SECURITIES PURCHASE AGREEMENT
Securities
Purchase Agreement dated as of November 3, 2006 (this “Agreement”)
by and
between 3DIcon Corporation, an Oklahoma corporation, with principal executive
offices located at 0000 Xxxxxxxx Xxx., Xxxxx, Xxxxxxxx 00000 (the “Company”),
and
Golden Gate Investors, Inc., a California corporation (“Holder”).
WHEREAS,
Holder desires to purchase from the Company, and the Company desires to issue
and sell to Holder, upon the terms and subject to the conditions of this
Agreement, a Convertible Debenture of the Company in the aggregate principal
amount of $1,250,000 (the “Debenture”);
and
WHEREAS,
upon the terms and subject to the conditions set forth in the Debenture, the
Debenture is convertible into shares of the Company’s Common Stock (the
“Common
Stock”);
and
WHEREAS,
upon the satisfaction of the terms and conditions more specifically set forth
in
this Agreement and upon compliance with the terms of the Debenture, the Holder
has agreed to purchase from the Company, and the Company has agreed to issue
and
sell to Holder, a second Convertible Debenture in the aggregate principal amount
of $1,250,000 (the “Second Debenture”).
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
| I. |
PURCHASE AND SALE OF
DEBENTURE
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A. Transaction.
Holder
hereby agrees to purchase from the Company, and the Company has offered and
hereby agrees to issue and sell to Holder in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act of
1933,
as amended (the “Securities
Act”),
the
Debenture.
B. Purchase
Price; Form of Payment.
The
purchase price for the Debenture to be purchased by Holder hereunder shall
be
$1,250,000 (the “Purchase
Price”).
Simultaneously with the execution of this Agreement, Holder shall pay $125,000
of the Purchase Price (the “Initial Purchase Price”) by wire transfer of
immediately available funds to the Company. Simultaneously with the execution
of
this Agreement, the Company shall deliver the Convertible Debenture (which
shall
have been duly authorized, issued and executed I/N/O Holder or, if the Company
otherwise has been notified, I/N/O Holder’s nominee). Upon notification and
verification that the Registration Statement for the Conversion Shares has
been declared
effective by the Securities and Exchange Commission (“Commission”),
and
such shares can legally be issued to Holder (such date, the “Effective Date”),
Holder shall pay the Company as follows: (1) $312,500 of the Purchase Price
by
wire transfer of immediately available funds to the Company and, (2) the balance
of $812,500 by wire to the Escrow Agent. The Escrow Agent shall release (by
wire
transfer to an account designated by the Company) $200,000 of such amount on
the
first day of each month, beginning with the second month following the Effective
Date, and continuing until the full Purchase Price has been paid, provided
that,
at the time that any funds are to be paid by the Escrow Agent to the Company:
(a) the value of the Conversion Shares remaining under the Registration
Statement is at least $400,000 (calculated by multiplying the number of
remaining shares registered under the Registration Statement that are available
for issuance as Conversion Shares by the Volume Weighted Average Prices of
the
stock for the five Trading Days prior to the date that funds are to be released
by the Escrow Agent), and (b) the Company has complied with all of the terms
and
conditions of the Debenture and this Agreement.
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Subject
to the two conditions set forth in subclauses (a) and (b) immediately above,
release of amounts from the Escrow to the Company following the Effective Date
shall be subject to no contingency whatsoever, other than the passage of time.
Further, in the event funds are not required to be disbursed from the Escrow
due
to the existence of the contingency provided in subclause (a) above, the Company
shall not be deemed to be in default under any provision of this Agreement,
the
Debenture or the Registration Rights Agreement by reason of the failure to
have
available for issuance a sufficient number of shares registered under the
Registration Statement for conversion only as to any portion of the Purchase
Price not yet funded or with respect to which an adequate number of Conversion
Shares are available for issuance.
Upon
notification and verification that the Registration Statement for the Conversion
Shares has been declared effective by the Commission (such date, the “Effective
Date”), and such shares can legally be issued to Holder upon payment therefore
in accordance with the terms of this Agreement and the Debenture, the Company
shall, concurrently with the payment to the Escrow Agent of the $812,500
Purchase Price described in the immediately preceding paragraph, deliver that
number of the Company’s registered Common Shares (in 20 certificates of equal
amount) equal to $2,500,000 divided by the average of the closing prices of
the
Company’s Common Shares for the five Trading Days prior to the Effective Date,
registered in the name of Holder, to Sichenzia Xxxx Xxxxxxxx Xxxxxxxx LLP
(“Escrow Agent”), who shall hold the shares in trust as a joint escrow agent for
the Company and Holder. The delivery of such shares and the balance of the
Purchase Price shall occur no later than five Business Days after the Effective
Date. Such shares may only be released by the Escrow Agent pursuant to valid
Debenture conversions notices submitted by Holder. Any shares not released
to
Holder for Debenture conversions shall be returned to the Company. It is
understood that Holder shall not be considered the owner of the Company Common
Shares held in escrow, and Holder agrees that it will not vote the shares in
escrow or exercise any control whatsoever over such shares until such times
as
the shares are released to Holder by the Escrow Agent.
