Exhibit 10.7
AEROBIC CREATIONS, INC.
JOINDER AGREEMENT
This Joinder Agreement to the Securities Purchase Agreement (Common
Stock and Warrants) ("JOINDER AGREEMENT"), dated as of October 31, 2006 (as
amended, restated, supplemented and/or modified in accordance with the
provisions thereof, the "SECURITIES PURCHASE AGREEMENT"), by and among Maritime
Logistics US Holdings Inc. (the "COMPANY") and the investors identified on the
Schedule of Buyers attached thereto (the "Buyers"), is entered into as of
November 8, 2006 by Aerobic Creations, Inc. ("SHELLCO"), a Delaware corporation.
It is the current intention of Aerobic Creations, Inc. to change its name to
Summit Global Logistics, Inc. Capitalized terms used but not otherwise defined
herein shall have the meanings set forth in the Securities Purchase Agreement.
ShellCo hereby represents, warrants, and certifies to, and agrees
with, the Buyers as follows:
I. Each of the representations and warranties set forth in Section 3 of
the Securities Purchase Agreement, mutatis mutandis, as of the date
hereof, are true and correct as if each reference to the Company
contained in such representations and warranties was a reference to
ShellCo (unless otherwise expressly provided herein or in the
disclosure schedules hereto). Attached hereto are disclosure
schedules providing the disclosures required by the Securities
Purchase Agreement in respect of ShellCo.
II. ShellCo hereby assumes all covenants and obligations of the Company
set forth in the Securities Purchase Agreement (including, without
limitation, all indemnification obligations) as if each obligation
of the Company and each reference thereto contained in the
Securities Purchase Agreement was an obligation of and a reference
to ShellCo; provided that all obligations of the Company to use best
efforts to cause ShellCo to act or refrain from acting, shall be
read as the obligation of ShellCo to act or refrain for acting, as
applicable. Attached hereto are disclosure schedules providing the
disclosures required by the Securities Purchase Agreement in respect
of ShellCo.
III. In addition, ShellCo represents and warrants to each of the Buyers
that:
A. AUTHORIZATION; ENFORCEMENT; VALIDITY. ShellCo has the requisite
power and authority to enter into and perform its obligations under this Joinder
Agreement and the Transaction Documents to which it is a party and to issue the
Securities in accordance with the terms thereof. The execution and delivery of
the Transaction Documents by ShellCo and the consummation by ShellCo of the
transactions contemplated hereby and thereby, including, without limitation, the
issuance of the shares of Common Stock and the Warrants, the reservation
for issuance and the issuance of the Warrant Shares issuable upon exercise of
the Warrants, have been duly authorized by ShellCo's Board of Directors. Other
than the Current Report on Form 8-K required to be filed after Closing by
ShellCo pursuant to Section 4(h) of the Securities Purchase Agreement, the Form
D filing required to be made following the Closing by ShellCo with the SEC and
the registration statement and related state filings required by the
Registration Rights Agreement and the Schedule 14C relating to the Reverse Split
(as defined below), no further filing, consent, or authorization is required by
ShellCo, its Board of Directors or its stockholders. This Joinder Agreement and
the Transaction Documents to which ShellCo is a party have been duly executed
and delivered by ShellCo, and constitute the legal, valid and binding
obligations of ShellCo, enforceable against ShellCo in accordance with their
respective terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, liquidation or similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights and
remedies.
B. ISSUANCE OF SECURITIES. The issuance of the shares of Common
Stock and the Warrants are duly authorized and are free from all taxes, liens
and charges in respect of the issue thereof other than Permitted Liens (as
defined in the Notes). As of the Closing, a number of shares of Common Stock
shall have been duly authorized and reserved for issuance which equals 130% of
the maximum number of shares Common Stock issuable upon exercise of the Warrants
contingent only on the consummation of one for 11.226 reverse stock split
approved by the Board of Directors and by a majority of the stockholders (the
"REVERSE SPLIT"). Upon exercise in accordance with the Warrants, the Warrant
Shares will be validly issued, fully paid and nonassessable and free from all
preemptive or similar rights, taxes, liens and charges in respect of the issue
thereof other than Permitted Liens, with the holders being entitled to all
rights accorded to a holder of Common Stock. Subject to the accuracy of the
Buyers' representations and warranties in the Securities Purchase Agreement, the
offer and issuance by ShellCo of the Securities is exempt from registration
under the 1933 Act.
