MEDICAL MEDIA TELEVISION, INC. $325,000 10% SECURED PROMISSORY NOTE DUE AUGUST 11, 2007 NOTE PURCHASE AGREEMENT By and Among MEDICAL MEDIA TELEVISION, INC., PETCARE TELEVISION NETWORK, INC., KIDCARE MEDICAL TELEVISION NETWORK, INC., AFRICAN AMERICAN...
$325,000
10% SECURED PROMISSORY NOTE DUE
AUGUST
11, 2007
By
and Among
PETCARE
TELEVISION NETWORK, INC.,
KIDCARE
MEDICAL TELEVISION NETWORK, INC.,
AFRICAN
AMERICAN MEDICAL NETWORK, INC.,
and
VICIS
CAPITAL MASTER FUND
DATED
August 2, 2007
This
NOTE
PURCHASE AGREEMENT (the “Agreement”), dated this 2nd day of August, 2007, is
made by and among MEDICAL MEDIA TELEVISION, INC., a Florida corporation (the
“Company”), PETCARE
TELEVISION NETWORK, INC.,
a
Florida corporation (“PetCARE”), KIDCARE
MEDICAL TELEVISION NETWORK, INC.,
a
Florida corporation (“KidCARE”), AFRICAN
AMERICAN MEDICAL NETWORK, INC.,
a
Florida corporation (“African American Medical” and together with PetCARE and
KidCARE each a “Subsidiary” and collectively, the “Subsidiaries”), and VICIS
CAPITAL MASTER FUND (the “Purchaser”), a trust formed under the laws of the
Cayman Islands.
RECITALS
WHEREAS,
pursuant to the terms and conditions of this Agreement, the Company wishes
to
issue and sell to the Purchaser, and the Purchaser wishes to acquire from the
Company, a 10% Secured Promissory Note due August 11, 2007 in the
principal amount of $325,000 and in the form attached hereto as Exhibit
A
(the
“Note”).
NOW,
THEREFORE,
the
Company and the Purchaser hereby agree as follows:
ARTICLE
I
PURCHASE
AND SALE OF THE NOTE
1.1 Purchase
and Sale of the Note.
Subject
to the terms and conditions hereof and in reliance on the representations and
warranties contained herein, or made pursuant hereto, the Company will issue
and
sell to the Purchaser, and the Purchaser will purchase from the Company at
the
closing of the transactions contemplated hereby (the “Closing”), the Note for
$325,000 (the “ Purchase Price”).
1.2 Closing.
The
Closing shall be deemed to occur at the offices of Xxxxxxx & Xxxxx, LLP, 000
Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx at 5:00 p.m. CDT on August 2, 2007
or at such other place, date or time as mutually agreeable to the parties (the
“Closing Date).
1.3 Closing
Matters.
On the
Closing Date, subject to the terms and conditions hereof, the following actions
shall be taken:
(a) The
Company will deliver to the Purchaser the Note dated the Closing Date, in
the principal amount of $325,000.
(b) The
Purchaser shall deliver to the Company the Purchase Price in immediately
available funds to the Company.
ARTICLE
II
SECURITY
DOCUMENTS
2.1 Company
Security Documents.
(a) Security
Agreement.
All of
the obligations of the Company under the Note shall be secured by a lien on
all
the personal property and assets of the Company now existing or hereinafter
acquired granted pursuant to that certain Security Agreement dated as of
February 1, 2007, between the Company and Purchaser (“Security Agreement”),
which, except for Permitted Liens (as hereinafter defined), shall be a first
lien. The parties acknowledge and agree that the term “Obligations” as defined
in the Security Agreement, includes all obligations of the Company to the
Purchaser, including without limitation, those obligations of the Company under
the Note and Transaction Documents (as hereinafter defined).
(b) Stock
Pledge Agreement.
To
secure the obligations of the Company under this Agreement and the Note, the
Company shall pledge, hypothecate, and assign, to the Purchaser all the capital
stock of its Subsidiaries (the “Pledged Shares”), pursuant to that certain Stock
Pledge Agreement and Escrow Agreement, dated as of February 1, 2007 between
the
Company and the Purchaser (the “Stock Pledge Agreement”). The
parties acknowledge and agree that the term “Obligations” as defined in the
Stock Pledge Agreement, includes all obligations of the Company to the
Purchaser, including without limitation, those obligations of the Company under
the Note and Transaction Documents. The Parties further acknowledge that
the
Pledged Shares were previously transferred and delivered to Xxxxxxx & Xxxxx
LLP (the “Escrow Agent”) pursuant to the terms of that certain Stock Pledge and
Escrow Agreement, dated August 11, 2006.
2.2 Guaranty.
All of
the obligations of the Company under the Note shall be guaranteed by each
Subsidiary of the Company pursuant to those certain Guaranty Agreements, dated
as of February 1, 2007 (each a “Guaranty Agreement”). The
parties acknowledge and agree that the term “Obligations” as defined in each
Guaranty Agreement, includes all obligations of the Company to the Purchaser,
including without limitation, those obligations of the Company under the Note
and Transaction Documents.
2.3 Guarantor
Security Documents.
All of
the obligations of the Subsidiaries under the Guaranty Agreement shall be
secured by a lien on all the personal property and assets of each respective
Subsidiary now existing or hereinafter acquired granted pursuant to those
certain Guarantor Security Agreements dated as of February 1, 2007 (each a
“Guarantor Security Agreement”), which, except for Permitted Liens, shall be a
first lien. The
parties acknowledge and agree that the term “Obligations” as defined in each
Guaranty Security Agreement, includes all obligations of each applicable
Subsidiary to the Purchaser, including without limitation, those obligations
of
such Subsidiary under the applicable Guaranty Security Agreement.
2
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company hereby represents and warrants to the Purchaser as of the date of this
Agreement as follows:
3.1 Organization
and Qualification.
The
Company is a corporation duly organized and validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated, and
has
all requisite corporate power and authority to carry on its business as now
conducted. The Company is duly qualified as a foreign corporation 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. As used in this
Agreement, “Material Adverse Effect” means any material adverse effect on the
business, properties, assets, operations, results of operations, condition
(financial or otherwise) or prospects of the Company and its Subsidiaries or
on
the transactions contemplated hereby or by the agreements and instruments to
be
entered into in connection herewith, or on the authority or ability of the
Company to perform its obligations under the Transaction Documents.
3.2 Subsidiaries.
The
Company has no subsidiaries PetCARE, African American Medical, and KidCARE.
The
Company owns, directly or indirectly, all of the capital stock of its
Subsidiaries, free and clear of any and all Liens, and all the issued and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights. Each
Subsidiary is a corporation duly organized and validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated, and
has
all requisite corporate power and authority to carry on its business as now
conducted. Each Subsidiary is duly qualified as a foreign corporation 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.
3.3 No
Violation.
Neither
the Company nor any of its Subsidiaries is in violation of: (a) any of the
provisions of its certificate or articles of incorporation, bylaws or other
organizational or charter documents; or (b) any judgment, decree or order
or any statute, ordinance, rule or regulation applicable to the Company or
any
of its Subsidiaries, except for possible violations which would not,
individually or in the aggregate, have a Material Adverse Effect.
3.4 Capitalization.
(a) As
of the
date hereof, the Company’s authorized capital stock consists of
(i) 100,000,000 shares of Common Stock, par value $.0005 per share, of
which 56,847,389 shares are outstanding and 40,600,182 shares have been reserved
for issuance upon the exercise of all of the outstanding options, warrants
and
other securities issued by the Company that are convertible into Common Stock;
and (ii) 25,000,000 shares of Preferred Stock, no par value per share, of
which 4,303,959 shares are outstanding. All of such outstanding shares have
been, or upon issuance will be, validly issued, are fully paid and
nonassessable.
3
(b) Except
as
disclosed in the Company’s reports, financial statements, schedules, forms,
statements and other documents required to be filed by it with the Securities
and Exchange Commission (the “SEC”) pursuant to the reporting requirements of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or
otherwise on Schedule 3.4(b), prior to the date hereof (the “SEC
Documents”):
(i) no
holder
of shares of the Company’s capital stock has any preemptive rights or any other
similar rights or has been granted or holds any liens or encumbrances suffered
or permitted by the Company;
(ii) except
for annual issuances of Common Stock that will be issued in connection with
the
Company’s ESOP and to an advisory board that in the aggregate will not exceed,
during any calendar year, 1.576% of the Company’s outstanding Common Stock
calculated on a fully-diluted basis at a per share price of $.17, 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 3.14 hereof) 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 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
Securities Act of 1933, as amended, (the “Securities Act”);
(vi) there
are
no outstanding securities or instruments of the Company or any of its
Subsidiaries that 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 antidilution or similar provisions
that
will be triggered by the issuance of the Note; and
(viii) the
Company does not have any stock appreciation rights or “phantom stock” plans or
agreements or any similar plan or agreement.
4
3.5 Issuance
of the Note.
The
Note to be issued hereunder is duly authorized and, upon payment and issuance
in
accordance with the terms hereof, shall be free from all taxes, Liens and
charges with respect to the issuance thereof. All actions by the Board, the
Company and its stockholders necessary for the valid issuance of the
Note.
3.6 Authorization;
Enforcement; Validity.
The
Company has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement, the Security Agreement, the Stock
Pledge Agreement, the Guaranty Agreement, the Guarantor Security Agreement,
the
Note, and each of the other agreements or instruments entered into by the
parties hereto in connection with the transactions contemplated by this
Agreement (collectively, the “Transaction Documents”) and to issue the Note 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,
and
the issuance of the Note, have been duly authorized by the board of directors
of
the Company (the “Board”), and no further consent or authorization is required
by the Company, the Board or its stockholders. This Agreement and the other
Transaction Documents of even date herewith 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 (i) 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, or (ii) as any rights to indemnity or contribution hereunder may
be limited by federal and state securities laws and public policy
consideration.
