NOTE PURCHASE AGREEMENT
THIS
NOTE
PURCHASE AGREEMENT (the “Agreement”)
is
made this 5th day of June 2008 by and among INTELLIHOME, INC. (the “Company”),
a
Texas corporation, XXXX XXXXXXX, an individual residing in Katy, Texas
(“Trimble”),
and
the purchasers whose names appear on the signature page hereof (the
“Purchasers”).
WHEREAS,
the Purchasers, and their designees, desire to acquire from certain shareholders
(the “Selling
Shareholders”)
of the
Company shares (the “Purchased
Shares”)
representing a controlling interest in the Company and, in connection therewith,
desire to provide certain funding to the Company in order to (i) pay all of
the
outstanding indebtedness and liabilities of the Company (the “Settled
Debts”),
(ii)
pay certain costs (the “Reporting
Costs”)
associated with preparation and filing with the Securities and Exchange
Commission (the “SEC”)
of the
Company’s quarterly report on Form 10-QSB for the quarter ended March 31, 2008
and (iii) provide working capital to support existing operations (the
“Legacy
Operations”)
of the
Company (the “Working
Capital Requirement”)(the
actual funds provided to the Company by the Purchasers, and their designees,
with respect to the Settled Debts, the Reporting Costs and the Working Capital
Requirement is referred to as the “Company
Funding”
and
the
obligation of the Purchasers to pay the Company Funding is referred to as the
“Company
Funding Obligation”);
WHEREAS,
the aggregate amount to be paid by the Purchasers, and their designees, to
the
Selling Shareholders and to Company with respect to the Purchased Shares, the
Settled Debts, the Reporting Costs and the Working Capital Requirement shall
be
$575,000 (the “Total
Funding”);
WHEREAS,
the Company proposes, subject to the terms and conditions stated herein, to
issue and sell from time to time as funds are advanced to the Company in
satisfaction of the Company Funding, and the Purchasers desire to purchase
from
time to time, 8% Convertible Notes, in the form attached hereto as Exhibit
A
(the
“Notes”),
in
the aggregate principal amount equal to the Company Funding;
WHEREAS,
upon satisfaction of the obligation by the Purchasers, or their designees,
of
the obligation to provide the Total Funding, the Notes will be convertible
into
duly and validly issued, fully paid and non-assessable shares of common stock,
par value $0.001 per share (the “Common
Stock”),
of
the Company (such shares, the “Shares”
and,
together with the Notes, the “Securities”)
on the
terms, and subject to the conditions, set forth herein;
WHEREAS,
funds in settlement of the Total Funding obligation of the Purchasers will
be
advanced in multiple advances and will be applied to the Purchased Shares,
the
Settled Debts, the Reporting Costs and Working Capital Requirement in the manner
provided for herein;
WHEREAS,
upon the advance of funds hereunder by the Purchasers in an amount of not less
than $25,000 (the “First
Funding”),
the
Company shall cause a designee of the Purchasers to be appointed to the Board
of
Directors and as Chief Executive Officer of the Company, in which capacity,
said
designee will be granted full budgetary authority and signing authority on
Company bank accounts, subject only to the rights of Trimble to review and
approve the manner of settlement and application of funds from the Company
Funding;
WHEREAS,
on or prior to the satisfaction in full of the Company Funding Obligation (the
“Full
Funding Date”),
the
Company shall cause its current officers and directors to resign in such
capacities;
WHEREAS,
Trimble will continue to oversee and conduct the Company’s “home security
monitoring” and “smart home” operations for a minimum of forty-five (45) days
following the First Funding;
WHEREAS,
pending satisfaction in full of the Company Funding Obligation, the Purchasers
shall fully and unconditionally guarantee, and shall indemnify and hold harmless
the Company and each officer, director and shareholder against any claim, loss
or liability relating to (together, the “Guarantee
and Indemnity Obligation”),
(i)
all outstanding liabilities and indebtedness of the Company existing as of
the
date hereof, (ii) all liabilities and indebtedness relating to Reporting Costs
and Working Capital Requirements; provided, however, that the Guarantee and
Indemnity Obligation shall in no event exceed the excess, if any, of $575,000
over the funds actually advanced in satisfaction of the Company Funding
Obligation and to purchase the Purchased Shares; and (iii) all liabilities
and
indebtedness incurred by the Company after the First Funding (“New
Business Indebtedness”),
other
than liabilities and indebtedness directly attributable to the Legacy
Operations.
