CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
Between
HINDSIGHT RECORDS, INC.
and
THE PURCHASER LISTED ON
SCHEDULE 1 HERETO
-----------------------------
December 30, 2004
-----------------------------
TABLE OF CONTENTS
ARTICLE I CERTAIN DEFINITIONS.................................................................1
1.1 Certain Definitions...................................................................1
ARTICLE II PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.........................................5
2.1 Purchase and Sale; Purchase Price.....................................................5
2.2 Execution and Delivery of Documents; the Closing......................................5
2.3 The Post-Closing......................................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES.....................................................8
3.1 Representations, Warranties and Agreements of the Company.............................8
3.2 Representations and Warranties of the Purchaser......................................11
ARTICLE IV OTHER AGREEMENTS OF THE PARTIES....................................................12
4.1 Manner of Offering...................................................................12
4.2 Furnishing of Information............................................................13
4.3 Notice of Certain Events.............................................................13
4.4 Copies and Use of Disclosure Documents and Non-Public Filings........................13
4.5 Modification to Disclosure Documents.................................................13
4.6 Blue Sky Laws........................................................................14
4.7 Integration..........................................................................14
4.8 Furnishing of Rule 144(c) Materials..................................................14
4.9 Solicitation Materials...............................................................14
4.10 Subsequent Financial Statements......................................................14
4.11 Prohibition on Certain Actions.......................................................15
4.12 Listing of Common Stock..............................................................15
4.13 Escrow...............................................................................15
4.14 Reservation of Common Stock..........................................................15
4.15 Indemnification......................................................................15
4.16 Exclusivity..........................................................................17
4.17 Purchaser's Ownership of Common Stock................................................17
4.18 Purchaser's Rights if Trading in Common Stock is Suspended...........................18
4.19 No Violation of Applicable Law.......................................................19
4.20 Redemption Restrictions..............................................................19
4.21 No Other Registration Rights.........................................................19
4.22 Merger or Consolidation..............................................................19
4.23 Registration of Underlying Shares....................................................20
4.24 Intentionally Omitted................................................................22
4.25 Liquidated Damages...................................................................21
4.26 Short Sales..........................................................................22
4.27 Fees.................................................................................22
4.28 Changes to Federal and State Securities Laws.........................................22
4.29 Merger Agreement.....................................................................23
4.30 Future Financing.....................................................................23
4.31 Applicability of Agreements after Post-Closing.......................................23
4.32 Company's Right of Redemption........................................................23
4.33 Conversion and Exercise Procedures...................................................24
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ARTICLE V TERMINATION..........................................................................24
5.1 Termination by the Company or the Purchaser..........................................24
5.2. Remedies.............................................................................25
ARTICLE VI LEGAL FEES AND DEFAULT INTEREST RATE...............................................25
ARTICLE VII MISCELLANEOUS........................................................................25
7.1 Fees and Expenses....................................................................25
7.2 Entire Agreement; Amendments.........................................................26
7.3 Notices..............................................................................26
7.4 Amendments; Waivers..................................................................27
7.5 Headings.............................................................................27
7.6 Successors and Assigns...............................................................27
7.7 No Third Party Beneficiaries.........................................................27
7.8 Governing Law; Venue; Service of Process.............................................27
7.9 Survival.............................................................................27
7.10 Counterpart Signatures...............................................................27
7.11 Publicity............................................................................28
7.12 Severability.........................................................................28
LIST OF SCHEDULES:
Schedule 1.................Purchaser
Schedule 3.1(a)...Subsidiaries
Schedule 3.1(c)...Capitalization and Registration Rights
Schedule 3.1(d)...Equity and Equity Equivalent Securities
Schedule 3.1(e)...Conflicts
Schedule 3.1(f)...Consents and Approvals
Schedule 3.1(g)...Litigation
Schedule 3.1(h)...Defaults and Violations
Schedule 5.1 Form 8-K Disclosure Obligations
LIST OF EXHIBITS:
Exhibit A-1.......Debenture A
Exhibit A-2.......Debenture B
Exhibit B.........Merger Agreement
Exhibit C.........Certificate of Merger
Exhibit D.........Security Agreement
Exhibit E.........Escrow Agreement
Exhibit F.........Legal Opinion
Exhibit G.........Rule 504 Legal Opinion
Exhibit H.........Officer's Certificate
Exhibit I.........Company Certificate
Exhibit J.........Company Certificate
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THIS CONVERTIBLE DEBENTURE PURCHASE AGREEMENT ("Agreement") is made and
entered into as of December 30, 2004, between Hindsight Records, Inc., a
corporation organized and existing under the laws of the State of California
(the "Company"), and the purchaser listed on Schedule 1 hereto (the
"Purchaser").
WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Company desires to issue and sell to the Purchaser and the Purchaser desires
to acquire from the Company the Company's $1,000,000, 5% Secured Convertible
Debenture, due December 29, 2006 in the aggregate amount of One Million Dollars
($1,000,000), at the aggregate price of One Million Dollars ($1,000,000) in the
forms of Exhibit A-1 ("Debenture A") and Exhibit A-2 ("Debenture B"), annexed
hereto and made a part hereof (the "Debentures").
IN CONSIDERATION of the mutual covenants contained in this Agreement, the
Company and the Purchaser agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Advisory Fee" shall have the meaning set forth in Section 4.27 hereof.
"Affiliate" means, with respect to any Person, any Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control with")
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
"Agreement" shall have the meaning set forth in the introductory paragraph
of this Agreement.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the State of
New York are authorized or required by law or other government actions to close.
"Closing" shall have the meaning set forth in Section 2.2(a).
"Closing Date" shall have the meaning set forth in Section 2.2(a).
"Commission" means the Securities and Exchange Commission.
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"Common Stock" means shares now or hereafter authorized of the class of
common stock, par value $100.00, of the Company and stock of any other class
into which such shares may hereafter have been reclassified or changed.
"Company" shall have the meaning set forth in the introductory paragraph.
"Control Person" shall have the meaning set forth in Section 4.15(a)(i)
hereof.
"Conversion Date" shall have the meaning set forth in the Debentures.
"Debenture A" shall have the meaning set forth in the recitals.
"Debenture B" shall have the meaning set forth in the recitals.
"Debentures" shall have the meaning set forth in the recitals.
"Default" means any event or condition which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Disclosure Documents" means (a) all documents and written materials
provided to the Purchaser and/or its representatives in connection with the
Company and this offering, including, but not limited to, the Company's
unaudited balance sheet as at June 30, 2004 and profit and loss statement for
the period from inception to June 30, 2004 and (b) the Schedules required to be
furnished to the Purchaser by or on behalf of the Company pursuant to Section
3.1 hereof.
"Effective Date" shall mean the date on which certificate of merger (the
"Certificate of Merger") annexed as Exhibit C hereto is filed with the Secretary
of State of the State of California to effect the merger of Stradaveri, Inc.
("Acquisition"), a California corporation and a wholly owned subsidiary of
Michelex Corporation ("MLXOV"), a Utah corporation, with and into the Company
(the "Merger") pursuant to the Merger Agreement.
"Escrow Agent" means Gottbetter & Partners, LLP, 000 Xxxxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, XX 00000; Tel: 000-000-0000; Fax: 000-000-0000.
"Escrow Agreement" shall have the meaning set forth in Section 4.13 hereof.
"Event of Default" shall have the meaning set forth in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Execution Date" means the date of this Agreement first written above.
"G&P" means Gottbetter & Partners, LLP.
"Indemnified Party" shall have the meaning set forth in Section 4.15(b)
hereof.
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"Indemnifying Party" shall have the meaning set forth in Section 4.15(b)
hereof.
"Limitation on Conversion" shall have the meaning set forth in Section 4.17
hereof.
"Limitation Notice" shall have the meaning set forth in Section 4.18
hereof.
"Losses" shall have the meaning set forth in Section 4.15(a) hereof.
"Lump Sum Payment" shall have the meaning set forth in Section 4.30 hereof.
"Material" shall mean having a financial consequence in excess of $10,000.
"Material Adverse Effect" shall have the meaning set forth in Section
3.1(a).
"Merger Agreement" means the Merger Agreement among MLXOV, Acquisition and
the Company, annexed as Exhibit B hereto.
"NASD" means the National Association of Securities Dealers, Inc.
"Nasdaq" shall mean the Nasdaq Stock Market, Inc.(R)
"Non-Public Filings" shall have the meaning set forth in Section 4.2
hereof.
"Notice of Conversion" shall have the meaning set forth in the Debentures.
"Original Issuance Date," shall have the meaning set forth in the
Debentures.