3.7 [Intentionally
Omitted]
3.8 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 will not (i) result in a violation of any articles or certificate
of incorporation, any certificate of designations, preferences and rights of
any
outstanding series of preferred stock or bylaws of the Company or any of its
Subsidiaries 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 material agreement, indenture or instrument to which the
Company or any of its Subsidiaries is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations) applicable to the Company
or
any of its Subsidiaries or by which any property or asset of the Company or
any
of its Subsidiaries is bound or affected, except in the case of
clauses (ii) and (iii), for such breaches or defaults as would not be
reasonably expected to have a Material Adverse Effect.
3.9 Governmental
Consents.
Except
for the filing of a Form D with the SEC, 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 (as hereinafter defined) 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. All
consents, authorizations, orders, filings and registrations which the Company
is
required to obtain at or prior to the Closing pursuant to the preceding sentence
have been obtained or effected. The Company is unaware of any facts or
circumstances which might prevent the Company from obtaining or effecting any
of
the foregoing.
5
3.10 No
General Solicitation.
Neither
the Company, nor any of its affiliates, nor any Person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the Securities Act) in connection
with
the offer or sale of the Note.
3.11 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 the Note under the Securities Act or cause this
offering of the Note to be integrated with prior offerings by the Company for
purposes of the Securities Act or any applicable stockholder approval
provisions.
3.12 Placement
Agent’s Fees.
No
brokerage or finder’s fee or commission are or will be payable to any Person
with respect to the transactions contemplated by this Agreement based upon
arrangements made by the Company or any of its affiliates.
3.13 Litigation.
There
is no action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the Company, threatened against or affecting the
Company, the transactions contemplated by the Transaction Documents, the Common
Stock or any of its Subsidiaries or any of their respective current or former
officers or directors in their capacities as such. To the knowledge of the
Company, there has not been within the past two (2) years, and there is not
pending, any investigation by the SEC involving the Company or any current
or
former director or officer of the Company (in his or her capacity as such).
The
SEC has not issued any stop order or other order suspending the effectiveness
of
any registration statement filed by the Company under the Securities Act within
the past two (2) years.
3.14 Indebtedness
and Other Contracts.
Except
as disclosed in the SEC Documents or otherwise set forth on Schedule 3.14,
neither the Company nor any of its Subsidiaries (a) has any outstanding
Indebtedness (as defined below), (b) is a party to any contract, agreement
or instrument, the violation of which, or default under, by any other party
to
such contract, agreement or instrument would result in a Material Adverse
Effect, (c) is in 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, individually or in the aggregate,
in a Material Adverse Effect, or (d) 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 (i) all indebtedness for borrowed money,
(ii) 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), (iii) all reimbursement or payment
obligations with respect to letters of credit, surety bonds and other similar
instruments, (iv) 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, (v) 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),
(vi) 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,
(vii) all indebtedness referred to in clauses (i) through (vi) 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, change,
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 (viii) all Contingent Obligations in
respect of indebtedness or obligations of others of the kinds referred to in
clauses (i) through (vii) 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; and (z) ”Person” means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any department or
agency thereof.
6
3.15 Financial
Information; SEC Documents.
The
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Exchange Act. As of their respective dates, the SEC Documents complied
in
all material respects with the requirements of the Exchange Act and the rules
and regulations of the SEC promulgated thereunder applicable to such SEC
Documents, and none of such 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 such 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 Purchaser that is not included in the SEC Documents 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.
3.16 Absence
of Certain Changes.
Except
as disclosed in the SEC Documents, since December 31, 2005, 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. Since December
31,
2005, the Company has not (i) declared or paid any dividends,
(ii) sold any assets, individually or in the aggregate, in excess of
$50,000 outside of the ordinary course of business or (iii) had capital
expenditures, individually or in the aggregate, in excess of $100,000. 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. After
giving effect to the transactions contemplated hereby to occur at the Closing,
the Company will not be Insolvent (as hereinafter defined). For purposes of
this
Agreement, “Insolvent” means (i) the present fair saleable value of the
Company’s assets is less than the amount required to pay the Company’s total
indebtedness, contingent or otherwise, (ii) the Company is unable to pay
its debts and liabilities, subordinated, contingent or otherwise, as such debts
and liabilities become absolute and matured, (iii) the Company intends to
incur or believes that it will incur debts that would be beyond its ability
to
pay as such debts mature or (iv) the Company 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.
7
3.17 Foreign
Corrupt Practices.
(a) Neither
the Company, nor any director, officer, agent, employee or other Person acting
on behalf of the Company has, in the course of its actions (a) used any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity, (b) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds, (c) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended or
(d) made any unlawful bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any foreign or domestic government official or
employee.
(b) None
of
the Subsidiaries of the Company, nor any of their respective directors,
officers, agents, employees or other Persons acting on behalf of such
subsidiaries has, in the course of their respective actions (a) used any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity, (b) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds, (c) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended or
(d) made any unlawful bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any foreign or domestic government official or
employee.
3.18 Transactions
With Affiliates.
Except
as set forth 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.
8
3.19 Insurance.
The
Company and each of its Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
as
management of the Company believes to be prudent and customary in the businesses
in which the Company and each of its Subsidiaries are engaged. Neither the
Company nor any of its Subsidiaries has been refused any insurance coverage
sought or applied for and neither the Company nor any of its Subsidiaries has
any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.
3.20 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. No Executive Officer of the Company
(as defined in Rule 501(f) of the Securities Act) has notified the Company
that such officer intends to leave the Company or otherwise terminate such
officer’s employment with the Company. No Executive Officer of the Company, to
the knowledge of the Company, is, or is now, 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 each
of
its Subsidiaries are in compliance with all federal, state, local and foreign
laws and regulations respecting employment and employment practices, 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.
3.21 Title.
The
Company and each of its Subsidiaries have good and marketable title to all
personal property owned by them which is material to their respective business,
in each case free and clear of all liens, encumbrances and defects except such
as are described in the SEC Documents or 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 its Subsidiaries. Any real property
and
facilities held under lease by the Company and each 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 each of its
Subsidiaries.
3.22 Intellectual
Property Rights.
Schedule
3.22
sets
forth a list of all of the Company’s patents, trademarks, trade names, service
marks copyrights, and registrations and applications therefor, trade secrets
and
any other intellectual property right (collectively, “Intellectual Property
Rights”), identifying whether owned by the Company, any of its Subsidiaries or a
third party. The Intellectual Property Rights are, to the best of the Company’s
knowledge, fully valid and are in full force and effect. The Company does not
have any knowledge of any infringement by the Company or any of 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 that could have a Material Adverse Effect. 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 their Intellectual Property Rights.
9
3.23 Environmental
Laws.
The
Company and each of its Subsidiaries (a) are in compliance with any and all
Environmental Laws (as hereinafter defined), (b) have received all permits,
licenses or other approvals required of them under applicable Environmental
Laws
to conduct their respective businesses and (c) are in compliance with all
terms and conditions of any such permit, license or approval where, in each
of
the foregoing clauses (a), (b) and (c), the failure to so comply could be
reasonably expected to have, individually or 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.
3.24 Tax
Matters.
The
Company and each of its Subsidiaries (a) have made or filed all federal and
state income and all other tax returns, reports and declarations required by
any
jurisdiction to which it is subject, (b) have 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 (c) have set aside on its books
reasonably adequate provision for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply,
except where such failure would not have a Material Adverse Effect. 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.
3.25 Xxxxxxxx-Xxxxx
Act.
The
Company is in compliance with any and all requirements of the Xxxxxxxx-Xxxxx
Act
of 2002 that are effective as of the date hereof and applicable to it, and
any
and all rules and regulations promulgated by the SEC thereunder that are
effective and applicable to it as of the date hereof, except where such
noncompliance would not have a Material Adverse Effect.
3.26 Investment
Company Status.
The
Company is not, and immediately after receipt of payment for the Note will
not
be, an “investment company,” an “affiliated person” of, “promoter” for or
“principal underwriter” for, or an entity “controlled” by an “investment
company,” within the meaning of the Investment Company Act.
3.27 Material
Contracts.
Each
contract of the Company that involves expenditures or receipts in excess of
$100,000 (each an “Applicable Contract”) is in full force and effect and is
valid and enforceable in accordance with its terms. The Company is and has
been
in full compliance with all applicable terms and requirements of each Applicable
Contract and , to the Company’s knowledge, no event has occurred or circumstance
exists that (with or without notice or lapse of time) may contravene, conflict
with or result in a violation or breach of, or give the Company or any other
entity the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate or modify
any
Applicable Contract. The Company has not given or received from any other entity
any notice or other communication (whether oral or written) regarding any
actual, alleged, possible or potential violation or breach of, or default under,
any Applicable Contract.
10
3.28 Inventory.
All
inventory of the Company consists of a quality and quantity usable and salable
in the ordinary course of business, except for obsolete items and items of
below-standard quality, all of which have been or will be written off or written
down to net realizable value on the unaudited consolidated balance sheet of
the
Company and its Subsidiaries as of December 31, 2006. The quantities of
each type of inventory (whether raw materials, work-in-process, or finished
goods) are not excessive, but are reasonable and warranted in the present
circumstances of the Company.
