SECURITIES PURCHASE AGREEMENT
Exhibti 10.5
THIS SECURITIES PURCHASE AGREEMENT, dated as of October 28, 2011 (this “Agreement”), is entered into by and among ENSURGE, INC., a Nevada corporation (the “Company”), ENSURGE NM, LLC, a Utah limited liability company (“EnSurge NM”), NEXT VIEW CAPITAL,
L.P., a Delaware limited partnership, its successors or assigns (“Next View”), ZADAR LLC, a Delaware limited liability company, its successors or assigns (“Zadar LLC,” and together with Next View, the “Buyers”).
WHEREAS, the Company and the Buyers are executing and delivering this Agreement in reliance upon the exemption from securities registration for offers and sales to accredited investors afforded, inter alia, 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;
WHEREAS, the Buyers wish to acquire from the Company, and the Company desires to issue and sell to each Buyer, a Warrant (as defined below) and a Note (as defined below), which Notes will be convertible into shares of common stock of the Company, par value $0.001 per share (the “Common Stock”), upon the terms and subject to the conditions of the Notes, the Warrants, this Agreement and the other Transaction Documents (as defined below); and
WHEREAS, the Buyers wish to appoint Agent to act as their agent for the purposes set forth in this Agreement.
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:
“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.
“Buyers’ Counsel” means EGS.
“Buyer Control Person” means each manager, executive officer, promoter, and such other Persons as may be deemed in control of the Buyers pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act (as defined below).
“Certificate of Incorporation” means the certificate of incorporation, articles of incorporation or other charter document (howsoever denominated) of the Company, as amended to date.
“Closing Date” means the date of the closing of the purchase and sale of the Securities.
“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 Xxxxxxx X. Xxxxxxx.
“Company’s SEC Documents” means the Company’s filings on the SEC’s XXXXX system.
“Conversion Date” means the date a Holder submits a Notice of Conversion, as provided in the Notes.
“Conversion Shares” means the shares of Common Stock issuable upon conversion of the Notes and/or in payment of accrued interest, as contemplated in the Notes.
“Delivery Date” has the meaning ascribed to it in the Notes (with respect to Conversion Shares) or the Warrants (with respect to Warrant Shares).
“Disbursement Schedule” means the schedule setting forth the disbursement of the Purchase Price (as defined below), including the payees, amounts to be wired to each payee, and the wire instructions for each payee, as provided by the Company and set forth on Annex I.
“EGS” means Ellenoff Xxxxxxxx & Schole LLP, with offices located at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
“Holder” means the Person holding the relevant Securities at the relevant time.
“Last Audited Date” means December 31, 2010.
“Material Adverse Effect” means an event or combination of events, which individually or in the aggregate, would reasonably be expected to (a) adversely affect the legality, validity or enforceability of the Notes, the Warrants or any of the Transaction Documents, (b) 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 (c) adversely impair the Company’s ability to perform fully on a timely basis its material obligations under any of the Transaction
Documents or the transactions contemplated thereby.
“Maturity Date” has the meaning ascribed to it in the Notes.
“Person” means any living person or any entity, such as, but not necessarily limited to, a corporation, partnership or trust.
“Principal Trading Market” means (a) NYSE Amex, (b) the New York Stock Exchange, (c) the Nasdaq Global Market, (d) the Nasdaq Capital Market, (e) the OTC Bulletin Board, (f) the OTCQX or OTCQB, or (g) such other market on which the Common Stock is principally traded at the relevant time, but shall not include the “pink sheets.”
“Rule 144” means (a) Rule 144 promulgated under the 1933 Act or (b) any other similar rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration under the 1933 Act.
“Securities” means the Notes, the Warrants and the Shares.
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“Shares” means the shares of Common Stock representing any or all of the Conversion Shares and the Warrant Shares.
“State of Incorporation” means Nevada.
“Subsidiary” means, as of the relevant date, any subsidiary of the Company (whether or not included in the Company’s SEC Documents) whether now existing or hereafter acquired or created.
“Trading Day” means any day during which the Principal Trading Market shall be open for business.
“Transaction Documents” means this Agreement, the Notes, the Security Agreements (defined below), the Pledge Agreement (defined below), the Transfer Agent Letter (defined below), the Warrants, the Lockup Agreements (defined below), the Confessions (defined below), and all other certificates, documents, agreements, resolutions and instruments delivered to any party under or in connection with this Agreement.