"OTCBB" shall mean the NASD over-the counter Bulletin Board(R) or similar
organization or agency succeeding to its functions.
"Per Share Market Value" of the Common Stock means on any particular date
(a) the last sale price of shares of Common Stock on such date or, if no such
sale takes place on such date, the last sale price on the most recent prior
date, in each case as officially reported on the principal national securities
exchange on which the Common Stock is then listed or admitted to trading, or (b)
if the Common Stock is not then listed or admitted to trading on any national
securities exchange, the closing bid price per share as reported by Nasdaq, or
(c) if the Common Stock is not then listed or admitted to trading on the Nasdaq,
the closing bid price per share of the Common Stock on such date as reported on
the OTCBB or if there is no such price on such date, then the last bid price on
the date nearest preceding such date, or (d) if the Common Stock is not quoted
on the OTCBB, the closing bid price for a share of Common Stock on such date in
the over-the-counter market as reported by the Pinksheets LLC (or similar
organization or agency succeeding to its functions of reporting prices) or if
there is no such price on such date, then the last bid price on the date nearest
preceding such date, or (e) if the Common Stock is not publicly traded, the fair
market value of a share of the Common Stock as determined by an Appraiser (as
defined in and pursuant to the procedures set forth in Section 4(c)(iv) of the
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Debentures) selected in good faith by the holders of a majority of the
Debentures; provided, however, that the Company, after receipt of the
determination by such Appraiser, shall have the right to select an additional
Appraiser, in which case, the fair market value shall be equal to the average of
the determinations by each such Appraiser.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Post-Closing" shall have the meaning set forth in Section 2.3(a).
"Post-Closing Date" shall have the meaning set forth in Section 2.3(a).
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"Purchase Price" shall have the meaning set forth in Section 2.1(a).
"Purchaser" shall have the meaning set forth in the introductory paragraph.
"Registrable Securities" means the Underlying Shares entitled to
registration pursuant to Section 4.23 and Section 4.28.
"Reporting Issuer" means a company that is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act.
"Required Approvals" shall have the meaning set forth in Section 3.1(f).
"Restriction Period" shall have the meaning set forth in Section 4.16.
"Securities" means the Debentures and the Underlying Shares.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreement" means the Security Agreement between the Purchaser and
the Company, annexed as Exhibit D hereto.
"Short Sale" shall have the meaning set forth in Section 4.26 hereof.
"Subsidiaries" shall have the meaning set forth in Section 3.1(a).
"Successors-in-Interest" shall have the meaning set forth in Section 4.30
hereof.
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"Trading Day" means (a) a day on which the Common Stock is quoted on the
Nasdaq, the OTCBB or the principal stock exchange on which the Common Stock has
been listed, or (b) if the Common Stock is not quoted on the Nasdaq, the OTCBB
or any stock exchange, a day on which the Common Stock is quoted in the
over-the-counter market, as reported by the Pinksheets LLC (or any similar
organization or agency succeeding its functions of reporting prices).
"Transaction Documents" means this Agreement and all exhibits and schedules
hereto and all other agreements executed pursuant to this Agreement.
"Underlying Shares" means the shares of duly issued Common Stock, without
restriction and freely tradable pursuant to Rule 504 of Regulation D of the
Securities Act, into which the Debentures are convertible in accordance with the
terms hereof, the Debentures.
ARTICLE II
PURCHASE AND SALE OF CONVERTIBLE DEBENTURES
2.1 Purchase and Sale; Purchase Price.
(a) Subject to the terms and conditions set forth herein, the Company
shall issue and sell and the Purchaser shall purchase an aggregate principal
amount of One Million Dollars ($1,000,000) (the "Purchase Price") of the
Debentures, of which Nine Hundred Ninety Nine Thousand Dollars ($999,000) shall
be attributable to the Debenture A and One Thousand Dollars ($1,000) shall be
attributable to the Debenture B. The Debentures shall have the respective
rights, preferences and privileges as set forth in the respective Debentures
annexed as Exhibit A-1 and Exhibit A-2.
(b) The Purchase Price shall be paid and attributable as follows:
(i) for the Debenture A, cash in the amount of Nine Hundred
Ninety Nine Thousand Dollars ($999,000); and
(ii) for the Debenture B, cash in the amount of One Thousand
Dollars ($1,000).
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2.2 Execution and Delivery of Documents; The Closing.
(a) The Closing of the purchase and sale of the Debentures (the
"Closing") shall take place simultaneously with the execution and delivery of
this Agreement (the "Closing Date"). On the Closing Date,
(i) the parties shall execute and deliver the Escrow Agreement
and the Security Agreement to the Escrow Agent;
(ii) the Company shall deliver to the Purchaser the (A) the
Disclosure Documents, (B) a duly executed copy of the Merger Agreement and (C)
the legal opinions of counsel to the Company substantially in the form of
Exhibit F and Exhibit G annexed hereto, addressed to the Purchaser and dated the
date hereof;
(iii) the Company shall deliver to the Escrow Agent original and
duly executed Debentures registered in the name of the Purchaser and/or its
assigns in the amount set forth in Schedule 1;
(iv) the Company shall execute and deliver to the Purchaser a
certificate of its Chief Executive Officer, in the form of Exhibit H annexed
hereto, certifying that attached thereto is a copy of resolutions duly adopted
by the Board of Directors of the Company authorizing the Company to execute and
deliver the Transaction Documents and to enter into the transactions
contemplated thereby and the appointment; and
(v) the Purchaser shall deliver to the Escrow Agent the Purchase
Price by wire transfer of immediately available funds in the amount of One
Million Dollars ($1,000,000) pursuant to written wire transfer instructions
delivered by the Escrow Agent to the Purchaser at least three (3) Business Days
prior to the Closing.
(b) If this Agreement is terminated pursuant to Section 5.1 hereof,
then, within two (2) Business Days from the date of termination, either the
Company or the Purchaser shall notify the Escrow Agent of same, and
(i) the Escrow Agent shall, within two (2) Business Days of its
receipt of such notice,
(A) return the Purchase Price to the Purchaser; and
(B) return the Debentures to the Company.
2.3 The Post-Closing.
(a) The post-closing of the purchase and sale of the Debentures (the
"Post-Closing") shall take place immediately after the Effective Date (the
"Post-Closing Date") at the offices of Gottbetter & Partners, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, XX 00000; provided, however, that all of the transactions
contemplated by the Merger Agreement shall have been consummated in accordance
with the terms of the Merger Agreement prior to the Post-Closing; and further,
provided, that the Post-Closing may not occur later than ten (10) days after the
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Closing Date (except if such 10th day is not a Business Day, then the next
Business Day), unless the Purchaser agrees in writing in advance to an
extension, which writing shall set forth the new Post-Closing Date. The Merger
Agreement shall be executed immediately after the Closing.
(b) At the Post-Closing,
(i) the Escrow Agent shall deliver to the Purchaser and/or its
assigns the original and duly issued Debentures, each registered in the name of
the Purchaser and in denominations specified by the Purchaser in the amounts set
forth in Schedule 1 hereto or with written notice to the Escrow Agent prior to
the Post-Closing; and
(ii) the Company shall deliver to the Purchaser the following:
(A) certified copies of the Certificate of Merger as filed
with
the Secretary of State of the State of California;
(B) a certificate in the form of Exhibit I annexed hereto,
dated the Post-Closing Date and signed by the Secretary of the Company,
certifying (1) that attached thereto are true, correct and complete copies of
(a) the Company's Certificate of Incorporation, as amended to the date thereof,
(b) the Company's by-laws, as amended to the date thereof, and (c) a certificate
of good standing from the Secretary of State of California and (2) the
incumbency of the officer executing this Agreement;
(C) a certificate of the Company's Chief Executive Officer,
dated the Post-Closing Date, in the form of Exhibit J annexed hereto, certifying
that the representations and warranties of the Company contained in Article III
hereof are true and correct in all material respects on the Post-Closing Date
(except for representations and warranties that speak of a specific date, which
representations and warrants shall be true, correct and complete in all material
respects as of such date); and
(D) all other documents, instruments and writings required to
have been delivered by the Company at or prior to the Post-Closing pursuant to
this Agreement.
