AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT
Execution
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AMENDED
AND RESTATED SECURITIES PURCHASE AGREEMENT
THIS
AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT
(this
“Agreement”),
dated
as of August 3, 2006, by and among FUTUREMEDIA
PLC,
a
corporation organized and existing under the laws of England and Wales (the
“Company”),
and
the Buyers listed on Schedule I attached hereto (individually, a
“Buyer”
or
collectively “Buyers”).
WITNESSETH
WHEREAS,
the
Company and the Buyer(s) 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(s), as provided herein,
and the Buyer(s) shall purchase Nine Million Dollars ($9,000,000) of convertible
notes (the “Convertible
Notes”),
which
shall be convertible into the Company’s Ordinary Shares (as evidenced by
American Depositary Shares, as evidenced by American Depositary Receipts
(the
“Ordinary
Shares”)
(as
converted, the “Conversion
Shares”),
of
which Seven Million Five Hundred Thousand Dollars ($7,500,000) was previously
funded under the convertible debentures dated April 19, 2006 (which shall
be
amended and restated on the date hereof), and One Million Five Hundred Thousand
Dollars ($1,500,000) shall be funded on or before August 4, 2006 (the
“Closing”),
for a
total purchase price of Nine Million Dollars ($9,000,000), (the “Purchase
Price”)
in the
respective amounts set forth opposite each Buyer(s) name on Schedule I (the
“Subscription
Amount”);
WHEREAS,
contemporaneously with the execution and delivery of this Agreement, the
parties
hereto are executing and delivering an Amended and Restated Investor
Registration Rights Agreement substantially in the form attached hereto as
Exhibit
A
(the
“Investor
Registration Rights Agreement”)
pursuant to which the Company has agreed to provide certain registration
rights
under the Securities Act and the rules and regulations promulgated there
under,
and applicable state securities laws;
WHEREAS,
contemporaneously with the execution and delivery of this Agreement, the
parties
hereto are executing and delivering a Deed of Variation (relating to the
Debentures between the parties dated on or about April 25, 2006) substantially
in the form attached hereto as Exhibit
B
(such
Deed of Variation being referred to herein together with such Debentures
as the
“Debenture”)
pursuant to which the Company has agreed to provide the Buyer a security
interest in Charged Property (as this term is defined in the Debenture) to
secure the Company’s obligations under this Agreement, the Convertible Note, the
Investor Registration Rights Agreement, the Debenture or any other obligations
of the Company to the Buyer;
NOW,
THEREFORE,
in
consideration of the mutual covenants and other agreements contained in this
Agreement the Company and the Buyer(s) hereby agree as follows:
1. PURCHASE
AND SALE OF CONVERTIBLE NOTES.
(a) Purchase
of Convertible Notes. Subject to the satisfaction (or waiver) of the terms
and
conditions of this Agreement, each Buyer agrees, severally and not jointly,
to
purchase at the Closing and the Company agrees to sell and issue to each
Buyer,
severally and not jointly, at the Closing, Convertible Notes in amounts
corresponding with the Subscription Amount set forth opposite each Buyer’s name
on Schedule I hereto.
(b) Closing
Date. The Closing of the purchase and sale of the Convertible Notes shall
take
place at 10:00 a.m. Eastern Standard Time on the fifth (5th)
business day following 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 other date as is mutually agreed to by the Company and the Buyer(s))
(the “Closing Date”). The Closing shall occur on the respective Closing Dates 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(s)).
(c) Form
of
Payment. Subject to the satisfaction of the terms and conditions of this
Agreement, on the Closing Dates, (i) the Buyers shall deliver to the Company
such aggregate proceeds for the Convertible Notes to be issued and sold to
such
Buyer(s), minus the fees to be paid directly from the proceeds the Closings
as
set forth herein, and (ii) the Company shall deliver to each Buyer,
Convertible Debentures which such Buyer(s) is purchasing in amounts indicated
opposite such Buyer’s name on Schedule I, duly executed on behalf of the
Company.
2. BUYER’S
REPRESENTATIONS, WARRANTIES AND COVENANTS.
