SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of April 26, 2006
(this "Agreement"), is entered into by and between AMEDIA NETWORKS, INC., a
Delaware corporation with headquarters located at 0 Xxxxxxx Xxx, Xxxxxxxxx, Xxx
Xxxxxx 00000 (the "Company"), and each individual or entity named on an executed
counterpart of the signature page hereto (each such signatory is referred to as
a "Buyer") (each agreement with a Buyer being deemed a separate and independent
agreement between the Company and such Buyer, except that each Buyer
acknowledges and consents to the rights granted to each other Buyer [each, an
"Other Buyer"] under such agreement and the Transaction Agreements, as defined
below, referred to therein).
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing and
delivering this Agreement in reliance upon the exemption from securities
registration for offers and sales to accredited investors afforded, inter alia,
by Rule 506 under Regulation D ("Regulation D") as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 Act"), and/or Section 4(2) of the 1933 Act; and
WHEREAS, the Buyer wishes to lend to the Company, subject to
and upon the terms and conditions of this Agreement and acceptance of this
Agreement by the Company, the Purchase Price (as defined below), the repayment
of which will be represented by 8% Senior Secured Convertible Debentures Series
06-02 of the Company (the "Convertible Debentures"), which Convertible
Debentures will be convertible into shares of Common Stock, $.001 par value per
share, of the Company (the "Common Stock"), upon the terms and subject to the
conditions of such Convertible Debentures, together with the Warrants (as
defined below) exercisable for the purchase of shares of Common Stock;
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE.
a. Purchase.
(i) Subject to the terms and conditions of this Agreement and
the other Transaction Agreements, the undersigned Buyer hereby agrees to loan to
the Company the principal amount set forth on the Buyer's signature page of this
Agreement (the "Total Purchase Price"),(1) out of the aggregate amount being
loaned by all Buyers of $10,000,000(the "Aggregate Purchase Price").
(ii) The Total Purchase Price shall be paid by the Buyer as
follows: (x) one hundred percent (100%) of the Total Purchase Price (the
"Initial Purchase Price") shall be paid on the Initial Closing Date (as defined
below) and (y) the balance of the Total Purchase Price (the "Additional Purchase
Price") shall be paid on the
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(1)The minimum Total Purchase Price per Buyer named on a signature page is
$100,000, unless the Company, in its sole and absolute discretion, waives this
minimum with respect to any specific Buyer.
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Additional Closing Date (as defined below).(3) The applicable portion of the
Total Purchase Price payable on or in connection with the relevant Closing Date
(as defined below) is referred to as the "Purchase Price" for such Closing Date.
Payments for each Closing Date shall be made as provided in Section 1(c) hereof.
The aggregate Initial Purchase Price of all Buyers is referred to as the
"Aggregate Initial Purchase Price." The aggregate Additional Purchase Price of
all Buyers is referred to as the "Aggregate Additional Purchase Price."
(iii) The obligation to repay the loan from the Buyer shall be
evidenced by the Company's issuance of one or more Convertible Debentures to the
Buyer in such principal amount (the Convertible Debentures issued to the Buyer,
the "Debentures"). Each Debenture (i) shall provide for a Conversion Price (as
defined below), which price may be adjusted from time to as provided in the
Debenture, (ii) shall have the terms and conditions of, and be substantially in
the form attached hereto as, Annex I, and (iii) shall be secured pursuant to the
terms of the Security Interest Agreement substantially in the form annexed
hereto as Annex VIII (the "Security Interest Agreement").(4)
(iv) With respect to each Closing Date, the Company will
deliver the relevant Certificates (as defined below) to the Escrow Agent as
provided in Section 1(c) hereof.
(v) The loan to be made by the Buyer and the issuance of the
Debentures and the Warrants (collectively, the "Purchased Securities") to the
Buyer are sometimes referred to herein and in the other Transaction Agreements
as the purchase and sale of the Debentures and the Warrants.
b. Certain Definitions. As used herein, each of the following
terms has the meaning set forth below, unless the context otherwise requires:
"Additional Closing Date" means the date of the closing of the
purchase and sale of the Additional Debentures and the Additional Warrants, as
provided herein.
"Additional Debentures" means the Debentures issued on the
Additional Closing Date.
"Additional Warrants" means the Warrants issued on the
Additional Closing Date.
"Affiliate" means, with respect to a specific Person referred
to in the relevant provision, another Person who or which controls or is
controlled by or is under common control with such specified Person.
"Authorized Share Increase" means the approval of an amendment
to the Company's Certificate of Incorporation, as amended to date, to be duly
presented to the stockholders of the Company at the Company's next annual or
special stockholders meeting (or, if approved by written consent of the holders
of a sufficient number of outstanding shares eligible to vote in accordance with
the law of the State of Incorporation, as reflected in an
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(3)Because 100% of the Total Purchase Price is to be paid by the Initial Closing
Date, there will be only one Closing Date and all Debentures and Warrants will
be issued on that date. All references in the Transaction Agreements to (i)
events to occur on or in connection with the Additional Closing Date should be
read in this context and (ii) dates determined in relation to the Additional
Closing Date should be refer to refer to such date in relation to the single
Initial Closing Date.
(4)By signing this Agreement, the Buyer, subject to acceptance by the Agent
named in the Security Interest Agreement, agrees to all of the terms and
conditions of, and becomes a party to, the Security Interest Agreement, all of
the provisions of which are incorporated herein by this reference as if set
forth in full.
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Information Statement distributed to the stockholders of the Company),
increasing the authorized shares of the Common Stock to at least 100 million
shares.
"Buyer Control Person" means each director, executive officer,
promoter, and such other Persons as may be deemed in control of the Buyer
pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act (as
defined below).
"Buyer's Allocable Share" means the fraction, of which (i) the
numerator is the Buyer's Total Purchase Price (to the extent actually paid) and
(ii) the denominator is the Closed Aggregate Purchase Price.
"Certificate of Incorporation" means the Certificate of
Incorporation, Articles of Incorporation or other charter document (howsoever
denominated) of the Company, as amended to date.
"Certificates" means the (x) the original ink-signed
Debentures and (y) the original ink-signed Warrants, each duly executed by the
Company and issued in the name of the Buyer on the relevant Closing Date.
"Charter Amendment" means an amendment to its Certificate of
Incorporation, as currently in effect, to reflect the Authorized Share Increase.
"Charter Amendment Date" means the date the Charter Amendment
is duly filed in the State of Incorporation.
"Closed Aggregate Purchase Price" means (i) until the
Additional Closing Date, the Aggregate Initial Purchase Price, and (ii) after
the Additional Closing Date, the sum of the Aggregate Initial Purchase Price and
the Aggregate Additional Purchase Price actually paid by the Buyer and all Other
Buyers.
"Closing Date" means the relevant Initial Closing Date or the
Additional Closing Date.
"Closing Price" means the 4:00 P.M. closing bid price of the
Common Stock on the Principal Trading Market on the relevant Trading Day(s), as
reported by the Reporting Service for the relevant date.
"Company Control Person" means each director, executive
officer, promoter, and such other Persons as may be deemed in control of the
Company pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act.
"Company Counsel" means Aboudi & Xxxxxxxxxx.
"Company Principal's Agreement" has the meaning ascribed to in
Section 4(h).
"Company's SEC Documents" means the Company's filings on the
SEC's XXXXX system which are listed on Annex VI annexed hereto, to the extent
available on XXXXX or otherwise provided to the Buyer as indicated on said Annex
VI.
"Conversion Certificates" means certificates representing the
Conversion Shares or the Warrant Shares, as the case may be.
"Conversion Date" means the date a Holder submits a Notice of
Conversion, as provided in the Debentures.
"Conversion Price" means the lower of (i) the Fixed Conversion
Price or (ii) the Lowest Fixed Conversion Price.
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"Conversion Shares" means the shares of Common Stock issuable
upon conversion of the Debentures and/or in payment of accrued interest, as
contemplated in the Debentures.
"Converting Holder" means the Holder of Debentures or
Warrants, as the case may be, who or which has submitted a Notice of Conversion
(as contemplated by the Debentures) or a Notice of Exercise (as contemplated by
the Warrants).
"Delivery Date" has the meaning ascribed to it, as may be
relevant, (x) in the Debentures (with respect to Conversion Shares), (y) in the
Warrants (with respect to Warrant Shares), or (z) in the Registration Rights
Agreement (with respect to Payment Shares).
"Disclosure Letter" means a letter and any modifications
thereof, the latest of which is dated at least one Trading Day prior to the
Initial Closing Date, from the Company to the Buyer; provided, however, that the
Disclosure Letter shall be arranged in sections corresponding to the identified
Sections of this Agreement, but the disclosure in any such section of the
Disclosure Letter shall qualify other provisions in this Agreement to the extent
that it would be readily apparent to an informed reader from a reading of such
section of the Disclosure Letter that it is also relevant to other provisions of
this Agreement.
"Document Escrow Agent" means Xxxxxxx & Prager LLP, the escrow
agent identified in the Joint Document Escrow Instructions attached hereto as
Annex II (the "Joint Escrow Instructions").
"Effective Date" means the date the Registration Statement
covering the Registrable Securities is declared effective by the SEC.
"Escrow Funds" means the Purchase Price delivered to the Funds
Escrow Agent as contemplated by Sections 1(c) and (d) hereof.
"Exercise Price" means the per share exercise price of the
Warrant.
"Fixed Conversion Price" means $0.75 (as such amount may be
adjusted as provided herein or in the Debentures).
"Funds Escrow Agent" means American Stock Transfer & Trust
Company, the escrow agent identified in the Wire Instructions.
"Holder" means the Person holding the relevant Securities at
the relevant time.
"Initial Closing Date" means the date of the closing of the
purchase and sale of the Initial Debentures and the Initial Warrants, as
provided herein.
"Initial Debentures" means the Debentures issued on the
Initial Closing Date.
"Initial Warrants" means the Warrants issued on the Initial
Closing Date.
"Issue Date Conversion Share" means, with respect to the
relevant Closing Date, the number of shares of Common Stock equal to (x) the
Purchase Price paid by the Buyer on that Closing Date, divided by (y) the amount
which would have been the Conversion Price on such Closing Date, were such date
a Conversion Date (without regard to whether or not the Debentures were
convertible on such date in accordance with their terms).
"Last Audited Date" means December 31, 2005.
"Lowest Fixed Conversion Price" means the lowest New
Transaction Price (as defined below; as that amount may subsequently be adjusted
as provided in the Debentures or herein).
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"Majority in Interest of the Holders" means one or more
Holders whose respective outstanding principal amounts of the Debentures held by
each of them, as of the relevant date, aggregate at least sixty-six and 67/100
percent (66.67%) of the aggregate outstanding principal amounts of the
outstanding Debentures held by the Buyer and all Other Buyers on that date.
"Material Adverse Effect" means an event or combination of
events, which individually or in the aggregate, would reasonably be expected to
(x) adversely affect the legality, validity or enforceability of the Purchased
Securities or any of the Transaction Agreements, (y) have or result in a
material adverse effect on the results of operations, assets, or financial
condition of the Company and its subsidiaries, taken as a whole, or (z)
adversely impair the Company's ability to perform fully on a timely basis its
material obligations under any of the Transaction Agreements or the transactions
contemplated thereby.
"Maturity Date" has the meaning ascribed to it in the
Convertible Debentures.
"New Common Stock" means shares of Common Stock and/or
securities convertible into, and/or other rights exercisable for, Common Stock,
which are offered or sold in a New Transaction.
"New Investor" means the third party investor, purchaser or
lender (howsoever denominated) in a New Transaction.