3.29 Disclosure.
The
Company confirms that neither it nor any other Person acting on its behalf
has
provided the Purchaser or its agents or counsel with any information that
constitutes or might constitute material, nonpublic information that has not
been disclosed in the SEC Documents. The Company understands and confirms that
the Purchaser will rely on the foregoing representations in effecting
transactions in securities of the Company. All
disclosure provided to the Purchaser regarding the Company, its business and
the
transactions contemplated hereby, including the Schedules to this Agreement,
furnished by or on behalf of the Company are true and correct and do not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE PURCHASER
The
Purchaser hereby represents and warrants to the Company as of the date of this
Agreement as follows:
4.1 Organization.
The
Purchaser 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.
4.2 Authorization.
This
Agreement has been duly authorized, validly executed and delivered by the
Purchaser and is a valid and binding agreement and obligation of the Purchaser
enforceable against the Purchaser 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
Purchaser has full power and authority to execute and deliver this Agreement
and
the other agreements and documents contemplated hereby and to perform its
obligations hereunder and thereunder.
11
4.3 Investment
Investigation.
The
Purchaser understands that no Federal, state, local or foreign governmental
body
or regulatory authority has made any finding or determination relating to the
fairness of an investment in the Note and that no Federal, state, local or
foreign governmental body or regulatory authority has recommended or endorsed,
or will recommend or endorse, any investment in the Note. The Purchaser, in
making the decision to purchase the Note, has relied upon independent
investigation made by it and has not relied on any information or
representations made by third parties.
4.4 Accredited
Investor.
The
Purchaser is an “accredited investor” as defined under Rule 501 of Regulation D
promulgated under the Securities Act.
4.5 No
Distribution.
The
Purchaser is and will be acquiring the Note for its own account, and not with
a
view to any resale or distribution of the Note in whole or in part, in violation
of the Securities Act or any applicable securities laws.
4.6 Resale.
The
parties intend that the offer and sale of the Note be exempt from registration
under the Securities Act, by virtue of Section 4(2) and/or Rule 506 of
Regulation D promulgated under the Securities Act. The Purchaser understands
that the Note purchased hereunder has not been, and may never be, registered
under the Securities Act and that the Note cannot be sold or transferred unless
its is first registered under the Securities Act and such state and other
securities laws as may be applicable or in the opinion of counsel for the
Company an exemption from registration under the Securities Act is available
(and then the Note may be sold or transferred only in compliance with such
exemption and all applicable state and other securities laws).
4.7 Reliance.
The
Purchaser understands that the Note is 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 Purchaser set forth herein
for purposes of qualifying for exemptions from registration under the Securities
Act, and applicable state securities laws.
4.8 Title
to Exchanged Shares.
The
Purchaser is the lawful owner of the Exchanged Shares and has good title
thereto, free and clear of all liens, claims and encumbrances of any
kind.
ARTICLE
V
CONDITIONS
TO CLOSING OF THE PURCHASERS
The
obligation of the Purchaser to purchase the Note at the Closing is subject
to
the fulfillment to the Purchaser’s satisfaction on or prior to the Closing Date
of each of the following conditions, any of which may be waived by the
Purchaser:
5.1 Representations
and Warranties Correct.
The
representations and warranties in Article III hereof shall be true and correct
when made, and shall be true and correct on the Closing Date with the same
force
and effect as if they had been made on and as of the Closing Date.
12
5.2 Performance.
All
covenants, agreements and conditions contained in this Agreement to be performed
or complied with by the Company on or prior to the Closing Date shall have
been
performed or complied with by the Company in all material respects.
5.3 No
Impediments.
Neither
the Company nor any Purchaser shall be subject to any order, decree or
injunction of a court or administrative agency of competent jurisdiction that
prohibits the transactions contemplated hereby or would impose any material
limitation on the ability of such Purchaser to exercise full rights of ownership
of the Note. At the time of the Closing, the purchase of the Note to be
purchased by the Purchaser hereunder shall be legally permitted by all laws
and
regulations to which the Purchaser and the Company are subject.
5.4 Other
Agreements and Documents.
Company
and/or its Subsidiaries, as applicable, shall have executed and delivered the
following agreements and documents:
(a) The
Note
in the form of Exhibit
A
attached
hereto;
(b) A
certificate of the Company’s CEO, dated the Closing Date, certifying
(i) the fulfillment of the conditions specified in Sections 5.1 and
5.2 of this Agreement, (ii) the Board resolutions approving this Agreement
and the transactions contemplated hereby, and (iii) other matters as the
Purchaser shall reasonably request;
(c) A
written
waiver, in form and substance satisfactory to the Purchaser, from each person,
other than the Purchaser and those Persons set forth on Schedule 5.4(c), who
has
any of the following rights:
(i) any
currently effective right of first refusal to acquire the Note; or
(ii) any
right
to an anti-dilution adjustment of securities issued by the Company that are
held
by such person that will be triggered as a result of the issuance of the Note;
and
(d) All
necessary consents or waivers, if any, from all parties to any other material
agreements to which the Company is a party or by which it is bound immediately
prior to the Closing in order that the transactions contemplated hereby may
be
consummated and the business of the Company may be conducted by the Company
after the Closing without adversely affecting the Company.
5.5 Due
Diligence Investigation.
No fact
shall have been discovered, whether or not reflected in the Schedules hereto,
which in the Purchaser’s determination would make the consummation of the
transactions contemplated by this Agreement not in the Purchaser’s best
interests.
5.6 Post-Closing
Deliveries.
Within
10 days after Closing, the Company shall deliver to Purchaser a
completed and executed Florida Department of Revenue Documentary Stamp Tax
Return Form DR-228, or such other successor form specified by the Florida
Department of Revenue.
13
ARTICLE
VI
CONDITIONS
TO CLOSING OF THE COMPANY
The
Company’s obligation to sell the Note at the Closing is subject to the
fulfillment to its satisfaction on or prior to the Closing Date of each of
the
following conditions:
6.1 Representations.
The
representations made by the Purchaser pursuant to Article IV hereof shall
be true and correct when made and shall be true and correct on the Closing
Date.
6.2 No
Impediments.
Neither
the Company nor any Purchaser shall be subject to any order, decree or
injunction of a court or administrative agency of competent jurisdiction that
prohibits the transactions contemplated hereby or would impose any material
limitation on the ability of such Purchaser to exercise full rights of ownership
of the Note. At the time of the Closing, the purchase of the Note to be
purchased by the Purchaser hereunder shall be legally permitted by all laws
and
regulations to which the Purchaser and the Company are subject.
6.3 Payment
of Purchase Price.
The
Company shall have received the Purchase Price.
ARTICLE
VII
AFFIRMATIVE
COVENANTS
The
Company hereby covenants and agrees, so long as the Note remains outstanding,
as
follows:
7.1 Maintenance
of Corporate Existence.
The
Company shall and shall cause its Subsidiaries to, maintain in full force and
effect its corporate existence, rights and franchises and all material terms
of
licenses and other rights to use licenses, trademarks, trade names, service
marks, copyrights, patents or processes owned or possessed by it and necessary
to the conduct of its business.
7.2 Maintenance
of Properties.
The
Company shall and shall cause its Subsidiaries to, keep each of its properties
necessary to the conduct of its business in good repair, working order and
condition, reasonable wear and tear excepted, and from time to time make all
needful and proper repairs, renewals, replacements, additions and improvements
thereto; and the Company shall and shall cause its Subsidiaries to at all times
comply with each material provision of all leases to which it is a party or
under which it occupies property.
7.3 Payment
of Taxes.
The
Company shall and shall cause its Subsidiaries to, promptly pay and discharge,
or cause to be paid and discharged when due and payable, all lawful taxes,
assessments and governmental charges or levies imposed upon the income, profits,
assets, property or business of the Company and its Subsidiaries; provided,
however, that any such tax, assessment, charge or levy need not be paid if
the
validity thereof shall be contested timely and in good faith by appropriate
proceedings, if the Company or its Subsidiaries shall have set aside on its
books adequate reserves with respect thereto, and the failure to pay shall
not
be prejudicial in any material respect to the holder of the Note, and provided,
further, that the Company or its Subsidiaries will pay or cause to be paid
any
such tax, assessment, charge or levy forthwith upon the commencement of
proceedings to foreclose any lien which may have attached as security
therefor.
14
7.4 Payment
of Indebtedness.
The
Company shall and shall cause its Subsidiaries to pay or cause to be paid all
Indebtedness incident to the operations of the Company or its Subsidiaries
(including, without limitation, claims or demands of workmen, materialmen,
vendors, suppliers, mechanics, carriers, warehousemen and landlords) which,
if
unpaid might become a lien (except for Permitted Liens) upon the assets or
property of the Company or its Subsidiaries.
7.5 Maintenance
of Insurance.
The
Company shall and shall cause its Subsidiaries to, keep its assets which are
of
an insurable character insured by financially sound and reputable insurers
against loss or damage by theft, fire, explosion and other risks customarily
insured against by companies in the line of business of the Company or its
Subsidiaries, in amounts sufficient to prevent the Company and its Subsidiaries
from becoming a co-insurer of the property insured; and the Company shall and
shall cause its Subsidiaries to maintain, with financially sound and reputable
insurers, insurance against other hazards and risks and liability to persons
and
property to the extent and in the manner customary for companies in similar
businesses similarly situated or as may be required by law, including, without
limitation, general liability, fire and business interruption insurance, and
product liability insurance as may be required pursuant to any license agreement
to which the Company or its Subsidiaries is a party or by which it is
bound.
7.6 Notice
of Adverse Change.
