PURCHASE AGREEMENT
EXHIBIT
10.1
PURCHASE AGREEMENT (this
“Agreement”), dated as of September 17, 2010, by and between ONSTREAM MEDIA CORPORATION, a
Florida corporation, (the “Company”), and LINCOLN PARK CAPITAL FUND,
LLC, an Illinois limited liability company (the “Investor”).
WHEREAS:
Subject to the terms and conditions
set forth in this Agreement, the Company wishes to sell to the Investor, and the
Investor wishes to buy from the Company, (i) shares of the Company's common
stock, $0.0001 par value per share (the “Common Stock”), (ii) shares of the
Company’s Series A-14 Preferred Stock, $0.0001 par value per share (the “Series
A-14 Preferred Stock), which Preferred Shares (as defined below)
shall have the rights and preferences set forth in the Certificate of
Designation attached hereto as Exhibit
E (the “Certificate of Designation”) and (iii) warrants to purchase Five
Hundred Forty Thousand (540,000) shares (subject to adjustment as set forth
therein) of Common Stock (the "Warrants" and the shares of Common Stock
underlying such Warrants, the "Warrant Shares") in the form of Exhibit F
attached hereto.
NOW,
THEREFORE, the Company and the Investor hereby agree as follows:
1.
CERTAIN DEFINITIONS.
For
purposes of this Agreement, the following terms shall have the following
meanings:
(a) “Available
Amount” means initially 1,130,000 shares of Common Stock in the aggregate (to be
appropriately adjusted for any reorganization, recapitalization, non-cash
dividend, stock split or other similar transaction) which amount shall be
reduced by the Purchase Amount each time the Investor purchases shares of Common
Stock pursuant to Section 2 hereof and as such amount may be increased pursuant
to Section 2.
(b) “Bankruptcy
Law” means Title 11, U.S. Code, or any similar federal or state law for the
relief of debtors.
(c) “Business
Day” means any day on which the Principal Market is open for trading including
any day on which the Principal Market is open for trading for a period of time
less than the customary time.
(d) “Closing
Sale Price” means, for any security as of any date, the last closing sale price
for such security on the Principal Market as reported by the Principal Market,
or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last closing sale price of such security on the
principal securities exchange or trading market where such security is listed or
traded as reported by the Principal Market.
(e) “Common
Stock Equivalents” means any securities of the Company or the Subsidiaries (as
defined below) which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.
(f) “Confidential
Information” means any information disclosed by either party to the other party,
either directly or indirectly, in writing, orally or by inspection of tangible
objects (including, without limitation, documents, prototypes, samples, plant
and equipment), which is designated as "Confidential," "Proprietary" or some
similar designation. Information communicated orally shall be considered
Confidential Information if such information is confirmed in writing as being
Confidential Information within ten (10) Business Days after the initial
disclosure. Confidential Information may also include information disclosed to a
disclosing party by third parties. Confidential Information shall not, however,
include any information which (i) was publicly known and made generally
available in the public domain prior to the time of disclosure by the disclosing
party; (ii) becomes publicly known and made generally available after disclosure
by the disclosing party to the receiving party through no action or inaction of
the receiving party; (iii) is already in the possession of the receiving party
at the time of disclosure by the disclosing party as shown by the receiving
party’s files and records immediately prior to the time of disclosure; (iv) is
obtained by the receiving party from a third party without a breach of such
third party’s obligations of confidentiality; (v) is independently developed by
the receiving party without use of or reference to the disclosing party’s
Confidential Information, as shown by documents and other competent evidence in
the receiving party’s possession; or (vi) is required by law to be disclosed by
the receiving party, provided that the receiving party gives the disclosing
party prompt written notice of such requirement prior to such disclosure and
assistance in obtaining an order protecting the information from public
disclosure.
(g) “Custodian”
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
(h) “Exchange
Act” means the Securities Exchange Act of 1934, as amended.
(i)
“Maturity Date” means the date that is Five
Hundred (500) Business Days (Twenty-Five (25) Monthly Periods) from the
Commencement Date or the date of Termination of this Agreement, if
sooner.
(j)
“Monthly Period” means each successive
Twenty (20) Business Day period commencing with the Commencement
Date.
(k) “Person”
means an individual or entity including but not limited to any limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.
