SECURITIES PURCHASE AGREEMENT
THIS SECURITIES
PURCHASE AGREEMENT
(this
“Agreement”),
dated
as of May 13, 2005, by and among MOBILEPRO
CORP.,
a
Delaware corporation (the “Company”),
and
CORNELL
CAPITAL PARTNERS, LP (the
“Buyer”).
WHEREAS,
the
Company and the Buyer are executing and delivering this Agreement in reliance
upon an exemption from securities registration pursuant to Section 4(2) and/or
Rule 506 of Regulation D (“Regulation
D”)
as
promulgated by the U.S. Securities and Exchange Commission (the “SEC”)
under
the Securities Act of 1933, as amended (the “Securities
Act”);
WHEREAS,
the
parties desire that, upon the terms and subject to the conditions contained
herein, the Company shall issue and sell to the Buyer, as provided herein,
and
the Buyer shall purchase for Fifteen Million Five Hundred Thousand Dollars
($15,500,000) (the “Purchase
Price”)
a
7.75% Secured Convertible Debenture (the “Convertible
Debenture”),
which
shall be convertible into shares of the Company’s common stock, par value $0.001
(the “Common
Stock”)
(as
converted, the “Conversion
Shares”)
which
shall be funded on the date hereof (the “Closing”);
and
WHEREAS,
contemporaneously with the execution and delivery of this Agreement, the
parties
hereto are executing and delivering certain other Transaction Documents (as
defined in the Secured Convertible Debenture of even date herewith in the
original principal amount of $15,500,000); and
NOW,
THEREFORE,
in
consideration of the mutual covenants and other agreements contained in this
Agreement the Company and the Buyer hereby agree as follows:
(a) Purchase
of Convertible Debenture.
Subject
to the satisfaction (or waiver) of the terms and conditions of this Agreement,
the Buyer agrees to purchase at Closing (as defined herein below) and the
Company agrees to sell and issue to the Buyer at Closing, a Convertible
Debenture in the amount of the Purchase Price. Upon execution hereof by the
Buyer, the Buyer shall wire transfer the Purchase Price same-day funds or
a
check payable to “Xxxxx Xxxxxxxx, Esq., as Escrow Agent for MobilePro
Corp./Cornell Capital Partners, LP”, which Purchase Price shall be held in
escrow pursuant to the terms of the Escrow Agreement (as hereinafter defined)
and disbursed in accordance therewith. Notwithstanding the foregoing, a Buyer
may withdraw his Purchase Price and terminate this Agreement as to such Buyer
at
any time after the execution hereof and prior to Closing (as hereinafter
defined).
(b) Closing
Date.
The
Closing of the purchase and sale of the Convertible Debenture shall take
place
on the date hereof, subject to notification of satisfaction of the conditions
to
the Closing set forth herein and in Sections 6 and 7 below (or such later
date
as is mutually agreed to by the Company and the Buyer) (the “Closing
Date”).
The
Closing shall occur on the respective Closing Date at the offices of Yorkville
Advisors, LLC, 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx Xxxx, Xxx Xxxxxx 00000
(or
such other place as is mutually agreed to by the Company and the Buyer).
(c) Escrow
Arrangements; Form of Payment.
Upon
execution hereof by Buyer and pending the Closing, the aggregate proceeds
of the
sale of the Convertible Debenture to Buyer pursuant hereto shall be deposited
in
a non-interest bearing escrow account with Xxxxx Xxxxxxxx, Esq., as escrow
agent
(the “Escrow
Agent”),
pursuant to the terms of an Escrow Agreement (the “Escrow
Agreement”)
between the Company, the Buyer and the Escrow Agent. Subject to the satisfaction
of the terms and conditions of this Agreement, on the Closing Date, (i) the
Escrow Agent shall deliver to the Company in accordance with the terms of
the
Escrow Agreement such aggregate proceeds for the Convertible Debenture to
be
issued and sold to such Buyer, minus a commitment fee payable to the Buyer
of
$775,000 and a structuring fee payable to Yorkville Advisors Management,
LLC
(“YAM”)
of
$35,000, each of which shall be deducted from the gross proceeds held in
escrow
and paid to the Buyer and YAM, as applicable, on the Closing Date and
(ii) the Company shall deliver to the Buyer, an original Convertible
Debenture, duly executed on behalf of the Company.
The
Buyer
represents and warrants that:
(a) Investment
Purpose.
The
Buyer is acquiring the Convertible Debenture and, upon conversion of Convertible
Debenture, the Buyer will acquire the Conversion Shares then issuable, for
its
own account for investment only and not with a view towards, or for resale
in
connection with, the public sale or distribution thereof, except pursuant
to
sales registered or exempted under the Securities Act; provided, however,
that
by making the representations herein, such Buyer reserves the right to dispose
of the Conversion Shares at any time in accordance with or pursuant to an
effective registration statement covering such Conversion Shares or an available
exemption under the Securities Act.
(b) Accredited
Investor Status.
The
Buyer is an “Accredited
Investor”
as that
term is defined in Rule 501(a)(3) of Regulation D.
(c) Reliance
on Exemptions.
The
Buyer understands that the Convertible Debenture are being offered and sold
to
it in reliance on specific exemptions from the registration requirements
of
United States federal and state securities laws and that the Company is relying
in part upon the truth and accuracy of, and such Buyer’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings
of
such Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of such Buyer to acquire such
securities.
(d) Information.
The
Buyer and its advisors (and its counsel), if any, have been furnished with
all
materials relating to the business, finances and operations of the Company
and
information they deemed material to making an informed investment decision
regarding Buyer’s purchase of the Convertible Debenture and the Conversion
Shares, which have been requested by the Buyer. The Buyer and its advisors,
if
any, have been afforded the opportunity to ask questions of the Company and
its
management. Neither such inquiries nor any other due diligence investigations
conducted by the Buyer or its advisors, if any, or its representatives shall
modify, amend
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or
affect
the Buyer’s right to rely on the Company’s representations and warranties
contained in Section 3 below. The Buyer understands that its investment in
the
Convertible Debenture and the Conversion Shares involves a high degree of
risk.