The
Company shall promptly give notice to the holder of the Note (but in any event
within seven (7) days) after becoming aware of the existence of any condition
or
event which constitutes, or the occurrence of, any of the
following:
(a) any
Event
of Default (as hereinafter defined);
(b) any
other
event of noncompliance by the Company or its Subsidiaries under this
Agreement;
(c) the
institution or threatening of institution of an action, suit or proceeding
against the Company or any Subsidiary before any court, administrative agency
or
arbitrator, including, without limitation, any action of a foreign government
or
instrumentality, which, if adversely decided, could materially adversely affect
the business, prospects, properties, financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole whether or
not
arising in the ordinary course of business; or
(d) any
information relating to the Company or any Subsidiary which could reasonably
be
expected to materially and adversely affect the assets, property, business
or
condition (financial or otherwise) of the Company or its ability to perform
the
terms of this Agreement. Any notice given under this Section 7.6 shall
specify the nature and period of existence of the condition, event, information,
development or circumstance, the anticipated effect thereof and what actions
the
Company has taken and/or proposes to take with respect thereto.
7.7 Compliance
With Agreements.
The
Company shall and shall cause its Subsidiaries to comply in all material
respects, with the terms and conditions of all material agreements, commitments
or instruments to which the Company or any of its Subsidiaries is a party or
by
which it or they may be bound.
15
7.8 Compliance
With Laws.
The
Company shall and shall cause each of its Subsidiaries to duly comply in all
material respects with any material laws, ordinances, rules and regulations
of
any foreign, Federal, state or local government or any agency thereof, or any
writ, order or decree, and conform to all valid requirements of governmental
authorities relating to the conduct of their respective businesses, properties
or assets.
7.9 Protection
of Licenses, etc. The
Company shall and shall cause its Subsidiaries to, maintain, defend and protect
to the best of their ability licenses and sublicenses (and to the extent the
Company or a Subsidiary is a licensee or sublicensee under any license or
sublicense, as permitted by the license or sublicense agreement), trademarks,
trade names, service marks, patents and applications therefor and other
proprietary information owned or used by it or them and shall keep duplicate
copies of any licenses, trademarks, service marks or patents owned or used
by
it, if any, at a secure place selected by the Company.
7.10 Accounts
and Records; Inspections.
(a) The
Company shall keep true records and books of account in which full, true and
correct entries will be made of all dealings or transactions in relation to
the
business and affairs of the Company and its Subsidiaries in accordance with
generally accepted accounting principles applied on a consistent
basis.
(b) The
Company shall permit each holder of the Note or any of such holder’s officers,
employees or representatives during regular business hours of the Company,
upon
forty-eight (48) hours notice and as often as such holder may reasonably
request, to visit and inspect the offices and properties of the Company and
its
Subsidiaries and to make extracts or copies of the books, accounts and records
of the Company or its Subsidiaries at such holder’s expense.
(c) Nothing
contained in this Section 7.10 shall be construed to limit any rights which
a holder of any Note may otherwise have with respect to the books and records
of
the Company and its Subsidiaries, to inspect its properties or to discuss its
affairs, finances and accounts.
7.11 Maintenance
of Office.
The
Company will maintain its principal office at the address of the Company set
forth in Section 12.6 of this Agreement where notices, presentments and
demands in respect of this Agreement and of the Note may be made upon the
Company, until such time as the Company shall notify the holder of the Note
in
writing, at least thirty (30) days prior thereto, of any change of location
of
such office.
7.12 Use
of
Proceeds.
The
Company shall use all the proceeds received from the sale of the Note pursuant
to this Agreement solely for the purpose of working capital and the repayment
of
certain payables incurred in the ordinary course of business not for the
repayment of debt.
7.13 Payment
of the Note.
The
Company shall pay the principal of and interest on the Note in the time, the
manner and the form provided therein, except to the extent that such principal
and/or interest shall have been converted into Common Stock in accordance with
its terms.
16
7.14 SEC
Reporting Requirements.
The
Company shall comply with its reporting and filing obligations pursuant to
Section 13 or 15(d) of the Exchange Act. The Company shall provide copies
of such reports to the holder of the Note promptly upon such holder’s
request.
7.15 [Intentionally
Omitted].
7.16 Further
Assurances.
From
time to time the Company shall execute and deliver to the Purchaser and the
Purchaser shall execute and deliver to the Company such other instruments,
certificates, agreements and documents and take such other action and do all
other things as may be reasonably requested by the other party in order to
implement or effectuate the terms and provisions of this Agreement and the
Note.
ARTICLE
VIII
NEGATIVE
COVENANTS
The
Company hereby covenants and agrees, so long as the Note remains outstanding,
it
will not (and not allow any of its Subsidiaries to), directly or indirectly,
without the prior written consent of the Purchaser, as follows:
8.1 Payment
of Dividends; Stock Purchase.
Declare
or pay any cash dividends on, or make any distribution to the holders of, any
shares of capital stock of the Company, other than dividends or distributions
payable in such capital stock, or purchase, redeem or otherwise acquire or
retire for value any shares of capital stock of the Company or warrants or
rights to acquire such capital stock, other than in connection with repurchases
upon the termination of employment of employee equityholders.
8.2 Stay,
Extension and Usury Laws.
At any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay, extension or usury law wherever enacted, now or
at
any time hereinafter in force, which may affect the covenants or the performance
of the Note, the Company hereby expressly waiving all benefit or advantage
of
any such law, or by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Purchaser but will suffer and
permit the execution of every such power as though no such law had been
enacted.
8.3 Reclassification.
Effect
any reclassification, combination or reverse stock split of the Common
Stock.
17
8.4 Liens.
Except
as otherwise provided in this Agreement, create, incur, assume or permit to
exist any mortgage, lien, pledge, charge, security interest or other
encumbrance, or any interest or title of any vendor, lessor, lender or other
secured party to or of the Company or any Subsidiary under any conditional
sale
or other title retention agreement or any capital lease, upon or with respect
to
any property or asset of the Company or any subsidiary (each a “Lien” and
collectively, “Liens”), except that the foregoing restrictions shall not apply
to:
(a) liens
for
taxes, assessments and other governmental charges, if payment thereof shall
not
at the time be required to be made, and provided such reserve as shall be
required by generally accepted accounting principles consistently applied shall
have been made therefor;
(b) liens
of
workmen, materialmen, vendors, suppliers, mechanics, carriers, warehouseman
and
landlords or other like liens, incurred in the ordinary course of business
for
sums not then due or being contested in good faith, if an adverse decision
in
which contest would not materially affect the business of the
Company;
(c) liens
securing indebtedness of the Company or any Subsidiaries which is in an
aggregate principal amount not exceeding $100,000 and which liens are
subordinate to liens on the same assets held by the Purchaser;
(d) statutory
liens of landlords, statutory liens of banks and rights of set-off, and other
liens imposed by law, in each case incurred in the ordinary course of business
(i) for amounts not yet overdue or (ii) for amounts that are overdue
and that are being contested in good faith by appropriate proceedings, so long
as such reserves or other appropriate provisions, if any, as shall be required
by generally accepted accounting principles shall have been made for any such
contested amounts;
(e) liens
incurred or deposits made in the ordinary course of business in connection
with
workers’ compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, leases, government contracts, trade contracts,
performance and return-of-money bonds and other similar obligations (exclusive
of obligations for the payment of borrowed money);
(f) any
attachment or judgment lien not constituting an Event of Default;
(g) easements,
rights-of-way, restrictions, encroachments, and other minor defects or
irregularities in title, in each case which do not and will not interfere in
any
material respect with the ordinary conduct of the business of the Company or
any
of its subsidiaries;
(h) any
(i) interest or title of a lessor or sublessor under any lease,
(ii) restriction or encumbrance that the interest or title of such lessor
or sublessor may be subject to, or (iii) subordination of the interest of
the lessee or sublessee under such lease to any restriction or encumbrance
referred to in the preceding clause (ii), so long as the holder of such
restriction or encumbrance agrees to recognize the rights of such lessee or
sublessee under such lease;
18
(i) liens
in
favor of customs and revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation of
goods;
(j) any
zoning or similar law or right reserved to or vested in any governmental office
or agency to control or regulate the use of any real property;
(k) liens
securing obligations (other than obligations representing debt for borrowed
money) under operating, reciprocal easement or similar agreements entered into
in the ordinary course of business of the Company and its Subsidiaries;
and
(l) the
replacement, extension or renewal of any lien permitted by this Section 8.4
upon or in the same property theretofore subject or the replacement, extension
or renewal (without increase in the amount or change in any direct or contingent
obligor) of the indebtedness secured thereby.
All
of
the Foregoing Liens described in subsections (a) - (l) above shall be referred
to as “Permitted Liens”.
8.5 Indebtedness.
Create,
incur, assume, suffer, permit to exist, or guarantee, directly or indirectly,
any Indebtedness, excluding, however, from the operation of this
covenant:
(a) any
indebtedness or the incurring, creating or assumption of any indebtedness
secured by liens permitted by the provisions of Section 8.4(c)
above;
(b) the
endorsement of instruments for the purpose of deposit or collection in the
ordinary course of business;
(c) indebtedness
which may, from time to time be incurred or guaranteed by the Company which
in
the aggregate principal amount does not exceed $100,000 and is subordinate
to
the indebtedness under this Agreement;
(d) indebtedness
under the Note and any Indebtedness otherwise existing on the date
hereof;
(e) indebtedness
relating to contingent obligations of the Company and its subsidiaries under
guaranties in the ordinary course of business of the obligations of suppliers,
customers, and licensees of the Company and its Subsidiaries;
(f) indebtedness
relating to loans from the Company to its Subsidiaries;
(g) indebtedness
relating to capital leases in an amount not to exceed $100,000;
(h) accounts
or notes payable arising out of the purchase of merchandise or services in
the
ordinary course of business; or
(i) indebtedness
(if any) expressly permitted by, and in accordance with, the terms and
conditions of this Agreement.
