SECURITIES PURCHASE AGREEMENT
Securities
Purchase Agreement dated as of December 27, 2007 (this “Agreement”) by and between
xXxxXxxxxx.xxx, a Nevada corporation, with principal executive offices located
at 0000 X. Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000 (the “Company”), and Golden Gate
Investors, Inc. (“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 $1,500,000 (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”).
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:
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I.
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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 $1,500,000 (the “Purchase
Price”). Simultaneously with the execution of this Agreement,
Holder shall pay the Purchase Price by wire transfer of $200,000 in immediately
available funds to the Company and delivery to the Company of a Secured
Promissory Note in the principal amount of $1,300,000, in the form attached
hereto as Exhibit
A (the “Promissory
Note”). Simultaneous with the execution of this Agreement, the
Company shall deliver the 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) to the Holder.
C.
Second
Debenture. Provided that no Event of Default (as defined in
the Debenture) has occurred under the Debenture (provided that Holder may,
in
its sole and absolute discretion waive the occurrence of such Event of Default
with respect to this Section), Holder shall, in Holder’s sole and absolute
discretion, select a date during the Second Debenture Period (as defined
below)
(with such date as selected by Holder referred to herein as the “Second Debenture Date”) at
which the Company shall sell and the Holder shall purchase a debenture in
the
principal amount of $1,500,000 in exchange for a purchase price of $1,500,000
(the “Second
Debenture”), with such purchase price paid via a cash payment of $200,000
and the issuance of a promissory note in the principal amount of $1,300,000
(the
“Second Promissory
Note”), with the form of and terms of the Second Debenture and the Second
Promissory Note and payment of the purchase price subject to the same terms
and
conditions of this Agreement, the Debenture and the Promissory Note, as
applicable, including the issuance of a Stock Pledge Agreement in the same
form
as the Stock Pledge Agreement (as defined herein) executed in connection
withthe execution of the this Agreement, and when the
Second Debenture is issued, the term “Debenture” as used in this Agreement shall
be deemed to include the Second Debenture in all respects and when the Second
Promissory Note is issued, the term “Promissory Note” as used in this Agreement
shall be deemed to include the Second Promissory Note in all respects. The
closing of the purchase and sale of the Second Debenture and the issuance
of the
Second Promissory Note shall occur upon the earlier of (i) thirty days from
the
Second Debenture Date, or (ii) the funding of the Second Debenture by
Holder. For the purposes of this Agreement, the “Second Debenture
Period” shall mean the period that commences on the date hereof and terminates
upon the date that the remaining Principal Amount of the Debenture issued
on the
date hereof is equal to an amount not greater than $250,000.
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D.
Third
Debenture. Provided that no Event of Default (as defined in
the Debenture) has occurred under the Debenture (provided that Holder may,
in
its sole and absolute discretion waive the occurrence of such Event of Default
with respect to this Section), Holder shall, in Holder’s sole and absolute
discretion, select a date during the Third Debenture Period (as defined below)
(with such date as selected by Holder referred to herein as the “Third Debenture Date”) at
which the Company shall sell and the Holder shall purchase a debenture in
the
principal amount of $1,500,000 in exchange for a purchase price of $1,500,000
(the “Third Debenture”),
with such purchase price paid via a cash payment of $200,000 and the issuance
of
a promissory note in the principal amount of $1,300,000 (the “Third Promissory Note”), with
the form of and terms of the Third Debenture and the Third Promissory Note
and
payment of the purchase price subject to the same terms and conditions of
this
Agreement, the Debenture and the Promissory Note, as applicable, including
the
issuance of a Stock Pledge Agreement in the same form as the Stock Pledge
Agreement (as defined herein) executed in connection with the execution of
the
this Agreement, and when the Third Debenture is issued, the term “Debenture” as
used in this Agreement shall be deemed to include the Third Debenture in
all
respects and when the Third Promissory Note is issued, the term “Promissory
Note” as used in this Agreement shall be deemed to include the Third Promissory
Note in all respects. The closing of the purchase and sale of the Third
Debenture and the issuance of the Third Promissory Note shall occur upon
the
earlier of (i) thirty days from the Third Debenture Date, or (ii) the funding
of
the Third Debenture by Holder. For the purposes of this Agreement,
the “Third Debenture Period” shall mean the period that commences on the date of
the issuance of the Second Debenture to Holder and terminates upon the date
that
the remaining Principal Amount of the Second Debenture is equal to an amount
not
greater than $250,000.