“Transfer Agent” means, at any time, the transfer agent for the Common Stock.
“Warrant Shares” means the shares of Common Stock issuable upon exercise of a Warrant.
(i) Subject to the terms and conditions of this Agreement and the other Transaction Documents, Next View hereby agrees to purchase from the Company a Secured Convertible Promissory Note in the principal amount of $605,000.00 substantially in the form attached hereto as Annex II (the “Next ViewNote”) and Zadar LLC hereby agrees to purchase from the Company a Secured Convertible Promissory Note in
the principal amount of $605,000.00 substantially in the form attached hereto as Annex III (the “Zadar LLC Note,” and together with the Next View Note, the “Notes”). The Notes shall be secured by (1) a Security Agreement substantially in the form attached hereto as Annex IV listing all of the Company’s assets as security for the Company’s obligations under the Transaction Documents (the “CompanySecurity Agreement”), (2) a Security Agreement
substantially in the form attached hereto as Annex V listing all of EnSurge NM’s assets as security for the Company’s obligations under the Transaction Documents (the “EnSurge Security Agreement,” and together with the Company Security Agreement, the “Security Agreements”), and (3) a Membership Unit Pledge Agreement substantially in the form attached hereto as Annex VI pursuant to which the Company shall pledge all of the membership units of EnSurge NM as additional security for the Company’s obligations under the Transaction Documents (the “Pledge
Agreement”). In consideration thereof, each Buyer shall pay the principal amount set forth on such Buyer’s signature page to this Agreement (the “Purchase Price”). The Purchase Price shall be paid in accordance with the Disbursement Schedule.
(ii) In consideration for the Purchase Price, the Company shall also issue to the each Buyer a Warrant to Purchase Shares of Common Stock in the forms attached hereto as Annex VII and Annex VIII respectively (the “Warrants”) and execute and deliver to each Buyer a Confession of Judgment substantially in the forms attached hereto as
Annex IX and Annex X respectively (the “Confessions”).
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(iii) The Company shall also execute and deliver to the Transfer Agent, and the Transfer Agent shall execute to indicate its acceptance thereof, the irrevocable transfer agent instruction letter substantially in the form attached hereto as Annex XI (the “Transfer Agent Letter”).
(iv) Each officer, director and others designated by Agent shall execute a Lockup Agreement (the “Lockup Agreement”) in the form attached hereto as Annex XII.
(v) At the Closing (as defined below), each Buyer shall deliver to the Company its respective share of the Purchase Price.
Each Buyer, severally but not jointly, represents and warrants to, and covenants and agrees with, the Company, as of the date hereof and as of the Closing Date, as follows:
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(i) The authorized capital stock of the Company consists of 100,000,000 shares of Common Stock, of which approximately 29,362,341 are outstanding. Of the outstanding shares of Common Stock, approximately 2,600,000 shares are beneficially owned by Affiliates of the Company.
(ii) Other than as set forth in the Company’s SEC Documents, there are no outstanding securities which are convertible into or exchangeable for 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.
(iii) All issued and outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid and non-assessable. After considering all other commitments that may require the issuance of Common Stock, 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 (1) the Notes issued and fully converted on that date and (2) the Warrants issued and fully exercised on that date.
(iv) The Shares have been duly authorized by all necessary corporate action on the part of the Company, and, when issued (1) on conversion of, or in payment of interest on the Notes in accordance with the terms thereof, (2) upon exercise of the Warrants in accordance with the terms thereof, or (3) at the Closing in accordance with the terms of this Agreement, as applicable, will have been duly and validly issued, fully paid and non-assessable, free from all taxes, liens, claims, pledges, mortgages, restrictions, obligations, security interests and encumbrances of any kind, nature and
description, and will not subject the Holder thereof to personal liability by reason of being a Holder.
(v) The Conversion Shares and Warrant Shares are enforceable against the Company and the Company presently has no claims or defenses of any nature whatsoever with respect to the Conversion Shares or the Warrant Shares.
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(i) 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 or she was a general partner at or within two (2) years before the time of such filing, or any corporation or business association of which he or she was an executive officer at or within two (2) years before the time of such filing;
(ii) 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);
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(iii) 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 or her from, or otherwise limiting, the following activities:
A. 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;
B. engaging in any type of business practice; or
C. 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;
(iv) 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 sixty (60) days the right of such Company Control Person to engage in any activity described in subsection (iii) immediately above, or to be associated with Persons engaged in any such activity; or
(v) 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.