The Buyer is in a position regarding the Company, which, based upon employment,
family relationship or economic bargaining power, enabled and enables such
Buyer
to obtain information from the Company in order to evaluate the merits and
risks
of this investment. The Buyer has sought such accounting, legal and tax advice,
as it has considered necessary to make an informed investment decision with
respect to its acquisition of the Convertible Debenture and the Conversion
Shares.
(e) No
Governmental Review.
The
Buyer 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 Convertible Debenture or the Conversion Shares, or the
fairness or suitability of the investment in the Convertible Debenture or
the
Conversion Shares, nor have such authorities passed upon or endorsed the
merits
of the offering of the Convertible Debenture or the Conversion
Shares.
(f) Transfer
or Resale.
The
Buyer understands that except as provided in the Investor Registration Rights
Agreement: (i) the Convertible Debenture have not been and are not being
registered under the Securities Act or any state securities laws, and may
not be
offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, or (B) such Buyer shall have delivered to the Company
an
opinion of counsel, in a generally acceptable form, to the effect that such
securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration requirements;
(ii)
any sale of such securities made in reliance on Rule 144 under the Securities
Act (or a successor rule thereto) (“Rule 144”)
may be
made only in accordance with the terms of Rule 144 and further, if Rule 144
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 defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules
and
regulations of the SEC thereunder; and (iii) neither the Company nor any
other
person is under any obligation to register such securities under the Securities
Act or any state securities laws or to comply with the terms and conditions
of
any exemption thereunder. The Company reserves the right to place stop transfer
instructions against the shares and certificates for the Conversion
Shares.
(g) Legends.
The
Buyer understands that the certificates or other instruments representing
the
Convertible Debenture and or the Conversion Shares shall bear a restrictive
legend in substantially the following form (and a stop -transfer order may
be
placed against transfer of such stock certificates):
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
THE
SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH
A VIEW
TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS,
OR AN
OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS
NOT
REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.
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The
legend set forth above shall be removed and the Company within two (2) business
days shall issue a certificate without such legend to the holder of the
Conversion Shares upon which it is stamped, if, unless otherwise required
by
state securities laws, (i) in connection with a sale transaction, provided
the
Conversion Shares are registered under the Securities Act or (ii) in connection
with a sale transaction, after such holder provides the Company with an opinion
of counsel, which opinion shall be in form, substance and scope customary
for
opinions of counsel in comparable transactions, to the effect that a public
sale, assignment or transfer of the Conversion Shares may be made without
registration under the Securities Act.
(h) Authorization,
Enforcement.
This
Agreement has been duly and validly authorized, executed and delivered on
behalf
of such Buyer and is a valid and binding agreement of such Buyer enforceable
in
accordance with its terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to,
or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.
(i) Receipt
of Documents.
The
Buyer and his or its counsel has received and read in their entirety: (i)
this
Agreement and each representation, warranty and covenant set forth herein,
the
Security Agreement, the Investor Registration Rights Agreement, the Escrow
Agreement, the Irrevocable Transfer Agent Agreement, and the Pledge and Escrow
Agreement; (ii) all due diligence and other information necessary to verify
the
accuracy and completeness of such representations, warranties and covenants;
(iii) the Company’s Form 10-KSB for the fiscal year ended March 31, 2004; (iv)
the Company’s Form 10-QSB for the fiscal quarter ended December 30, 2004 and (v)
answers to all questions the Buyer submitted to the Company regarding an
investment in the Company; and the Buyer has relied on the information contained
therein and has not been furnished any other documents, literature, memorandum
or prospectus.
(j) Due
Formation of Corporate and Other Buyers.
If the
Buyer is a corporation, trust, partnership or other entity that is not an
individual person, it has been formed and validly exists and has not been
organized for the specific purpose of purchasing the Convertible Debenture
and
is not prohibited from doing so.
(k) No
Legal Advice From the Company.
The
Buyer acknowledges, that it had the opportunity to review this Agreement
and the
transactions contemplated by this Agreement with his or its own legal counsel
and investment and tax advisors. The Buyer is relying solely on such counsel
and
advisors and not on any statements or representations of the Company or any
of
its representatives or agents for legal, tax or investment advice with respect
to this investment, the transactions contemplated by this Agreement or the
securities laws of any jurisdiction.
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The
Company represents and warrants to the Buyer that, except as set forth in
the
SEC Documents (as defined herein):
(a) Organization
and Qualification.
The
Company and its subsidiaries are corporations duly organized and validly
existing in good standing under the laws of the jurisdiction in which they
are
incorporated or organized, and have the requisite corporate or limited liability
company power to own their properties and to carry on their business as now
being conducted. Each of the Company and its subsidiaries is duly qualified
as a
foreign corporation or limited liability company to do business and is in
good
standing in every jurisdiction in which the nature of the business conducted
by
it makes such qualification necessary, except to the extent that the failure
to
be so qualified or be in good standing would not have a material adverse
effect
on the Company and its subsidiaries taken as a whole.
(b) Authorization,
Enforcement, Compliance with Other Instruments.
(i) The Company has the requisite corporate power and authority to
enter
into and perform this Agreement, the Security Agreement, the Investor
Registration Rights Agreement, the Irrevocable Transfer Agent Agreement,
the
Escrow Agreement, the Pledge and Escrow Agreement, and any related agreements
(collectively the “Transaction
Documents”)
and to
issue the Convertible Debenture and the Conversion Shares in accordance with
the
terms hereof and thereof, (ii) the execution and delivery of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated hereby and thereby, including, without limitation, the issuance
of
the Convertible Debenture, the Conversion Shares and the reservation for
issuance and the issuance of the Conversion Shares issuable upon conversion
or
exercise thereof, have been duly authorized by the Company’s Board of Directors
and no further consent or authorization is required by the Company, its Board
of
Directors or its stockholders, (iii) the Transaction Documents have been
duly
executed and delivered by the Company, (iv) the Transaction Documents constitute
the valid and binding obligations of the Company enforceable against the
Company
in accordance with their terms, except as such enforceability may be limited
by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors’ rights and remedies. The
authorized officer of the Company executing the Transaction Documents knows
of
no reason why the Company cannot file the registration statement as required
under the Investor Registration Rights Agreement or perform any of the Company’s
other obligations under such documents.