E.
Fourth
Debenture. Provided that no Event of Default (as defined in
the Debenture) has occurred under the Debenture (provided that Holder may,
in
its sole and absolute discretion waive the occurrence of such Event of Default
with respect to this Section), Holder shall, in Holder’s sole and absolute
discretion, select a date during the Fourth Debenture Period (as defined
below)
(with such date as selected by Holder referred to herein as the “Fourth Debenture Date”) at
which the Company shall sell and the Holder shall purchase a debenture in
the
principal amount of $1,500,000 in exchange for a purchase price of $1,500,000
(the “Fourth
Debenture”), with such purchase price paid via a cash payment of $200,000
and the issuance of a promissory note in the principal amount of $1,300,000
(the
“Fourth Promissory
Note”), with the form of and terms of the Fourth Debenture and the Fourth
Promissory Note and payment of the purchase price subject to the same terms
and
conditions of this Agreement, the Debentureand the
Promissory Note, as applicable, including the issuance of a Stock Pledge
Agreement in the same form as the Stock Pledge Agreement (as defined herein)
executed in connection with the execution of the this Agreement, and when
the
Fourth Debenture is issued, the term “Debenture” as used in this Agreement shall
be deemed to include the Fourth Debenture in all respects and when the Fourth
Promissory Note is issued, the term “Promissory Note” as used in this Agreement
shall be deemed to include the Fourth Promissory Note in all respects. The
closing of the purchase and sale of the Fourth Debenture and the issuance
of the
Fourth Promissory Note shall occur upon the earlier of (i) thirty days from
the
Fourth Debenture Date, or (ii) the funding of the Fourth Debenture by
Holder. For the purposes of this Agreement, the “Fourth Debenture
Period” shall mean the period that commences on the date of the issuance of the
Third Debenture to Holder and terminates upon the date that the remaining
Principal Amount of the Third Debenture is equal to an amount not greater
than
$250,000.
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F.
Non-Funding
Penalty. Notwithstanding the foregoing requirements of Holder
to purchase each of the Second Debenture, Third Debenture and Fourth Debenture
(each, an “Additional
Debenture” and collectively, the “Additional Debentures”), in
the event that Holder does not purchase any or all of the Additional Debentures
within 10 business days of the date that the delivery of funds associated
with
such purchase would otherwise be due, upon 20 days’ prior written notice from
the Company of such failure to so purchase any or all of the Additional
Debentures, Holder shall pay an amount equal to $100,000 (the “Non-Funding Penalty”) to the
Company. The amount payable by the Holder to the Company in
connection with any damages, losses, claims or other amounts in connection
with
the failure of the Holder to purchase any or all of the Additional Debentures
shall not exceed $100,000 in the aggregate. Upon the payment of the
Non-Funding Penalty to the Company, the Holder shall have no further obligations
or duties under this Agreement, the Debenture or any agreements or debentures
entered into in connection with any of the Additional Debentures, if any,
with
respect to the purchase of any Additional Debenture or other duties to deliver
any additional funds to the Company, provided however, that other than with
respect to the removal of the requirement to enter into any Additional
Debenture, the Company and the Holder shall remain obligated and bound by
the
remaining terms and conditions of this Agreement, the Debenture, the Promissory
Note and any agreements or debentures previously entered into in connection
with
any Additional Debenture. The Company’s sole and exclusive remedy in
the event that the Holder fails to purchase any or all of the Additional
Debentures shall be the right of the Company to receive the Non-Funding Penalty
from the Holder.
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II.
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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.
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2.
Holder is (i) an “accredited investor” within the meaning of Rule 501 of
Regulation D under the Securities Act, (ii) experienced in making investments
of
the kind contemplated by this Agreement, (iii) capable, by reason of its
business and financial experience, of evaluating the relative merits and
risks
of an investment in the Securities, and (iv) able to afford the loss of its
investment in the Securities.
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 Securities and Exchange Commission (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.
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III.
