name of Holder (or its nominee) or
such other persons as designated by Holder and in such denominations
to be specified at conversion representing the number of shares of
common stock issuable upon such conversion or exercise. The Company
warrants that the Conversion Shares and Warrant Shares will be
unlegended, free-trading, and freely transferable, and will not
contain a legend restricting the resale or transferability of the
Company Common Stock provided the Conversion Shares and Warrant Shares
are being sold pursuant to an effective registration statement
covering the Common Stock to be sold or is otherwise exempt from
registration when sold.
D. The Company understands that a delay in the delivery of the
Common Stock in the form required pursuant to this section, or the
Mandatory Redemption Amount described in Section E hereof, beyond the
Delivery Date or Mandatory Redemption Payment Date (as hereinafter
defined) could result in economic loss to the Holder. As compensation
to the Holder for such loss, the Company agrees to pay late payments
to the Holder for late issuance of Common Stock in the form required
pursuant to Section E hereof upon Conversion of the Debenture or late
payment of the Mandatory Redemption Amount, in the amount of $100 per
business day after the Delivery Date or Mandatory Redemption Payment
Date, as the case may be, for each $10,000 of Debenture principal
amount being converted or redeemed. The Company shall pay any payments
incurred under this Section in immediately available funds upon
demand. Furthermore, in addition to any other remedies which may be
available to the Holder, in the event that the Company fails for any
reason to effect delivery of the Common Stock by the Delivery Date or
make payment by the Mandatory Redemption Payment Date, the Holder will
be entitled to revoke all or part of the relevant Notice of Conversion
or rescind all or part of the notice of Mandatory Redemption by
delivery of a notice to such effect to the Company whereupon the
Company and the Holder shall each be restored to their respective
positions immediately prior to the delivery of such notice, except
that late payment charges described above shall be payable through the
date notice of revocation or rescission is given to the Company.
E. Mandatory Redemption. In the event the Company is prohibited
from issuing Common Stock, or fails to timely deliver Common Stock on
a Delivery Date, or upon the occurrence of an Event of Default (as
defined in the Debenture) or for any reason other than pursuant to the
limitations set forth herein, or upon the occurrence of an Event of
Default as defined in the Debenture, then at the Holder's election,
the Company must pay to the Holder ten (10) business days after
request by the Holder or on the Delivery Date (if requested by the
Holder) a sum of money determined by multiplying up to the outstanding
principal amount of the Debenture designated by the Holder by 130%,
together with accrued but unpaid interest thereon ("Mandatory
Redemption Payment"). The Mandatory Redemption Payment must be
received by the Holder on the same date as the Company Common Stock
otherwise deliverable or within ten (10) business days after request,
whichever is sooner ("Mandatory Redemption Payment Date"). Upon
receipt of the Mandatory Redemption Payment, the corresponding
Debenture principal and interest will be deemed paid and no longer
outstanding.
F. Buy-In. In addition to any other rights available to the
Holder, if the Company fails to deliver to the Holder such Common
Stock issuable upon conversion of a Debenture or exercise of a Warrant
by the Delivery Date and if ten (10) days after the Delivery Date the
Holder purchases (in an open market transaction or otherwise) shares
of Common Stock to deliver in satisfaction of a sale by the Holder of
the Common Stock which the Holder anticipated receiving upon such
conversion (a "Buy-In"), then the Company shall pay in cash to the
Holder (in addition to any remedies available to or elected by the
Holder) the amount by which (A) the Holder's total purchase price
(including brokerage commissions, if any) for the shares of Common
Stock so purchased exceeds (B) the aggregate principal and/or interest
amount of the Debenture or Warrant for which such conversion or
exercise was not timely honored, together with interest thereon at a
rate of 15% per annum, accruing until such amount and any accrued
interest thereon is paid in full (which amount shall be paid as
liquidated damages and not as a penalty). For example, if the Holder
purchases shares of Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted conversion of
$10,000 of Debenture or Warrant principal and/or interest, the Company
shall be required to pay the Holder $1,000, plus interest. The Holder
shall provide the Company written notice indicating the amounts
payable to the Holder in respect of the Buy-In.
G. The Securities shall be delivered by the Company to the
Holder pursuant to Section I.B. hereof on a "delivery-against-payment
basis" at the Closing.
VI. CLOSING DATE
The Closing shall occur by the delivery: (i) to the Holder of the
certificate evidencing the Debenture and all other Agreements, and
(ii) to the Company the Purchase Price.