C. NO CONFLICTS. The execution, delivery and performance of this
Joinder Agreement and the Transaction Documents to which it is a party by
ShellCo and the consummation by ShellCo of the transactions contemplated hereby
and thereby (including, without limitation, the issuance of the shares of Common
Stock and the Warrants, and reservation for issuance and issuance of the Warrant
Shares) will not (i) result in a violation of any certificate of incorporation,
certificate of formation, any certificate of designations or other constituent
documents of ShellCo or any of its Subsidiaries (which for purposes of this
Joinder Agreement shall mean all subsidiaries of ShellCo prior to giving effect
to the Merger), any capital stock of ShellCo or any of its Subsidiaries or
bylaws of ShellCo or any of its Subsidiaries or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which ShellCo or any of its Subsidiaries is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of the market or automated quotation system upon which the common
equity of ShellCo is listed or quoted) that are applicable to ShellCo or any of
its Subsidiaries or by which any property or asset of ShellCo or any of its
Subsidiaries is bound or affected, except in the case
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of clauses (ii) and (iii) of this Section C for such conflicts, defaults, rights
or violations which would not, individually or in the aggregate, have a Material
Adverse Effect.
D. CONSENTS. ShellCo is not required to obtain any consent,
authorization or order of, or make any filing (other than the filing with the
SEC of one or more Registration Statements in accordance with the requirements
of the Registration Rights Agreement, a Current Report on Form 8-K, a Schedule
14C, as well as the Form D filing required to be filed after Closing by ShellCo
with the SEC, and filings required by applicable state securities laws) or
registration with, any court, governmental agency or any regulatory or
self-regulatory agency or any other Person in order for it to execute, deliver
or perform any of its obligations under or contemplated by the Transaction
Documents, in each case in accordance with the terms hereof or thereof. All
consents, authorizations, orders, filings and registrations that ShellCo is
required to obtain pursuant to the preceding sentence prior to the Closing Date
have been obtained or effected on or prior to the Closing Date, and ShellCo and
its Subsidiaries are unaware of any facts or circumstances which might prevent
ShellCo from obtaining or effecting any of the registration, application or
filings pursuant to the preceding sentence.
E. DILUTIVE EFFECT. ShellCo understands and acknowledges that the
number of Warrant Shares issuable upon exercise of the Warrants will increase in
certain circumstances. ShellCo further acknowledges that its obligation to issue
the Warrant Shares upon exercise of the Warrants in accordance with the
Securities Purchase Agreement and the Warrants is absolute and unconditional
regardless of the dilutive effect, which may be substantial, that such issuance
may have on the ownership interests of other stockholders of ShellCo.
F. APPLICATION OF TAKEOVER PROTECTIONS; RIGHTS AGREEMENT. ShellCo
and its board of directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under ShellCo's certificate of incorporation (as amended
and restated and in effect on the date hereof, the "CERTIFICATE OF
INCORPORATION") or the laws of the jurisdiction of its formation or otherwise
which is or could become applicable to any Buyer as a result of the transactions
contemplated by the Securities Purchase Agreement, including, without
limitation, ShellCo's issuance of the Securities and any Buyer's ownership of
the Securities. ShellCo has not adopted a stockholder rights plan or similar
arrangement relating to accumulations of beneficial ownership of Common Stock or
a change in control of ShellCo. Certain stockholders of ShellCo, or persons who
upon the consummation of the transactions contemplated by the Transaction
Agreements will become stockholders of ShellCo, representing in the aggregate
approximately 37.3% of the common equity of ShellCo at the consummation of the
transactions contemplated by the Transaction Documents (approximately 14.7% on a
fully-diluted basis) have agreed, among other things, to only vote to increase
the authorized number of shares of ShellCo, or amend the certificate of
incorporation of ShellCo or by-laws of ShellCo, if at least 75% of such
stockholders so vote and to vote for Xxxxxx Xxxxxxx, Xxxxxxx XxXxxx, Xxxxxxxx
XxxXxxxx and Xxxxxx XxXxxxxxx to a seven person board of directors.