Each
Buyer represents and warrants, severally and not jointly, that:
(a) Investment
Purpose. Each Buyer is acquiring the Convertible Notes and other securities
issuable hereunder and, upon conversion of Convertible Notes and/or other
securities issuable hereunder, the Buyer will acquire the Conversion Shares
or
other securities 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 or other
securities at any time in accordance with or pursuant to an effective
registration statement (the “Registration Statement”), filed pursuant to the
Investor Registration Rights Agreement, covering such Conversion Shares (or
other securities) or an available exemption under the Securities
Act.
(b) Accredited
Investor Status. Each Buyer is an “Accredited Investor” as that term is defined
in Rule 501(a)(3) of Regulation D.
(c) Reliance
on Exemptions. Each Buyer understands that the Convertible Notes 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.
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(d) Information.
Each Buyer and its advisors (and his or, its counsel), if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and information he deemed material to making an informed
investment decision regarding his purchase of the Convertible Notes and the
Conversion Shares, which have been requested by such Buyer. Each 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 such Buyer or its advisors, if any, or its
representatives shall modify, amend or affect such Buyer’s right to rely on the
Company’s representations and warranties contained in Section 3 below. Each
Buyer understands that its investment in the Convertible Notes and the
Conversion Shares involves a high degree of risk. Each 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.
Each 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 Notes and the Conversion Shares.
(e) No
Governmental Review. Each 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 Notes or the
Conversion Shares, or the fairness or suitability of the investment in the
Convertible Notes or the Conversion Shares, nor have such authorities passed
upon or endorsed the merits of the offering of the Convertible Notes or the
Conversion Shares.
(f) Transfer
or Resale. Each Buyer understands that except as provided in the Investor
Registration Rights Agreement: (i) the Convertible Notes 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.
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(g) Legends.
Each Buyer understands that the certificates or other instruments representing
the Convertible Notes, the Conversion Shares and/or other securities issuable
hereunder 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.
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. Each 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 Convertible Notes issued hereto, the Debenture and the
Investor Registration Rights 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 20-F for the
fiscal year ended April 30, 2005; (iv) all press releases issued by the Company
since April 30, 2005, and (v) answers to all questions each Buyer submitted
to
the Company regarding an investment in the Company; and each Buyer has relied
on
the information contained therein and has not been furnished any other
documents, literature, memorandum or prospectus.
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(j) Due
Formation of Corporate and Other Buyers. If the Buyer(s) 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 Notes and is not prohibited from doing
so.
(k) No
Legal
Advice From the Company. Each 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. Each 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.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
The
Company represents and warrants to each of the Buyers 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, and have the requisite corporate
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 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 Convertible Notes, the Debenture, the Investor Registration
Rights Agreement, Warrants and any related agreements (collectively the
“Transaction Documents”) and to issue the Convertible Notes 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 Notes 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.
(c) Capitalization.
As of the date hereof (and before taking into account the transactions
contemplated by this Agreement) the authorized capital stock of the Company
consists of 350,000,000 shares of Ordinary Shares, par value 11/9
xxxxx,
and 2,000,000 shares of Preferred Stock, par value 2 xxxxx (“Preferred Stock”)
of which 163,646,244 Ordinary Shares and zero 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 herein or in the
SEC
Documents (as defined in Section 3(f)), no Ordinary Shares are subject to
preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company. As of the date of this Agreement, there
are outstanding options to purchase an aggregate of 9,422,423 Ordinary Shares
at
exercise process ranging from $0.085 to $1.622 under the Company’s employee
share option plans (such options expire on dates ranging from January 2008
to
October 2015) and warrants to purchase an aggregate of 6,497,128 Ordinary
Shares at an exercise price of $0.61 per share (such warrants expire on July
21,
2010) and warrants to purchase an aggregate of 250,000 Ordinary Shares at
an
exercise price of $0.70 per share (such warrants expire on December 19, 2010)
and warrants to purchase an aggregate of 750,000 Ordinary Shares at an exercise
price of $0.70 per share (such warrants expire on April 25, 2011) and warrants
to purchase an aggregate of 4,000,000 Shares at an exercise price of $0.20
per
share (such warrants expire on April 25, 2011). Except as disclosed herein
or in
the SEC Documents, 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 arrangements in
place
between the Company and MAG Capital LLC and its affiliates) 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 Notes as described in this
Agreement. The Company has furnished to the Buyer true and correct copies
of the
Company’s Articles of Incorporation, as amended and as in effect on the date
hereof (the “Articles of Association”), and the terms of all securities
convertible into or exercisable for Ordinary Shares and the material rights
of
the holders thereof in respect thereto other than stock options issued to
employees and consultants.