(c) Capitalization.
As of
the date hereof the authorized capital stock of the Company consists of
600,000,000 shares of Common Stock, par value $0.001 per share, and 5,000,000
shares of Preferred Stock, of which 360,918,011 shares of Common Stock and
35,425 shares of Preferred Stock are issued and outstanding. All of such
outstanding shares have been validly issued and are fully paid and
nonassessable. Except as disclosed in the SEC Documents (as defined in Section
3(f)), no shares of Common Stock are subject to preemptive rights or any
other
similar rights or any liens or encumbrances suffered or permitted by the
Company. Except as
-5-
disclosed
in the SEC Documents and the warrant for Xxxxx Xxxxxxxxxx for 3,500,000 shares
of the Company’s common stock with piggyback registration rights, as of the date
of this Agreement, (i) 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, any shares of capital stock of
the
Company or any of its subsidiaries, or contracts, commitments, understandings
or
arrangements by which the Company or any of its subsidiaries is or may become
bound to issue additional shares of capital stock of the Company 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, any shares of capital stock of the Company or any of its
subsidiaries, (ii) there are no outstanding debt securities and (iii) there
are
no agreements or arrangements under which the Company or any of its subsidiaries
is obligated to register the sale of any of their securities under the
Securities Act (except pursuant to the Investor Registration Rights Agreement)
and (iv) there are no outstanding registration statements and there are no
outstanding comment letters from the SEC or any other regulatory agency.
There
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Convertible Debenture as described
in this Agreement. The Company has furnished to the Buyer true and correct
copies of the Company’s Certificate of Incorporation, as amended and as in
effect on the date hereof (the “Certificate
of Incorporation”),
and
the Company’s By-laws, as in effect on the date hereof (the “By-laws”),
and
the terms of all securities convertible into or exercisable for Common Stock
and
the material rights of the holders thereof in respect thereto other than
stock
options issued to employees and consultants.
(d) Issuance
of Securities.
The
Convertible Debenture are duly authorized and, upon issuance in accordance
with
the terms hereof, shall be duly issued, fully paid and nonassessable, are
free
from all taxes, liens and charges with respect to the issue thereof. The
Conversion Shares issuable upon conversion of the Convertible Debenture have
been duly authorized and reserved for issuance. Upon conversion or exercise
in
accordance with the Convertible Debenture the Conversion Shares will be duly
issued, fully paid and nonassessable.
(e) No
Conflicts.
Except
as disclosed in the SEC Documents, the execution, delivery and performance
of
the Transaction Documents by the Company and the consummation by the Company
of
the transactions contemplated hereby will not (i) result in a violation of
the
Certifictae of Incorporation, any certificate of designations of any outstanding
series of preferred stock of the Company or the By-laws 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 the Company or any of its subsidiaries is a party, or
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 National Association of Securities Dealers Inc.’s OTC
Bulletin Board on which the Common Stock is quoted) applicable to the Company
or
any of its subsidiaries or by which any property or asset of the Company
or any
of its subsidiaries is bound or affected. Except as disclosed in the SEC
Documents, neither the Company nor its subsidiaries is in violation of any
term
of or in default under its Articles of Incorporation or By-laws or their
organizational charter or by-laws, respectively, or any material contract,
agreement, mortgage, indebtedness, indenture, instrument, judgment, decree
or
order or any statute, rule or regulation applicable to the Company or its
subsidiaries. The business of the Company and its subsidiaries is not
-6-
being
conducted, and shall not be conducted in violation of any material law,
ordinance, or regulation of any governmental entity. Except as specifically
contemplated by this Agreement and as required under the Securities Act and
any
applicable state securities laws, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with,
any
court or governmental agency in order for it to execute, deliver or perform
any
of its obligations under or contemplated by this Agreement or the Investor
Registration Rights Agreement in accordance with the terms hereof or thereof.
Except as disclosed in the SEC Documents, all consents, authorizations, orders,
filings and registrations which the Company is required to obtain pursuant
to
the preceding sentence have been obtained or effected on or prior to the
date
hereof. The Company and its subsidiaries are unaware of any facts or
circumstance, which might give rise to any of the foregoing.
(f) SEC
Documents: Financial Statements.
Since
January 1, 2004, the Company has filed all reports, schedules, forms, statements
and other documents required to be filed by it with the SEC under of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”)
(all
of the foregoing filed prior to the date hereof or amended after the date
hereof
and all exhibits included therein and financial statements and schedules
thereto
and documents incorporated by reference therein, being hereinafter referred
to
as the “SEC
Documents”).
The
Company has delivered to the Buyers or their representatives, or made available
through the SEC’s website at xxxx://xxx.xxx.xxx., true and complete copies of
the SEC Documents. As of their respective dates, the financial statements
of the
Company disclosed in the SEC Documents (the “Financial
Statements”)
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, 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 the Company 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). No other
information provided by or on behalf of the Company to the Buyer which is
not
included in the SEC Documents, including, without limitation, information
referred to in this Agreement, contains any untrue statement of a material
fact
or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(g) 10(b)-5.
The SEC
Documents do not include any untrue statements of material fact, nor do they
omit to state any material fact required to be stated therein necessary to
make
the statements made, in light of the circumstances under which they were
made,
not misleading.
(h) Absence
of Litigation.
Except
as disclosed in the SEC Documents, there is no action, suit, proceeding,
inquiry
or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending against or affecting the Company,
the Common Stock or any of the Company’s subsidiaries, wherein an unfavorable
decision, ruling or finding would (i) have a material adverse effect on the
transactions contemplated hereby (ii) adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform
its
obligations under, this Agreement or any of the documents contemplated herein,
or (iii) except as expressly disclosed in the SEC Documents, have a material
adverse effect on the business, operations, properties, financial condition
or
results of operations of the Company and its subsidiaries taken as a
whole.