This
Agreement, the agreements with the Selling Shareholders (the “Selling
Shareholder Agreements”),
and
the form of Note between the Company and the Purchasers, are referred to herein
collectively as the “Transaction
Documents,”
and
the transactions contemplated hereby and thereby are referred to herein
collectively as the “Transactions.”
NOW,
THEREFORE, in consideration of the mutual covenants and undertakings herein
set
forth, the parties hereto agree as follows:
1. Purchase
and Sale of Notes.
(a) On
the
basis of the representations, warranties and covenants contained in this
Agreement, and subject to its terms and conditions, the Company agrees to issue
and sell to the Purchasers and the Purchasers agree to purchase from the Company
an aggregate principal amount of Notes in an amount not to exceed, in the
aggregate, the Total Funding.
(b) The
purchase price for the Notes will be equal to 100% of the principal amount
thereof.
(c) Delivery
of, and payment for, the Notes shall be made on one or more occasions (each,
a
“Closing”
and
together the “Closings”)
as
funds are provided in accordance with Section 2, to satisfy the Company Funding
Obligation at such place as the Company and the Purchasers shall designate
and
upon each Closing, the amount funded will be recorded on the schedule attached
at the end of this Agreement.
2
2. Company
Funding Obligation.
(a) As
consideration for the Notes, the Purchasers, and their designees, agree to
provide funding to the Company in an aggregate amount not to exceed the Total
Funding, on the following terms:
(i) Not
later
than three days after the date of this Agreement, the Purchasers shall provide
funding to the Company in the amount of not less than $25,000, which amount
shall comprise the First Funding and will be applied by the Company first to
pay
the Reporting Costs.
(ii) During
the four week period (the “Operating
Period”)
beginning on the date of the First Funding, the Purchasers shall provide funding
to the Company in amounts designated in writing by Xxxx Xxxxxxx, the total
amount not to exceed $25,000, which amount shall be applied first to payment
of
operating costs and fulfillment of contractual obligations (and not to repayment
of indebtedness or liabilities existing as of the date hereof) of the Company
and the payment of which will be applied to satisfaction of the Working Capital
Requirement.
(iii) On
or
before forty five (45) days after the date of this Agreement (the “Initial
Funding Period”),
the
Purchasers shall provide funding to the Company in an amount equal to the lesser
of (A) the Settled Debts, as reflected on the Settled Amounts Schedule (as
defined below), or (B) $175,000 less all amounts funded pursuant to Section
4(b)(iii)(z) of this Agreement (such lesser amount being referred to as the
“Cash
Settlement Funding Amount”),
which
amount shall be applied to the payment of all outstanding indebtedness and
liabilities of the Company other than Installment Debt (as defined below),
including, but not be limited to, (Y) accrued and unpaid salary as of the date
hereof as reflected on the Company’s books and records and accruing from the
date hereof through the last day of the Operating Period (provided, however,
that such amount is not otherwise included in the Working Capital Requirement),
and (Z) amounts borrowed on credit cards, bank facilities or otherwise by
officers, directors or shareholders of the Company for the benefit and use
of
the Company as reflected on the Company’s books and records; provided, however,
that the Purchasers may, by written notice to the Company, extend the Initial
Funding Period by fifteen (15) days (as extended, the “Extended
Funding Period”)
if,
and only if, the Purchasers have, on or before the last day of the Initial
Funding Period, provided funding in an aggregate amount not less than $87,500
pursuant to Sections 2(b)(iii) and 4(b)(iii)(z) of this Agreement.
