Exhibit 10.4
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SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (the "Agreement") is made and
entered into on November 10, 2004, by and between Return on Investment
Corporation, a corporation organized under the laws of the State of Delaware,
with its principal place of business located at 0000 Xxxxxxx Xxxxx Xxxxxxxxx,
Xxxxx 000, Xxxxxxxx, Xxxxxxx (the "Company"), and the parties listed on the
attached Exhibit A (collectively, the "Buyers;" individually, a "Buyer").
RECITALS
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A. The Company and the Buyers are executing and delivering this
Agreement in reliance upon the exemptions from securities registration afforded
by (i) the provisions of Regulation D ("Regulation D") as promulgated by the
United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "1933 Act"), and (ii) Section 4(2) under
the 0000 Xxx.
B. The Buyers desire to purchase from the Company, and the Company
desires to sell to the Buyers, for the amount and upon the terms and conditions
stated in this Agreement, in a closing (the "Closing") as herein described, the
following securities of the Company:
(i) The Company's Subordinated Second Secured Convertible Promissory
Notes, the form of which is attached as Exhibit B (collectively, the "Notes"),
which may be converted into the Company's $0.01 par value common stock (the
"Common Stock") and/or other securities on the terms and conditions set forth in
the Notes. The aggregate principal amount of the Notes shall be Seven Hundred
Fifty Thousand Dollars ($750,000), allocated among the Buyers as set forth on
Exhibit A.
(ii) As additional consideration for the Buyers' purchase of the Notes,
the Company shall also issue to the Buyers certain warrants (the "Warrants") to
purchase an aggregate of 600,000 shares of Common Stock at an exercise price as
provided in the Warrants, which Warrants must be exercised (if at all) within
five (5) years after the date of issuance. The Warrants shall be in the form
attached as Exhibit C and shall be allocated among the Buyers as set forth on
Exhibit A.
Any Common Stock or other securities issuable pursuant to Section 5 of
the Note shall be referred to herein as the "Conversion Shares." The Common
Stock receivable upon exercise of the Warrants shall be referred to herein as
the "Warrant Shares." The Notes, the Conversion Shares, the Warrants and the
Warrant Shares may be collectively referred to herein as the "Securities."
C. Contemporaneously with the execution and delivery of this Agreement,
the Company is executing and delivering an Amendment to Security Agreement (the
"Security Agreement") in the form of the attached Exhibit D, pursuant to which
the Company has agreed to secure its obligations under the Notes with a
second-priority security interest in substantially all tangible and intangible
assets (including intellectual property) owned by the Company (the
"Collateral"), such security interest to be on a pari passu basis with the
security interest granted to the Buyers pursuant to the Security Agreement
between the Buyers and the Company dated August 18, 2004. As additional security
for the Company's obligations under the Notes, contemporaneously with the
execution and delivery of this Agreement, Xxxx Xxxxxxx, the Company's President
and Chief Executive Officer, is executing and delivering an Amendment to
Guaranty, Pledge and Security Agreement (the "Pledge Agreement") in the form
attached as Exhibit E pursuant to which Xx. Xxxxxxx agrees to guaranty payment
of the Notes and to secure that guaranty with a first-priority security interest
in all shares of the Company which he owns, such security interest to be on a
pari passu basis with the security interest granted to the Buyers pursuant to
the Guaranty, Pledge and Security Agreement between the Buyers and Xx. Xxxxxxx
dated August 18, 2004.
D. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are also executing and delivering a Registration Rights
Agreement (the "Registration Rights Agreement") in the form of the attached
Exhibit F, pursuant to which the Company has, among other things, agreed to
provide certain registration rights under the 1933 Act and applicable state
securities laws with respect to (i) the Warrant Shares and (ii) those shares
(the "Existing Warrant Shares") that are issuable pursuant to the "Warrants to
Purchase Common Stock" dated August 18, 2004, which were previously issued to
the Buyers (the "Existing Warrants"). As a result of the foregoing, the
Registration Rights Agreement dated August 18, 2004, with respect to the
Existing Warrant Shares is to be superceded and replaced by the Registration
Rights Agreement.
AGREEMENTS
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NOW, THEREFORE, in consideration of their respective promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Buyers hereby agree as
follows:
1. PURCHASE AND SALE OF THE SECURITIES.
(a) Purchase. At the Closing, each Buyer agrees to purchase from the
Company a Note in the principal amount shown on Exhibit A, and the Company
agrees to sell such Note to the Buyer. The aggregate purchase price for the
Notes shall be $750,000 (the "Purchase Price"), allocated among the Buyers in
proportion to the principal amount of each Note. Out of the Purchase Price shall
be paid (i) an aggregate of $45,000 in pre-paid interest (as provided in the
Notes), allocated among the Buyers in proportion to the principal amount of each
Note, (ii) an aggregate origination fee of $22,500, allocated among the Buyers
in proportion to the principal amount of each Note, and (iii) such other amounts
as may be included in the Disbursement Instructions attached as Exhibit G (the
"Disbursement Instructions"). The disbursements specified in the Disbursement
Instructions
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(including disbursement to the Company of the remainder of the Purchase Price)
shall be made on the Closing Date (as defined below).
(b) The Closing. The date of the Closing (the "Closing Date") shall be
November 10, 2004, or such other date as the parties may agree in writing. On or
before the Closing Date, (i) the Purchase Price shall be delivered to the Escrow
Agent (as defined in the Escrow Agreement in the form of the attached Exhibit H
(the "Escrow Agreement")) and (ii) the Company shall deliver to the Escrow Agent
on behalf of the Company the originals of this Agreement, the Notes, the
Warrants, the Security Agreement, the Pledge Agreement, the Registration Rights
Agreement, the Disbursement Instructions and the Escrow Agreement, each duly
authorized and executed by the Company and/or any other parties thereto (other
than the Buyers), together with such other items as may be required by this
Agreement (collectively, the "Closing Documents").
