STANDBY EQUITY DISTRIBUTION AGREEMENT
THIS AGREEMENT ("Agreement") dated as of the 22nd day of
December 2008 (the "Execution Date") is between YA GLOBAL
INVESTMENTS, L.P., a Cayman Islands exempt limited partnership
(the "Investor"), and OMAGINE, INC., a corporation organized and
existing under the laws of the State of Delaware (the
"Company").
WHEREAS, the parties desire that, upon the terms and
subject to the conditions contained herein, the Company shall
issue and sell to the Investor, from time to time as provided
herein, and the Investor shall purchase from the Company up to
$5,000,000 of the Company's common stock, par value $0.001 per
share (the "Common Stock"); and
WHEREAS, such offers and sales of Common Stock by the
Company in exchange for the Commitment Amount will be made
subsequent to the Effective Date and will be made in reliance
upon the provisions of Regulation D ("Regulation D") of the
Securities Act of 1933, as amended, and the regulations
promulgated thereunder (the "Securities Act"), and or upon such
other exemption from the registration requirements of the
Securities Act as may be available with respect to any or all of
the investments to be made hereunder; and
WHEREAS, any resales of such Common Stock by the Investor
will be made solely pursuant to the Registration Statement.
NOW, THEREFORE, the parties hereto agree as follows:
Article I. Certain Definitions
Section 1.01 "Advance" shall mean the portion of the Commitment
Amount requested by the Company in an Advance Notice.
Section 1.02 "Advance Date" shall mean the first (1st) Trading
Day after expiration of the applicable Pricing Period for each
Advance.
Section 1.03 "Advance Notice" shall mean a written notice in
the form of Exhibit A attached hereto to the Investor executed
by an officer of the Company and setting forth the Advance
amount that the Company requests from the Investor.
Section 1.04 "Advance Notice Date" shall mean each date the
Company delivers (in accordance with Section 2.02(b) of this
Agreement) to the Investor an Advance Notice requiring the
Investor to purchase shares of Common Stock from the Company
subject to the terms of this Agreement. No Advance Notice Date
shall be less than five (5) Trading Days after the delivery date
of the prior Advance Notice Date.
Section 1.05 "Closing" shall mean any one of the closings of a
purchase and sale of Common Stock wherein the sale of Common
Stock and the payment of the relevant Purchase Price is
completed pursuant to this Agreement Section 2.03.
Section 1.06 "Commitment Amount" shall mean the aggregate
amount of up to $5,000,000 which the Investor has agreed to
provide to the Company in exchange for the purchase by the
Investor of the Company's Common Stock pursuant to the terms and
conditions of this Agreement.
Section 1.07 "Commitment Period" shall mean the period
commencing on the Effective Date, and expiring upon the
termination of this Agreement in accordance with Section 10.02
hereof Section 10.02.
Section 1.08 "Common Stock" shall have the meaning set forth in
the recitals of this Agreement.
Section 1.09 "Damages" shall mean any loss, claim, damage,
liability, costs and expenses (including, without limitation,
reasonable attorney's fees and disbursements and costs and
expenses of expert witnesses and investigation).
Section 1.10 "Effective Date" shall mean the date on which the
SEC first declares effective the Registration Statement Section
7.01(a).
Section 1.11 "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
Section 1.12 "Investor's Shares" shall have the meaning set
forth in Section 12.04(b) of this Agreement.
Section 1.13 "Material Adverse Effect" shall mean any
condition, circumstance, or situation that may result in, or
reasonably be expected to result in (i) a material adverse
effect on the legality, validity or enforceability of this
Agreement or the transactions contemplated herein, (ii) a
material adverse effect on the results of operations, assets,
business or condition (financial or otherwise) of the Company,
taken as a whole, or (iii) a material adverse effect on the
Company's ability to perform in any material respect on a timely
basis its obligations under this Agreement.
Section 1.14 "Market Price" shall mean the lowest daily VWAP of
the Common Stock during a Pricing Period.
Section 1.15 "Maximum Advance Amount" shall be $200,000 per
Advance Notice.
Section 1.16 "Person" shall mean an individual, a corporation, a
partnership, an association, a trust or other entity or
organization, including a government or political subdivision or
an agency or instrumentality thereof.
Section 1.17 "Pricing Period" shall mean the five (5)
consecutive Trading Days commencing on the Trading Day
immediately following an Advance Notice Date.
Section 1.18 "Principal Market" shall mean the Nasdaq Global
Select Market, the Nasdaq Global Market, the Nasdaq Capital
Market, the American Stock Exchange, the OTC Bulletin Board or
the New York Stock Exchange, whichever is at the time the
principal trading exchange or market for the Common Stock.
Section 1.19 "Purchase Price" shall be equal to ninety-five
percent (95%) of the Market Price during the relevant Pricing
Period.
Section 1.20 "Registrable Securities" shall mean the Shares to
be issued hereunder (i) in respect of which the Registration
Statement has not been declared effective by the SEC, (ii) which
have not been sold under circumstances meeting all of the
applicable conditions of Rule 144 (or any similar provision then
in force) under the Securities Act ("Rule 144") or (iii) which
have not been otherwise transferred to a holder who may trade
such shares without restriction under the Securities Act, and
the Company has delivered a new certificate or other evidence of
ownership for such securities not bearing a restrictive legend.
Section 1.21 "Registration Rights Agreement" shall mean the
Registration Rights Agreement dated the date hereof, regarding
the filing of the Registration Statement for the resale of the
Registrable Securities, entered into between the Company and the
Investor.
Section 1.22 "Registration Statement" shall mean a registration
statement on Form S-3 (if use of such form is then available to
the Company pursuant to the rules of the SEC and, if not, Form
S-1 or on such other form promulgated by the SEC for which the
Company then qualifies and which counsel for the Company shall
deem appropriate, and which form shall be available for the
resale of the Registrable Securities to be registered thereunder
in accordance with the provisions of this Agreement and the
Registration Rights Agreement, and in accordance with the
intended method of distribution of such securities), for the
registration of the resale by the Investor of the Registrable
Securities under the Securities Act.
Section 1.23 "Regulation D" shall have the meaning set forth in
the recitals of this Agreement.
Section 1.24 "SEC" means the United States Securities &
Exchange Commission.
Section 1.25 "Securities Act" shall have the meaning set forth
in the recitals of this Agreement.
Section 1.26 "Shares" shall mean the Investor's Shares and the
shares of Common Stock to be issued to the Investor by the
Company from time to time hereunder pursuant to Advances.
Section 1.27 "Trading Day" shall mean any day during which the
New York Stock Exchange shall be open for business.