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(d) Issuance
of Securities. The Convertible Notes 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
Notes have been duly authorized and reserved for issuance. Upon conversion
or
exercise in accordance with the Convertible Notes 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 Articles of Association 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
NASDAQ-CM on which the Company’s ADSs are 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 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.
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(f) SEC
Documents: Financial Statements. Since January 1, 2003, 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”) and all registration statements required under the
Securities 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”); provided, however, as disclosed
to the Buyers, the Company has not filed with the SEC its audited financials
statements for the year ended April 30, 2006 (the “2006 Audited Financial
Statements”). 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.
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(g) 10(b)-5.
As of their respective dates, the SEC Documents did not include any untrue
statements of material fact, nor did 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 Ordinary Shares 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.
(i) Acknowledgment
Regarding Buyer’s Purchase of the Convertible Notes. The Company acknowledges
and agrees that the Buyer(s) 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(s) 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(s) or any of their respective representatives or
agents in connection with this Agreement and the transactions contemplated
hereby is merely incidental to such Buyer’s purchase of the Convertible Notes 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
Notes 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 Notes
or
the Conversion Shares under the Securities Act or cause this offering of
the
Convertible Notes 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.
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(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 reasonably
be
expected to give rise to any of the foregoing.
(n) Environmental
Laws. The Company and its subsidiaries are (i) in compliance in all material
respects 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 compliance in all
material respects 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.
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(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. As previously disclosed to the Buyers, the Company
has obtained written waivers effective as of July 31, 2006 from Cornell Capital
Partners, LP and MAG Capital LLC (and its affiliates) in connection with
the
Company’s failure to file the 2006 Audited Financial Statements with the SEC by
July 31, 2006.
(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 or herein, 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.
10
(v) Rights
of
First Refusal. Except for fees to be paid in shares or warrants as previously
issued to Alegro Capital Limited in connection with the transactions
contemplated by this Agreement(as disclosed to the Buyers), 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.
(w) Reserved.
4. COVENANTS.
(a) Best
Efforts. Each party shall use its commercially reasonable efforts to timely
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 transactions
contemplated hereby as required under Regulation D and to provide a copy
thereof
to each Buyer promptly after such filing. The Company shall 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
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.
(c) Reporting
Status. Until the earlier of (i) the date as of which the Buyer(s) 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(s) shall have sold all the Conversion Shares and (B) none of the
Convertible Notes are outstanding, 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
Notes for the Acquisition (as defined in Section 7 below) and for general
corporate and working capital 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 Ordinary Shares 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 Ordinary Shares as shall from time to time be sufficient to effect
the
conversion of all of the Conversion Shares, the Company shall call a special
meeting of the shareholders within 60 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 Ordinary Shares authorized. Management shall also vote all of its
shares in favor of increasing the number of authorized shares of Ordinary
Shares.
11
(f) Listings
or Quotation. The Company shall promptly secure the listing or quotation
of ADSs
representing Conversion Shares upon each national securities exchange, automated
quotation system or other market, if any, upon which Ordinary Shares are
then
listed or quoted (subject to official notice of issuance) and shall use its
commercially reasonable efforts to maintain, so long as any other ADSs or
Ordinary Shares shall be so listed, such listing of all Conversion Shares
from
time to time issuable under the terms of this Agreement.
(g) Fees
and
Expenses.
(i) Each
of
the Company and the Buyer(s) shall pay all costs and expenses incurred by
such
party in connection with the negotiation, investigation, preparation, execution
and delivery of the Transaction Documents. On or about April 19, 2006, the
Company paid Yorkville Advisors, LLC a commitment fee equal to Five Hundred
Sixty Two Thousand Five Hundred Dollars ($562,500). On the date hereof, the
Company shall pay Yorkville Advisors, LLC a commitment fee equal to One Hundred
Twenty Five Thousand Dollars ($125,000), which shall be paid directly from
the
proceeds of the Closing.