(c) Payment. The Buyers shall pay the Purchase Price by wire transfer
of immediately available funds in United States Dollars, to be deposited into
the Escrow Account (as defined in the Escrow Agreement), against delivery to the
Escrow Agent of the Closing Documents by the Company. At the Closing, the Escrow
Agent shall be responsible for disbursement of the Purchase Price according to
the Disbursement Instructions and delivery of the Closing Documents to the
Buyers (with copies to the Company duly executed by the Buyers, where required),
in each case in accordance with the terms of the Escrow Agreement.
2. THE BUYERS' REPRESENTATIONS AND WARRANTIES. With respect to his or
its purchase hereunder, each Buyer, severally and not jointly, represents and
warrants to the Company, and agrees, as follows:
(a) Investment Purposes; Compliance With 1933 Act. The Buyer is
purchasing his or its Securities for his or its own account for investment only
and not with a view towards, or in connection with, the public sale or
distribution thereof. The Buyer (i) is not purchasing his or its Securities for
the purpose of covering short sale positions in the Common Stock established on
or prior to the Closing Date and (ii) agrees not to enter into any market
transaction designed to accomplish any short sale of the Common Stock. The Buyer
agrees to offer, sell or otherwise transfer his or its Securities only (i) in
accordance with the terms of this Agreement, the Buyer's Note and the Buyer's
Warrant, as applicable, and (ii) pursuant to registration under the 1933 Act or
an exemption from registration under the 1933 Act and any other applicable
securities laws. The Buyer does not by his or its representations in this
Section 2(a) agree to hold his or its Securities for any minimum or other
specific term. The Buyer understands that it shall be a condition to the
issuance of his or its Conversion Shares and Warrant Shares that such shares be
and are subject to the representations set forth in this Section 2(a).
(b) Accredited Investor Status. The Buyer is an "accredited investor,"
as that term is defined in Rule 501(a) of Regulation D. The Buyer has such
knowledge and experience in financial and business matters that he or it is
capable of evaluating the merits and risks of the investment made pursuant to
this Agreement. The Buyer is aware that he or it may be required to bear the
economic risk of the investment made pursuant to this Agreement for an
indefinite period of time, and is able to bear such risk.
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(c) Reliance on Exemptions. The Buyer understands that his or its
Securities are being offered and sold to him or it in reliance on specific
exemptions from the registration requirements of applicable federal and state
securities laws, and that the Company is relying upon the truth and accuracy of,
and the Buyer's compliance with, the representations, warranties, agreements and
covenants of the Buyer set forth herein in order to determine the availability
of such exemptions and the eligibility of the Buyer to acquire such Securities.
(d) Information. The Buyer and his or its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
that have been requested by the Buyer. The Buyer and his or its advisors, if
any, have been afforded the opportunity to ask all questions of the Company as
they have in their discretion deemed advisable. The Buyer understands that his
or its investment in the Securities involves a high degree of risk. The Buyer
has sought such accounting, legal and tax advice as he or it has considered
necessary to an informed investment decision with respect to the investment made
pursuant to this Agreement.
(e) No Government Review. The Buyer understands that no United States
federal or state agency or any other government or governmental agency has
approved or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities, nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
(f) Transfer or Resale. The Buyer understands that: (i) except as
provided in the Registration Rights Agreement, his or its Securities have not
been and are not being registered under the 1933 Act or any state securities
laws, and may not be offered for sale, sold or otherwise transferred unless
either (A) subsequently registered thereunder or (B) the Buyer shall have
delivered to the Company an opinion by counsel reasonably satisfactory to the
Company, in form, scope and substance reasonably satisfactory to the Company, to
the effect that the securities to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration and (ii) neither the
Company nor any other person is under any obligation to register the Buyer's
Securities under the 1933 Act or any state securities laws or to comply with the
terms and conditions of any exemption thereunder (in each case, except as
required by this Agreement or the Registration Rights Agreement).
(g) Legend. Subject to Section 5(b) below, the Buyer understands that
his or its Note, his or its Warrant and the stock certificates representing his
or its Conversion Shares and Warrant Shares will bear a restrictive legend (the
"Legend") in substantially the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE (COLLECTIVELY, THE "LAWS"). THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE APPLICABLE LAWS OR
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(II) AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE REASONABLY ACCEPTABLE TO
THE ISSUER, TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED DUE TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE APPLICABLE LAWS.
(h) Authorization; Enforcement. This Agreement, the Registration Rights
Agreement, the Disbursement Instructions, the Security Agreement, the Escrow
Agreement and such other documents the Buyer's execution of which may be
required by this Agreement (collectively, the "Agreements") have been duly and
validly authorized, executed and delivered by the Buyer and are each valid and
binding agreements of the Buyer enforceable in accordance with their terms,
subject as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement of
creditors' rights generally.
3. THE COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company represents
and warrants to the Buyers, and agrees, as follows:
(a) Organization and Qualification. The Company is a corporation duly
organized and existing in good standing under the laws of the State of Delaware,
and has the requisite corporate power to own its properties and to carry on its
business as now being conducted. The Company 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 and where the failure so to qualify would have a Material Adverse
Effect. As used herein, "Material Adverse Effect" means any material adverse
effect on the operations, properties or financial condition of the Company and
its subsidiaries taken as a whole. The Common Stock is quoted on the OTC
Bulletin Board under the symbol "ROIE." The Company has received no notice,
either written or oral, with respect to the continued eligibility of the Common
Stock for such quotation, the Company has maintained all requirements for the
continuation of such quotation, and the Company does not reasonably anticipate
that the Common Stock will be removed from the OTC Bulletin Board in the
foreseeable future. The Company has complied, and will timely comply, with all
requirements of the SEC, the National Association of Securities Dealers and the
OTC Bulletin Board with respect to the issuance of the Securities.