19
8.6 Liquidation
or Sale.
Sell,
transfer, lease or otherwise dispose of 10% or more of its consolidated assets
(as shown on the most recent financial statements of the Company or the
Subsidiaries, as the case may be) in any single transaction or series of related
transactions (other than the sale of inventory in the ordinary course of
business), or liquidate, dissolve, recapitalize or reorganize in any form of
transaction, or acquire all or substantially all of the capital stock or assets
of another business or entity.
8.7 Change
in Control Transaction.
Enter
into a Change in Control Transaction. For purposes of this Agreement, “Change in
Control Transaction” means, except with respect to acquisitions by the Company
in the normal course of business, the occurrence of (a) an acquisition by
an individual or legal entity or “group” (as described in Rule 13d-5(b)(1)
promulgated under the Exchange Act) of effective control (whether through legal
or beneficial ownership of capital stock of the Company, by contract or
otherwise) of in excess of fifty percent (50%) of the voting securities of
the
Company (except that the acquisition of voting securities by the Purchaser
shall
not constitute a Change of Control Transaction for purposes hereof), (b) a
replacement at one time or over time of more than one-half of the members of
the
Board of the Company which is not approved by a majority of those individuals
who are members of the Board on the date hereof (or by those individuals who
are
serving as members of the Board on any date whose nomination to the Board was
approved by a majority of the members of the Board who are members on the date
hereof), (c) the merger or consolidation of the Company or any subsidiary
of the Company in one or a series of related transactions with or into another
entity (except in connection with a reincorporation merger involving the Company
or with respect to which the Company is the survivor), or (d) the execution
by the Company of an agreement to which the Company is a party or by which
it is
bound, providing for any of the events set forth above in (a), (b) or
(c).
8.8 Amendment
of Charter Documents.
Make
any further amendment to the articles of incorporation or by-laws of the Company
or any of its Subsidiaries.
8.9 Loans
and Advances.
Except
for loans and advances outstanding as of the Closing Date, directly or
indirectly, make any advance or loan to, or guarantee any obligation of, any
person, firm or entity, except for intercompany loans or advances and those
provided for in this Agreement.
8.10 Transactions
with Affiliates.
(a) Make
any
intercompany transfers of monies or other assets in any single transaction
or
series of transactions, except as otherwise permitted in this
Agreement.
(b) Engage
in
any transaction with any of the officers, directors, employees or affiliates
of
the Company or of its Subsidiaries, except on terms no less favorable to the
Company or the Subsidiary as could be obtained in an arm’s length
transaction.
(c) Divert
(or permit anyone to divert) any business or opportunity of the Company or
subsidiary to any other corporate or business entity.
20
8.11 Other
Business.
Enter
into or engage, directly or indirectly, in any business other than the business
currently conducted or proposed to be conducted as of the date of this Agreement
by the Company or any Subsidiary.
8.12 Investments.
Make
any investments in, or purchase any stock, option, warrant, or other security
or
evidence of indebtedness of, any person or entity (exclusive of any Subsidiary),
other than obligations of the United States Government or certificates of
deposit or other instruments maturing within one year from the date of purchase
from financial institutions with capital in excess of $50 million.
ARTICLE
IX
EVENTS
OF DEFAULT
9.1 Events
of Default.
The
occurrence and continuance of any of the following events shall constitute
an
event of default under this Agreement and the Note (each an “Event of Default”
and, collectively, “Events of Default”):
(a) if
the
Company shall default in the payment of (i) any part of the principal of
the Note, when the same shall become due and payable, whether at maturity or
at
a date fixed for prepayment or by acceleration or otherwise; or (ii) the
interest on the Note; when the same shall become due and payable; and in each
case such default shall have continued without cure for ten (10) business days
after written notice (a “Default Notice”) is given to the Company of such
default;
(b) if
the
Company shall default in the performance of any of the covenants contained
in
Articles VIII or IX hereof and such default shall have continued without cure
for thirty (30) days after a Default Notice is given to the
Company;
(c) if
the
Company shall default in the performance of any other material agreement or
covenant contained in this Agreement and such default shall not have been
remedied to the satisfaction of the Purchaser within thirty-five (35) days
after
a Default Notice shall have been given to the Company;
(d) if
the
Company shall have failed to obtain the waivers of all persons holding
preemptive or anti-dilution adjustment rights as required by Section 5.4(l)
hereof and such default shall not have been remedied to the satisfaction of
the
Purchaser, within thirty-five (35) days after a Default Notice shall have been
given to the Company
(e) if
any
representation or warranty made in this Agreement or in or any certificate
delivered pursuant hereto shall prove to have been incorrect in any material
respect when made;
(f) if
any
default shall occur under any indenture, mortgage, agreement, instrument or
commitment (other than a default under any trade payable or the continuation
of
default under those agreements set forth on Schedule 3.14) evidencing or
under which there is at the time outstanding any indebtedness of the Company
or
a Subsidiary, in excess of $25,000, or which results in such indebtedness,
in an
aggregate amount (with other defaulted indebtedness) in excess of $50,000
becoming due and payable prior to its due date and if such indenture or
instrument so requires, the holder or holders thereof (or a trustee on their
behalf) shall have declared such indebtedness due and payable;
21
(g) if
any of
the Company or its Subsidiaries shall default in the observance or performance
of any term or provision of an agreement, other than those agreements set forth
on Schedule 3.14, to which it is a party or by which it is bound, which
default will have a Material Adverse Effect and such default is not waived
or
cured within the applicable grace period provided for in such
agreement;
(h) if
a
final judgment which, either alone or together with other outstanding final
judgments against the Company and its Subsidiaries, exceeds an aggregate of
$100,000 shall be rendered against the Company or any Subsidiary and such
judgment shall have continued undischarged or unstayed for thirty-five (35)
days
after entry thereof;
(i) if
the
Company or any Subsidiary shall make an assignment for the benefit of creditors,
or shall admit in writing its inability to pay its debts; or if the Company
or
any Subsidiary shall suffer a receiver or trustee for it or substantially all
of
its assets to be appointed, and, if appointed without its consent, not to be
discharged or stayed within ninety (90) days; or if the Company or any
Subsidiary shall suffer proceedings under any law relating to bankruptcy,
insolvency or the reorganization or relief of debtors to be instituted by or
against it, and, if contested by it, not to be dismissed or stayed within ninety
(90) days; or if the Company or any Subsidiary shall suffer any writ of
attachment or execution or any similar process to be issued or levied against
it
or any significant part of its property which is not released, stayed, bonded
or
vacated within ninety (90) days after its issue or levy; or if the Company
or
any Subsidiary takes corporate action in furtherance of any of the aforesaid
purposes or conditions; or
9.2 Remedies.
(a) Upon
the
occurrence and continuance of an Event of Default, the Purchaser may at any
time
(unless all defaults shall theretofore have been remedied) at its option, by
written notice or notices to the Company (i) declare the Note to be due and
payable, whereupon the same shall forthwith mature and become due and payable,
together with interest accrued thereon, without presentment, demand, protest
or
notice, all of which are hereby waived; and (ii) declare any other amounts
payable to the Purchaser under this Agreement or as contemplated hereby due
and
payable.
(b) Notwithstanding
anything contained in Section 9.2(a), in the event that at any time after
the principal of the Note shall so become due and payable and prior to the
date
of maturity stated in the Note all arrears of principal of and interest on
the
Note (with interest at the rate specified in the Note on any overdue principal
and, to the extent legally enforceable, on any interest overdue) shall be paid
by or for the account of the Company, then the Purchaser, by written notice
or
notices to the Company, may (but shall not be obligated to) waive such Event
of
Default and its consequences and rescind or annul such declaration, but no
such
waiver shall extend to or affect any subsequent Event of Default or impair
any
right resulting therefrom.
9.3 Enforcement.
In case
any one or more Events of Default shall occur and be continuing, the Purchaser
may proceed to protect and enforce its rights by an action at law, suit in
equity or other appropriate proceeding, whether for the specific performance
of
any agreement contained herein or in the Note or for an injunction against
a
violation of any of the terms hereof or thereof, or in aid of the exercise
of
any power granted hereby or thereby or by law. In case of a default in the
payment of any principal of or interest on the Note, the Company will pay to
the
Purchaser such further amount as shall be sufficient to cover the cost and
the
expenses of collection, including, without limitation, reasonable attorney’s
fees, expenses and disbursements. No course of dealing and no delay on the
part
of the Purchaser in exercising any rights shall operate as a waiver thereof
or
otherwise prejudice the Purchaser’s rights. No right conferred hereby or by the
Note upon the Purchaser shall be exclusive of any other right referred to herein
or therein or now available at law in equity, by statute or
otherwise.
22
ARTICLE
X
[INTENTIONALLY
OMITTED]
ARTICLE
XI
INDEMNIFICATION
11.1 Indemnification
by the Company.
The
Company agrees to defend, indemnify and hold harmless the Purchaser and shall
reimburse the Purchaser for, from and against each claim, loss, liability,
cost
and expense (including without limitation, interest, penalties, costs of
preparation and investigation, and the reasonable fees, disbursements and
expenses of attorneys, accountants and other professional advisors)
(collectively, “Losses”) directly or indirectly relating to, resulting from or
arising out of any untrue representation, misrepresentation, breach of warranty
or non-fulfillment of any covenant, agreement or other obligation by or of
the
Company contained herein or in any certificate, document, or instrument
delivered to the Purchaser pursuant hereto.