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G. SEC DOCUMENTS; FINANCIAL STATEMENTS. Since March 3, 2005, ShellCo
has filed all reports, schedules, forms, statements and other documents required
to be filed by it with the SEC pursuant to the reporting requirements of the
1934 Act (all of the foregoing filed prior to the date hereof and all exhibits
included therein and financial statements, notes and schedules thereto and
documents incorporated by reference therein being hereinafter referred to as the
"SEC DOCUMENTS"). ShellCo has delivered to the Buyers or their respective
representatives true, correct and complete copies of the SEC Documents not
available on the XXXXX system. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the 1934 Act and the
rules and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the
SEC, contained 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 the light of the circumstances under which they were
made, not misleading. As of their respective dates, the financial statements of
ShellCo included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied ("GAAP"), during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of ShellCo as of the dates thereof and
the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
H. CONDUCT OF BUSINESS; REGULATORY PERMITS. Neither ShellCo nor its
Subsidiaries is in violation of any term of or in default under its certificate
of incorporation or bylaws or their organizational charter or certificate of
incorporation or bylaws, respectively. Neither ShellCo nor any of its
Subsidiaries is in violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to such entity, and neither ShellCo nor
any of its Subsidiaries will conduct its respective business in violation of any
of the foregoing, except for such violations and/or possible violations which
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. ShellCo and each of its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate regulatory
authorities necessary to conduct their respective businesses, except where the
failure to possess such certificates, authorizations or permits would not have,
individually or in the aggregate, a Material Adverse Effect, and neither ShellCo
nor any Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit
except where such proceedings, revocation or modification would not have a
Material Adverse Effect.
X. XXXXXXXX-XXXXX ACT. ShellCo is in compliance with any and all
applicable requirements of the Xxxxxxxx-Xxxxx Act of 2002 that are effective as
of the date hereof, and any and all applicable rules and regulations promulgated
by the SEC thereunder that are effective as of the date hereof, except where
such noncompliance would not have, individually or in the aggregate, a Material
Adverse Effect.
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J. EQUITY CAPITALIZATION. As of the date hereof and prior to
issuance of the Securities and the closing of the Convertible Note Offering, the
Acquisitions, the issuance of securities to Xxxxxx & Xxxxxxx, LLC, the issuance
of 62,500 shares of Common Stock (such number of shares presented as if giving
effect to the Reverse Stock Split) issuable to certain former stockholders of
Shellco in connection with the Merger (the "TRIGGER Shares") and prior to giving
effect to the Reverse Split, but, after the Merger: (i) the authorized capital
stock of ShellCo consists of (a) 99,000,000 shares of Common Stock, $0.001 par
value per share, of which 18,349,156 are issued and outstanding, and (b)
1,000,000 shares of preferred stock, $0.001 par value per share, none of which
is issued and outstanding or reserved for issuance; (ii) there are no shares
reserved for issuance pursuant to any stock option and purchase plans other than
an Approved Stock Plan and no shares are reserved for issuance pursuant to
securities (other than the shares of Common Stock and the Warrants, the Notes
and Warrants issued pursuant to the Convertible Notes Offering, the Warrants
issued to Xxxxxx & Xxxxxxx, LLC in connection with the Convertible Notes
Offering, the Common PIPE Offering and the Trigger Shares) exercisable or
exchangeable for, or convertible into, shares of Common Stock; (iii) all of the
outstanding shares have been, or upon issuance will be, validly issued and are
fully paid and nonassessable; (iv) except as set forth on SCHEDULE J, none of