(l)
“Preferred Shares” means those Four Hundred
Twenty Thousand (420,000) shares of Series A-14 Preferred Stock (as
appropriately adjusted for any reorganization, recapitalization, non-cash
dividend, stock split or other similar transaction) issued in connection with
the transactions contemplated hereby .
(m) “Principal
Market” means the Nasdaq Capital Market; provided however, that in the event the
Company’s Common Stock is ever listed or traded on the Nasdaq Global Market, the
Nasdaq Global Select Market, the New York Stock Exchange, the NYSE Amex, or the
OTC Bulletin Board, then the “Principal Market” shall mean such other market or
exchange on which the Company’s Common Stock is then listed or
traded.
(n) “Proceeding”
means an action, claim, suit, inquiry, investigation or proceeding (including,
without limitation, an investigation or partial proceeding, such as a
deposition), whether commenced or threatened.
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(o) “Purchase
Amount” means, with respect to any particular purchase made hereunder, the
portion of the Available Amount to be purchased by the Investor pursuant to
Section 2 hereof.
(p) “Purchase
Date” means with respect to any particular purchase made hereunder, the Business
Day on which the Investor receives by 10:00 a.m. eastern time of such Business
Day a valid Purchase Notice that the Investor is to buy Purchase Shares pursuant
to Section 2 hereof.
(q)
“Purchase Price” means the lower of the (A) the lowest Sale Price of the Common
Stock on the Purchase Date and (B) the arithmetic average of the three (3)
lowest Closing Sale Prices for the Common Stock during the twelve (12)
consecutive Business Days ending on the Business Day immediately preceding such
Purchase Date (to be appropriately adjusted for any reorganization,
recapitalization, non-cash dividend, stock split or other similar
transaction).
(r)
“Purchase Shares” means the shares of Common Stock up to
the Available Amount (as appropriately adjusted for any reorganization,
recapitalization, non-cash dividend, stock split or other similar transaction)
which may be sold to the Investor by the Company in accordance with the terms of
Section 2 of this Agreement. For the avoidance of doubt, Purchase
Shares do not include Warrant Shares, Commitment Shares or Conversion Shares (as
defined below).
(s) “Purchase
Notice” shall mean an irrevocable written notice from the Company to the
Investor directing the Investor to buy such Regular Purchase Amount in Purchase
Shares as specified by the Company therein on the Purchase Date.
(t) “Sale
Price” means any sale price for the shares of Common Stock on the Principal
Market as reported by the Principal Market.
(u) “SEC”
means the United States Securities and Exchange Commission.
(v) “Securities
Act” means the Securities Act of 1933, as amended.
(w) “Transfer
Agent” means the transfer agent of the Company as set forth in Section 11(f)
hereof or such other person who is then serving as the transfer agent for the
Company in respect of the Common Stock.
2.
PURCHASE OF SECURITIES.
Subject
to the terms and conditions set forth in this Agreement, the Company has the
right to sell to the Investor, and the Investor has the obligation to purchase
from the Company, Purchase Shares, Preferred Shares and Warrants as
follows:
(a) Initial Purchase and
Commencement of Regular Sales of Common Stock. Within one (1) Business
Day following the satisfaction of the conditions (the "Commencement") as set
forth in Sections 7 and 8 below (the date of satisfaction of such conditions,
the "Commencement Date"), the Investor shall purchase from the Company (i) Three
Hundred Thousand (300,000) Purchase Shares (such Purchase Shares are referred to
herein as “Initial Purchase Shares”) (ii) the Preferred Shares with the rights
and preferences set forth in the Certificate of Designation, and (iii) the
Warrants, and upon receipt of such Initial Purchase Shares, Preferred Shares and
Warrants, pay to the Company as the purchase price for such Initial Purchase
Shares, Preferred Shares and Warrants, the sum of $900,000, via wire
transfer. Thereafter, the Company shall have the right but not the
obligation to direct the Investor by its delivery to the Investor of a Purchase
Notice from time to time to buy up to Forty Five Thousand (45,000) (the “Regular
Purchase Amount”) Purchase Shares (each such purchase a “Regular Purchase”) (to
be appropriately adjusted for any reorganization, recapitalization, non-cash
dividend, stock split or other similar transaction) at the Purchase Price on the
Purchase Date. The Company may deliver multiple Purchase Notices to
the Investor so long as at least two (2) Business Days have passed since the
payment for the most recent Regular Purchase was completed.