11.2 Indemnification
by the Purchaser.
The
Purchaser agrees to defend, indemnify and hold harmless the Company and shall
reimburse the Company for, from and against all Losses directly or indirectly
relating to, resulting from or arising out of any untrue representation,
misrepresentation, breach of warranty or non-fulfillment of any covenant,
agreement or other obligation of the Purchaser contained herein or in any
certificate, document or instrument delivered to the Company pursuant
hereto.
11.3 Procedure.
The
indemnified party shall promptly notify the indemnifying party of any claim,
demand, action or proceeding for which indemnification will be sought under
Sections 11.1 or 11.2 of this Agreement, and, if such claim, demand, action
or
proceeding is a third party claim, demand, action or proceeding, the
indemnifying party will have the right at its expense to assume the defense
thereof using counsel reasonably acceptable to the indemnified party. The
indemnified party shall have the right to participate, at its own expense,
with
respect to any such third party claim, demand, action or proceeding. In
connection with any such third party claim, demand, action or proceeding, the
Purchaser and the Company shall cooperate with each other and provide each
other
with access to relevant books and records in their possession. No such third
party claim, demand, action or proceeding shall be settled without the prior
written consent of the indemnified party, which shall not be unreasonably
withheld. If a firm written offer is made to settle any such third party claim,
demand, action or proceeding and the indemnifying party proposes to accept
such
settlement and the indemnified party refuses to consent to such settlement,
then: (i) the indemnifying party shall be excused from, and the indemnified
party shall be solely responsible for, all further defense of such third party
claim, demand, action or proceeding; and (ii) the maximum liability of the
indemnifying party relating to such third party claim, demand, action or
proceeding shall be the amount of the proposed settlement if the amount
thereafter recovered from the indemnified party on such third party claim,
demand, action or proceeding is greater than the amount of the proposed
settlement.
23
ARTICLE
XII
MISCELLANEOUS
12.1 Governing
Law.
This
Agreement and the rights of the parties hereunder shall be governed in all
respects by the laws of the State of New York wherein the terms of this
Agreement were negotiated.
12.2 Survival.
Except
as specifically provided herein, the representations, warranties, covenants
and
agreements made herein shall survive the Closing.
12.3 Amendment.
This
Agreement may not be amended, discharged or terminated (or any provision hereof
waived) without the written consent of the Company and the
Purchaser.
12.4 Successors
and Assigns.
Except
as otherwise expressly provided herein, the provisions hereof shall inure to
the
benefit of, and be binding upon and enforceable by and against, the successors,
assigns, heirs, executors and administrators of the parties hereto. The
Purchaser may assign its rights hereunder (provided, that the Purchaser may
not
so assign any of such rights to any competitor of the Company), and the Company
may not assign its rights or obligations hereunder without the consent of the
Purchaser or any of its successors, assigns, heirs, executors and
administrators.
12.5 Entire
Agreement.
This
Agreement, the Transaction Documents and the other documents delivered pursuant
hereto and simultaneously herewith constitute the full and entire understanding
and agreement between the parties with regard to the subject matter hereof
and
thereof.
12.6 Notices,
etc.
All
notices, demands or other communications given hereunder shall be in writing
and
shall be sufficiently given if delivered personally, via facsimile, or by a
nationally recognized courier service marked for next business day delivery
or
sent in a sealed envelope by first class mail, postage prepaid and either
registered or certified, addressed as follows:
(a) if
to the
Company:
Mr.
Xxxxxx Xxxxx, President/CEO
0000
Xxxxxxxx Xxxx, Xxxxx X
Xxxxx,
XX
00000
Phone:
(000) 000-0000
Fax:
(000) 000-0000
24
with
a
copy to:
Xxxx
X.
Xxxxxxxx, Esq.
Xxxx
Xxxx, P.A.
000
X.
Xxxxxxxx Xxxxxx
Xxxxx,
Xxxxxxx 00000
Phone:
(000) 000-0000
Fax:
(000) 000-0000
(b) if
to a
Purchaser:
Vicis
Capital Master Fund
Xxxxx
00,
Xxxxx 000
000
X.
00xx Xxxxxx, 0xx Xxxxx
Xxx
Xxxx,
XX 00000
Phone:
(000) 000-0000
Fax:
(000) 000-0000
Attn:
Xxxx Xxxxxxxx
with
a
copy to:
Xxxxxx
X.
Xxxxxx, Esq.
Xxxxxxx
& Xxxxx LLP
000
Xxxx
Xxxxxxxxx Xxxxxx
Xxxxxxxxx,
Xxxxxxxxx 00000
Phone:
(000) 000-0000
Fax:
(000) 000-0000
12.7 Delays
or Omissions.
No
delay or omission to exercise any right, power or remedy accruing to the holder
of the Note upon any breach or default of the Company under this Agreement
shall
impair any such right, power or remedy of such holder nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence, therein,
or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any holder of any breach or
default under this Agreement, or any waiver on the part of any holder of any
provisions or conditions of this Agreement must be, made in writing and shall
be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.
12.8 Severability.
The
invalidity of any provision or portion of a provision of this Agreement shall
not affect the validity of any other provision of this Agreement or the
remaining portion of the applicable provision. It is the desire and intent
of
the parties hereto that the provisions of this Agreement shall be enforced
to
the fullest extent permissible under the laws and public policies applied in
each jurisdiction in which enforcement is sought. Accordingly, if any particular
provision of this Agreement shall be adjudicated to be invalid or unenforceable,
such provision shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only with
respect to the operation of such provision in the particular jurisdiction in
which such adjudication is made.
25
12.9 Expenses.
Each
party shall bear its own expenses and legal fees incurred on its behalf with
respect to the negotiation, execution and consummation of the transactions
contemplated by this Agreement.
12.10 Consent
to Jurisdiction; Waiver of Jury Trial.
EACH
OF
THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS
TO
THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED THE STATE
AND
COUNTY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE TRANSACTION DOCUMENTS. EACH OF THE PARTIES
TO
THIS AGREEMENT IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY
OBJECTION WHICH SUCH PARTY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE
OF ANY SUCH PROCEEDING BROUGHT IN ANY SUCH COURTS AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN ANY SUCH COURTS HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY SUCH LEGAL PROCEEDING. EACH OF THE
PARTIES TO THIS AGREEMENT HEREBY CONSENTS TO SERVICE OF PROCESS BY NOTICE IN
THE
MANNER SPECIFIED IN SECTION 12.6 AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION SUCH PARTY MAY NOW OR HEREAFTER HAVE
TO
SERVICE OF PROCESS IN SUCH MANNER.
12.11 Titles
and Subtitles.
The
titles of the articles, sections and subsections of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement.
12.12 Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
an original, but all of which together shall constitute one
instrument.
26
12.13 Disclosure
Schedules.
The
representations and warranties of the Company set forth in this Agreement are
made and given subject to disclosures contained in (a) the schedules
attached to this agreement (collectively, the “Disclosure Schedules”), and
(b) where specifically referenced by the particular representation or
warranty, the SEC Documents. The Company will not be, nor will it be deemed
to
be, in any breach of any such representations or warranties in connection with
any such matter so disclosed in the Disclosure Schedules or in the SEC
Documents, provided that such representation or warranty made specific reference
to the SEC Documents. Where only brief particulars of a matter are set out
or
referred to in the Disclosure Schedules, or a reference is made only to a
particular part of a disclosed document, full particulars of the matter and
the
full contents of the document are deemed to be disclosed. Inclusion of
information in the Disclosure Schedules will not be construed as an admission
that such information is material to the business, operations or condition
(financial or otherwise) of the Company, taken as a whole, or as an admission
of
liability or obligation of the Company to any third party. The specific
disclosures set forth in the Disclosure Schedules have been organized to
correspond to section references in this Agreement to which the disclosure
may
be most likely to relate, together with appropriate cross references when
disclosure is applicable to other sections of this Agreement; provided, however,
that any disclosure in the Disclosure Schedules will apply to and will be deemed
to be disclosed for the purposes of this Agreement generally. In the event
that
there is any inconsistency between this Agreement and matters disclosed in
the
Disclosure Schedules, information contained in the Disclosure Schedules will
prevail and will be deemed to be the relevant disclosure.