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a. Covenants and Acknowledgements of the Buyers.
(i) Transfer Restrictions. Each Buyer acknowledges that (1) the Securities have not been and are not being registered under the provisions of the 1933 Act and, except as 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) such Buyer shall have delivered to the Company an opinion of counsel, the cost of which shall be borne by the Company and which the Company
shall accept provided it is reasonable in form, scope and substance, 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 such Rule and further, if such 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 under the 1933 Act or to comply with the
terms and conditions of any exemption thereunder.
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(ii) Restrictive Legend. Each Buyer acknowledges and agrees that, until such time as the relevant Securities have been registered under the 1933 Act, and may be sold in accordance with an effective registration statement, or until such Securities 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.
(iii) Confessions of Judgment. Each Buyer agrees it will not file such Buyer’s Confession unless and until an Event of Default (as defined in the Notes) under such Buyer’s Note has occurred; provided, however, that upon such an Event of Default, such Buyer shall be entitled to immediately file such Buyer’s Confession in an ex parte fashion.
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(xi) 3(a)(10) Shares. In the event the Company, in violation of the covenants contained herein, ever ceases to be a reporting company for purposes of the 1934 Act for any period of time, then the Company, for so long as Rule 144 is not available to the Buyers as an exemption from registration, shall cause any of its stockholders who at such time are in possession of Common Stock tradable under Section 3(a)(10) of the Securities Act (“3(a)(10)
Shares”) to cease to sell such 3(a)(10) Shares.
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Late Filing Payment For
Each $10,000.00 of
No. Business Days Late Outstanding Principal of the Applicable Note
1 $100.00
2 $200.00
3 $300.00
4 $400.00
5 $500.00
6 $600.00
7 $700.00
8 $800.00
9 $900.00
10 $1,000.00
>10 $1,000.00 + $200.00 for each TradingDay Late beyond 10 days
The Company shall pay any payments incurred under this subsection in immediately available funds upon demand by the Holder; provided, however, that the Holder making the demand may specify that the payment shall be made in shares of Common Stock at the Conversion Price (as defined in the Notes) applicable to the date of such demand. If the payment is to be made in shares of Common Stock, such shares shall be considered Conversion Shares under the Notes, with the “Delivery Date” for such shares being determined from the date of such demand. The demand for
payment of such amount in shares of Common Stock shall be considered a “Conversion Notice” (but the delivery of such shares shall be in payment of the amount contemplated by this subsection and not in payment of any principal or interest on the Notes).
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A. Incur any new indebtedness for borrowed money without the prior written consent of each Buyer, which consent may be withheld at the sole discretion of the Buyers; provided, however the Company may incur obligations under trade payables in the ordinary course of business consistent with past practice without the consent of the Buyers;
X. Xxxxx or permit any security interest (or other lien or other encumbrance) in or on any of its assets;
C. Enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate of the Company, or amend or modify any agreement related to any of the foregoing, except on terms that are no less favorable, in any material respect, than those obtainable from any person or entity who is not an Affiliate of the Company; or
D. Enter into any debt or equity financing transaction without giving each Buyer at least ten (10) Trading Days notice of such prospective financing transaction (the “Transaction Notice”) and the pre-emptive right to provide such financing on substantially similar terms within five (5) Trading Days of receiving the Transaction Notice. Each Buyer may also elect, in its sole discretion, to convert then then-outstanding balance of its Note (including all default interest, penalties and fee) into securities issued in any such subsequent financing transactions on the
same terms and conditions as the other investors in such financing transaction. The applicable Buyer shall make such election by giving the Company written notice of its election within five (5) Trading Days of receiving the Transaction Notice.