(b) Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and perform the Agreements, to issue and sell
the Securities in accordance with the terms thereof, and to perform its
obligations under the Notes and the Warrants in accordance with their terms. The
Company's execution, delivery and performance of the Agreements, the Notes and
the Warrants, and its consummation of the transactions contemplated thereby,
have been duly authorized by the Company's Board of Directors and no further
consent or authorization of the Company, its Board of Directors, its
stockholders, or any other person or entity is required. The Agreements and, on
the Closing Date, the Notes and the Warrants, have been duly and validly
authorized, executed and delivered by the Company, and the Notes (when issued),
the Warrants (when issued), and the Agreements constitute the valid and binding
obligations of the Company enforceable in accordance with their terms, subject
as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement of
creditors' rights generally.
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(c) Capitalization. As of September 21, 2004, the authorized capital
stock of the Company consisted of 25,000,000 shares of Common Stock, of which
13,867,054 shares were issued and outstanding, and 500,000 shares of preferred
stock, of which no shares were issued and outstanding. All of such outstanding
shares have been validly issued and are fully paid and non-assessable. No shares
of Common Stock are subject to preemptive rights or any other similar rights
granted by the Company. As of the Closing Date, except as set forth in the
attached Schedule 3(c) or as previously agreed with or issued to the Buyers, (i)
there are no outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever issued or agreed to by the Company
relating to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its subsidiaries, or arrangements by which the
Company or any of its subsidiaries is or may become bound to issue additional
shares of capital stock of the Company or any of its subsidiaries, (ii) there
are no outstanding debt securities of the Company or any of its subsidiaries and
(iii) there are no agreements or arrangements under which the Company or any of
its subsidiaries is obligated to register the sale of any of its or their
securities under the 1933 Act (except as provided herein and in the Registration
Rights Agreement). If requested by the Buyers, the Company has furnished to the
Buyers true and correct copies of the Company's Certificate of Incorporation as
in effect on the date hereof (the "Certificate of Incorporation"), and the
Company's Bylaws as in effect on the date hereof.
(d) Issuance of Warrant and Conversion Shares. The Warrant Shares are
all duly authorized and reserved for issuance, and in all cases upon issuance
shall be validly issued, fully paid and non-assessable, free from all taxes,
liens and charges with respect to the issuance thereof, and will not be subject
to preemptive rights or other similar rights of stockholders of the Company.
Upon issuance, the Conversion Shares shall be validly issued, fully paid and
non-assessable, free from all taxes, liens and charges with respect to the
issuance thereof, and will not be subject to preemptive rights or other similar
rights of stockholders of the Company.
(e) Acknowledgment Regarding Buyers' Purchase of the Securities. Except
as set forth on Schedule 3(e), (i) the Buyers are not acting as financial
advisors to or fiduciaries of the Company (or in any similar capacity) with
respect to this Agreement or the transactions contemplated hereby and (ii)any
statements made by the Buyers, or any of their representatives or agents, in
connection with this Agreement and the transactions contemplated hereby are not
to be construed as advice or a recommendation, are merely incidental to the
Buyers' purchase of the Securities and have not been relied upon in any way by
the Company, its officers or directors.
(f) No Integrated Offering. Neither the Company nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances which would prevent the parties hereto from
consummating the transactions contemplated hereby pursuant to an exemption from
registration under the 1933 Act and, specifically, in accordance with the
provisions of Regulation D. The transactions contemplated hereby are exempt from
the registration requirements of the 1933 Act, assuming the accuracy of the
representations and warranties of the Buyers contained herein.
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(g) No Conflicts. Except as set forth in the attached Schedule 3(g),
neither the Company nor any of its subsidiaries is in violation of its
Certificate of Incorporation or other organizational documents, and neither the
Company nor any of its subsidiaries is in default (and no event has occurred
which, with notice or lapse of time or both, would put the Company or any of its
subsidiaries in default) under, nor has there occurred any event giving others
(with notice or lapse of time or both) any rights of termination, amendment,
acceleration or cancellation, of any agreement, indenture or other instrument to
which the Company or any of its subsidiaries is a party, except for possible
defaults or rights as would not, in the aggregate or individually, have a
Material Adverse Effect. The business of the Company and its subsidiaries is not
being conducted and, so long as the Buyers own any of the Securities, shall not
be conducted, in violation of any law, ordinance or regulation of any
governmental entity, except for possible violations which neither singly or in
the aggregate would have a Material Adverse Effect. Except as specifically
contemplated by this Agreement or as required under the 1933 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, governmental agency, individual or entity in order for it to execute,
deliver and perform any of its obligations under the Agreements, the Notes or
the Warrants in accordance with the terms thereof.
