EXCHANGE AGREEMENT
THIS
EXCHANGE AGREEMENT (the
“Agreement”) is
entered into effective as of the 30th
day of
June, 2006 (the “Effective Date”), by and between PALISADES MASTER FUND LP (the
“Purchaser”); and,
OXFORD
MEDIA, INC., a Nevada corporation (the “Company”).
WHEREAS,
the Company and the Purchaser are parties to that certain Bridge Loan Agreement
dated in February 2006 (the “Bridge Loan Agreement”) and Extension Agreement
dated in June 2006 (the “Extension Agreement”). In connection with the Bridge
Loan Agreement, the Company issued its promissory note in the principal amount
of $1,666,667.00 in favor of the Purchaser (the “Note”). The Bridge Loan
Agreement, the Note, the Extension Agreement and all other agreements delivered
by the Company in connection with the Bridge Loan Agreement are collectively
referred to herein as the “Loan Agreements;”
WHEREAS,
the Company and the Purchaser wish to provide for the terms and conditions
pursuant to which the Purchaser shall exchange $1,000,000.00 principal amount
of
the Note (“Note”) and $3,836.00 of accrued interest, for a $1,003,836.00
principal amount new promissory note, in the form attached hereto as Exhibit
A,
(the “New Note”).
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of
which the parties hereby acknowledge, the parties agree as follows:
1. AGREEMENT
TO EXCHANGE.
a. Exchange.
(i) Subject
to the terms and conditions of this Agreement, Purchaser hereby agree that
$1,000,000 principal amount of the Note and $3,836 of accrued interest shall
be
exchanged for $1,003,836 of New Note (the “Transaction”).
b. Certain
Definitions. As
used
herein, each of the following terms has the meaning set forth below, unless
the
context otherwise requires:
“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.
“Certificate”
means the New Note duly executed by the Company and issued on the Closing Date
in the name of the Purchaser.
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“Closing
Date” means the date of the closing of the Transaction, as provided
herein.
“Company
Control Person” means each current 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 (as defined
below).
“Company’s
SEC Documents” means all filings made by the Company with the Securities and
Exchange Commission in compliance with the applicable provisions of the
Securities Exchange Act of 1934, ass amended, and the Securities Act of 1933,
as
amended.
“Holder”
means the Person holding the relevant Securities at the relevant
time.
“Last
Audited Date” means December 31, 2005.
“Purchaser
Control Person” means each director, executive officer, promoter, and such other
Persons as may be deemed in control of the Purchaser pursuant to Rule 405 under
the 1933 Act or Section 20 of the 1934 Act.
“Material
Adverse Effect” means an event or combination of events, which individually or
in the aggregate, would reasonably be expected to (w) adversely affect the
legality, validity or enforceability of the Securities or any of the Loan
Agreements, (x) have or result in a material adverse effect on the results
of
operations, assets, prospects, or condition (financial or otherwise) of the
Company and its subsidiaries, taken as a whole, (y) adversely impair the
Company's ability to perform fully on a timely basis its obligations under
any
of the Loan Agreements or the transactions contemplated thereby, or (z)
materially and adversely affect the value of the rights granted to the Purchaser
in the Loan Agreements.
“Person”
means any living person or any entity, such as, but not necessarily limited
to,
a corporation, partnership, or trust.
“Principal
Trading Market” means the Over the Counter Bulletin Board or such other market
on which the Common Stock is principally traded at the relevant time, but shall
not included the pink sheets.”
“Securities”
means the New Note.
“State
of
Incorporation” means Nevada.
“Trading
Day” means any day during which the Principal Trading Market shall be open for
business.
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“Transfer
Agent” means, at any time, the transfer agent for the Company’s Common
Stock.
“Loan
Agreements” means this Bridge Loan Agreement, the Note, the Echange Agreement,
and includes all ancillary documents referred to in those
agreements.
c. Delivery
of Certificate.
(ii) No
later
than the Closing Date the Company shall deliver to the Purchaser the
Certificate, duly executed on behalf of the Company and issued in the name
of
the Purchaser.
2.
PURCHASER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION; INDEPENDENT
INVESTIGATION.
The
Purchaser represents and warrants to, and covenants and agrees with, the Company
as follows:
a. Without
limiting Purchaser's right to sell the Securities pursuant to an effective
registration statement or otherwise in compliance with the 1933 Act, the
Purchaser is purchasing the Securities for its own account for investment only
and not with a view towards the public sale or distribution thereof and not
with
a view to or for sale in connection with any distribution thereof.
b. The
Purchaser is (i) an “accredited investor” as that term is defined in Rule 501 of
the General Rules and Regulations under the 1933 Act by reason of Rule
501(a)(3), (ii) experienced in making investments of the kind described in
this
Agreement and the related documents, (iii) able, by reason of the business
and
financial experience of its officers (if an entity) and professional advisors
(who are not affiliated with or compensated in any way by the Company or any
of
its Affiliates or selling agents), to protect its own interests in connection
with the transactions described in this Agreement, and the related documents,
and to evaluate the merits and risks of an investment in the Securities, and
(iv) able to afford the entire loss of its investment in the
Securities.
c. All
subsequent offers and sales of the Securities by the Purchaser shall be made
pursuant to registration of the relevant Securities under the 1933 Act or
pursuant to an exemption from registration.
d. The
Purchaser understands that the Securities are being offered and sold to it
in
reliance on specific exemptions from the registration requirements of the 1933
Act and state securities laws and that the Company is relying upon the truth
and
accuracy of, and the Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Purchaser
set
forth herein in order to determine the availability of such exemptions and
the
eligibility of the Purchaser to acquire the Securities.