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a. The Company warrants that, with respect to the Securities, other than the stop transfer instructions to give effect to Section 5(a)(i) hereof, it will give the Transfer Agent no instructions inconsistent with instructions to issue Common Stock upon conversion of the Notes and/or exercise of the Warrants, 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 5(a)(ii) of this Agreement prior to registration
of the Shares under the 1933 Act, registered in the name of the Holder or its designee 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 Documents. Nothing in this Section shall affect in any way the Buyers’ respective obligations and agreement to comply with all applicable securities laws upon resale of the Securities. If a Buyer provides the Company with an opinion of counsel reasonably satisfactory to the Company that registration of a resale by such Buyer of any of the Securities in accordance with clause (1)(B) of Section 5(a)(i) of this Agreement is not required under the 1933 Act or upon request from a Holder while an
applicable registration statement is effective, the Company shall (except as provided in clause (2) of Section 5(a)(i) of this Agreement) permit the transfer of the Securities and, in the case of the Conversion Shares and the Warrant Shares, as may be applicable, use its best efforts to cause the Transfer Agent to promptly electronically transmit to the Holder via DWAC such Conversion Shares or Warrant Shares. The Company specifically covenants that, as of the Closing Date, the Transfer Agent shall be (a) participating in the DWAC program, and (b) DWAC eligible. Moreover, the Company shall notify Agent in writing if the Company at any time while the Holder holds Securities becomes aware of any plans of the Transfer Agent to terminate such DWAC participation or eligibility. While any Holder holds Securities, the Company shall at all times after the
Closing Date maintain a transfer agent which participates in the DWAC program and is DWAC eligible, and the Company shall not appoint any transfer agent which does not both participate in the DWAC program and maintain DWAC eligibility. Nevertheless, if at any time that the Company receives a Conversion Notice the Transfer Agent is not participating in the DWAC program or the Conversion Shares or Warrant Shares are not otherwise transferable via the DWAC program, then the Company shall 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 Holder. In the event the Transfer Agent is not DWAC eligible on any Conversion Date or Exercise Date (as defined in the Warrants), and consequently the Company issues Conversion Shares or Warrant Shares pursuant to a Notice of
Conversion or Notice of Exercise in certificated rather than electronic form, then in such event the amount set forth in Section 5(b)(xvi) shall be added to the principal balance of the applicable Note.
b. (i) The Company understands that a delay in the delivery of Conversion Shares or Warrant Shares, whether on conversion of all or any portion of the Notes and/or in payment of accrued interest, or exercise of the Warrants, beyond the relevant Delivery Date (as defined in the Notes or the Warrants, as applicable) could result in economic loss to the Holder. As compensation to the Holder for such loss, in addition to any other available remedies at law
or equity, the Company shall pay late payments to the Holder for late delivery of the Shares in accordance with the following schedule (where “No. Business Days Late” is defined as the number of Trading Days beyond three (3) Trading Days after the Delivery Date):
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|
No. Business Days Xxxx
|
Xxxx Payment for Each $10,000.00
of Principal or Interest Being Converted
|
|
(or amount of Warrant exercise)
|
|
1 $100.00
2 $200.00
3 $300.00
4 $400.00
5 $500.00
6 $600.00
7 $700.00
8 $800.00
9 $900.00
10 $1,000.00
|
>10
|
$1,000.00 + $200.00 for each Business Day Late beyond 10 days
|
As elected by the Holder, the amount of any payments incurred under this Section 6(b)(i) shall either be automatically added to the principal balance of the applicable Note or otherwise paid by the Company in immediately available funds upon demand. Nothing herein shall limit the Holder’s right to pursue additional damages for the Company’s failure to issue and deliver the Shares 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 Shares within three (3) Trading Days after the Delivery Date, the 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 such Holder’s receipt of the relevant Shares, whereupon the Company and the 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 6(b)(i) which have accrued through the date of such revocation notice shall remain due and owing to the Holder notwithstanding such revocation.
(ii) If, by the fifth Trading Day after the relevant Delivery Date, the Company fails for any reason to deliver the Shares, but at any time after the Delivery Date, the 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 Holder (the “Sold Shares”), which delivery such Holder anticipated to
make using the shares of Common Stock to be issued upon such conversion or exercise (a “Buy-In”), the Holder shall have the right to require the Company to pay to the Holder, in addition to and not in lieu of the amounts contemplated in other provisions of the Transaction Documents, including, but not limited to, the provisions of the immediately preceding Section 6(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 (1) the Holder’s total purchase price per share (including brokerage commissions, if any) for the Covering Shares over (2) 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 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 $11,000.00 to cover a Buy-In with respect to shares of Common Stock the Holder sold for net proceeds of $10,000.00, the Buy-In Adjustment Amount which Company will be required to pay to the Holder will be $1,000.00.
