ADDITIONAL NOTE PURCHASE AND GLOBAL AMENDMENT AGREEMENT
Exhibit 10.1
ADDITIONAL NOTE PURCHASE
AND GLOBAL AMENDMENT AGREEMENT
AND GLOBAL AMENDMENT AGREEMENT
ADDITIONAL NOTE PURCHASE AND GLOBAL AMENDMENT AGREEMENT (this “Agreement”), dated as of May
18, 2007, by and among INNUITY, INC., a Utah corporation (the “Company”), Xxxxx.xxx, Inc., a
Washington corporation (“Vista”), Jadeon, Inc., a Nevada corporation (“Jadeon” and, collectively
with the Company and Vista, the “Company Entities”), and Imperium Master Fund, Ltd. (the
“Investor”). Capitalized terms used in this Agreement and not otherwise defined have the
respective meanings ascribed thereto in the Securities Purchase Agreement (as defined below).
A. The Company and the Investor entered into that certain Securities Purchase Agreement, dated
as of May 3, 2007 (the “Securities Purchase Agreement”), pursuant to which the Company sold to the
Investor a 15% Senior Secured Note (the “First Note”) and a Warrant exercisable for shares of the
Company’s common stock (the “Warrant”).
B. The Company’s obligations under the Securities Purchase Agreement and the other Transaction
Documents, including, without limitation, its obligation to make payments of principal and interest
on the First Note, are guaranteed by Vista, Jadeon and the future direct and indirect subsidiaries
of the Company (collectively, the “Company Subsidiaries”) pursuant to a Subsidiary Guarantee, dated
as of May 3, 2007 (the “Subsidiary Guarantee”), and are secured by the assets of the Company and
the Company Subsidiaries pursuant to the terms of a Security Agreement, dated as of May 3, 2007
(the “Security Agreement”, and together with the Guarantee, the “Security Documents”).
C. Pursuant to Section 1.1(b) of the Securities Purchase Agreement, the Company wishes to
issue and sell to the Investor, and the Investor wishes to purchase from the Company, upon the
terms and subject to the conditions set forth in this Agreement, an additional 15% Senior Secured
Note with terms substantially similar to the First Note and in the form attached hereto as Exhibit
A (the “Additional Note”).
In consideration of the mutual promises made herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the
Investor hereby agree as follows:
1. PURCHASE AND SALE OF ADDITIONAL NOTE.
Upon the terms and subject to the satisfaction or waiver of the conditions set forth herein,
the Company agrees to sell to the Investor, and the Investor agrees to purchase from the Company,
an Additional Note with a principal amount equal to the amount set forth below the Investor’s name
on the signature page hereof. The date on which the closing of such purchase and sale occurs (the
“Second Closing”) is hereinafter referred to as the “Second Closing Date”. The Second Closing will
be deemed to occur at the offices of Xxxxxx Song LLP, 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000 when (A) this Agreement has been executed
and delivered by the Company and the Investor, (B) the Company has executed and delivered the
Additional Note to the Investor, (C) each of the other conditions to the Second Closing described
in this Agreement has been satisfied or waived as specified therein, and (D) payment by the
Investor of an amount equal to the principal amount of the Additional Note has been made by wire
transfer of immediately available funds to the Company’s account.
1. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
The Investor hereby represents and warrants to the Company and agrees with the Company that,
as of the date hereof:
1.1 Authorization; Enforceability. The Investor is duly and validly organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or
organization as set forth below the Investor’s name on the signature page hereof with the requisite
corporate power and authority to purchase the Additional Note and to execute and deliver this
Agreement. This Agreement constitute the Investor’s valid and legally binding obligation,
enforceable in accordance with its terms, subject to (i) applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other similar laws of general application
relating to or affecting the enforcement of creditors’ rights generally and (ii) general principles
of equity.
1.2 No Conflicts. The execution and performance of this Agreement do not conflict in
any material respect with any agreement to which the Investor is a party or is bound, any court
order or judgment applicable to the Investor, or the constituent documents of the Investor.
