EXCHANGE AGREEMENT
Exhibit
4.2
This
Exchange Agreement (this “Agreement”) is dated
as of April , 2010, by and between Juma Technology
Corp., a Delaware corporation (the “Company”), and Vision
Capital Advantage Fund. LP, a holder of certain warrants issued by the Company
(the “Holder”).
Recitals:
WHEREAS,
the Holder currently holds the specific classes and number of warrants listed on
Exhibit A
(collectively, the “Warrants”) to
purchase shares of the Company’s common stock, par value $.0001 per share (the
“Common
Stock”), issued by the Company to the Holder pursuant to certain
previously consummated note and warrant financings of the Company (collectively, the
“Financings”). Capitalized
terms used but not otherwise defined herein shall have the meanings assigned to
such terms in the financing documents entered into by the parties pursuant to
the applicable Financings.
WHEREAS,
subject to the terms and conditions set forth herein, the Company and the Holder
desire to cancel and terminate the Warrants in full and exchange the Warrants
for shares of the Company’s Series C Convertible Preferred Stock, par value
$.0001 per share (the “Series C Preferred
Stock”), at the exchange rate set forth on Exhibit
A.
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby agreed and acknowledged, the parties hereto hereby agree as
follows:
AGREEMENT:
1. Cancellation
of the Warrants; Exchange of Warrants for Series C Preferred
Stock.
(a) In
consideration of and in express reliance upon the representations, warranties,
covenants, terms and conditions of this Agreement, the Holder and the Company
agree to the cancellation of the Warrants and the exchange of the Warrants into
newly issued shares of Series C Preferred Stock in the amounts set forth on
Exhibit A
attached hereto.
(b) The
closing under this Agreement (the “Closing”) shall take
place at the offices of Xxxxxxx Xxxxxx LLP, 000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx,
Xxx Xxxx, XX 00000 upon the satisfaction or waiver of each of the conditions set
forth in Sections 4 and 5 hereof (the “Closing
Date”). At the Closing, the Company shall issue to the Holder
the shares of Series C Preferred Stock and the Holder shall deliver to the
Company for cancellation the Warrants.
(c) The
designation, rights, preferences and other terms and provisions of the Series C
Preferred Stock are set forth in the Certificate of Designation of the Relative
Rights and Preferences of the Series C Convertible Preferred Stock attached
hereto as Exhibit
B (the “Certificate of
Designation”).
(d) The
shares of Series C Preferred Stock issuable upon the exchange of the Warrants
and the shares of Common Stock issuable upon conversion of the Series C
Preferred Stock are sometimes collectively referred to herein as the “Securities”.
2. Representations,
Warranties and Covenants of the Holder. The Holder hereby
makes the following representations and warranties to the Company, and covenants
for the benefit of the Company:
(a)
The Holder is a corporation, limited liability company or partnership duly
incorporated or organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization.
(b) This
Agreement has been duly authorized, validly executed and delivered by the Holder
and is a valid and binding agreement and obligation of the Holder enforceable
against the Holder in accordance with its terms, subject to limitations on
enforcement by general principles of equity and by bankruptcy or other laws
affecting the enforcement of creditors’ rights generally, and the Holder has
full power and authority to execute and deliver the Agreement and the other
agreements and documents contemplated hereby and to perform its obligations
hereunder and thereunder.
(c) The
Holder understands that the Securities are being offered and sold to it in
reliance on specific provisions of Federal and state securities laws and that
the Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of the Holder set
forth herein for purposes of qualifying for exemptions from registration under
the Securities Act of 1933, as amended (the “Securities Act”), and
applicable state securities laws. The Holder understands that no
United States federal or state agency or any government or governmental agency
has passed upon or made any recommendation or endorsement of the
Securities.
(d) The
Holder is an “accredited investor” (as defined in Rule 501 of Regulation D), and
the Holder has such experience in business and financial matters that it is
capable of evaluating the merits and risks of an investment in the
Securities. The Holder is not required to be registered as a
broker-dealer under Section 15 of the Securities Exchange Act of 1934, as
amended, and the Holder is not a broker-dealer. The Holder
acknowledges that an investment in the Securities is speculative and involves a
high degree of risk.