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THE
COMPANY’S REPRESENTATIONS
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The
Company represents and warrants as of the date hereof to the Holder that,
except
as set forth on Schedule III attached hereto, the statements contained in
this
Section 3 are complete and accurate as of the date of this
Agreement. As used in this Section 3, the term “Knowledge” shall mean
the knowledge of the members of the board of directors of the Company and/or
the
officers or employees of the Company after reasonable investigation.
A.
Capitalization.
1.
The authorized capital stock of the Company consists of 400,000,000 shares
of
Common Stock of which 282,087,602 shares 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 (based, for the purposes of this Section III.A.2.
only,
on an assumed $0.05 Conversion Price), 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.
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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 subject to the reporting requirements of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). The
Common Stock is traded on the OTC Bulletin Board service of the National
Association of Securities Dealers, Inc. (“OTCBB”) 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
in full 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.
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 xxxxx
necessary corporate action on the part of the Company and no further filing,
consent, or authorization is required by the Company, its board of directors,
or
its stockholders. 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 Debenture; (iii) the Promissory Note; and (iv) the Stock
Pledge Agreement dated as of the date hereof between the Holder and the parties
listed on the signature pages thereto (the “Stock Pledge
Agreement”).
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E.
Validity
of Issuance of the
Securities. The Debenture and 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 statute,
law,
rule or regulation 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. A
“Lien” means any
assignment, transfer, pledge, mortgage, security interest or other encumbrance
of any nature, or an agreement to do so, or the ownership or acquisition
or
agreement to acquire any asset or property of any character subject to any
of
the foregoing encumbrances (including any conditional sale contract or other
title retention agreement).
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
ofthe 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.
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H.
Commission
Filings. Except as set forth on Schedule
III.H., the
Company has properly and timely filed (or if not timely filed, such filing
have
since been made) with the Commission all reports, proxy statements, forms
and
other documents required to be filed with the Commission under the Securities
Act and the Exchange Act since becoming subject to such Acts (the “Commission
Filings”). As of their respective dates, (i) the Commission
Filings complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the Commission promulgated thereunder applicable to such
Commission Filings and (ii) none of the Commission Filings contained at the
time
of its filing any untrue statement of a material fact or omitted to state
a
material fact required to be stated therein or necessary in order to make
the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in
the Commission Filings, as of the dates of such documents, were true and
complete in all material respects and complied with applicable accounting
requirements and the published rules and regulations of the Commission with
respect thereto, were prepared in accordance with generally accepted accounting
principles in the United States (“GAAP”) (except in the
case of
unaudited statements permitted by Form 10-QSB under the Exchange Act) applied
on
a consistent basis during the periods involved (except as may be indicated
in
the notes thereto) and fairly presented the consolidated financial position
of
the Company and its Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit adjustments
that
in the aggregate are not material and to any other adjustment described
therein).
I.
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 in the Commission Filings 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.
J.
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.
K.
Securities
Law
Matters. Assuming the accuracy of the representations and
warranties of Holder set forth in Article II, the offer and sale by the Company
of the Securities is 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 forthe
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 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. As used in the Documents, “Affiliate” has the meaning
ascribed to such term in Rule 12b-2 under the Exchange Act.
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L.
Registration
Rights. Except as set forth on Schedule III.L.,
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.
M.
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.
N.
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.
O.
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.
P.
Subsidiaries. Other
than the
Subsidiaries, the Company does not presently own or control, directly or
indirectly, any interest in any other corporation, association, or other
business entity. The Company is not a participant in any joint
venture, partnership, or similar arrangement.
Q.
Litigation. Other
than as
disclosed in the Commission Filings, there is no action, suit, proceeding
or
investigation pending or, to the Company’s knowledge, currently threatened
against the Company or its Subsidiaries that questions the validity of this
Agreement, the Documents, or the right of the Company to enter into such
agreements, or to consummate the transactions contemplated hereby or thereby,
or
that might result, either individually or in the aggregate, in any material
adverse changes in the business, assets or condition of the Company and its
Subsidiaries, taken as a whole, financially or otherwise, or any change in
the
current equity ownership of the Company or its Subsidiaries. Neither
the Company nor its Subsidiaries are parties or subject to the provisions
of any
order, writ, injunction, judgment or decree of any court or government agency
or
instrumentality. There is no action, suit, proceeding or
investigation by the Company or its Subsidiaries currently pending or that
the
Company or its Subsidiaries intends to initiate.