1.3 Certain Trading Activities. The Investor has not, in violation of the securities
laws, directly or indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with the Investor, engaged in any transactions in the securities of the Company since
the time that the Investor was first contacted by the Company or Xxxxxxx Bros., L.P. regarding the
investment in the Company contemplated by this Agreement. The Investor covenants that neither it
nor any Person acting on its behalf or pursuant to any understanding with it will engage in any
transactions in the securities of the Company prior to the time that the transactions contemplated
by this Agreement are publicly disclosed pursuant to Section 3.2.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY ENTITIES. Each of the Company Entities
hereby represents and warrants to the Investor and agrees with the Investor that, as of the hereof:
2.1 Organization, Good Standing and Qualification. Each of the Company Entities is
duly organized, validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization and has all requisite power and authority to carry on its business as
now conducted. Each of the Company Entities is duly qualified to transact business and is in good
standing in each jurisdiction in which it conducts business except where the failure so to qualify
has not had or would not reasonably be expected to have a Material Adverse Effect.
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2.2 Authorization; Consents. Each of the Company Entities has the requisite corporate
power and authority to enter into and perform its obligations under this Agreement (and the
Additional Note, in the case of the Company). All corporate action on the part of each of the
Company Entities by its officers, directors and stockholders necessary for the authorization,
execution and delivery of, and the performance by each of the Company Entities of its obligations
under this Agreement (and the Additional Note, in the case of the Company) has been taken, and no
further consent or authorization of any of the Company Entities, their boards of directors,
stockholders, any Governmental Authority or any other Person is required (pursuant to any rule of
the Principal Market or otherwise).
2.3 Enforcement. This Agreement has been duly executed and delivered by each of the
Company Entities, and at the Second Closing, the Company will have duly executed and delivered the
Additional Note. This Agreement constitutes the valid and legally binding obligations of the
Company Entities (and at the Second Closing, the Additional Note will constitute the valid and
legally binding obligations of the Company), enforceable against the Company Entities in accordance
with their respective terms, subject to (i) applicable bankruptcy, insolvency, fraudulent transfer,
moratorium, reorganization or other similar laws of general application relating to or affecting
the enforcement of creditors’ rights generally and (ii) general principles of equity.
2.4 Due Authorization; Valid Issuance. The Additional Note is duly authorized and,
when issued, sold and delivered in accordance with the terms of this Agreement, will be duly and
validly issued, free and clear of any Liens imposed by or through the Company.
2.5 No Conflict. The execution, delivery and performance of this Agreement (and the
Additional Note, in the case of the Company), and the consummation of the transactions contemplated
hereby and thereby, will not result in any violation of any provisions of any of the Company
Entities’ charter, bylaws or any other governing document or in a default under any provision of
any instrument or contract to which any of the Company Entities is a party or by which they or any
of their assets are bound, or in violation of any provision of any Governmental Requirement
applicable to any of the Company Entities or be in conflict with or constitute, with or without the
passage of time and giving of notice, either a default under any such provision, instrument or
contract or an event which results in the creation of any Lien upon any assets of any of the
Company Entities.
2.6 Additional Representation. The representations and warranties of the Company
Entities set forth in the Securities Purchase Agreement and in the other Transaction Documents are
true and correct in all material respects as of the date hereof as if made on the date hereof
(except that to the extent that any such representation or warranty relates to a particular date,
in which case, such representation or warranty is true and correct in all material respects as of
such particular date).
3. GLOBAL AMENDMENTS TO TRANSACTION DOCUMENTS; OTHER AGREEMENTS.
3.1 Amendments to Transaction Documents. Each of the Transaction Documents,
including, without limitation, the Securities Purchase Agreement, the First Note, the Warrant, the
Registration Rights Agreement, the Subsidiary Guarantee and the Security Agreement, is hereby
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amended so that (i) references to “Notes” therein shall be deemed to include the Additional Notes,
and (ii) references to “Transaction Documents” therein shall be deemed to include this Agreement
and the Additional Notes.