(h) SEC Documents; Financial Statements. Except as disclosed on
Schedule 3(h) hereof, since June 30, 2004, the Company has timely filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), with all of the foregoing
that were filed prior to the date hereof and all exhibits included therein and
all financial statements and schedules thereto and all documents (other than
exhibits) incorporated by reference therein being hereinafter referred to as the
"SEC Documents." The Company has delivered to the Buyers (to the extent
requested by the Buyers) 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 1934 Act and the applicable rules and regulations of the
SEC promulgated thereunder, 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 in order to make the
statements therein, in 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 (i) have
been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved except (A) as may be otherwise
indicated in such financial statements or the notes thereto or (B) in the case
of unaudited interim statements, to the extent they may exclude footnotes or may
be condensed or summary statements and (ii) 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). Taking
into account the proposed sale of GO Software, Inc., no information provided by
or on behalf of the Company to the Buyers pursuant to this Agreement, when
considered as a whole, contains any untrue statement of a material fact or omits
to state any material
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fact required to be stated therein in order to make the statements therein, in
the light of the circumstances under which they are or were made, not
misleading. Except as set forth in the financial statements of the Company
included in the SEC Documents or in the attached Schedule 3(h), the Company has
no liabilities, contingent or otherwise, other than (i) liabilities incurred in
the ordinary course of business subsequent to the date of such financial
statements and (ii) obligations under contracts and commitments incurred in the
ordinary course of business and not required under generally accepted accounting
principles to be reflected in such financial statements. The SEC Documents
contain a complete and accurate description of all material written and oral
contracts, agreements, leases or other instruments to which the Company or any
subsidiary is a party or by which the Company or any subsidiary is bound which
are required by the rules and regulations promulgated by the SEC to be disclosed
(each a "Contract"). None of the Company, its subsidiaries or, to the Company's
knowledge, any of the other parties thereto, is in breach or violation of any
Contract, which breach or violation would, or with the lapse of time, the giving
of notice, or both, have a Material Adverse Effect.
(i) Absence of Certain Changes; Bankruptcy. Except as disclosed in the
SEC Documents, since June 30, 2004, there has been no material adverse change or
development in the business, properties, operation, financial condition, or
results of operations of the Company and its subsidiaries taken as a whole. The
Company has not taken any steps, and does not currently have any reasonable
expectation of taking any steps, to seek protection pursuant to any bankruptcy
law, nor does the Company have any knowledge that its creditors intend to
initiate involuntary bankruptcy proceedings.
(j) Absence of Litigation. Except as set forth in the SEC Documents or
set forth in the attached Schedule 3(j), there is no action, suit, proceeding,
inquiry or investigation before or by any court, public board or governmental
body pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its subsidiaries, wherein an unfavorable
decision, ruling or finding would be reasonably expected to have a Material
Adverse Effect or which would 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.
(k) Foreign Corrupt Practices. Neither the Company nor any of its
subsidiaries, nor any officer, director or other person acting on behalf of the
Company or any subsidiary has, in the course of his, her or its actions for or
on behalf of the Company, (i) used any corporate funds for any unlawful
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contribution, gift, entertainment or other unlawful expense relating to
political activity, (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds, (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended, or (iv) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
(l) Brokers; No General Solicitation. The Company has taken no action
that would give rise to any claim by any person for brokerage commissions,
finder's fees or similar payments relating to this Agreement and the
transactions contemplated hereby, other than as set forth in the attached
Schedule 3(l) or the Disbursement Instructions. The Company acknowledges that no
broker or finder was involved with respect to the transactions contemplated
hereby, other than as set forth in the attached Schedule 3(l) or the
Disbursement Instructions. Neither the Company nor to the Company's knowledge,
any other person or entity participating on the Company's behalf in the
transactions contemplated hereby, has conducted any "general solicitation," as
described in Rule 502(c) under Regulation D, with respect to the Securities.
(m) Status of Assets. Except as described on Schedule 3(m), the Company
has good and marketable title to each of the assets that is material to its
business, free and clear of all liens, claims, restrictions and other
encumbrances except those previously granted to the Buyers and/or Silicon Valley
Bank.
(n) No Encumbrances on Shares. There are no pledges or hypothecations
of, or other encumbrances on, any shares of the Company held as treasury shares
or in an account pending issuance and, to the Company's knowledge after inquiry
of Xxxx Xxxxxxx, Xx. Xxxxxxx has not pledged, hypothecated or otherwise
encumbered any shares in the Company that he may own other than as described in
the Pledge Agreement.
(o) Validity of Pledge Agreement. To the Company's knowledge and based
on the Company's understanding of relevant Georgia law, the Pledge Agreement
constitutes a valid and binding obligation of Xxxx Xxxxxxx, enforceable in
accordance with its terms, subject to bankruptcy, insolvency, moratorium and
other similar laws affecting the enforcement of creditors' rights generally.
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4. COVENANTS OF THE PARTIES.
(a) Best Efforts. Each party shall use his or its commercially
reasonable efforts to timely satisfy each of the conditions to be satisfied by
him or it as provided in Sections 6 and 7 of this Agreement.
(b) Securities Laws. The Company shall timely file a Form D (and any
other equivalent form or notice required by applicable state law) with respect
to the Securities if and as required under Regulation D and applicable state
securities laws and provide copies thereof to the Buyers upon their request. The
Company shall, on or before the Closing Date, take all action necessary in order
to sell the Securities to the Buyers in compliance with federal and applicable
state securities laws, and shall provide written evidence of such action to the
Buyers upon their request.
(c) Reporting Status. So long as the Buyers beneficially own any of the
Securities, the Company shall (i) file all reports required to be filed with the
SEC pursuant to the 1934 Act and (ii) maintain its status as an issuer required
to file reports under the 1934 Act, even if the 1934 Act or the rules and
regulations thereunder would permit termination of such status.
(d) Reservation of Shares. The Company shall at all times have
authorized and reserved for the purpose of issuance that number of shares of
Common Stock which is sufficient to provide for the issuance of all of the
Warrant Shares. Prior to complete exercise of the Warrants, the Company shall
not reduce the number of shares of Common Stock reserved for issuance hereunder
without the written consent of the Buyers, except for a reduction proportionate
to a reverse stock split which affects all shares of Common Stock equally.
(e) Listing or Quotation. The Company shall promptly secure the listing
of the Warrant Shares and the Conversion Shares upon each national securities
exchange or automated quotation system, if any, upon which shares of Common
Stock are then listed (subject to official notice of issuance), and shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of the Warrant Shares and the Conversion Shares as may exist from time
to time under the terms of this Agreement and/or the Registration Rights
Agreement. The Company shall at all times comply in all material respects with
the Company's reporting, filing and other obligations under the by-laws or rules
of the National Association of Securities Dealers and the OTC Bulletin Board or
such national securities exchange or other market on which the Common Stock may
then be quoted or listed, as applicable.