C. Purchase
of Second Debenture. At
such
time as the Principal Balance of the Debenture is less than $400,000, and
provided the Company is then in compliance with the terms of the Debenture
and
this Agreement, the Company shall sell and the Holder shall purchase the Second
Debenture, with the terms of the Second Debenture and payment of the purchase
price thereof subject to the same terms and conditions of this Agreement, the
Debenture and the Registration Rights Agreement, and when the Second Debenture
is issued, the term “Debenture” as used in this Agreement and the Registration
Rights Agreement shall be deemed to include the Second Debenture in all
respects. The closing of the purchase and sale of the Second Debenture shall
occur within thirty days of the date that the Principal Balance of the Debenture
is less than $400,000. In the event that Holder fails to enter into the Second
Debenture in accordance with the terms of this section, Holder shall pay the
Company liquidated damages of $150,000.
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| II. |
HOLDER’S
REPRESENTATIONS AND
WARRANTIES
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Holder
represents and warrants to and covenants and agrees with the Company as
follows:
1. Holder
is
purchasing the Debenture and the Common Stock issuable upon conversion or
redemption of the Debenture (the “Conversion
Shares”
and,
collectively with the Debenture, the “Securities”)
for
its own account, for investment purposes only and not with a view towards or
in
connection with the public sale or distribution thereof in violation of the
Securities Act.
2. Holder
(i) is an “accredited investor” within the meaning of Rule 501 of Regulation D
under the Securities Act, (ii) is experienced in making investments of the
kind
contemplated by this Agreement, (iii) is capable, by reason of its business
and
financial experience, of evaluating the relative merits and risks of an
investment in the Securities, and (iv) has had the opportunity to ask questions
of and receive answers from management of the Company, and (v) is able to afford
the loss of its investment in the Securities. Holder is incorporated under
the
laws of the state set forth in the preamble to this Agreement, and Holder’s
principal place of business is located in such state.
3. Holder
understands that the Securities are being offered and sold by the Company in
reliance on an exemption from the registration requirements of the Securities
Act and equivalent state securities and “blue sky” laws, and that the Company is
relying upon the accuracy of, and Holder’s compliance with, Holder’s
representations, warranties and covenants set forth in this Agreement to
determine the availability of such exemption and the eligibility of Holder
to
purchase the Securities;
4. Holder
understands that the Securities have not been approved or disapproved by the
Commission or any state or provincial securities commission.
5. This
Agreement has been duly and validly authorized, executed and delivered by Holder
and is a valid and binding agreement of Holder enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally and except as rights to indemnity and
contribution may be limited by federal or state securities laws or the public
policy underlying such laws.
6. Assuming
the compliance by the Company with the terms of this Agreement, the Debenture
and the Registration Rights Agreement, the Holder will fulfill its obligation
to
purchase the Second Debenture in accordance with the provisions of Section
I.C.
above.
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| III. |
THE
COMPANY’S REPRESENTATIONS
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The
Company represents and warrants to Holder that:
A. Capitalization.
1. The
authorized capital stock of the Company consists of 250,000,000 shares of Common
Stock and -0- shares of Series A Preferred Stock of which 95,000,000 shares
and
-0- shares, respectively, are issued and outstanding as of the date hereof
and
are fully paid and nonassessable. The amount, exercise, conversion or
subscription price and expiration date for each outstanding option and other
security or agreement to purchase shares of Common Stock is accurately set
forth
on Schedule
III.A.1.
2. The
Conversion Shares have been duly and validly authorized and reserved for
issuance by the Company, and, when issued by the Company upon conversion of
the
Debenture, will be duly and validly issued, fully paid and nonassessable and
will not subject the holder thereof to personal liability by reason of being
such holder.
3. Except
as
disclosed on Schedule III.A.3.,
there
are no preemptive, subscription, “call,” right of first refusal or other similar
rights to acquire any capital stock of the Company or other voting securities
of
the Company that have been issued or granted to any person and no other
obligations of the Company to issue, grant, extend or enter into any security,
option, warrant, “call,” right, commitment, agreement, arrangement or
undertaking with respect to any of their respective capital stock.
B. Organization;
Reporting Company Status.
1. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the state or jurisdiction in which it is incorporated and
is
duly qualified as a foreign corporation in all jurisdictions in which the
failure so to qualify would reasonably be expected to have a material adverse
effect on the business, properties, prospects, condition (financial or
otherwise) or results of operations of the Company or on the consummation of
any
of the transactions contemplated by this Agreement (a “Material
Adverse Effect”).
2. The
Company is currently not subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”).
The
Common Stock is currently traded over the counter via the “pink sheets” through
the Interdealer Trading and Quotation System (“Pink Sheets”) and the Company has
not received any notice regarding, and to its knowledge there is no threat
of,
the termination or discontinuance of the eligibility of the Common Stock for
such trading.