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c. 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 the Securities, and (ii) the issuance of certificates or DWAC 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.
d. The Holder of each Note shall be entitled to exercise its conversion privilege with respect to such Note, 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 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. §362 in respect of the conversion of such Note. 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. §362.
a. The Closing Date shall occur on the date which is the first Trading Day after each of the conditions contemplated by Sections 8 and 9 hereof shall have either been satisfied or been waived by the party in whose favor such conditions run.
b. Closing of the purchase and sale of the Securities, which the parties anticipate shall occur concurrently with the execution of this Agreement, shall occur at the offices of EGS and shall take place no later than 3:00 P.M., Eastern Time, or on such day or such other time as is mutually agreed upon by the Company and the Buyers.
a. The execution and delivery of this Agreement and, as applicable, the other Transaction Documents by each respective Buyer;
b. Delivery by each respective Buyer of good funds as payment in full of an amount equal to such Buyer’s portion of the Purchase Price in accordance with this Agreement;
c. The accuracy on the Closing Date of the representations and warranties of each respective Buyer contained in this Agreement, each as if made on such date, and the performance by such Buyer on or before such date of all covenants and agreements of such 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.
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a. The execution and delivery of this Agreement, the Company Security Agreement, the Pledge Agreement, the Transfer Agent Letter, the Confessions and, as applicable, the other Transaction Documents by the Company;
b. The execution and delivery of the Lockup Agreements by the appropriate officers and directors of the Company, as determined by Agent in its sole discretion;
c. The execution and delivery of the EnSurge Security Agreement by EnSurge NM;
d. The delivery by the Company to each Buyer of such Buyer’s respective Note and Warrant, each in original form, duly executed by the Company, in accordance with this Agreement;
e. The delivery by the Company to Agent of the Opinion Letter, which Opinion Letter is in a form reasonably satisfactory to Agent;
f. On the Closing Date, each of the Transaction Documents 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;
g. The Share Reserve shall be sufficient to effect the full conversion of the Notes and exercise of the Warrants as of the Closing Date;
h. The accuracy in all material respects on the Closing Date of the representations and warranties of the Company contained in this Agreement and the other Transaction Documents, each as if made on such date, and the performance by the Company on or before such date of all covenants and agreements of the Company required to be performed on or before such date;
i. 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;
j. From and after the date hereof up to and including the 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; (iv) there shall not have been any material adverse change in any financial
market; and (v) there shall not have occurred any Material Adverse Effect;
k. Except for any notices required or permitted to be filed after the Closing Date with certain federal and state securities commissions, the Company shall have obtained (i) all governmental approvals required in connection with the lawful sale and issuance of the Securities, and (ii) all third party approvals required to be obtained by the Company in connection with the execution and delivery of the Transaction Documents by the Company or the performance of the Company’s obligations thereunder; and
l. All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to Agent.
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m. The execution and delivery of the EnSurge NM Services Contract by EnSurge NM and the other parties thereto.
n. The delivery of the waiver agreement, , in form and substance reasonably satisfactory to the Buyers, duly executed by the Company, EnSurge NM, Next View Capital L.P. (“Next View”), Zadar LLC. (“Zadaor” and together with Next View, the “Outstanding Debtholders”), evidencing the payoff of such debt owed to the Outstanding Debtholders and the release of the liens in favor of the Outstanding Debtholders.
a. The Company agrees to defend, indemnify and forever hold harmless Agent and each Buyer and their respective stockholders, directors, officers, managers, members, partners, Affiliates, employees, and agents, and each Buyer Control Person (collectively, the “Buyer Parties”) from and against any losses, claims, damages, liabilities or expenses incurred (collectively, “Damages”), joint or
several, and any action in respect thereof to which a Agent, a Buyer or any of the other Buyer Parties becomes subject, 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 the Company contained in this Agreement or any of the other Transaction Documents, as such Damages are incurred. The Buyer Parties with the right to be indemnified under this Section (the “Indemnified Parties”) shall have the right to defend any such action or proceeding with attorneys of their own selection, and the Company shall be solely responsible for all costs and expenses related thereto. If the Indemnified Parties opt not to retain their own counsel, the Company shall defend any such action or proceeding with
attorneys of its choosing at its sole cost and expense, provided that such attorneys have been pre-approved by the Indemnified Parties, which approval shall not be unreasonably withheld, and provided further that the Company may not settle any such action or proceeding without first obtaining the written consent of the Indemnified Parties.
b. The indemnity contained in this Agreement shall be in addition to (i) any cause of action or similar rights of the Buyer Parties against the Company or others, and (ii) any other liabilities the Company may be subject to.