Section 1.28 "VWAP" means, as of any date, the daily dollar
volume-weighted average price for such security on such date as
reported by Bloomberg, LP through its "Historical Price Table
Screen (HP)" with Market: Weighted Ave function selected, or, if
no dollar volume-weighted average price is reported for such
security on such date, then the average of the highest closing
bid price and the lowest closing ask price of any of the market
makers for such security on such date.
Article II. Advances
Section 2.01 Advances. Subject to the terms and conditions of
this Agreement, the Company, at its sole and exclusive option
may, by the delivery in the Company's sole discretion of Advance
Notices, issue and sell to the Investor and the Investor shall
purchase from the Company, shares of the Company's Common Stock.
Section 2.02 Mechanics.
(a) Advance Notice. At any time and from time to time during
the Commitment Period, the Company may, subject to the
conditions set forth in this Agreement, require the Investor to
purchase shares of Common Stock by delivering an Advance Notice
to the Investor Section 7.01; provided however, that (i) the
amount for each Advance as designated by the Company in the
applicable Advance Notice shall not be more than the Maximum
Advance Amount, (ii) the aggregate amount of the Advances
pursuant to this Agreement shall not exceed the Commitment
Amount, and (iii) in no event shall the number of shares of
Common Stock issuable to the Investor pursuant to an Advance
cause the aggregate number of shares of Common Stock
beneficially owned (as calculated pursuant to Section 13(d) of
the Exchange Act) by the Investor and its affiliates to exceed
9.99% of the then outstanding Common Stock (the "Ownership
Limitation"). The Company acknowledges that the Investor may
sell shares of the Company's Common Stock corresponding with a
particular Advance Notice after the Advance Notice is received
by the Investor. No Advance Notice Date shall be less than five
(5) Trading Days after the delivery date of the prior Advance
Notice Date.
(b) Date of Delivery of Advance Notice. Advance Notices shall
be delivered in accordance with the instructions set forth on
the bottom of Exhibit A. An Advance Notice shall be deemed
delivered on (i) the Trading Day it is received by facsimile or
otherwise by the Investor if such notice is received prior to
5:00 pm Eastern Time, or (ii) the immediately succeeding Trading
Day if it is received by facsimile or otherwise after 5:00 pm
not a Trading Day. No Advance Notice may be deemed delivered on
a day that is not a Trading Day.
(c) Ownership Limitation. In connection with each Advance
Notice delivered by the Company, any portion of an Advance that
would cause the Investor to exceed the Ownership Limitation
shall automatically be withdrawn.
Section 2.03 Closings. Each Closing shall take place on each
applicable Advance Date in accordance with the procedures set
forth below. In connection with each Closing the Company and
the Investor shall fulfill each of its obligations as set forth
below:
(a) Prior to two o'clock pm, EST (1400 hours) on each Advance
Date, the Investor shall deliver to the Company a written
document (each a "Settlement Document") setting forth the
Ownership Limitation, the amount of the Advance (taking into
account any adjustments pursuant thereto Section 2.02(c)), the
Purchase Price, the number of shares of Common Stock to be
issued and subscribed for (which in no event will be greater
than the Ownership Limitation), and a report by Bloomberg, LP
indicating the VWAP for each of the Trading Days during the
relevant Pricing Period, in each case taking into account the
terms and conditions of this Agreement.
(b) Upon receipt of the Settlement Document with respect to each
Advance, the Company shall (i) immediately review and either
approve such Settlement Document or provide any corrections to
the Settlement Document (a "Corrected Settlement Document") and
return it to the Investor on such Advance Date and (ii) along
with the return of each Settlement Document or Corrected
Settlement Document confirm that it has all the legal rights and
power necessary for the issuance of the shares of Common Stock
applicable to such Advance and that the sale and issuance of
such shares of Common Stock shall be legally permitted by all
laws and regulations to which the Company is subject or that the
Company shall have the availability of exemptions therefrom.
(c) Upon receipt of any Corrected Settlement Document pursuant
to Section 2.03(b)the above, the Investor shall immediately
review and either approve such Corrected Settlement Document or
if the Investor feels additional corrections are necessary, such
Corrected Settlement Document will be promptly submitted to an
independent, reputable appraiser jointly selected by the Company
and the Investor. Such appraiser will review and if necessary,
revise, such Corrected Settlement Document. The determination
of such appraiser shall be deemed binding upon all parties
absent manifest error and the fees and expenses of such
appraiser shall be borne equally by both parties.
(d) Immediately after a Settlement Document or Corrected
Settlement Document with respect to an Advance is deemed final,
(i) the Company shall deliver to the Investor such number of
shares of Common Stock registered in the name of the Investor as
shall equal (x) the amount of the Advance divided by (y) the
Purchase Price (as each of (x) and (y) are specified in such
Settlement Document or Corrected Settlement Document) and (ii)
upon receipt of such shares, the Investor shall deliver to the
Company the amount of the Advance specified in such Settlement
Document or Corrected Settlement Document by wire transfer of
immediately available funds. The certificates evidencing such
shares of Common Stock delivered pursuant hereto shall be free
of restrictive legends.
(e) On or prior to the Advance Date, each of the Company and the
Investor shall deliver to the other all documents, instruments
and writings required to be delivered by either of them pursuant
to this Agreement in order to implement and effect the
transactions contemplated herein.
(f) Each of the Company and the Investor acknowledge and agree
that with respect to each Settlement Document that "time is of
the essence" with respect to a Closing occurring on, or as close
as possible to the, the relevant Advance Date, and with respect
to each Corrected Settlement Document that "time is of the
essence" with respect to a Closing occurring immediately after
either (i) approval of such Corrected Settlement Document by the
Investor, or (ii) receipt by the parties of the appraiser's
determination.
Section 2.04 Hardship. In the event the Investor sells shares
of the Company's Common Stock after receipt of an Advance Notice
and the Company fails to deliver to the Investor at the Closing
the shares of Common Stock corresponding to the applicable
Settlement Document or Corrected Settlement Document pursuant to
Section 2.03, the Company acknowledges that the Investor shall
suffer financial hardship and therefore shall be liable for any
and all losses, commissions, fees, or financial hardship caused
Article III. Representations and Warranties of Investor
Investor hereby represents and warrants to, and agrees
with, the Company that the following are true and correct as of
the date hereof and will be true and correct as of each Advance
Date:
Section 3.01 Organization and Authorization. The Investor is
duly incorporated or organized and validly existing in the
jurisdiction of its incorporation or organization and has all
requisite power and authority to purchase and hold the Shares.
The decision to invest and the execution and delivery of this
Agreement by Yorkville Advisors, LLC on behalf of the Investor,
the performance by the Investor of its obligations hereunder and
the consummation by the Investor of the transactions
contemplated hereby have been duly authorized by the Investor
and requires no other proceedings on the part of the Investor.