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R.
Agreements. Except
for agreements explicitly contemplated hereby, or disclosed in the Commission
Filings, there are no agreements, understandings or proposed transactions
between the Company and any of its officers, directors, Affiliates, or any
affiliate thereof.
S.
Tax
Returns. Except
as disclosed in the Commission Filings, the Company and each of its Subsidiaries
has made and filed all federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject
and
(unless and only to the extent that the Company and each of its Subsidiaries
has
set aside on its books provisions reasonably adequate for the payment of
all
unpaid and unreported taxes) has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined
to be
due on such returns, reports and declarations, except those being contested
in
good faith and has set aside on its books provision reasonably adequate for
the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such claim.
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IV.
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CERTAIN
COVENANTS AND ACKNOWLEDGMENTS
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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. So long as Holder beneficially owns any of the
Securities, the Company shall timely file all reports required to be filed
by it
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act or
otherwise required by the Exchange Act. On or before the fourth
Business Day following the date hereof, the Company shall file a Current
Report
on Form 8-K describing the terms of the transactions contemplated by the
Documents in the form required by the Exchange Act and attaching the material
Documents (including, without limitation, this Agreement, the Debenture and
the
Stock Pledge Agreement) as exhibits to such filing.
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 on
OTCBB. If the Common Stock is delisted from OTCBB, 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, provided however that the Company shall not be required to authorize
and reserve additional shares of Common Stock required for the conversion
of any
Additional Debenture until the 6 month anniversary of the date hereof.
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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 “Subsidiary” means any entity
of which securities or other ownership interests having ordinary voting power
to
elect a majority of the board of directors or other persons performing similar
functions are owned directly or indirectly by the Company. 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.
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 IV.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. 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 shall be entitled, subject to
applicable securities laws, 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.
-10-
|
|
V.
|
ISSUANCE
OF COMMON STOCK
|
A.
The
Company
undertakes and agrees that no instruction other than the instructions referred
to in this Article V 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 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). 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
three (3) business days after receipt by the Company of the Conversion Notice,
as applicable (the “Delivery
Date”).
C.
Upon
the
conversion of the Debenture or respective 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
or exercise 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
the Conversion Shares, as applicable, are being sold pursuant to an effective
registration statement covering the Common Stock to be sold or is otherwise
freely transferable under Rule 144(k) promulgated under the Securities Act,
or
its successor.
D.
The
Company
understands that 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 beentitled
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.
-11-
E.
Mandatory
Redemption. In the
event the Company is prohibited from issuing Common Stock, or fails to timely
deliver Common Stock on a Delivery Date, 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
or on
the Delivery Date (if requested by the Holder) a sum of money determined
by
multiplying up to the outstanding Principal Amount (as defined in the Debenture)
of the Debenture designated by the Holder by 120%, together with accrued
but
unpaid interest thereon ("Mandatory Redemption
Payment"). The Mandatory Redemption Payment must be received by the
Holder on the same date as the Company Common Stock otherwise deliverable
or
within ten (10) business days after request, whichever is sooner ("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.
F.
Buy-In.
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, 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
Securities shall be deemed delivered by the Company to the Holder upon the
Holder’s delivery of the Purchase Price (including the Promissory Note) at the
Closing.
|
|
VI.
|
CLOSING
DATE
|
The
“Closing” shall occur by
the delivery: (i) to the Holder of the documents evidencing the Debenture
and
all other Documents, and (ii) to the Company the Purchase Price,
includingthe
Promissory Note, and the date on which the Closing occurs shall be referred
to
herein as the “Closing
Date”.
-12-
|
|
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 Purchase Price, including the Promissory Note
evidencing such applicable portion of the Purchase Price;
B.
The
accuracy
on the Closing Date of the representations and warranties of Holder contained
in
this Agreement and the other Documents 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 and the other Documents
on or
before the Closing Date; and
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.
|
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 (I/N/O Holder or I/N/O Holder’s nominee) to
Holder;
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 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.
The
Company
shall have delivered to the Holder a certificate of the Company executed
by an
officer of the Company, dated as of the Closing, certifying the resolutions
adopted by the Company’s board of directors authorizing the execution of the
Documents, the issuance of the Securities, and the transactions contemplated
hereby, and copies of any required third party consents, approvals and filings
required in connection with the consummation of the transactions contemplated
by
this Agreement;
-13-
D.