VII. CONDITIONS TO THE COMPANY'S OBLIGATIONS
Holder understands that the Company's obligation to sell the Debenture
on the Closing Date to Holder pursuant to this Agreement is
conditioned upon:
A. Delivery by Holder to the Company of the Initial Purchase Price;
B. The accuracy on the Closing Date of the representations and
warranties of Holder contained in this Agreement as if made on the
Closing Date (except for representations and warranties which, by
their express terms, speak as of and relate to a specified date, in
which case such accuracy shall be measured as of such specified date)
and the performance by Holder in all material respects on or before
the Closing Date of all covenants and agreements of Holder required to
be performed by it pursuant to this Agreement on or before the Closing
Date; and
There shall not be in effect any law or order, ruling, judgment or
writ of any court or public or governmental authority restraining,
enjoining or otherwise prohibiting any of the transactions
contemplated by this Agreement.
VIII. CONDITIONS TO HOLDER'S OBLIGATIONS
The Company understands that Holder's obligation to purchase the
Securities on the Closing Date pursuant to this Agreement is
conditioned upon:
A. Delivery by the Company of the Debenture, the Warrant and
the other Agreements (I/N/O Holder or I/N/O Holder's nominee);
B. The accuracy on the Closing Date of the representations and
warranties of the Company contained in this Agreement as if made on
the Closing Date (except for representations and warranties which, by
their express terms, speak as of and relate to a specified date, in
which case such accuracy shall be measured as of such specified date)
and the performance by the Company in all respects on or before the
Closing Date of all covenants and agreements of the Company required
to be performed by it pursuant to this Agreement on or before the
Closing Date, all of which shall be confirmed to Holder by delivery of
the certificate of the chief executive officer of the Company to that
effect;
C. There not having occurred (i) any general suspension of
trading in, or limitation on prices listed for, the Common Stock on
the OTCBB/Pink Sheet, (ii) the declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States,
(iii) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving
the United States or any of its territories, protectorates or
possessions or (iv) in the case of the foregoing existing at the date
of this Agreement, a material acceleration or worsening thereof;
D. There not having occurred any event or development, and
there being in existence no condition, having or which reasonably and
foreseeably could have a Material Adverse Effect;
E. There shall not be in effect any law, order, ruling,
judgment or writ of any court or public or governmental authority
restraining, enjoining or otherwise prohibiting any of the
transactions contemplated by this Agreement;
F. The Company shall have obtained all consents, approvals or
waivers from governmental authorities and third persons necessary for
the execution, delivery and performance of the Documents and the
transactions contemplated thereby, all without material cost to the
Company;
X. Xxxxxx shall have received such additional documents,
certificates, payment, assignments, transfers and other deliveries as
it or its legal counsel may reasonably request and as are customary to
effect a closing of the matters herein contemplated;
H. Delivery by the Company of an enforceability opinion from
its outside counsel in form and substance satisfactory to Holder
IX. SURVIVAL; INDEMNIFICATION
A. The representations, warranties and covenants made by each
of the Company and Holder in this Agreement, the annexes, schedules
and exhibits hereto and in each instrument, agreement and certificate
entered into and delivered by them pursuant to this Agreement shall
survive the Closing and the consummation of the transactions
contemplated hereby. In the event of a breach or violation of any of
such representations, warranties or covenants, the party to whom such
representations, warranties or covenants have been made shall have all
rights and remedies for such breach or violation available to it under
the provisions of this Agreement or otherwise, whether at law or in
equity, irrespective of any investigation made by or on behalf of such
party on or prior to the Closing Date.