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(f) Prospectus Delivery Requirement. The Buyers understand that the
1933 Act requires delivery of a prospectus relating to the Conversion Shares and
the Warrant Shares in connection with any sale thereof pursuant to a
registration statement under the 1933 Act, and the Buyers shall comply with any
applicable prospectus delivery requirements of the 1933 Act in connection with
any such sale. The Company shall have the right to rely upon the Buyers'
agreement contained in this Section 4(f); therefore, with respect to any resale
of the Conversion Shares and the Warrant Shares by the Buyers pursuant to a
registration statement, any certificate evidencing such Conversion Shares and
Warrant Shares shall not contain a restrictive legend of any kind.
(g) Intentional Acts or Omissions. No party shall intentionally perform
or fail to perform any act that, if performed or omitted to be performed, would
prevent or excuse the performance of this Agreement or any of the transactions
contemplated hereby.
(h) Expenses. At the Closing, the Company agrees to pay to, or at the
direction of, the Buyers an amount equal to the attorney's fees and other
expenses incurred by the Buyers in connection with the Buyers' due diligence
investigation, document preparation and escrow for the transactions contemplated
by this Agreement.
(j) Corporate Status; Taxes. The Company shall, so long as the Buyers
hold any of the Securities, maintain its corporate existence in good standing
and shall pay all taxes when due except for taxes it reasonably disputes.
(k) Use of Proceeds. The Company shall apply the Purchase Price as
follows: (i) to the costs of this transaction and (ii) the balance for working
capital.
(l) Restrictions on Debt and Debt Payments. Until such time as the
Notes have been paid in full (i) the Company shall not make any payment on or
with respect to any debt, except trade payables and payments to its Senior
Lender, as defined in the Security Agreement, and (ii) the Company's total
indebtedness to the Buyers and its Senior Lender shall not exceed $4,250,000.
(m) Right of First Refusal. Until such time as the Notes have been paid
in full, Instream Partners LLC shall have a right of first refusal to provide or
obtain any equity financing (i.e., a financing where the primary security being
sold is either an equity security or debt convertible into equity) required by
the Company (or any of its subsidiaries) on substantially the same terms as have
been specified in a term sheet or other document provided by a bona fide third
party financing source, such right to be exercised within five (5) business days
after Instream Partners LLC receives from the Company a copy of such term sheet
or other document.
11
(n) Non-Disclosure of Non-Public Information.
(i) After the Closing, the Company shall in no event disclose
non-public information to any Buyer or his or its advisors or representatives
unless, prior to such disclosure, the Company marks such information as
"Non-Public Information - Confidential" and provides the Buyer and such advisors
and representatives with the opportunity to accept or refuse to accept such
non-public information for review. The Company may, as a condition to disclosing
any non-public information hereunder, require a Buyer and his or its advisors
and representatives to enter into a confidentiality agreement in a form
reasonably satisfactory to the Company and the Buyer.
(ii) Nothing herein shall require the Company to disclose
non-public information to any Buyer or his or its advisors or representatives
after the Closing. Notwithstanding anything herein to the contrary, the Company
will immediately notify the Buyers, and any persons who may then be acting as
underwriters to the Company, 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
the Buyers and/or any other persons or entities), which, if not disclosed in the
prospectus included in a registration statement to be filed pursuant to the
Registration Rights Agreement, 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 herein shall be construed to mean that persons or
entities other than the Buyers may not obtain non-public information in the
course of conducting due diligence with respect to a registration statement, and
nothing herein shall prevent any such persons or entities from notifying the
Company of their opinion that, based upon such due diligence by such persons or
entities, that such registration statement contains an untrue statement of a
material fact or omits a material fact required to be stated in such
registration statement or necessary to make the statements contained therein, in
light of the circumstances in which they were made, not misleading.
12
(o) Effect of Provision in the Notes. The Buyers agree that the
provision in Section 1 of the Notes with respect to payment upon the occurrence
of a Financing (as defined in the Notes) shall supercede the provision in
Section 1 of each of the Company's Subordinated Second Secured Convertible
Promissory Notes dated August 18, 2004 which reads as follows: "(ii) upon the
Company's receipt of equity or debt financing in excess of $500,000 from any
person or entity (excluding debt financing from Silicon Valley Bank and
financing involving the sale of other Subordinated Second Secured Convertible
Promissory Notes concurrently herewith), the Company shall immediately pay to
the Holder, as a payment on this Note, an amount equal to the lesser of 50% of
the amount of such financing or the amount needed to pay this Note in full."
5. LEGEND; TRANSFER INSTRUCTIONS; RELATED MATTERS.
(a) Transfer Agent Instructions. Promptly after receiving notice of
exercise of a Warrant, and in any event no more than three (3) trading days
after the Company's receipt of such notice of exercise, the Company shall
instruct its transfer agent to issue certificates, registered in the name of the
appropriate Buyer or his or its permitted nominee, for Warrant Shares in such
amounts as are specified in such notice. All such certificates shall bear the
restrictive legend specified in Section 2(g) of this Agreement to the extent
required by applicable law and as specified in this Agreement or any documents
referenced herein. The Company represents and warrants that (i) no instructions
will be given by it to its transfer agent other than (A) the instructions
referred to in this Section 5 and (B) any stop transfer instructions required to
give effect to Section 2(f) hereof in the case of the Warrant Shares and (ii)
the Warrant Shares shall otherwise be freely transferable on the books and
records of the Company as and to the extent permitted by applicable law and
provided by this Agreement, the Warrants and the Registration Rights Agreement.