(c) Upon receipt by the Purchaser of those items set forth in Sections
2.3(b)(i) through (ii) above, the Escrow Agent shall as soon as practicable
deliver the following to or on behalf of MLXOV, as applicable:
(i) the Purchase Price, (A) attributable to Debenture A and
Debenture B by wire transfer of immediately available funds in the amount of One
Million Dollars ($1,000,000), minus all fees and expenses, including the
Advisory Fee, due under the Transaction Documents, to MLXOV pursuant to written
wire transfer instructions delivered by MLXOV to the Escrow Agent at least three
(3) Business Days prior to the Post-Closing Date, and (B) the Advisory Fee to
the Purchaser; and
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(ii) all documents, instruments, and writings required to have
been delivered or necessary at or prior to the Post-Closing by the Purchaser
pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations, Warranties and Agreements of the Company. The Company
hereby makes the following representations and warranties to the Purchaser, all
of which shall survive the Post-Closing;
(a) Organization and Qualification. The Company is a corporation, duly
incorporated, validly existing and in good standing under the laws of the State
of California, with the requisite corporate power and authority to own and use
its properties and assets and to carry on its business as currently conducted.
The Company has no subsidiaries other than as set forth on Schedule 3.1(a)
attached hereto (collectively, the "Subsidiaries"). Each of the Subsidiaries is
a corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, with the full corporate authority
to own and use its properties and assets and to carry on its business as
currently conducted. Each of the Company and the Subsidiaries is duly qualified
to do business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, would not, individually or in
the aggregate, have a material adverse effect on the results of operations,
assets, prospects, or financial condition of the Company and the Subsidiaries,
taken as a whole (a "Material Adverse Effect").
(b) Authorization, Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated hereby and by each other Transaction Document and to otherwise to
carry out its obligations hereunder and thereunder. The execution and delivery
of this Agreement and each of the other Transaction Documents to which it is a
party by the Company and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action on the part
of the Company. Each of this Agreement and each of the other Transaction
Documents to which it is a party has been or will be duly executed by the
Company and when delivered in accordance with the terms hereof or thereof will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
(c) Capitalization. The authorized, issued and outstanding capital
stock of the Company is set forth on Schedule 3.1(c). No Debentures have been
issued as of the date hereof. No shares of Common Stock are entitled to
preemptive or similar rights, nor is any holder of the Common Stock entitled to
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preemptive or similar rights arising out of any agreement or understanding with
the Company by virtue of this Agreement. Except as described in this Agreement,
or disclosed in Schedule 3.1(c), there are no outstanding options, voting
agreements or merger agreements, arrangements, warrants, script, rights to
subscribe to, registration rights, calls or commitments of any character
whatsoever relating to, or, except as a result of the purchase and sale of the
Debentures hereunder, securities, rights or obligations convertible into or
exchangeable for, or giving any person any right to subscribe for or acquire,
any shares of Common Stock or other securities, or contracts, commitments,
understandings, or arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock or other securities, or
securities or rights convertible or exchangeable into shares of Common Stock or
other securities. Neither the Company nor any Subsidiary is in violation of any
of the provisions of its respective Certificate of Incorporation, bylaws or
other charter documents.
(d) Issuance of Securities. The Debentures and the Underlying Shares
have been duly and validly authorized for issuance, offer and sale pursuant to
this Agreement and, the Securities when issued and delivered as provided
hereunder or in the Debentures against payment in accordance with the terms
hereof, shall be valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms. The Company has
and at all times while the Debentures are outstanding will continue to maintain
an adequate reserve of shares of Common Stock to enable it to perform its
obligations under this Agreement and the Debentures except as otherwise
permitted in this Agreement or the Debentures. When issued in accordance with
the terms hereof and the Debentures, the Securities will be duly authorized,
validly issued, fully paid and non-assessable. Except as set forth in Schedule
3.1(d) or Schedule 3.1(c) hereto, there is no equity, equity equivalent
security, debt or equity lines of credit outstanding that is substantially
similar to the Debentures, including any security having a floating conversion
substantially similar to the Debentures; provided, however, that, except, as
otherwise provided herein, nothing contained in this Section 3.1(d) shall be
deemed to permit the Company to issue any convertible security or instrument or
equity line of credit.
(e) No Conflicts. The execution, delivery and performance of this
Agreement and the other Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
do not and will not (i) conflict with or violate any provision of its
Certificate of Incorporation or bylaws (each as amended through the date hereof)
or (ii) be subject to obtaining any of the consents referred to in Section
3.1(f), 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 its Subsidiaries is a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or its Subsidiaries is subject (including, but
not limited to, those of other countries and the federal and state securities
laws and regulations), or by which any property or asset of the Company or its
Subsidiaries is bound or affected, except in the case of clause (ii), such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
9
Adverse Effect. The business of the Company is not being conducted in violation
in any material respect of any law, ordinance or regulation of any governmental
authority.
(f) Consents and Approvals. Other than the approval of its board of
directors and stockholders, which have been obtained, and except as specifically
set forth in Schedule 3.1(f), neither the Company nor any Subsidiary is required
to obtain any consent, waiver, authorization or order of, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of this Agreement and each of the other
Transaction Documents, except for the filing of the Certificate of Merger with
the Secretary of State of the State of California to effect the Merger pursuant
to the Merger Agreement, which shall be filed no later than ten (10) days from
the Closing Date (together with the consents, waivers, authorizations, orders,
notices and filings referred to in Schedule 3.1(f), the "Required Approvals").
(g) Litigation; Proceedings. Except as specifically disclosed in
Schedule 3.1(g), there is no action, suit, notice of violation, proceeding or
investigation pending or, to the best knowledge of the Company, threatened
against the Company or any of its Subsidiaries or any of their respective
properties before or by any court, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) which (i)
relates to or challenges the legality, validity or enforceability of any of the
Transaction Documents, the Debentures and the Underlying Shares (ii) could,
individually or in the aggregate, have a Material Adverse Effect or (iii) could,
individually or in the aggregate, materially impair the ability of the Company
to perform fully on a timely basis its obligations under the Transaction
Documents.
(h) No Default or Violation. Except as set forth in Schedule 3.1(h)
hereto, neither the Company nor any Subsidiary (i) is in default under or in
violation of any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound, except such defaults or violations as do not have a Material Adverse
Effect, (ii) is in violation of any order of any court, arbitrator or
governmental body, except for such violations as do not have a Material Adverse
Effect, or (iii) is in violation of any statute, rule or regulation of any
governmental authority which could (individually or in the aggregate) (x)
adversely affect the legality, validity or enforceability of this Agreement, (y)
have a Material Adverse Effect or (z) adversely impair the Company's ability or
obligation to perform fully on a timely basis its obligations under this
Agreement.
(i) Certain Fees. No fees or commission will be payable by the Company
to any investment banker, broker, placement agent or bank with respect to the
consummation of the transactions contemplated hereby except as provided in
Section 4.27 hereof.
(j) Disclosure Documents. The Disclosure Documents taken as a whole
are accurate in all material respects and do not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they were
made, not misleading.
(k) Manner of Offering. Assuming the Purchaser's representations and
warranties contained in Section 3.2 are true and correct (a) the Securities are
being offered and sold to the Purchaser without registration under the
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Securities Act in a private placement that is exempt from registration pursuant
to Rule 504 of Regulation D of the Securities Act and without registration under
the Minnesota Revised Statues, 1986 (the "Minnesota Act") in reliance upon the
exemption provided by Section 80A.15.2(g) of the Minnesota Act and
Administrative Rule 2875.0170; and (b) accordingly, the Securities are being
issued without restriction and may be freely traded pursuant to Rule 504 of
Regulation D of the Securities Act.
(l) Non-Registered Offering. Neither the Company nor any Person acting
on its behalf has taken or will take any action (including, without limitation,
any offering of any securities of the Company under circumstances which would
require the integration of such offering with the offering of the Securities
under the Securities Act) which might subject the offering, issuance or sale of
the Securities to the registration requirements of Section 5 of the Securities
Act.
(m) Not a Reporting Company; Eligibility to use Exemption under
504(b). The Company is not subject to the reporting requirements of Section 13
or Section 15(d) of the Exchange Act. The Company has not sold any securities
under Rule 504(b) in the last twelve months. The Company is eligible to issue
securities exempt from registration pursuant to Rule 504 of Regulation D
promulgated under the Securities Act.
(n) No Undisclosed Liabilities. Except for the transactions
contemplated in this Agreement and the Merger Agreement, there are no material
undisclosed liabilities of the Company, whether absolute, accrued, contingent or
otherwise.
The Purchaser acknowledges and agrees that the Company makes no representation
or warranty with respect to itself or the transactions contemplated hereby other
than those specifically set forth in Section 3.1 hereof.