3.2 Filings and Disclosure Reports. The Company agrees with the Investor that the
Company will, (i) on or prior to 8:30 a.m. (eastern time) on the second Business Day following the
date hereof, issue a press release disclosing the material terms of this Agreement and the
Additional Note and the transactions contemplated hereby and thereby, and (ii) on or prior to 5:00
p.m. (eastern time) on the fourth Business Day following the date hereof, file with the Commission
a Current Report on Form 8-K disclosing the material terms of and including as exhibits this
Agreement and the Additional Note and the transactions contemplated hereby and thereby; provided,
however, that the Investor shall have a reasonable opportunity to review and comment on any such
press release or Form 8-K prior to the issuance or filing thereof; and provided, further, that if
the Company fails to issue a press release disclosing the material terms of this Agreement and the
Additional Note within the time frames described herein, the Investor may issue a press release
disclosing such information without any notice to or consent by the Company. Thereafter, the
Company shall timely file any filings and notices required by the Commission or applicable law with
respect to the transactions contemplated hereby.
3.3 Use of Proceeds. The Company shall use the proceeds from the sale of the
Additional Notes for general working capital purposes.
3.4 Indemnification of the Investor. The Company will indemnify and hold the Investor
and its directors, managers, officers, shareholders, members, partners, employees and agents (each,
an “Investor Party”) harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements,
court costs and reasonable attorneys’ fees and costs of investigation that any such Investor Party
may suffer or incur as a result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by any of the Company Entities in this Agreement or (b)
any action instituted against the Investor, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of the Investor, with respect to any of the
transactions contemplated by this Agreement or the Additional Note (unless such action is based
upon a breach of the Investor’s representation, warranties or covenants under this Agreement or any
agreements or understandings the Investor may have with any such stockholder or any violations by
the Investor of state or federal securities laws or any conduct by the Investor which constitutes
fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought
against any Investor Party in respect of which indemnity may be sought pursuant to this Agreement,
such Investor Party shall promptly notify the Company in writing, and the Company shall have the
right to assume the defense thereof with counsel of its own choosing. Any Investor Party shall
have the right to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of such Investor Party
except to the extent that (i) the employment thereof has been specifically authorized by the
Company in writing, (ii) the Company has failed after a reasonable period of time following such
Investor Party’s written request that it do so, to assume such defense and to employ counsel or
(iii) in such action there is, in the reasonable opinion of such separate counsel, a material
conflict on any material issue between the position of the Company and the position of such
Investor Party. The Company will not be liable to any Investor Party under this Agreement (i) for
any settlement by an Investor Party effected without the
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Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (ii) to
the extent, but only to the extent that a loss, claim, damage or liability is attributable to such
Investor Party’s wrongful actions or omissions, or gross negligence or to such Investor Party’s
breach of any of the representations, warranties, covenants or agreements made by such Investor in
this Agreement.
3.5 [Reserved.]
4. CONDITIONS TO SECOND CLOSING.
4.1 Conditions to the Investors’ Obligations at the Second Closing. The Investor’s
obligations to effect the Second Closing, including without limitation its obligation to purchase
the Additional Note at the Second Closing, are conditioned upon the fulfillment (or waiver by the
Investor in its sole and absolute discretion) of each of the following events as of the Second
Closing Date, and the Company shall use commercially reasonable efforts to cause each of such
conditions to be satisfied:
4.1.1
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the Company shall have delivered to the Investor written lock-up agreements of each the Key Employees listed on Schedule 4.2(f) to the Securities Purchase Agreement; | |
4.1.2
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there shall have occurred no material adverse change in the Company’s consolidated business or financial condition since the date of the Company’s most recent financial statements contained in the Disclosure Documents; | |
4.1.3
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there shall be no injunction, restraining order or decree of any nature of any court or Government Authority of competent jurisdiction that is in effect that restrains or prohibits the consummation of the transactions contemplated hereby and the Additional Note; | |
4.1.4
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the Company shall have delivered to the Investor an opinion of counsel for the Company, dated as of the Second Closing Date, in the form and substance reasonably satisfactory to the Investor; and | |
4.1.5
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the Company shall have paid the expenses described in Section 6.9 of this Agreement. |
4.2 Conditions to Company’s Obligations at the Second Closing. The Company’s
obligations to effect the Second Closing with the Investor are conditioned upon the fulfillment (or
waiver by the Company in its sole and absolute discretion) of each of the following events as of
the Second Closing Date:
4.2.1
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the representations and warranties of the Investor set forth in this Agreement shall be true and correct in all material respects as of such |
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| date as if made on such date (except that to the extent that any such representation or warranty relates to a particular date, such representation or warranty shall be true and correct in all material respects as of that date); and | ||
4.2.2
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there shall be no injunction, restraining order or decree of any nature of any court or Government Authority of competent jurisdiction that is in effect that restrains or prohibits the consummation of the transactions contemplated hereby and by the Additional Note. |