(e) The
Holder is acquiring the Securities solely for its own account and not with a
view to or for sale in connection with distribution. The Holder does
not have a present intention to sell any of the Securities, nor a present
arrangement (whether or not legally binding) or intention to effect any
distribution of any of the Securities to or through any person or entity; provided, however, that by
making the representations herein, the Holder does not agree to hold the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with Federal and state
securities laws applicable to such disposition. The Holder
acknowledges that it (i) has such knowledge and experience in financial and
business matters such that the Holder is capable of evaluating the merits and
risks of the Holder's investment in the Company, (ii) is able to bear the
financial risks associated with an investment in the Securities and (iii) has
been given full access to such records of the Company and its subsidiaries and
to the officers of the Company and the subsidiaries as it has deemed necessary
or appropriate to conduct its due diligence investigation.
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(f) The
offer and sale of the Securities is intended to be exempt from registration
under the Securities Act, by virtue of Section 4(2) thereof. The
Holder understands that the Securities purchased hereunder have not been, and
may never be, registered under the Securities Act and that none of the
Securities can be sold or transferred unless they are first registered under the
Securities Act and such state and other securities laws as may be applicable or
the Company receives an opinion of counsel reasonably acceptable to the Company
that an exemption from registration under the Securities Act is available (and
then the Securities may be sold or transferred only in compliance with such
exemption and all applicable state and other securities laws). The
Holder acknowledges that it is familiar with Rule 144 of the rules and
regulations of the Commission, as amended, promulgated pursuant to the
Securities Act ("Rule
144"), and that the Holder has been advised that Rule 144 permits resales
only under certain circumstances. The Holder understands that to the
extent that Rule 144 is not available, the Holder will be unable to sell any
Securities without either registration under the Securities Act or the existence
of another exemption from such registration requirement.
(g) The
Holder has not employed any broker or finder or incurred any liability for any
brokerage or investment banking fees, commissions, finders’ structuring fees,
financial advisory fees or other similar fees in connection with any of the
transactions contemplated by this Agreement.
(h) The
Holder acknowledges that the Securities were not offered to the Holder by means
of any form of general or public solicitation or general advertising, or
publicly disseminated advertisements or sales literature, including (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine, or similar media, or broadcast over television or radio, or
(ii) any seminar or meeting to which the Holder was invited by any of the
foregoing means of communications. The Holder, in making the decision
to purchase the Securities, has relied upon independent investigation made by it
and the representations, warranties and agreements set forth in this Agreement
and the other transaction documents and has not relied on any information or
representations made by third parties.
3. Representations,
Warranties and Covenants of the Company. The Company
represents and warrants to the Holder, and covenants for the benefit of the
Holder, as follows:
(a) The
Company has been duly incorporated and is validly existing and, upon the payment
of its State of Delaware franchise taxes, will be in good standing under the
laws of the State of Delaware, with full corporate power and authority to own,
lease and operate its properties and to conduct its business as currently
conducted, and is duly registered and qualified to conduct its business and is
in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure to register or qualify would not have a
Material Adverse Effect. For purposes of this Agreement, “Material Adverse
Effect” shall mean any effect on the business, results of operations,
prospects, assets or financial condition of the Company that is material and
adverse to the Company and its subsidiaries and affiliates, taken as a whole
and/or any condition, circumstance, or situation that would prohibit or
otherwise materially interfere with the ability of the Company from entering
into and performing any of its obligations under this Agreement in any material
respect.
(b) The
Securities have been duly authorized by all necessary corporate action and, when
paid for or issued in accordance with the terms hereof, the Securities shall be
validly issued and outstanding, fully paid and nonassessable, free and clear of
all liens, encumbrances and rights of refusal of any kind.