The undersigned Yorkville Advisors, LLC has the right, power and
authority to execute and deliver this Agreement and all other
instruments (including, without limitation, the Registration
Rights Agreement), on behalf of the Investor. This Agreement
has been duly executed and delivered by Yorkville Advisors, LLC
on behalf of the Investor and, assuming the execution and
delivery hereof and acceptance thereof by the Company, will
constitute the legal, valid and binding obligations of the
Investor, enforceable against the Investor in accordance with
its terms.
Section 3.02 Evaluation of Risks. The Investor has such
knowledge and experience in financial, tax and business matters
as to be capable of evaluating the merits and risks of, and
bearing the economic risks entailed by, an investment in the
Company and of protecting its interests in connection with this
transaction. It recognizes that its investment in the Company
involves a high degree of risk.
Section 3.03 No Legal Advice From the Company. The Investor
acknowledges that it had the opportunity to review this
Agreement and the transactions contemplated by this Agreement
with its own legal counsel and investment and tax advisors. The
Investor is relying solely on such counsel and advisors and not
on any statements or representations of the Company or any of
its representatives or agents for legal, tax or investment
advice with respect to this investment, the transactions
contemplated by this Agreement or the securities laws of any
jurisdiction.
Section 3.04 Investment Purpose. The Shares are being purchased
by the Investor for its own account, and for investment
purposes. The Investor agrees not to assign or in any way
transfer the Investor's rights to the Shares or any interest
therein and acknowledges that the Company will not recognize any
purported assignment or transfer except in accordance with
applicable Federal and state securities laws. No other Person
has or will have a direct or indirect beneficial interest in the
Shares. The Investor agrees not to sell, hypothecate or
otherwise transfer the Shares unless the Shares are registered
under Federal and applicable state securities laws or unless, in
the opinion of counsel satisfactory to the Company, an exemption
from such registration requirement is available.
Section 3.05 Accredited Investor. The Investor is an
"Accredited Investor" as that term is defined in Rule 501(a)(3)
of Regulation D of the Securities Act.
Section 3.06 Information. The Investor and its advisors (and
its counsel), if any, have been furnished with all materials
relating to the business, finances and operations of the Company
and information it deemed material to making an informed
investment decision. The Investor and its advisors, if any,
have been afforded the opportunity to ask questions of the
Company and its management. Neither such inquiries nor any
other due diligence investigations conducted by the Investor or
its advisors, if any, or its representatives shall modify, amend
or affect the Investor's right to rely on the Company's
representations and warranties contained in this Agreement. The
Investor understands that its investment involves a high degree
of risk. The Investor is in a position regarding the Company,
which, based upon employment, family relationship or economic
bargaining power, enabled and enables such Investor to obtain
information from the Company in order to evaluate the merits and
risks of this investment. } The Investor has sought such
accounting, legal and tax advice, as it has considered necessary
to make an informed investment decision with respect to the
transactions contemplated by this Agreement.
Section 3.07 Receipt of Documents. The Investor and its counsel
have received and read in their entirety: (i) this Agreement
and Exhibit A annexed hereto; (ii) all due diligence and other
information necessary to verify the accuracy and completeness of
the representations, warranties and covenants of the Company
contained in this Agreement; (iii) the Company's reports on Form
10-KSB for the year ended December 31, 2007 and on Form 10-Q for
the period ended September 30, 2008; and (iv) answers to all
questions the Investor submitted to the Company regarding the
Company; and the Investor has relied on the information
contained therein and on its own due diligence investigation and
has not been furnished any other documents, literature,
memorandum or prospectus.
Section 3.08 No General Solicitation. Neither the Company, nor
any of its affiliates, nor any Person acting on its or their
behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the
Shares.
Section 3.09 Not an Affiliate. The Investor is not an officer,
director or a Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under
common control with the Company or any "Affiliate" (as that term
is defined in Rule 405 of the Securities Act) of the Company.
Section 3.10 Trading Activities. The Investor's trading
activities with respect to the Company's Common Stock is and
shall be in compliance with all applicable federal and state
securities laws, rules and regulations and the rules and
regulations of the Principal Market on which the Company's
Common Stock is listed or traded. Neither the Investor nor any
of its affiliates has an open short position in the Common Stock
of the Company and the Investor agrees that it shall not, and
that it will cause its affiliates not to, engage in any short
sales of or hedging transactions with respect to the Common
Stock, provided that the Company acknowledges and agrees that
upon receipt of an Advance Notice the Investor has the right
during the applicable Pricing Period to sell the Shares to be
issued to the Investor pursuant to such Advance Notice.
Article IV. Representations and Warranties of the Company
Except as stated below or in the SEC Documents (as defined
herein), the Company hereby represents and warrants to, and
agrees with, the Investor that the following are true and
correct as of the date hereof and will be true and correct as of
each Advance Date:
Section 4.01 Organization and Qualification. The Company is
duly incorporated and validly existing in the jurisdiction of
its incorporation and has all requisite corporate power to own
its properties and to carry on its business as now being
conducted. Each of the Company and its subsidiary is duly
qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the
business conducted by it makes such qualification necessary,
except to the extent that the failure to be so qualified or to
be in good standing would not have a Material Adverse Effect on
the Company and its subsidiary taken as a whole.
Section 4.02 Authorization, Enforcement, Compliance with Other
Instruments. (i) The Company has the requisite corporate power
and authority to enter into and perform this Agreement, the
Registration Rights Agreement and any related agreements, in
accordance with the terms hereof and thereof, (ii) the execution
and delivery of this Agreement, the Registration Rights
Agreement and any related agreements by the Company and the
consummation by it of the transactions contemplated hereby and
thereby, have been duly authorized by the Company's Board of
Directors and no further consent or authorization is required by
the Company, its Board of Directors or its stockholders, (iii)
this Agreement, the Registration Rights Agreement and any
related agreements have been duly executed and delivered by the
Company, (iv) this Agreement, the Registration Rights Agreement
and assuming the execution and delivery thereof and acceptance
by the Investor constitute together with any related agreements
the valid and binding obligations of the Company enforceable
against the Company in accordance with their terms, except as
such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and
remedies.
Section 4.03 Capitalization. The authorized capital stock of
the Company consists of 75,000,000 shares of Common Stock and
850,000shares of Preferred Stock, $0.001 par value per share
("Preferred Stock"), of which 45,510,027 shares of Common Stock
and zero shares of Preferred Stock are issued and outstanding as
of the Execution Date. All of such outstanding shares have been
validly issued and are fully paid and nonassessable. Except as
disclosed in the SEC Documents, no shares of Common Stock are
subject to preemptive rights or any other similar rights or any
liens or encumbrances suffered or permitted by the Company.