(iv) On
or
before the last day of the Initial Funding Period or the Extended Funding
Period, if applicable, the Purchasers shall arrange for the settlement of the
excess of the Settled Debts, as reflected on the Settled Amounts Schedule,
less
the Cash Settlement Funding Amount (such excess being referred to as the
“Excess
Funding Obligation”)
by
either (A) providing funding to the Company or payments directly to the
creditors of the Company in cash sufficient to satisfy the Excess Funding
Obligation, or (B) providing a written undertaking to assume, and pay all
installments as they come due on, Settled Debts not otherwise paid hereunder
and
providing for scheduled payments (including but not limited to credit card
debts
and bank loans)(the “Installment
Debt”),
or
(C) subject to acceptance of the same by creditors of the Company, issuing
convertible promissory notes on terms substantially identical to those included
in the Trimble Note (as defined below), or (D) any combination of the
foregoing.
3
(b) The
Purchasers may, at their option, pay amounts directly to creditors of the
Company, which amounts will be applied toward satisfaction of the Company
Funding Obligation as if paid to the Company pursuant to Section
2(a).
(c) The
Purchasers and the Company agree that, during the Initial Funding Period as
extended, each will cooperate with the other in (i) negotiations with various
creditors of the Company with the objective of settling amounts owed to such
creditors on a discounted basis and (ii) preparing a written final definitive
schedule (the “Settled
Amounts Schedule”)
of all
amounts comprising Settled Debt, Reporting Costs and the Working Capital
Requirement. In connection with the foregoing, it is understood and agreed
that:
(i) Trimble,
as President of the Company, will have sole and final authority to determine
the
identity and terms on which amounts owed to creditors are ultimately
compromised;
(ii) With
respect to indebtedness settled for less than the full stated amount payable,
only the amount actually paid will be deemed to be Settled Debt;
(iii) In
the
event of disputes regarding the Settled Amounts Schedule, the Purchasers and
Trimble will attempt to negotiate a satisfactory resolution and, if they are
unable to negotiate a satisfactory resolution, the Settled Amounts Schedule,
this Agreement and the applicable accounting records of the Company will be
submitted to the Company’s independent registered public accounting firm (the
“Accountant”)
for
purposes of reconciling the amounts properly included on the Settled Amounts
Schedule and the determination of the Accountant shall be
conclusive.
(d) With
respect to any permitted payments of Installment Debt after the last day of
the
Initial Funding Period, as extended (as permitted under Section 2(b)(iv)(B)),
any amounts constituting interest on that Installment Debt accruing after the
last day of the Initial Funding Period shall not be credited in determining
the
amounts funded by the Purchasers under this Agreement.
3. Company
Operations.
(a) Upon
the
advance of funds hereunder by the Purchasers in the amount of the First Funding,
the Company shall cause a designee (the “Purchaser
Management Designee”)
of the
Purchasers to be appointed to the Board of Directors and as Chief Executive
Officer of the Company, in which capacity, said designee will be granted full
budgetary authority and signing authority on Company bank accounts, subject
only
to the rights of Trimble to review and approve the manner of settlement and
application of funds from the Company Funding.
4
(b) Trimble
will continue to oversee and conduct the Company’s “home security monitoring”
and “smart home” operations for a minimum of forty-five (45) days following the
First Funding and during that period will have authority to liquidate assets
and
settle obligations relating to such operations. All cash on hand on the First
Funding (excluding cash provided by the First Funding) and all proceeds received
from the collection of receivables or liquation of assets (collectively, the
“Residual
Cash”)
from
the date hereof through the last day of the Initial Funding Period, or the
Extended Funding Period if applicable, shall be applied to support operations
of
the “home security monitoring” and “smart home” business and to settle debt of
the Company. Residual Cash shall not be treated as cash provided by the
Purchasers pursuant to Section 2. Any Residual Cash remaining on hand on the
last day of the Initial Funding Period, or the Extended Funding Period if
applicable, shall be applied at that time to the settlement of any amounts
on
the Settled Amounts Schedule not otherwise previously satisfied as determined
by
Trimble.
(c) Subject
to the provisions of Section 3(b), on and after the First Funding, the business
direction and strategy of the Company shall be determined and controlled by
the
Purchaser Management Designee.
(d) On
or
prior to the Full Funding Date, the Company shall cause its current officers
and
directors (excluding the Purchaser Management Designee) to resign in such
capacities; provided, however, that should the Full Funding Date not have
occured on or before the last day of the Initial Funding Period, or the Extended
Funding Period if applicable, the Purchasers and the Purchaser Management
Designee shall take such steps as may be reasonably necessary to appoint Trimble
as the sole officer and director of the Company, including causing the Purchaser
Management Designee to resign as an officer and director of the
Company.