C. Authorization.
The
Company (i) has duly and validly authorized and reserved for issuance shares
of
Common Stock, which is a number sufficient for the conversion of the Debenture
and (ii) at all times from and after the date hereof shall have a sufficient
number of shares of Common Stock duly and validly authorized and reserved for
issuance to satisfy the conversion of the Debenture in full. The Company
understands and acknowledges the potentially dilutive effect on the Common
Stock
of the issuance of the Conversion Shares. The Company further acknowledges
that
its obligation to issue Conversion Shares upon conversion of the Debenture
in
accordance with this Agreement is absolute and unconditional regardless of
the
dilutive effect that such issuance may have on the ownership interests of other
stockholders of the Company and notwithstanding the commencement of any case
under 11 U.S.C. § 101 et
seq.
(the
“Bankruptcy
Code”).
In
the event the Company is a debtor under the Bankruptcy Code, the Company hereby
waives to the fullest extent permitted any rights to relief it may have under
11 U.S.C. § 362 in respect of the conversion of the Debenture. The
Company agrees, without cost or expense to Holder, to take or consent to any
and
all action necessary to effectuate relief under 11 U.S.C.
§ 362.
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D. Authority;
Validity and Enforceability.
The
Company has the requisite corporate power and authority to enter into the
Documents (as such term is hereinafter defined) and to perform all of its
obligations hereunder and thereunder (including the issuance, sale and delivery
to Holder of the Securities). The execution, delivery and performance by the
Company of the Documents and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the issuance
of
the Debenture and the issuance and reservation for issuance of the Conversion
Shares) have been duly and validly authorized by all necessary corporate action
on the part of the Company. Each of the Documents has been duly and validly
executed and delivered by the Company and each Document constitutes a valid
and
binding obligation of the Company enforceable against it in accordance with
its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally and except as rights to indemnity and contribution may be
limited by federal or state securities laws or the public policy underlying
such
laws. The Securities have been duly and validly authorized for issuance by
the
Company and, when executed and delivered by the Company, will be valid and
binding obligations of the Company enforceable against it in accordance with
their respective terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors’
rights and remedies generally. For purposes of this Agreement, the term
“Documents”
means
(i) this Agreement; (ii) the Registration Rights Agreement dated as of even
date
herewith between the Company and Holder; and (iii) the
Debenture.
E. Validity
of Issuance of the Securities.
The
Debenture, the Conversion Shares upon their issuance in accordance with the
Debenture will be validly issued and outstanding, fully paid and nonassessable,
and not subject to any preemptive rights, rights of first refusal, tag-along
rights, drag-along rights or other similar rights.
F. Non-contravention.
The
execution and delivery by the Company of the Documents, the issuance of the
Securities, and the consummation by the Company of the other transactions
contemplated hereby and thereby do not, and compliance with the provisions
of
this Agreement and other Documents will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration
of
any obligation or loss of a material benefit under, or result in the creation
of
any Lien (as such term is hereinafter defined) upon any of the properties or
assets of the Company or any of its Subsidiaries under, or result in the
termination of, or require that any consent be obtained or any notice be given
with respect to (i) the Articles or Certificate of Incorporation or By-Laws
of
the Company or the comparable charter or organizational documents of any of
its
Subsidiaries, in each case as amended to the date of this Agreement, (ii) any
loan or credit agreement, debenture, bond, mortgage, indenture, lease, contract
or other agreement, instrument or permit applicable to the Company or any of
its
Subsidiaries or their respective properties or assets or (iii) any Law (as
such
term is hereinafter defined) applicable to, or any judgment, decree or order
of
any court or government body having jurisdiction over, the Company or any of
its
Subsidiaries or any of their respective properties or assets.
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G. Approvals.
No
authorization, approval or consent of any court or public or governmental
authority is required to be obtained by the Company for the issuance and sale
of
the Securities to Holder as contemplated by this Agreement, except such
authorizations, approvals and consents as have been obtained by the Company
prior to the date hereof.
H. Full
Disclosure.
There is
no fact known to the Company (other than general economic or industry conditions
known to the public generally) that has not been fully disclosed by the Company
through press releases or otherwise that (i) reasonably could be expected to
have a Material Adverse Effect or (ii) reasonably could be expected to
materially and adversely affect the ability of the Company to perform its
obligations pursuant to the Documents.
I. Absence
of Events of Default.
No
“Event
of Default”
(as
defined in any agreement or instrument to which the Company is a party) and
no
event which, with notice, lapse of time or both, would constitute an Event
of
Default (as so defined), has occurred and is continuing.
J. Securities
Law Matters.
Assuming
the accuracy of the representations and warranties of Holder set forth in
Article II.C, the offer and sale by the Company of the Securities are exempt
from (i) the registration and prospectus delivery requirements of the Securities
Act and the rules and regulations of the Commission thereunder and (ii) the
registration and/or qualification provisions of all applicable state and
provincial securities and “blue sky” laws. The Company shall not directly or
indirectly take, and shall not permit any of its directors, officers or
Affiliates directly or indirectly to take, any action (including, without
limitation, any offering or sale to any person or entity of any security similar
to the Debenture) which will make unavailable the exemption from Securities
Act
registration being relied upon by the Company for the offer and sale to Holder
of the Debenture and the Conversion Shares as contemplated by this Agreement.