Except as disclosed in the SEC Documents, as of the date hereof,
(i) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any
shares of capital stock of the Company or its subsidiary, or
contracts, commitments, understandings or arrangements by which
the Company or its subsidiary is or may become bound to issue
additional shares of capital stock of the Company or its
subsidiary or options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital
stock of the Company or its subsidiary, (ii) there are no
outstanding debt securities (iii) there are no outstanding
registration statements other than on Form S-8 and (iv) there
are no agreements or arrangements under which the Company or its
subsidiary is obligated to register the sale of any of their
securities under the Securities Act (except pursuant to the
Registration Rights Agreement). There are no securities or
instruments containing anti-dilution or similar provisions that
will be triggered by this Agreement or any related agreement or
the consummation of the transactions described herein or
therein. The Company has furnished to the Investor true and
correct copies of the Company's Certificate of Incorporation, as
amended and as in effect on the date hereof (the "Certificate of
Incorporation"), and the Company's By-laws, as in effect on the
date hereof (the "By-laws"), and the terms of all securities
convertible into or exercisable for Common Stock and the
material rights of the holders thereof in respect thereto.
Section 4.04 No Conflict. The execution, delivery and
performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated
hereby will not (i) result in a violation of the Certificate of
Incorporation, any certificate of designation of any outstanding
series of preferred stock of the Company or the By-laws or (ii)
conflict with or constitute a default (or an event which with
notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or its subsidiary is a party, or
result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws
and regulations and the rules and regulations of the Principal
Market on which the Common Stock is quoted) applicable to the
Company or its subsidiary or by which any material property or
asset of the Company or its subsidiary is bound or affected and
which would cause a Material Adverse Effect. Except as
disclosed in the SEC Documents, neither the Company nor its
subsidiary is in violation of any term of or in default under
its Articles of Incorporation or By-laws, or any material
contract, agreement, mortgage, indebtedness, indenture,
instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiary. The
business of the Company and its subsidiary is not being
conducted in violation of any material law, ordinance,
regulation of any governmental entity. Except as specifically
contemplated by this Agreement and as required under the
Securities Act and any applicable state securities laws, the
Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or
perform any of its obligations under or as contemplated by this
Agreement or the Registration Rights Agreement in accordance
with the terms hereof or thereof. All consents, authorizations,
orders, filings and registrations, other than the filing of the
Registration Statement, which the Company is required to obtain
pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof. The Company and its
subsidiary are unaware of any fact or circumstance which might
give rise to any of the foregoing.
Section 4.05 SEC Documents; Financial Statements. The Company
has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC under the
Securities Exchange Act for the two years preceding the date
hereof (or such shorter period as the Company was required by
law or regulation to file such material) (all of the foregoing
filed prior to the date hereof or amended after the date hereof
and all exhibits included therein and financial statements and
schedules thereto and documents incorporated by reference
therein, being hereinafter referred to as the "SEC Documents")
on timely basis or has received a valid extension of such time
of filing and has filed any such SEC Document prior to the
expiration of any such extension. The Company has delivered to
the Investor or its representative, or made available through
the SEC's website at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇, true and complete
copies of the SEC Documents. As of their respective dates, the
SEC Documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations
of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were
filed with the SEC, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial
statements of the Company included in the SEC Documents complied
as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC
with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting
principles in the United States of America ("GAAP"),
consistently applied, during the periods involved (except (i) as
may be otherwise indicated in such financial statements or the
notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be
condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of
the dates thereof and the results of its operations and cash
flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No
other information provided by or on behalf of the Company to the
Investor which is not included in the SEC Documents contains any
untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements therein,
in the light of the circumstance under which they are or were
made, not misleading.
Section 4.06 10b-5. The SEC Documents do not include any untrue
statements of material fact, nor do they omit to state any
material fact required to be stated therein necessary to make
the statements made, in light of the circumstances under which
they were made, not misleading.
Section 4.07 No Default. Except as disclosed in the SEC
Documents, the Company is not in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust or
other material instrument or agreement to which it is a party or
by which it or its property is bound and neither the execution,
nor the delivery by the Company, nor the performance by the
Company of its obligations under this Agreement or any of the
exhibits or attachments hereto will conflict with or result in
the breach or violation of any of the terms or provisions of, or
constitute a default or result in the creation or imposition of
any lien or charge on any assets or properties of the Company
under its Certificate of Incorporation, By-Laws, any material
indenture, mortgage, deed of trust or other material agreement
applicable to the Company or instrument to which the Company is
a party or by which it is bound, or any statute, or any decree,
judgment, order, rule or regulation of any court, governmental
agency or body having jurisdiction over the Company or its
properties, in each case which default, lien or charge is likely
to cause a Material Adverse Effect.
Section 4.08 Intellectual Property Rights. The Company and its
subsidiary own or possess adequate rights or licenses to use all
material trademarks, trade names, service marks, service ▇▇▇▇
registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct
their respective businesses as now conducted. The Company and
its subsidiary do not have any knowledge of any infringement by
the Company or its subsidiary of trademark, trade name rights,
patents, patent rights, copyrights, inventions, licenses,
service names, service marks, service ▇▇▇▇ registrations, trade
secret or other similar rights of others, and, to the knowledge
of the Company, there is no claim, action or proceeding being
made or brought against, or to the Company's knowledge, being
threatened against, the Company or its subsidiary regarding
trademark, trade name, patents, patent rights, invention,
copyright, license, service names, service marks, service ▇▇▇▇
registrations, trade secret or other infringement; and the
Company and its subsidiary are unaware of any fact or
circumstance which might give rise to any of the foregoing.
Section 4.09 Employee Relations. Neither the Company nor its
subsidiary is involved in any labor dispute nor, to the
knowledge of the Company or its subsidiary, is any such dispute
threatened. None of the Company's or its subsidiary's employees
is a member of a union and the Company and its subsidiary
believe that their relations with their employees are good.
Section 4.10 Environmental Laws. The Company and its subsidiary
are (i) in compliance with any and all applicable material
foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all
permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval.
Section 4.11 Title. Except as set forth in the SEC Documents,
the Company has good and marketable title to its properties and
material assets owned by it, free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest
other than such as are not material to the business of the
Company. Except as set forth in the SEC Documents, any real
property and facilities held under lease by the Company or its
subsidiary are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its subsidiary.
Section 4.12 Insurance. The Company and its subsidiary are
insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as management
of the Company believes to be prudent and customary in the
businesses in which the Company and its subsidiary are engaged.
