Exhibit 10.19
STOCKHOLDER REPRESENTATION STATEMENT
AND TRANSFER RESTRICTION AGREEMENT
This Stockholder Representation Statement and Transfer Restriction
Agreement (this "AGREEMENT") is dated as of June 14, 2005, by and between
Secured Services, Inc., a Delaware corporation (the "COMPANY"), and the
undersigned holder ("HOLDER") of issued and outstanding shares of capital stock
of Chameleon Technologies, Inc. ("CHAMELEON") identified on the signature pages
hereto.
WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
"SECURITIES ACT") and Rule 506 promulgated thereunder, the Company desires to
issue and sell to Holder, and Holder desires to purchase from the Company,
securities of the Company pursuant to the terms of the Merger Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and Holder agree as
follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement: (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Certificate of Designation (as defined
herein), and (b) the following terms have the meanings indicated in this Section
1.1:
"AFFILIATE" means any Person that, directly or indirectly through
one or more intermediaries, controls or is controlled by or is under
common control with a Person, as such terms are used in and construed
under Rule 144 under the Securities Act. With respect to a Holder, any
investment fund or managed account that is managed on a discretionary
basis by the same investment manager as such Holder will be deemed to be
an Affiliate of such Holder.
"CERTIFICATE OF DESIGNATION" means the Certificate of Designation
to be filed prior to the Closing by the Company with the Secretary of
State of Delaware.
"CLOSING" means the closing of the Merger.
"CLOSING DATE" means the Trading Day when all of the conditions
precedent to closing of the Merger have been satisfied or waived.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the common stock of the Company, par value
$0.0001
per share, and any other class of securities into which such securities
may hereafter have been reclassified or changed into.
"COMPANY COUNSEL" means Morse, Zelnick, Rose & Lander, LLP.
"CONVERSION PRICE" shall have the meaning ascribed to such term in
the Certificate of Designation.
"DEBENTURES" means the debentures sold pursuant to the Debenture
Purchase Agreement.
"DEBENTURE PURCHASE AGREEMENT" means the Securities Purchase
Agreement, dated as of June 13, 2005, between the Company and the
purchasers signatory thereto.
"DEBENTURE PURCHASER" the purchasers of Debentures pursuant to the
Debenture Purchase Agreement.
"EFFECTIVE DATE" means the date that the initial Registration
Statement filed by the Company pursuant to the Investor Rights Agreement
is first declared effective by the Commission.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"INVESTOR RIGHTS AGREEMENT" means the Investor Rights Agreement,
dated the date hereof, among the Company and the signatories thereto.
"LEGEND REMOVAL DATE" shall have the meaning ascribed to such term
in Section 4.1(c).
"MAXIMUM RATE" shall have the meaning ascribed to such term in
Section 5.17.
"MAXIMUM DEBENTURE AMOUNT" shall mean the total aggregate dollar
amount of Debentures sold pursuant to the Debenture Purchase Agreement.
"MAXIMUM SECURITIES AMOUNT" shall mean the total aggregate number
of shares of Common Stock issued or issuable pursuant to the Merger
Agreement, assuming for this purpose the exercise of all Securities which
are exercisable, the conversion of all Securities which are convertible
and the conversion and exercise with respect to convertible Securities
which are convertible into exercisable Securities.
"MERGER AGREEMENT" means the Merger Agreement by and among the
Company, Chameleon and Secured Mobile, Inc.
"MERGER" means the merger of Chameleon with and into Secured
Mobile, Inc. pursuant to the terms of the Merger Agreement.
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"MERGER HOLDERS" means the recipients of Securities pursuant to
the Merger.
"PERMITTED PLEDGE" means a pledge pursuant to a bona fide margin
agreement with a registered broker-dealer or grant a security interest in
some or all of the Securities to a financial institution that is an
"accredited investor" as defined in Rule 501(a) under the Securities Act
and who agrees to be bound by the provisions of this Agreement and the
Investor Rights Agreement and, if required under the terms of such
arrangement, Holder may transfer pledged or secured Securities to the
pledgees or secured parties.