"New Transaction" means, unless consented to by a Majority in
Interest of the Holders (which consent is in the sole discretion of the Holders
and may be withheld for any reason or for no reason whatsoever),
(i) the offer or sale of New Common Stock by or on behalf of the
Company to a New Investor and/or
(ii) the grant of a security interest in or pledge of (x) any or all of
the Company's assets by the Company and/or (y) shares of the Company's
Common Stock or securities convertible into or exercisable for the
Company's Common Stock by any other party in connection with a
transaction in which the Company borrows or is otherwise obligated to
pay funds to a third party,
in a transaction offered or consummated after the date hereof; provided,
however, that it is specifically understood that the term "New Transaction" (1)
unless consented to otherwise by a Majority in Interest of the Holders (which
consent is in the sole discretion of the Holders and may be withheld for any
reason or for no reason whatsoever), includes, but is not limited to, a sale of
Common Stock or of a security convertible into Common Stock or an equity or
credit line transaction, but (2) does not include (a) the sale of the Purchased
Securities to the Buyer and the Other Buyers, (b) the issuance of Common Stock
upon the exercise or conversion of options, warrants or convertible securities
outstanding on the date hereof, or in respect of any other financing agreements
as in effect on the date hereof and identified in the Disclosure Letter
(provided the same is not amended after the date of the Disclosure Letter) or in
the Company's SEC Documents (provided the same is not amended after the date
hereof), (c) the issuance of an Employee Stock Option Plan (an "ESOP") of the
Company, (d) the issuance of a non-employee director stock option plan of the
Company, (e) the issuance of Common Stock pursuant to a consultants' stock
option plan of the Company, (f) the issuance of Common Stock upon the exercise
of any options or warrants referred to in the preceding clauses of this
paragraph (provided the same is not amended after the date hereof), (g) the
issuance of stock options or warrants to employees, officers or directors of the
Company, provided that all such shares are subject to a Company Principal's
Agreement, (h) the issuance of up to an aggregate of 500,000 shares of Common
Stock (or securities convertible into such number of shares and then the
subsequent issuance of such shares upon conversion) issued to other service
providers, or (i) the issuance of shares to a Strategic Partner.
"Payment Shares" has the meaning ascribed to it in the
Registration Rights Agreement.
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"Person" means any living person or any entity, such as, but
not necessarily limited to, a corporation, partnership or trust.
"Placement Agent" means Pond Equities.
"Principal Trading Market" means the Over the Counter Bulletin
Board or such other market on which the Common Stock is principally traded at
the relevant time, but shall not include the "pink sheets."
"Registrable Securities" has the meaning ascribed to it in the
Registration Rights Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement in the form annexed hereto as Annex IV as executed by the Buyer and
the Company simultaneously with the execution of this Agreement.
"Registration Statement" means an effective registration
statement covering the Registrable Securities.
"Regular Trading Day" means the regular trading hours of a
Trading Day on the Principal Trading Market shall be open for business (as of
the date of this Agreement, such hours are, for most Trading Days, approximately
9:30AM to approximately 4PM Eastern Time; provided, however, that certain
Trading Days may have shorter regular trading hours; and provided, further, that
the regular trading hours may be subsequently changed for the Principal Trading
Market).
"Reporting Service" means Bloomberg LP or if that service is
not then reporting the relevant information regarding the Common Stock, a
comparable reporting service of national reputation selected by a Majority in
Interest of the Holders and reasonably acceptable to the Company.
"Rule 144" means (i) Rule 144 promulgated under the 1933 Act
or (ii) any other similar rule or regulation of the SEC that may at any time
permit Holder to sell securities of the Company to the public without
registration.
"Securities" means the Purchased Securities and the Shares.
"Shares" means the shares of Common Stock representing any or
all of the Conversion Shares, the Warrant Shares and the Payment Shares.
"State of Incorporation" means Delaware.
"Strategic Partner" means a third party, whether or not
affiliated with the Company, as of the date hereof, which party (i) is engaged
in a business which is the business in which the Company is engaged or a similar
or related business, and (ii) subsequently purchases (or enters into an
agreement to purchase) equity securities of the Company (or securities
convertible into equity securities of the Company), where such purchase is
accompanied or followed by one or more of the following: the licensing by the
Company of all or any portion of its technology to such third party, the
licensing by such third party of all or any portion of its technology to the
Company, or any other coordination of all or a portion of their respective
business activities or operations by the Company and such third party.
"Trading Day" means any day during which the Principal Trading
Market shall be open for business.
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"Transaction Agreements" means this Agreement, the Debentures,
the Joint Escrow Instructions, the Registration Rights Agreement, the Security
Interest Agreement, the Warrants, each Company Principal's Agreement, and the
Disclosure Letter and includes all ancillary documents referred to in those
agreements.
"Transfer Agent" means, at any time, the transfer agent for
the Company's Common Stock.
"VWAP" means the volume weighted average price of the Common
Stock on the Principal Trading Market for the relevant Regular Trading Day(s),
as reported by the Reporting Service.
"Warrants" means (i) the warrants referred to in Section 4
hereof and (ii) the Added Warrants (as defined below), if any.
"Warrant Shares" means the shares of Common Stock issuable
upon exercise of the Warrants.
"Wire Instructions" means the Purchase Price Wire
Instructions as provided in Annex XI annexed hereto.
c. Form of Payment; Delivery of Certificates.
(i) The Buyer shall pay the Initial Purchase Price by
delivering immediately available good funds in that amount to the Funds Escrow
Agent no later than the date prior to the Initial Closing Date. The Buyer will
pay the Additional Purchase Price by delivering available good funds in that
amount to the Funds Escrow Agent no later than the date prior to the Additional
Closing Date, as provided in Section 6 hereof.
(ii) Within three (3) Trading Days after the Company is
notified that the Funds Escrow Agent has on deposit cleared funds from or on
behalf of one or more Buyers an aggregate amount equal to the Aggregate Initial
Purchase Price and the Company shall have accepted the Buyer's subscription
hereunder, but in no event later than the Initial Closing Date, the Company will
deliver the relevant Certificates for the Initial Debentures and the Initial
Warrants to the Document Escrow Agent. Such Certificates shall be held in escrow
by the Document Escrow Agent as provided in the Joint Escrow Instructions. The
Company will deliver the Certificates for the Additional Debentures and the
Additional Warrants to the Escrow Agent as provided in Section 6 hereof.
(iii) By signing this Agreement, each of the Buyer and the
Company, subject to acceptance by the Document Escrow Agent, agrees to all of
the terms and conditions of, and becomes a party to, the Joint Escrow
Instructions, all of the provisions of which are incorporated herein by this
reference as if set forth in full.
d. Method of Payment. Payment into escrow of the Purchase
Price shall be made to the Funds Escrow Agent as provided in the Wire
Instructions (see Annex XI).
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO
INFORMATION; INDEPENDENT INVESTIGATION.
The Buyer represents and warrants to, and covenants and agrees
with, the Company, as of the date hereof and as of the Initial Closing Date, as
follows:
a. Without limiting Buyer's right to sell the Securities
pursuant to an effective registration statement or otherwise in compliance with
the 1933 Act, the Buyer is purchasing the Securities for its own account for
investment only and not with a view towards the public sale or distribution
thereof and not with a view to or for sale in connection with any distribution
thereof.
b. The Buyer is (i) an "accredited investor" as that term is
defined in Rule 501 of the General Rules and Regulations under the 1933 Act,
(ii) experienced in making investments of the kind described in
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this Agreement and the other Transaction Agreements, (iii) able, by reason of
the business and financial experience of its officers (if an entity) and
professional advisors (who are not affiliated with or compensated in any way by
the Company or any of its Affiliates or selling agents), to protect its own
interests in connection with the transactions described in this Agreement and
the other Transaction Agreements, and to evaluate the merits and risks of an
investment in the Securities, and (iv) able to afford the entire loss of its
investment in the Securities.
c. All subsequent offers and sales of the Securities by the
Buyer shall be made pursuant to registration of the relevant Securities under
the 1933 Act or pursuant to an exemption from such registration.
d. The Buyer understands that the Securities are being offered
and sold to it in reliance on specific exemptions from the registration
requirements of the 1933 Act and state securities laws and that the Company is
relying upon the truth and accuracy of, and the Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the Securities.
e. The Buyer and its advisors, if any, have been furnished
with or have been given access to all materials relating to the business,
finances and operations of the Company and materials relating to the offer and
sale of the Purchased Securities which have been requested by the Buyer,
including those set forth in any annex attached hereto. The Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company and its management and have received complete and satisfactory answers
to any such inquiries. Without limiting the generality of the foregoing, the
Buyer has also had the opportunity to obtain and to review the Company's SEC
Documents.
f. The Buyer understands that its investment in the
Securities involves a high degree of risk.
g. If the Buyer is not a United States person (as defined by
Section 7701(a)(30) of the Internal Revenue Code, as currently in effect), such
Buyer hereby represents that it has satisfied itself as to the full observance
of the laws of its jurisdiction in connection with any invitation to subscribe
for the Purchased Securities or any use of this Agreement, including (i) the
legal requirements within its jurisdiction for the purchase of the Purchased
Securities, (ii) any foreign exchange restrictions applicable to such purchase,
(iii) any governmental or other consents that may need to be obtained, and (iv)
the income tax and other tax consequences, if any, that may be relevant to the
purchase, holding, redemption, sale, or transfer of the Securities. The Buyer's
subscription and payment for and continued beneficial ownership, if any, of the
Securities will not violate any applicable securities or other laws of the
Buyer's jurisdiction.
h. If the Buyer is an individual, then the Buyer resides in
the state or province identified in the address of the Buyer set forth on the
Buyer's signature page to this Agreement. If the Buyer is a partnership,
corporation, limited liability company or other entity, then the office or
offices of the Buyer in which its principal place of business is identified in
the address or addresses of the Buyer set forth on the Buyer's signature page to
this Agreement.
i. The Buyer hereby represents that, in connection with the
Buyer's investment or the Buyer's decision to its purchase of the Securities,
the Buyer has not relied on any statement or representation of any Person,
including any such statement or representation by the Company or the Placement
Agent or any of their respective controlling Persons, officers, directors,
partners, agents and employees or any of their respective attorneys, except as
specifically set forth herein. In furtherance of the foregoing, and not in
limitation thereof, the Buyer acknowledges that the Buyer is not relying upon
any Person, other than the Company and its controlling Persons, officers and
directors, as and to the extent specifically set forth herein, in making such
investment. The Buyer agrees that none of (i) any Other Buyer, (ii) any
controlling Persons, officers, directors, partners, agents, or employees of each
respective Other Buyer or (iii) any of their respective attorneys shall be
liable to the Buyer for any action heretofore or hereafter taken or omitted to
be taken by any of them in connection with the purchase of the Purchased
Securities or in connection with the Securities. Each of the Placement Agent,
each Other Buyer and each
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of their respective controlling Persons, officers, directors, partners, agents
and employees and each of their respective attorneys is a third party
beneficiary of this provision.
j. The Buyer understands that no United States federal or
state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Securities.
k. This Agreement and the other Transaction Agreements to
which the Buyer is a party, and the transactions contemplated thereby, have been
duly and validly authorized, executed and delivered on behalf of the Buyer and
are valid and binding agreements of the Buyer enforceable in accordance with
their respective terms, subject as to enforceability to general principles of
equity and to bankruptcy, insolvency, moratorium and other similar laws
affecting the enforcement of creditors' rights generally.
3. COMPANY REPRESENTATIONS, ETC. The Company represents and
warrants to the Buyer as of the date hereof and as of the Initial Closing Date
that, except as otherwise provided in the Disclosure Letter or in the Company's
SEC Documents:
a. Rights of Others Affecting the Transactions. There are no
preemptive rights of any stockholder of the Company, as such, to acquire the
Purchased Securities or the Shares. No other party has a currently exercisable
right of first refusal which would be applicable to any or all of the
transactions contemplated by the Transaction Agreements.
b. Status. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Incorporation and has the requisite corporate power to own its properties and to
carry on its business as now being conducted. The Company is duly qualified as a
foreign corporation to do business and is in good standing in each jurisdiction
where the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have or result in a Material Adverse Effect. The Company
has registered its stock and is obligated to file reports pursuant to Section 12
or Section 15(d) of the Securities and Exchange Act of 1934, as amended (the
"1934 Act"). The Common Stock is quoted on the Principal Trading Market. The
Company has received no notice, either oral or written, with respect to the
continued eligibility of the Common Stock for such quotation on the Principal
Trading Market, and the Company has maintained all requirements on its part for
the continuation of such quotation.
c. Authorized Shares.