ShellCo's share capital is subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by ShellCo; (v) except
as set forth on SCHEDULE J and other than the Trigger Shares and securities and
derivatives issued pursuant to an Approved Stock Plan, there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any share capital of ShellCo or any of its
Subsidiaries, or contracts, commitments, understandings or arrangements by which
ShellCo or any of its Subsidiaries is or may become bound to issue additional
share capital of ShellCo or any of its Subsidiaries or options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any share capital of ShellCo or any of its Subsidiaries; (vi)
there are no outstanding debt securities, notes, credit agreements, credit
facilities or other agreements, documents or instruments evidencing Indebtedness
of ShellCo or any of its Subsidiaries or by which ShellCo or any of its
Subsidiaries is or may become bound (other than Permitted Indebtedness (as
defined in the Notes)); (vii) there are no financing statements securing
obligations in any material amounts, either singly or in the aggregate, filed in
connection with ShellCo other than in connection with the Permitted Liens or as
set forth on SCHEDULE J; (viii) there are no agreements or arrangements under
which ShellCo or any of its Subsidiaries is obligated to register the sale of
any of their securities under the 1933 Act (except pursuant to the Registration
Rights Agreement and the Convertible Notes Registration Rights Agreement, and
registration rights the Company has agreed to provide to Xxxxxx & Xxxxxxx, LLC,
the Existing Shareholders, certain members of management and the current holders
of ShellCo Common Stock); (ix) there are no outstanding securities or
instruments of ShellCo or any of its Subsidiaries that contain any redemption or
similar provisions, and there are no contracts, commitments, understandings or
arrangements by which ShellCo or any of its Subsidiaries is or may become bound
to redeem a security of ShellCo or any of its Subsidiaries; (x) there are no
securities or instruments containing anti-dilution or similar provisions that
will be triggered by the issuance of the Securities; (xi) ShellCo does not have
any stock appreciation rights or "phantom stock" plans or agreements or any
similar plan or agreement; and (xii) ShellCo and its Subsidiaries have no
liabilities or obligations required to be disclosed in the SEC
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Documents but not so disclosed in the SEC Documents, other than those incurred
in the ordinary course of ShellCo's or its Subsidiaries' respective businesses
and which, individually or in the aggregate, do not or would not have a Material
Adverse Effect. ShellCo has furnished to the Buyers true, correct and complete
copies of ShellCo's Certificate of Incorporation, and ShellCo's Bylaws, as
amended and as in effect on the date hereof (the "BYLAWS"). Prior to the
issuance of the Securities and the Convertible Note Securities, ShellCo has no
securities convertible into, or exercisable or exchangeable for, shares of
Common Stock.
K. POST CLOSING CAPITALIZATION. After giving effect to the Merger,
the Acquisitions, the issuance of the Notes and Warrants as contemplated by the
Convertible Note Securities Purchase Agreement and shares of Common Stock and
Warrant pursuant to the Securities Purchase Agreement, the authorized capital
stock of ShellCo (a) 99,000,000 shares of Common Stock, $0.001 par value per
share, of which 7,555,759 shall be issued and outstanding and (b) 1,000,000
shares of preferred stock, $0.001 par value per share, none of which is issued
or outstanding or reserved for issuance. Any and all equity securities and
derivative securities convertible or exercisable into equity securities of
ShellCo and outstanding prior to the Closing, shall have been, concurrently with
the Closing, cancelled or terminated, except for ShellCo's obligations to issue
the Trigger Shares which will be issued at Closing.
L. ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation that, individually or in the aggregate, would have a
Material Adverse Effect before or by, any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of
ShellCo, threatened against or affecting the ShellCo, any Subsidiary, any of
their respective officers or directors, or the Common Stock.