27
IN
WITNESS WHEREOF, the parties hereto have duly executed this Securities Exchange
Agreement, as of the day and year first above written.
|
COMPANY:
|
||
| |
|
|
| /s/ Xxxxxx X. Xxxxx | ||
|
Xxxxxx X. Xxxxx |
||
| President and Chief Executive Officer | ||
|
SUBSIDIARIES:
PETCARE
TELEVISION NETWORK, INC.,
|
||
| |
|
|
| /s/ Xxxxxx X. Xxxxx | ||
|
Xxxxxx X. Xxxxx |
||
| President and Chief Executive Officer | ||
| KIDCARE MEDICAL TELEVISION NETWORK, INC., | ||
| |
|
|
| /s/ Xxxxxx X. Xxxxx | ||
|
Xxxxxx X. Xxxxx |
||
| President and Chief Executive Officer | ||
| AFRICAN AMERICAN MEDICAL NETWORK, INC. | ||
| |
|
|
| /s/ Xxxxxx X. Xxxxx | ||
|
Xxxxxx X. Xxxxx |
||
| President and Chief Executive Officer | ||
|
PURCHASER:
VICIS
CAPITAL MASTER FUND
By:
Vicis Capital LLC
|
||
| |
|
|
| /s/ Xxxxx Xxxxxx | ||
|
Xxxxx Xxxxxx, |
||
| Chief Financial Officer | ||
28
EXHIBIT
A
FORM
OF NOTE
29
SCHEDULE
3.04
CAPITALIZATION
1. CONVERTIBLE
PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO XXXXXX PORT FOR $100,000
DATED FEBRUARY 15, 2006:
THIS
ONE-YEAR NOTE WAS ISSUED AS A PARTIAL REPLACEMENT FOR THE CAPITALSMART NOTE
FOR
$1,000,000. IT BEARS INTEREST AT 20% WHICH MAY BE PAID AT THE END OF EACH
QUARTER IN EITHER (I) SHARES OF THE COMPANY’S SERIES C ZERO COUPON PREFERRED
STOCK VALUED A $1.00 PER SHARE, OR (II) CASH, AT THE OPTION OF PORT. ON THE
MATURITY DATE, PORT HAS THE OPTION TO CONVERT THE NOTE INTO SHARES OF THE
COMPANY’S COMMON STOCK AT A PRICE EQUAL TO $0.40 PER SHARE OR AN AMOUNT EQUAL TO
A TWENTY PERCENT (20%) DISCOUNT TO THE THEN CURRENT MARKET PRICE BASED ON THE
AVERAGE CLOSING PRICE FOR THE 20 DAYS IMMEDIATELY PRECEDING THE CONVERSION,
WITH
THE EXCEPTION THAT THE CONVERSION PRICE SHALL NOT BE LOWER THAN $0.166. THE
NOTE
MAY BE EXTENDED FOR ONE YEAR UNDER THE SAME TERMS. PORT WAS ALSO ISSUED 250,000
FIVE-YEAR COMMON STOCK PURCHASE WARRANTS WITH A FIXED EXERCISE PRICE OF $.75
PER
SHARE.
2. CONVERTIBLE
PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO XXXXXXX X. XXXX FOR
$200,000 DATED FEBRUARY 16, 2006:
THIS
THREE-YEAR NOTE WAS ISSUED AS A PARTIAL REPLACEMENT FOR THE CAPITALSMART NOTE
FOR $1,000,000. IT BEARS INTEREST AT 20% WHICH INTEREST WILL ACCRUE BUT NOT
BECOME DUE AND PAYABLE UNTIL THE MATURITY DATE. ON THE MATURITY DATE, XXXX
HAS
THE OPTION TO CONVERT THE NOTE INTO SHARES OF THE COMPANY’S COMMON STOCK AT A
PRICE EQUAL A TWENTY PERCENT (20%) DISCOUNT TO THE THEN CURRENT MARKET PRICE
BASED ON THE AVERAGE CLOSING PRICE FOR THE 20 DAYS IMMEDIATELY PRECEDING THE
CONVERSION, WITH THE EXCEPTION THAT THE CONVERSION PRICE SHALL NOT BE LOWER
THAN
$0.166. THE NOTE MAY BE EXTENDED FOR ONE YEAR UNDER THE SAME TERMS. XXXX WAS
ALSO ISSUED 500,000 FIVE-YEAR COMMON STOCK PURCHASE WARRANTS WITH A FIXED
EXERCISE PRICE OF $.75 PER SHARE.
3. CONVERTIBLE
PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO SOFTREV PARTNERS, INC.
FOR $250,000 DATED MARCH 30, 2006:
THIS
THREE-YEAR NOTE WAS ISSUED AS A PARTIAL REPLACEMENT FOR THE CAPITALSMART NOTE
FOR $1,000,000. IT BEARS INTEREST AT 20% WHICH INTEREST WILL ACCRUE BUT NOT
BECOME DUE AND PAYABLE UNTIL THE MATURITY DATE. ON THE MATURITY DATE, SOFTREV
PARTNERS HAS THE OPTION TO CONVERT THE NOTE INTO SHARES OF THE COMPANY’S COMMON
STOCK AT A PRICE EQUAL A TWENTY PERCENT (20%) DISCOUNT TO THE THEN CURRENT
MARKET PRICE BASED ON THE AVERAGE CLOSING PRICE FOR THE 20 DAYS IMMEDIATELY
PRECEDING THE CONVERSION, WITH THE EXCEPTION THAT THE CONVERSION PRICE SHALL
NOT
BE LOWER THAN $0.166. THE NOTE MAY BE EXTENDED FOR ONE YEAR UNDER THE SAME
TERMS. SOFTREV PARTNERS WAS ALSO ISSUED 625,000 FIVE-YEAR COMMON STOCK PURCHASE
WARRANTS WITH A FIXED EXERCISE PRICE OF $.75 PER SHARE.
30
4. CONVERTIBLE
PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO XXXXXXX X. XXXXXX FOR
$450,000 DATED MARCH 31, 2006:
THIS
THREE-YEAR NOTE WAS ISSUED AS A PARTIAL REPLACEMENT FOR THE CAPITALSMART NOTE
FOR $1,000,000. IT BEARS INTEREST AT 20% WHICH INTEREST WILL ACCRUE BUT NOT
BECOME DUE AND PAYABLE UNTIL THE MATURITY DATE. ON THE MATURITY DATE, XXXXXX
HAS
THE OPTION TO CONVERT THE NOTE INTO SHARES OF THE COMPANY’S COMMON STOCK AT A
PRICE EQUAL A TWENTY PERCENT (20%) DISCOUNT TO THE THEN CURRENT MARKET PRICE
BASED ON THE AVERAGE CLOSING PRICE FOR THE 20 DAYS IMMEDIATELY PRECEDING THE
CONVERSION, WITH THE EXCEPTION THAT THE CONVERSION PRICE SHALL NOT BE LOWER
THAN
$0.166. THE NOTE MAY BE EXTENDED FOR ONE YEAR UNDER THE SAME TERMS. XXXXXX
WAS
ALSO ISSUED 1,125,000 FIVE-YEAR COMMON STOCK PURCHASE WARRANTS WITH A FIXED
EXERCISE PRICE OF $.75 PER SHARE.
5. CONVERTIBLE
PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO XXXXXX X. PORT FOR
$125,000 DATED APRIL 1, 2006:
THIS
ONE-YEAR NOTE BEARS INTEREST AT 20% WHICH INTEREST WILL ACCRUE BUT NOT BECOME
DUE AND PAYABLE UNTIL THE MATURITY DATE. ON THE MATURITY DATE, PORT HAS THE
OPTION TO CONVERT THE NOTE INTO SHARES OF THE COMPANY’S COMMON STOCK AT A PRICE
EQUAL TO $0.40 PER SHARE OR AN AMOUNT EQUAL TO A TWENTY PERCENT (20%) DISCOUNT
TO THE THEN CURRENT MARKET PRICE BASED ON THE AVERAGE CLOSING PRICE FOR THE
20
DAYS IMMEDIATELY PRECEDING THE CONVERSION, WITH THE EXCEPTION THAT THE
CONVERSION PRICE SHALL NOT BE LOWER THAN $0.166. THE NOTE MAY BE EXTENDED FOR
ONE YEAR UNDER THE SAME TERMS. PORT WAS ALSO ISSUED 312,500 FIVE-YEAR COMMON
STOCK PURCHASE WARRANTS WITH A FIXED EXERCISE PRICE OF $.75 PER
SHARE.
5. THE
COMPANY INTENDS TO ISSUE 100,000 WARRANTS TO PURCHASE SHARES OF THE COMPANY’S
COMMON STOCK AT A STRIKE PRICE OF $.17 PER SHARE TO XXXXXXXX XXXXXXX.
31
6. THE
COMPANY INTENDS TO ISSUE 200,000 WARRANTS TO PURCHASE SHARES OF THE COMPANY’S
COMMON STOCK AT A STRIKE PRICE OF $.17 PER SHARE TO XXXXXX XXXXXXXX.
32
SCHEDULE
3.14
INDEBTEDNESS
AND OTHER CONTRACTS
|
1.
|
CONVERTIBLE
PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO XXXXXXXX
XXXXXXX:
|
PRINCIPAL
AMOUNT OF NOTE OF $100,000 PLUS INTEREST WAS DUE ON APRIL 17, 2006. THE
COMPANY IS IN DEFAULT UNDER THE NOTE.
|
2.
|
CONVERTIBLE
PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO XXXXXX
XXXXXXXXX:
|
PRINCIPAL
AMOUNT OF NOTE OF $200,000 PLUS INTEREST WAS DUE ON DECEMBER 14, 2005. THE
NOTE
HAS BEEN VERBALLY EXTENDED.
|
3.
|
EMPLOYMENT
AGREEMENT BETWEEN MEDICAL MEDIA TELEVISION, INC. AND XXXXXXX X.