"PERSON" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
"PREFERRED STOCK" means the up to 5,000 shares of the Company's
7.5% Series ___ Convertible Preferred Stock issued hereunder having the
rights, preferences and privileges set forth in the Certificate of
Designation.
"REGISTRATION STATEMENT" means a registration statement meeting
the requirements set forth in the Investor Rights Agreement and covering
the resale of the Underlying Shares by each purchaser as provided for in
the Investor Rights Agreement.
"RULE 144" means Rule 144 promulgated by the Commission pursuant
to the Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"SECURITIES" means the Preferred Stock, the Warrants and the
Underlying Shares.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"STATED VALUE" means $1,000 per share of Preferred Stock.
"TRADING DAY" means a day on which the Common Stock is traded on a
Trading Market.
"TRADING MARKET" means the following markets or exchanges on which
the Common Stock is listed or quoted for trading on the date in question:
the Nasdaq SmallCap Market, the American Stock Exchange, the New York
Stock Exchange, the Nasdaq National Market or the OTC Bulletin Board.
"TRANSACTION DOCUMENTS" means this Agreement, the Merger
Agreement, the Certificate of Designation, the Warrants, the Investor
Rights Agreement and any other documents or agreements executed in
connection with the transactions contemplated hereunder.
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"TRANSFER" means, with respect to securities, any sale, transfer
or exchange, in each case for consideration; PROVIDED that a Permitted
Pledge shall not constitute a Transfer.
"UNDERLYING SHARES" means the shares of Common Stock issued and
issuable upon conversion of the Preferred Stock, upon exercise of the
Warrants and issued and issuable in lieu of the cash payment of dividends
on the Preferred Stock in accordance with the terms of the Certificate of
Designation.
"VWAP" means, for any date, the price determined by the first of
the following clauses that applies: (a) if the Common Stock is then
listed or quoted on a Trading Market, the daily volume weighted average
price of the Common Stock for such date (or the nearest preceding date)
on the primary Trading Market on which the Common Stock is then listed or
quoted as reported by Bloomberg Financial L.P. (based on a Trading Day
from 9:30 a.m. EST to 4:02 p.m. Eastern Time) using the VAP function; (b)
if the Common Stock is not then listed or quoted on the Trading Market
and if prices for the Common Stock are then reported in the "Pink Sheets"
published by the Pink Sheets, LLC (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid
price per share of the Common Stock so reported; or (c) in all other
cases, the fair market value of a share of Common Stock as determined by
a nationally recognized-independent appraiser selected in good faith by
Merger Holders holding a majority of the Stated Value of the shares of
Preferred Stock then outstanding.
"WARRANTS" means collectively the Common Stock purchase warrants
delivered to the Merger Holders at the Closing in accordance with the
Merger Agreement, which Warrants shall be exercisable immediately and
have a term of exercise equal to four years.
"WARRANT SHARES" means the shares of Common Stock issuable upon
exercise of the Warrants.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF HOLDER
The undersigned Holder hereby, for itself and for no other Person,
represents and warrants as of the date hereof and as of the Closing Date to the
Company as follows:
2.1 OWN ACCOUNT. Holder understands that the Securities are
"restricted securities" and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Securities as principal
for its own account and not with a view to or for distributing or reselling such
Securities or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any of
such Securities in violation of the Securities Act or any applicable state
securities law and has no arrangement or understanding with any other persons
regarding the distribution of such Securities (this representation and
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warranty not limiting such Holder's right to sell the Securities pursuant to the
Registration Statement or otherwise in compliance with applicable federal and
state securities laws) in violation of the Securities Act or any applicable
state securities law. Holder is acquiring the Securities hereunder in the
ordinary course of its business. Holder does not have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the
Securities.
2.2 HOLDER STATUS. At the time Holder was offered the Securities, it
was, and at the date hereof it is, and on each date on which it converts any
shares of Preferred Stock or exercises any Warrants, it will be an "accredited
investor" as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under
the Securities Act.