3.2 Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Company as follows:
(a) Organization; Authority. The Purchaser is a limited liability
company, duly organized, validly existing and in good standing under the laws of
Minnesota with the requisite power and authority to enter into and to consummate
the transactions contemplated hereby and by the other Transaction Documents and
otherwise to carry out its obligations hereunder and thereunder. The acquisition
of the Debentures to be purchased by the Purchaser hereunder has been duly
authorized by all necessary action on the part of the Purchaser. This Agreement
has been duly executed and delivered by the Purchaser and constitutes the valid
and legally binding obligation of the Purchaser, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to, or affecting generally the enforcement of, creditors rights and
remedies or by other general principles of equity.
(b) Investment Intent. The Purchaser is acquiring the Debentures to be
purchased by it hereunder, and will acquire the Underlying Shares relating to
such Debentures, for its own account for investment purposes only and not with a
view to or for distributing or reselling such Debentures or Underlying Shares or
11
any part thereof or interest therein, without prejudice, however, to the
Purchaser's right, subject to the provisions of this Agreement, at all times to
sell or otherwise dispose of all or any part of such Debentures or Underlying
Shares in compliance with applicable federal and state securities laws.
(c) Purchaser Status. At the time the Purchaser was offered the
Debentures to be acquired by it hereunder, it was, at the date hereof it is and
at the Post-Closing it will be an "accredited investor" as defined in Rule
501(a) under the Securities Act. The Purchaser is a resident in the State of
Minnesota and no other jurisdiction.
(d) Experience of Purchaser. The Purchaser, either alone or together
with its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of an investment in the Securities to be acquired by it hereunder, and has
so evaluated the merits and risks of such investment.
(e) Ability of Purchaser to Bear Risk of Investment. The Purchaser is
able to bear the economic risk of an investment in the Securities to be acquired
by it hereunder and, at the present time, is able to afford a complete loss of
such investment.
(f) Prohibited Transactions. The Securities to be acquired by the
Purchaser hereunder are not being acquired, directly or indirectly, with the
assets of any "employee benefit plan," within the meaning of Section 3(3) of the
Employment Retirement Income Security Act of 1974, as amended.
(g) Access to Information. The Purchaser acknowledges receipt of the
Disclosure Documents and further acknowledges that it has been afforded (i) the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the Securities and the merits and risks of investing in the Securities; (ii)
access to information about the Company and the Company's financial condition,
results of operations, business, properties, management and prospects sufficient
to enable it to evaluate its investment in the Securities; and (iii) the
opportunity to obtain such additional information which the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment and to verify the
accuracy and completeness of the information contained in the Disclosure
Documents.
(h) Reliance. The Purchaser understands and acknowledges that (i) the
Securities being offered and sold to it hereunder are being offered and sold
without registration under the Securities Act in a private placement that is
exempt from the registration provisions of the Securities Act under Rule 504 of
Regulation D under the Securities Act and (ii) the availability of such
exemption depends in part on, and that the Company will rely upon the accuracy
and truthfulness of, the foregoing representations and the Purchaser hereby
consents to such reliance.
The Company acknowledges and agrees that the Purchaser makes no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2.
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ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Manner of Offering. The Securities are being issued pursuant to Rule
504 (b) of Regulation D of the Securities Act. The Securities will be exempt
from restrictions on transfer, and will carry no restrictive legend with respect
to the exemption from registration under the Securities Act. The Company will
use its best efforts to insure that it takes no actions that would jeopardize
the availability of the exemption from registration under Rule 504(b) for the
Securities and, if for any reason such exemption becomes unavailable due to the
Company's action or failure to act, the Company shall cause the Registrable
Securities to be registered under the Securities Act as required by Section
4.28.
4.2 Furnishing of Information. As long as the Purchaser owns any of the
Securities, and unless and until the Securities are assumed by MLXOV or the
Company becomes subject to the reporting requirements under Section 13(a) or
15(b) of the Exchange Act, the Company will promptly furnish to the Purchaser
financial information similar to that required to be reported in annual and
quarterly reports comparable to those required by Section 13(a) or 15(d) of the
Exchange Act (the "Non-Public Filings").
4.3 Notice of Certain Events. The Company shall, on a continuing basis, as
long as the Purchaser owns any of the Securities, (i) advise the Purchaser
promptly after obtaining knowledge of, and, if requested by the Purchaser,
confirm such advice in writing, of (A) the issuance by any state securities
commission of any stop order suspending the qualification or exemption from
qualification of the Securities, for offering or sale in any jurisdiction, or
the initiation of any proceeding for such purpose by any state securities
commission or other regulatory authority, or (B) any event that makes any
statement of a material fact made by the Company in Section 3.1 or in the
Disclosure Documents untrue or that requires the making of any additions to or
changes in Section 3.1 or in the Disclosure Documents in order to make the
statements therein, in each case at the time such Disclosure Documents were
delivered to the Purchaser and in the light of the circumstances under which
they were made, not misleading, (ii) use its commercially reasonable best
efforts to prevent the issuance of any stop order or order suspending the
qualification or exemption from qualification of the Securities under any state
securities or Blue Sky laws, and (iii) if at any time any state securities
commission or other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Securities under any such
laws, use its commercially reasonable best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time.
4.4 Copies and Use of Disclosure Documents and Non-Public Filings. The
Company (or, following the Post-Closing, MLXOV) shall furnish the Purchaser,
without charge, as many copies of the Disclosure Documents and the Non-Public
Filings and any amendments or supplements thereto as the Purchaser may
13
reasonably request. The Company consents to the use of the Disclosure Documents
and the Non-Public Filings and any amendments and supplements to any of them by
the Purchaser in connection with resales of the Securities.
4.5 Modification to Disclosure Documents. If any event shall occur as a
result of which, in the reasonable judgment of the Company or the Purchaser, it
becomes necessary or advisable to amend or supplement any of the Disclosure
Documents or the Non-Public Filings in order to make the statements therein, at
the time such Disclosure Documents or the Non-Public Filings were delivered to
the Purchaser and in the light of the circumstances under which they were made,
not misleading, or if it becomes necessary to amend or supplement any of the
Disclosure Documents or the Non-Public Filings to comply with applicable law,
the Company shall as soon as practicable prepare an appropriate amendment or
supplement to each such document in form and substance reasonably satisfactory
to both the Purchaser and Company so that (i) as so amended or supplemented,
each such document will not include an untrue statement of material fact or omit
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances existing at the time it is delivered to the
Purchaser, not misleading and (ii) the Disclosure Documents and the Non-Public
Filings will comply with applicable law in all material respects.
4.6 Blue Sky Laws. The Company shall cooperate with the Purchaser in
connection with the exemption from registration of the Securities under the
securities or Blue Sky laws of such jurisdictions as the Purchaser may request;
provided, however, that neither the Company nor its Subsidiaries shall be
required in connection therewith to (a) qualify as a foreign corporation where
they are not now so qualified, or (b) submit to taxation or general service of
process in such jurisdiction. The Company agrees that it will execute all
necessary documents and pay all necessary state filing or notice fees to enable
the Company to sell the Securities to the Purchaser.
4.7 Integration. The Company shall not and shall use its best efforts to
ensure that no Affiliate shall sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in Section 2 of the
Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Purchaser.
4.8 Furnishing of Rule 144(c) Materials. The Company shall, for so long as
any of the Securities remain outstanding and during any period in which the
Company is not subject to Section 13 or 15(d) of the Exchange Act, make
available to any registered holder of the Securities in connection with any sale
thereof and any prospective purchaser of such Securities from such Person, such
information in accordance with Rule 144(c)(2) promulgated under the Securities
Act as is required to sell the Securities under Rule 144 promulgated under the
Securities Act.
4.9 Solicitation Materials. The Company shall not (i) distribute any
offering materials in connection with the offering and sale of the Debentures or
the Underlying Shares other than the Disclosure Documents and any amendments and
supplements thereto prepared in compliance herewith or (ii) solicit any offer to
buy or sell the Debentures or the Underlying Shares by means of any form of
general solicitation or advertising.
14
4.10 Subsequent Financial Statements. (a) Until the Post-Closing Date, if
not otherwise publicly available, upon the written request of Purchaser, the
Company shall promptly furnish to the Purchaser a copy of all financial
statements for any period subsequent to the period covered by the financial
statements included in the Disclosure Documents until the full conversion of the
Debentures.
(b) After the Post-Closing Date, if not otherwise publicly available,
upon written request of Purchaser, MLXOV shall promptly furnish to the Purchaser
a copy of all financial statements relating to MLXOV for any period subsequent
to the period covered by the financial statements included in the Disclosure
Documents until the full conversion of the Debentures.