(e) From
the
date hereof until the First Funding, the Company shall not (except as otherwise
specifically contemplated herein) issue any securities, including debt
securities, or incur any indebtedness other than in the ordinary course of
business.
(f) On
or
before the First Funding, the Company shall secure releases of all existing
employment agreements, subject to and in accordance with the provisions of
Section 4(a) below.
4. Selling
Shareholder and Employee Xxxxxxxxxxx.Xx
a
condition of providing the financing contemplated herein, the Purchasers require
that certain members of management of the Company and certain shareholders
of
the Company enter into separate agreements releasing certain rights that each
may have against, or with respect to, the Company, whether under employment
agreements or with respect to securities held by those persons. In that regard,
the parties agree that:
(a) The
Company and the Purchasers will enter into agreements with each of Trimble
and
Xxxx Xxxxx (“Xxxxx”),
substantially in the form attached hereto as Exhibit
B,
pursuant to which:
5
(i) Each
of
Trimble and Xxxxx agree to terminate their existing employment agreements with
the Company, effective on the First Funding, and to release the Company from
any
and all obligations owing to each of them, other than obligations reflected
on
the books and records of the Company, which amounts are to be satisfied as
Settled Debt in the manner provided for herein;
(ii) Each
of
Trimble and Xxxxx agree to convey to the Purchasers, all shares of stock (the
“Employee
Shares”)
of the
Company held by each; provided, however, that the Employee Shares shall be
deposited in escrow with Xxxxxxx Xxxxxxx, counsel to the Company, to be held
until the earlier of (A) such time as the Purchasers have satisfied in full
their funding obligations under Section 2 of this Agreement or (B) the last
day
of the Initial Funding Period, or the Extended Funding Period if applicable;
at
which time the Employee Shares shall be released to the Purchasers if the
Purchasers have satisfied in full their funding obligations under Section 2
or
returned to Trimble and Xxxxx if the Purchasers have failed to satisfy in full
their funding obligations under Section 2; provided, however, that should the
Excess Funding Obligation be satisfied through the assumption of Installment
Debt or the delivery of convertible promissory notes, as permitted under Section
2(b)(iv)(b), (c) and/or (d), the Employee Shares shall continue to be held
in
escrow until the earlier of (X) June 30, 2009 or (Y) the payment of all
Installment Debt and all Settled Debt owed to Trimble and Xxxxx (together,
the
“Share
Release Amount”),
at
which time the Employee Shares shall be released to the Purchasers if the Share
Release Amount has been satisfied or returned to Trimble and Xxxxx if the Share
Release Amount has not been received; and, provided, further, that Trimble
and
Xxxxx shall xxxxx to the Purchasers a proxy whereby the Purchasers shall have
the sole and exclusive right to vote the Employee Shares during the period
in
which the Employee Shares continue to be held in escrow pursuant to the terms
of
this Section 4(a); and
(iii) As
consideration for the releases to be provided under Section 4(a)(i), the Company
shall, on the Measurement Date (as defined below), issue to each of Trimble
and
Xxxxx, convertible promissory notes (the “Trimble
Note”
and
the
“Xxxxx
Note”,
respectively), in the form attached hereto as Exhibit
C,
with
the principal amount of the Trimble Note being equal to 8.2% of the Unallocated
Purchase Price (as defined below) and the principal amount of the Xxxxx Note
being equal to 1.8% of the Unallocated Purchase Price.