Neither the Company nor its subsidiary has been refused any
insurance coverage sought or applied for and neither the Company
nor its subsidiary has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage at a cost that
would not have a Material Adverse Effect from similar insurers
as may be necessary to continue its business.
Section 4.13 Regulatory Permits. The Company and its subsidiary
possess all material certificates, authorizations and permits
issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct their respective businesses,
and neither the Company nor its subsidiary has received any
notice of proceedings relating to the revocation or modification
of any such certificate, authorization or permit.
Section 4.14 Internal Accounting Controls. The Company and its
subsidiary maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general
or specific authorization and (iv) the recorded amounts for
assets is compared with the value of such assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
Section 4.15 No Material Adverse Breaches. Except as set forth
in the SEC Documents, neither the Company nor its subsidiary is
subject to any charter, corporate or other legal restriction, or
any judgment, decree, order, rule or regulation which in the
judgment of the Company's officers has or is expected in the
future to have a Material Adverse Effect on the business,
properties, operations, financial condition, results of
operations or prospects of the Company or its subsidiaries.
Except as set forth in the SEC Documents, neither the Company
nor its subsidiary is in breach of any contract or agreement
which breach, in the judgment of the Company's officers, has or
is expected to have a Material Adverse Effect on the business,
properties, operations, financial condition, results of
operations or prospects of the Company or its subsidiary.
Section 4.16 Absence of Litigation. Except as set forth in the
SEC Documents, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government
agency, self-regulatory organization or body pending against or
affecting the Company, the Common Stock or the Company's
subsidiary, wherein an unfavorable decision, ruling or finding
would (i) have a Material Adverse Effect on the transactions
contemplated hereby (ii) adversely affect the validity or
enforceability of, or the authority or ability of the Company to
perform its obligations under, this Agreement or any of the
documents contemplated herein, or (iii) except as expressly
disclosed in the SEC Documents, have a Material Adverse Effect.
Section 4.17 Subsidiaries. Except as disclosed in the SEC
Documents, the Company does not presently own or control,
directly or indirectly, any interest in any other corporation,
partnership, association or other business entity.
Section 4.18 Tax Status. Except as disclosed in the SEC
Documents, the Company and its subsidiary has made or filed all
federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject
and (unless and only to the extent that the Company and its
subsidiary has set aside on its books provisions reasonably
adequate for the payment of all unpaid and unreported taxes) has
paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on
such returns, reports and declarations, except those being
contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for the periods
to which such returns, reports or declarations apply. There are
no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
Section 4.19 Certain Transactions. Except as set forth in the
SEC Documents none of the officers, directors, or employees of
the Company is presently a party to any transaction with the
Company (other than for services as employees, officers and
directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or
otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any
officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner.
Section 4.20 Fees and Rights of First Refusal. The Company is
not obligated to offer the Shares on a right of first refusal
basis or otherwise to any third parties including, but not
limited to, current or former shareholders of the Company,
underwriters, brokers, agents or other third parties.
Section 4.21 Use of Proceeds. The Company shall use the net
proceeds from the sale of the Shares for working capital and
other general corporate purposes.
Section 4.22 Further Representation and Warranties of the
Company. For so long as any of the Shares are owned by the
Investor, the Company acknowledges, represents, warrants and
agrees that it will use its best efforts to maintain the listing
of its Common Stock on a Principal Market.
Section 4.23 Opinion of Counsel at Closing. Investor shall
receive, on the date hereof, an opinion letter from counsel to
the Company in regards to this transaction, in an agreed upon
form.
Section 4.24 Dilution. The Company is aware and acknowledges
that issuance of the Shares could cause dilution to existing
shareholders and could significantly increase the outstanding
number of shares of Common Stock.
Section 4.25 Acknowledgment Regarding Investor's Purchase of
Shares. The Company acknowledges and agrees that the Investor is
acting solely in the capacity of an arm's length investor with
respect to this Agreement and the transactions contemplated
hereunder. The Company further acknowledges that the Investor is
not acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to this Agreement and
the transactions contemplated hereunder and any advice given by
the Investor or any of its representatives or agents in
connection with this Agreement and the transactions contemplated
hereunder is merely incidental to the Investor's purchase of the
Shares. The Company is aware and acknowledges that it may not
be able to request Advances under this Agreement if it cannot
obtain an effective Registration Statement or if issuances of
Common Stock pursuant to any Advances would violate any rules of
the Principal Market. The Company further is aware and
acknowledges that the Investor's Shares and any fees paid
pursuant to Section 12.04this Agreement shall be earned on the
date hereof and not refundable or returnable under any
circumstances.
Article V. Indemnification
The Investor and the Company represent to the other the
following with respect to itself:
Section 5.01 Indemnification.
(a) In consideration of the Investor's execution and delivery of
this Agreement, and in addition to all of the Company's other
obligations under this Agreement, the Company shall defend,
protect, indemnify and hold harmless the Investor, and all of
its officers, directors, partners, employees and agents
(including, without limitation, those retained in connection
with the transactions contemplated by this Agreement)
(collectively, the "Investor Indemnitees") from and against any
and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Investor
Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "Indemnified Liabilities"), incurred by
the Investor Indemnitees or any of them as a result of, or
arising out of, or relating to (a) any misrepresentation or
breach of any representation or warranty made by the Company in
this Agreement or the Registration Rights Agreement or any other
certificate, instrument or document contemplated hereby or
thereby, (b) any breach of any covenant, agreement or obligation
of the Company contained in this Agreement or the Registration
Rights Agreement or any other certificate, instrument or
document contemplated hereby or thereby, or (c) any cause of
action, suit or claim brought or made against such Investor
Indemnitee not arising out of any action or inaction of an
Investor Indemnitee, and arising out of or resulting from the
execution, delivery, performance or enforcement of this
Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Investor Indemnitees. To
the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the
Indemnified Liabilities, which is permissible under applicable
law.
(b) In consideration of the Company's execution and delivery of
this Agreement, and in addition to all of the Investor's other
obligations under this Agreement, the Investor shall defend,
protect, indemnify and hold harmless the Company and all of its
officers, directors, shareholders, employees and agents
(including, without limitation, those retained in connection
with the transactions contemplated by this Agreement)
(collectively, the "Company Indemnitees") from and against any
and all Indemnified Liabilities incurred by the Company
Indemnitees or any of them as a result of, or arising out of, or
relating to (a) any misrepresentation or breach of any
representation or warranty made by the Investor in this
Agreement, the Registration Rights Agreement, or any instrument
or document contemplated hereby or thereby executed by the
Investor, (b) any breach of any covenant, agreement or
obligation of the Investor(s) contained in this Agreement, the
Registration Rights Agreement or any other certificate,
instrument or document contemplated hereby or thereby executed
by the Investor, or (c) any cause of action, suit or claim
brought or made against such Company Indemnitee based on
misrepresentations or due to a breach by the Investor and
arising out of or resulting from the execution, delivery,
performance or enforcement of this Agreement or any other
instrument, document or agreement executed pursuant hereto by
any of the Company Indemnitees. To the extent that the
foregoing undertaking by the Investor may be unenforceable for
any reason, the Investor shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified
Liabilities, which is permissible under applicable law.