4.11 Prohibition on Certain Actions. From the date hereof through the
Post-Closing Date, the Company shall not and shall cause the Subsidiaries not
to, without the prior written consent of the Purchaser, (i) amend its
certificate or articles of incorporation, by-laws or other charter documents so
as to adversely affect any rights of the Purchaser; (ii) split, combine or
reclassify its outstanding capital stock; (iii) declare, authorize, set aside or
pay any dividend or other distribution with respect to the Common Stock; (iv)
redeem, repurchase or offer to repurchase or otherwise acquire shares of its
Common Stock; or (v) enter into any agreement with respect to any of the
foregoing other than the Merger Agreement.
4.12 Listing of Common Stock. Until the Post-Closing Date, if the Common
Stock shall become listed on the OTCBB or on another exchange, the Company shall
(a) use its commercially reasonable best efforts to maintain the listing of its
Common Stock on the OTCBB or such other exchange on which the Common Stock is
then listed until expiration of each of the periods during which the Debentures
may be converted and (b) shall provide to the Purchaser evidence of such
listing. After the Post-Closing Date, the references in this Section 4.12 to
Company and Common Stock shall be deemed references to MLXOV and the common
stock of MLXOV, respectively.
4.13 Escrow. The Company and the Purchaser agree to execute and deliver,
simultaneously with the execution and delivery of this Agreement, the escrow
agreement attached hereto and made part hereof as Exhibit E (the "Escrow
Agreement").
4.14 Reservation of Common Stock. The Company shall take all action
reasonably necessary to at all times have authorized, and reserved for the
purpose of issuance, that number of shares of Common Stock equal to a multiple
of five (5) times the number of shares of Common Stock into which the Debentures
are from time to time convertible unless a change in such multiple is agreed to
in writing by the Purchaser and the Company. If at any time the Company does not
have available such shares of Common Stock equal to a multiple of five (5) times
the number of shares of Common Stock into which the Debentures are from time to
time convertible, the Company shall call and hold a special meeting of the
shareholders within sixty (60) days of such occurrence, for the sole purpose of
increasing the number of shares authorized. The Company's management shall
15
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.
4.15 Indemnification.
(a) Indemnification
(i) The Company shall, notwithstanding termination of this
Agreement, indemnify and hold harmless the Purchaser and its officers,
directors, agents, employees and affiliates, each Person who controls the
Purchaser (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) (each such Person, a "Control Person") and the officers,
directors, agents, employees and affiliates of each such Control Person, to the
fullest extent permitted by applicable law, from and against any and all losses,
claims, damages, liabilities, costs (including, without limitation, costs of
preparation and reasonable attorneys' fees) and expenses (collectively,
"Losses"), as incurred, arising out of, or relating to, a breach or breaches of
any representation, warranty, covenant or agreement by the Company under this
Agreement or any other Transaction Document.
(ii) The Purchaser shall, notwithstanding termination of this
Agreement, indemnify and hold harmless the Company, its officers, directors,
agents and employees, each Control Person of the Company and the officers,
directors, agents and employees of each Control Person, to the fullest extent
permitted by applicable law, from and against any and all Losses, as incurred,
arising out of, or relating to, a breach or breaches of any representation,
warranty, covenant or agreement by the Purchaser under this Agreement or any
other Transaction Documents.
(b) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party promptly shall notify the Person
from whom indemnity is sought (the "Indemnifying Party") in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof; provided, that
the failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it shall be finally determined by a court
of competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in, but not control, the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed
to pay such fees and expenses; or (2) the Indemnifying Party shall have failed
promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named parties to any such Proceeding (including any impeded parties) include
both such Indemnified Party and the Indemnifying Party, and such Indemnified
16
Party shall have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense of the claim against the Indemnified Party but will
retain the right to control the overall Proceedings out of which the claim arose
and such counsel employed by the Indemnified Party shall be reasonably
acceptable to the Indemnifying Party and shall be at the expense of the
Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding, provided, however, the Indemnifying Party may
settle or compromise any asserted liability without the consent of the
Indemnitee so long as such settlement or compromise releases the Indemnitee and
does not include any admission or statement of fault against the Indemnitee.
All fees and expenses of the Indemnified Party to which the
Indemnified Party is entitled hereunder (including reasonable fees and expenses
to the extent incurred in connection with investigating or preparing to defend
such Proceeding in a manner not inconsistent with this Section) shall be paid to
the Indemnified Party, as incurred, within ten (10) Business Days of written
notice thereof to the Indemnifying Party.
No right of indemnification under this Section 4.15 shall be available
as to a particular Indemnified Party if there is a non-appealable final judicial
determination that such Losses arise solely or substantially out of the
negligence or bad faith of such Indemnified Party in performing the obligations
of such Indemnified Party under this Agreement or a breach by such Indemnified
Party of its obligations under this Agreement.
(c) Contribution. If a claim for indemnification under Section 4.16(a)
is unavailable to an Indemnified Party or is insufficient to hold such
Indemnified Party harmless for any Losses in respect of which this Section 4.15
would apply by its terms (other than by reason of exceptions provided in this
Section 4.15), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses in such proportion as is
appropriate to reflect the relative benefits received by the Indemnifying Party
on the one hand and the Indemnified Party on the other and the relative fault of
the Indemnifying Party and Indemnified Party in connection with the actions or
omissions that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and Indemnified
Party shall be determined by reference to, among other things, whether there was
a judicial determination that such Losses arise in part out of the negligence or
bad faith of the Indemnified Party in performing the obligations of such
Indemnified Party under this Agreement or the Indemnified Party's breach of its
obligations under this Agreement. The amount paid or payable by a party as a
result of any Losses shall be deemed to include any attorneys' or other fees or
expenses incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party.
17
(d) Non-Exclusivity. The indemnity and contribution agreements
contained in this Section are in addition to any obligation or liability that
the Indemnifying Parties may have to the Indemnified Parties.
4.16 Exclusivity. During the two year period commencing on the
Post-Closing Date (the "Restriction Period") or until the Debentures are paid in
full which ever comes first, (A) the Company and its Affiliates shall not issue
or offer (i) any convertible security and (ii) any security issued pursuant to
Rule 504 of Regulation D promulgated under the Securities Act and (B) the
Company and its Affiliates shall not offer any equity lines of credit. The
Company may request that the restrictions in this Section 4.16 be waived. Except
as specifically set forth above and for the SEDA transaction and the Commander
Fund Transactions, the Company may engage in any other debt or equity financing
during the Restriction Period.
4.17 Purchaser's Ownership of Common Stock. In addition to and not in
lieu of the limitations on conversion set forth in the Debentures, the
conversion rights of the Purchaser set forth in the Debentures shall be limited,
solely to the extent required, from time to time, such that, unless the
Purchaser gives written notice 75 days in advance to the Company of the
Purchaser's intention to exceed the Limitation on Conversion as defined herein,
with respect to all or a specified amount of the Debentures and the
corresponding number of the Underlying Shares in no instance the Purchaser
(singularly, together with any Persons who in the determination of the
Purchaser, together with the Purchaser, constitute a group as defined in Rule
13d-5 of the Exchange Act) be entitled to convert the Debentures to the extent
such conversion would result in the Purchaser beneficially owning more than five
percent (5%) of the outstanding shares of Common Stock of the Company. For these
purposes, beneficial ownership shall be defined and calculated in accordance
with Rule 13d-3, promulgated under the Exchange Act (the foregoing being herein
referred to as the "Limitation on Conversion"); provided, however, that the
Limitation on Conversion shall not apply to any forced or automatic conversion
pursuant to this Agreement or the Debentures; and provided, further that if the
Purchaser shall have declared an Event of Default and, if a cure period is
provided, the Company shall not have properly and fully cured such Event of
Default within any such cure period, the provisions of this Section 4.17 shall
be null and void from and after such date. The Company shall, promptly upon its
receipt of a Notice of Conversion tendered by the Purchaser (or its sole
designee) for the Debentures, as applicable, notify the Purchaser by telephone
and by facsimile (the "Limitation Notice") of the number of shares of Common
Stock outstanding on such date and the number of Underlying Shares, which would
be issuable to the Purchaser (or its sole designee, as the case may be) if the
conversion requested in such Notice of Conversion were effected in full and the
number of shares of Common Stock outstanding giving full effect to such
conversion whereupon, in accordance with the Debentures, notwithstanding
anything to the contrary set forth in the Debentures, the Purchaser may, by
notice to the Company within one (1) Business Day of its receipt of the
Limitation Notice by facsimile, revoke such conversion to the extent (in whole
or in part) that the Purchaser determines that such conversion would result in
the ownership by su the Purchaser of shares of Common Stock in excess of the
Limitation on Conversion. The Limitation Notice shall begin the 75 day advance
notice required in this Section 4.17.