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a. Governing Law and Venue. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Utah 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 personal jurisdiction of the federal courts whose districts encompass any part of Salt Lake County or the state courts of the State of Utah
sitting in Salt County in connection with any dispute arising under this Agreement, and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens, to the bringing of any such proceeding in such jurisdictions or to any claim that such venue of the suit, action or proceeding is improper. Nothing in this subsection shall affect or limit any right to serve process in any other manner permitted by law.
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interest shall have yet been so paid, dated the date of the applicable Note so surrendered and registered in the name of such person or persons as shall have been designated in writing by such Holder or its attorney for the same principal amount as the then unpaid principal amount of the applicable Note so surrendered. As applicable, upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of a Note and (i) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it; or (ii) in the case of mutilation, upon surrender thereof, the Company, at its expense, will execute and deliver in
lieu thereof a new convertible secured promissory note executed in the same manner as the Note being replaced, in the same principal amount as the unpaid principal amount of such Note and dated the date to which interest shall have been paid on the applicable Note or, if no interest shall have yet been so paid, dated the date of the applicable Note.
(i) the date delivered, if delivered by personal delivery as against written receipt therefor or by confirmed facsimile or electronic mail transmission,
(ii) the fifth Trading Day after deposit, postage prepaid, in the United States Postal Service by registered or certified mail, or
(iii) 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):
If to the Company or EnSurge NM:
EnSurge, Inc.
Attn: Xxxxxx Xxxxx
2800 Xxxx Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxx xxxx Xxxx, Xxxx 00000
with a copy to (which shall not constitute notice):
Law Office of Xxxxxxx X. Xxxxxxx
Attn: Xxxxxxx X. Xxxxxxx
130 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
If to Next View or Agent:
Next View Capital L.P.
Attn: Xxxxxxx Xxxxx
180 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
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If to Zadar LLC:
c/o Xxxxxxx Xxxxx
180 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
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Each Buyer further expressly acknowledges that neither Agent nor any other Buyer has made any representations or warranties to the Buyers as to the validity, effectiveness, genuineness, enforceability, priority or sufficiency of the Transaction Documents or the sufficiency, value, or condition of the Collateral (as defined in the Security Agreements). Each Buyer represents to Agent and the other Buyers that it has, independently and without reliance upon Agent, Agent’s attorneys, any other Buyer, or any other Buyer’s attorneys, made its own review and determination of the validity, effectiveness, genuineness, enforceability, priority, and sufficiency of the Transaction
Documents and the sufficiency, value and condition of the Collateral.
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IN WITNESS WHEREOF, each of 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.
NEXT VIEW PURCHASE PRICE: $550,000.00
ZADAR LLC PURCHASE PRICE: $550,000.00
THE COMPANY:
ENSURGE, INC.
By: /s/ Xxxxxx Xxxxx
Name: Xxxxxx Xxxxx
Title: CEO & President
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NEXT VIEW:
NEXT VIEW CAPITAL LP
By: /s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, Manager
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ENSURGE NM:
ENSURGE NM, LLC
By: /s/ Xxxxxx Xxxxx
Name: Xxxxxx Xxxxx
Title: Manager
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ZADAR LLC:
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Manager
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ANNEX I
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DISBURSEMENT SCHEDULE
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ANNEX II
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NEXT VIEW NOTE
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ANNEX III
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ZADAR LLC NOTE
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ANNEX IV
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COMPANY SECURITY AGREEMENT
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ANNEX V
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ENSURGE SECURITY AGREEMENT
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ANNEX VI
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PLEDGE AGREEMENT
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ANNEX VII
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NEXT VIEW WARRANT
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ANNEX VIII
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ZADAR LLC WARRANT
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ANNEX IX
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NEXT VIEW CONFESSION
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ANNEX X
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ZADAR LLC CONFESSION
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ANNEX XI
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TRANSFER AGENT INSTRUCTION LETTER
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ANNEX XII
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FORM OF LOCKUP AGREEMENT
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ANNEX XIII
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FORM OF ANTI-DILUTION CERTIFICATE
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ANNEX XIV
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WAIVER AGREEMENT
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