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e. The
Purchaser and its advisors, if any, have been furnished with or have been given
access to all materials relating to the business, finances, and operations
of
the Company and materials relating to the offer and sale of the Securities
which
have been requested by the Purchaser, including those set forth on in any annex
attached hereto. The Purchaser and its advisors, if any, have been afforded
the
opportunity to ask questions of the Company and its management and have received
complete and satisfactory answers to any such inquiries. Without limiting the
generality of the foregoing, the Purchaser has also had the opportunity to
obtain and to review the Company's filings on XXXXX.
f. The
Purchaser understands that its investment in the Securities involves a high
degree of risk.
g. The
Purchaser hereby represents that, in connection with its purchase of the
Securities, it has not relied on any statement or representation by the Company
or any finders or any of their respective officers, directors, and employees
or
any of their respective attorneys or agents.
h. The
Purchaser understands that no United States federal or state agency or any
other
government or governmental agency has passed on or made any recommendation
or
endorsement of the Securities.
i. This
Agreement and the other Loan Agreements to which the Purchaser is a party,
and
the transactions contemplated thereby, have been duly and validly authorized,
executed and delivered on behalf of the Purchaser and are valid and binding
agreements of the Purchaser enforceable in accordance with their respective
terms, subject as to enforceability to general principles of equity and to
bankruptcy, insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally.
3. COMPANY
REPRESENTATIONS, ETC. The
Company represents and warrants to the Purchaser as of the date hereof and
as of
the Closing Date that, except as otherwise provided in Annex
IV, attached hereto,
or in the Company’s SEC Documents:
a. Rights
of Others Affecting the Transactions. There
are
no preemptive rights of any shareholder of the Company, as such, to acquire
the
Notes. No party other than a Purchaser or an Other Purchaser has a currently
exercisable right of first refusal, which would be applicable to any or all
of
the transactions contemplated by the Loan Agreements.
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b. Status.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Incorporation and has the requisite corporate
power to own its properties and to carry on its business as now being conducted.
The Company is duly qualified as a foreign corporation to do business and is
in
good standing in each jurisdiction where the nature of the business conducted
or
property owned by it makes such qualification necessary, other than those
jurisdictions in which the failure to so qualify would not have or result in
a
Material Adverse Effect. The Company has registered its stock and is obligated
to file reports pursuant to Section 12 or Section 15(d) of the Securities and
Exchange Act of 1934, as amended (the A1934
Act”). The Common Stock is quoted on the Principal Trading Market. The Company
has received no notice, either oral or written, with respect to the continued
eligibility of the Common Stock for such quotation on the Principal Trading
Market, and the Company has maintained all requirements on its part for the
continuation of such quotation.
c. Authorized
Shares.
(i) The
authorized capital stock and capitalization of the Company is as described
in
the most recent applicable filing of the Company’s SEC Documents.
(ii) As
of the
date hereof and as of the Closing Date, (1) there are no outstanding securities
which are convertible into shares of Common Stock, whether such conversion
is
currently exercisable or exercisable only upon some future date or the
occurrence of some event in the future and (2) the Company has not issued any
warrants or other rights to acquire shares of the Common Stock other than those
referred to in the Company’s SEC Documents. If any such securities are listed on
Annex
IV,
the
number or amount of each such outstanding convertible security and the
conversion terms thereof or of each such warrant or other right and the terms
of
its exercise are set forth in said Annex
IV.
(iii)
All
issued and outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable.
(iv)
As
of the
Closing Date, the Certificate shall have been duly authorized by all necessary
corporate action on the part of the Company, and, when issued on the Closing
Date or pursuant to other relevant provisions of the Loan Agreements, in each
case in accordance with their respective terms, will be duly and validly issued,
fully paid and non-assessable and will not subject the Holder thereof to
personal liability by reason of being such Holder.
d. Loan
Agreements.
This
Agreement and each of the other Loan Agreements, and the transactions
contemplated thereby, have been duly and validly authorized by the Company,
this
Agreement has been duly executed and delivered by the Company and this Agreement
is, and the Notes, and each of the other Loan Agreements, when executed and
delivered by the Company, will be, valid and binding agreements of the Company
enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium, and other similar laws affecting the enforcement of creditors'
rights generally.
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e. Non-contravention.
The
execution and delivery of this Agreement, the issuance of the Securities, and
the consummation by the Company of the other transactions contemplated by this
Agreement, and the New Note and the other Loan Agreements do not and will not
conflict with or result in a breach by the Company of any of the terms or
provisions of, or constitute a default under (i) the certificate of
incorporation or by-laws of the Company, each as currently in effect, (ii)
any
indenture, mortgage, deed of trust, or other material agreement or instrument
to
which the Company is a party or by which it or any of its properties or assets
are bound, including any listing agreement for the Common Stock except as herein
set forth, or (iii) to its knowledge, any existing applicable law, rule, or
regulation or any applicable decree, judgment, or order of any court, United
States federal or state regulatory body, administrative agency, or other
governmental body having jurisdiction over the Company or any of its properties
or assets, except such conflict, breach or default which would not have or
result in a Material Adverse Effect.
f. Approvals.