(i) The authorized capital stock of the Company consists of (x)
75,000,000 shares of Common Stock, $.001 par value per share, of which
approximately 26,363,460 are outstanding as of April 24, 2006, and (y) 5,000,000
shares of Preferred Stock, $.001 par value, of which (1) 52,500 shares of the
Series A 7% Convertible Preferred Stock, par value $.001 per share and having a
Stated Value of $100 per share, are authorized and approximately 13,153 shares
are outstanding as of such date; and (2) 85,000 shares of the Series B 8%
Convertible Preferred Stock, par value $.001 per share and having a Stated Value
of $100 per share, are authorized and approximately 47,000 shares are
outstanding as of such date.
(ii) Other than the convertible preferred shares referred to in the
immediately preceding subparagraph (i), there are no outstanding securities
which are convertible into shares of Common Stock, whether such conversion is
currently exercisable or exercisable only upon some future date or the
occurrence of some event in the future. If any such securities are listed on the
Disclosure Letter, the number or amount of each such outstanding convertible
security and the conversion terms are set forth in said Disclosure Letter.
(iii) All issued and outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and non-assessable. The Company
has sufficient authorized and unissued shares of Common Stock as may be
necessary to effect the issuance of the Shares on the Closing Date, were the
Debentures fully converted and were the Warrant fully exercised on that date.
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(iv) The Shares have been duly authorized by all necessary corporate
action on the part of the Company, and, when issued on conversion of, or in
payment of interest on, the Debentures or upon exercise of the Warrants, in each
case in accordance with their respective terms, will have been duly and validly
issued, fully paid and non-assessable and will not subject the Holder thereof to
personal liability by reason of being such Holder.
(v) Notwithstanding any other representation or warranty made herein or
in any of the other Transaction Agreements, as of the date hereof and as of the
Initial Closing Date, the Company may not have sufficient authorized unissued
and unreserved shares to be able to issue shares to the Buyer and the Other
Buyers in amount which exceeds the shares issuable to honor Notices of
Conversion for the Initial Debentures and Notices of Exercise for the Initial
Warrants. The Company represents that the Board of Directors (x) has voted to
recommend to the stockholders that the Company's Certificate of Incorporation,
as currently in effect, be amended to reflect the Authorized Share Increase,
(ii) the Company will file with the SEC and, subject to SEC comments thereon,
will send out to the Company's stockholders a notice of, and proxy statement
for, a stockholders meeting at which the Authorized Share Increase will be voted
on by the stockholders, and (iii) if the Authorized Share Increase is approved
by the stockholders, the Company will file the Charter Amendment. All
representations, warranties and covenants contained in this Agreement or the
other Transaction Agreements are made subject to the provisions of this
paragraph (v); provided, however, that this paragraph (v) shall be deemed
deleted from this Agreement with respect to all dates after the Charter
Amendment is effected.
d. Transaction Agreements and Stock. This Agreement and each
of the other Transaction Agreements, and the transactions contemplated hereby
and thereby, have been duly and validly authorized by the Company, this
Agreement has been duly executed and delivered by the Company and this Agreement
is, and the Debentures, the Warrants and each of the other Transaction
Agreements, when executed and delivered by the Company, will be, valid and
binding obligations of the Company enforceable in accordance with their
respective terms, subject as to enforceability to general principles of equity
and to bankruptcy, insolvency, moratorium, and other similar laws affecting the
enforcement of creditors' rights generally.
e. Non-contravention. The execution and delivery of this
Agreement and each of the other Transaction Agreements by the Company, the
issuance of the Securities, and the consummation by the Company of the other
transactions contemplated by this Agreement, the Debentures, the Warrants and
the other Transaction Agreements do not and will not conflict with or result in
a breach by the Company of any of the terms or provisions of, or constitute a
default under (i) the certificate of incorporation or by-laws of the Company,
each as currently in effect, (ii) any indenture, mortgage, deed of trust, or
other material agreement or instrument to which the Company is a party or by
which it or any of its properties or assets are bound, including any listing
agreement for the Common Stock except as herein set forth, or (iii) to its
knowledge, any existing applicable law, rule, or regulation or any applicable
decree, judgment, or order of any court, United States federal or state
regulatory body, administrative agency, or other governmental body having
jurisdiction over the Company or any of its properties or assets, except such
conflict, breach or default which would not have or result in a Material Adverse
Effect.
f. Approvals. No authorization, approval or consent of any
court, governmental body, regulatory agency, self-regulatory organization, or
stock exchange or market or the stockholders of the Company is required to be
obtained by the Company for the issuance and sale of the Securities to the Buyer
as contemplated by this Agreement, except such authorizations, approvals and
consents that have been obtained.
g. Filings. None of the Company's SEC Documents contained, at
the time they were filed, any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. Since March 1, 2005, the Company has filed all annual and
quarterly reports required to be filed by the Company with the SEC under Section
13(a) or 15(d) of the 0000 Xxx.
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h. Absence of Certain Changes. Since the Last Audited Date,
there has been no Material Adverse Effect, except as disclosed in the Company's
SEC Documents. Since the Last Audited Date, except as provided in the Company's
SEC Documents, the Company has not (i) incurred or become subject to any
material liabilities (absolute or contingent) except liabilities incurred in the
ordinary course of business consistent with past practices; (ii) discharged or
satisfied any material lien or encumbrance or paid any material obligation or
liability (absolute or contingent), other than current liabilities paid in the
ordinary course of business consistent with past practices; (iii) declared or
made any payment or distribution of cash or other property to stockholders with
respect to its capital stock, or purchased or redeemed, or made any agreements
to purchase or redeem, any shares of its capital stock; (iv) sold, assigned or
transferred any other material tangible assets, or canceled any material debts
owed to the Company by any third party or material claims of the Company against
any third party, except in the ordinary course of business consistent with past
practices; (v) waived any rights of material value, whether or not in the
ordinary course of business, or suffered the loss of any material amount of
existing business; (vi) made any increases in employee compensation, except in
the ordinary course of business consistent with past practices; or (vii)
experienced any material problems with labor or management in connection with
the terms and conditions of their employment.
i. Full Disclosure. To the Company's knowledge, there is no
fact known to the Company (other than general economic conditions known to the
public generally or as disclosed in the Company's SEC Documents) that has not
been disclosed in writing to the Buyer that would reasonably be expected to have
or result in a Material Adverse Effect.
j. Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public board or
body pending or, to the knowledge of the Company, threatened against or
affecting the Company before or by any governmental authority or
non-governmental department, commission, board, bureau, agency or
instrumentality or any other person, wherein an unfavorable decision, ruling or
finding would have a Material Adverse Effect or which would adversely affect the
validity or enforceability of, or the authority or ability of the Company to
perform its obligations under, any of the Transaction Agreements. The Company is
not aware of any valid basis for any such claim that (either individually or in
the aggregate with all other such events and circumstances) could reasonably be
expected to have a Material Adverse Effect. There are no outstanding or
unsatisfied judgments, orders, decrees, writs, injunctions or stipulations to
which the Company is a party or by which it or any of its properties is bound,
that involve the transaction contemplated herein or that, alone or in the
aggregate, could reasonably be expect to have a Material Adverse Effect.
k. Absence of Events of Default. Except as set forth in
Section 3(e) hereof, no Event of Default (or its equivalent term), as defined in
the respective agreement to which the Company or its subsidiary is a party, and
no event which, with the giving of notice or the passage of time or both, would
become an Event of Default (or its equivalent term) (as so defined in such
agreement), has occurred and is continuing, which would have a Material Adverse
Effect.
l. Absence of Certain Company Control Person Actions or
Events. To the Company's knowledge, none of the following has occurred during
the past five (5) years with respect to a Company Control Person:
(1) A petition under the federal bankruptcy laws or any state insolvency
law was filed by or against, or a receiver, fiscal agent or similar officer
was appointed by a court for the business or property of such Company
Control Person, or any partnership in which he was a general partner at or
within two years before the time of such filing, or any corporation or
business association of which he was an executive officer at or within two
years before the time of such filing;
(2) Such Company Control Person was convicted in a criminal proceeding or
is a named subject of a pending criminal proceeding (excluding traffic
violations and other minor offenses);
4/26/06
(3) Such Company Control Person was the subject of any order, judgment or
decree, not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining him from, or
otherwise limiting, the following activities:
(i) acting, as an investment advisor, underwriter, broker or dealer in
securities, or as an affiliated person, director or employee of any
investment company, bank, savings and loan association or insurance
company, as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker, any
other Person regulated by the Commodity Futures Trading Commission
("CFTC") or engaging in or continuing any conduct or practice in
connection with such activity;
(ii) engaging in any type of business practice; or
(iii) engaging in any activity in connection with the purchase or sale
of any security or commodity or in connection with any violation of
federal or state securities laws or federal commodities laws;
(4) Such Company Control Person was the subject of any order, judgment or
decree, not subsequently reversed, suspended or vacated, of any federal or
state authority barring, suspending or otherwise limiting for more than 60
days the right of such Company Control Person to engage in any activity
described in paragraph (3) of this item, or to be associated with Persons
engaged in any such activity; or
(5) Such Company Control Person was found by a court of competent
jurisdiction in a civil action or by the CFTC or SEC to have violated any
federal or state securities law, and the judgment in such civil action or
finding by the CFTC or SEC has not been subsequently reversed, suspended,
or vacated.
m. No Undisclosed Liabilities or Events. To the best of the
Company's knowledge, the Company has no liabilities or obligations other than
those disclosed in the Transaction Agreements or the Company's SEC Documents or
those incurred in the ordinary course of the Company's business since the Last
Audited Date, or which individually or in the aggregate, do not or would not
have a Material Adverse Effect. No event or circumstance has occurred or exists
with respect to the Company or its properties, business, operations, condition
(financial or otherwise), or results of operations, which, under applicable law,
rule or regulation, requires public disclosure or announcement prior to the date
hereof by the Company but which has not been so publicly announced or disclosed.
There are no proposals currently under consideration or currently anticipated to
be under consideration by the Board of Directors or the executive officers of
the Company which proposal would (x) change the articles or certificate of
incorporation or other charter document or by-laws of the Company, each as
currently in effect, with or without stockholder approval, which change would
reduce or otherwise adversely affect the rights and powers of the stockholders
of the Common Stock or (y) materially or substantially change the business,
assets or capital of the Company, including its interests in subsidiaries.
n. No Integrated Offering. Neither the Company nor any of its
Affiliates nor any Person acting on its or their behalf has, directly or
indirectly, at any time since October 1, 2005, made any offer or sales of any
security or solicited any offers to buy any security under circumstances that
would eliminate the availability of the exemption from registration under
Regulation D in connection with the offer and sale of the Securities as
contemplated hereby.
o. Dilution. Each of the Company and its executive officers
and directors is aware that the number of shares issuable on conversion of the
Debentures, upon exercise of the Warrants or pursuant to the other terms of the
Transaction Agreements may have a dilutive effect on the ownership interests of
the other stockholders (and Persons having the right to become stockholders) of
the Company. The Company specifically acknowledges that its obligation to issue
the Conversion Shares upon conversion of the Debentures, the Warrant Shares upon
exercise of the Warrants or the Payment Shares as provided in the Registration
Rights Agreement is binding upon the Company and enforceable regardless of the
dilution such issuance may have on the ownership interests of other
4/26/06
stockholders of the Company, and the Company will honor such obligations,
including honoring every Notice of Conversion (as contemplated by the
Debentures), every Notice of Exercise (as contemplated by the Warrants), and
every demand for Payment Shares (as contemplated by the Registration Rights
Agreement), unless the Company is subject to an injunction (which injunction was
not sought by the Company) prohibiting the Company from doing so.
p. Fees to Brokers, Placement Agents and Others. The Company
has taken no action which would give rise to any claim by any Person for
brokerage commission, placement agent or finder's fees or similar payments by
Buyer relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the foregoing, the Company acknowledges that it has agreed to
pay the Placement Agent's Compensation (as defined in the Joint Escrow
Instructions) to the Placement Agent in connection with the transactions
contemplated hereby. Except for such fees arising as a result of any agreement
or arrangement entered into by the Buyer without the knowledge of the Company (a
"Buyer's Fee"), Buyer shall have no obligation with respect to such fees or with
respect to any claims made by or on behalf of other Persons for fees of a type
contemplated in this paragraph that may be due in connection with the
transactions contemplated hereby. The Company shall indemnify and hold harmless
each of Buyer, its employees, officers, directors, agents, and partners, and
their respective Affiliates, from and against all claims, losses, damages, costs
(including the costs of preparation and attorney's fees) and expenses suffered
in respect of any such claimed or existing fees (other than a Buyer's Fee).
q. Disclosure. All information relating to or concerning the
Company set forth in the Transaction Agreements or in the Company's public
filings with the SEC is true and correct in all material respects and have not
omitted to state any material fact necessary in order to make the statements
made, in light of the circumstances under which they were made, not misleading.