No
form of general solicitation or advertising has been used or authorized by
the
Company or any of its officers, directors or Affiliates (as such term is defined
in the Debenture) in connection with the offer or sale of the Debenture (and
the
Conversion Shares) as contemplated by this Agreement or any other agreement
to
which the Company is a party.
K. Registration
Rights.
Except
as set forth on Schedule III.K.,
no
Person has, and as of the Closing (as such term is hereinafter defined), no
Person shall have, any demand, “piggy-back” or other rights to cause the Company
to file any registration statement under the Securities Act relating to any
of
its securities or to participate in any such registration
statement.
L. Interest.
The
timely payment of interest on the Debenture is not prohibited by the Articles
or
Certificate of Incorporation or By-Laws of the Company, in each case as amended
to the date of this Agreement, or any agreement, contract, document or other
undertaking to which the Company is a party.
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M. No
Misrepresentation.
No
representation or warranty of the Company contained in this Agreement or any
of
the other Documents, any schedule, annex or exhibit hereto or thereto or any
agreement, instrument or certificate furnished by the Company to Holder pursuant
to this Agreement contains any untrue statement of a material fact or omits
to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
N. Finder’s
Fee.
There is
no finder’s fee, brokerage commission or like payment in connection with the
transactions contemplated by this Agreement for which Holder is liable or
responsible.
| IV. |
CERTAIN
COVENANTS AND
ACKNOWLEDGMENTS
|
A. Filings.
The
Company shall make all necessary Commission Filings and “blue sky” filings
required to be made by the Company in connection with the sale of the Securities
to Holder as required by all applicable laws, and shall provide a copy thereof
to Holder promptly after such filing.
B. Reporting
Status.
In the
event that the Company hereafter becomes subject to the reporting requirements
of the Exchange Act, and so long thereafter as Holder beneficially owns any
of
the Securities, the Company shall thereafter timely file all reports required
to
be filed by it with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act.
C. Listing.
Except
to the extent the Company lists its Common Stock on The New York Stock Exchange,
The American Stock Exchange or The Nasdaq Stock Market, the Company shall use
its best efforts to maintain its listing of the Common Stock in the Pink Sheets.
If the Common Stock is no longer subject to trading in the over the counter
market via the Pink Sheets, the Company will use its best efforts to list the
Common Stock on the most liquid national securities exchange or quotation system
that the Common Stock is qualified to be listed on.
D. Reserved
Conversion Common Stock.
The
Company at all times from and after the date hereof shall have such number
of
shares of Common Stock duly and validly authorized and reserved for issuance
as
shall be sufficient for the conversion in full of the Debenture.
E. Information.
Each of
the parties hereto acknowledges and agrees that Holder shall not be provided
with, nor be given access to, any material non-public information relating
to
the Company.
F. Accounting
and Reserves.
The
Company shall maintain a standard and uniform system of accounting and shall
keep proper books and records and accounts in which full, true, and correct
entries shall be made of its transactions, all in accordance with GAAP applied
on consistent basis through all periods, and shall set aside on such books
for
each fiscal year all such reserves for depreciation, obsolescence, amortization,
bad debts and other purposes in connection with its operations as are required
by such principles so applied.
G. Transactions
with Affiliates.
So long
as the Debenture is outstanding, neither the Company nor any of its Subsidiaries
shall, directly or indirectly, enter into any material transaction or agreement
with any stockholder, officer, director or Affiliate of the Company or family
member of any officer, director or Affiliate of the Company, unless the
transaction or agreement is (i) reviewed and approved by a majority of
Disinterested Directors (as such term is hereinafter defined) and (ii) on
terms no less favorable to the Company or the applicable Subsidiary than those
obtainable from a nonaffiliated person. A “Disinterested
Director”
shall
mean a director of the Company who is not and has not been an officer or
employee of the Company and who is not a member of the family of, controlled
by
or under common control with, any such officer or employee.
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H. Certain
Restrictions.
So long
as the Debenture is outstanding, no dividends shall be declared or paid or
set
apart for payment nor shall any other distribution be declared or made upon
any
capital stock of the Company, nor shall any capital stock of the Company be
redeemed, purchased or otherwise acquired (other than a redemption, purchase
or
other acquisition of shares of Common Stock made for purposes of an employee
incentive or benefit plan (including a stock option plan) of the Company or
pursuant to any of the security agreements listed on Schedule
III.H)
for any
consideration by the Company, directly or indirectly, nor shall any moneys
be
paid to or made available for a sinking fund for the redemption of any Common
Stock.