2.3 EXPERIENCE OF HOLDER. Holder, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment. Holder is able to bear the economic risk of an
investment in the Securities and, at the present time, is able to afford a
complete loss of such investment.
2.4 GENERAL SOLICITATION. Holder is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
2.5 SEC REPORTS. Holder has received from the Company the SEC Reports
(as defined in the Merger Agreement) and has had an opportunity to speak to and
ask questions of the officers of the Company concerning the Company, its
financial condition, its business and prospects which the Holder deems to be
adequate.
The Company acknowledges and agrees that the Holder does not make or has
not made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Article II.
ARTICLE III
CONTRACTUAL TRANSFER RESTRICTIONS
3.1 TRANSFER RESTRICTIONS. Holder has executed the form of lock-up
agreement attached hereto as Exhibit A (the "LOCK-UP AGREEMENT").
3.2 LEGEND. Holder agrees to the imprinting, so long as the
restrictions of the Lock-Up Agreement are applicable, of a legend on any of the
Securities in the following form:
THESE SECURITIES [AND THE SECURITIES INTO WHICH THESE SECURITIES ARE
[EXERCISABLE] [CONVERTIBLE]] ARE SUBJECT TO CERTAIN CONTRACTUAL
RESTRICTIONS ON TRANSFER. A COPY OF THE AGREEMENT RESTRICTING TRANSFER
MAY BE OBTAINED WITHOUT CHARGE FROM THE COMPANY'S SECRETARY. THESE
SECURITIES AND THE
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SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
SECURITIES.
The Company agrees that at such time as such legend is no longer required
under this Article III, it will, no later than three Trading Days following the
delivery by Holder to the Company and the Company's transfer agent of a
certificate representing Securities issued with a restrictive legend, deliver or
cause to be delivered to Holder a certificate representing such shares that is
free from the restrictive legends otherwise required by this Article III.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 SECURITIES LAWS TRANSFER RESTRICTIONS.
(a) The Securities may only be disposed of in compliance with
state and federal securities laws. In connection with any transfer of
Securities other than pursuant to an effective registration statement or
Rule 144, to the Company or to an affiliate of Holder, or to a
constituent partner, limited partner, member (or retired partner, limited
partner or member) of Holder or in connection with a pledge as
contemplated in Section 4.1(b), the Company may require the transferor
thereof to provide to the Company an opinion of counsel selected by the
transferor and reasonably acceptable to the Company, the form and
substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration
of such transferred Securities under the Securities Act. As a condition
of transfer, any such transferee shall agree in writing to be bound by
the terms of this Agreement and shall have the rights of a Holder under
this Agreement and the Investor Rights Agreement.
(b) Holder agrees to the imprinting, so long as is required by
this Section 4.1(b), of a legend on any of the Securities in the
following form:
[NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE [EXERCISABLE] [CONVERTIBLE]] HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF
COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES AND THE SECURITIES
ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH
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A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
The Company acknowledges and agrees that Holder may from time to
time enter into a Permitted Pledge in some or all of the Securities and,
if required under the terms of such arrangement, Holder may transfer
pledged or secured Securities to the pledgees or secured parties. Such a
pledge or transfer would not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party or pledgor
shall be required in connection therewith. Further, no notice shall be
required of such pledge. At the appropriate Holder's expense, the Company
will execute and deliver such reasonable documentation as a pledgee or
secured party of Securities may reasonably request in connection with a
pledge or transfer of the Securities, including, if the Securities are
subject to registration pursuant to the Investor Rights Agreement, the
preparation and filing of any required prospectus supplement under Rule
424(b)(3) under the Securities Act or other applicable provision of the
Securities Act to appropriately amend the list of Selling Stockholders
thereunder.