(ii) On
or
about April 19, 2006, the Company issued to Cornell Capital Partners, LP
(“Cornell”) an aggregate of 562,500 Ordinary Shares. On the date hereof, the
Company shall issue to Cornell an additional 165,000 Ordinary Shares (the
Ordinary Shares issued on April 19, 2006 and on the date hereof shall
collectively be referred to as the “Investor’s
Shares”).
The
Investor’s Shares shall have “piggy-back” and demand registration
rights.
(iii) On
or
about April 19, 2006, the Company issued to Cornell warrants (the “Warrants”) to
purchase in the aggregate Four Million Seven Hundred Fifty Thousand (4,750,000)
Ordinary Shares as follows: (A) a warrant to purchase 750,000 Ordinary Shares
exercisable for a period of five (5) years at an exercise price of $0.70
per
share and (B) a warrant to purchase 4,000,000 Ordinary Shares exercisable
for a
period of five (5) years at an exercise price of $0.20 per share (the Ordinary
Shares underlying the Warrants shall collectively be referred to as the “Warrant
Shares”). The Warrant Shares shall have “piggy-back” and demand registration
rights.
(iv)
The
Company shall pay a structuring fee to Yorkville Advisors LLC of Twenty Five
Thousand Dollars ($25,000), which shall be paid directly from the proceeds
of
the Closing.
(h) Corporate
Existence. So long as any of the Convertible Notes remain 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 of an Organizational Change, the Company ensures (to the reasonable
satisfaction of the Buyers) that the definitive agreements relating thereto
contain appropriate provision with respect to the Buyers’ rights and interests
to insure that the provisions of this Agreement and the Convertible Notes
(with
appropriate modifications to take into account the Organizational Change,
as
applicable) will continue to apply after such Organizational
Change.
12
(i) Transactions
With Affiliates. So long as any Convertible Notes are 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 Ordinary Shares, 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 the Company or 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.
(j) Reserved.
(k) Restriction
on Issuance of the Capital Stock. So long as any Convertible Notes are
outstanding, the Company shall not, without the prior written consent of
the
Buyer(s) (such consent not to be unreasonably withheld), (i) issue or sell
Ordinary Shares or Preferred Stock without consideration or for a consideration
per share less than the closing bid price (the “Bid Price”) of the Ordinary
Shares, as reported by Bloomberg, LP, determined immediately prior to its
issuance (except for Ordinary Shares issued pursuant to options or other
rights
to acquire Ordinary Shares outstanding on the date hereof, Ordinary Shares
to be
issued or previously issued to Alegro Capital Limited in connection with
the
transaction completed by the Agreement, Ordinary Shares issued pursuant to
options or other rights to acquire Ordinary Shares issued to employees,
directors or consultants pursuant to the Company’s equity incentive plans as
such plans exist on the date hereof, Ordinary Shares issuable pursuant to
the
transactions contemplated by the Securities Purchase Agreement dated July
21,
2005 between the Company and M.A.G. Capital LLC and certain of its affiliates),
and Ordinary Shares issuable to the Buyer or any of its affiliates, (ii)
issue
any warrant, option, right, contract, call, or other security instrument
granting the holder thereof, the right to acquire Ordinary Shares without
consideration or for a consideration less than such Bid Price of the Ordinary
Shares value determined immediately prior to it’s issuance (except for options
or other rights to acquire Ordinary Shares issued to employees, directors
or
consultants pursuant to the Company’s equity incentive plans as such plans exist
on the date hereof and warrants to be issued to Alegro Capital Limited in
connection with the transaction completed by the Agreement), or (iii) file
any
registration statement on Form S-8 (other than in connection with the Company’s
equity incentive plans existing on the date hereof).
13
(l) Restriction
on Short Selling. Neither the Buyer(s) nor any of its affiliates have had
(directly or indirectly) an open short position in the ADSs or Ordinary Shares
of the Company during the period from November 8, 2005 up to and including
the
date hereof, and the Buyer(s) agrees that it shall not, and that it will
cause
its affiliates not to, directly or indirectly, engage in any short sales
of or
hedging transactions with respect to any securities of the Company as long
as
any Convertible Notes or warrants to purchase the Warrant Shares shall remain
outstanding.