No
authorization, approval or consent of any court, governmental body, regulatory
agency, self-regulatory organization, or stock exchange or market or the
shareholders of the Company is required to be obtained by the Company for the
issuance and sale of the Securities to the Purchaser as contemplated by this
Agreement, except such authorizations, approvals and consents that have been
obtained.
g. Filings.
None of
the Company’s SEC Documents contained, at the time they were filed, any untrue
statement of a material fact or omitted to state any material fact required
to
be stated therein or necessary to make the statements made therein in light
of
the circumstances under which they were made, not misleading. Since September
30, 2005 the Company has timely filed all requisite forms, reports, and exhibits
thereto required to be filed by the Company with the SEC.
h. Absence
of Certain Changes.
Since
December 31, 2005 there has been no material adverse change and no Material
Adverse Effect, except as disclosed in the Company’s SEC Documents. Since the
Last Audited Date, except as provided in the Company’s SEC Documents, the
Company has not (i) incurred or become subject to any material liabilities
(absolute or contingent) except liabilities incurred in the ordinary course
of
business consistent with past practices; (ii) discharged or satisfied any
material lien or encumbrance or paid any material obligation or liability
(absolute or contingent), other than current liabilities paid in the ordinary
course of business consistent with past practices; (iii) declared or made any
payment or distribution of cash or other property to shareholders with respect
to its capital stock, or purchased or redeemed, or made any agreements to
purchase or redeem, any shares of its capital stock; (iv) sold, assigned or
transferred any other tangible assets, or canceled any debts owed to the Company
by any third party or claims of the Company against any third party, except
in
the ordinary course of business consistent with past practices; (v) waived
any
rights of material value, whether or not in the ordinary course of business,
or
suffered the loss of any material amount of existing business; (vi) made any
increases in employee compensation, except in the ordinary course of business
consistent with past practices; or (vii) experienced any material problems
with
labor or management in connection with the terms and conditions of their
employment.
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i. Full
Disclosure.
To the
best of the Company’s knowledge, there is no fact known to the Company (other
than general economic conditions known to the public generally or as disclosed
in the Company’s SEC Documents) that has not been disclosed in writing to the
Purchaser that would reasonably be expected to have or result in a Material
Adverse Effect.
j. Absence
of Litigation.
There is
no action, suit, proceeding, inquiry or investigation before or by any court,
public board or body pending or, to the knowledge of the Company, threatened
against or affecting the Company before or by any governmental authority or
nongovernmental department, commission, board, bureau, agency or instrumentality
or any other person, wherein an unfavorable decision, ruling or finding would
have a Material Adverse Effect or which would adversely affect the validity
or
enforceability of, or the authority or ability of the Company to perform its
obligations under, any of the Loan Agreements. The Company is not aware of
any
valid basis for any such claim that (either individually or in the aggregate
with all other such events and circumstances) could reasonably be expected
to
have a Material Adverse Effect. There are no outstanding or unsatisfied
judgments, orders, decrees, writs, injunctions or stipulations to which the
Company is a party or by which it or any of its properties is bound, that
involve the transaction contemplated herein or that, alone or in the aggregate,
could reasonably be expect to have a Material Adverse Effect.
k. Absence
of Events of Default.
Except
as set forth in Section 3(e) hereof, (i) neither the Company nor any of its
subsidiaries is in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any material
indenture, mortgage, deed of trust or other material agreement to which it
is a
party or by which its property is bound, and (ii) no Event of Default (or its
equivalent term), as defined in the respective agreement to which the Company
or
its subsidiary is a party, and no event which, with the giving of notice or
the
passage of time or both, would become an Event of Default (or its equivalent
term) (as so defined in such agreement), has occurred and is continuing, which
would have a Material Adverse Effect.
l. Absence
of Certain Company Control Person Actions or Events.
To the
Company’s knowledge, none of the following has occurred during the past two (2)
years with respect to a Company Control Person:
(1)
A
petition under the federal bankruptcy laws or any state insolvency law was
filed
by or against, or a receiver, fiscal agent or similar officer was appointed
by a
court for the business or property of such Company Control Person, or any
partnership in which he was a general partner at or within two years before
the
time of such filing, or any corporation or business association of which he
was
an executive officer at or within two years before the time of such
filing;
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(2)
Such
Company Control Person was convicted in a criminal proceeding or is a named
subject of a pending criminal proceeding (excluding traffic violations and
other
minor offenses);
(3)
Such
Company Control Person was the subject of any order, judgment, or decree, not
subsequently reversed, suspended, or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him from, or otherwise
limiting, the following activities:
(i)
acting, as an investment advisor, underwriter, broker or dealer in securities,
or as an affiliated person, director or employee of any investment company,
bank, savings and loan association or insurance company, as a futures commission
merchant, introducing broker, commodity trading advisor, commodity pool
operator, floor broker, any other Person regulated by the Commodity Futures
Trading Commission ("CFTC") or engaging in or continuing any conduct or practice
in connection with such activity;
(ii)
engaging in any type of business practice; or
(iii)
engaging in any activity in connection with the purchase or sale of any security
or commodity or in connection with any violation of federal or state securities
laws or federal commodities laws;
(4)
Such
Company Control Person was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any federal or state authority
barring, suspending or otherwise limiting for more than 60 days the right of
such Company Control Person to engage in any activity described in paragraph
(3)
of this item, or to be associated with Persons engaged in any such activity;
or
(5)
Such
Company Control Person was found by a court of competent jurisdiction in a
civil
action or by the CFTC or SEC to have violated any federal or state securities
law, and the judgment in such civil action or finding by the CFTC or SEC has
not
been subsequently reversed, suspended, or vacated.
m. No
Undisclosed Liabilities or Events.