I. Short
Selling/Volume Limitations. So
long
as the Debenture is outstanding, Holder agrees and covenants on its behalf
and
on behalf of its Affiliates that neither Holder nor its Affiliates shall at
any
time engage in any short sales with respect to the Company’s Common Stock, or
sell put options or similar instruments with respect to the Company’s Common
Stock. The parties acknowledge that Holder on and after the Effective Date
shall
be entitled to sell the Common Stock from each Debenture conversion immediately
upon submission of the applicable Debenture Conversion Notice, and payment
of
the purchase price, to the Company for such Common Stock; provided, however,
that Holder agrees that it shall not sell any volume of Common Stock in excess
of the greater of: (i) 15% of the daily volume of the Company’s common shares
traded on that Trading Day (which volume may include shares of Common Stock
traded by the Holder), or (ii) 15% of the average dollar volume (computed by
multiplying the low price of the Common Stock by the number of shares traded)
for the 20 Trading Days prior to the Closing Date, unless the Company gives
its
prior written permission to sell more shares or the sales price of the Common
Stock received by Holder is above $1.50 per share.
| V. |
ISSUANCE
OF COMMON STOCK
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A. The
Company undertakes and agrees that no instruction other than the instructions
referred to in this Article V and customary stop transfer instructions prior
to
the registration and sale of the Common Stock pursuant to an effective
Securities Act registration statement shall be given to its transfer agent
for
the Conversion Shares and that the Conversion Shares shall otherwise be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement, the Registration Rights Agreement and applicable
law. Nothing contained in this Section V.A. shall affect in any way Holder’s
obligations and agreement to comply with all applicable securities laws upon
resale of such Common Stock.
X. Xxxxxx
shall have the right to convert the Debenture by telecopying an executed and
completed Conversion Notice (as such term is defined in the Debenture) to the
Company. Each date on which a Conversion Notice is telecopied to and received
by
the Company in accordance with the provisions hereof shall be deemed a
Conversion Date (as such term is defined in the Debenture). In the event the
number of registered Common Shares delivered to the Escrow Agent by the Company
pursuant to Section I.B hereof are insufficient to cover an authorized
Conversion by the Holder, the Company shall cause the transfer agent to transmit
the certificates evidencing the Common Stock issuable upon conversion of the
Debenture (together with a new debenture, if any, representing the principal
amount of the Debenture not being so converted) to Holder via express courier,
or if a Registration Statement covering the Common Stock has been declared
effective by the SEC by electronic transfer, within two (2) business days after
receipt by the Company of the Conversion Notice (the “Delivery
Date”).
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C. Upon
the
conversion of the Debenture or part thereof, the Company shall, at its own
cost
and expense, take all necessary action (including the issuance of an opinion
of
counsel) to assure that the Company's transfer agent shall issue stock
certificates in the name of Holder (or its nominee) or such other persons as
designated by Holder and in such denominations to be specified at conversion
representing the number of shares of common stock issuable upon such conversion
or exercise. The Company warrants that the Conversion Shares will be unlegended,
free-trading, and freely transferable, and will not contain a legend restricting
the resale or transferability of the Company Common Stock provided, on the
Conversion Date the Holder (or its nominee) are not Affiliates of the Company
and the Conversion Shares are being sold pursuant to an effective registration
statement covering the Common Stock to be sold or are otherwise exempt from
registration when sold.
D. The
Company understands that, in the event the number of registered Common Shares
delivered to the Escrow Agent by the Company pursuant to Section I.B hereof
are
insufficient to cover an authorized Conversion by the Holder, a delay in the
delivery of the Common Stock in the form required pursuant to this section,
or
the Mandatory Redemption Amount described in Section E hereof, beyond the
Delivery Date or Mandatory Redemption Payment Date (as hereinafter defined)
could result in economic loss to the Holder. As compensation to the Holder
for
such loss, the Company agrees to pay late payments to the Holder for late
issuance of Common Stock in the form required pursuant to Section E hereof
upon
Conversion of the Debenture or late payment of the Mandatory Redemption Amount,
in the amount of $100 per business day after the Delivery Date or Mandatory
Redemption Payment Date, as the case may be, for each $10,000 of Debenture
principal amount being converted or redeemed. The Company shall pay any payments
incurred under this Section in immediately available funds upon demand.
Furthermore, in addition to any other remedies which may be available to the
Holder, in the event that the Company fails for any reason to effect delivery
of
the Common Stock by the Delivery Date or make payment by the Mandatory
Redemption Payment Date, the Holder will be entitled to revoke all or part
of
the relevant Notice of Conversion or rescind all or part of the notice of
Mandatory Redemption by delivery of a notice to such effect to the Company
whereupon the Company and the Holder shall each be restored to their respective
positions immediately prior to the delivery of such notice, except that late
payment charges described above shall be payable through the date notice of
revocation or rescission is given to the Company.
E. In
the
event the Company is prohibited from issuing Common Stock, or upon the
occurrence of an Event of Default (as defined in the Debenture) or for any
reason other than pursuant to the limitations set forth herein, then at the
Holder's election, the Company must pay to the Holder ten (10) business days
after request by the Holder a sum of money determined by multiplying up to
the
then outstanding principal amount of the Debenture designated by the Holder
by
115%, together with accrued but unpaid interest thereon ("Mandatory Redemption
Payment"). The Mandatory Redemption Payment must be received by the Holder
within ten (10) business days after request ("Mandatory Redemption Payment
Date"). Upon receipt of the Mandatory Redemption Payment, the corresponding
Debenture principal and interest will be deemed paid and no longer outstanding.