XXXXXXXXXX:
|
DATED
AS
OF NOVEMBER 16, 2005; IN DEFAULT REGARDING PAYMENTS.
|
4.
|
EMPLOYMENT
AGREEMENT BETWEEN AFRICAN AMERICAN MEDICAL NETWORK, INC. AND XXXXXX
CAMBRIDGE:
|
DATED
AS
OF NOVEMBER 16, 2005; IN DEFAULT REGARDING PAYMENTS.
|
5.
|
CONVERTIBLE
PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO XXXXXX PORT
FOR
$100,000 DATED FEBRUARY 15,
2006:
|
THIS
ONE-YEAR NOTE WAS ISSUED AS A PARTIAL REPLACEMENT FOR THE CAPITALSMART NOTE
FOR
$1,000,000. IT BEARS INTEREST AT 20% WHICH MAY BE PAID AT THE END OF EACH
QUARTER IN EITHER (I) SHARES OF THE COMPANY’S SERIES C ZERO COUPON PREFERRED
STOCK VALUED A $1.00 PER SHARE, OR (II) CASH, AT THE OPTION OF PORT. ON THE
MATURITY DATE, PORT HAS THE OPTION TO CONVERT THE NOTE INTO SHARES OF THE
COMPANY’S COMMON STOCK AT A PRICE EQUAL TO $0.40 PER SHARE OR AN AMOUNT EQUAL TO
A TWENTY PERCENT (20%) DISCOUNT TO THE THEN CURRENT MARKET PRICE BASED ON THE
AVERAGE CLOSING PRICE FOR THE 20 DAYS IMMEDIATELY PRECEDING THE CONVERSION,
WITH
THE EXCEPTION THAT THE CONVERSION PRICE SHALL NOT BE LOWER THAN $0.166. THE
NOTE
MAY BE EXTENDED FOR ONE YEAR UNDER THE SAME TERMS. PORT WAS ALSO ISSUED 250,000
FIVE-YEAR COMMON STOCK PURCHASE WARRANTS WITH A FIXED EXERCISE PRICE OF $.75
PER
SHARE.
33
|
6.
|
CONVERTIBLE
PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO XXXXXXX X.
XXXX FOR
$200,000 DATED FEBRUARY 16,
2006:
|
THIS
THREE-YEAR NOTE WAS ISSUED AS A PARTIAL REPLACEMENT FOR THE CAPITALSMART NOTE
FOR $1,000,000. IT BEARS INTEREST AT 20% WHICH INTEREST WILL ACCRUE BUT NOT
BECOME DUE AND PAYABLE UNTIL THE MATURITY DATE. ON THE MATURITY DATE, XXXX
HAS
THE OPTION TO CONVERT THE NOTE INTO SHARES OF THE COMPANY’S COMMON STOCK AT A
PRICE EQUAL A TWENTY PERCENT (20%) DISCOUNT TO THE THEN CURRENT MARKET PRICE
BASED ON THE AVERAGE CLOSING PRICE FOR THE 20 DAYS IMMEDIATELY PRECEDING THE
CONVERSION, WITH THE EXCEPTION THAT THE CONVERSION PRICE SHALL NOT BE LOWER
THAN
$0.166. THE NOTE MAY BE EXTENDED FOR ONE YEAR UNDER THE SAME TERMS. XXXX WAS
ALSO ISSUED 500,000 FIVE-YEAR COMMON STOCK PURCHASE WARRANTS WITH A FIXED
EXERCISE PRICE OF $.75 PER SHARE.
|
7.
|
CONVERTIBLE
PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO SOFTREV PARTNERS,
INC. FOR $250,000 DATED MARCH 30,
2006:
|
THIS
THREE-YEAR NOTE WAS ISSUED AS A PARTIAL REPLACEMENT FOR THE CAPITALSMART NOTE
FOR $1,000,000. IT BEARS INTEREST AT 20% WHICH INTEREST WILL ACCRUE BUT NOT
BECOME DUE AND PAYABLE UNTIL THE MATURITY DATE. ON THE MATURITY DATE, SOFTREV
PARTNERS HAS THE OPTION TO CONVERT THE NOTE INTO SHARES OF THE COMPANY’S COMMON
STOCK AT A PRICE EQUAL A TWENTY PERCENT (20%) DISCOUNT TO THE THEN CURRENT
MARKET PRICE BASED ON THE AVERAGE CLOSING PRICE FOR THE 20 DAYS IMMEDIATELY
PRECEDING THE CONVERSION, WITH THE EXCEPTION THAT THE CONVERSION PRICE SHALL
NOT
BE LOWER THAN $0.166. THE NOTE MAY BE EXTENDED FOR ONE YEAR UNDER THE SAME
TERMS. SOFTREV PARTNERS WAS ALSO ISSUED 625,000 FIVE-YEAR COMMON STOCK PURCHASE
WARRANTS WITH A FIXED EXERCISE PRICE OF $.75 PER SHARE.
|
8.
|
CONVERTIBLE
PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO XXXXXXX X.
XXXXXX
FOR $450,000 DATED MARCH 31,
2006:
|
THIS
THREE-YEAR NOTE WAS ISSUED AS A PARTIAL REPLACEMENT FOR THE CAPITALSMART NOTE
FOR $1,000,000. IT BEARS INTEREST AT 20% WHICH INTEREST WILL ACCRUE BUT NOT
BECOME DUE AND PAYABLE UNTIL THE MATURITY DATE. ON THE MATURITY DATE, XXXXXX
HAS
THE OPTION TO CONVERT THE NOTE INTO SHARES OF THE COMPANY’S COMMON STOCK AT A
PRICE EQUAL A TWENTY PERCENT (20%) DISCOUNT TO THE THEN CURRENT MARKET PRICE
BASED ON THE AVERAGE CLOSING PRICE FOR THE 20 DAYS IMMEDIATELY PRECEDING THE
CONVERSION, WITH THE EXCEPTION THAT THE CONVERSION PRICE SHALL NOT BE LOWER
THAN
$0.166. THE NOTE MAY BE EXTENDED FOR ONE YEAR UNDER THE SAME TERMS. XXXXXX
WAS
ALSO ISSUED 1,125,000 FIVE-YEAR COMMON STOCK PURCHASE WARRANTS WITH A FIXED
EXERCISE PRICE OF $.75 PER SHARE.
34
|
9.
|
CONVERTIBLE
PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO XXXXXX X.
PORT FOR
$125,000 DATED APRIL 1,
2006:
|
THIS
ONE-YEAR NOTE BEARS INTEREST AT 20% WHICH INTEREST WILL ACCRUE BUT NOT BECOME
DUE AND PAYABLE UNTIL THE MATURITY DATE. ON THE MATURITY DATE, PORT HAS THE
OPTION TO CONVERT THE NOTE INTO SHARES OF THE COMPANY’S COMMON STOCK AT A PRICE
EQUAL TO $0.40 PER SHARE OR AN AMOUNT EQUAL TO A TWENTY PERCENT (20%) DISCOUNT
TO THE THEN CURRENT MARKET PRICE BASED ON THE AVERAGE CLOSING PRICE FOR THE
20
DAYS IMMEDIATELY PRECEDING THE CONVERSION, WITH THE EXCEPTION THAT THE
CONVERSION PRICE SHALL NOT BE LOWER THAN $0.166. THE NOTE MAY BE EXTENDED FOR
ONE YEAR UNDER THE SAME TERMS. PORT WAS ALSO ISSUED 312,500 FIVE-YEAR COMMON
STOCK PURCHASE WARRANTS WITH A FIXED EXERCISE PRICE OF $.75 PER
SHARE.
35
SCHEDULE
3.20
EMPLOYEE
RELATIONS
EMPLOYMENT
AGREEMENT BETWEEN MEDICAL MEDIA TELEVISION, INC. AND XXXXXXX X.
XXXXXXXXXX:
DATED
AS
OF NOVEMBER 16, 2005; IN DEFAULT REGARDING PAYMENTS.
36
SCHEDULE
3.22
INTELLECTUAL
PROPERTY RIGHTS
1. NOTICE
OF
PUBLICATION WAS RECEIVED INDICATING THAT THE LOGO (SUBJECT
XXXX) OF AFRICAN AMERICAN MEDICAL NETWORK, INC. HAS BEEN
APPROVED BY THE UNITED STATES PATENT AND TRADEMARK OFFICE.
SERIAL NUMBER: 78/473792; FILING DATE: 08/26/04; INTERNATIONAL
CLASSES 009 AND 042.
37
SCHEDULE
3.27
MATERIAL
CONTRACTS
PLEASE
REFERENCE SCHEDULE 3.14.
38
SCHEDULE
5.4(c)
WAIVERS
|
WARRANT
DATE
|
WARRANT
DESCRIPTION
|
WARRANT
HOLDER
|
NUMBER
OF WARRANTS
|
|||
|
5/17/04
|
Common
Stock Purchase Warrant-W-HCW-04-01
|
X.X.
Xxxxxxxxxx & Co., Inc.
|
7,396
|
|||
|
0/00/00
|
Xxxxxx
Xxxxx Xxxxxxxx Xxxxxxx-X-XXX-00-00
|
Xxxxxx
Business Consultants, LLC
|
3,556
|
|||
|
5/17/04
|
Common
Stock Purchase Warrant-W-HCW-04-03
|
Xxxx
X. Xxxxxx
|
3,067
|
|||
|
5/17/04
|
Common
Stock Purchase Warrant-W-HCW-04-04
|
Xxxxx
X. Xxxx
|
3,067
|
|||
|
5/17/04
|
Common
Stock Purchase Warrant-W-HCW-04-05
|
Xxx
X. Xxxxx
|
347
|
|||
|
5/17/04
|
Common
Stock Xxxxxxxx Xxxxxxx-X-XXX-00-00
|
Xxxxxxx
Xxxxxx
|
347
|
|||
|
17,780
|
||||||
|
7/28/04
|
Common
Stock Purchase Warrant
|
TotalCFO,
LLC
|
10,000
|
|||
|
3/16/05
|
Common
Stock Purchase Warrant
|
MidTown
Partners & Co., LLC
|
1,667
|
|||
|
5/6/05
|
Series
D Common Stock Warrant-05-0605-D-MP
|
MidTown
Partners & Co., LLC
|
20,000
|
|||
|
7/19/05
|
Series
BB Common Stock Warant-05-0719AM
|
MidTown
Partners & Co., LLC
|
50,000
|
|||
|
71,667
|
||||||
|
TOTAL
WARRANTS
|
99,447
|
39