-7-
(i) Acknowledgment
Regarding Buyer’s Purchase of the Convertible Debenture.
The
Company acknowledges and agrees that the Buyer is acting solely in the capacity
of an arm’s length purchaser with respect to this Agreement and the transactions
contemplated hereby. The Company further acknowledges that the Buyer is not
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any advice given by the Buyer or any of their respective
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is merely incidental to the Buyer’s purchase of the
Convertible Debenture or the Conversion Shares. The Company further represents
to the Buyer that the Company’s decision to enter into this Agreement has been
based solely on the independent evaluation by the Company and its
representatives.
(j) No
General Solicitation.
Neither
the Company, nor any of its affiliates, nor any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the Securities Act) in connection
with
the offer or sale of the Convertible Debenture or the Conversion
Shares.
(k) No
Integrated Offering.
Neither
the Company, nor any of its affiliates, nor any person acting on its or their
behalf has, directly or indirectly, made any offers or sales of any security
or
solicited any offers to buy any security, under circumstances that would
require
registration of the Convertible Debenture or the Conversion Shares under
the
Securities Act or cause this offering of the Convertible Debenture or the
Conversion Shares to be integrated with prior offerings by the Company for
purposes of the Securities Act.
(l) Employee
Relations.
Neither
the Company nor any of its subsidiaries is involved in any labor dispute
nor, to
the knowledge of the Company or any of its subsidiaries, is any such dispute
threatened. None of the Company’s or its subsidiaries’ employees is a member of
a union and the Company and its subsidiaries believe that their relations
with
their employees are good.
(m) Intellectual
Property Rights.
The
Company and its subsidiaries own or possess adequate rights or licenses to
use
all trademarks, trade names, service marks, service xxxx registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and rights necessary to conduct
their
respective businesses as now conducted. The Company and its subsidiaries
do not
have any knowledge of any infringement by the Company or its subsidiaries
of
trademark, trade name rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service xxxx registrations, trade
secret
or other similar rights of others, and, to the knowledge of the Company there
is
no claim, action or proceeding being made or brought against, or to the
Company’s knowledge, being threatened against, the Company or its subsidiaries
regarding trademark, trade name, patents, patent rights, invention, copyright,
license, service names, service marks, service xxxx registrations, trade
secret
or other infringement; and the Company and its subsidiaries are unaware of
any
facts or circumstances which might give rise to any of the
foregoing.
-8-
(n) Environmental
Laws.
The
Company and its subsidiaries are (i) in material compliance with any and
all
applicable foreign, federal, state and local laws and regulations relating
to
the protection of human health and safety, the environment or hazardous or
toxic
substances or wastes, pollutants or contaminants (“Environmental
Laws”),
(ii)
have received all material permits, licenses or other approvals required
of them
under applicable Environmental Laws to conduct their respective businesses
and
(iii) are in material compliance with all terms and conditions of any such
permit, license or approval.
(o) Title.
Any
real property and facilities held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use
made
and proposed to be made of such property and buildings by the Company and
its
subsidiaries.
(p) Insurance.
The
Company and each of its subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its subsidiaries are engaged. Neither the Company
nor
any such subsidiary has been refused any insurance coverage sought or applied
for and neither the Company nor any such subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and
when
such coverage expires or to obtain similar coverage from similar insurers
as may
be necessary to continue its business at a cost that would not materially
and
adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and its subsidiaries, taken as a
whole.
(q) Regulatory
Permits.
The
Company and its subsidiaries possess all material certificates, authorizations
and permits issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct their respective businesses, and neither
the
Company nor any such subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization
or
permit.
(r) Internal
Accounting Controls.
The
Company and each of its subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions
are
executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to
maintain asset accountability, and (iii) the recorded amounts for assets
is
compared with the existing assets at reasonable intervals and appropriate
action
is taken with respect to any differences.
(s) No
Material Adverse Breaches, etc.
Except
as set forth in the SEC Documents, neither the Company nor any of its
subsidiaries is subject to any charter, corporate or other legal restriction,
or
any judgment, decree, order, rule or regulation which in the judgment of
the
Company’s officers has or is expected in the future to have a material adverse
effect on the business, properties, operations, financial condition, results
of
operations or prospects of the Company or its subsidiaries. Except as set
forth
in the SEC Documents, neither the Company nor any of its subsidiaries is
in
breach of any contract or agreement which breach, in the judgment of the
Company’s officers, has or is expected to have a material adverse effect on the
business, properties, operations, financial condition, results of operations
or
prospects of the Company or its subsidiaries.
-9-
(t) Tax
Status.
Except
as set forth in the SEC Documents, the Company and each of its subsidiaries
has
made and filed all federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject and
(unless
and only to the extent that the Company and each of its subsidiaries has
set
aside on its books provisions reasonably adequate for the payment of all
unpaid
and unreported taxes) has paid all taxes and other governmental assessments
and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment
of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of
the
Company know of no basis for any such claim.
(u) Certain
Transactions.
Except
as set forth in the SEC Documents, and except for arm’s length transactions
pursuant to which the Company makes payments in the ordinary course of business
upon terms no less favorable than the Company could obtain from third parties
and other than the grant of stock options disclosed in the SEC Documents,
none
of the officers, directors, or employees of the Company is presently a party
to
any transaction with the Company (other than for services as employees, officers
and directors), including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from
any
officer, director or such employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.
(v) Fees
and Rights of First Refusal.
The
Company is not obligated to offer the securities offered hereunder on a right
of
first refusal basis or otherwise to any third parties including, but not
limited
to, current or former shareholders of the Company, underwriters, brokers,
agents
or other third parties.
4. COVENANTS.
(a) Best
Efforts.
Each
party shall use its best efforts timely to satisfy each of the conditions
to be
satisfied by it as provided in Sections 6 and 7 of this Agreement.
(b) Form
D.