(c) The obligations of the parties under this Section 5.01 to
indemnify or make contributions to the payment and satisfaction
of each of the Indemnified Liabilities Section 5.01shall survive
the termination of this Agreement.
Article VI.
Covenants of the Company
Section 6.01 Registration Rights. The Company shall use its
best efforts to cause the Registration Rights Agreement to
remain in full force and effect and the Company shall comply in
all material respects with the terms thereof.
Section 6.02 Listing of Common Stock. The Company shall use its
best efforts to at all times maintain the Common Stock's
authorization for quotation or listing on a Principal Market.
Section 6.03 Exchange Act Registration. The Company will use
its best efforts to cause its Common Stock to continue to be
registered under Section 12(g) of the Exchange Act, will file in
a timely manner all reports and other documents required of it
as a reporting company under the Exchange Act and will not take
any action or file any document (whether or not permitted by
Exchange Act or the rules thereunder) to terminate or suspend
such registration or to terminate or suspend its reporting and
filing obligations under said Exchange Act.
Section 6.04 Transfer Agent Instructions. On the Effective Date
the Company shall deliver instructions to its transfer agent to
issue shares of Common Stock to the Investor free of restrictive
legends on or before the date of each Closing.
Section 6.05 Corporate Existence. The Company will take all
steps necessary to preserve and continue the corporate existence
of the Company.
Section 6.06 Notice of Certain Events Affecting Registration;
Suspension of Right to Request an Advance. The Company will
immediately notify the Investor upon its becoming aware of the
occurrence of any of the following events in respect of the
Registration Statement or related prospectus relating to an
offering of Registrable Securities: (i) receipt from the SEC or
any other Federal or state governmental authority during the
period of effectiveness of the Registration Statement of any
request for additional information or for amendments or
supplements to the registration statement or related prospectus;
(ii) the issuance by the SEC or any other Federal or state
governmental authority of any stop order suspending the
effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose; (iii) receipt of any
notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the
happening of any event that makes any statement made in the
Registration Statement or related prospectus of any document
incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of
any changes in the Registration Statement, related prospectus or
documents so that, in the case of the Registration Statement, it
will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and
that in the case of the related prospectus, it will not contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading; and (v) the Company's
reasonable determination that a post-effective amendment to the
Registration Statement would be appropriate; and the Company
will promptly make available to the Investor any such supplement
or amendment to the related prospectus. The Company shall not
deliver to the Investor any Advance Notice during the
continuation of any of the foregoing events.
Section 6.07 Consolidation; Merger. The Company shall not, at
any time after the date hereof, effect any merger or
consolidation of the Company with or into another Person, or
transfer all or substantially all the assets of the Company to
another Person (each, a "Consolidation Event") unless the Person
surviving such merger or consolidation (if not the Company) or
such acquiring entity assumes by written instrument the
obligations of the Company under this Agreement.
Section 6.08 Issuance of the Company's Common Stock. The sale
of the Shares shall be made in accordance with the provisions
and requirements of Regulation D and any applicable state
securities law.
Section 6.09 Review of Public Disclosures. All SEC filings
(including, without limitation, all filings required under the
Exchange Act, which include Forms 10-Q and 10-QSB, 10-K and 10K-
SB, 8-K, etc) and other public disclosures made by the Company,
including, without limitation, all press releases, investor
relations materials, and scripts of analysts meetings and calls,
shall be reviewed and approved for release by the Company's
Chief Executive Officer and, if containing financial
information, the Company's independent certified public
accountants.
Section 6.10 Market Activities. The Company will not, directly
or indirectly, (i) take any action designed to cause or result
in, or that constitutes or might reasonably be expected to
constitute, the stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of
the Common Stock or (ii) sell, bid for or purchase the Common
Stock during the Commitment Period, or (iii) pay anyone any
compensation for soliciting purchases of the Common Stock.
Section 6.11 Opinion of Counsel Concerning Resales. Provided
that the Investor's resale of Common Stock received pursuant to
this Agreement may be freely sold by the Investor either
pursuant to an effective Registration Statement or in accordance
with Rule 144, the Company shall obtain for the Investor, at the
Company's expense, any and all opinions of counsel which may be
required by the Company's transfer agent to issue such shares
free of restrictive legends, or to remove legends from such
shares.
Section 6.12 Subsequent Officer/Director Registration
Statements. Commencing on the Execution Date and expiring upon
termination of this Agreement, the Company agrees that it will
not, without the prior written consent of Investor, register for
resale any shares of the common stock of the Company belonging
to any Officer or Director of the Company.
Article VII.
Conditions for Advance and Conditions to Closing
Section 7.01 Conditions Precedent to the Right of the Company to
Deliver an Advance Notice. The right of the Company to deliver
an Advance Notice is subject to the fulfillment by the Company,
on such relevant Advance Notice Date, of each of the following
conditions:
(a) Accuracy of the Company's Representations and Warranties.
The representations and warranties of the Company shall be true
and correct in all material respects (except for representations
and warranties that speak as of a specific date).
(b) Registration of the Common Stock with the SEC. There is an
effective Registration Statement pursuant to which the Investor
is permitted to utilize the prospectus thereunder to resell all
of the shares of Common Stock issuable pursuant to such Advance
Notice, and the Company believes, in good faith, that such
effectiveness will continue uninterrupted for the foreseeable
future. Neither the Company nor the Investor shall have
received notice that the SEC has issued or intends to issue a
stop order with respect to the Registration Statement or that
the SEC otherwise has suspended or withdrawn the effectiveness
of the Registration Statement, either temporarily or
permanently, or intends or has threatened to do so (unless the
SEC's concerns have been addressed and the Investor is
reasonably satisfied that the SEC no longer is considering or
intends to take such action), and (ii) no other suspension of
the use or withdrawal of the effectiveness of the Registration
Statement or related prospectus shall exist.
(c) Authority. The Company shall have obtained all permits and
qualifications required by any applicable state in accordance
with the Registration Rights Agreement for the offer and sale of
the shares of Common Stock, or shall have the availability of
exemptions therefrom. The sale and issuance of the shares of
Common Stock shall be legally permitted by all laws and
regulations to which the Company is subject.