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(c) This
Agreement has been duly authorized, validly executed and delivered on behalf of
the Company and is a valid and binding agreement and obligation of the Company
enforceable against the Company in accordance with its terms, subject to
limitations on enforcement by general principles of equity and by bankruptcy or
other laws affecting the enforcement of creditors’ rights generally, and the
Company has full power and authority to execute and deliver the Agreement and
the other agreements and documents contemplated hereby and to perform its
obligations hereunder and thereunder.
(d) The
execution and delivery of the Agreement and the consummation of the transactions
contemplated by this Agreement by the Company, will not (i) conflict with or
result in a breach of or a default under any of the terms or provisions of: (A)
the Company’s certificate of incorporation or by-laws, or (B) of any provision
of any indenture, mortgage, deed of trust or other agreement or instrument to
which the Company is a party or by which it or any of its properties or assets
is bound, (ii) result in a violation of any provision of any law, statute, rule,
regulation, or any existing applicable decree, judgment or order by any court,
Federal or state regulatory body, administrative agency, or other governmental
body having jurisdiction over the Company, or any of its properties or assets or
(iii) result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its subsidiaries pursuant
to the terms of any agreement or instrument to which any of them is a party or
by which any of them may be bound or to which any of their property or any of
them is subject, except in the case of clauses (i)(B), (ii) or (iii) for any
such conflicts, breaches, or defaults or any liens, charges, or encumbrances
which would not have a Material Adverse Effect.
(e) The
delivery and issuance of the Securities in accordance with the terms of and in
reliance on the accuracy of the Holder’s representations and warranties set
forth in this Agreement will be exempt from the registration requirements of the
Securities Act.
(f) No
consent, approval or authorization of or designation, declaration or filing with
any governmental authority on the part of the Company is required in connection
with the valid execution and delivery of this Agreement or the offer, sale or
issuance of the Securities or the consummation of any other transaction
contemplated by this Agreement (other than any filings which may be required to
be made by the Company with the Secretary of State of Delaware or the Securities
and Exchange Commission (the “Commission”) or
pursuant to any state or “blue sky” securities laws subsequent to the
Closing).
(g) There
is no action, suit, claim, investigation or proceeding pending or, to the
knowledge of the Company, threatened against the Company which questions the
validity of this Agreement or the transactions contemplated hereby or any action
taken or to be taken pursuant thereto. There is no action, suit,
claim, investigation or proceeding pending or, to the knowledge of the Company,
threatened, against or involving the Company or any subsidiary, or any of their
respective properties or assets which, if adversely determined, is reasonably
likely to result in a Material Adverse Effect.
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(h) The
Company has complied and will comply with all applicable federal and state
securities laws in connection with the offer, issuance and delivery of the
Securities hereunder. Neither the Company nor anyone acting on its
behalf, directly or indirectly, has or will sell, offer to sell or solicit
offers to buy any of the Securities, or similar securities to, or solicit offers
with respect thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any person, or has taken or will take any
action so as to bring the issuance and sale of any of the Securities under the
registration provisions of the Securities Act and applicable state securities
laws. Neither the Company nor any of its affiliates, nor any person
acting on its or their behalf, has engaged in any form of general solicitation
or general advertising (within the meaning of Regulation D under the Securities
Act) in connection with the offer or sale of any of the Securities.
(i) The
Company has not employed any broker or finder or incurred any liability for any
brokerage or investment banking fees, commissions, finders’ structuring fees,
financial advisory fees or other similar fees in connection with any of the
transactions contemplated by this Agreement.
4. Conditions
Precedent to the Obligation of the Company to Issue the Series C Preferred
Stock. The obligation hereunder of the Company to issue and
deliver the Series C Preferred Stock to the Holder is subject to the
satisfaction or waiver, at or before the Closing Date, of each of the conditions
set forth below. These conditions are for the Company’s sole benefit
and may be waived by the Company at any time in its sole
discretion.
(a) The
Holder shall have executed and delivered this Agreement.
(b) The
Warrants shall have been delivered to the Company for cancellation.
(c) The
representations and warranties of the Holder shall be true and correct in all
respects as of the date when made and as of the Closing Date as though made at
that time, except for representations and warranties that are expressly made as
of a particular date, which shall be true and correct in all respects as of such
date.