No event or circumstance has occurred or exists with respect to the Company or
its business, properties, prospects, operations or financial conditions, which
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company.
r. Confirmation. The Company confirms that all statements of
the Company contained herein shall survive acceptance of this Agreement by the
Buyer for a period of three (3) years from the Closing Date. The Company agrees
that, if, to the knowledge of the Company, any events occur or circumstances
exist prior to the release of the Escrow Funds to the Company which would make
any of the Company's representations, warranties, agreements or other
information set forth herein materially untrue or materially inaccurate as of
such date, the Company shall immediately notify the Buyer (directly or through
its counsel, if any) and the Document Escrow Agent in writing prior to such date
of such fact, specifying which representation, warranty or covenant is affected
and the reasons therefor.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer Restrictions.
(i) The Buyer acknowledges that (1) the Securities have not
been and are not being registered under the provisions of the 1933 Act and,
except as provided in the Registration Rights Agreement or otherwise included in
an effective registration statement, the Shares have not been and are not being
registered under the 1933 Act, and may not be transferred unless (A)
subsequently registered thereunder or (B) the Buyer shall have delivered to the
Company an opinion of counsel, reasonably satisfactory in form, scope and
substance to the Company, to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration; (2) any sale of the Securities made in reliance on Rule 144 may be
made only in accordance with the terms of said Rule and further, if said Rule is
not applicable, any resale of such Securities under circumstances in which the
seller, or the Person through whom the sale is made, may be deemed to be an
underwriter, as that term is used in the 1933 Act, may require compliance with
some other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (3) neither the Company nor any other Person is under any
obligation to register the Securities (other than pursuant to the Registration
Rights Agreement) under the 1933 Act or to comply with the terms and conditions
of any exemption thereunder.
4/26/06
(ii) In addition to the foregoing, and not in lieu thereof,
the Buyer agrees that, without the express written consent of the Company in
each instance, it will not transfer any of the Purchased Securities to any
Person which is known to the Buyer to be in substantially the same business as
the Company or which is known to be a subsidiary or affiliate of such a Person.
b. Restrictive Legend. The Buyer acknowledges and agrees that,
until such time as the relevant Shares have been registered under the 1933 Act,
as contemplated by the Registration Rights Agreement, and may be sold in
accordance with an effective Registration Statement or otherwise in accordance
with another effective registration statement, or until such Shares can
otherwise be sold without restriction, whichever is earlier, the certificates
and other instruments representing any of the Securities shall bear a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of any such Securities):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
c. Filings. The Company undertakes and agrees to make all
filings required to be made by it in connection with the sale of the Securities
to the Buyer under the 1933 Act, the 1934 Act or any United States state
securities laws and regulations thereof applicable to the Company or by any
domestic securities exchange or trading market, and, unless such filing is
publicly available on the SEC's XXXXX system (via the SEC's web site at no
additional charge), to provide a copy thereof to the Buyer promptly after such
filing. Reference is made to the Section titled "Publicity, Filings, Releases,
Etc." below.
d. Reporting Status. So long as the Buyer beneficially owns
any of the Purchased Securities and for at least twenty (20) Trading Days
thereafter, the Company shall file all reports required to be filed with the SEC
pursuant to Section 13 or 15(d) of the 1934 Act, shall take all reasonable
action under its control to ensure that adequate current public information with
respect to the Company, as required in accordance with Rule 144(c)(2) of the
1933 Act, is publicly available, and shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would permit such termination. The Company will take
all reasonable action under its control to maintain the continued listing and
quotation and trading of its Common Stock (including, without limitation, all
Registrable Securities) on the Principal Trading Market or a listing on the
NASDAQ/Small Cap or National Markets or AMEX and, to the extent applicable to
it, will comply in all material respects with the Company's reporting, filing
and other obligations under the by-laws or rules of the Principal Trading Market
and/or the National Association of Securities Dealers, Inc., as the case may be,
applicable to it at least through the date which is sixty (60) days after the
later of the date on which (x) all of the Debentures have been converted or have
been paid in full or (y) all of the Warrants have been exercised or have
expired.
e. Use of Proceeds. The Company will use the net proceeds
received hereunder (excluding amounts paid as contemplated by the Joint Escrow
Instructions) as provided in Annex IX attached hereto (the "Use of Proceeds").
The Use of Proceeds provides, among other things, that such net proceeds on the
Initial Closing Date shall be used (i) first, for repayment of the promissory
notes identified in the Use of Proceeds (each, a "Specified Note") to the
holders thereof named therein (each, a "Specified Holder"); and (ii) then, for
general corporate purposes; provided however, the Company will not use such to
pay fees payable (x) to another broker or finder (other than the Placement
Agent) relating to the offer and sale of the Purchased Securities or (y) to any
other party relating to any financing transaction effected prior to the Initial
Closing Date.
f. Warrants.
(i) The Company agrees to issue to the Buyer on the Closing
Date a transferable warrants (each, a "Warrant" and, collectively, the
"Warrants") for the purchase of the number of shares of Common Stock
4/26/06
equal to fifty percent (50%) of the Issue Date Conversion Shares. The Warrants
shall have a per share exercise price (the "Exercise Price") equal to $1.50(5);
provided, however, that the Exercise Price will be subject to adjustment as
provided in the Warrant. The Warrants shall be exercisable commencing on the
Commencement Date specified in the Warrants and shall expire at the close of
business on the date which is the last day of the calendar month in which the
fifth annual anniversary of the Effective Date occurs. The Warrant shall have
cashless exercise rights as provided in the Warrant. Except as specified above,
each Warrant shall generally be in the form annexed hereto as Annex V.
(ii) The Warrant Shares shall be subject to the provisions of
the Registration Rights Agreement.
g. Certain Agreements.
(i) For purposes of this Agreement, the following terms shall
have meanings indicated:
(A) "New Transaction Period" means the period commencing on the Closing
Date and continuing through and including the Final Lock-up Date.
(B) "Final Lock-up Date" means the date which is the earlier of (i) the
date on which the aggregate principal amount of all outstanding
Debentures is twenty-five percent (25%) or less of the Closed Aggregate
Purchase Price, or (ii) the date which is 365 days after the Effective
Date, but not counting for such purposes the days, if any, during which
sale of Registrable Securities was suspended after the Effective
Date.(6)
(C) "New Transaction Price" means the Basic New Transaction Price (as
defined below) except that if the New Transaction Exercise Price is
lower than the Basic New Transaction Price, it means the New
Transaction Exercise Price.
(D) "Basic New Transaction Price" means, as may be applicable, on a per
share basis, the lower of (1) the lowest fixed purchase price of any
shares of the New Common Stock contemplated in the New Transaction, or
(2) the lowest conversion price or put or call price which would be
applicable under the terms of the New Transaction; in each such case,
whether such purchase or conversion price or put or call price is
stated or otherwise specified or is determined on the closing date of
the New Transaction by the application of a formula set in the
documents reflecting the New Transaction or could result from
adjustments or revisions contemplated in the relevant agreements for
the New Transaction and whenever such adjustment or revision would be
applicable (and if no minimum purchase price, conversion price or put
or call price, as the case may be, is set, it shall be assumed that
such minimum purchase price or conversion price is $.01); and provided,
further, that, if the securities issued in the New Transaction are
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(5)This price will apply to Warrants issued on each Closing Date; provided,
however, if, prior to the Additional Closing Date, the Exercise Price for the
Initial Warrants was adjusted, the stated Exercise Price for the Additional
Warrants shall be such adjusted Exercise Price.
(6)By way of illustration: If the sale of Registrable Securities was suspended
for ten (10) days in the interim, the applicable Final Lock-up Date will be
three hundred seventy-five (375) days after the Effective Date. If on the 368th
day after the Effective Date, the sale of Registrable Securities was suspended
again for five (5) days, the Final Lock-up Date will be three hundred seventy
(370) days after the Effective Date.
4/26/06
issued at a Face Value Discount (as defined below), the New Transaction
Price shall be adjusted to reflect such discount.(7)
(E) "Exercise Threshold Price" means the then applicable Exercise
Price.
(F) "New Transaction Exercise Price" means the lowest exercise price
per share applicable to the warrants, option or similar instrument
(howsoever denominated; collectively, "New Transaction Warrants")
included in such New Transaction, whether such exercise price is stated
or could result from adjustments or revisions contemplated in the
relevant agreements for the New Transaction and whenever such exercise
price would be applicable (and, if no minimum exercise price is set, it
shall be assumed that such minimum exercise price is $.01).
(G) "Alternative Warrant Percentage" means, with respect to the
relevant New Transaction, (1) the number of shares which are eligible
to be purchased under the New Transaction Warrants, divided by (2) the
aggregate of the shares of New Common Stock issued or issuable in such
transaction (excluding the shares issuable on exercise of the New
Transaction Warrants).
(H) "Current Warrant Percentage" means, as of immediately before the
consummation of the relevant New Transaction, the higher of (1) fifty
percent (50%) or (2) the highest Alternative Warrant Percentage of any
preceding New Transaction.
(I) "Outstanding Warrant Shares" means, for the Warrants or for any
previously issued Added Warrants, the then outstanding number of
Warrant Shares which would then be issuable upon the exercise in full
of such Warrants (without regard to any limitations which may then
restrict the Holder's full exercise of such Warrant at any time) or
such Added Warrants, if any, as in effect immediately prior to the
relevant New Transaction.
(J) "Original Warrant Shares" means, for the Warrants or for any
previously issued Added Warrants, the original number of Warrant Shares
issuable on exercise of such Warrants on the relevant Closing Date or
as Added Warrants, as the case may be (in each case without regard to
any limitations which may then restrict the Holder's full exercise of
such Warrant at any time).
(K) "Face Value Discount" means consideration less than, as the case
may be, (x) the number of shares being issued multiplied by the stated
purchase price, (y) the stated principal amount of a debenture, note or
similar instrument or (z) the stated value of the shares of convertible
stock.
(ii) The Company covenants and agrees that, if, during the New
Transaction Period, without the prior written consent of a Majority in Interest
of the Holders in each instance (which consent is in the sole discretion of the
Holders and may be withheld for any reason or for no reason whatsoever), the
Company enters into a New Transaction, then
(A) the New Transaction Price shall be deemed to be the "Lowest Fixed
Conversion Price" for purposes of clause (y) of the definition of
"Conversion Price" in the Debentures for all Unconverted Debentures;
provided, however, if there was one or more previous New Transaction
Prices, the Lowest Fixed Conversion Price shall be the lowest New
Transaction Price(8) of all New Transactions; and
----------
(7)By way of illustration, if convertible preferred shares having a stated value
of $1 million and a fixed conversion price of $0.05 were sold for a purchase
price of $800,000, the effective New Transaction Price would be $0.04.
(8)Any New Transaction Price shall be adjusted for subsequent events as
contemplated by the Debentures.