The
Company agrees to file a Form D with respect to the Conversion Shares as
required under Regulation D and to provide a copy thereof to the Buyer promptly
after such filing. The Company shall, on or before the Closing Date, take
such
action as the Company shall reasonably determine is necessary to qualify
the
Conversion Shares, or obtain an exemption for the Conversion Shares for sale
to
the Buyers at the Closing pursuant to this Agreement under applicable securities
or “Blue Sky” laws of the states of the United States, and shall provide
evidence of any such action so taken to the Buyers on or prior to the Closing
Date.
-10-
(c) Reporting
Status.
Until
the earlier of (i) the date as of which the Buyer may sell all of the Conversion
Shares without restriction pursuant to Rule 144(k) promulgated under the
Securities Act (or successor thereto), or (ii) the date on which (A) the
Buyer
shall have sold all the Conversion Shares and (B) none of the Convertible
Debenture are outstanding (the “Registration
Period”),
the
Company shall file in a timely manner all reports required to be filed with
the
SEC pursuant to the Exchange Act and the regulations of the SEC thereunder,
and
the Company shall not terminate its status as an issuer required to file
reports
under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would otherwise permit such termination.
(d) Use
of
Proceeds.
The
Company will use the proceeds from the sale of the Convertible Debenture
for
general corporate, working capital and repayment of debt purposes.
(e) Reservation
of Shares.
The
Company shall take all action reasonably necessary to at all times have
authorized, and reserved for the purpose of issuance, such number of shares
of
Common Stock as shall be necessary to effect the issuance of the Conversion
Shares. If at any time the Company does not have available such shares of
Common
Stock as shall from time to time be sufficient to effect the conversion of
all
of the Conversion Shares of the Company, the Company’s management shall call and
hold a special meeting of the shareholders within thirty (30) days of such
occurrence, for the sole purpose of increasing the number of shares authorized.
The Company’s management shall recommend to the shareholders to vote in favor of
increasing the number of shares of Common Stock authorized. Management shall
also vote all of its shares in favor of increasing the number of authorized
shares of Common Stock.
(f) Listings
or Quotation.
The
Company shall promptly secure the listing or quotation of the Conversion
Shares
upon each national securities exchange, automated quotation system or The
National Association of Securities Dealers Inc.’s Over-The-Counter Bulletin
Board (“OTCBB”)
or
other market, if any, upon which shares of Common Stock are then listed or
quoted (subject to official notice of issuance) and shall use its best efforts
to maintain, so long as any other shares of Common Stock shall be so listed,
such listing of all Conversion Shares from time to time issuable under the
terms
of this Agreement. The Company shall maintain the Common Stock’s authorization
for quotation on the OTCBB.
(g) Fees
and Expenses.
Each of
the Company and the Buyer shall pay all costs and expenses incurred by such
party in connection with the negotiation, investigation, preparation, execution
and delivery of the Transaction Documents. The Company shall pay a commitment
fee equal to five percent (5%) of the Purchase Price. The Company shall pay
a
structuring fee to Yorkville Advisors Management, LLC of Thirty Five Thousand
Dollars ($35,000). These fees shall be deducted from the gross proceeds of
the
Closing.
(h) The
Company shall issue to the Buyer a warrant to purchase Six Million (6,000,000)
shares of the Company’s Common Stock (the “Warrant
Shares”)
for a
period of five (5) years at an exercise price of $0.50 per share. The Warrant
Shares shall have “piggy-back” and demand registration rights.
-11-
(i) Corporate
Existence.
So long
as any of the Convertible Debenture remains outstanding, the Company shall
not
directly or indirectly consummate any merger, reorganization, restructuring,
reverse stock split consolidation, sale of all or substantially all of the
Company’s assets or any similar transaction or related transactions (each such
transaction, an “Organizational
Change”)
unless, prior to the consummation an Organizational Change, the Company obtains
the written consent of the Buyer. In any such case, the Company will make
appropriate provision with respect to such holders’ rights and interests to
insure that the provisions of this Section 4(h) will thereafter be applicable
to
the Convertible Debenture.
(j) Transactions
With Affiliates.
So long
as the Convertible Debenture is outstanding, the Company shall not, and shall
cause each of its subsidiaries not to, enter into, amend, modify or supplement,
or permit any subsidiary to enter into, amend, modify or supplement any
agreement, transaction, commitment, or arrangement with any of its or any
subsidiary’s officers, directors, person who were officers or directors at any
time during the previous two (2) years, stockholders who beneficially own
five
percent (5%) or more of the Common Stock, or Affiliates (as defined below)
or
with any individual related by blood, marriage, or adoption to any such
individual or with any entity in which any such entity or individual owns
a five
percent (5%) or more beneficial interest (each a “Related
Party”),
except for (a) customary employment arrangements and benefit programs on
reasonable terms, (b) any investment in an Affiliate of the Company, (c)
any
agreement, transaction, commitment, or arrangement on an arms-length basis
on
terms no less favorable than terms which would have been obtainable from
a
person other than such Related Party, (d) any agreement transaction, commitment,
or arrangement which is approved by a majority of the disinterested directors
of
the Company, for purposes hereof, any director who is also an officer of
the
Company or any subsidiary of the Company shall not be a disinterested director
with respect to any such agreement, transaction, commitment, or arrangement.
“Affiliate”
for
purposes hereof means, with respect to any person or entity, another person
or
entity that, directly or indirectly, (i) has a ten percent (10%) or more
equity
interest in that person or entity, (ii) has ten percent (10%) or more common
ownership with that person or entity, (iii) controls that person or entity,
or
(iv) shares common control with that person or entity. “Control”
or
“controls”
for
purposes hereof means that a person or entity has the power, direct or indirect,
to conduct or govern the policies of another person or entity.
(k) Transfer
Agent.
The
Company covenants and agrees that, in the event that the Company’s agency
relationship with the transfer agent should be terminated for any reason
prior
to a date which is two (2) years after the Closing Date, the Company shall
immediately appoint a new transfer agent and shall require that the new transfer
agent execute and agree to be bound by the terms of the Irrevocable Transfer
Agent Instructions (as defined herein)[not defined].