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(b)
Payment for Purchase
Shares. With respect to a Regular Purchase, the Investor
shall pay to the Company an amount equal to the Purchase Amount multiplied by
the Purchase Price with respect to such Purchase Shares as full payment for such
Purchase Shares via wire transfer of immediately available funds on the same
Business Day that the Investor receives such Purchase Shares if they are
received by the Investor before 1:00 p.m. eastern time or if received by the
Investor after 1:00 p.m. eastern time, the next Business Day. The Company shall
not issue any fraction of a share of Common Stock upon any purchase. If the
issuance would result in the issuance of a fraction of a share of Common Stock,
the Company shall round such fraction of a share of Common Stock up or down to
the nearest whole share. All payments made under this Agreement shall be made in
lawful money of the United States of America by wire transfer of immediately
available funds to such account as the Company may from time to time designate
by written notice in accordance with the provisions of this Agreement. Whenever
any amount expressed to be due by the terms of this Agreement is due on any day
that is not a Business Day, the same shall instead be due on the next succeeding
day that is a Business Day.
(c) Purchase Price
Floor. The Company and the Investor shall not effect any
sales and purchases under this Agreement on any Purchase Date where the Purchase
Price for any purchases of Purchase Shares would be less than the Floor Price.
“Floor Price” means $0.75, which shall be appropriately adjusted for any
reorganization, recapitalization, non-cash dividend, stock split or other
similar transaction.
(d) Compliance with Principal
Market Rules. “Market Price” shall mean $1.02375, which is the
Closing Sale Price of the Common Stock on the Business Day immediately preceding
the date of this Agreement, $0.93, increased by $0.09375 per share to allow for
the Warrants. The Company shall not be required or permitted to issue
any shares of Common Stock under this Agreement if such issuance would breach
the Company's obligations under the rules or regulations of the Principal
Market. The Company may not issue more than 1,600,000 shares of its
Common Stock under this Agreement, including shares of Common Stock issuable
upon conversion of the Preferred Shares and the Commitment Shares, without the
approval of its stockholders exclusive of any shares of Common Stock issuable
upon exercise of the Warrants which Warrants are not exercisable for six (6)
months from the date hereof and may not be exercised at a price per share less
than the greater of Market Price and Book Value per share. Book Value
per share is equal to $1.71. The number of shares which may be issued
hereunder will be increased by an additional 1,900,000 shares of Common Stock,
when the Company, obtains the requisite shareholder approval and the Company
hereby covenants and agrees that it shall use its reasonable best efforts to get
such requisite shareholder approval for such 1,900,000 additional Purchase
Shares and the entire transaction contained herein within one hundred and ninety
(190) days from the date hereof.
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3.
INVESTOR'S REPRESENTATIONS AND
WARRANTIES.
The
Investor represents and warrants to the Company that as of the date hereof and
as of the Commencement Date:
(a) Investment
Purpose. The Investor is acquiring the Purchase Shares,
Preferred Shares and Commitment Shares (“Securities”) as principal for its own
account and not with a view to or for distributing or reselling such Securities
or any part thereof in violation of the Securities Act or any applicable state
securities law, has no present intention of distributing any of such Securities
in violation of the Securities Act or any applicable state securities law and
has no direct or indirect arrangement or understandings with any other persons
to distribute or regarding the distribution of such Securities in violation of
the Securities Act or any applicable state securities law (this representation
and warranty not limiting the Investor’s right to sell the Securities at any
time in compliance with applicable federal and state securities laws and with
respect to the Commitment Shares, subject to Section 5(e)
hereof). The Investor is acquiring the Securities hereunder in the
ordinary course of its business.
(b) Accredited Investor
Status. The Investor is an "accredited investor" as that term
is defined in Rule 501(a)(3) of Regulation D.
(c) Reliance on
Exemptions. The Investor understands that the Securities may
be offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and the
Investor's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Investor set forth herein in order to
determine the availability of such exemptions and the eligibility of the
Investor to acquire the Securities.
(d) Information. The
Investor understands that its investment in the Securities involves a high
degree of risk. The Investor (i) is able to bear the economic risk of
an investment in the Securities including a total loss, (ii) has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of the proposed investment in the Securities and
(iii) has had an opportunity to ask questions of and receive answers from the
officers of the Company concerning the financial condition and business of the
Company and others matters related to an investment in the
Securities. Neither such inquiries nor any other due diligence
investigations conducted by the Investor or its representatives shall modify,
amend or affect the Investor's right to rely on the Company's representations
and warranties contained in Section 4 below. The Investor has sought
such accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the
Securities.