(b) The
Company and the Purchasers will enter into an agreement (the “CRI
Stock Agreement”)
with
Company Reporter Investments II (“CRI”),
substantially in the form attached hereto as Exhibit
D,
pursuant to which:
(i) CRI
will
agree to waive its rights, and release the Company from any and all obligations
owing to it, with respect to the shares of Series A Preferred Stock and Series
B
Preferred Stock (collectively, the “Preferred
Stock”)
held
by CRI;
6
(ii) CRI
agrees to convey to the Purchasers, all of the Preferred Stock held by CRI;
provided, however, that seventy percent (70%) of the Preferred Stock shall
be
deposited in escrow with Xxxxxxx Xxxxxxx, counsel to the Company, to be held
until the earlier of (A) such time as the Purchasers have satisfied in full
their funding obligations under Section 2 or (B) the last day of the Initial
Funding Period, or the Extended Funding Period if applicable; at which time
the
Preferred Stock shall be returned to CRI if the Purchasers have failed to
satisfy in full their funding obligations under Section 2 or, if such funding
obligations are satisfied, released to the Purchasers from time to time on
a pro
rata basis as the principal balance of the CRI Note is reduced; and, provided,
further, that CRI shall grant to the Purchasers a proxy whereby the Purchasers
shall have the sole and exclusive right to vote the Preferred Stock during
the
period in which the Preferred Stock continues to be held in escrow pursuant
to
the terms of this Section 4(a);and
(iii) As
consideration for the releases to be provided under Section 4(b)(i), the Company
shall, on the Measurement Date (as defined below), issue to CRI, a convertible
promissory note (the “CRI
Note”),
in
the form attached hereto as Exhibit
C,
with
the principal amount of the CRI Note being equal to (y) 90% of the Unallocated
Purchase Price less (z) $60,000 payable to CRI in cash (the “CRI
Cash Payment”)
pursuant to the CRI Stock Agreement.
(c) For
purposes hereof, the “Measurement
Date”
shall
mean the date on which the Settled Amounts Schedule is finalized in accordance
with Section 2(c).
(d) For
purposes hereof, the “Unallocated
Purchase Price”
shall
mean the Total Funding less the amounts reflected on the Settled Amounts
Schedule.
5. Representations,
Warranties and Agreements of the Company. In
addition to the other representations, warranties and agreements contained
in
this Agreement, the Company represents and warrants to, and agrees with, the
Purchasers as follows:
(a) The
Company is subject to the reporting requirements set out in, and files reports
(the “SEC
Reports”)
under,
Section 15(d) of the Securities Exchange Act of 1934. The SEC Reports conformed
in all material respects to the requirements of the Securities Exchange Act
of
1934, as amended, and the rules and regulations of the SEC thereunder
(collectively, the “Exchange
Act”);
and
none of such documents contained 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 therein, in the light of the circumstances under which
they
were made, not misleading.
(b) The
Company has been duly incorporated and is validly existing and in good standing
as a corporation under the laws of its respective jurisdiction of incorporation,
is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or lease of property
or
the conduct of its businesses requires such qualification, and has all power
and
authority necessary to own, lease or hold its properties and to conduct the
businesses in which it is engaged. The Company does not have any
subsidiaries.
7
(c) The
Company has an authorized capitalization as set forth in the SEC Reports, and
all of the issued shares of common stock of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable and conform
to
the description thereof contained in the SEC Reports. Except as disclosed in
the
SEC Reports, (i) there are no outstanding securities convertible into or
exchangeable for, or warrants, options or rights issued by the Company to
purchase, any shares of the Common Stock, (ii) there are no statutory,
contractual, preemptive or other rights to subscribe for or to purchase any
Common Stock and (iii) there are no restrictions upon transfer of the Common
Stock pursuant to the Company’s charter or bylaws.
(e) The
Company is not in violation of its charter, by laws or formation
documents.
(f) The
financial statements, including the related notes and supporting schedules,
included in the SEC Reports present fairly the financial condition, results
of
operations and changes in financial position of the Company on the basis stated
therein at the respective dates or for the respective periods to which they
apply; such statements and related schedules and notes have been prepared in
accordance with generally accepted accounting principles in the United States
(“GAAP”) consistently applied throughout the periods involved.
(g) The
Company has all necessary power and authority to execute and deliver this
Agreement and each of the other Transaction Documents to which it is a party,
and to perform its obligations hereunder and thereunder to issue the Securities
and to consummate the other Transactions; each of the Transaction Documents
and
the Transactions have been duly authorized by the Company; this Agreement has
been duly executed and delivered by the Company and each of the other
Transaction Documents, when executed and delivered by the Company assuming
that
such Transaction Documents are or will be the valid and binding agreements
of
the other parties thereto, will constitute a valid and binding obligation of
the
Company, enforceable against the Company in accordance with its respective
terms, subject to (i) the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors’ rights generally and (ii) general equitable principles
(whether considered in a proceeding in equity or at law).