Nothing in this Section shall affect in any way the Buyers' obligations and
agreement to comply with all applicable securities laws upon resale of the
Warrant Shares. If a Buyer (i) provides the Company with an opinion of counsel
reasonably satisfactory to Company that registration by such Buyer of his or its
Securities is not required under the 1933 Act in connection with a transfer
request, (ii) transfers any of his or its Securities to an affiliate which is an
accredited investor (in accordance with the provisions of this Agreement) or
(iii) transfers any of his or its Securities in compliance with Rule 144
promulgated under the 1933 Act ("Rule 144"), then, in each instance, the Company
shall permit such transfer and, if applicable, promptly (and in all events
within three (3) trading days) instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by such Buyer.
13
(b) Removal of Legend. Upon the transfer of a Security, the Legend
shall be removed from any certificate for such Security, and or a certificate
for a Security shall be originally issued without the Legend, if, unless
otherwise required by state securities laws, (i) the resale of such Security is
registered under the 1933 Act and such transfer is made pursuant to and in
accordance with such registration statement, (ii) the holder of such Security
provides the Company with an opinion by counsel reasonably satisfactory to the
Company, that is in form, substance and scope reasonably satisfactory to the
Company, to the effect that a public sale or transfer of such Security may be
made without registration under the 1933 Act and such Security in the hands of
the transferee will not be a "restricted security" as defined in Rule 144 or
(iii) such holder provides the Company with assurances reasonably satisfactory
to the Company and its counsel that such Security is being sold pursuant to Rule
144. Each Buyer agrees that any sale of his or its Securities, including those
represented by a certificate from which the Legend has been removed, or which
were originally issued without the Legend, shall be made only pursuant to an
effective registration statement (with delivery of a prospectus in connection
with such sale) or in compliance with an exemption from the registration
requirements of the 1933 Act.
(c) Exercise of Warrants. Each Buyer shall have the right to exercise
his or its Warrant by delivering a Notice of Exercise as provided in the
Warrant. Each date on which a Notice of Exercise is delivered to the Company in
accordance with the provisions hereof shall be deemed an "Exercise Date." The
Company will transmit the certificates representing the shares of Common Stock
issuable upon exercise of the Warrant (along with a replacement Warrant
representing the amount of said Warrant not so exercised, if applicable) to the
Buyer or his or its designee via overnight courier within five (5) business days
after the relevant Exercise Date (with respect to each exercise, the
"Deadline"). Time is of the essence with respect to the requirements of the
immediately preceding sentence.
(d) Injunctive Relief for Breach. The Company acknowledges that a
breach of its obligations under Sections 5(a), 5(b) and/or 5(c) above will cause
irreparable harm to the Buyers by vitiating the intent and purpose of the
transactions contemplated hereby. Accordingly, the Company agrees that the
remedy at law for a breach of its obligations under such Sections would be
inadequate and agrees that, in the event of a breach or threatened breach by the
Company, the Buyers shall be entitled, in addition to all other remedies at law
or in equity, to an injunction restraining any breach and requiring immediate
issuance and/or transfer, without the necessity of showing economic loss and
without any bond or other security being required.
14
(e) Liquidated Damages for Non-Delivery of Certificates. In addition to
the provisions of Section 5(d) above, the Company understands and agrees that
any delay in the issuance of certificates beyond the Deadline will result in
substantial economic loss and other damages to each applicable Buyer; provided
that during the resolution of any dispute under Section 2(e) of the Warrant, the
Deadline as to those shares of Common Stock subject to such dispute shall be
suspended. As partial compensation to each such Buyer for such loss, the Company
agrees to pay liquidated damages (which the Company acknowledges is not a
penalty) to each such Buyer for issuance and delivery of the certificates after
the Deadline, in accordance with the following schedule (where "No. of Business
Days Late" is defined as the number of business days beyond five (5) business
days from the date of delivery by the Buyer to the Company of a Notice of
Exercise or, if later, from the date on which all other necessary documentation
duly executed and in proper form required for exercise of the Warrant has been
delivered to the Company, but only if such necessary documentation has not been
delivered to the Company within the five (5) business day period after the
delivery to the Company of the Notice of Exercise):
No. of Business Days Late Liquidated Damages (in US$)
------------------------- ---------------------------
1 $300
2 $400
3 $500
4 $600
5 $700
6 $800
7 $900
8 $1,000
9 $1,250
10 $1,500
11+ $1,750 + $1,000 for
each Business Day Late
beyond 11 days
Subject to each Buyer's right, in his or its sole discretion, to add
accrued liquidated damages on to the principal amount of his or its Note (as
provided in the Note), the Company shall pay the applicable Buyer any liquidated
damages incurred under this Section 5(e) by certified or cashier's check upon
the earlier of (i) the issuance to such Buyer of the certificates with respect
to which the damages accrued or (ii) each monthly anniversary
15
of the receipt by the Company of such Buyer's Notice of Exercise, as the case
may be. Nothing herein shall limit a Buyer's right to pursue actual damages for
the Company's failure to issue and deliver certificates to the Buyer in
accordance with the terms of this Agreement or for breach by the Company of this
Agreement.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of
the Company hereunder to sell the Notes and the Warrants at the Closing is
subject to the satisfaction, on or before the Closing Date, of each of the
following conditions; provided, however, that these conditions are for the
Company's sole benefit and may be waived by the Company at any time in its sole
discretion:
(a) The Buyers shall have (i) executed the Agreements (to the extent
required thereby) and (ii) delivered such documents or signature pages thereof
(via facsimile or as otherwise provided in the Escrow Agreement), together with
such other items as may be required by this Agreement, to the Escrow Agent.