To the
best of the Company’s knowledge, the Company has no liabilities or obligations
other than those disclosed in the Loan Agreements or the Company's SEC Documents
or in the Preferred Stock Transaction or those incurred in the ordinary course
of the Company's business since the Last Audited Date, or which individually
or
in the aggregate, do not or would not have a Material Adverse Effect. No event
or circumstances has occurred or exists with respect to the Company or its
properties, business, operations, condition (financial or otherwise), or results
of operations, which, under applicable law, rule or regulation, requires public
disclosure or announcement prior to the date hereof by the Company but which
has
not been so publicly announced or disclosed. There are no proposals currently
under consideration or currently anticipated to be under consideration by the
Board of Directors or the executive officers of the Company which proposal
would
(x) change the articles or certificate of incorporation or other charter
document or by-laws of the Company, each as currently in effect, with or without
shareholder approval, which change would reduce or otherwise adversely affect
the rights and powers of the shareholders of the Common Stock or (y) materially
or substantially change the business, assets or capital of the Company,
including its interests in subsidiaries.
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n. No
Integrated Offering.
Neither
the Company nor any of its Affiliates nor any Person acting on its or their
behalf has, directly or indirectly, at any time since September 30, 2004, made
any offer or sales of any security or solicited any offers to buy any security
under circumstances that would eliminate the availability of the exemption
from
registration under Regulation D in connection with the offer and sale of the
Securities as contemplated hereby.
o. Confirmation.
The
Company confirms that all statements of the Company contained herein shall
survive acceptance of this Agreement by the Purchaser. The Company agrees that,
if any events occur or circumstances exist prior to the Closing Date or the
release of the Loan Amount to the Company which would make any of the Company’s
representations, warranties, agreements or other information set forth herein
materially untrue or materially inaccurate as of such date, the Company shall
immediately notify the Purchaser (directly or through its counsel, if any)
in
writing prior to such date of such fact, specifying which representation,
warranty or covenant is affected and the reasons therefore.
4. CERTAIN
COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer
Restrictions.
The
Purchaser acknowledges that (1) the Securities have not been and are not being
registered under the provisions of the 1933 Act and, except as provided in
the
Registration Rights Provisions or otherwise included in an effective
registration statement, the Issued Shares have not been and are not being
registered under the 1933 Act, and may not be transferred unless (A)
subsequently registered thereunder or (B) the Purchaser shall have delivered
to
the Company an opinion of counsel, reasonably satisfactory in form, scope and
substance to the Company, to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration; (2) any sale of the Securities made in reliance on Rule 144
promulgated under the 1933 Act may be made only in accordance with the terms
of
said Rule and further, if said Rule is not applicable, any resale of such
Securities under circumstances in which the seller, or the Person through whom
the sale is made, may be deemed to be an underwriter, as that term is used
in
the 1933 Act, may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (3) neither the
Company nor any other Person is under any obligation to register the Securities
(other than pursuant to the Registration Rights Provisions) under the 1933
Act
or to comply with the terms and conditions of any exemption
thereunder.
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b. Restrictive
Legend.
The
Purchaser acknowledges and agrees that, until such time as the relevant
Securities have been registered under the 1933 Act, the Certificate and other
instruments representing any of the Securities shall bear a restrictive legend
in substantially the following form (and a stop-transfer order may be placed
against transfer of any such Securities):
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED
FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
OR
AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
c. Filings.
The
Company undertakes and agrees to make all necessary filings in connection with
the sale of the Securities to the Purchaser under any United States laws and
regulations applicable to the Company, or by any domestic securities exchange
or
trading market, and to provide a copy thereof to the Purchaser promptly after
such filing.
d. Reporting
Status.
So long
as the Purchaser beneficially owns any of the Securities and for at least twenty
(20) Trading Days thereafter, the Company shall file all reports required to
be
filed with the SEC pursuant to Section 13 or 15(d) of the 1934 Act, shall take
all reasonable action under its control to ensure that adequate current public
information with respect to the Company, as required in accordance with Rule
144(c)(2) of the 1933 Act, is publicly available, and shall not terminate its
status as an issuer required to file reports under the 1934 Act even if the
1934
Act or the rules and regulations thereunder would permit such termination.
The
Company will take all reasonable action under its control to maintain the
continued listing and quotation and trading of its Common Stock (including,
without limitation, all Registrable Securities) on the Principal Trading Market
or a listing on the NASDAQ/Small Cap or National Markets and, to the extent
applicable to it, will comply in all material respects with the Company’s
reporting, filing and other obligations under the by-laws or rules of the
Principal Trading Market and/or the National Association of Securities Dealers,
Inc., as the case may be, applicable to it at least through the date which
is
sixty (60) days after the date on which the Note has been been paid in
full.
e. Use
of Proceeds.
The
Company will use 100% of the proceeds received hereunder solely for working
capital and general corporate purposes.
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f. Publicity,
Filings, Releases, Etc.