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;
E.
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;
F.
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;
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 with respect to this Agreement and
the
transactions contemplated hereunder from its outside counsel in form and
substance satisfactory to Holder;
I.
Delivery
to
the Holder of the fully executed Stock Pledge Agreement and the delivery
of the
Pledged Shares (as defined in the Stock Pledge Agreement) to the Holder in
connection therewith; and
I.
Delivery
by
the Company of a valid waiver of any preemptive rights held by the individuals
and/or parties listed on Schedule III.A.3 hereto 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 orotherwise,
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.
-14-
B.
The
Company
hereby agrees to indemnify and hold harmless Holder, its affiliates and their
respective officers, directors, employees, consultants, 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 reasonable out-of-pocket expenses
(including the reasonable 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 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; and
3.
any claims by third parties in connection with the purchase of the Debenture,
the conversion of the Debenture, the payment of interest on the Debenture,
the
consummation of the transactions contemplated by this Agreement and the other
Documents, the use of any of the proceeds of the Purchase Price by the Company,
the purchase or ownership of any or all of the Securities, the performance
by
the parties hereto of their respective obligations hereunder and under the
Documents or any claim, litigation, investigation, proceedings or governmental
action relating to any of the foregoing, whether or not Holder is a party
thereto.
C.
Promptly
after receipt by a party 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 Company 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.
-15-
D.
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.
|
|
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 in any such action or proceeding shall be conclusive and
maybe
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
-16-
|
|
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.
|
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.
|
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 constitutea
waiver
of any other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
-17-
|
|
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:
xXxxXxxxxx.xxx
0000
X. Xxxxxxx, Xxxxx 000
Xxxxxx,
Xxxxx
Telephone:
972-298-3800
Facsimile:
[_______________________]
B.
If
to Holder,
to:
Golden
Gate Investors, Inc.
0000
Xxxxxxxx Xxxxxx, Xxxxx 000
Xx
Xxxxx,
Xxxxxxxxxx 00000
Telephone:
858-551-8789
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 or S-B
under
the Securities Act and the Exchange Act).
|
XIX.
|
ASSIGNMENT
|
This
Agreement shall not be assignable by the Company without the prior written
consent of the Holder. The Holder may assign this Agreement upon 10
days prior written notice to the Company.
-18-
IN
WITNESS WHEREOF, the parties hereto have duly caused this Agreement to be
executed and delivered on the date first above written.
xXxxXxxxxx.xxx
Golden Gate Investors, Inc.
By:
__________________________
By: __________________________
Title:
_________________________
Title: _________________________
-19-
SCHEDULE
III.A.1
|
Name
|
Number
of Shares of Common
Stock
|
|
Options
|
|
|
Xxxxxxx
Xxx
|
10,000
|
|
Xxxxx
(Xxxx) Xxxxxx
|
1,200,000
|
|
Xxxxxx
X. Xxxx, III
|
20,000,000
|
|
Xxxxx
Xxxxx-Xxxxxx
|
1,200,000
|
|
Xxxx
Xxxx
|
2,200,000
|
-20-
SCHEDULE
III.A.3
PREEMPTIVE
RIGHTS
None.
-21-
SCHEDULE
III.H.
The
Company has determined that certain “Information Statements” required to be
filed under Reg 14C of the Exchange Act in connection with certain actions
taken
by written consent of the Company’s stockholders, in 2000, 2005 and 2007, were
not so filed, and has begun communications with the Securities and Exchange
Commission’s Division of Corporation Finance in this regard. Current
management of the Company, which came on board in mid 2007, has not made
a
thorough review of prior Commission Filings. However, except as set
forth above, current management is not aware of material omissions or
misstatements in said filings that have not since been corrected by more
recent
filings. In addition, current management, with newly hired S.E.C.
counsel, has undertaken to prepare and file a Form 10KSB for the year ended
Dec
31, 2007, and all periodic reports required under the Exchange Act thereafter,
that will comply in all respects with the requirements of the Exchange
Act.
-22-
SCHEDULE
III.L.
REGISTRATION
RIGHTS
None.
-23-
SCHEDULE
IV.H.
SECURITY
AGREEMENTS
None.
-24-