5 MISCELLANEOUS.
5.1 Survival; Severability. The representations, warranties, covenants and
indemnities made by the parties herein and in the Additional Notes shall survive the Second Closing
notwithstanding any due diligence investigation made by or on behalf of the party seeking to rely
thereon. In the event that any provision of this Agreement becomes or is declared by a court of
competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full
force and effect without said provision; provided that in such case the parties shall negotiate in
good faith to replace such provision with a new provision which is not illegal, unenforceable or
void, as long as such new provision does not materially change the economic benefits of this
Agreement to the parties.
5.2 No Reliance. Each party acknowledges that (i) it has such knowledge in business
and financial matters as to be fully capable of evaluating this Agreement, the Additional Note and
the transactions contemplated hereby and thereby, (ii) it is not relying on any advice or
representation of any other party in connection with entering into this Agreement, the Additional
Note or such transactions (other than the representations made in this Agreement), (iii) it has not
received from any other party any assurance or guarantee as to the merits (whether legal,
regulatory, tax, financial or otherwise) of entering into this Agreement or the Additional Note or
the performance of its obligations hereunder and thereunder, and (iv) it has consulted with its own
legal, regulatory, tax, business, investment, financial and accounting advisors to the extent that
it has deemed necessary, and has entered into this Agreement and the Additional Note based on its
own independent judgment and, if applicable, on the advice of such advisors, and not on any view
(whether written or oral) expressed by any other party.
5.3 Injunctive Relief. Each of the Company Entities and the Investor acknowledges and
agrees that a breach by it of its obligations hereunder will cause irreparable harm to the other
and that the remedy or remedies at law for any such breach will be inadequate and agrees, in the
event of any such breach, in addition to all other available remedies, the non-breaching party
shall be entitled to an injunction restraining any breach and requiring immediate and specific
performance of such obligations without the necessity of showing economic loss or the posting of
any bond.
5.4 Governing Law; Jurisdiction; Waiver of Jury Trial. (a) This Agreement shall be
governed by and construed under the laws of the State of New York applicable to contracts made and
to be performed entirely within the State of New York. Each party hereby irrevocably submits
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to the exclusive jurisdiction of the state and federal courts sitting in the City and County of New
York for the adjudication of any dispute hereunder or any other Transaction Document or in
connection herewith or therewith or with any transaction contemplated hereby or thereby, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding
is improper. Each party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy thereof to such party
at the address in effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law.
(b) EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES AND AGREES THAT ANY DISPUTE OR CONTROVERSY THAT
MAY ARISE UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS IS LIKELY TO INVOLVE COMPLICATED
AND DIFFICULT ISSUES AND, THEREFORE, EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS
AGREEMENT OR THE ADDITIONAL NOTE, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO
THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY UNDERSTANDS AND HAS
CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY,
AND (IV) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.4(b).
5.5 Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and permitted assigns
of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and permitted assigns any
rights, remedies, obligations or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement. An Investor may assign its rights and obligations hereunder
in connection with any private sale or transfer of the Additional Note or any other Securities, in
accordance with the terms hereof, the Additional Note and of the Securities Purchase Agreement, as
long as, as a condition precedent to such transfer, the transferee executes an acknowledgment
agreeing to be bound by the applicable provisions of this Agreement, in which case the term
“Investor” shall be deemed to refer to such transferee as though such transferee were an original
signatory hereto. No Company Entity may assign its rights or obligations under this Agreement.