(d) Fundamental Changes. There shall not exist any fundamental
changes to the information set forth in the Registration
Statement which would require the Company to file a post-
effective amendment to the Registration Statement.
(e) Performance by the Company. The Company shall have
performed, satisfied and complied in all material respects with
all covenants, agreements and conditions required by this
Agreement and the Registration Rights Agreement to be performed,
satisfied or complied with by the Company at or prior to each
Advance Notice Date.
(f) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted,
entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits or directly
and adversely affects any of the transactions contemplated by
this Agreement, and no proceeding shall have been commenced that
may have a Material Adverse Effect.
(g) No Suspension of Trading in or Delisting of Common Stock.
The Common Stock is trading or is quoted on a Principal Market
and all of the Shares issuable pursuant to such Advance Notice
will be listed or quoted for trading on such Principal Market
(and the Company believes, in good faith, that the trading or
quoting of the Common Stock on a Principal Market will continue
uninterrupted for the foreseeable future. The issuance of
Shares with respect to the applicable Advance Notice will not
violate the shareholder approval requirements of the Principal
Market. The Company shall not have received any notice
threatening the continued listing or quotation of the Common
Stock on the Principal Market.
(h) Maximum Advance Amount. The amount of an Advance requested
by the Company shall not exceed the Maximum Advance Amount.
(i) Authorized. There shall be a sufficient number of
authorized but unissued and otherwise unreserved shares of
Common Stock available for the issuance of all of the Shares.
(j) Executed Advance Notice. The Investor shall have received
the Advance Notice executed by an officer of the Company and the
representations contained in such Advance Notice shall be true
and correct as of each Advance Notice Date.
Article VIII.
Due Diligence Review; Non-Disclosure of Non-Public Information
Section 8.01 Non-Disclosure of Non-Public Information.
(a) The Company covenants and agrees that it shall refrain from
disclosing, and shall cause its officers, directors, employees
and agents to refrain from disclosing, any material non-public
information to the Investor without also disseminating such
information to the public, unless prior to disclosure of such
information the Company identifies such information as being
material non-public information and provides the Investor with
the opportunity to accept or refuse to accept such material non-
(b) Nothing herein shall require the Company to disclose non-
public information to the Investor or its advisors or
representatives, and the Company represents that it does not
disseminate non-public information to any investors who purchase
stock in the Company in a public offering, to money managers or
to securities analysts, provided, however, that notwithstanding
anything herein to the contrary, the Company will, as
hereinabove provided, immediately notify the advisors and
representatives of the Investor and, if any, underwriters, of
any event or the existence of any circumstance (without any
obligation to disclose the specific event or circumstance) of
which it becomes aware, constituting non-public information
(whether or not requested of the Company specifically or
generally during the course of due diligence by such persons or
entities), which, if not disclosed in the prospectus included in
the Registration Statement would cause such prospectus to
include a material misstatement or to omit a material fact
required to be stated therein in order to make the statements,
therein, in light of the circumstances in which they were made,
not misleading. Nothing contained in this Section 8.01Section
8.01 shall be construed to mean that Persons or entities other
than the Investor (without the written consent of the Investor
prior to disclosure of such information) may not obtain non-
public information in the course of conducting due diligence in
accordance with the terms of this Agreement and nothing herein
shall prevent any such Persons or entities from notifying the
Company of their opinion that based on such due diligence by
such Persons or entities, that the Registration Statement
contains an untrue statement of material fact or omits a
material fact required to be stated in the Registration
Statement or necessary to make the statements contained therein,
in light of the circumstances in which they were made, not
misleading.
Article IX.
Choice of Law/Jurisdiction
This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New Jersey without
regard to the principles of conflict of laws. The parties
further agree that any action between them shall be heard in
▇▇▇▇▇▇ County, New Jersey, and expressly consent to the
jurisdiction and venue of the Superior Court of New Jersey,
sitting in ▇▇▇▇▇▇ County, New Jersey and the United States
District Court of New Jersey, sitting in Newark, New Jersey, for
the adjudication of any civil action asserted pursuant to this
Article X. Assignment; Termination
Section 10.01 Assignment. Neither this Agreement nor any rights
of the Company hereunder may be assigned to any other Person.
Section 10.02 Termination.
(a) Unless earlier terminated as provided hereunder, this
Agreement shall terminate automatically on the earliest of (i)
the first day of the month next following the 24-month
anniversary of the Effective Date, or (ii) the date on which the
Investor shall have made payment of Advances pursuant to this
Agreement in the aggregate amount of the Commitment Amount.
(b) The Company may terminate this Agreement effective upon
fifteen Trading Days' prior written notice to the Investor;
provided that (i) there are no Advances outstanding for which a
Closing has not occurred, and (ii) the Company has paid all
amounts owed to the Investor pursuant to this Agreement. This
Agreement may be terminated at any time by the mutual written
consent of the parties, effective as of the date of such mutual
written consent unless otherwise provided in such mutual written
consent. In the event of any termination of this Agreement by
the Company hereunder, so long as the Investor owns any Shares
and at the time of any such termination the Investor will
promptly inform the Company in writing of such ownership and
thereafter when it has sold all such Shares, unless all of such
Shares may be resold by the Investor without registration and
without any time, volume or manner limitations pursuant to Rule
144, the Company shall not suspend (except as provided for in
the Registration Rights Agreement) or withdraw the Registration
Statement or otherwise cause the Registration Statement to
become ineffective, or voluntarily delist the Common Stock from,
the Principal Market without listing the Common Stock on another
(c) The obligation of the Investor to make an Advance to the
Company pursuant to this Agreement shall terminate permanently
(including with respect to an Advance Date that has not yet
occurred) in the event that (i) there shall occur, for any
reason other than due to the acts of the Investor, any stop
order or suspension of the effectiveness of the Registration
Statement for an aggregate of fifty (50) Trading Days during the
Commitment Period, or (ii) the Company shall at any time fail
materially to comply with the requirements of Article VI of this
Agreement and such failure is not cured within 30 days after
receipt of written notice from the Investor, provided, however,
that this termination provision shall not apply to any period
commencing upon the filing of a post-effective amendment to such
Registration Statement and ending upon the date on which such post
effective amendment is declared effective by the SEC.
(d) Nothing in this Section 10.02Section 10.02 shall be deemed
to release the Company or the Investor from any liability for
any breach under this Agreement, or to impair the rights of the
Company or the Investor to compel specific performance by the
other party of its obligations under this Agreement.