Each of
the parties agrees that it will not disseminate any information relating to
the
Loan Agreements or the transactions contemplated thereby, including issuing
any
press releases, holding any press conferences or other forums, or filing any
reports (collectively, “Publicity”), without giving the other party reasonable
advance notice and an opportunity to comment on the contents thereof. Neither
party will include in any such Publicity any statement or statements or other
material to which the other party reasonably objects, unless in the reasonable
opinion of counsel to the party proposing such statement, such statement is
legally required to be included. In furtherance of the foregoing, the Company
will provide to the Purchaser drafts of the applicable text of the first filing
of a Current Report on Form 8-K or a Quarterly or Annual Report on Form 10-Q
or
10-K intended to be made with the SEC which refers to the Loan Agreements or
the
transactions contemplated thereby as soon as practicable (but at least two
(2)
Trading Days before such filing will be made) will not include in such filing
any statement or statements or other material to which the other party
reasonably objects, unless in the reasonable opinion of counsel to the party
proposing such statement, such statement is legally required to be included.
Notwithstanding the foregoing, each of the parties hereby consents to the
inclusion of the text of the Loan Agreements in filings made with the SEC as
well as any descriptive text accompanying or part of such filing which is
accurate and reasonably determined by the Company’s
counsel
to be legally required. Notwithstanding, but subject to, the foregoing
provisions of this Section 4(i), the Company will, after the Closing Date,
promptly issue a press release and file a Current Report on Form 8-K or, if
appropriate, a quarterly or annual report on the appropriate form, referring
to
the transactions contemplated by the Loan Agreements.
g. Independent
Investment Decision.
No
Purchaser has agreed to act with any Other Purchaser for the purpose of
acquiring, holding, voting or disposing of the Securities purchased hereunder
for purposes of Section 13(d) under the 1934 Act, and each Purchaser is acting
independently with respect to its investment in the Securities. The decision
of
each Purchaser to purchase Securities pursuant to this Agreement has been made
by such Purchaser independently of any other purchase and independently of
any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or its subsidiaries which
may have made or given by any Other Purchaser or by any agent or employee of
any
Other Purchaser, and no Purchaser or any of its agents or employees shall have
any liability to any Other Purchaser (or any other person) relating to or
arising from any such information, materials, statements or opinions.
5. Intentionally
Omitted.
6. CLOSING
DATE.
a. The
Closing Date shall occur on the date which is the first Trading Day after each
of the conditions contemplated by Sections 7 and 8 hereof shall have either
been
satisfied or been waived by the party in whose favor such conditions
run.
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b. The
closing of the Transactions shall occur on the Closing Date at the offices
of
the Purchaser and shall take place no later than 3:00 P.M., New York time,
on
such day or such other time as is mutually agreed upon by the Company and the
Purchaser.
7. CONDITIONS
TO THE COMPANY'S OBLIGATION TO SELL.
The
Purchaser understands that the Company's obligation to sell the Notes to the
Purchaser pursuant to this Agreement on the Closing Date is conditioned
upon:
a. The
execution and delivery of this Agreement by the Purchaser;
b. The
accuracy on such Closing Date of the representations and warranties of the
Purchaser contained in this Agreement, each as if made on such date, and the
performance by the Purchaser on or before such date of all covenants and
agreements of the Purchaser required to be performed on or before such date;
c. There
shall not be in effect any law, rule, or regulation prohibiting or restricting
the transactions contemplated hereby, or requiring any consent or approval
which
shall not have been obtained.
8. CONDITIONS
TO THE PURCHASER'S OBLIGATION TO PURCHASE.
The
Company understands that the Purchaser's obligation to purchase the New Notes
on
the Closing Date is conditioned upon:
a. The
execution and delivery of this Agreement and any other Loan Agreements by the
Company;
b. Delivery
by the Company of the Certificate in accordance with this
Agreement;
c. The
delivery of a legal opinion of Company Counsel, in the form attached hereto
as
Annex V, addressed to the Purchaser, no later than July 5, 2006;
d. The
delivery, no later than July 5, 2006, of a certificate, signed by the Secretary
of the Company, attaching (i) the charter and By-Laws of the Company, and (ii)
resolutions passed by its Board of Directors to authorize the transactions
contemplated hereby and by the other Loan Agreements, and certifying that such
documents are true and complete copies of the originals and that such
resolutions have not been amended or superseded, it being understood that the
Purchasers may rely on such certificate as a representation and warranty of
the
Company made herein;
12
e. The
delivery of a
certificate, no later than July 5, 2006, signed by the Chief Executive Officer
of the Company, certifying that the conditions specified in this Section have
been fulfilled as of the Closing, it being understood that such Purchaser may
rely on such certificate as though it were a representation and warranty of
the
Company made herein; and
f. The
delivery, no later than July 5, 2006, of a copy of a Press Release or Current
Report on Form 8-K describing the Loan Agreements.
g. The
accuracy in all material respects on the Closing Date of the representations
and
warranties of the Company contained in this Agreement, each as if made on such
date, and the performance by the Company on or before such date of all covenants
and agreements of the Company required to be performed on or before such date;
h. 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;
i. From
and
after the date hereof 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; and (iv) there shall not
have
been any material adverse change in any financial market.