8
(h) The
Company has all necessary power and authority to execute, issue and deliver
the
Shares; the Shares have been duly and validly authorized, and, when duly issued
and delivered to holders of the Notes upon conversion of the Notes from time
to
time, the Shares will be duly and validly authorized and issued, fully paid
and
nonassessable and will be free and clear of any preemptive rights and
liens.
(i) The
Company has all necessary power and authority to execute, issue and deliver
the
Notes and perform its obligations thereunder; the Notes have been duly
authorized by the Company, will be in the form attached hereto as Exhibit
A
and,
when executed, authenticated, delivered to and paid for by the Purchasers
pursuant to this Agreement, will constitute valid and binding obligations of
the
Company, enforceable against the Company in accordance with their terms, subject
to (i) the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors’ rights generally and (ii) general equitable principles (whether
considered in a proceeding in equity or at law).
(j) The
execution, delivery and performance by the Company of this Agreement and the
other Transaction Documents, the performance of the obligations of the Company
hereunder and thereunder, the issuance of the Securities and the consummation
of
the other Transactions will not, as of the Closing Date, result in any violation
of the provisions of the charter, by laws or formation documents of the Company
or any statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of their properties
or assets.
(k) No
consent, approval, authorization or order of, or filing or registration with,
any court or governmental agency or body is required for the execution, delivery
and performance of the Transaction Documents by the Company, the issuance of
the
Securities, the performance of the obligations of the Company hereunder and
thereunder and the consummation of the other Transactions contemplated hereby
and thereby, except (i) as required by the state securities or “blue sky” laws
and (ii) for such consents, approvals, authorizations, orders, filings or
registrations which have been obtained or made.
(l) None
of
the Company or any of its Affiliates (as defined in Rule 501(b) of Regulation
D)
has engaged, and will not engage, directly or indirectly in any form of general
solicitation or general advertising in connection with the offering of the
Securities (as those terms are used in Regulation D) under the Securities Act
or
in any manner involving a public offering within the meaning of Section 4(2);
and the Company has not entered, and will not enter, into any arrangement or
agreement with respect to the distribution of the Securities, except for this
Agreement, and the Company agrees not to enter into any such arrangement or
agreement.
(m) Neither
the Company nor any of its Affiliates has directly or indirectly sold, offered
for sale, solicited offers to buy or otherwise negotiated in respect of any
“security” (as defined in the Securities Act) which is, or would be, integrated
with the sale of any of the Securities in a manner that would require the
registration under the Securities Act of any of the Securities.
9
6. Representations,
Warranties and Agreements of the Purchasers. Each
Purchaser represents and warrants to, and agrees with, the Company that
it:
(a) is
not
acquiring the Notes with a view to any distribution thereof or with any present
intention of offering or selling any of the Notes in a transaction that would
violate the Securities Act or the securities laws of any State of the United
States or any other applicable jurisdiction.
(b) is
an
Accredited Investor, as that term is defined in Regulation D.
(c) is
aware
that the Notes are speculative and that it may lose its entire investment and
it
can afford to bear the risks of an investment in the Company, including the
risk
of losing its entire investment.
(d) has
(i)
been provided an opportunity to obtain information concerning the Company and
any other relevant matters as Purchaser has requested, and (ii) been given
the
opportunity to ask questions of and receive answers from the Company concerning
the terms and conditions of the offering of the Notes.
(e) is
aware
that its must bear the economic risk of its investment in the Company for an
indefinite period of time because: (1) the Notes have not been registered under
the Securities Act, or qualified under the state securities laws of any state,
and therefore cannot be sold, assigned or otherwise disposed of unless
appropriate exemptions from such registration or qualification requirements
are
available; (2) the Company will place a legend on the certificates evidencing
the Notes stating that the Notes have not been registered under the Act or
any
state securities laws and setting forth the limitations on resale contained
above and the Company will also require that its registrar and transfer agent
make a notation of such restrictions in its appropriate records; and (3) there
is no public market for such Notes. The Purchaser further understands and agrees
that the Company will not honor any attempt by Purchaser to sell, transfer
of
otherwise dispose of the Notes in the absence of either an effective
registration statement and qualification under applicable Blue Sky laws or
exemptions therefrom.