(e) No Governmental
Review. The Investor understands that no United States federal
or state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the 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
Sale. The Investor understands that (i) the Securities may not
be offered for sale, sold, assigned or transferred unless (A) registered
pursuant to the Securities Act or (B) an exemption exists permitting such
Securities to be sold, assigned or transferred without such registration; (ii)
any sale of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which
the seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the SEC thereunder.
(g) Validity;
Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Investor and is a valid and
binding agreement of the Investor enforceable against the Investor in accordance
with its terms, subject as to enforceability to general principles of equity and
to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
and other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
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(h) Residency. The
Investor is a resident of the State of Illinois.
(i)
No Short
Selling. The Investor represents and warrants to the Company
that at no time has any of the Investor, its agents, representatives or
affiliates engaged in or effected or will engage in or effect, in any manner
whatsoever, directly or indirectly, any (i) "short sale" (as such term is
defined in Section 242.200 of Regulation SHO of the Exchange Act) of the Common
Stock or (ii) hedging transaction, which establishes a net short position with
respect to the Common Stock.
4.
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.
The
Company represents and warrants to the Investor that as of the date hereof and
as of the Commencement Date:
(a) Organization and
Qualification. The Company and each of the Subsidiaries (which for
purposes of this Agreement means any entity in which the Company, directly or
indirectly, owns 50% or more of the voting stock or capital stock or other
similar equity interests) is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, with the requisite corporate power and authority
to own and use its properties and assets and to carry on its business as
currently conducted. Neither the Company nor any Subsidiary is in
violation nor default of any of the provisions of its respective certificate or
articles of incorporation, bylaws or other organizational or charter
documents. Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in: (i) a material adverse effect on
the legality, validity or enforceability of any Transaction Document; (ii) a
material adverse effect on the results of operations, assets, business or
financial condition of the Company and the Subsidiaries, taken as a whole,
provided, however, that a Company Material Adverse Effect shall not include
facts, circumstances, events, changes, effects or occurrences (a) generally
affecting the economy or the financial, debt, credit or securities markets in
the United States, including as a result of changes in geopolitical conditions,
(b) generally affecting any of the industries in which the Company or the
Company Subsidiaries operate, (c) resulting from the announcement of this
Agreement, (d) resulting from changes in any applicable laws or regulations or
applicable accounting regulations or principles or interpretations thereof, (e)
resulting from any actions taken pursuant to or in accordance with the terms of
this Agreement, (f) resulting from any outbreak or escalation of hostilities or
war or any act of terrorism, (g) resulting from any failure by the Company to
meet its internal or published projections, budgets, plans or forecasts of its
revenues, earnings or other financial performance or results of operations, in
and of itself (it being understood that the facts or occurrences giving rise or
contributing to such failure that are not otherwise excluded from the definition
of a “Company Material Adverse Effect” may be taken into account in determining
whether there has been a Company Material Adverse Effect), or (h) resulting from
a decline in the price of the Company Common Stock on its Principal Market (it
being understood that the facts or occurrences giving rise or contributing to
such decline that are not otherwise excluded from the definition of a “Company
Material Adverse Effect” may be taken into account in determining whether there
has been a Company Material Adverse Effect); or (iii) a material adverse effect
on the Company’s ability to perform in any material respect on a timely basis
its obligations under any Transaction Document (any of (i), (ii) or (iii), a
“Material Adverse
Effect”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such
power and authority or qualification. The Company has no Subsidiaries
except as set forth on Schedule
4(a).