(m) Rights
of
First Refusal. During the period of twelve (12) months from the date hereof,
if
the
Company intends to raise additional capital by the issuance or sale of capital
stock of the Company, including without limitation Ordinary Shares, any class
of
preferred stock, options, warrants or any other securities convertible or
exercisable into Ordinary Shares (whether the offering is conducted by the
Company, underwriter, placement agent or any third party) the Company shall
be
obligated to offer to the Buyers 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, 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 obligor, underwriters, brokers, agents
or
other third parties. The Buyers shall have seven (7) trading days from
receipt of such notice of the sale or issuance of capital stock to accept
or
reject all or a portion of such capital raising offer. If the Buyers elect
not
to accept such capital raising offer, or the partiers hereto are unable to
agree
upon definitive terms within thirty (30) days following the commencement
of such
negotiations, the Company shall be permitted to enter into such equity financing
with a third party at any time during the following ninety (90) days provided,
however, that the terms and conditions of such equity financing with the
third
party are not more favorable in any material respect than the terms and
conditions offered to the Buyer(s) pursuant to this Section.
5. Reserved.
6. CONDITIONS
TO THE COMPANY’S OBLIGATION TO SELL.
The
obligation of the Company hereunder to issue and sell the Convertible Notes
to
the Buyer(s) 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:
(a) Each
Buyer shall have executed the Transaction Documents and delivered them to
the
Company.
14
(b) The
Buyer(s) shall have delivered to the Company the Purchase Price for Convertible
Debentures in respective amounts as set forth next to each Buyer as outlined
on
Schedule I attached hereto, minus any fees to be paid directly from the proceeds
the Closings as set forth herein, 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(s) 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(s) 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(s)
at or
prior to the Closing Date.
7. CONDITIONS
TO THE BUYER’S OBLIGATION TO PURCHASE.
(a) The
obligation of the Buyer(s) hereunder to Purchase the Convertible Notes 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 the Transaction Documents and delivered the same
to
the Buyer(s).
(ii) ADSs
representing Ordinary Shares shall be authorized for quotation on the NASDAQ-CM
and trading in the ADSs shall not have been suspended for any reason.
(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.
(iv) The
Company shall have executed and delivered to the Buyer(s) the Convertible
Notes
in the respective amounts set forth opposite each Buyer(s) name on Schedule
I
attached hereto.
(v) The
Buyer(s) shall have received an opinion of counsel from Xxxxx Xxxxxxx in
a form
satisfactory to the Buyer(s).
15
(vi) The
Company shall have provided to the Buyer(s) a certificate of good standing
from
the secretary of state from the state in which the company is
incorporated.
(vii) The
Company shall have filed such forms as may be required to perfect the Buyer’s
interest in the Charged Property as detailed in the Debenture dated the date
hereof and provided proof of such filing to the Buyer(s).
(viii) The
Company shall have provided to the Buyer an acknowledgement, to the satisfaction
of the Buyer, from the Company’s independent registered public accounting firm
as to its ability to provide all consents required in order to file a
registration statement in connection with this transaction.
(ix) The
Company shall have reserved out of its authorized and unissued Ordinary Shares,
solely for the purpose of effecting the conversion of the Convertible Notes,
shares of Ordinary Shares 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 Notes 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(s) and
each
other holder of the Convertible Notes 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 Notes 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, 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 by an unaffiliated third party 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 parties hereto, any transaction financed or to be financed in whole or
in
part, directly or indirectly, with the proceeds of the issuance of the
Convertible Notes or the status of the Buyer or holder of the Convertible
Notes,
the Conversion Shares, or as a Buyer of Convertible Notes 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(s) in this Agreement, or any
other
certificate, instrument or document contemplated hereby or thereby executed
by
the Buyer, (b) any breach of any covenant, agreement or obligation of the
Buyer(s) 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 by an unaffiliated third party and arising
out
of or resulting from the execution, delivery, performance or enforcement
of this
Agreement, the Investor Registration Rights Agreement or any other certificate,
instrument, document or agreement executed pursuant hereto by any of the
parties
hereto. To the extent that the foregoing undertaking by each Buyer may be
unenforceable for any reason, each Buyer shall make the maximum contribution
to
the payment and satisfaction of each of the Indemnified Liabilities, which
is
permissible under applicable law.
9. Reserved.
10. GOVERNING
LAW: MISCELLANEOUS.