10
7. Additional
Funding, Guarantee and Indemnity Obligation.
In
addition to the other agreements of the Purchasers in this Agreement, the
Purchasers further agree to provide all funding necessary to support operations
of the Company (other than Legacy Operations, following the First Funding and,
until such time as the Company Funding Obligation is satisfied in full, to
fully
and unconditionally guarantee, and indemnify and hold harmless the Company
and
each officer, director and shareholder of the Company as of the First Funding
against any claim, loss or liability relating to, (a) all outstanding
liabilities and indebtedness of the Company existing as of the date hereof,
(b)
all liabilities and indebtedness relating to Reporting Costs and Working Capital
Requirements; provided, however, that the Guarantee and Indemnity Obligation
under this Section 7 shall in no event exceed the excess, if any, of $575,000
over (y) the funds actually advanced in satisfaction of the Company Funding
Obligation plus (z) the CRI Cash Payment; and (c) all New Business
Indebtedness.
8. Miscellaneous.
(a) Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of Texas.
(b) Consent
to Jurisdiction; Forum Selection; Appointment of Agent for Service of
Process
(i) Each
of
the Purchaser and the Company hereby submits to the jurisdiction of the courts
of the State of Texas and the courts of the United States of America located
in
the State of Texas over any suit, action or proceeding with respect to this
Agreement or the transactions contemplated hereby.
(ii) Any
suit,
action or proceeding with respect to this Agreement or the transactions
contemplated hereby may be brought only in the courts of the State of Texas
or
the courts of the United States of America located in the State of Texas,
located in Xxxxxx County, State of Texas. Each of the parties hereto waives
any
objection that it may have to the venue of such suit, action or proceeding
in
any such court or that such suit, action or proceeding in such court was brought
in an inconvenient court and agrees not to plead or claim the same.
(c) Waiver
of Jury Trial.
Any
right to trial by jury with respect to any lawsuit, claim, action or other
proceeding arising out of or relating to this Agreement or the services to
be
rendered by you hereunder is expressly and irrevocably waived.
(d) Entire
Agreement.
This
Agreement and the exhibits referenced herein constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof and supersede
all prior agreements and undertakings, both written and oral, among the parties,
or any of them, with respect to the subject matter hereof. No provision of
this
Agreement may be waived or amended other than by an instrument in writing signed
by the party to be charged with enforcement.
11
(e) Amendments
and Waiver.
The
provisions of this Agreement may not be amended, modified or supplemented,
and
waivers or consents to departures from the provisions hereof may not be given,
except by the parties to this Agreement. The failure by 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.
(f) Persons
Entitled to Benefit of Agreement. This
Agreement will inure to the benefit of and be binding upon the Purchasers,
the
Company, CRI and their respective officers, directors, shareholders, successors
and assigns. This Agreement and the terms and provisions hereof are for the
sole
benefit of only those persons.
(g) Severability.
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.
(h) Counterparts.
This
Agreement may be executed in one or more counterparts and, if executed in more
than one counterpart, the executed counterparts shall each be deemed to be
an
original but all such counterparts shall together constitute one and the same
instrument.
(i) Headings.
The
headings herein are inserted for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this
Agreement.
(j) Notices.
All
statements, requests, notices and agreements hereunder shall be in writing,
and:
(i) if
to the
Purchasers, shall be delivered or sent by mail, telex or facsimile transmission
to the address set forth on the signature page hereof;
(ii) if
to the
Company, Trimble, Xxxxx or any officer, director or shareholder of the Company,
shall be delivered or sent by mail, telex or facsimile transmission c/o Xxxx
Xxxxxxx, 0000 Xxxxxxxx Xxxxxxx, #0000, Xxxxxxx, Xxxxx 00000.
Any
such
statements, requests or notices will take effect at the time of receipt thereof.
Each party shall provide notice to the other party of any changes in address.