4/26/06
(B) if the New Transaction Exercise Price of any of the New Transaction
Warrants is lower than the Exercise Threshold Price of the Warrants,
then the Exercise Price of the then outstanding Warrants shall be
adjusted to be equal to the New Transaction Exercise Price of such New
Transaction Warrants; and
(C) if the provisions applicable to the convertible preferred stock,
convertible debenture or similar instrument (howsoever denominated), if
any, of the New Transaction are more beneficial to the holder of such
instrument than the corresponding terms applicable to the Debentures or
in or to the Warrants, as the case may be, or if the terms which are
beneficial to the Company in the relevant Transaction Agreements are
not included in the corresponding instrument in the New Transaction,
then, unless waived by the Holder, the terms of the Transaction
Agreements applying to the then outstanding Debentures or the Warrants
or to the other Transaction Agreements, as the case may be, shall be
modified to reflect similar terms (based, if relevant, on the Closing
Date); provided, however, that nothing in this provision shall be read
to mean that the Purchased Securities shall be changed to any other
form of security;
(D) if either (1) the Conversion Price is adjusted as contemplated by
clause (A) above, and/or (2) the Alternative Warrant Percentage is
greater than the Current Warrant Percentage (whether or not the
Conversion Price has been adjusted as a result of the New Transaction),
the Company shall issue to the Holder additional warrants ("Added
Warrants") for the purchase of the number of shares equal to the
excess, if any, of
(x) (I) the higher of (a) the Alternative Warrant
Percentage or (b) the Current Warrant Percentage, multiplied
by (II) (a) the Purchase Price, divided by (b) the Conversion
Price as determined on the Closing Date or on the closing date
of the New Transaction, whichever is lower, multiplied by
(III) a fraction, of which the numerator is the Outstanding
Warrant Shares for all Warrants (including previously issued
Added Warrants) and the denominator is Original Warrant Shares
for all Warrants (including previously issued Added Warrants);
over
(y) the aggregate Outstanding Warrant Shares for all
Warrants (including previously issued Added Warrants);
the terms of such Added Warrants (including, but not limited, to term
of exercisability, exercise price, manner and limitations, if any, on
exercise, registration rights) shall be the same as the shall be the
same as the applicable New Transaction Warrants issued in such New
Transaction.
(iii) The Company covenants and agrees that, any of the
foregoing provisions of this Section 4(g) or any other provision of this
Agreement or any of the other Transaction Agreements to the contrary
notwithstanding, without the prior written consent of a Majority in Interest of
the Holders in each instance (which consent is in the sole discretion of the
Holders and may be withheld for any reason or for no reason whatsoever),
(A) during the New Transaction Period, the Company will not enter into
any New Transaction where such transaction provides for a variable
conversion price or a variable exercise price;
(B) during the period commencing on the Closing Date and continuing
through the Effective Date, the Company will not enter into any New
Transaction whatsoever, and
(C) during the period commencing on the Effective Date and continuing
through the date which is the sixth month anniversary of the Effective
Date, the Company will not enter into any New Transaction where such
New Transaction provides for any registration rights (including, but
not limited to demand or piggy-back registration rights) to any one or
more of the New Investors in such New Transaction.
4/26/06
The Company acknowledges that each of the foregoing provisions is independent of
the others and that a breach of any of the foregoing provisions might result in
adjustments referred to in other provisions of this Section 4(g) and, in
addition (and not in lieu of such adjustments, if any) shall constitute an event
of default under the Debenture and the other Transaction Agreements. The Company
is aware that if such event of default occurs, a Holder of a Debenture will have
certain redemption rights contemplated by the Debenture.
(iv) Nothing in the foregoing provisions reflects either an
obligation on the part of any Buyer to participate in any New Transaction or a
limitation on any Buyer from participating in any New Transaction.
(v) Any of the foregoing provisions of this Section 4(g) or
any other provision of this Agreement or any of the other Transaction Agreements
to the contrary notwithstanding, the Company shall not engage in any offers,
sales or other transactions of its securities which would adversely affect the
exemption from registration available for the transactions contemplated by the
Transaction Agreements.
(vi) The Company agrees that, prior to the Effective Date, the
Company will not file any registration statement for the sale of shares by the
Company or any other stockholder other than the Registration Statement
contemplated by the Registration Rights Agreement (or amendments to such
Registration Statement) and other than (x) a registration statement on Form S-8
(and any post-effective amendments thereto) and (y) a post-effective
registration statement with respect to any registration statement which was
effective prior to the Initial Closing Date.
h. Company Principal's Agreements.
(i) The Company hereby agrees that, no later than the Closing
Date, the Company will cause each of its principal officers and all of its
directors (each, a "Company Principal"), and certain Persons who are related to
or controlled by such Company Principal, to execute and deliver an agreement
(each, a "Company Principal's Agreement") regarding limitations on the sale or
other disposition of the shares of the Company's Common Stock (or instruments
convertible into or exercisable for such shares) held by such Company Principal
or other Principal (as defined in the Company Principal's Agreement), except
that, notwithstanding its terms, the Company Principal's Agreement will be
deemed not apply to the sale of shares of Common Stock bought by a Principal in
open market transactions. Subject to the foregoing, each Company Principal's
Agreement shall be substantially in the form set forth in Annex VII attached
hereto.
(ii) In addition, under certain circumstances as contemplated
by the definition of "New Transaction" in this Agreement, certain future
issuances by the Company to persons identified in clause (g) of such definition
are conditioned on such shares being subject to a Company Principal's Agreement
being executed by the relevant party (who, whether or not included in the
definition of Company Principal in the preceding subparagraph (i), shall, for
purposes of this Section 4(h), be deemed to be a "Company Principal" identified
in such definition). The Company covenants that it will obtain such executed
Company Principal's Agreement from the relevant party no later than the issuance
of the relevant security to such party and that it will promptly provide a copy
thereof to the Document Escrow Agent on behalf of the Buyer and the Other
Buyers.
i. Available Shares.
(i) The Company shall have at all times authorized and
reserved for issuance, free from preemptive rights, a number of shares (the
"Reserved Amount") at least equal to one hundred percent (100%) of the sum of
(x) the number of shares of Common Stock issuable as may be required, at any
time, to satisfy the conversion rights of the Holders of principal on all
outstanding Convertible Debentures plus interest thereon through the Maturity
Date (assuming for such purposes that interest is paid at the the Conversion
Price), plus (y) after the Authorized Share Increase (but not before), the
number of shares issuable upon exercise of all outstanding Warrants held by all
Holders (in each case, whether any of such outstanding Convertible Debentures or
Warrants were originally issued to the Holder, the Buyer or to any other party
and without regard to any restrictions which might limit any Holder's right to
convert any of the Debentures or to exercise any of the Warrants held by any
Holder).
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(ii) The Reserved Amount shall be determined on each Closing
Date and after each New Transaction Closing Date, and thereafter on the first
Trading Day after the end of each subsequent calendar quarter, and the number of
shares to be reserved shall be based on (q) all outstanding Debentures and the
Conversion Price which would have been applicable as of such date and (r) all
unexercised Warrants as of such date. The Reserved Amount determined on such
date shall remain the Reserved Amount until the Closing Date or the next Closing
Date, New Transaction Closing Date or quarterly determination, as the case may
be. The Company shall give written instructions to the Transfer Agent to reserve
for issuance to the Buyer the number of shares equal to the Reserved Amount. The
Company will, at the request of the Buyer, provide written confirmation,
certified by an executive officer of the Company, of the number of shares then
reserved for the Buyer and that the instructions referred to in the preceding
sentence have been given to the Transfer Agent.
j. Publicity, Filings, Releases, Etc. Each of the parties
agrees that it will not disseminate any information relating to the Transaction
Agreements or the transactions contemplated thereby, including issuing any press
releases, holding any press conferences or other forums, or filing any reports
(collectively, "Publicity"), without giving the other party reasonable advance
notice and an opportunity to comment on the contents thereof. Neither party will
include in any such Publicity any statement or statements or other material to
which the other party reasonably objects, unless in the reasonable opinion of
counsel to the party proposing such statement, such statement is legally
required to be included. In furtherance of the foregoing, the Company will
provide to the Investor's Counsel (as defined in the Registration Rights
Agreement) drafts of the applicable text the first filing of a Current Report on
Form 8-K or a Quarterly or Annual Report on Form 10-Q or 10-K (or equivalent SB
forms) intended to be made with the SEC which refers to the Transaction
Agreements or the transactions contemplated thereby as soon as practicable (but
at least two (2) Trading Days before such filing will be made) and will not
include in such filing (or any other filing filed before then) any statement or
statements or other material to which the other party reasonably objects, unless
in the reasonable opinion of counsel to the party proposing such statement, such
statement is legally required to be included. Notwithstanding the foregoing,
each of the parties hereby consents to the inclusion of the text of the
Transaction Agreements in filings made with the SEC (but any descriptive text
accompanying or part of such filing shall be subject to the other provisions of
this paragraph). Notwithstanding, but subject to, the foregoing provisions of
this Section 4(j), the Company will, after the Closing Date, promptly issue a
press release and file a Current Report on Form 8-K or, if appropriate, a
quarterly or annual report on the appropriate form, referring to the
transactions contemplated by the Transaction Agreements.
k. Independent Nature of Buyers' Obligations and Rights. The
obligations of each Buyer under the Transaction Agreements are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible
in any way for the performance of the obligations of any Other Buyer under any
one or more of the Transaction Agreements. The decision of each Buyer or Other
Buyer to purchase Purchased Securities pursuant to the Transaction Agreements
has been made by such Buyer independently of any Other Buyer and independently
of any information, materials, statements or opinions as to the business,
affairs, operations, assets, properties, liabilities, results of operations,
condition (financial or otherwise) or prospects of the Company or of its
subsidiaries, if any, which may been made or given by any Other Buyer or any of
their respective officers, directors, principals, employees, agents, counsel or
representatives (collectively, including the Buyer, the "Buyer
Representatives"). No Buyer Representative shall have any liability to any Other
Buyer or the Company relating to or arising from any such information,
materials, statements or opinions, if any. Each Buyer acknowledges that no Other
Buyer has acted as agent for such Buyer in connection with making its investment
hereunder and that no Buyer will be acting as agent of such Other Buyer in
connection with monitoring its investment in the Purchased Securities or
enforcing its rights under the Transaction Agreements. Each Buyer shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Agreements, and it shall not be necessary for any Other Buyer to be
joined as an additional party in any proceeding for such purpose. The Company
acknowledges that, for reasons of administrative convenience, (x) the
Transaction Agreements have been prepared by counsel for one of the Buyers and
such counsel does not represent all of the Buyers with respect to the
transactions contemplated hereby, and each other Buyer has retained its own
counsel (or had the opportunity to do so) with respect to such transactions, and
(y) the Company has elected to provide each of the Buyers with the same
Transaction Agreements for the purpose of closing a transaction with
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multiple Buyers and not because it was required or requested to do so by any
Buyer. In furtherance of the foregoing, and not in limitation thereof, the
Company acknowledges that nothing contained in this Agreement or in any
Transaction Agreement, and no action taken by any Buyer pursuant thereto, shall
be deemed to constitute any two or more Buyers as a partnership, an association,
a joint venture or any other kind of entity, or create a presumption that the
Buyers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Agreements.
l. Equal Treatment of Buyers. No consideration shall be
offered or paid to any person to amend or consent to a waiver or modification of
any provision of any of the Transaction Agreements unless the same consideration
is also offered to all of the parties to the Transaction Agreements.
m. Independent Investment Decision. No Buyer has agreed to act
with any Other Buyer for the purpose of acquiring, holding, voting or disposing
of the Securities purchased hereunder for purposes of Section 13(d) under the
Exchange Act, and each Buyer is acting independently with respect to its
investment in the Securities. The decision of each Buyer to purchase Purchased
Securities pursuant to this Agreement has been made by such Buyer independently
of any other purchase and independently of any information, materials,
statements or opinions as to the business, affairs, operations, assets,
properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or its subsidiaries which may have made
or given by any Other Buyer or by any agent or employee of any Other Buyer, and
no Buyer or any of its agents or employees shall have any liability to any Other
Buyer (or any other person) relating to or arising from any such information,
materials, statements or opinions.
n. NASD Rule 2710. The Company is aware that the Corporate
Financing Rule 2710 ("NASD Rule 2710") of the National Association of Securities
Dealers ("NASD") is or may become applicable to the transactions contemplated by
the Transaction Agreements or to the sale by a Holder of any of the Securities.