B. The Company hereby agrees to indemnify and hold harmless
Holder, its affiliates and their respective officers, directors,
partners and members (collectively, the "Holder Indemnitees") from and
against any and all losses, claims, damages, judgments, penalties,
liabilities and deficiencies (collectively, "Losses") and agrees to
reimburse Holder Indemnitees for all out-of-pocket expenses (including
the fees and expenses of legal counsel), in each case promptly as
incurred by Holder Indemnitees and to the extent arising out of or in
connection with:
1. any misrepresentation, omission of fact or breach of
any of the Company's representations or warranties contained in this
Agreement or the other Documents, or the annexes, schedules or
exhibits hereto or thereto or any instrument, agreement or certificate
entered into or delivered by the Company pursuant to this Agreement or
the other Documents;
2. any failure by the Company to perform any of its
covenants, agreements, undertakings or obligations set forth in this
Agreement or the other Documents or any instrument, certificate or
agreement entered into or delivered by the Company pursuant to this
Agreement or the other Documents;
3. the purchase of the Debenture, the conversion of the
Debenture, the payment of interest on the Debenture, the issuance of
the Warrant Shares, the consummation of the transactions contemplated
by this Agreement and the other Documents, the use of any of the
proceeds of the Purchase Price by the Company, the purchase or
ownership of any or all of the Securities, the performance by the
parties hereto of their respective obligations hereunder and under the
Documents or any claim, litigation, investigation, proceedings or
governmental action relating to any of the foregoing, whether or not
Holder is a party thereto; or
4. resales of the Common Stock by Holder in the manner and
as contemplated by this Agreement and the Registration Rights
Agreement.
X. Xxxxxx hereby agrees to indemnify and hold harmless the
Company, its Affiliates and their respective officers, directors,
partners and members (collectively, the "Company Indemnitees") from
and against any and all Losses, and agrees to reimburse the Company
Indemnitees for all out-of-pocket expenses (including the fees and
expenses of legal counsel), in each case promptly as incurred by the
Company Indemnitees and to the extent arising out of or in connection with:
1. any misrepresentation, omission of fact or breach of
any of Holder's representations or warranties contained in this
Agreement or the other Documents, or the annexes, schedules or
exhibits hereto or thereto or any instrument, agreement or certificate
entered into or delivered by Holder pursuant to this Agreement or the
other Documents; or
2. any failure by Holder to perform in any material
respect any of its covenants, agreements, undertakings or obligations
set forth in this Agreement or the other Documents or any instrument,
certificate or agreement entered into or delivered by Holder pursuant
to this Agreement or the other Documents.
D. Promptly after receipt by either party hereto seeking
indemnification pursuant to this Article VIII (an "Indemnified Party")
of written notice of any investigation, claim, proceeding or other
action in respect of which indemnification is being sought (each, a
"Claim"), the Indemnified Party promptly shall notify the party
against whom indemnification pursuant to this Article VIII is being
sought (the "Indemnifying Party") of the commencement thereof, but the
omission so to notify the Indemnifying Party shall not relieve it from
any liability that it otherwise may have to the Indemnified Party
except to the extent that the Indemnifying Party is materially
prejudiced and forfeits substantive rights or defenses by reason of
such failure. In connection with any Claim as to which both the
Indemnifying Party and the Indemnified Party are parties, the
Indemnifying Party shall be entitled to assume the defense thereof.
Notwithstanding the assumption of the defense of any Claim by the
Indemnifying Party, the Indemnified Party shall have the right to
employ separate legal counsel and to participate in the defense of
such Claim, and the Indemnifying Party shall bear the reasonable fees,
out-of-pocket costs and expenses of such separate legal counsel to the
Indemnified Party if (and only if): (x) the Indemnifying Party shall
have agreed to pay such fees, out-of-pocket costs and expenses,
(y) the Indemnified Party and the Indemnifying Party reasonably shall
have concluded that representation of the Indemnified Party and the
Indemnifying Party by the same legal counsel would not be appropriate
due to actual or, as reasonably determined by legal counsel to the
Indemnified Party, potentially differing interests between such
parties in the conduct of the defense of such Claim, or if there may
be legal defenses available to the Indemnified Party that are in
addition to or disparate from those available to the Indemnifying
Party or (z) the Indemnifying Party shall have failed to employ legal
counsel reasonably satisfactory to the Indemnified Party within a
reasonable period of time after notice of the commencement of such
Claim. If the Indemnified Party employs separate legal counsel in
circumstances other than as described in clauses (x), (y) or (z)
above, the fees, costs and expenses of such legal counsel shall be
borne exclusively by the Indemnified Party. Except as provided above,
the Indemnifying Party shall not, in connection with any Claim in the
same jurisdiction, be liable for the fees and expenses of more than
one firm of legal counsel for the Indemnified Party (together with
appropriate local counsel). The Indemnifying Party shall not, without
the prior written consent of the Indemnified Party (which consent
shall not unreasonably be withheld), settle or compromise any Claim or
consent to the entry of any judgment that does not include an
unconditional release of the Indemnified Party from all liabilities
with respect to such Claim or judgment.