5. Conditions
Precedent to the Obligation of the Holder to Accept the Series C Preferred
Stock. The obligation hereunder of the Holder to accept the Series C
Preferred Stock is subject to the satisfaction or waiver, at or before the
Closing Date, of each of the conditions set forth below. These
conditions are for the Holder’s sole benefit and may be waived by the Holder at
any time in its sole discretion.
(a) The
Company shall have executed and delivered this Agreement.
(b) Each
of the representations and warranties of the Company shall be true and correct
in all respects as of the date when made and as of the Closing Date as though
made at that time, except for representations and warranties that speak as of a
particular date, which shall be true and correct in all respects as of such
date.
(c) No
statute, regulation, executive order, decree, ruling or injunction shall have
been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction which prohibits the consummation of any of
the transactions contemplated by this Agreement at or prior to the Closing
Date.
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(d) No
action, suit or proceeding before or by any court or governmental agency or
body, domestic or foreign, shall be pending against or affecting the Company, or
any of its properties, which questions the validity of the Agreement or the
transactions contemplated thereby or any action taken or to be taken pursuant
thereto. As of the Closing Date, no action, suit, claim or proceeding
before or by any court or governmental agency or body, domestic or foreign,
shall be pending against or affecting the Company, or any of its properties,
which, if adversely determined, is reasonably likely to result in a Material
Adverse Effect.
(e) The
certificates representing the shares of Series C Preferred Stock shall have been
duly executed and delivered to the Holder.
(f) [reserved]
(g) The
Company shall have delivered on the Closing Date to the Holder a certified copy
of the resolutions of the board of directors of the Company authorizing the
transactions contemplated by this Agreement.
(h) At
the Closing, the Holder shall have received an opinion of counsel to the
Company, dated the date of the Closing, in the form of Exhibit C
hereto.
(i) The
Company shall have received executed written consents and waivers from its
security holders, if required, consenting to the transactions contemplated by
this Agreement and waiving any price protection such securityholders may be
entitled to as a result of the issuance of the Securities.
(j) No
Material Adverse Effect shall have occurred at or before the Closing
Date.
6. Fees and
Expenses. Each party shall pay the fees and expenses of its
advisors, counsel, accountants and other experts, if any, and all other
expenses, incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement, provided, however, that the
Company shall pay all reasonable attorneys’ fees and expenses incurred by the
Holder in connection with the preparation, negotiation, execution and delivery
of this Agreement.
7. Company
Indemnification. The Company
hereby agrees to indemnify and hold harmless the Holder and its respective
officers, directors, shareholders, employees, agents, affiliates and attorneys
against any and all losses, claims, damages, liabilities and reasonable expenses
(collectively “Claims”) incurred by
each such person in connection with defending or investigating any such Claims,
whether or not resulting in any liability to such person, to which any such
indemnified party may become subject, insofar as such Claims arise out of or are
based upon any breach of any representation or warranty or agreement made by the
Company in this Agreement or the Certificate of Designation.
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8. Governing
Law; Consent to Jurisdiction. This Agreement
shall be governed by and interpreted in accordance with the laws of the State of
New York without giving effect to the rules governing the conflicts of
laws. Each of the parties consents to the exclusive jurisdiction of
the Federal courts whose districts encompass any part of the County of New York
located in the City of New York in connection with any dispute arising under
this Agreement and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on forum non conveniens, to the
bringing of any such proceeding in such jurisdictions. Each party
waives its right to a trial by jury. Each party to this Agreement
irrevocably consents to the service of process in any such proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such party at its address set forth herein. Nothing herein shall
affect the right of any party to serve process in any other manner permitted by
law.
9. Notices. All notices and
other communications provided for or permitted hereunder shall be made in
writing by hand delivery, express overnight courier, registered first class
mail, or telecopier (provided that any notice sent by telecopier shall be
confirmed by other means pursuant to this Section 9), initially to the address
set forth below, and thereafter at such other address, notice of which is given
in accordance with the provisions of this Section.