M. MANIPULATION OF PRICE. ShellCo has not, and to its knowledge no
one acting on its behalf has, (i) taken, directly or indirectly, any action
designed to cause or to result in the stabilization or manipulation of the price
of any security of ShellCo to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay
to any person any compensation for soliciting another to purchase any other
securities of ShellCo other than the engagement of Xxxxxx & Xxxxxxx, LLC by the
Company as agent in connection with the Convertible Note Offering and the
offering pursuant which the Securities are being sold and the execution of the
Lock-up Agreement relating to the Management Restricted Stock.
N. DISCLOSURE. ShellCo confirms that neither it nor any other Person
acting on its behalf has provided any of the Buyers or their agents or counsel
with any information that constitutes or could reasonably be expected to
constitute material, nonpublic information that will not be disclosed on the 8-K
Filing (as defined below). ShellCo understands and confirms that each of the
Buyers will rely on the foregoing representations in effecting transactions in
securities of ShellCo. Each of this Joinder Agreement (including the Schedules
hereto), the Securities Purchase Agreement (including the Schedules thereto),
the other Transaction Documents and that certain Private Placement Memorandum
dated October 23, 2006 (including the various attachments thereto) and furnished
by or on behalf of the Company regarding the Company, the Targets, their
respective businesses and the transactions contemplated hereby is
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true and correct in all material respects and does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which it was made, not misleading. Each press release issued by ShellCo
during the 12 months preceding the date of this Joinder Agreement did not at the
time of release contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading. No event or circumstance has occurred or information exists in
respect of ShellCo or any of its Subsidiaries (other than the Subsidiaries
organized outside the United States of America, any of the States thereof or the
District of Columbia (collectively, the "FOREIGN SUBSIDIARIES")) or its or their
business, properties, operations or financial condition, which, under applicable
law, rule or regulation, requires public disclosure or announcement by ShellCo
but which has not been so publicly announced or disclosed. To the knowledge of
ShellCo, no event or circumstance has occurred or information exists in respect
of any of the Foreign Subsidiaries or its business, properties, operations or
financial condition, which, under applicable law, rule or regulation, requires
public disclosure or announcement by such Person or its parent company but which
has not been so publicly announced or disclosed.
IV. In addition, ShellCo covenants to each of the Buyers that:
A. FORM D AND BLUE SKY. ShellCo shall file a Form D in respect of
the Securities as required under Regulation D and to provide a copy thereof to
each Buyer promptly after such filing. ShellCo shall have taken such action, on
or before the Closing Date (should the Company have not already taken such
action), as ShellCo shall reasonably determine is necessary in order to obtain
an exemption for or to qualify the Securities for sale to the Buyers at the
Closing pursuant to this Joinder Agreement under applicable securities or "Blue
Sky" laws of the states of the United States (or to obtain an exemption from
such qualification), and shall provide evidence of any such action so taken to
the Buyers on or prior to the Closing Date. ShellCo shall make all filings and
reports relating to the offer and sale of the Securities required under
applicable securities or "Blue Sky" laws of the states of the United States
following the Closing Date.
B. USE OF PROCEEDS. ShellCo will use the proceeds from the sale of
the Securities solely as permitted by the Securities Purchase Agreement.
C. FINANCIAL INFORMATION. ShellCo shall send the following to each
Investor during the Reporting Period (i) unless the following are filed with the
SEC through XXXXX and are available to the public through the XXXXX system,
within three (3) Business Days after the filing thereof with the SEC, a copy of
its Annual Reports on Form 10-K or 10-KSB, its Quarterly Reports on Form 10-Q or
10-QSB or any other any interim reports or any consolidated balance sheets,
income statements, stockholders' equity statements and/or cash flow statements
for any period other than annual, any Current Reports on Form 8-K and any
registration statements (other than on Form S-8) or amendments filed pursuant to
the 1933 Act, (ii) two (2) Business Days after the release thereof (unless such
press release is available on PR Newswire or Business Wire), facsimile copies of
all press releases issued by ShellCo, the Company or any of its Subsidiaries,
and (iii) copies of any notices and other information made available or given to
the
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stockholders of ShellCo or the Company generally, contemporaneously with the
making available or giving thereof to the stockholders.