[Signature
page follows]
12
If
the
foregoing correctly sets forth the agreement between the parties hereto, please
indicate your acceptance in the space provided for that purpose below.
|
COMPANY:
|
|
|
By:
/s/ Xxxx Xxxxxxx
|
|
|
Name:
Xxxx Xxxxxxx
|
|
|
Title:
President
|
|
|
Date:
June 2, 2008
|
|
|
XXXX
XXXXXXX:
|
/s/
Xxxx Xxxxxxx
|
|
Xxxx
Xxxxxxx, Individually
|
|
|
Date:
June 2, 2008
|
|
|
PURCHASERS:
|
STARR
CONSULTING, INC.
|
|
By:
/s/ Xxxxxx Xxxxxxxxxxx
|
|
|
Name:
Xxxxxx Xxxxxxxxxxx
|
|
|
Title:
President
|
|
|
Address:
000 Xxxxx Xx.
|
|
|
Xxxxxxx
Xxxxx, XX 00000
|
|
|
Date:
June 2, 2008
|
|
|
POWER
NETWORK, INC.
|
|
|
By:
/s/ Xxx X. Xxxxxxxx
|
|
|
Name:
Xxx X. Xxxxxxxx
|
|
|
Title:
President
|
|
|
Address:
0000 Xxxxxxxxxx Xxx., Xxx. 00
|
|
|
Xxxxxxx
Xxxxx, XX 00000
|
|
|
Date:
June 5, 2008
|
|
|
BAF
CONSULTING, INC.
|
|
|
By:
/s/ Xxxxxxx Xxxxxxx
|
|
|
Name:
Xxxxxxx Xxxxxxx
|
|
|
Title:
President
|
|
|
Address:
000 Xxxxx Xx.
|
|
|
Xxxxxxx
Xxxxx, XX 00000
|
|
|
Date:
June 5, 2008
|
13
|
NEW
AGE SPORTS, INC.
|
|
|
By:
/s/ Xxxxxx Xxxxxxxx
|
|
|
Name:
Xxxxxx Xxxxxxxx
|
|
|
Title:
President
|
|
|
Address:
0000 Xxxxxxxxxx Xxx., Xxx. 00
|
|
|
Xxxxxxx
Xxxxx, XX 00000
|
|
|
Date:
June 5, 2008
|
|
|
PROJECT
DEVELOPMENT, INC.
|
|
|
By:
/s/ Xxxxxx Xxxxxxxxx
|
|
|
Name:
Xxxxxx Xxxxxxxxx
|
|
|
Title:
President
|
|
|
Address:
000 Xxxxx Xx.
|
|
|
Xxxxxxx
Xxxxx, XX 00000
|
|
|
Date:
June 5, 2008
|
|
|
SEVILLE
CONSULTING, INC.
|
|
|
By:
/s/ Xxxxx X. Xxxxx
|
|
|
Name:
Xxxxx X. Xxxxx
|
|
|
Title:
President
|
|
|
Address:
0000 Xxxxxxxxxx Xxx., Xxx. 00
|
|
|
Xxxxxxx
Xxxxx, XX 00000
|
|
|
Date:
June 5, 2008
|
|
|
MBA
INVESTORS
|
|
|
By:
/s/ Xxxxxx Xxxxxxx
|
|
|
Name:
Xxxxxx Xxxxxxx
|
|
|
Title:
President
|
|
|
Address:
0000 X. Xxxxxxxxxx Xx. #000
|
|
|
Xxxxxxx,
XX 00000
|
|
|
Date:
June 5, 2008
|
|
|
YT2K,
INC.
|
|
|
By:
/s/ Xxxxxxx Xxxxxx
|
|
|
Name:
Xxxxxxx Xxxxxx
|
|
|
Title:
President
|
|
|
Address:
0000 X. Xxxxxxxxxx Xx. #000
|
|
|
Xxxxxxx,
XX 00000
|
|
|
Date:
June 1, 2008
|
|
ACTIVE
STEALTH, LLC
|
|
|
By:
/s/ Xxxxxxx Xxxxxx
|
|
|
Name:
Xxxxxxx Xxxxxx
|
|
|
Title:
Manager
|
|
|
Address:
0000 X. Xxxxxxxxxx Xx. #000
|
|
|
Xxxxxxx,
XX 00000
|
|
|
Date:
June 1, 2008
|