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5.6 Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, and all of which together shall constitute one and the same
instrument. This Agreement may be executed and delivered by facsimile transmission.
5.7 Headings. The headings used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this Agreement.
5.8 Notices. Any notice, demand or request required or permitted to be given by the
Company Entities or the Investor pursuant to the terms of this Agreement shall be in writing and
shall be deemed delivered (i) when delivered personally or by verifiable facsimile transmission,
unless such delivery is made on a day that is not a Business Day, in which case such delivery will
be deemed to be made on the next succeeding Business Day, (ii) on the next Business Day after
timely delivery to an overnight courier and (iii) on the Business Day actually received if
deposited in the U.S. mail (certified or registered mail, return receipt requested, postage
prepaid), addressed as follows:
| If to the Company and/or any Company Entity: | ||
| Innuity, Inc. | ||
| 0000 000xx Xxxxxx XX | ||
| Xxxxxxx, Xxxxxxxxxx 00000 | ||
Attn:
|
Xxxx Xxxx | |
Tel:
|
000-000-0000 | |
Fax:
|
000-000-0000 | |
| with a copy (which shall not constitute notice) to: | ||
| DLA Piper US LLP | ||
| 000 Xxxxx Xxxxxx, Xxxxx 0000 | ||
| Xxxxxxx, Xxxxxxxxxx 00000 | ||
Attn:
|
Xxxxxxx Xxxxxxxxx | |
Tel:
|
000-000-0000 | |
Fax:
|
000-000-0000 | |
and if to the Investor, to such address for the Investor as shall appear on the signature page
hereof executed by the Investor, or as shall be designated by the Investor in writing to the
Company in accordance with this Section 5.8.
5.9 Expenses. The Company and the Investor shall pay all costs and expenses that it
incurs in connection with the negotiation, execution, delivery and performance of this Agreement or
the Additional Note, provided, however, that that the Company shall, at the Second Closing, pay to
Imperium Advisers, LLC (“Imperium”) an amount of $15,000 in immediately available funds as
reimbursement for its out-of-pocket expenses (including without limitation legal fees and expenses)
incurred or to be incurred by it in connection with its due diligence investigation of the Company
and the negotiation, preparation, execution, delivery and performance of this Agreement and the
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Additional Note. At the Second Closing, the amount due for such fees and expenses may be netted
out of the purchase price payable by the Investor for the Additional Note.
5.10 Entire Agreement; Amendments. This Agreement, the Additional Note and the other
Transaction Documents constitute the entire agreement between the parties with regard to the
subject matter hereof and thereof, superseding all prior agreements or understandings, whether
written or oral, between or among the parties. No amendment, modification or other change to this
Agreement or waiver of any agreement or other obligation of the parties under this Agreement may be
made or given unless such amendment, modification or waiver is set forth in writing and is signed
by the Company and (i) prior to the first date on which neither a First Note nor an Additional Note
is outstanding, by the holders of a majority of the aggregate principal of the First Note and the
Additional Note then outstanding and the holders of a majority of the aggregate number of the
Warrant Shares into which the Warrants then outstanding are exercisable (without regard to any
limitation on the exercise of the Warrants), and (ii) on and after the first date on which neither
a First Note or an Additional Note is outstanding, by the holders of a majority of the aggregate
number of the Warrant Shares into which the Warrants then outstanding are exercisable (without
regard to any limitation on the exercise of the Warrants). Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which given.
[Signature Pages to Follow]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first-above
written.
INNUITY, INC.
By: |
||
| Name: | ||
| Title: |
JADEON, INC.
By: |
||
| Name: | ||
| Title: |
XXXXX.XXX, INC.
By: |
||
| Name: | ||
| Title: |
IMPERIUM MASTER FUND, LTD.
| By: | Imperium Advisers, LLC | |||
| By: | ||||
| Name: | ||||
| Title: | ||||
Principal Amount of Note Purchased at Second Closing:
|
$ | 1,000,000 |
ADDRESS:
c/o Imperium Advisers, LLC
000 Xxxx 00xx Xxxxxx- 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
000 Xxxx 00xx Xxxxxx- 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
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