9. INDEMNIFICATION
AND REIMBURSEMENT.
a. (i) The
Company agrees to indemnify and hold harmless the Purchaser and its officers,
directors, employees, and agents, and each Purchaser Control Person from and
against any losses, claims, damages, liabilities or expenses incurred
(collectively, “Damages”), joint or several, and any action in respect thereof
to which the Purchaser, its partners, Affiliates, officers, directors,
employees, and duly authorized agents, and any such Purchaser Control Person
becomes subject to, resulting from, arising out of or relating to any
misrepresentation, breach of warranty or nonfulfillment of or failure to perform
any covenant or agreement on the part of Company contained in this Agreement,
as
such Damages are incurred, except to the extent such Damages result primarily
from Purchaser's failure to perform any covenant or agreement contained in
this
Agreement or the Purchaser's or its officer’s, director’s, employee’s, agent’s
or Purchaser Control Person’s gross negligence, recklessness or bad faith in
performing its obligations under this Agreement.
13
(ii) The
Company hereby agrees that, if the Purchaser, other than by reason of its gross
negligence, illegal or willful misconduct (in each case, as determined by a
non-appealable judgment to such effect), (x) becomes involved in any capacity
in
any action, proceeding or investigation brought by any shareholder of the
Company, in connection with or as a result of the consummation of the
transactions contemplated by this Agreement or the other Loan Agreements, or
if
the Purchaser is impleaded in any such action, proceeding or investigation
by
any Person, or (y) becomes involved in any capacity in any action, proceeding
or
investigation brought by the SEC, any self-regulatory organization or other
body
having jurisdiction, against or involving the Company or in connection with
or
as a result of the consummation of the transactions contemplated by this
Agreement or the other Loan Agreements, or (z) is impleaded in any such action,
proceeding or investigation by any Person, then in any such case, the Company
shall indemnify, defend and hold harmless the Purchaser from and against and
in
respect of all losses, claims, liabilities, damages or expenses resulting from,
imposed upon or incurred by the Purchaser, directly or indirectly, and reimburse
such Purchaser for its reasonable legal and other expenses (including the cost
of any investigation and preparation) incurred in connection therewith, as
such
expenses are incurred. The indemnification and reimbursement obligations of
the
Company under this paragraph shall be in addition to any liability which the
Company may otherwise have, shall extend upon the same terms and conditions
to
any Affiliates of the Purchaser who are actually named in such action,
proceeding or investigation, and partners, directors, agents, employees and
Purchaser Control Persons (if any), as the case may be, of the Purchaser and
any
such Affiliate, and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Company, the
Purchaser, any such Affiliate and any such Person. The Company also agrees
that
neither the Purchaser nor any such Affiliate, partner, director, agent, employee
or Purchaser Control Person shall have any liability to the Company or any
Person asserting claims on behalf of or in right of the Company in connection
with or as a result of the consummation of this Agreement or the other Loan
Agreements, except as may be expressly and specifically provided in or
contemplated by this Agreement.
b. All
claims for indemnification by any Indemnified Party (as defined below) under
this Section shall be asserted and resolved as follows:
(i)
In
the
event any claim or demand in respect of which any Person claiming
indemnification under any provision of this Section (an "Indemnified Party")
might seek indemnity under paragraph (a) of this Section is asserted against
or
sought to be collected from such Indemnified Party by a Person other than a
party hereto or an Affiliate thereof (a "Third Party Claim"), the Indemnified
Party shall deliver a written notification, enclosing a copy of all papers
served, if any, and specifying the nature of and basis for such Third Party
Claim and for the Indemnified Party's claim for indemnification that is being
asserted under any provision of this Section against any Person (the
"Indemnifying Party"), together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith, of such Third
Party Claim (a "Claim Notice") with reasonable promptness to the Indemnifying
Party. If the Indemnified Party fails to provide the Claim Notice with
reasonable promptness after the Indemnified Party receives notice of such Third
Party Claim, the Indemnifying Party shall not be obligated to indemnify the
Indemnified Party with respect to such Third Party Claim to the extent that
the
Indemnifying Party's ability to defend has been prejudiced by such failure
of
the Indemnified Party. The Indemnifying Party shall notify the Indemnified
Party
as soon as practicable within the period ending thirty (30) calendar days
following receipt by the Indemnifying Party of either a Claim Notice or an
Indemnity Notice (as defined below) (the "Dispute Period") whether the
Indemnifying Party disputes its liability or the amount of its liability to
the
Indemnified Party under this Section and whether the Indemnifying Party desires,
at its sole cost and expense, to defend the Indemnified Party against such
Third
Party Claim. The following provisions shall also apply.