18
4.18 Purchaser's Rights if Trading in Common Stock is Suspended. If the
Common Stock is listed on any exchange, then at any time after the Post-Closing
if trading in the shares of the Common Stock is suspended on such stock exchange
or market upon which the Common Stock is then listed for trading (other than as
a result of the suspension of trading in securities on such market generally or
temporary suspensions pending the release of material information), or the
Common Stock is delisted from the OTCBB, then, at the option of the Purchaser
exercisable by giving written notice to the Company (the "Redemption Notice"),
the Company shall redeem, as applicable, all of the Debentures and Underlying
Shares owned by the Purchaser within seven (7) Business Days at an aggregate
purchase price equal to the sum of:
(i) the product of (1) the average Per Share Market Value for the
five (5) Trading Days immediately preceding (a) the date of the Redemption
Notice, (b) the date of payment in full of the repurchase price under this
Section 4.18 recalculated as of such payment date, or (c) the day when the
Common Stock was suspended, delisted or deleted from trading, whichever is
greater, multiplied by (2) the aggregate number of Underlying Shares then held
and owned by the Purchaser;
(ii) the greater of (A) the outstanding principal amount and
accrued and unpaid interest on the Debentures owned by the Purchaser and (B) the
product of (1) the average Per Share Market Value for the five (5) Trading Days
immediately preceding (a) the date of the Redemption Notice, (b) the date of
payment in full of the repurchase price under this Section 4.18 recalculated as
of such payment date, or (c) the day when the Common Stock was suspended,
delisted or deleted from trading, whichever is greater, and (2) the aggregate
number of Underlying Shares issuable upon the conversion of the outstanding
Debentures then held and owned by the Purchaser utilizing the conversion
procedures contained in the Debentures (without taking into account the
Limitation on Conversion described in Section 4.17 hereof); and
(iii) interest on such amounts set forth in (i) and (ii) above
accruing from the seventh (7th) Business Day after the date of the Redemption
Notice until the repurchase price under this Section 4.18 is paid in full, at
the rate of fifteen percent (15%) per annum.
4.19 No Violation of Applicable Law. Notwithstanding any provision of this
Agreement to the contrary, if the redemption of the Debentures or the Underlying
Shares otherwise required under this Agreement or the Debentures would be
prohibited by the relevant provisions of California law, such redemption shall
be effected as soon as it is permitted under such law; provided, however, that
interest payable by the Company with respect to any such redemption shall accrue
in accordance with Section 4.18.
4.20 Redemption Restrictions. Notwithstanding any provision of this
Agreement to the contrary, if any redemption of the Debentures the Underlying
Shares otherwise required under this Agreement or the Debentures would be
prohibited in the absence of consent from any lender to the Company, or by the
holders of any class of securities of the Company or any of the Subsidiaries,
the Company shall use its best efforts to obtain such consent as promptly as
practicable after any such redemption is required. Interest payable by the
Company with respect to any such redemption shall accrue in accordance with
Section 4.18 until such consent is obtained. Nothing contained in this Section
19
4.20 shall be construed as a waiver by the Purchaser of any rights it may have
by virtue of any breach of any representation or warranty of the Company herein
as to the absence of any requirement to obtain any such consent.
4.21 No Other Registration Rights. During the period commencing on the date
hereof and ending on the Post-Closing Date, the Company shall not file any
registration statement that provides for the registration of shares of Common
Stock to be sold by security holders of the Company, other than the Purchaser
and/or its respective Affiliates or assigns, without the prior written consent
of the Purchaser or its assigns, provided, however, that the limitation on the
right to file registration statements contained in this Section 4.21 shall not
apply to registration statements relating solely to (i) employee benefit plans,
notwithstanding the inclusion of a resale prospectus for securities received
under any such employee benefit plan, or (ii) business combinations not
otherwise prohibited by the terms of this Agreement or the other Transaction
Documents. This registration restriction is in addition to the Company's
registration restrictions set forth in Section 4.23.
4.22 Merger or Consolidation. Until the earlier of (a) the full redemption,
payment or conversion of the Debentures and (b) the Maturity Date of the
Debentures (as that term is defined in the Debentures), the Company and each
Subsidiary will not, in a single transaction or a series of related transactions
(other than the Merger), (i) consolidate with or merge with or into any other
Person, or (ii) permit any other Person to consolidate with or merge into it,
unless (w) either (A) the Company shall be the survivor of such merger or
consolidation or (B) the surviving Person shall expressly assume by supplemental
agreement all of the obligations of the Company under the Debentures, this
Agreement and the other Transaction Documents; (x) immediately before and
immediately after giving effect to such transactions (including any indebtedness
incurred or anticipated to be incurred in connection with the transactions), no
Event of Default shall have occurred and be continuing; (y) if the Company is
not the surviving entity, such surviving entity's common shares will be listed
on either The New York Stock Exchange, American Stock Exchange, Nasdaq National
Market or Nasdaq SmallCap Market, or the OTCBB on or prior to the closing of
such transaction(s) and (z) the Company shall have delivered to the Purchaser an
officer's certificate and opinion of counsel, each stating that such
consolidation, merger (other than the Merger) or transfer complies with this
Agreement, that the agreements relating to such transaction(s) provide that the
surviving Person agrees to be bound by this Agreement and that all conditions
precedent in this Agreement relating to such transaction(s) have been satisfied.
4.23 Registration of Underlying Shares. (a) So long as the Purchaser and/or
its assigns owns any of the Securities and the Underlying Shares would not be
freely transferable without registration, the Company agrees not to file a
registration statement with the SEC without Purchaser's express written consent,
other than on Form 10, Form S-4 (except for a public reoffering or resale) or
Form S-8 without first having registered (or simultaneous registering) the
Registrable Securities for resale under the Securities Act and in such states of
the United States as the holders thereof shall reasonably request.
20
(b) If the Company shall propose to file with the SEC any registration
statement other than a Form 10, Form S-4 (except for a public reoffering or
resale) or Form S-8 which would cause, or have the effect of causing, the
Company to become a Reporting Issuer or to take any other action, other than the
sale of the Debentures to the Purchaser hereunder, the effect of which would be
to cause the Underlying Shares to be restricted securities (as such term is
defined in Rule 144 promulgated under the Securities Act), the Company agrees to
give written notification of such to the holders of the Securities at least two
weeks prior to such filing or taking of the proposed action. If any of the
Securities are then outstanding, the Company agrees to include in such
registration statement the Registrable Securities.
If the registration of which the Company gives notice is for a registered
public offering involving an underwriting, the Company will so advise the
holders of the Securities. In such event, these registration rights shall be
conditioned upon such holder's participation in such underwriting and the
inclusion of such holder's Registrable Securities in the underwriting to the
extent provided herein. All holders proposing to distribute their Registrable
Securities through such underwriting shall enter into an underwriting agreement
in customary form with the underwriter selected by the Company. In the event
that the lead or managing underwriter in its good faith judgment determines that
material adverse market factors require a limitation on the number of shares to
be underwritten, the underwriter may limit the number of Registrable Securities.
In such event, the Company shall so advise all holders of securities requesting
registration, and the number of shares of the Registrable Securities that are
entitled to be included in the registration and underwriting shall be allocated
pro rata among all holders and other participants, including the Company, in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities and other securities which they had requested to be included in such
registration statement at the time of filing the registration statement. If any
holder disapproves of the terms of any such underwriting, he may elect to
withdraw therefrom by written notice to the Company and the underwriter,
provided such notice is delivered within sixty (60) days of full disclosure of
such terms to such holder, without thereby affecting the right of such holder to
participate in subsequent offerings hereunder.
(c) Notwithstanding the foregoing, if the Company for any reason shall
have taken any action, other than the sale of the Debentures to the Purchaser
hereunder, the effect of which would be to cause the Registrable Securities to
be restricted securities (as such term is defined in Rule 144 promulgated under
the Securities Act), the Company agrees to use its best efforts to file a
registration statement with the SEC and use its best efforts to have such
registration statement declared effective by the SEC which would permit the
public resale of the Registrable Securities under the Securities Act and in such
states of the United States as the holders thereof shall reasonably request.
(d) The Company agrees to keep any registration required pursuant to
this Section 4.23 continuously effective under the Securities Act and with such
states of the United States as the holders of the Registrable Securities shall
reasonably request until the earlier of (i) the date on which all of the
Registrable Securities covered by any such registration have been sold, (ii) two
(2) years from the effective date of any such registration, or (iii) the date on
which all of the Registrable Securities may be sold without restriction pursuant
to Rule 144 of the Securities Act. All costs and expenses of any such
registration and related Blue Sky filings and maintaining continuous
21
effectiveness of such registration and filings shall be borne by the Company,
other than underwriters and brokers, fees and commissions.