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F. In
addition to any other rights available to the Holder, if the Company fails
to
deliver to the Holder such Common Stock issuable upon conversion of a Debenture
by the Delivery Date and if ten (10) days after the Delivery Date the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock
to
deliver in satisfaction of a sale by the Holder of the Common Stock which the
Holder anticipated receiving upon such conversion (a "Buy-In"), then the Company
shall pay in cash to the Holder (in addition to any remedies available to or
elected by the Holder) the amount by which (A) the Holder's total purchase
price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (B) the aggregate principal and/or interest amount of the
Debenture for which such conversion was not timely honored, together with
interest thereon at a rate of 15% per annum, accruing until such amount and
any
accrued interest thereon is paid in full (which amount shall be paid as
liquidated damages and not as a penalty). For example, if the Holder purchases
shares of Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of $10,000 of Debenture principal
and/or interest, the Company shall be required to pay the Holder $1,000, plus
interest. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In.
G. The
Debenture shall be delivered by the Company to the Holder pursuant to Section
I.B. hereof on a “delivery-against-payment basis” at the Closing.
| VI. |
CLOSING
DATE
|
The
Closing shall occur by the delivery: (i) to the Holder of the certificate
evidencing the Debenture and all other Agreements, and (ii) to the Company
the
Purchase Price.
| VII. |
CONDITIONS
TO THE COMPANY’S
OBLIGATIONS
|
Holder
understands that the Company’s obligation to sell the Debenture on the Closing
Date to Holder pursuant to this Agreement is conditioned upon:
A. Delivery
by Holder to the Company of the Initial Purchase Price;
B. The
accuracy on the Closing Date of the representations and warranties of Holder
contained in this Agreement as if made on the Closing Date (except for
representations and warranties which, by their express terms, speak as of and
relate to a specified date, in which case such accuracy shall be measured as
of
such specified date) and the performance by Holder in all material respects
on
or before the Closing Date of all covenants and agreements of Holder required
to
be performed by it pursuant to this Agreement on or before the Closing Date;
and
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C. There
shall not be in effect any law or order, ruling, judgment or writ of any court
or public or governmental authority restraining, enjoining or otherwise
prohibiting any of the transactions contemplated by this Agreement.
In
the
event Holder fails or refuses to pay the balance of the Purchase Price for
the
Debenture as provided for herein for any reason other than an existing Event
of
Default (as defined in the Debenture) of the Company, the Company shall be
relieved of any and all further obligations hereunder or under the Debenture,
other than the obligation to repay the then outstanding Principal Amount of
the
Debenture, with interest at the stated rate thereon, to Holder within ninety
(90) days after the breach of this Agreement by Holder.
| VIII. |
CONDITIONS
TO HOLDER’S OBLIGATIONS
|
The
Company understands that Holder’s obligation to purchase the Securities on the
Closing Date pursuant to this Agreement is conditioned upon:
A. Delivery
by the Company of the Debenture and the other Agreements (I/N/O Holder or I/N/O
Holder’s nominee);
B. The
accuracy on the Closing Date of the representations and warranties of the
Company contained in this Agreement as if made on the Closing Date (except
for
representations and warranties which, by their express terms, speak as of and
relate to a specified date, in which case such accuracy shall be measured as
of
such specified date) and the performance by the Company in all material respects
on or before the Closing Date of all covenants and agreements of the Company
required to be performed by it pursuant to this Agreement on or before the
Closing Date, all of which shall be confirmed to Holder by delivery of the
certificate of the chief executive officer of the Company to that
effect;
C. There
not
having occurred (i) any general suspension of trading in, or limitation on
prices listed for, the Common Stock on the OTCBB/Pink Sheet, (ii) the
declaration of a banking moratorium or any suspension of payments in respect
of
banks in the United States, (iii) the commencement of a war, armed hostilities
or other international or national calamity directly or indirectly involving
the
United States or any of its territories, protectorates or possessions or
(iv) in the case of the foregoing existing at the date of this Agreement, a
material acceleration or worsening thereof;
D. There
not
having occurred any event or development, and there being in existence no
condition, having or which reasonably and foreseeably could have a Material
Adverse Effect;
E. There
shall not be in effect any Law, order, ruling, judgment or writ of any court
or
public or governmental authority restraining, enjoining or otherwise prohibiting
any of the transactions contemplated by this Agreement;
F. The
Company shall have obtained all consents, approvals or waivers from governmental
authorities and third persons necessary for the execution, delivery and
performance of the Documents and the transactions contemplated thereby, all
without material cost to the Company;
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X. Xxxxxx
shall have received such additional documents, certificates, payment,
assignments, transfers and other deliveries as it or its legal counsel may
reasonably request and as are customary to effect a closing of the matters
herein contemplated;
H. Delivery
by the Company of an enforceability opinion (subject to all normal
qualifications and exceptions) from its outside counsel in form and substance
satisfactory to Holder.
| IX. |
SURVIVAL;
INDEMNIFICATION
|
A. The
representations, warranties and covenants made by each of the Company and Holder
in this Agreement, the annexes, schedules and exhibits hereto and in each
instrument, agreement and certificate entered into and delivered by them
pursuant to this Agreement shall survive the Closing and the consummation of
the
transactions contemplated hereby. In the event of a breach or violation of
any
of such representations, warranties or covenants, the party to whom such
representations, warranties or covenants have been made shall have all rights
and remedies for such breach or violation available to it under the provisions
of this Agreement or otherwise, whether at law or in equity, irrespective of
any
investigation made by or on behalf of such party on or prior to the Closing
Date.