Article XI. Notices
Any notices, consents, waivers, or other communications
required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been
delivered (i) upon receipt, when delivered personally; (ii) if
it is a notice that is not related to an Advance, upon receipt,
when sent by facsimile, provided a copy is mailed by U.S.
certified mail, return receipt requested; (iii) if it is a
notice related to an Advance, upon receipt, when sent by
facsimile, provided (a) the recipient of such notice
acknowledges the receipt of such notice, or (b) a copy is mailed
by U.S. first class mail; (iv) three (3) days after being sent
by U.S. certified mail, return receipt requested, or (v) one (1)
day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party
to receive the same. The addresses and facsimile numbers for
such communications shall be:
If to the Company, to: Omagine, Inc.
Empire State Building
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Sichenzia ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
Att: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Investor(s): YA Global Investments, LP
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▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Portfolio Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ (for
Advance Notices)
With a Copy to: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Yorkville Advisors, LLC
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Each party shall provide five (5) days prior written notice to
the other party of any change in address or facsimile number.
Article XII. Miscellaneous
Section 12.01 Counterparts. This Agreement may be executed in
two or more identical counterparts, all of which shall be
considered one and the same agreement and shall become effective
as of the Execution Date when counterparts have been signed by
each party and delivered to the other party. In the event any
signature page is delivered by facsimile transmission, the party
using such means of delivery shall cause four (4) additional
originally executed signature pages to be physically delivered
to the other party within five (5) days of such delivery by
facsimile transmission, though failure to deliver such copies
shall not affect the validity of this Agreement.
Section 12.02 Entire Agreement; Amendments. This Agreement
supersedes all other prior oral or written agreements between
the Investor, the Company, their affiliates and Persons acting
on their behalf with respect to the matters discussed herein,
and this Agreement and the instruments referenced herein contain
the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically
set forth herein or therein, neither the Company nor the
Investor makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this
Agreement may be waived or amended other than by an instrument
in writing signed by the party to be charged with enforcement.
Section 12.03 Reporting Entity for the Common Stock. The
reporting entity relied upon for the determination of the
trading price, trading volume and the VWAP of the Common Stock
on any given Trading Day for the purposes of this Agreement
shall be Bloomberg, L.P. or any successor thereto. The written
mutual consent of the Investor and the Company shall be required
to employ any other reporting entity.
Section 12.04 Fees and Expenses. The Company hereby agrees to
pay the following fees:
(a) Structuring Fees. Each of the parties shall pay its own
fees and expenses (including the fees of any attorneys,
accountants, appraisers or others engaged by such party) in
connection with this Agreement and the transactions contemplated
hereby, except that (i) the Company shall pay a structuring fee
of $25,000 to Yorkville Advisors, LLC, of which $12,500 has been
paid prior to the date hereof and, provided this Agreement has
been executed and delivered by the parties, the remaining
$12,500 shall be paid on or promptly after the Execution Date.
(b) Commitment Fees. Provided this Agreement has been executed
and delivered by the parties, the Company shall, within three
(3) Trading Days after the Execution Date, issue to the Investor
that number of shares of restricted Common Stock which is equal
to the number arrived at by dividing $150,000 by the VWAP of the
Common Stock on the Execution Date (the "Investor's Shares").
Provided this Agreement has been executed and delivered by the
parties, the Investor's Shares shall be deemed fully earned as
of the Execution Date regardless of the amount of Advances, if
any, that the Company is able to, or chooses to, request
hereunder. The Investor's Shares will have "piggy-back"
registration rights and shall be included in the Registration
Statement, unless such shares may be resold without any
limitation pursuant to Rule 144.
Section 12.05 Brokerage. Each of the parties hereto represents
that it has had no dealings in connection with this transaction
with any finder or broker who will demand payment of any fee or
commission from the other party. The Company on the one hand,
and the Investor, on the other hand, agree to indemnify the
other against and hold the other harmless from any and all
liabilities to any Person claiming brokerage commissions or
finder's fees on account of services purported to have been
rendered on behalf of the indemnifying party in connection with
this Agreement or the transactions contemplated hereby.
Section 12.06 Confidentiality. If for any reason the
transactions contemplated by this Agreement are not consummated,
each party hereto shall keep confidential any information
obtained from the other party (except information publicly
available or in such party's domain prior to the date hereof,
and except as required by court order) and shall promptly return
to the other party all schedules, documents, instruments, work
papers or other written information without retaining copies
thereof, previously furnished to it as a result of this
Agreement or in connection herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this
Standby Equity Distribution Agreement to be executed by the
undersigned, thereunto duly authorized, as of the date first set
forth above.
COMPANY:
OMAGINE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice-President & Secretary
INVESTOR:
YA GLOBAL INVESTMENTS, L.P.
By: Yorkville Advisors, LLC
Its: Investment Manager
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Portfolio Manager
EXHIBIT A
ADVANCE NOTICE
OMAGINE, INC.
The undersigned, _______________________ hereby certifies,
with respect to the offer and sale of shares of Common Stock of
OMAGINE, INC. (the "Company") issuable in connection with this
Advance Notice, delivered pursuant to the Standby Equity
Distribution Agreement (the "Agreement"), as follows:
1. The undersigned is the duly elected ______________ of
the Company.
2. There are no fundamental changes to the information
set forth in the Registration Statement which would require the
Company to file a post effective amendment to the Registration
Statement.
3. The Company has performed in all material respects all
covenants and agreements to be performed by the Company and has
complied in all material respects with all obligations and
conditions contained in the Agreement on or prior to the Advance
Notice Date, and shall continue to perform in all material
respects all covenants and agreements to be performed by the
Company through the applicable Advance Date and Closing. All
conditions to the delivery of this Advance Notice required to be
satisfied by the Company are satisfied as of the date hereof.
4. The undersigned hereby represents, warrants and
covenants that the Company has made all filings ("SEC Filings")
required to be made by it pursuant to applicable securities laws
(including, without limitation, all filings required under the
Securities Exchange Act of 1934, which include Forms 10-Q or 10-
QSB, ▇▇-▇ ▇▇ ▇▇-▇▇▇, ▇-▇, ▇▇▇.). All SEC Filings and other
public disclosures made by the Company, including, without
limitation, all press releases, analysts meetings and calls,
etc. (collectively, the "Public Disclosures"), have been
reviewed and approved for release by the Company's Chief
Executive Officer and, if containing financial information, the
Company's independent certified public accountants. None of the
Company's Public Disclosures contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
5. The Advance requested is _____________________.
The undersigned has executed this Advance Notice this ____
day of _________________.
OMAGINE, INC.
By: ___________________________
Name:
Title:
If Returning This Advance Notice via Facsimile Please Send To:
(▇▇▇) ▇▇▇-▇▇▇▇
If by Mail, via Federal Express To:
YA Global Investments, LP
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