(b) The Buyers shall have delivered to the Escrow Agent on behalf of
the Company the Purchase Price by wire transfer of immediately available funds
pursuant to the wiring instructions provided by the Escrow Agent.
(c) The representations and warranties of the Buyers in this Agreement
shall be true and correct in all material respects as of the date made and as of
the Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyers shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Buyers at or prior to the Closing Date.
(d) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered or issued by any court or
governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which
restricts or prohibits the consummation of any of the transactions contemplated
herein.
7. CONDITIONS TO THE BUYERS' OBLIGATION TO PURCHASE. The obligation of
the Buyers to purchase the Notes and Warrants is subject to the satisfaction, on
or before the Closing Date, of each of the following conditions; provided,
however, that these conditions are for the sole benefit of the Buyers and may be
waived by the Buyers at any time in their sole discretion:
16
(a) The Company shall have (i) executed the Agreements and (ii)
delivered such documents and the Pledge Agreement or signature pages thereof
(via overnight delivery or as otherwise provided in the Escrow Agreement),
together with such other items as may be required by this Agreement, to the
Escrow Agent.
(b) The Company shall have issued and have duly executed by the
authorized officers of the Company, and delivered to the Escrow Agent on behalf
of the Buyers, the original Notes and Warrants (via overnight delivery or as
otherwise provided by the Escrow Agreement).
(c) The representations and warranties of the Company in this Agreement
shall be true and correct in all material respects as of the date made and as of
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing Date. The Buyers may
require a certificate, executed by the Chief Executive Officer of the Company
and dated as of the Closing Date, to the foregoing effect and as to such other
matters as may be reasonably requested by the Buyers.
(d) The Common Stock shall be authorized for quotation on the OTC
Bulletin Board (or listing on a national securities exchange or other market)
and trading in the Common Stock on such market shall not have been suspended by
the SEC or other relevant regulatory agency.
(e) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered or issued by any court or
governmental authority of competent jurisdiction or any self- regulatory
organization having authority over the matters contemplated hereby which
restricts or prohibits the consummation of any of the transactions contemplated
herein.
(f) The Existing Warrants shall be cancelled and replaced with
"Warrants to Purchase Common Stock" (the "Replacement Warrants") that are
identical to the Existing Warrants in all respects except that they each add a
provision substantially similar to the following at the end of the first
sentence thereof: "provided, however, that one (1) time prior to the
17
Expiration Date, upon written notice to the Company (the "Notice") by the
holders of a majority of the Warrants issued on August 18, 2004 (of which this
Warrant is one) and November 10, 2004, such holders may reset the Warrant
Exercise Price of all such Warrants to an amount equal to the closing price of
the Common Stock (as defined herein) on the trading day immediately preceding
the date of the Notice (as specified in the Notice) as quoted on the OTC
Bulletin Board or such national securities exchange or other market on which the
Common Stock is then listed or quoted."
8. GOVERNING LAW; MISCELLANEOUS.
(a) Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Georgia without regard to the
principles of conflict of laws. Service of process in any civil action relating
to or arising out of this Agreement (including all Exhibits or Schedules or any
addenda hereto) or the transactions contemplated herein may be accomplished in
any manner provided by law. The parties hereto agree that a final,
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
(b) Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and signature pages from such counterparts have been delivered to the
Escrow Agent.
(c) Headings; Interpretation. The headings of this Agreement are for
convenience of reference and shall not form a part of, or affect the
interpretation of this Agreement. As used herein, the masculine shall refer to
the feminine and neuter, and vice versa, as the context may require. As used
herein, unless the context clearly requires otherwise, the words "herein,"
"hereunder" and "hereby," shall refer to this entire Agreement and not only to
the Section or paragraph in which such word appears. If any date specified
herein falls on a Saturday, Sunday or public or legal holiday, the date shall be
construed to mean the next business day following such Saturday, Sunday or
public or legal holiday. For purposes of this Agreement, a "business day" is any
day other than a Saturday, Sunday or public or legal holiday. Each party intends
that this Agreement be deemed and construed to have been jointly prepared by the
parties. As a result, the parties agree that any uncertainty or ambiguity
existing herein shall not be interpreted against either of them.
18
(d) Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
(e) Entire Agreement; Amendments. This Agreement and the documents
referenced herein (which are incorporated herein by reference) contain the
entire understanding of the parties with respect to the matters covered herein
and supercede all prior agreements, negotiations and understandings, written or
oral, with respect to such subject matter. Except as specifically set forth
herein, neither the Company nor any of the Buyers makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement shall be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement. No delay or omission of any
party hereto in exercising any right or remedy hereunder shall constitute a
waiver of such right or remedy, and no waiver as to any obligation shall operate
as a continuing waiver or as a waiver of any subsequent breach.
(f) Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be in writing and sent by U. S. Mail or delivered
personally or by overnight courier or via facsimile (if via facsimile, to be
followed within one (1) business day by an original of the notice document via
overnight courier) and shall be effective (i) five (5) days after being placed
in the mail, if mailed, certified or registered, return receipt requested, (ii)
upon receipt, if delivered personally or (iii) one (1) day after facsimile
transmission or delivery to a courier service for overnight delivery, in each
case properly addressed to the party to receive the same. The addresses for such
communications shall be as follows:
If to the Company: Return on Investment Corporation
0000 Xxxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxx
If to the Buyers: As shown on the attached Exhibit A
Each party shall provide written notice to the other party of any
change in address.
19
(g) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. Neither the Company nor any Buyer shall assign this Agreement
or any rights or obligations hereunder without the prior written consent of the
other (which consent shall not be unreasonably withheld) and, in any event, any
assignee of a Buyer shall be an accredited investor (as defined in Regulation
D), in the written opinion of counsel who is reasonably satisfactory to the
Company and in form, substance and scope reasonably satisfactory to the Company.