(l) Restriction
on Issuance of the Capital Stock.
Except
for the issuance of capital stock under any financing arrangements now or
hereafter existing by the Company to the Holder, so
long as
the Convertible Debenture is outstanding, the Company shall not, without
the
prior written consent of the Buyer, (i) issue or sell shares of Common Stock
or
Preferred Stock without consideration or for a consideration per share less
than
the lowest closing bid price of the Company’s Common Stock, as quoted by
Bloomberg, LP (the “Closing
Bid Price”)
determined immediately prior to its issuance, (ii) issue any warrant, option,
right, contract, call, or other security instrument granting the holder thereof,
the right to acquire Common Stock without consideration or for a consideration
less than such Common Stock’s Closing Bid Price value determined immediately
prior to it’s issuance, (iii) enter into any security instrument granting the
holder a security interest in any and all assets of the Company other than
equipment financing and capital leases entered in the ordinary course of
business, or (iv) file any registration statement on Form S-8.
-12-
(m)
Neither
the Buyer nor any of its affiliates have an open short position in the Common
Stock of the Company, and the Buyer agrees that it shall not, and that it
will
cause its affiliates not to, engage in any short sales of or hedging
transactions with respect to the Common Stock as long as the Convertible
Debenture or warrants to purchase the Warrant Shares shall remain outstanding.
(n) The
Company covenants and agrees that if the aggregate indebtedness owed to the
Buyer (including all indebtedness now or hereafter existing) exceeds $4.0
million on March 1, 2006, then the Company shall be obligated to enter into
a
new Standby Equity Distribution Agreement (the “SEDA”)
with
the Buyer in an amount not less than the aggregate indebtedness owed to the
Buyer. The terms of the SEDA shall be identical to the Company’s current Standby
Equity Distribution Agreement in the amount of $100 million (the “Current
SEDA”),
except that the upfront commitment shall be proportional to those collected
on
the Current SEDA.
(o) In
connection with this Agreement and the other Transaction Documents, the Company
and its subsidiaries agree not to grant security interests in any other their
assets to any other party other than equipment financing and capital leases
entered in the ordinary course of business. The Buyer shall give consideration
to consenting to the Company’s subsidiaries entering into an accounts receivable
line with an institutional lender in an amount not to exceed $5.0
million.
(p) Rights
of First Refusal.
So long
as there is any outstanding indebtedness owed by the Company to the Buyer,
if
the Company intends to raise additional capital by the issuance or sale of
capital stock of the Company, including, without limitation, shares of any
class
of common stock, any class of preferred stock, options, warrants or any other
securities convertible or exercisable into shares of common stock (whether
the
offering is conducted by the Company, underwriter, placement agent or any
third
party) the Company shall be obligated to offer to the Buyer such issuance
or
sale of capital stock, by providing in writing the principal amount of capital
it intends to raise and outline of the material terms of such capital raise
(“Capital
Raise Notice”),
prior
to the offering such issuance or sale of capital stock to any third parties
including, but not limited to, current or former officers or directors, current
or former shareholders and/or investors of the Company, underwriters, brokers,
agents or other third parties, provided,
however,
that
such right of first refusal shall not apply (i) if the Company’s capital raise
is to repay all principal and interest that the Company owes to the Buyer
under
the Convertible Debenture and (ii) so long as the Buyer has at least thirty
(30)
days from the date the Buyer receives such Capital Raise Notice to exercise
its
right of conversion under the Convertible Debenture. The
Buyer's right of conversion after receipt of the Capital Raise Notice shall
continue until all amounts owed to the Buyer under the Convertible Debenture
are
converted in full by the Buyer or are repaid in immediately available funds
by
the Company. In
all
other circumstances, the Buyer shall have ten (10) business days from receipt
of
the Capital Raise Notice of the sale or issuance of capital stock to accept
or
reject all or a portion of such capital raising offer.
-13-
(a) The
Company shall issue the Irrevocable Transfer Agent Instructions to its transfer
agent irrevocably appointing Xxxxx Xxxxxxxx, Esq. as its agent for purpose
of
having certificates issued, registered in the name of the Buyer or its
respective nominee(s), for the Conversion Shares representing such amounts
of
Convertible Debenture as specified from time to time by the Buyer to the
Company
upon conversion of the Convertible Debenture, for interest owed pursuant
to the
Convertible Debenture, and for any and all Liquidated Damages (as this term
is
defined in the Investor Registration Rights Agreement). Xxxxx Xxxxxxxx, Esq.
shall be paid a cash fee of Fifty Dollars ($50) for every occasion they act
pursuant to the Irrevocable Transfer Agent Instructions. The Company shall
not
change its transfer agent without the express written consent of the Buyer,
which may be withheld by the Buyer in its sole discretion. Prior to registration
of the Conversion Shares under the Securities Act, all such certificates
shall
bear the restrictive legend specified in Section 2(g) of this Agreement.
The
Company warrants that no instruction other than the Irrevocable Transfer
Agent
Instructions referred to in this Section 5, and stop transfer instructions
to
give effect to Section 2(g) hereof (in the case of the Conversion Shares
prior
to registration of such shares under the Securities Act) will be given by
the
Company to its transfer agent and that the Conversion Shares shall otherwise
be
freely transferable on the books and records of the Company as and to the
extent
provided in this Agreement and the Investor Registration Rights Agreement.
Nothing in this Section 5 shall affect in any way the Buyer’s obligations and
agreement to comply with all applicable securities laws upon resale of
Conversion Shares. If the Buyer provides the Company with an opinion of counsel,
in form, scope and substance customary for opinions of counsel in comparable
transactions to the effect that registration of a resale by the Buyer of
any of
the Conversion Shares is not required under the Securities Act, the Company
shall within two (2) business days instruct its transfer agent to issue one
or
more certificates in such name and in such denominations as specified by
the
Buyer. The Company acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to the Buyer by vitiating the intent and purpose
of
the transaction contemplated hereby. Accordingly, the Company acknowledges
that
the remedy at law for a breach of its obligations under this Section 5 will
be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 5, that the Buyer shall
be
entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.