(e) The Underlying Shares shall be registered by the Company under the
Securities Act if required by Section 4.28 and subject to the conditions stated
therein.
(f) Each holder of Registrable Securities agrees to cooperate and
assist the Company in preparing and filing any registration statement required
to be filed pursuant to this Agreement, including, without limitation, providing
the Company with such information about the holder and answering such questions
as deemed reasonably necessary by the Company in order to complete such
registration statement. Until such time as the Company is no longer required to
keep the registration statement effective, each holder of Registrable Securities
agrees to immediately notify the Company of any change to the information
provided to the Company in connection with the preparation or maintenance of the
registration statement, and each such holder agrees to certify to the accuracy
and completeness of all information provided by it to the Company or its
representatives in connection with such registration statement.
4.24 [Intentionally Omitted]
4.25 Liquidated Damages. The Company understands and agrees that a breach
by the Company of Section 4.1, Section 4.23, Section 4.28, Section 4.29 or an
Event of Default as contained in this Agreement and/or any other Transaction
Document will result in substantial economic loss to the Purchaser, which loss
will be extremely difficult to calculate with precision. Therefore, if, for any
reason the Company breaches Section 4.1, Section 4.23, Section 4.28, Section
4.29 or fails to cure any Event of Default under Section 5.1, as compensation
and liquidated damages for such breach or default, and not as a penalty, the
Company agrees to pay the Purchaser an amount equal to three times the Purchase
Price and the Purchaser, upon receipt of such payment, shall return any
unconverted Debentures to the Company. The Company shall, upon demand, pay the
Purchaser such liquidated damages by wire transfer of immediately available
funds to an account designated by the Purchaser. Nothing herein shall limit the
right of the Purchaser to pursue actual damages (less the amount of any
liquidated damages received pursuant to the foregoing) for the Company's breach
of Section 4.1, Section 4.23, Section 4.28, Section 4.29 or failure to cure an
Event of Default under Section 5.1, consistent with the terms of this Agreement.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT OR THE
OTHER TRANSACTION DOCUMENTS, THE COMPANY'S OBLIGATIONS UNDER THIS SECTION SHALL
SURVIVE ANY TERMINATION OF THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS.
4.26 Short Sales. The Purchaser agrees it will not enter into any Short
Sales (as hereinafter defined) until the earlier to occur of the date that the
Purchaser no longer owns the Debentures and the Maturity Date. For purpose
hereof, a "Short Sale" shall mean a sale of Common Stock by the Purchaser that
is marked as a short sale and that is made at a time when there is no equivalent
offsetting long position in the Common Stock by the Purchaser. For the purposes
of determining whether there is an equivalent offsetting long position in the
Common Stock held by the Purchaser, shares of Common Stock issuable upon
conversion of the Debentures shall be deemed to be held long by the Purchaser
22
with respect to the Underlying Shares for which a Notice of Conversion is
delivered within two (2) Trading Days following the Trading Day that such Short
Sale is entered into.
4.27 Fees. The Company will pay the following fees and expenses in
connection with the transactions contemplated hereby: (a) to G&P (i) legal fees
for document production in the amount of $20,000 and (ii) all reasonable
out-of-pocket expenses incurred in connection with such document production, (b)
to Jehu Hand (i) legal fees in the amount of $5,000 and (ii) all reasonable
out-of-pocket expenses incurred and (c) a commitment fee in an amount equal to
ten percent (10%) of the Purchase Price to the Purchaser (the "Advisory Fee").
Unless paid prior, all fees and expenses will be paid at Post-Closing and the
Company and the Purchaser hereby authorize and direct the Escrow Agent to deduct
such fees and expenses directly from escrow prior to distributing any funds to
the Company. Except with respect to the fees set forth in part (b) of this
Section 4.27 and except as otherwise set forth in the Retainer Agreement, all
fees and expenses shall be paid regardless of whether the transactions
contemplated hereby are closed or otherwise completed. All fees to be paid
hereunder shall have no offsets, are non-refundable and non-cancelable. The
Company will also pay fees to Argilus LLC and/or Xxxxxxx & Company as Investment
Bankers to the Company.
4.28 Changes to Federal and State Securities Laws. If any of the Securities
require registration with or approval of any governmental authority under any
federal (including but not limited to the Securities Act or similar federal
statute then in force) or state law, or listing on any national securities
exchange, before they may be resold or transferred without any restrictions on
their resale or transfer for reasons including, but not limited to, a material
change in Rule 504 of Regulation D promulgated under the Securities Act or a
change to the exemption for sales made to Accredited Investors in the state in
which the Purchaser resides, the Company will, at its expense, (a) as
expeditiously as possible cause the Registrable Securities to be duly registered
or approved or listed on the relevant national securities exchange, as the case
may be, and (b) keep such registration, approval or listing, as the case may be,
continuously effective until the earlier of (i) the date on which all of the
Registrable Securities have been sold, (ii) two (2) years from the effective
date of any such registration, or (iii) the date on which all of the Securities
may be sold without restriction pursuant to Rule 144 of the Securities Act;
subject to the terms and limitations set forth in Section 4.22. The Registrable
Securities shall be registered by the Company under the Securities Act if
required by Section 4.22 and subject to the conditions stated therein.
4.29 Merger Agreement. Immediately upon the Effective Date, all of the
transactions contemplated by the Merger Agreement shall be consummated in
accordance with the terms thereof.
4.30 Future Financing. If, at any time any of the Debentures are
outstanding, the Company, or its successors in interest due to mergers,
consolidations and/or acquisitions (the "Successors-in-Interest"), is funded an
amount equal to or exceeding Five Million United States Dollars ($5,000,000),
the Company or the Successors-in-Interest, as the case may be, agrees to pay the
Purchaser an amount equal to One Hundred Fifty Percent (150%) of the then
outstanding Debentures (the "Lump Sum Payment"), except for the SEDA transaction
and the Commander Fund Transactions. Upon the Purchaser's receipt of the Lump
Sum Payment, any and all remaining obligations then outstanding between the
23
Company or the Successors-in-Interest, as the case may be, and the Purchaser in
connection with this Agreement and the Debentures shall be deem satisfied, and
the Agreement and the Debentures shall be terminated. This provision shall
survive both Closing and Post-Closing.
4.31 Applicability of Agreements after Post-Closing. At the Effective Date
or upon the consummation of any other merger or other transaction pursuant to
which the Company's obligations under the Debentures are assumed by another
party (whether or not such assumption is joint and several), the Company shall
be released from, and have no further obligation pursuant to Sections 4.1
through 4.6, 4.8, 4.10, 4.12, 4.14 through 4.28 hereof, and any reference to the
Company in such sections shall instead be deemed to refer solely to the party
that assumes the Debentures.
4.32 Company's Right of Redemption. In addition to any right of the Company
to redeem any unconverted amount of the Debentures, the Company shall have any
redemption right set forth in the Debentures. Notwithstanding anything contained
herein or in the Debentures to the contrary, the Company shall only have the
right to redeem, in whole, the aggregate principal balance of the outstanding
Debentures. The Company shall specifically not have the right to redeem a
portion of the aggregate principal balance of the outstanding Debentures.
4.33 Conversion Procedures. The Debentures set forth the procedures,
including the forms of Notice of Conversion to be provided upon conversion and
such other information and instructions as may be reasonably necessary to enable
the Purchaser or its permitted transferee(s) to exercise the right of conversion
smoothly and expeditiously. ARTICLE V
TERMINATION
5.1 Termination by the Company or the Purchaser. This Agreement shall be
terminated as follows upon the occurrence of any of the following events (each
an "Event of Default"):
(a) Automatically terminated prior to Post-Closing if:
(i) there shall be in effect any statute, rule, law or
regulation, including an amendment to Regulation D or an interpretive release
promulgated or issued thereunder, that prohibits the consummation of the
Post-Closing or if the consummation of the Post-Closing would violate any
non-appealable final judgment, order, decree, ruling or injunction of any court
of or governmental authority having competent jurisdiction;
(ii) the Post-Closing shall not have occurred by the Post-Closing
Date through no fault of the Company;
24
(iii) the common stock of MLXOV is not registered under Section
12 of the Exchange Act;
(iv) MLXOV is not current in its reporting obligations under
Section 13 or 15(d) of the Exchange Act;
(v) an event occurs prior to the Post-Closing requiring MLXOV to
report such event to the SEC on Form 8-K and not otherwise set forth in Schedule
5.1, provided, however, such event shall only include the following items under
Form 8-K: Item 5.01; Item 2.01, to the extent that any event reported under Item
2./01 involves a change in the nature of MLXOV's business; Item 1.03; Item 4.01
(provided further, that as to Item 4.01, only if the event requires disclosure
under Item 304(a)(1)(iv) of Regulation S-B or under Item 304(a)(1)(iv) of
Regulation S-K, as applicable); Item 7.01; or Item 2.02;
(vi) the Company causes the Post-Closing to not occur by the
Post-Closing Date;
(vii) if MLXOV becomes listed for trading on the OTCBB, trading
in the common stock of MLXOV has been suspended, delisted, or otherwise ceased
by the Commission or the NASD or other exchange or the Nasdaq (whether the
National Market or otherwise); or
(viii) the Company fails to deliver or cause to be delivered the
Debentures as required by and by the date set forth in Section 2.2 hereof.