B. The
Company hereby agrees to indemnify and hold harmless Holder, its Affiliates
and
their respective officers, directors, partners and members (collectively, the
“Holder
Indemnitees”)
from
and against any and all losses, claims, damages, judgments, penalties,
liabilities and deficiencies (collectively, “Losses”)
and
agrees to reimburse Holder Indemnitees for all out-of-pocket expenses (including
the fees and expenses of legal counsel), in each case promptly as incurred
by
Holder Indemnitees and to the extent arising out of or in connection
with:
1. any
misrepresentation, omission of fact or breach of any of the Company’s
representations or warranties contained in this Agreement or the other
Documents, or the annexes, schedules or exhibits hereto or thereto or any
instrument, agreement or certificate entered into or delivered by the Company
pursuant to this Agreement or the other Documents;
2. any
failure by the Company to perform in any material respect any of its covenants,
agreements, undertakings or obligations set forth in this Agreement or the
other
Documents or any instrument, certificate or agreement entered into or delivered
by the Company pursuant to this Agreement or the other Documents;
X. Xxxxxx
hereby agrees to indemnify and hold harmless the Company, its Affiliates and
their respective officers, directors, partners and members (collectively, the
“Company
Indemnitees”)
from
and against any and all Losses, and agrees to reimburse the Company Indemnitees
for all out-of-pocket expenses (including the fees and expenses of legal
counsel), in each case promptly as incurred by the Company Indemnitees and
to
the extent arising out of or in connection with:
1. any
misrepresentation, omission of fact or breach of any of Holder’s representations
or warranties contained in this Agreement or the other Documents, or the
annexes, schedules or exhibits hereto or thereto or any instrument, agreement
or
certificate entered into or delivered by Holder pursuant to this Agreement
or
the other Documents; or
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2. any
failure by Holder to perform in any material respect any of its covenants,
agreements, undertakings or obligations set forth in this Agreement or the
other
Documents or any instrument, certificate or agreement entered into or delivered
by Holder pursuant to this Agreement or the other Documents.
D. Promptly
after receipt by either party hereto seeking indemnification pursuant to this
Article VIII (an “Indemnified
Party”)
of
written notice of any investigation, claim, proceeding or other action in
respect of which indemnification is being sought (each, a “Claim”),
the
Indemnified Party promptly shall notify the party against whom indemnification
pursuant to this Article VIII is being sought (the “Indemnifying
Party”)
of the
commencement thereof, but the omission so to notify the Indemnifying Party
shall
not relieve it from any liability that it otherwise may have to the Indemnified
Party except to the extent that the Indemnifying Party is materially prejudiced
and forfeits substantive rights or defenses by reason of such failure. In
connection with any Claim as to which both the Indemnifying Party and the
Indemnified Party are parties, the Indemnifying Party shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of
any
Claim by the Indemnifying Party, the Indemnified Party shall have the right
to
employ separate legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs
and expenses of such separate legal counsel to the Indemnified Party if (and
only if): (x) the Indemnifying Party shall have agreed to pay such fees,
out-of-pocket costs and expenses, (y) the Indemnified Party and the
Indemnifying Party reasonably shall have concluded that representation of the
Indemnified Party and the Indemnifying Party by the same legal counsel would
not
be appropriate due to actual or, as reasonably determined by legal counsel
to
the Indemnified Party, potentially differing interests between such parties
in
the conduct of the defense of such Claim, or if there may be legal defenses
available to the Indemnified Party that are in addition to or disparate from
those available to the Indemnifying Party or (z) the Indemnifying Party
shall have failed to employ legal counsel reasonably satisfactory to the
Indemnified Party within a reasonable period of time after notice of the
commencement of such Claim. If the Indemnified Party employs separate legal
counsel in circumstances other than as described in clauses (x), (y) or (z)
above, the fees, costs and expenses of such legal counsel shall be borne
exclusively by the Indemnified Party. Except as provided above, the Indemnifying
Party shall not, in connection with any Claim in the same jurisdiction, be
liable for the fees and expenses of more than one firm of legal counsel for
the
Indemnified Party (together with appropriate local counsel). The Indemnifying
Party shall not, without the prior written consent of the Indemnified Party
(which consent shall not unreasonably be withheld), settle or compromise any
Claim or consent to the entry of any judgment that does not include an
unconditional release of the Indemnified Party from all liabilities with respect
to such Claim or judgment.