14
(x)
If
the Indemnifying Party notifies the Indemnified Party within the Dispute Period
that the Indemnifying Party desires to defend the Indemnified Party with respect
to the Third Party Claim pursuant to this paragraph (b) of this Section, then
the Indemnifying Party shall have the right to defend, with counsel reasonably
satisfactory to the Indemnified Party, at the sole cost and expense of the
Indemnifying Party, such Third Party Claim by all appropriate proceedings,
which
proceedings shall be vigorously and diligently prosecuted by the Indemnifying
Party to a final conclusion or will be settled at the discretion of the
Indemnifying Party (but only with the consent of the Indemnified Party in the
case of any settlement that provides for any relief other than the payment
of
monetary damages or that provides for the payment of monetary damages as to
which the Indemnified Party shall not be indemnified in full pursuant to
paragraph (a) of this Section). The Indemnifying Party shall have full control
of such defense and proceedings, including any compromise or settlement thereof;
provided, however, that the Indemnified Party may, at the sole cost and expense
of the Indemnified Party, at any time prior to the Indemnifying Party's delivery
of the notice referred to in the first sentence of this subparagraph (x), file
any motion, answer or other pleadings or take any other action that the
Indemnified Party reasonably believes to be necessary or appropriate protect
its
interests; and provided further, that if requested by the Indemnifying Party,
the Indemnified Party will, at the sole cost and expense of the Indemnifying
Party, provide reasonable cooperation to the Indemnifying Party in contesting
any Third Party Claim that the Indemnifying Party elects to contest. The
Indemnified Party may participate in, but not control, any defense or settlement
of any Third Party Claim controlled by the Indemnifying Party pursuant to this
subparagraph (x), and except as provided in the preceding sentence, the
Indemnified Party shall bear its own costs and expenses with respect to such
participation. Notwithstanding the foregoing, the Indemnified Party may take
over the control of the defense or settlement of a Third Party Claim at any
time
if it irrevocably waives its right to indemnity under paragraph (a) of this
Section with respect to such Third Party Claim.
15
(y)
If
the Indemnifying Party fails to notify the Indemnified Party within the Dispute
Period that the Indemnifying Party desires to defend the Third Party Claim
pursuant to paragraph (b) of this Section, or if the Indemnifying Party gives
such notice but fails to prosecute vigorously and diligently or settle the
Third
Party Claim, or if the Indemnifying Party fails to give any notice whatsoever
within the Dispute Period, then the Indemnified Party shall have the right
to
defend, at the sole cost and expense of the Indemnifying Party, the Third Party
Claim by all appropriate proceedings, which proceedings shall be prosecuted
by
the Indemnified Party in a reasonable manner and in good faith or will be
settled at the discretion of the Indemnified Party (with the consent of the
Indemnifying Party, which consent will not be unreasonably withheld). The
Indemnified Party will have full control of such defense and proceedings,
including any compromise or settlement thereof; provided, however, that if
requested by the Indemnified Party, the Indemnifying Party will, at the sole
cost and expense of the Indemnifying Party, provide reasonable cooperation
to
the Indemnified Party and its counsel in contesting any Third Party Claim which
the Indemnified Party is contesting. Notwithstanding the foregoing provisions
of
this subparagraph (y), if the Indemnifying Party has notified the Indemnified
Party within the Dispute Period that the Indemnifying Party disputes its
liability or the amount of its liability hereunder to the Indemnified Party
with
respect to such Third Party Claim and if such dispute is resolved in favor
of
the Indemnifying Party in the manner provided in subparagraph(z) below, the
Indemnifying Party will not be required to bear the costs and expenses of the
Indemnified Party's defense pursuant to this subparagraph (y) or of the
Indemnifying Party's participation therein at the Indemnified Party's request,
and the Indemnified Party shall reimburse the Indemnifying Party in full for
all
reasonable costs and expenses incurred by the Indemnifying Party in connection
with such litigation. The Indemnifying Party may participate in, but not
control, any defense or settlement controlled by the Indemnified Party pursuant
to this subparagraph (y), and the Indemnifying Party shall bear its own costs
and expenses with respect to such participation.
(z)
If
the Indemnifying Party notifies the Indemnified Party that it does not dispute
its liability or the amount of its liability to the Indemnified Party with
respect to the Third Party Claim under paragraph (a) of this Section or fails
to
notify the Indemnified Party within the Dispute Period whether the Indemnifying
Party disputes its liability or the amount of its liability to the Indemnified
Party with respect to such Third Party Claim, the amount of Damages specified
in
the Claim Notice shall be conclusively deemed a liability of the Indemnifying
Party under paragraph (a) of this Section and the Indemnifying Party shall
pay
the amount of such Damages to the Indemnified Party on demand. If the
Indemnifying Party has timely disputed its liability or the amount of its
liability with respect to such claim, the Indemnifying Party and the Indemnified
Party shall proceed in good faith to negotiate a resolution of such dispute;
provided, however, that if the dispute is not resolved within thirty (30) days
after the Claim Notice, the Indemnifying Party shall be entitled to institute
such legal action as it deems appropriate.
16
(ii) In
the
event any Indemnified Party should have a claim under paragraph (a) of this
Section against the Indemnifying Party that does not involve a Third Party
Claim, the Indemnified Party shall deliver a written notification of a claim
for
indemnity under paragraph (a) of this Section specifying the nature of and
basis
for such claim, together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith, of such claim
(an
"Indemnity Notice") with reasonable promptness to the Indemnifying Party. The
failure by any Indemnified Party to give the Indemnity Notice shall not impair
such party's rights hereunder except to the extent that the Indemnifying Party
demonstrates that it has been irreparably prejudiced thereby. If the
Indemnifying Party notifies the Indemnified Party that it does not dispute
the
claim or the amount of the claim described in such Indemnity Notice or fails
to
notify the Indemnified Party within the Dispute Period whether the Indemnifying
Party disputes the claim or the amount of the claim described in such Indemnity
Notice, the amount of Damages specified in the Indemnity Notice will be
conclusively deemed a liability of the Indemnifying Party under paragraph (a)
of
this Section and the Indemnifying Party shall pay the amount of such Damages
to
the Indemnified Party on demand. If the Indemnifying Party has timely disputed
its liability or the amount of its liability with respect to such claim, the
Indemnifying Party and the Indemnified Party shall proceed in good faith to
negotiate a resolution of such dispute; provided, however, that it the dispute
is not resolved within thirty (30) days after the Claim Notice, the Indemnifying
Party shall be entitled to institute such legal action as it deems
appropriate.
c. The
indemnity agreements contained herein shall be in addition to (i) any cause
of
action or similar rights of the indemnified party against the indemnifying
party
or others, and (ii) any liabilities the indemnifying party may be subject
to.