D. DISCLOSURE OF TRANSACTIONS AND OTHER MATERIAL INFORMATION. On or
before 8:30 a.m. New York time on the first Business Day following the Closing
Date, ShellCo shall file a press release describing the material terms of the
transactions contemplated by the Transaction Documents. ShellCo shall file, as a
"small business issuer" (as defined in Item 10(a) of Regulation SB under the
1934 Act), if applicable, a Current Report on Form 8-K describing the terms of
the transactions contemplated by the Transaction Documents in the form, on or
prior to the date, and as, required by the 1934 Act and attaching the material
Transaction Documents (including, without limitation, the Securities Purchase
Agreement (and all schedules thereto), this Joinder Agreement (and all schedules
hereto), the form of the Notes, the form of Warrants, the Registration Rights
Agreement and the Security Documents) as exhibits to such filing if and to the
extent required by the 1934 Act (including all attachments, the "8-K FILING").
From and after the filing of the 8-K Filing with the SEC, no Buyer shall be in
possession of any material, nonpublic information received from the Company,
ShellCo, any of its Subsidiaries or any of their respective officers, directors,
employees or agents, that is not disclosed in an 8-K Filing. ShellCo and each of
its Subsidiaries and their respective officers, directors, employees and agents,
shall not provide any Buyer with any material, nonpublic information regarding
the Company, ShellCo or any of their Subsidiaries from and after the filing of
the 8-K Filing without the express written consent of such Buyer. If a Buyer
has, or believes it has, received any such material, nonpublic information
regarding ShellCo, the Company or any of the Subsidiaries, it shall provide
ShellCo with written notice thereof. ShellCo shall, within five (5) Trading Days
(as defined in the Notes) of receipt of such notice, make public disclosure of
such material, nonpublic information. In the event of a breach of the foregoing
covenant by ShellCo, any of its Subsidiaries, or any of their respective
officers, directors, employees and agents, in addition to any other remedy
provided herein or in the Transaction Documents, a Buyer shall have the right to
make a public disclosure, in the form of a press release, public advertisement
or otherwise, of such material, nonpublic information without the prior approval
by ShellCo, its Subsidiaries, or any of their respective officers, directors,
employees or agents. No Buyer shall have any liability to ShellCo, its
Subsidiaries, or any of their respective officers, directors, employees,
stockholders or agents for any such disclosure. Subject to the foregoing, none
of ShellCo, the Company, any of their Subsidiaries or any Buyer shall issue any
press releases or any other public statements in respect of the transactions
contemplated hereby; PROVIDED, HOWEVER, that ShellCo shall be entitled, without
the prior approval of any Buyer, to make any press release or other public
disclosure in respect of such transactions (i) in substantial conformity with
the 8-K Filing and contemporaneously therewith and (ii) as is required by
applicable law and regulations. Notwithstanding the foregoing, ShellCo shall not
publicly disclose the name of any Buyer, or include the name of any Buyer in any
filing with the SEC or any regulatory agency or Principal Market, without the
prior written consent of such Buyer, except (i) for disclosure thereof in the
8-K Filing or Registration Statement or (ii) as required by law, the regulations
of the stock exchange or automatic quotation system upon which ShellCo's shares
of Common Stock are then traded or any order of any court or other governmental
agency, in which case ShellCo shall provide such Buyer with prior notice of such
disclosure and the opportunity to review and comment on such disclosure.