E. In the event one party hereunder should have a claim for
indemnification that does not involve a claim or demand being asserted
by a third party, the Indemnified Party promptly shall deliver notice
of such claim to the Indemnifying Party. If the Indemnified Party
disputes the claim, such dispute shall be resolved by mutual agreement
of the Indemnified Party and the Indemnifying Party or by binding
arbitration conducted in accordance with the procedures and rules of
the American Arbitration Association. Judgment upon any award
rendered by any arbitrators may be entered in any court having
competent jurisdiction thereof.
X. GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance
with the laws of the State of California, without regard to the
conflicts of law principles of such state.
XI. SUBMISSION TO JURISDICTION
Each of the parties hereto consents to the exclusive jurisdiction
of the federal courts whose districts encompass any part of the City
of San Diego or the state courts of the State of California sitting in
the City of San Diego in connection with any dispute arising under
this Agreement and the other Documents. Each party hereto hereby
irrevocably and unconditionally waives, to the fullest extent it may
effectively do so, any defense of an inconvenient forum or improper
venue to the maintenance of such action or proceeding in any such
court and any right of jurisdiction on account of its place of
residence or domicile. Each party hereto irrevocably and
unconditionally consents to the service of any and all process in any
such action or proceeding in such courts by the mailing of copies of
such process by registered or certified mail (return receipt
requested), postage prepaid, at its address specified in Article XVII.
Each party hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided
by law.
XII. WAIVER OF JURY TRIAL
TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THE PARTIES
HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER DOCUMENT OR
ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
AGREEMENT AND OTHER DOCUMENTS. EACH PARTY HERETO (i) CERTIFIES THAT
NEITHER OF THEIR RESPECTIVE REPRESENTATIVES, AGENTS OR ATTORNEYS HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (ii)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS HEREIN.
XIII. COUNTERPARTS; EXECUTION
This Agreement may be executed in counterparts, each of which
when so executed and delivered shall be an original, but both of which
counterparts shall together constitute one and the same instrument. A
facsimile transmission of this signed Agreement shall be legal and
binding on both parties hereto.
XIV. HEADINGS
The headings of this Agreement are for convenience of reference
and shall not form part of, or affect the interpretation of, this
Agreement.
XV. SEVERABILITY
In the event any one or more of the provisions contained in this
Agreement or in the other Documents should be held invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein or therein
shall not in any way be affected or impaired thereby. The parties
shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions, the
economic effect of which comes as close as possible to that of the
invalid, illegal or unenforceable provisions.
XVI. ENTIRE AGREEMENT; REMEDIES, AMENDMENTS AND WAIVERS
This Agreement and the Documents constitute the entire agreement
between the parties hereto pertaining to the subject matter hereof and
supersede all prior agreements, understandings, negotiations and
discussions, whether oral or written, of such parties. No supplement,
modification or waiver of this Agreement shall be binding unless
executed in writing by both parties. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
XVII. NOTICES
Except as may be otherwise provided herein, any notice or other
communication or delivery required or permitted hereunder shall be in
writing and shall be delivered personally, or sent by telecopier
machine or by a nationally recognized overnight courier service, and
shall be deemed given when so delivered personally, or by telecopier
machine or overnight courier service as follows:
A. if to the Company, to:
RMD Technologies, Inc.
000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
B. if to Holder, to:
La Jolla Cove Investors, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
The Company or Holder may change the foregoing address by notice given
pursuant to this Article XVII.
XVIII. CONFIDENTIALITY
Each of the Company and Holder agrees to keep confidential and
not to disclose to or use for the benefit of any third party the terms
of this Agreement or any other information which at any time is
communicated by the other party as being confidential without the
prior written approval of the other party; provide, however, that this
provision shall not apply to information which, at the time of
disclosure, is already part of the public domain (except by breach of
this Agreement) and information which is required to be disclosed by
law (including, without limitation, pursuant to Item 601(b)(10) of
Regulation S-K under the Securities Act and the Exchange Act).
XIX. ASSIGNMENT
This Agreement shall not be assignable by either of the parties
hereto.
IN WITNESS WHEREOF, the parties hereto have duly caused this
Agreement to be executed and delivered on the date first above written.
RMD Technologies, Inc. La Jolla Cove Investors, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxx
Xxxxxxx X. Xxxxxxxx Xxxxxx X. Xxxx
Title: President Title: Portfolio Manager