(a) if
to the Company:
000
Xxxxxx Xxxxxx
Xxxxxxxxxxx,
Xxx Xxxx 00000
Attention:
Chief Executive Officer
Tel. No.:
(000) 000-0000
Fax No.:
(000) 000-0000
with a
copy to:
Xxxxxxx
Savage LLP
000
Xxxxxxxxx Xxxxxx, 0xx
Xxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attention:
Xxx Xxxxxxxxx, Esq.
Tel. No.:
(000) 000-0000
Fax No.:
(000) 000-0000
(b) if
to a Holder:
To the
applicable address set forth on the signature page hereto
with a
copy to:
Sadis
& Xxxxxxxx LLP
000 Xxxxx
Xxxxxx, 00xx
Xxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attention:
Xxxx Xxxxxxxx, Esq.
Tel. No.:
(000) 000-0000
Fax No.:
(000) 000-0000
All such
notices and communications shall be deemed to have been duly given: when
delivered by hand, if personally delivered; when receipt is acknowledged, if
telecopied; or when actually received or refused if sent by other
means.
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10. Entire
Agreement. This Agreement
constitutes the entire understanding and agreement of the parties with respect
to the subject matter hereof and supersedes all prior and/or contemporaneous
oral or written proposals or agreements relating thereto all of which are merged
herein. This Agreement may not be amended or any provision hereof
waived in whole or in part, except by a written amendment signed by both of the
parties.
11. Counterparts. This Agreement
may be executed by facsimile signature and in counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
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REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN
WITNESS WHEREOF, this Exchange Agreement was duly executed on the date first
written above.
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By:
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Name:
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Title:
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VISION
CAPITAL ADVANTAGE FUND, LP
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By:
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Name:
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Title:
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Vision
Capital Advantage Fund, LP
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00
X 00xx Xx., 0xx
Xxxxx
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Xxx
Xxxx, XX 00000
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Tel.
No.: (000) 000-0000
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Fax
No.: (000) 000-0000
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Attention: Xxxxxxx
Xxxxxxxx
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EXHIBIT
A
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Cancelled Security
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Issued Security
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Exchange Rate
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3,454,268
Series A Warrants
$0.15
Strike Price
Expiring
5/21/2014
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207,256
Series C Preferred
Stock
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0.6
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1,425,812
Series B Warrants
$0.25
Strike Price
Expiring
8/16/2012
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85,549
Series C Preferred
Stock
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0.6
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EXHIBIT
B
FORM
OF CERTIFICATE OF DESIGNATION
11
EXHIBIT
C
FORM
OF OPINION
1. The
Company is a corporation duly incorporated, validly existing and, upon the
payment of its State of Delaware franchise taxes, will be in good standing under
the laws of the State of Delaware and has the requisite corporate power to own,
lease and operate its properties and assets, and to carry on its business as
presently conducted.
2. The
Company has the requisite corporate power and authority to enter into and
perform its obligations under the Exchange Agreement and to issue the Series C
Preferred Stock and the Common Stock issuable upon conversion of the Series C
Preferred Stock. The execution, delivery and performance of each of
the transaction documents contemplated by the Exchange Agreement by the Company
and the consummation by it of the transactions contemplated thereby have been
duly and validly authorized by all necessary corporate action and no further
consent or authorization of the Company or its Board of Directors or
stockholders is required.
3. The
Series C Preferred Stock has been duly authorized and the shares of Common Stock
issuable upon conversion of the Series C Preferred Stock, have been duly
authorized and reserved for issuance, and, when delivered upon conversion or
against payment in full as provided in the Certificate of Designation, will be
validly issued, fully paid and nonassessable.
4. The
offer, issuance and sale of the Series C Preferred Stock and the offer, issuance
and sale of the shares of Common Stock issuable upon conversion of the Series C
Preferred Stock pursuant to the Exchange Agreement and the Certificate of
Designation, are exempt from the registration requirements of the Securities
Act.
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