The
obligation of the Company hereunder to issue and sell the Convertible Debenture
to the Buyer at the Closing is subject to the satisfaction, at or before
the
Closing Date, of each of the following conditions, provided that these
conditions are for the Company’s sole benefit and may be waived by the Company
at any time in its sole discretion:
-14-
(a) The
Buyer
shall have executed the Transaction Documents and delivered them to the
Company.
(b) The
Buyer
shall have delivered to the Escrow Agent the Purchase Price for Convertible
Debenture and the Escrow Agent shall have delivered the net proceeds to the
Company by wire transfer of immediately available U.S. funds pursuant to
the
wire instructions provided by the Company.
(c) The
representations and warranties of the Buyer shall be true and correct in
all
material respects as of the date when made and as of the Closing Date as
though
made at that time (except for representations and warranties that speak as
of a
specific date), and the Buyer shall have performed, satisfied and complied
in
all material respects with the covenants, agreements and conditions required
by
this Agreement to be performed, satisfied or complied with by the Buyer at
or
prior to the Closing Date.
(a) The
obligation of the Buyer hereunder to Purchase the Convertible Debenture at
the
Closing is subject to the satisfaction, at or before the Closing Date, of
each
of the following conditions:
(i) The
Company shall have executed and delivered the Transaction Documents, including,
without limitation, the Convertible Debenture in the original principal amount
of $15,500,000.
(ii) The
Common Stock shall be authorized for quotation on the OTCBB, trading in the
Common Stock shall not have been suspended for any reason, and all the
Conversion Shares issuable upon the conversion of the Convertible Debenture
shall be approved by the OTCBB.
(iii) The
representations and warranties of the Company shall be true and correct in
all
material respects (except to the extent that any of such representations
and
warranties is already qualified as to materiality in Section 3 above, in
which
case, such representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the Closing Date
as
though made at that time (except for representations and warranties that
speak
as of a specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by
the
Company at or prior to the Closing Date. If requested by the Buyer, the Buyer
shall have received a certificate, executed by the President of the Company,
dated as of the Closing Date, to the foregoing effect and as to such other
matters as may be reasonably requested by the Buyer including, without
limitation an update as of the Closing Date regarding the representation
contained in Section 3(c) above.
-15-
(iv) The
Buyer
shall have received an opinion of counsel from Xxxxxx Xxxxxx LLP in a form
satisfactory to the Buyer.
(v) The
Company shall have provided to the Buyer a certificate of good standing from
the
secretary of state from the state in which the company is
incorporated.
(vi) Airlie
Opportunity Master Fund, Ltd. shall have assigned its security interests
in the
Company and its subsidiaries to the Buyer. Further, the Security Documents
(as
defined in the Debenture) shall be in a form acceptable to the Buyer. The
Company shall have filed a form UCC-1 or such other forms as may be required
to
perfect the Buyer’s security interests.
(vii) The
Company shall have provided to the Buyer an acknowledgement, to the satisfaction
of the Buyer, from the Company’s certified public accountant as to its ability
to provide all consents required in order to file a registration statement
in
connection with this transaction.
(viii) The
Company shall have reserved out of its authorized and unissued Common Stock,
solely for the purpose of effecting the conversion of the Convertible Debenture,
shares of Common Stock to effect the conversion of all of the Conversion
Shares
then outstanding.
8. INDEMNIFICATION.
(a) In
consideration of the Buyer’s execution and delivery of this Agreement and
acquiring the Convertible Debenture and the Conversion Shares hereunder,
and in
addition to all of the Company’s other obligations under this Agreement, the
Company shall defend, protect, indemnify and hold harmless the Buyer and
each
other holder of the Convertible Debenture and the Conversion Shares, and
all of
their officers, directors, employees and agents (including, without
limitation, those retained in connection with the transactions contemplated
by
this Agreement) (collectively, the “Buyer
Indemnitees”)
from
and against any and all actions, causes of action, suits, claims, losses,
costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Buyer Indemnitee is a party to the action
for
which indemnification hereunder is sought), and including reasonable attorneys’
fees and disbursements (the “Indemnified
Liabilities”),
incurred by the Buyer Indemnitees or any of them as a result of, or arising
out
of, or relating to (a) any misrepresentation or breach of any representation
or
warranty made by the Company in this Agreement, the Convertible Debenture
or the
Investor Registration Rights Agreement or any other certificate, instrument
or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in this Agreement, or the
Investor Registration Rights Agreement or any other certificate, instrument
or
document contemplated hereby or thereby, or (c) any cause of action, suit
or
claim brought or made against such Indemnitee and arising out of or resulting
from the execution, delivery, performance or enforcement of this Agreement
or
any other instrument, document or agreement executed pursuant hereto by any
of
the Indemnities, any transaction financed or to be financed in whole or in
part,
directly or indirectly, with the proceeds of the issuance of the Convertible
Debenture or the status of the Buyer or holder of the Convertible Debenture
the
Conversion Shares, as a Buyer of Convertible Debenture in the Company. To
the
extent that the foregoing undertaking by the Company may be unenforceable
for
any reason, the Company shall make the maximum contribution to the payment
and
satisfaction of each of the Indemnified Liabilities, which is permissible
under
applicable law.
-16-
(b) In
consideration of the Company’s execution and delivery of this Agreement, and in
addition to all of the Buyer’s other obligations under this Agreement, the Buyer
shall defend, protect, indemnify and hold harmless the Company and all of
its
officers, directors, employees and agents (including, without limitation,
those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the “Company
Indemnitees”)
from
and against any and all Indemnified Liabilities incurred by the Indemnitees
or
any of them as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Buyer
in this Agreement, instrument or document contemplated hereby or thereby
executed by the Buyer, (b) any breach of any covenant, agreement or obligation
of the Buyer contained in this Agreement, the Investor Registration Rights
Agreement or any other certificate, instrument or document contemplated hereby
or thereby executed by the Buyer, or (c) any cause of action, suit or claim
brought or made against such Company Indemnitee based on material
misrepresentations or due to a material breach and arising out of or resulting
from the execution, delivery, performance or enforcement of this Agreement,
the
Investor Registration Rights Agreement or any other instrument, document
or
agreement executed pursuant hereto by any of the Company Indemnities. To
the
extent that the foregoing undertaking by the Buyer may be unenforceable for
any
reason, the Buyer shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities, which is permissible
under
applicable law.