(b) By Purchaser giving written notice of such termination to the
Company, if the Company has breached any representation, warranty, covenant or
agreement contained in this Agreement or the other Transaction Documents
following receipt by the Company of notice of such breach.
(c) By Company giving written notice of such termination to the
Purchaser, if the Purchaser has materially breached any representation,
warranty, covenant or agreement contained in this Agreement or the other
Transaction Documents and such breach is not cured within five (5) Business Days
following receipt by the Purchaser of notice of such breach.
5.2 Remedies. Notwithstanding anything else contained herein to the
contrary, if an Event of Default has occurred pursuant to Section 5.1, the
defaulting party shall be deemed in default hereof and the non-defaulting party
shall be entitled to pursue all available rights without further notice. The
defaulting party shall pay all attorney's fees and costs incurred in enforcing
this Agreement and the other Transaction Documents. In addition, all unpaid
amounts shall accrue interest at a rate of 15% per annum.
25
ARTICLE VI
LEGAL FEES AND DEFAULT INTEREST RATE
In the event any party hereto commences legal action to enforce its rights
under this Agreement or any other Transaction Document, the non-prevailing party
shall pay all reasonable costs and expenses (including but not limited to
reasonable attorney's fees, accountant's fees, appraiser's fees and
investigative fees) incurred in enforcing such rights. In the event of an Event
of Default by any party hereunder, interest shall accrue on all unpaid amounts
due the aggrieved party at the rate of 15% per annum, compounded annually.
ARTICLE VII
MISCELLANEOUS
7.1 Fees and Expenses. Except as set forth in this Agreement each party
shall pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all stamp and similar taxes and duties levied in
connection with the issuance of the Debentures (and, upon conversion, the
Underlying Shares) pursuant hereto. The Purchaser shall be responsible for any
taxes (other than income taxes) payable by the Purchaser that may arise as a
result of the investment hereunder or the transactions contemplated by this
Agreement or any other Transaction Document. Whether or not the transactions
contemplated hereby and thereby are consummated or this Agreement is terminated.
The Company shall pay (i) all costs, expenses, fees and all taxes incident to
and in connection with: (A) the preparation, printing and distribution of any
registration statement required hereunder and all amendments and supplements
thereto (including, without limitation, financial statements and exhibits), and
all preliminary and final Blue Sky memoranda and all other agreements,
memoranda, correspondence and other documents prepared and delivered in
connection herewith, (B) the issuance and delivery of the Securities, (C) the
exemption from registration of the Securities for offer and sale to the
Purchaser under the securities or Blue Sky laws of the applicable jurisdiction,
(D) furnishing such copies of any registration statement required hereunder, the
preliminary and final prospectuses and all amendments and supplements thereto,
as may reasonably be requested for use in connection with resales of the
Securities, and (E) the preparation of certificates for the Securities
(including, without limitation, printing and engraving thereof), (ii) all fees
and expenses of counsel and accountants of the Company and (iii) all expenses
and fees of listing on securities exchanges, if any.
7.2 Entire Agreement; Amendments. This Agreement, together with all of the
Exhibits and Schedules annexed hereto, and any other Transaction Document
contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or
written, with respect to such matters. This Agreement shall be deemed to have
been drafted and negotiated by both parties hereto and no presumptions as to
26
interpretation, construction or enforceability shall be made by or against
either party in such regard.
7.3 Notices. Any notice, request, demand, waiver, consent, approval, or
other communication which is required or permitted to be given to any party
hereunder shall be in writing and shall be deemed to have been duly given only
if delivered to the party personally or sent to the party by facsimile upon
electronic confirmation and receipt (promptly followed by a hard-copy delivered
in accordance with this Section 7.3) or three days after being mailed by
registered or certified mail (return receipt requested), with postage and
registration or if sent by nationally recognized overnight courier, one day
after being mailed certification fees thereon prepaid, addressed to the party at
its address set forth below:
If to the Company: Hindsight Records, Inc.
00 Xxxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Purchaser: See Schedule 1 attached hereto
With copies to: Gottbetter & Partners, LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Escrow Agent: Gottbetter & Partners, LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
or such other address as may be designated hereafter by notice given pursuant to
the terms of this Section 7.3.
7.4 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
both the Company and the Purchaser, or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
27
7.5 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
7.6 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns. This Agreement and any of the rights, interests or obligations
hereunder may be assigned by the Purchaser to an accredited investor without the
consent of the Company as long as such assignee agrees to be bound by this
Agreement. This Agreement and any of the rights, interests or obligations
hereunder may not be assigned by the Company without the prior written consent
of the Purchaser. It is agreed that the Company may assign all of the rights,
interests and obligations hereunder to MLXOV pursuant to the Merger Agreement.
7.7 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.
7.8 Governing Law; Venue; Service of Process. The parties hereto
acknowledge that the transactions contemplated by this Agreement and the
exhibits hereto bear a reasonable relation to the State of New York. The parties
hereto agree that the internal laws of the State of New York shall govern this
Agreement and the exhibits hereto, including, but not limited to, all issues
related to usury. Any action to enforce the terms of this Agreement or any of
its exhibits shall be brought exclusively in the state and/or federal courts
situated in the County and State of New York. Service of process in any action
by the Purchaser to enforce the terms of this Agreement may be made by serving a
copy of the summons and complaint, in addition to any other relevant documents,
by commercial overnight courier to the Company at its principal address set
forth in this Agreement.
7.9 Survival. The agreements and covenants of the parties contained in
Article IV and this Article VII shall survive the Post-Closing (or any earlier
termination of this Agreement).
7.10 Counterpart Signatures. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
7.11 Publicity. The Company and the Purchaser shall consult with each other
in issuing any press releases or otherwise making public statements with respect
to the transactions contemplated hereby and neither party shall issue any such
press release or otherwise make any such public statement without the prior
written consent of the other, which consent shall not be unreasonably withheld
28
or delayed, unless counsel for the disclosing party deems such public statement
to be required by applicable federal and/or state securities laws. Except as
otherwise required by applicable law or regulation, the Company will not
disclose to any third party the names of the Purchaser.
7.12 Severability. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision which shall be a reasonable substitute
therefore, and upon so agreeing, shall incorporate such substitute provision in
this Agreement.
[Signature Page Follows]
29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first indicated above.
Company:
Hindsight Records, Inc.
By: /S/ Xxxxxxx Xxxxxxx
------------------------
Name: Xxxxxxx Xxxxxxx
Title: President
Purchaser:
HIGHGATE HOUSE, LLC
By: HH Advisors, LLC, its managing member
By: Xxxxxxx Investment Group, Inc., its
managing member
By:
Name: Xxxx X. Xxxxxxxxxx
Title: President
Schedule 1
Purchaser
30
--------------------------------------- -----------------------------
Name and Address of Purchaser Amount of Debentures to be
Purchased
--------------------------------------- -----------------------------
Highgate House, LLC
0000 Xxxxxxxxxx Xxxx Xxxx. $999,000 Debenture A
Suite 920 $1,000 Debenture B
Xxxxxxxxxxx, Xxxxxxxxx 00000
--------------------------------------- -----------------------------
31
Schedule 3.1(c)
Capitalization and Registration Rights
The certificate of incorporation authorizes 1,000 shares of Common Stock and no
shares of Preferred Stock to be outstanding at one time. 40 shares of Common
Stock and no shares of Preferred Stock are outstanding.
32
Schedule 3.1(d)
Equity and Equity Equivalent Securities
None
33
Schedule 3.1(e)
Conflicts
None
34
Schedule 3.1(f)
Consents and Approvals
SEC Filing - Form D
Minnesota Blue Sky Filing (or exemption therefrom)
35
Schedule 3.1(g)
Litigation
None
36
Schedule 3.1(h)
Defaults and Violations
None
37
Schedule 5.1
Form 8-K Disclosure Obligations
38