(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(s), 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 certified mail, return receipt requested, or (iv) one (1) day
after deposit with a internationally 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:
|
|
|
Nile
House, Nile Street
|
|
|
Brighton,
Xxxx Xxxxxx XX0 0XX, Xxxxxx Xxxxxxx
|
|
|
Attention: Xxxxxxx
Xxxxxx, CEO
|
|
|
Telephone: x00
0000 000000
|
|
|
Facsimile: x00
0000 000000
|
|
|
With
a copy to:
|
Xxxx
X. Xxxxx
|
|
Xxxxx
Xxxxxxx
|
|
|
0
Xxxxxxxx Xxxxxx
|
|
|
Xxxxxx
|
|
|
X0X
0XX
|
|
|
Telephone:
+ 00 00 0000 0000
|
|
|
Facsimile:
x00 00 0000 0000
|
If
to the
Buyer(s), to its address and facsimile number on Schedule I, with copies
to the
Buyer’s counsel as set forth on Schedule I. Each party shall provide five (5)
days’ prior written notice to the other party of any change in address or
facsimile number.
(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.
18
(i) Survival.
Unless this Agreement is terminated under Section 10(l), the representations
and
warranties of the Company and the Buyer(s) contained in Sections 2 and 3,
the
agreements and covenants set forth in Sections 4, 5 and 10, 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 Notes
are
converted in full. The Buyer(s) shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
(j) Publicity.
The Company and the Buyer(s) 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(s), 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 commercially reasonable efforts to consult the Buyer(s) in connection
with
any such press release or other public disclosure prior to its release and
Buyer(s) 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
Buyers
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
10(l).
(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.
(n) Confidentiality.
The Buyers agree that any material non-public information with respect to
the
Company received in connection with the transactions contemplated by this
Agreement shall be kept confidential by the Buyers, shall be used exclusively
for purposes of the transactions contemplated by this Agreement and shall
be
treated with at least the same degree of care as the Buyers use in connection
with their own confidential information. The provisions of this Section shall
continue to apply to any such information until it is made publicly
available.
[REMAINDER
PAGE INTENTIONALLY LEFT BLANK]
19
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.
|
COMPANY:
|
||
| |
|
|
| By: | /s/ Xxxxxxx Xxxxxx | |
|
Name: Xxxxxxx
Xxxxxx
|
||
|
Title: CEO
|
||
20
Execution
Copy
EXHIBIT
A
FORM
OF INVESTOR REGISTRATION RIGHTS AGREEMENT
Execution
Copy
EXHIBIT
B
FORM
OF DEED OF VARIATION
Execution
Copy
SCHEDULE
I
SCHEDULE
OF BUYERS
|
Name
|
Signature
|
Address/Facsimile
Number
of Buyer
|
Amount
of Subscription
|
||||
|
Cornell
Capital Partners, LP
|
By: Yorkville Advisors, LLC |
000
Xxxxxx Xxxxxx - Xxxxx 0000
|
$7,000,000
|
||||
| Its: General Partner |
Xxxxxx
Xxxx, XX 00000
|
||||||
|
Facsimile: (000)
000-0000
|
|||||||
| By: |
/s/
Xxxx Xxxxxx
|
||||||
|
Name: Xxxx
Xxxxxx
|
|||||||
|
Its: Portfolio
Manager
|
|||||||
|
Certain
Wealth, Ltd.
|
C/o
TAIB Securities, Inc.
|
$1,000,000
|
|||||
|
000
Xxxx Xxxxxx
|
|||||||
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|||||||
| By: |
/s/
Xxxxx Xxxxxxx
|
||||||
|
Name: Xxxxx
Xxxxxxx
|
|||||||
|
TAIB
Bank, B.S.C.(c)
|
C/o
TAIB Securities, Inc.
|
$1,000,000
|
|||||
|
000
Xxxx Xxxxxx
|
|||||||
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|||||||
| By: |
/s/
Xxxxx Xxxxxxx
|
||||||
|
Name: Xxxxx
Xxxxxxx
|
|||||||
|
With
a copy to:
|
Xxxx
Xxxxx, Esq.
|
000
Xxxxxx Xxxxxx - Xxxxx 0000
|
|||||
|
Xxxxxx
Xxxx, XX 00000
|
|||||||
|
Facsimile:
(000) 000-0000
|
|||||||