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E. VARIABLE SECURITIES; DILUTIVE ISSUANCES. For so long as any
shares of Common Stock issued pursuant to the Securities Purchase Agreement or
Warrants remain outstanding, ShellCo shall not, in any manner, issue or sell any
rights, warrants or options to subscribe for or purchase Common Stock or
directly or indirectly convertible into or exchangeable or exercisable for
Common Stock at a price which varies or may vary with the market price of the
Common Stock, including by way of one or more reset(s) to any fixed price unless
the conversion, exchange or exercise price of any such security cannot be less
than the then applicable Exercise Price (as defined in the Warrants) in respect
of the Common Stock into which any Warrant is exercisable. For as long as any
shares of Common Stock issued pursuant to the Securities Purchase Agreement or
Warrants remain outstanding, ShellCo shall not, in any manner, enter into or
affect any Dilutive Issuance (as defined in the Warrants) if the effect of such
Dilutive Issuance is to cause ShellCo to be required to issue upon exercise of
any Warrant any shares of Common Stock in excess of that number of shares of
Common Stock which ShellCo may issue upon exercise of the Warrants without
breaching ShellCo's obligations under the rules or regulations of the Principal
Market or the stock exchange or automated quotation system upon which ShellCo's
shares of Common Stock are traded, including, without limitation, any and all
discounted issuance rules, if applicable.
F. CORPORATE EXISTENCE. So long as any Buyer beneficially owns any
Securities, ShellCo shall not be party to any Fundamental Transaction (as
defined in the Warrants) unless ShellCo is in compliance with the applicable
provisions governing Fundamental Transactions set forth in the Warrants.
G. RESERVATION OF SHARES. For as long as any Buyer owns any
Warrants, and contingent on the effectiveness of the Reverse Split, ShellCo
shall take all action necessary to at all times have authorized, and reserved
for the purpose of issuance, no less than 130% of the sum of (i) the number of
shares of Common Stock issuable upon exercise of the Warrants issued at the
Closing, (ii) the number of shares of Common Stock issuable upon exercise of the
Convertible Preferred Notes' Warrants, and (iii) the number of shares of Common
Stock issuable upon conversion of all of the Convertible Preferred Notes
(without taking into account any limitations on the exercise of the Warrants or
the Convertible Preferred Notes' Warrants or the conversion of the Convertible
Preferred Notes, respectively).
H. CONDUCT OF BUSINESS. The business of ShellCo, the Company and
their Subsidiaries shall not be conducted in violation of any law, ordinance or
regulation of any governmental entity, except where such violations would not
result, either individually or in the aggregate, in a Material Adverse Effect.
I. HOLDING PERIOD. For the purposes of Rule 144, ShellCo
acknowledges, based on current securities laws, that the holding period of the
Warrant Shares may be tacked onto the holding period of the Warrants (in the
case of Cashless Exercise (as defined in the Warrants)) and ShellCo agrees not
to take a position contrary to this Section I.
J. NO ADDITIONAL REGISTERED SECURITIES. From the Closing Date until
the date that is 90 Trading Days following the Effective Date (as defined in the
Registration Rights Agreement), neither ShellCo nor the Company will file a
registration statement under the 1933 Act, or allow any such registration
statement to become effective, in respect of any securities
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other than the Registration Statement contemplated by the Registration Rights
Agreement and the registration rights agreement in respect of the Common PIPE
Offering and a registration statement on Form S-8.
K. REPORTING STATUS. Until the date on which the Investors (as
defined in the Registration Rights Agreement) shall have sold all the Conversion
Shares and Warrant Shares and none of the Notes or Warrants is outstanding,
ShellCo shall use every reasonable effort timely file all reports required to be
filed with the SEC pursuant to the 1934 Act, provided that prior to the filing
of the registration statement with the SEC as required by the Registration
Rights Agreement, compliance with the current public information requirements of
Rule 144(c) thereunder shall be sufficient. ShellCo 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.
L. OTC BULLETIN BOARD. ShellCo shall use best efforts to comply with
the rules of the Principal Market.
M. NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Joinder Agreement must
be given and will be deemed to have been delivered in accordance with the terms
of the Securities Purchase Agreement: The addresses and facsimile number for
such communications to the Transfer Agent shall be:
Xxxxxxxx Stock Transfer, Inc.
0000 Xxxxx 00xx xxxxx
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
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IN WITNESS WHEREOF, Aerobic Creations, Inc. has executed this
Joinder Agreement on the date first written above.
AEROBIC CREATIONS, INC.
By:_____________________________________
Name:
President and Chief Executive Officer