(c) Certificates evidencing the Underlying Shares shall not
contain any legend (including the legend set forth in Section 4.1(b)
hereof): (i) while a registration statement (including the Registration
Statement) covering the resale of such security is effective under the
Securities Act, or (ii) following any sale of such Underlying Shares
pursuant to Rule 144, or (iii) if such Underlying Shares are eligible for
sale under Rule 144(k), or (iv) if such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the
Commission). The Company shall cause its counsel to issue a legal opinion
to the Company's transfer agent promptly after the Effective Date if
required by the Company's transfer agent to effect the removal of the
legend hereunder. If all or any shares of Preferred Stock or any portion
of a Warrant is converted or exercised (as applicable) at a time when
there is an effective registration statement to cover the resale of the
Underlying Shares, or if such Underlying Shares may be sold under Rule
144(k) or if such legend is not otherwise required under applicable
requirements of the Securities Act (including judicial interpretations
thereof) then such Underlying Shares shall be issued free of all legends.
The Company agrees that following the Effective Date or at such time as
such legend is no longer required under this Section 4.1(c), it will, no
later than three Trading Days following the delivery by Holder to the
Company or the Company's transfer agent of a certificate representing
Underlying Shares, as applicable, issued with a restrictive legend (such
third Trading Day, the "LEGEND REMOVAL DATE"), deliver or cause to be
delivered to Holder a certificate representing such shares that is free
from all restrictive and other legends. The Company may not make any
notation on its records or give instructions to any transfer agent of the
Company that enlarge the restrictions on transfer set forth in this
Section. Certificates for Securities subject to legend removal hereunder
shall be transmitted by the transfer agent of the Company to Holder by
crediting the account of Holder's prime broker with the Depository Trust
Company System.
(d) In addition to Holder's other available remedies, the
Company shall pay to
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Holder, in cash, as partial liquidated damages and not as a penalty, for
each $2,000 of Underlying Shares (based on the VWAP of the Common Stock
on the date such Securities are submitted to the Company's transfer
agent) delivered for removal of the restrictive legend and subject to
Section 4.1(c), $10 per Trading Day (increasing to $20 per Trading Day 5
Trading Days after such damages have begun to accrue) for each Trading
Day after the second Trading Day after the Legend Removal Date until such
certificate is delivered without a legend. Nothing herein shall limit
Holder's right to pursue actual damages for the Company's failure to
deliver certificates representing any Securities as required by the
Transaction Documents, and Holder shall have the right to pursue all
remedies available to it at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief.
(e) Holder, severally and not jointly with the other recipients
of capital stock of the Company pursuant to the Merger, agrees that the
removal of the restrictive legend from certificates representing
Securities as set forth in this Section 4.1 is predicated upon the
Company's reliance that Holder will sell any Securities only pursuant to
either the registration requirements of the Securities Act, including any
applicable prospectus delivery requirements, or an exemption therefrom.
(f) Until the one year anniversary of the Effective Date, the
Company shall not undertake a reverse or forward stock split or
reclassification of the Common Stock without the prior written consent of
the Merger Holders holding a majority in interest of the shares of
Preferred Stock.
4.2 ACKNOWLEDGMENT OF DILUTION. The Company acknowledges that the
issuance of the Securities may result in dilution of the outstanding shares of
Common Stock, which dilution may be substantial under certain market conditions.
The Company further acknowledges that its obligations under the Transaction
Documents, including without limitation its obligation to issue the Underlying
Shares pursuant to the Transaction Documents, are unconditional and absolute and
not subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim the Company may have
against any Merger Holder and regardless of the dilutive effect that such
issuance may have on the ownership of the other stockholders of the Company.
4.3 FURNISHING OF INFORMATION. As long as Holder owns Securities, the
Company covenants to use its best efforts to timely file (or obtain extensions
in respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. As long as Holder owns Securities, if the Company is not required
to file reports pursuant to the Exchange Act, it will prepare and furnish to
Holder and make publicly available in accordance with Rule 144(c) such
information as is required for Holder to sell the Securities under Rule 144. The
Company further covenants that it will take such further action as any holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Person to sell such Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144.
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4.4 INTEGRATION. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to Holder or that would be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market.