Notwithstanding the foregoing, if applicable, a Buyer may assign his or its
rights hereunder to any of his or its "affiliates," as that term is defined in
Rule 405 of the 1933 Act, without the consent of the Company; provided, however,
that (i) any suchassignment shall not release such Buyer from his or its
obligations hereunder unless such obligations are assumed by such affiliate and
(ii) no such assignment shall be made unless it is made in accordance with any
applicable securities laws. Any request for consent to an assignment made
hereunder by a Buyer shall be accompanied by a legal opinion in form, substance
and scope reasonably satisfactory to the Company that such assignment is proper
under applicable law. Notwithstanding anything herein to the contrary, the
Buyers may pledge all or any part of their Securities as collateral for a bona
fide loan pursuant to a security agreement with a third party lender, and such
pledge shall not be considered an assignment in violation of this Agreement so
long as it is made in compliance with all applicable laws.
(h) No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
(i) Survival. Unless this Agreement is terminated under Section 8(l)
below, the representations and warranties of the Company and the Buyers
contained herein, and the agreements and covenants set forth herein, shall
survive the Closing.
(j) Publicity. The Company and the Buyers shall have the right to
review, before issuance by the other, any press releases or other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without prior consultation with or
approval of the Buyers, to make any press release or other public disclosure
with respect to such transactions that is required by applicable law or
regulations.
20
(k) Further Assurance. Each party shall do and perform, or cause to be
done and performed, at his or its expense, all such further acts and things, and
shall execute and deliver all such other agreements, certificates, instruments
and documents, as another party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(l) Termination. In the event that the Closing shall not have occurred
on or before November 30, 2004, this Agreement may be terminated at any time
thereafter by written notice from one party to the others. Such termination
shall not be the sole remedy for a breach of this Agreement by the non-breaching
party, and each party shall retain all of his or its rights hereunder at law or
in equity. Notwithstanding anything herein to the contrary, a party whose breach
of a covenant or representation and warranty or failure to satisfy a condition
prevented the Closing shall not be entitled to terminate this Agreement.
(m) Remedies. No provision of this Agreement providing for any specific
remedy to a party shall be construed to limit such party to the specific remedy
described, and that any other remedy that would otherwise be available to such
party at law or in equity shall also be available. The parties also intend that
the rights and remedies hereunder be cumulative, so that exercise of any one or
more of such rights or remedies shall not preclude the later or concurrent
exercise of any other rights or remedies.
(n) Attorney's Fees. If any party to this Agreement shall bring any
action for relief against the other arising out of or in connection with this
Agreement, in addition to all other remedies to which the prevailing party may
be entitled, the losing party shall be required to pay to the prevailing party a
reasonable sum for attorney's fees and costs incurred in bringing such action
and/or enforcing any judgment granted therein, all of which shall be deemed to
have accrued upon the commencement of such action and shall be paid whether or
not such action is prosecuted to judgment. Any judgment or order entered in such
action shall contain a specific provision providing for the recovery of
attorney's fees and costs incurred in enforcing such judgment. For the purposes
of this Section, attorney's fees shall include, without limitation, fees
incurred with respect to the following: (i) post-judgment motions, (ii) contempt
proceedings, (iii) garnishment, levy and debtor and third party examinations,
(iv) discovery and (v) bankruptcy litigation.
21
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Agreement to be duly executed by their respective authorized persons on the date
first written above.
The Company:
RETURN ON INVESTMENT CORPORATION
By: /s/ Xxxxxxx Xxxx
----------------------------------
Chief Financial Officer
By: /s/ Xxxxxxx XxXxxxxxx
----------------------------------
Secretary
The Buyers:
OCEANUS VALUE FUND, L.P.
By: Oceanus Asset Management, L.L.C.,
General Partner
By: /s/ Xxxx X. Xxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxx
Title: Member
R CAPITAL II, LTD.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President
GRANITE HILL CAPITAL VENTURES LLC
By: /s/ Xxxxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: President
OM CAPITAL, LLC
By: /s/ Niranjan (Xxxx) Xxxxxxxxx
--------------------------------
Name: Niranjan (Xxxx) Xxxxxxxxx
Title: President
/s/ Xxxx Xxxxx Blankfort
-------------------------------------
XXXX XXXXX BLANKFORT
/s/ Xxxxxxxxxxx X. Xxxxxx
-------------------------------------
XXXXXXXXXXX X. XXXXXX
22
LIST OF EXHIBITS AND SCHEDULES
Exhibit A List of the Buyers
Exhibit B Form of Subordinated Second Secured Convertible Promissory Note
Exhibit C Form of Warrant to Purchase Common Stock
Exhibit D Amendment to Security Agreement
Exhibit E Amendment to Guaranty, Pledge and Security Agreement
Exhibit F Registration Rights Agreement
Exhibit G Disbursement Instructions
Exhibit H Escrow Agreement
Schedule 3(c)
Schedule 3(g)
Schedule 3(h)
Schedule 3(j)
Schedule 3(l)
Schedule 3(m)
EXHIBIT A
NAME AND ADDRESS OF THE BUYERS NOTE PRINCIPAL NUMBER OF WARRANT SHARES
Oceanus Value Fund, L.P. $250,000 200,000
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx
R Capital II, Ltd. $250,000 200,000
0000 Xxxxxxxx Xxxxx
00 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxxxx
Xxxxxxxxxxx X. Xxxxxx $112,500 90,000
000 Xxxxx Xxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxxxx X. Xxxxxx
Granite Hill Capital Ventures LLC $62,500 50,000
000 Xx Xxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx Xxxxx
OM Capital, LLC $62,500 50,000
0000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxxxx
Xxxx Xxxxx Blankfort $12,500 10,000
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxx Blankfort