E. In
the
event one party hereunder should have a claim for indemnification that does
not
involve a claim or demand being asserted by a third party, the Indemnified
Party
promptly shall deliver notice of such claim to the Indemnifying Party. If the
Indemnified Party disputes the claim, such dispute shall be resolved by mutual
agreement of the Indemnified Party and the Indemnifying Party or by binding
arbitration conducted in accordance with the procedures and rules of the
American Arbitration Association. Judgment upon any award rendered by any
arbitrators may be entered in any court having competent jurisdiction
thereof.
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| X. |
GOVERNING
LAW
|
This
Agreement shall be governed by and interpreted in accordance with the laws
of
the State of California, without regard to the conflicts of law principles
of
such state.
| XI. |
SUBMISSION
TO JURISDICTION
|
Each
of
the parties hereto consents to the exclusive jurisdiction of the federal courts
whose districts encompass any part of the City of San Diego or the state courts
of the State of California sitting in the City of San Diego in connection with
any dispute arising under this Agreement and the other Documents. Each party
hereto hereby irrevocably and unconditionally waives, to the fullest extent
it
may effectively do so, any defense of an inconvenient forum or improper venue
to
the maintenance of such action or proceeding in any such court and any right
of
jurisdiction on account of its place of residence or domicile. Each party hereto
irrevocably and unconditionally consents to the service of any and all process
in any such action or proceeding in such courts by the mailing of copies of
such
process by registered or certified mail (return receipt requested), postage
prepaid, at its address specified in Article XVII. Each party hereto agrees
that
a final judgment which is not subject to further appeal in any such action
or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
| XII. |
WAIVER
OF JURY TRIAL
|
TO
THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ITS RESPECTIVE RIGHTS TO A
JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OTHER DOCUMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS AGREEMENT AND OTHER DOCUMENTS. EACH PARTY HERETO (i)
CERTIFIES THAT NEITHER OF THEIR RESPECTIVE REPRESENTATIVES, AGENTS OR ATTORNEYS
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE
EVENT
OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (ii) ACKNOWLEDGES
THAT
IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS HEREIN.
| XIII. s |
COUNTERPARTS;
EXECUTION
|
This
Agreement may be executed in counterparts, each of which when so executed and
delivered shall be an original, but both of which counterparts shall together
constitute one and the same instrument. A facsimile transmission of this signed
Agreement shall be legal and binding on both parties hereto.
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| XIV. |
HEADINGS
|
The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
| XV. |
SEVERABILITY
|
In
the
event any one or more of the provisions contained in this Agreement or in the
other Documents should be held invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein or therein shall not in any way be affected or impaired thereby. The
parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions, the economic effect
of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
| XVI. |
ENTIRE
AGREEMENT; REMEDIES, AMENDMENTS AND
WAIVERS
|
This
Agreement and the Documents constitute the entire agreement between the parties
hereto pertaining to the subject matter hereof and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of such parties. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by both parties. No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute
a
waiver of any other provision hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly
provided.
| XVII. |
NOTICES
|
Except
as
may be otherwise provided herein, any notice or other communication or delivery
required or permitted hereunder shall be in writing and shall be delivered
personally, or sent by telecopier machine or by a nationally recognized
overnight courier service, and shall be deemed given when so delivered
personally, or by telecopier machine or overnight courier service as
follows:
A.
If
to the
Company, to:
3D
Icon
Corporation
0000
Xxxxxxxx Xxx.
Xxxxx,
Xxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
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With
a
copy to:
Xxxx
X.
X’Xxxxxx
Xxxxxx,
X’Xxxxxx, Xxxxxx & Xxxxxxx
00
X.
Xxxxx Xxxxxx, Xxxxx 0000
Xxxxx,
Xxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 918-587-0102
B.
If
to
Holder, to:
Golden
Gate Investors, Inc.
0000
Xxxxxxxx Xxxxxx, Xxxxx 000
Xx
Xxxxx,
Xxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
The
Company or Holder may change the foregoing address by notice given pursuant
to
this Article XVII.
| XVIII. |
CONFIDENTIALITY
|
Each
of
the Company and Holder agrees to keep confidential and not to disclose to or
use
for the benefit of any third party the terms of this Agreement or any other
information which at any time is communicated by the other party as being
confidential without the prior written approval of the other party; provide,
however, that this provision shall not apply to information which, at the time
of disclosure, is already part of the public domain (except by breach of this
Agreement) and information which is required to be disclosed by law (including,
without limitation, pursuant to Item 601(b)(10) of Regulation S-K under the
Securities Act and the Exchange Act).
| XIX. |
ASSIGNMENT
|
This
Agreement shall not be assignable by either of the parties hereto.
IN
WITNESS WHEREOF, the parties hereto have duly caused this Agreement to be
executed and delivered on the date first above written.
| 3DIcon Corporation | Golden Gate Investors, Inc. | ||
| By: /s/ Xxxxxx Xxxxxxx |
By:
|
/s/ Xxxxxx Xxxx | |
|
|
|
||
| Title: Chief Executive Officer | Title: Portfolio Manager, Vice President | ||
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