10.
JURY
TRIAL WAIVER. The
Company and the Purchaser hereby waive a trial by jury in any action, proceeding
or counterclaim brought by either of the Parties hereto against the other in
respect of any matter arising out or in connection with the Loan
Agreements.
11.
GOVERNING
LAW: MISCELLANEOUS.
17
a. (i) This
Agreement shall be governed by and interpreted in accordance with the laws
of
the State of New York for contracts to be wholly performed in such state and
without giving effect to the principles thereof regarding the conflict of laws.
Each of the parties consents to the exclusive jurisdiction of the federal courts
whose districts encompass any part of the County of New York or the state courts
of the State of New York sitting in the County of New York in connection with
any dispute arising under this Agreement or any of the other Loan Agreements
and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on
forum non conveniens,
to the
bringing of any such proceeding in such jurisdictions or to any claim that
such
venue of the suit, action or proceeding is improper. To the extent determined
by
such court, the Company shall reimburse the Purchaser for any reasonable legal
fees and disbursements incurred by the Purchaser in enforcement of or protection
of any of its rights under any of the Loan Agreements. Nothing in this Section
shall affect or limit any right to serve process in any other manner permitted
by law.
(ii) The
Company
and the Purchaser acknowledge and agree that irreparable damage would occur
in
the event that any of the provisions of this Agreement or the other Loan
Agreements were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to seek an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement and the other Loan Agreements and to enforce
specifically the terms and provisions hereof and thereof, this being in addition
to any other remedy to which any of them may be entitled by law or
equity.
b. Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as
a
waiver thereof.
c. This
Agreement shall inure to the benefit of and be binding upon the successors
and
assigns of each of the parties hereto.
d. All
pronouns and any variations thereof refer to the masculine, feminine or neuter,
singular or plural, as the context may require.
e. A
facsimile transmission of this signed Agreement shall be legal and binding
on
all parties hereto.
f. This
Agreement may be signed in one or more counterparts, each of which shall be
deemed an original.
g. The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
h. If
any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction.
18
i. This
Agreement may be amended only by an instrument in writing signed by the party
to
be charged with enforcement thereof.
j. This
Agreement supersedes all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof.
12.
NOTICES.
Any
notice required or permitted hereunder shall be given in writing (unless
otherwise specified herein) and shall be deemed effectively given on the
earliest of
(a)
the date
delivered, if delivered by personal delivery as against written receipt
therefore or by confirmed facsimile transmission,
(b)
the fifth Trading
Day after deposit, postage prepaid, in the United States Postal Service by
registered or certified mail, or
(c)
the third Trading
Day after mailing by domestic or international express courier, with delivery
costs and fees prepaid,
in
each
case, addressed to each of the other parties thereunto entitled at the following
addresses (or at such other addresses as such party may designate by ten (10)
day’s advance written notice similarly given to each of the other parties
hereto):
|
COMPANY:
|
Xxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx X
Xxxxxx,
XX 00000
Tel
000.000.0000
| PURCHASER: |
At
the address set forth on the signature page of this Agreement.with
a copy
to:
|
Xxxxxx
X.
Xxxxxx, Esq.
Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
XX 00000
19
13.
SURVIVAL
OF REPRESENTATIONS AND WARRANTIES.
The
Company’s and the Purchaser’s representations and warranties herein shall
survive the execution and delivery of this Agreement and the delivery of the
Certificates and the payment of the Loan Amount, and shall inure to the benefit
of the Purchaser and the Company and their respective successors and
assigns.
14.
Broker
and Similar Fees.
Each
party
to this Agreement represents and warrants that no broker or finder has acted
for
it in connection with this Agreement or the Transactions contemplated hereby
and
that no broker or finder is entitled to any brokerage or finder’s fee or other
commission, except as otherwise expressly disclosed by one party to the other.
Each party to this Agreement agrees to indemnify and hold harmless the other
parties hereto with respect to any claim for any brokerage or finder’s fee or
other commission.
[BALANCE
OF PAGE INTENTIONALLY LEFT BLANK.]
IN
WITNESS WHEREOF,
with
respect to the Loan Amount specified below, this Agreement has been duly
executed by the Purchaser and the Company as of the date set first above
written.
|
PRINCIPAL
AMOUNT OF NEW NOTE:
|
$1,003,836.00
|
PURCHASER:
PALISADES
MASTER FUND LP
Harbour
House, Waterfront Drive
PO
Box
972
Road
Town, Tortola
British
Virgin Islands
|
Printed
Name of Purchaser
|
|
|
Telephone
No.
|
By:
__________________________________
|
|
Telecopier
No. __________________________
|
(Signature
of Authorized Person)
|
|
_____________________________________
|
|
|
______________________________________
|
Printed
Name and Title
|
|
Jurisdiction
of Incorporation or Organization
|
COMPANY
By:
__________________________________
(Signature
of Authorized Person)
_____________________________________
Printed
Name and Title
20