(a) Governing
Law.
This
Agreement shall be governed by and interpreted in accordance with the laws
of
the State of New Jersey without regard to the principles of conflict of laws.
The parties further agree that any action between them shall be heard in
Xxxxxx
County, New Jersey, and expressly consent to the jurisdiction and venue of
the
Superior Court of New Jersey, sitting in Xxxxxx County and the United States
District Court for the District of New Jersey sitting in Newark, New Jersey
for
the adjudication of any civil action asserted pursuant to this
Paragraph.
(b) Counterparts.
This
Agreement may be executed in two or more identical counterparts, all of which
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.
In
the event any signature page is delivered by facsimile transmission, the
party
using such means of delivery shall cause four (4) additional original executed
signature pages to be physically delivered to the other party within five
(5)
days of the execution and delivery hereof.
(c) Headings.
The
headings of this Agreement are for convenience of reference and shall not
form
part of, or affect the interpretation of, this Agreement.
(d) Severability.
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 in that jurisdiction
or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
-17-
(e) Entire
Agreement, Amendments.
This
Agreement supersedes all other prior oral or written agreements between the
Buyer, the Company, their affiliates and persons acting on their behalf with
respect to the matters discussed herein, and this Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set
forth
herein or therein, neither the Company nor any Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision
of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.
(f) Notices.
Any
notices, consents, waivers, or other communications required or permitted
to be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered (i) upon receipt, when delivered personally; (ii) upon
confirmation of receipt, when sent by facsimile; (iii) three (3) days after
being sent by U.S. certified mail, return receipt requested, or (iv) one
(1) day
after deposit with a nationally recognized overnight delivery service, in
each
case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:
If
to the Company, to:
|
|
0000
Xxxxxxxxx Xxxx., Xxxxx 000
|
|
Xxxxxxxx,
XX 00000
|
|
Attention:
Xxx Xxxxxx, President
|
|
Telephone:
(000) 000-0000
|
|
Facsimile:
(000) 000-0000
|
|
With
a copy to:
|
Xxxxxx
Xxxxxx LLP
|
0000
Xxxxxxxxxxx Xxxxxx, XX
|
|
Xxxxx
000
|
|
Xxxxxxxxxx,
XX 00000-0000
|
|
Attention:
Xxxxxx X. Xxxxx, Esq.
|
|
Telephone:
(000) 000-0000
|
|
Facsimile:
(000) 000-0000
|
|
If
to the Holder:
|
Cornell
Capital Partners, LP
|
000
Xxxxxx Xxxxxx, Xxxxx 0000
|
|
Xxxxxx
Xxxx, XX 00000
|
|
Attention: Xxxx
Xxxxxx, President
|
|
Telephone: (000)
000-0000
|
|
Facsimile: (000)
000-0000
|
|
With
a copy to:
|
Cornell
Capital Partners, LP
|
000
Xxxxxx Xxxxxx - Xxxxx 0000
|
|
Xxxxxx
Xxxx, XX 00000
|
|
Attention: Xxxx
X. Xxxxx, Esq.
|
|
Telephone: (000)
000-0000
|
|
Facsimile: (000)
000-0000
|
|
Each
party shall provide five (5) days’ prior written notice to the other party of
any change in address or facsimile number.
-18-
(g) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns. Neither the Company nor any Buyer
shall
assign this Agreement or any rights or obligations hereunder without the
prior
written consent of the other party hereto.
(h) No
Third Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may
any
provision hereof be enforced by, any other person.
(i) Survival.
Unless
this Agreement is terminated under Section
9(l),
the
representations and warranties of the Company and the Buyer contained in
Sections
2 and 3,
the
agreements and covenants set forth in Sections
4, 5 and 9,
and the
indemnification provisions set forth in Section
8,
shall
survive the Closing for a period of two (2) years following the date on which
the Convertible Debenture is converted in full. The Buyer shall be responsible
only for its own representations, warranties, agreements and covenants
hereunder.
(j) Publicity.
The
Company and the Buyer shall have the right to approve, before issuance any
press
release or any other public statement with respect to the transactions
contemplated hereby made by any party; provided, however, that the Company
shall
be entitled, without the prior approval of the Buyer, to issue any press
release
or other public disclosure with respect to such transactions required under
applicable securities or other laws or regulations (the Company shall use
its
best efforts to consult the Buyer in connection with any such press release
or
other public disclosure prior to its release and Buyer shall be provided
with a
copy thereof upon release thereof).
(k) Further
Assurances.
Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
(l) Termination.
In the
event that the Closing shall not have occurred with respect to the Buyer
on or
before five (5) business days from the date hereof due to the Company’s or the
Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7 above
(and the non-breaching party’s failure to waive such unsatisfied condition(s)),
the non-breaching party shall have the option to terminate this Agreement
with
respect to such breaching party at the close of business on such date without
liability of any party to any other party; provided, however, that if this
Agreement is terminated by the Company pursuant to this Section 9(l), the
Company shall remain obligated to reimburse the Buyer for the fees and expenses
of Yorkville Advisors Management, LLC described in Section 4(g)
above.
(m) No
Strict Construction.
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.
[REMAINDER
PAGE INTENTIONALLY LEFT BLANK]
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IN
WITNESS WHEREOF,
the
Buyers and the Company have caused this Securities Purchase Agreement to
be duly
executed as of the date first written above.
By:_____________________________
|
|
Name: Xxx
Xxxxxx
|
|
Title: President
|
|
CORNELL
CAPITAL PARTNERS, LP
|
|
By:
Yorkville
Advisors, LLC
|
|
Its:
General
Partner
|
|
By:_____________________________
|
|
Name:
Xxxx
Xxxxxx
|
|
Its:
President
|
-20-