If NASD Rule 2710 is so applicable, the Company shall, to the extent required by
such rule, cooperate with any broker or selling stockholder in respect of any
consents, authorizations or approvals that may be necessary for the NASD to
timely and expeditiously permit the stockholder to sell the securities.
o. Keeping of Records and Books of Account. The Company shall
keep and cause each subsidiary, if any, to keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP
consistently applied, reflecting all financial transactions of the Company and
such subsidiaries, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made.
p. Authorized Share Increase.
(i) The Company will take all commercially reasonable steps
necessary to effectuate the filing of an amendment to its Certificate of
Incorporation, as currently in effect, to reflect the Authorized Share Increase.
In furtherance of the foregoing, it will take all reasonable steps necessary to
have the stockholders meeting held and to obtain the requisite stockholder
approval, including, but not necessarily limited to, filing with the SEC and
distributing to the Company's stockholders a notice of and a proxy statement for
a stockholders meeting expected to be held by June 30, 2006 (or as soon
thereafter as may be practicable), and the Board of Directors' recommending
approval of the Authorized Share Increase. Upon the requisite authorization for
the Authorize Share Increase, the Company will file the Charter Amendment, such
filing to be made no later than the Filing Date (as defined below).
(ii) The term "Filing Date" means July 15, 2006, unless the
SEC issues comments on the preliminary proxy statement filed by the Company, in
which event, it means July 31, 2006. The term "Filing Evidence Date" means the
date which is three (3) Trading Days after the Filing Date.
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(iii) The Company will provide evidence of the timely filing
of the Charter Amendment. Evidence of such filing (the "Filing Evidence") shall
be made by the Company providing a letter from Company Counsel to the Document
Escrow Agent within three (3) Trading Days after the filing of the amendment,
but in no event later than the Filing Evidence Date, confirming (1) the
Authorized Share Increase was duly approved by the Company's stockholders on or
before the Filing Date, and (2) confirming the filing of the amendment to the
Certificate of Incorporation, specifying the date of such filing and providing a
copy of the amendment which is either (x) an original or a photocopy of the
amendment certified or stamped by the office in the State of Incorporation in
which the amendment was filed or (y) a photocopy of the amendment as filed,
together with an unqualified confirmation from Company Counsel that such
amendment has been filed.
5. TRANSFER AGENT INSTRUCTIONS.
a. The Company warrants that, with respect to the Securities,
other than the stop transfer instructions to give effect to Section 4(a) hereof,
it will give the Transfer Agent no instructions inconsistent with instructions
to issue Common Stock from time to time upon conversion of the Debentures or
exercise of the Warrants or in connection with the issuance of Payment Shares,
as may be applicable from time to time, in such amounts as specified from time
to time by the Company to the Transfer Agent, bearing the restrictive legend
specified in Section 4(b) of this Agreement prior to registration of the Shares
under the 1933 Act, registered in the name of the Buyer or its nominee and in
such denominations to be specified by the Holder in connection therewith. Except
as so provided, the Shares shall otherwise be freely transferable on the books
and records of the Company as and to the extent provided in this Agreement and
the other Transaction Agreements. Nothing in this Section shall affect in any
way the Buyer's obligations and agreement to comply with all applicable
securities laws upon resale of the Securities. If the Buyer provides the Company
with an opinion of counsel reasonably satisfactory to the Company that
registration of a resale by the Buyer of any of the Securities in accordance
with clause (1)(B) of Section 4(a) of this Agreement is not required under the
1933 Act or upon request from a Holder while the Registration Statement is
effective, the Company shall (except as provided in clause (2) of Section 4(a)
of this Agreement) permit the transfer of the Securities and, in the case of the
Conversion Shares, the Warrant Shares or the Payment Shares, as may be
applicable, promptly instruct the Transfer Agent to issue one or more
certificates for Common Stock without legend in such name and in such
denominations as specified by the Buyer.
b. (i) The Company understands that a delay in the delivery of
Conversion Certificates, whether on conversion of the Debenture and/or in
payment of accrued interest or on exercise of the Warrants, beyond the relevant
Delivery Date (as defined in the Debenture or Warrant, as the case may be) could
result in economic loss to the Holder. As compensation to the Holder for such
loss, the Company agrees to pay late payments to the Holder for late issuance of
the Conversion Certificates in accordance with the following schedule (where
"No. Business Days Late" is defined as the number of Trading Days beyond two (2)
Trading Days after the Delivery Date):(9)
----------
(9) Example: Notice of Conversion or Notice of Exercise is delivered on Monday,
October 2, 2006. The Delivery Date would be Thursday, October 5 (the third
Trading Day after such delivery). If the certificate is delivered by Monday,
October 9 (2 Trading Days after the Delivery Date), no payment under this
provision is due. If the certificates are delivered on October 10, that is 1
"Trading Day Late" in the table below; if delivered on October 17, that is 6
"Trading Days Late" in the table.
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Late Payment For Each $10,000
of Principal or Interest Being Converted or
No. Business Days Late of Exercise Price of Warrant Being Exercised
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
>10 $1,000 + $200 for each Business
Day Late beyond 10 days
The Company shall pay any payments incurred under this Section in immediately
available funds upon demand. Nothing herein shall limit the Holder's right to
pursue actual damages for the Company's failure to issue and deliver the
Conversion Certificates to the Holder within a reasonable time. Furthermore, in
addition to any other remedies which may be available to a Holder, in the event
that the Company fails for any reason to effect delivery of such Conversion
Certificates within two (2) Trading Days after the Delivery Date, the Converting
Holder will be entitled to revoke the relevant Notice of Conversion or Notice of
Exercise by delivering a notice to such effect to the Company prior to the
Converting Holder's receipt of the relevant Conversion Certificates, whereupon
the Company and the Converting Holder shall each be restored to their respective
positions immediately prior to delivery of such Notice of Conversion or Notice
of Exercise, as the case may be; provided, however, that any payments
contemplated by this Section 5(b) of this Agreement which have accrued through
the date of such revocation notice shall remain due and owing to the Converting
Holder notwithstanding such revocation.
(ii) If, by the tenth Trading Day after the relevant
Delivery Date, the Company fails for any reason to deliver the Conversion
Certificates, but at any time after the Delivery Date, the Converting Holder
purchases, in an arm's-length open market transaction or otherwise, shares of
Common Stock (the "Covering Shares") in order to make delivery in satisfaction
of a sale of Common Stock by the Converting Holder (the "Sold Shares"), which
delivery such Converting Holder anticipated to make using the shares to be
issued upon such conversion (a "Buy-In"), the Converting Holder shall have the
right to require the Company to pay to the Converting Holder, in addition to and
not in lieu of the amounts contemplated in other provisions of the Transaction
Agreements, including, but not limited to, the provisions of the immediately
preceding Section 5(b)(i)), the Buy-In Adjustment Amount (as defined below). The
"Buy-In Adjustment Amount" is the amount equal to the number of Sold Shares
multiplied by the excess, if any, of (x) the Holder's total purchase price per
share (including brokerage commissions, if any) for the Covering Shares over (y)
the net proceeds per share (after brokerage commissions, if any) received by the
Holder from the sale of the Sold Shares. The Company shall pay the Buy-In
Adjustment Amount to the Holder in immediately available funds immediately upon
demand by the Converting Holder. By way of illustration and not in limitation of
the foregoing, if the Holder purchases shares of Common Stock having a total
purchase price (including brokerage commissions) of $11,000 to cover a Buy-In
with respect to shares of Common Stock it sold for net proceeds of $10,000, the
Buy-In Adjustment Amount which Company will be required to pay to the Holder
will be $1,000.
c. The provisions of this paragraph apply on or after the
Effective Date. After such Effective Date, the Company will issue Shares without
legend and without transfer restrictions on the books of the Transfer Agent,
and, at the request of the Holder, will use it best efforts to have previously
issued certificates representing the Shares re-issued without legend and without
transfer restrictions on the books of the Transfer
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Agent. In lieu of delivering physical certificates representing the Common Stock
issuable upon conversion of the Debenture or exercise of a Warrant or at the
request of the Holder with respect to any Shares previously issued, provided the
Transfer Agent is participating in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer program, upon request of the Holder and the
Holder's compliance with the provisions contained in this paragraph, so long as
the certificates therefor do not bear a legend and the Holder thereof is not
obligated to return such certificate for the placement of a legend thereon, the
Company shall use its best efforts to cause the Transfer Agent to electronically
transmit to the Holder the Common Stock issuable upon conversion of the
Debenture or exercise of the Warrant or in replacement of any Shares previously
issued by crediting the account of Holder's Prime Broker with DTC through its
Deposit Withdrawal Agent Commission system. Anything to the contrary herein or
in any other Transaction Agreement notwithstanding, the Buyer acknowledges that
the Buyer is aware that the Company's current Transfer Agent does not currently
participate in the DTC program.
d. The Company shall assume any fees or charges of the
Transfer Agent or Company counsel regarding (i) the removal of a legend or stop
transfer instructions with respect to Registrable Securities, and (ii) the
issuance of certificates or DTC registration to or in the name of the Holder or
the Holder's designee or to a transferee as contemplated by an effective
Registration Statement. Notwithstanding the foregoing, it shall be the Holder's
responsibility to obtain all needed formal requirements (specifically: medallion
guarantee and prospectus delivery compliance) in connection with any electronic
issuance of shares of Common Stock.
e. The Holder of a Debenture or a Warrant shall be entitled to
exercise its conversion or exercise privilege with respect to the Debenture or
the Warrant, as the case may be, notwithstanding the commencement of any case
under 11 U.S.C. ss.101 et seq. (the "Bankruptcy Code"). In the event the Company
is a debtor under the Bankruptcy Code, the Company hereby waives, to the fullest
extent permitted, any rights to relief it may have under 11 U.S.C. ss.362 in
respect of such holder's exercise privilege. The Company hereby waives, to the
fullest extent permitted, any rights to relief it may have under 11 U.S.C.
ss.362 in respect of the conversion of the Debenture or the exercise of the
Warrant. The Company agrees, without cost or expense to such Holder, to take or
to consent to any and all action necessary to effectuate relief under 11 U.S.C.
ss.362.
f. The Company will authorize the Transfer Agent to give
information relating to the Company directly to the Holder or the Holder's
representatives upon the request of the Buyer or any such representative, to the
extent such information relates to (i) the status of shares of Common Stock
issued or claimed to be issued to the Holder in connection with a Notice of
Conversion or a Notice of Exercise, or (ii) the aggregate number of outstanding
shares of Common Stock of all stockholders (as a group and not individually) as
of a current or other specified date. At the request of the Holder, the Company
will provide the Holder with a copy of the authorization so given to the
Transfer Agent.
6. CLOSING DATE.
a. The Initial Closing Date shall occur on the date which is
the first Trading Day after each of the conditions contemplated by Sections 7
and 8 hereof shall have either been satisfied or been waived by the party in
whose favor such conditions run.
b. (i) Subject to the provisions of subparagraph this Section
6(b), the Additional Closing Date shall be the date specified in the Additional
Closing Date Notice (as defined below).
(ii) Subject to the other provisions of this Section 6(b),
the term "Additional Closing Date Notice" means a written notice given by the
Company to the Buyer and to the Placement Agent by fax transmission or hand
delivery no earlier than the date the Company submits the Filing Evidence to the
Document Escrow Agent and no later than the Filing Evidence Date.