4.5 CONVERSION AND EXERCISE PROCEDURES. The form of Notice of Exercise
included in the Warrants and the form of Notice of Conversion included in the
Certificate of Designation set forth the totality of the procedures required of
Holder in order to exercise the Warrants or convert the Preferred Stock. No
additional legal opinion or other information or instructions shall be required
of Holder to exercise its Warrants or convert its Preferred Stock. The Company
shall honor exercises of the Warrants and conversions of the Preferred Stock and
shall deliver Underlying Shares in accordance with the terms, conditions and
time periods set forth in the Transaction Documents.
4.6 SECURITIES LAWS DISCLOSURE; PUBLICITY. The Company shall, by 8:30
a.m. Eastern time on the Trading Day following the date hereof, issue a Current
Report on Form 8-K, reasonably acceptable to Chameleon disclosing the material
terms of the transactions contemplated hereby, and shall attach the Transaction
Documents thereto. The Company and Holder shall consult with each other in
issuing any other press releases with respect to the transactions contemplated
hereby, and neither the Company nor Holder shall issue any such press release or
otherwise make any such public statement without the prior consent of the
Company, with respect to any press release of Holder, or without the prior
consent of Holder, with respect to any press release of the Company, which
consent shall not unreasonably be withheld, except if such disclosure is
required by law, in which case the disclosing party shall promptly provide the
other party with prior notice of such public statement or communication.
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of Holder, or include the name of Holder in any filing with the Commission or
any regulatory agency or Trading Market, without the prior written consent of
Holder, except (i) as required by federal securities law in connection with the
registration statement contemplated by the Investor Rights Agreement and (ii) to
the extent such disclosure is required by law or Trading Market regulations, in
which case the Company shall provide the Merger Holders with prior notice of
such disclosure permitted under subclause (i) or (ii).
4.7 SHAREHOLDER RIGHTS PLAN. No claim will be made or enforced by the
Company or, to the knowledge of the Company, any other Person that Holder is an
"Acquiring Person" under any shareholder rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that Holder could
be deemed to trigger the provisions of any such plan or arrangement, by virtue
of receiving Securities under the Transaction Documents or under any other
agreement between the Company and Holder. The Company shall conduct its business
in a manner so that it will not become subject to the Investment Company Act.
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ARTICLE V
MISCELLANEOUS
5.1 TERMINATION. This Agreement may be terminated by Holder, as to
Holder's obligations hereunder only, by written notice to the other party, if
the Closing has not been consummated on or before June ___, 2005; PROVIDED,
HOWEVER, that no such termination will affect the right of any party to xxx for
any breach by the other party (or parties).
5.2 FEES AND EXPENSES. Except as expressly set forth in the
Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all transfer agent fees, stamp taxes and other taxes and duties levied
in connection with the delivery of any Securities.
5.3 ENTIRE AGREEMENT. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
5.4 NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto prior to 5:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (c) the second Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (d) upon actual receipt by
the party to whom such notice is required to be given. The address for such
notices and communications shall be as set forth on the signature pages attached
hereto.
5.5 AMENDMENTS; WAIVERS. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and Holder or, in the case of a waiver, by the party against whom
enforcement of any such waiver is sought. No waiver of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.
5.6 HEADINGS. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
5.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign
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this Agreement or any rights or obligations hereunder without the prior written
consent of Holder, which consent shall not be unreasonably withheld. Holder may
assign any or all of its rights under this Agreement to any Person to whom
Holder assigns or transfers any Securities, provided such transferee agrees in
writing to be bound, with respect to the transferred Securities, by the
provisions hereof that apply to the Holder.
5.8 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
5.9 GOVERNING LAW. All questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents shall be
governed by and construed and enforced in accordance with the internal laws of
the State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper or inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by law. The parties
hereby waive all rights to a trial by jury. If either party shall commence an
action or proceeding to enforce any provisions of the Transaction Documents,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its attorneys' fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.
5.10 SURVIVAL. The representations and warranties contained herein
shall survive the Closing and the delivery, exercise and/or conversion of the
Securities, as applicable for the applicable statue of limitations.