(iii) It also shall be a condition to the giving of an
Additional Closing Date Notice that the representations and warranties of the
Company contained in Section 3 and otherwise in this Agreement,
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shall be true and correct in all material respects and there shall have been no
Material Adverse Effect from the Initial Closing Date through and including the
date the Company gives the Additional Closing Date Notice to the Buyer (and the
Company's issuance of the Additional Closing Date Notice shall constitute the
Company's making each such representation and warranty as of such date).
(iv) The Additional Closing Date Notice shall specify a
Trading Day, which shall not be less than five (5) and not more than ten (10)
Trading Days after the date the Additional Closing Date Notice is given as
provided in subparagraph (ii) above as date which will be the Additional Closing
Date.
(v) The Company shall execute the Certificates for the
Additional Debentures and the Additional Warrants and deliver them to the
Document Escrow Agent at least one Trading Day prior to the Additional Closing
Date. The "Issue Date" and the execution date in such Additional Debentures and
Additional Warrants shall be left blank and the Company will authorize the
Document Escrow Agent, upon their release to the Buyer, to fill in such dates
based on the date of the Additional Closing Date.
(vi) Upon receipt of the Additional Closing Date Notice, the
Buyer will pay the Additional Purchase Price by delivering immediately available
good funds in such amount to the Funds Escrow Agent no later than the date prior
to the Additional Closing Date, as contemplated by Section 1(c)(i) hereof.
(vii) Except as provided in this Section 6(b), the closing
for the Additional Debentures and the Additional Warrants shall be conducted
upon the same terms and conditions as those applicable to the Initial Debentures
and Initial Warrants.
(viii) The Company hereby covenants and agrees that the
Company will issue the Additional Closing Date Notice to the Buyer and the
Placement Agent on a timely basis.
(ix) If any one of the following conditions is true:
(x) the Company advises the Document Escrow Agent in writing that the
stockholders did not approve the Authorized Share Increase;
(y) the Company does not provide the Filing Evidence to the Document
Escrow Agent by the Filing Evidence Date; or
(z) the Company does not timely give the Additional Closing Date
Notice,
then the obligations of the Buyer to purchase the Additional Debentures and the
Additional Warrants and the obligations of the Company to issue the Additional
Debentures and the Additional Warrants shall automatically terminate (an
"Additional Closing Date Termination"). Such Additional Closing Date Termination
shall not affect the obligations of the Company or the Buyer under any of the
other Transaction Agreements, including, without limitation, the Registration
Rights Agreement, except that, as of the Additional Closing Date Termination,
the Transaction Agreements shall be deemed not to refer to any unissued
Additional Debentures and Additional Warrants. All obligations (other than the
unconsummated purchase and sale obligations) accrued as of such Additional
Closing Date Termination shall remain in effect.
(x) If there is an Additional Closing Date Termination, the
Document Escrow Agent will (a) return all Certificates for the Additional
Debentures and Additional Warrants then being held in escrow and (b) direct the
Funds Escrow Agent to return any Additional Purchase Price amounts held by the
Funds Escrow Agent to the Buyer. Notwithstanding the foregoing, each Buyer
understands that the Funds Escrow Agent may require certain information from the
Buyer prior to effecting such return, and, if such information is requested, (q)
the Funds Escrow Agent may not disburse such funds to the Buyer without such
information, and (r) any directions given by the Document Escrow Agent may not
be effected until such information is provided.
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(xi) In addition to, and not in lieu of, the foregoing, the
Company agrees that if there is an Additional Closing Date Termination, the
Company will not, without the prior written consent of a Majority in Interest of
the Holders in each instance (which consent is in the sole discretion of the
Holders and may be withheld for any reason or for no reason whatsoever), enter
into any New Transaction whatsoever until the date which is the first annual
anniversary of the Initial Closing Date.
c. Each closing of the purchase and issuance of Debentures and
Warrants shall occur on the relevant Closing Date at the offices of the Escrow
Agent.
d. Notwithstanding anything to the contrary contained herein,
on the relevant Closing Date upon satisfaction of the conditions set forth in
Sections 7 and 8 hereof and as provided in the Joint Escrow Instructions, the
Document Escrow Agent will be authorized to (i) authorize the Funds Escrow Agent
to release the relevant Escrow Funds to the Company and to others, as provided
in the Joint Escrow Instructions, and (ii) as provided herein, release to the
Buyer the relevant Certificates issued to the Buyer.
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Buyer understands that the Company's obligation to sell
the relevant Purchased Securities to the Buyer pursuant to this Agreement on the
relevant Closing Date is conditioned upon:
a. The execution and delivery of this Agreement by the Buyer
on or before such Closing Date;
b. Delivery by the Buyer to the Funds Escrow Agent by the
relevant Closing Date of good funds as payment in full of an amount equal to the
relevant Purchase Price in accordance with this Agreement;
c. The accuracy on such Closing Date of the representations
and warranties of the Buyer contained in this Agreement, each as if made on such
date, and the performance by the Buyer on or before such date of all covenants
and agreements of the Buyer required to be performed on or before such date; and
d. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.
8. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to
purchase the relevant Purchased Securities on the relevant Closing Date is
conditioned upon:
a. The execution and delivery of this Agreement and the other
Transaction Agreements by the Company on or before such Closing Date;
b. The delivery by the Company to the Document Escrow Agent of
the relevant Certificates in accordance with this Agreement;
c. The delivery by the Company to the Document Escrow Agent on
or before the Initial Closing Date of the executed Company Principal's
Agreements from each Company Principal and the related Principals (as defined in
each Company Principal's Agreement) of such Company Principal;
d. On such Closing Date, each of the Transaction Agreements
executed by the Company on or before such date shall be in full force and effect
and the Company shall not be in default thereunder;
e. The accuracy in all material respects on such Closing Date
of the representations and warranties of the Company contained in this
Agreement, each as if made on such date, and the performance by the
4/26/06
Company on or before such date of all covenants and agreements of the Company
required to be performed on or before such date;
f. The delivery to the Document Escrow Agent of an opinion of
counsel for the Company, dated such Closing Date, addressed to the Buyer and the
Other Buyers and to the Placement Agent, in form, scope and substance reasonably
satisfactory to the Buyer and the Placement Agent, substantially to the effect
set forth in Annex III attached hereto; provided, that, on the Additional
Closing Date such opinion may refer to the opinion issued on the Initial Closing
Date and indicate that the Buyer and the Placement Agent may continue to rely on
it with respect to the transactions and the securities issued in connection with
the Additional Closing Date;
g. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained;
h. From and after the date hereof to and including such
Closing Date, each of the following conditions will remain in effect: (i) the
trading of the Common Stock shall not have been suspended by the SEC or on the
Principal Trading Market; (ii) trading in securities generally on the Principal
Trading Market shall not have been suspended or limited; (iii), no minimum
prices shall been established for securities traded on the Principal Trading
Market; and (iv) there shall not have been any material adverse change in any
financial market; and
i. With respect to the Additional Closing Date,
(i) the receipt by the Document Escrow Agent of the Filing
Evidence on or before the Filing Evidence Date;
(ii) the receipt by the Buyer of the Additional Closing Date
Notice, which shall have been duly and timely given as provided in the relevant
provisions of Section 6(b); and
(iii) the representations and warranties of the Company
contained in Section 3 hereof shall be true and correct in all material respects
as if made on the Additional Closing Date (rather than the Initial Closing Date)
and there shall have been no Material Adverse Effect from the Initial Closing
Date through and including the Additional Closing Date (and an executive officer
of the Company shall issue an Officer's Certificate substantially in the form of
Annex X hereto with respect thereto; provided, however, that such Officer's
Certificate may update certain information, such as the number of shares of the
Company's stock outstanding, included in Section 3).
9. INDEMNIFICATION AND REIMBURSEMENT.
a. (i) The Company agrees to indemnify and hold harmless the
Buyer and its officers, directors, employees, and agents, and each Buyer Control
Person from and against any losses, claims, damages, liabilities or expenses
incurred (collectively, "Damages"), joint or several, and any action in respect
thereof to which the Buyer, its partners, Affiliates, officers, directors,
employees, and duly authorized agents, and any such Buyer Control Person becomes
subject to, resulting from, arising out of or relating to any misrepresentation,
breach of warranty or nonfulfillment of or failure to perform any covenant or
agreement on the part of Company contained in this Agreement, as such Damages
are incurred, except to the extent such Damages result primarily from Buyer's
failure to perform any covenant or agreement contained in this Agreement or the
Buyer's or its officer's, director's, employee's, agent's or Buyer Control
Person's illegal or willful misconduct, gross negligence, recklessness or bad
faith (in each case, as determined by a non-appealable judgment to such effect)
in performing its obligations under this Agreement.
(ii) The Company hereby agrees that, if the Buyer, other
than by reason of its gross negligence or willful misconduct (in each case, as
determined by a non-appealable judgment to such effect), (x) becomes involved in
any capacity in any action, proceeding or investigation brought by any
stockholder of the Company, in connection with or as a result of the
consummation of the transactions contemplated by this Agreement or the other
Transaction Agreements, or if the Buyer is impleaded in any such action,
proceeding or investigation by
4/26/06
any Person, or (y) becomes involved in any capacity in any action, proceeding or
investigation brought by the SEC, any self-regulatory organization or other body
having jurisdiction, against or involving the Company or in connection with or
as a result of the consummation of the transactions contemplated by this
Agreement or the other Transaction Agreements, or (z) is impleaded in any such
action, proceeding or investigation by any Person, then in any such case, the
Company shall indemnify, defend and hold harmless the Buyer from and against and
in respect of all losses, claims, liabilities, damages or expenses resulting
from, imposed upon or incurred by the Buyer, directly or indirectly, and
reimburse such Buyer for its reasonable legal and other expenses (including the
cost of any investigation and preparation) incurred in connection therewith, as
such expenses are incurred. The indemnification and reimbursement obligations of
the Company under this paragraph shall be in addition to any liability which the
Company may otherwise have, shall extend upon the same terms and conditions to
any Affiliates of the Buyer who are actually named in such action, proceeding or
investigation, and partners, directors, agents, employees and Buyer Control
Persons (if any), as the case may be, of the Buyer and any such Affiliate, and
shall be binding upon and inure to the benefit of any successors, assigns, heirs
and personal representatives of the Company, the Buyer, any such Affiliate and
any such Person. The Company also agrees that neither the Buyer nor any such
Affiliate, partner, director, agent, employee or Buyer Control Person shall have
any liability to the Company or any Person asserting claims on behalf of or in
right of the Company in connection with or as a result of the consummation of
this Agreement or the other Transaction Agreements, except as may be expressly
and specifically provided in or contemplated by this Agreement.
b. All claims for indemnification by any Indemnified Party (as
defined below) under this Section shall be asserted and resolved as follows:
(i) In the event any claim or demand in respect of which any
Person claiming indemnification under any provision of this Section (an
"Indemnified Party") might seek indemnity under paragraph (a) of this Section is
asserted against or sought to be collected from such Indemnified Party by a
Person other than a party hereto or an Affiliate thereof (a "Third Party
Claim"), the Indemnified Party shall deliver a written notification, enclosing a
copy of all papers served, if any, and specifying the nature of and basis for
such Third Party Claim and for the Indemnified Party's claim for indemnification
that is being asserted under any provision of this Section against any Person
(the "Indemnifying Party"), together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith, of such Third
Party Claim (a "Claim Notice") with reasonable promptness to the Indemnifying
Party. If the Indemnified Party fails to provide the Claim Notice with
reasonable promptness after the Indemnified Party receives notice of such Third
Party Claim, the Indemnifying Party shall not be obligated to indemnify the
Indemnified Party with respect to such Third Party Claim to the extent that the
Indemnifying Party's ability to defend has been prejudiced by such failure of
the Indemnified Party. The Indemnifying Party shall notify the Indemnified Party
as soon as practicable within the period ending thirty (30) calendar days
following receipt by the Indemnifying Party of either a Claim Notice or an
Indemnity Notice (as defined below) (the "Dispute Period") whether the
Indemnifying Party disputes its liability or the amount of its liability to the
Indemnified Party under this Section and whether the Indemnifying Party desires,
at its sole cost and expense, to defend the Indemnified Party against such Third
Party Claim. The following provisions shall also apply.