5.11 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding
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obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
5.12 SEVERABILITY. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
5.13 RESCISSION AND WITHDRAWAL RIGHT. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever Holder exercises a right, election, demand or
option under a Transaction Document and the Company does not timely perform its
related obligations within the periods therein provided, then Holder may rescind
or withdraw, in its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights; PROVIDED, HOWEVER, in the case of a
rescission of a conversion of the Preferred Stock or exercise of a Warrant,
Holder shall be required to return any shares of Common Stock subject to any
such rescinded conversion or exercise notice.
5.14 REPLACEMENT OF SECURITIES. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.
5.15 REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of Holder
and the Company will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
described in the foregoing sentence and hereby agrees to waive in any action for
specific performance of any such obligation the defense that a remedy at law
would be adequate.
5.16 PAYMENT SET ASIDE. To the extent that the Company makes a payment
or payments to Holder pursuant to any Transaction Document or Holder enforces or
exercises its rights thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
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5.17 USURY. To the extent it may lawfully do so, the Company hereby
agrees not to insist upon or plead or in any manner whatsoever claim, and will
resist any and all efforts to be compelled to take the benefit or advantage of,
usury laws wherever enacted, now or at any time hereafter in force, in
connection with any claim, action or proceeding that may be brought by Holder in
order to enforce any right or remedy under any Transaction Document.
Notwithstanding any provision to the contrary contained in any Transaction
Document, it is expressly agreed and provided that the total liability of the
Company under the Transaction Documents for payments in the nature of interest
shall not exceed the maximum lawful rate authorized under applicable law (the
"MAXIMUM RATE"), and, without limiting the foregoing, in no event shall any rate
of interest or default interest, or both of them, when aggregated with any other
sums in the nature of interest that the Company may be obligated to pay under
the Transaction Documents exceed such Maximum Rate. It is agreed that if the
maximum contract rate of interest allowed by law and applicable to the
Transaction Documents is increased or decreased by statute or any official
governmental action subsequent to the date hereof, the new maximum contract rate
of interest allowed by law will be the Maximum Rate applicable to the
Transaction Documents from the effective date forward, unless such application
is precluded by applicable law. If under any circumstances whatsoever, interest
in excess of the Maximum Rate is paid by the Company to Holder with respect to
indebtedness evidenced by the Transaction Documents, such excess shall be
applied by Holder to the unpaid principal balance of any such indebtedness or be
refunded to the Company, the manner of handling such excess to be at Holder's
election.
5.19 LIQUIDATED DAMAGES. The Company's obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid notwithstanding the
fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.
5.20 CONSTRUCTION. The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Stockholder
Representation Statement and Transfer Restriction Agreement to be duly executed
by their respective authorized signatories as of the date
first indicated above.
SECURED SERVICES, INC. ADDRESS FOR NOTICE:
-------------------
By: _/s/ King Moore__________________ 000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Name: King Xxxxx Xxx Xxxx, Xxx Xxxx 00000
Title: President and CEO
With a copy to (which shall not constitute notice):
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR HOLDER FOLLOWS]
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[HOLDER SIGNATURE PAGES TO STOCKHOLDER REPRESENTATION STATEMENT AND
TRANSFER RESTRICTION AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Stockholder
Representation Statement and Transfer Restriction Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above.
Name of Holder: Nextpoint Partners II, LP
-------------------------
SIGNATURE OF AUTHORIZED SIGNATORY OF HOLDER:
By: NextPoint GP LLC, its General Partner
By: /s/ Xxxxxxx Xxxxx
-----------------
A member
Name of Authorized Signatory: ___________________________
Title of Authorized Signatory: __________________________
Email Address of Holder:_________________________________
Address for Notice of Holder: 000 Xxxxxxxxxxxx Xxxxxx XX
Xxxxx 000
Xxxxxxxxxx, XX 00000
Address for Delivery of Securities for Holder (if not same as above):
Shares of Preferred Stock:
Warrant Shares:
EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]
[SIGNATURE PAGES CONTINUE]
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