(x) If the Indemnifying Party notifies the Indemnified Party within the
Dispute Period that the Indemnifying Party desires to defend the
Indemnified Party with respect to the Third Party Claim pursuant to
this paragraph (b) of this Section, then the Indemnifying Party shall
have the right to defend, with counsel reasonably satisfactory to the
Indemnified Party, at the sole cost and expense of the Indemnifying
Party, such Third Party Claim by all appropriate proceedings, which
proceedings shall be vigorously and diligently prosecuted by the
Indemnifying Party to a final conclusion or will be settled at the
discretion of the Indemnifying Party (but only with the consent of the
Indemnified Party in the case of any settlement that provides for any
relief other than the payment of monetary damages or that provides for
the payment of monetary damages as to which the Indemnified Party shall
not be indemnified in full pursuant to paragraph (a) of this Section).
The Indemnifying Party shall have full control of such defense and
proceedings, including any compromise or settlement thereof; provided,
however, that the Indemnified Party may, at the sole cost and expense
of the Indemnified Party, at any time prior to the Indemnifying Party's
delivery
4/26/06
of the notice referred to in the first sentence of this subparagraph
(x), file any motion, answer or other pleadings or take any other
action that the Indemnified Party reasonably believes to be necessary
or appropriate protect its interests; and provided further, that if
requested by the Indemnifying Party, the Indemnified Party will, at
the sole cost and expense of the Indemnifying Party, provide
reasonable cooperation to the Indemnifying Party in contesting any
Third Party Claim that the Indemnifying Party elects to contest. The
Indemnified Party may participate in, but not control, any defense or
settlement of any Third Party Claim controlled by the Indemnifying
Party pursuant to this subparagraph (x), and except as provided in the
preceding sentence, the Indemnified Party shall bear its own costs and
expenses with respect to such participation. Notwithstanding the
foregoing, the Indemnified Party may take over the control of the
defense or settlement of a Third Party Claim at any time if it
irrevocably waives its right to indemnity under paragraph (a) of this
Section with respect to such Third Party Claim.
(y) If the Indemnifying Party fails to notify the Indemnified Party
within the Dispute Period that the Indemnifying Party desires to defend
the Third Party Claim pursuant to paragraph (b) of this Section, or if
the Indemnifying Party gives such notice but fails to prosecute
vigorously and diligently or settle the Third Party Claim, each in a
reasonable manner, or if the Indemnifying Party fails to give any
notice whatsoever within the Dispute Period, then the Indemnified Party
shall have the right to defend, at the sole cost and expense of the
Indemnifying Party, the Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted by the Indemnified
Party in a reasonable manner and in good faith or will be settled at
the discretion of the Indemnified Party (with the consent of the
Indemnifying Party, which consent will not be unreasonably withheld).
The Indemnified Party will have full control of such defense and
proceedings, including any compromise or settlement thereof; provided,
however, that if requested by the Indemnified Party, the Indemnifying
Party will, at the sole cost and expense of the Indemnifying Party,
provide reasonable cooperation to the Indemnified Party and its counsel
in contesting any Third Party Claim which the Indemnified Party is
contesting. Notwithstanding the foregoing provisions of this
subparagraph (y), if the Indemnifying Party has notified the
Indemnified Party within the Dispute Period that the Indemnifying Party
disputes its liability or the amount of its liability hereunder to the
Indemnified Party with respect to such Third Party Claim and if such
dispute is resolved in favor of the Indemnifying Party in the manner
provided in subparagraph(z) below, the Indemnifying Party will not be
required to bear the costs and expenses of the Indemnified Party's
defense pursuant to this subparagraph (y) or of the Indemnifying
Party's participation therein at the Indemnified Party's request, and
the Indemnified Party shall reimburse the Indemnifying Party in full
for all reasonable costs and expenses incurred by the Indemnifying
Party in connection with such litigation. The Indemnifying Party may
participate in, but not control, any defense or settlement controlled
by the Indemnified Party pursuant to this subparagraph (y), and the
Indemnifying Party shall bear its own costs and expenses with respect
to such participation.
(z) If the Indemnifying Party notifies the Indemnified Party that it
does not dispute its liability or the amount of its liability to the
Indemnified Party with respect to the Third Party Claim under paragraph
(a) of this Section or fails to notify the Indemnified Party within the
Dispute Period whether the Indemnifying Party disputes its liability or
the amount of its liability to the Indemnified Party with respect to
such Third Party Claim, the amount of Damages specified in the Claim
Notice shall be conclusively deemed a liability of the Indemnifying
Party under paragraph (a) of this Section and the Indemnifying Party
shall pay the amount of such Damages to the Indemnified Party on
demand. If the Indemnifying Party has timely disputed its liability or
the amount of its liability with respect to such claim, the
Indemnifying Party and the Indemnified Party shall proceed in good
faith to negotiate a resolution of such dispute; provided, however,
that if the dispute is not resolved within thirty (30) days after the
Claim Notice, the Indemnifying Party shall be entitled to institute
such legal action as it deems appropriate.
4/26/06
(ii) In the event any Indemnified Party should have a claim
under paragraph (a) of this Section against the Indemnifying Party that does not
involve a Third Party Claim, the Indemnified Party shall deliver a written
notification of a claim for indemnity under paragraph (a) of this Section
specifying the nature of and basis for such claim, together with the amount or,
if not then reasonably ascertainable, the estimated amount, determined in good
faith, of such claim (an "Indemnity Notice") with reasonable promptness to the
Indemnifying Party. The failure by any Indemnified Party to give the Indemnity
Notice shall not impair such party's rights hereunder except to the extent that
the Indemnifying Party demonstrates that it has been irreparably prejudiced
thereby. If the Indemnifying Party notifies the Indemnified Party that it does
not dispute the claim or the amount of the claim described in such Indemnity
Notice or fails to notify the Indemnified Party within the Dispute Period
whether the Indemnifying Party disputes the claim or the amount of the claim
described in such Indemnity Notice, the amount of Damages specified in the
Indemnity Notice will be conclusively deemed a liability of the Indemnifying
Party under paragraph (a) of this Section and the Indemnifying Party shall pay
the amount of such Damages to the Indemnified Party on demand. If the
Indemnifying Party has timely disputed its liability or the amount of its
liability with respect to such claim, the Indemnifying Party and the Indemnified
Party shall proceed in good faith to negotiate a resolution of such dispute;
provided, however, that if the dispute is not resolved within thirty (30) days
after the Claim Notice, the Indemnifying Party shall be entitled to institute
such legal action as it deems appropriate.
c. The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar rights of the indemnified party
against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to.
10. JURY TRIAL WAIVER. The Company and the Buyer hereby waive
a trial by jury in any action, proceeding or counterclaim brought by either of
the Parties hereto against the other in respect of any matter arising out or in
connection with the Transaction Agreements.
11. SPECIFIC PERFORMANCE. The Company and the Buyer
acknowledge and agree that irreparable damage would occur in the event that any
provision of this Agreement or any of the other Transaction Agreements were not
performed in accordance with its specific terms or were otherwise breached. It
is accordingly agreed that the parties (including any Holder) shall be entitled
to an injunction or injunctions, without (except as specified below) the
necessity to post a bond, to prevent or cure breaches of the provisions of this
Agreement or such other Transaction Agreement and to enforce specifically the
terms and provisions hereof or thereof, this being in addition to any other
remedy to which any of them may be entitled by law or equity; provided, however
that the Company, upon receipt of a Notice of Conversion or a Notice of
Exercise, may not fail or refuse to deliver the stock certificates and the
related legal opinions, if any, based on any claim that the Holder has violated
any provision hereof or for any other reason, unless the Company has first
posted a bond for one hundred fifty percent (150%) of the principal amount and
then obtained a court order specifically directing it not to deliver said stock
certificates to the Holder. This provision is deemed incorporated by reference
into each of the Transaction Agreements as if set forth therein in full.
12. GOVERNING LAW: MISCELLANEOUS.
a. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the exclusive
jurisdiction of the federal courts whose districts encompass any part of the
County of New York or the state courts of the State of New York sitting in the
County of New York in connection with any dispute arising under this Agreement
or any of the other Transaction Agreements and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based on forum
non conveniens, to the bringing of any such proceeding in such jurisdictions or
to any claim that such venue of the suit, action or proceeding is improper. To
the extent determined by such court, the Company shall reimburse the Buyer for
any reasonable legal fees and disbursements incurred by the Buyer in enforcement
of or protection of any of its rights under any of the Transaction Agreements.
Nothing in this Section shall affect or limit any right to serve process in any
other manner permitted by law.
4/26/06
b. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
c. This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties hereto.
d. All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
e. A facsimile transmission of this signed Agreement shall be
legal and binding on all parties hereto.
f. This Agreement may be signed in one or more counterparts,
each of which shall be deemed an original.
g. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
h. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
i. This Agreement may be amended only by an instrument in
writing signed by the party to be charged with enforcement thereof.
j. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
k. All dollar amounts referred to or contemplated by this
Agreement or any other Transaction Agreement shall be deemed to refer to US
Dollars, unless otherwise explicitly stated to the contrary.
13. NOTICES. Any notice required or permitted hereunder shall
be given in writing (unless otherwise specified herein) and shall be deemed
effectively given on the earliest of
(a) the date delivered, if delivered by personal
delivery as against written receipt therefor or by confirmed
facsimile transmission,
(b) the fifth Trading Day after deposit, postage
prepaid, in the United States Postal Service by registered or
certified mail, or
(c) the third Trading Day after mailing by domestic
or international express courier, with delivery costs and fees
prepaid,
in each case, addressed to each of the other parties thereunto entitled at the
following addresses (or at such other addresses as such party may designate by
ten (10) days' advance written notice similarly given to each of the other
parties hereto):
4/26/06
COMPANY: At the address set forth at the head of this Agreement.
Attn: President
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to:
Aboudi & Xxxxxxxxxx
Attn: Xxxxx Xxxxxx, Esq.
Rechov Gavish 3, POB 2432
Kfar Xxxx Xxxxxxxxxx Xxxx 00000 Xxxxxx
Telephone No.: (000-000-0) 000-0000
Telecopier No.: (000-000-0) 000-0000
BUYER: At the address set forth on the signature page of this Agreement.
with a copy to:
Xxxxxxx & Xxxxxx LLP, Esqs.
00 Xxxxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
DOCUMENT
ESCROW AGENT: Xxxxxxx & Xxxxxx LLP, Esqs.
00 Xxxxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's
and the Buyer's representations and warranties herein shall survive the
execution and delivery of this Agreement and the delivery of the Certificates
and the payment of the Purchase Price, for a period of three (3) years after the
Closing Date and shall inure to the benefit of the Buyer and the Company and
their respective successors and assigns.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK.]
4/26/06
[SECURITIES PURCHASE AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, with respect to the Purchase Price
specified below, each the undersigned represents that the foregoing statements
made by it above are true and correct and that it has caused this Agreement to
be duly executed on its behalf (if an entity, by one of its officers thereunto
duly authorized) as of the date first above written.
TOTAL PURCHASE PRICE: $________________________
[Note: The TOTAL PURCHASE PRICE is the aggregate total to be paid
by the Buyer on the Initial Closing Date and the Additional Closing Date.]
BUYER:
-------------------------------- ------------------------------------
Address Printed Name of Buyer
--------------------------------
By: _________________________________
Telecopier No. _________________ (Signature of Authorized Person)
---------------------------------
______________________________ Printed Name and Title
Jurisdiction of Incorporation
or Organization
If the above Notice Address is not the Residence (for individual Buyer) or
Principal Place of Business (for Buyer which is not an individual), such
Residence or Principal Place of Business is:
-----------------------------
-----------------------------
-----------------------------
COMPANY:
AMEDIA NETWORKS, INC.
By: __________________________
Title: __________________________
4/26/06