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(b) Authorization; Enforcement;
Validity. (i) The Company has the requisite corporate power
and authority to enter into and perform its obligations under this Agreement,
the Registration Rights Agreement, the Warrants, the Certificate of Designation
and each of the other agreements entered into by the parties on the Commencement
Date and attached hereto as exhibits to this Agreement (collectively, the
“Transaction Documents”), and to issue the Purchase Shares, Preferred Shares,
the Commitment Shares, the Conversion Shares, the Warrants and the Warrant
Shares in accordance with the terms hereof and thereof, (ii) the execution and
delivery of the Transaction Documents by the Company and the consummation by it
of the transactions contemplated hereby and thereby, including without
limitation, the issuance of the Commitment Shares and the reservation for
issuance and the issuance of the Purchase Shares, the Warrants, the Warrant
Shares, the Preferred Shares and the Conversion Shares, 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
shareholders, (iii) this Agreement has been, and each other Transaction Document
shall be on the Commencement Date, duly executed and delivered by the Company
and (iv) this Agreement constitutes, and each other Transaction Document upon
its execution on behalf of the Company, shall constitute, the valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by general principles
of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies. The Board of Directors of the
Company has approved the resolutions (the “Signing Resolutions”) substantially
in the form as set forth as Exhibit C attached
hereto to authorize this Agreement and the transactions contemplated
hereby. The Signing Resolutions are valid, in full force and effect
and have not been modified or supplemented in any respect. No other
approvals or consents of the Company’s Board of Directors and/or shareholders is
necessary under applicable laws and the Company’s Articles of Incorporation
and/or Bylaws to authorize the execution and delivery of this Agreement or the
other Transaction Documents or any of the transactions contemplated hereby or
thereby, including, but not limited to, the issuance of the Commitment Shares,
the Warrants, the Warrant Shares, the Preferred Shares, the Conversion Shares
and the Purchase Shares.
(c) Capitalization. As
of the date hereof, the authorized capital stock of the Company is set forth on
Schedule
4(c). Except as disclosed in Schedule 4(c), (i) no
shares of the Company's capital stock are subject to preemptive rights or any
liens or encumbrances suffered or permitted by the Company, (ii) there are no
outstanding debt securities, (iii) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue additional shares of capital stock of the
Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its Subsidiaries, (iv) there are no agreements or arrangements
under which the Company or any of its Subsidiaries is obligated to register the
sale of any of their securities under the Securities Act (except the
Registration Rights Agreement), (v) there are no outstanding securities or
instruments of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its
Subsidiaries, (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Commitment Shares, the Purchase Shares, the Warrants, the Warrant Shares,
the Preferred Shares or the Conversion Shares and (vii) the Company does not
have any stock appreciation rights or "phantom stock" plans or agreements or any
similar plan or agreement. The Company has furnished to the Investor
true and correct copies of the Company's Articles of Incorporation, as amended
and as in effect on the date hereof (the “Articles of Incorporation”), and the
Company's By-laws, as amended and as in effect on the date hereof (the
"By-laws") .
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(d) Issuance of
Securities. Upon issuance and payment therefor in accordance
with the terms and conditions of this Agreement, the Purchase Shares, shall be
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof, with the holders being entitled to
all rights accorded to a holder of Common Stock. The Initial Purchase
Shares have been duly authorized and, upon issuance in accordance with the terms
hereof, the Initial Purchase Shares shall be (i) validly issued, fully paid and
non-assessable and (ii) free from all taxes, liens and charges with respect to
the issue thereof. The Preferred Shares have been duly authorized
and, upon issuance in accordance with the terms hereof, the Preferred Shares
shall be (i) validly issued, fully paid and non-assessable and (ii) free from
all taxes, liens and charges with respect to the issue thereof. The Commitment
Shares have been duly authorized and, upon issuance in accordance with the terms
hereof, the Commitment Shares shall be (i) validly issued, fully paid and
non-assessable and (ii) free from all taxes, liens and charges with respect to
the issue thereof. The Warrant Shares have been duly authorized
and reserved for issuance upon exercise in accordance with the
Warrants. When issued in accordance with the terms of the Warrants,
the Warrant Shares shall be validly issued, fully paid and non-assessable and,
to our knowledge, free of all taxes, liens, charges, restrictions, rights of
first refusal and preemptive rights. 1,130,000 shares of Common Stock (subject
to equitable adjustment for any reorganization, recapitalization, non-cash
dividend, stock split or other similar transaction) have been duly authorized
and reserved for issuance upon purchase under this Agreement as Purchase Shares,
and this amount will be increased as appropriate for any increases in the
Available Amount in accordance with Section 2(d). When issued in accordance with
this Agreement, the Purchase Shares shall be validly issued, fully paid and
non-assessable and, to our knowledge, free of all taxes, liens, charges,
restrictions, rights of first refusal and preemptive
rights. 420,000 shares of Common Stock (subject to
equitable adjustment for any reorganization, recapitalization, non-cash
dividend, stock split or other similar transaction) have been duly authorized
and reserved for issuance as Conversion Shares. When issued in accordance with
the Certificate of Designation, the Conversion Shares shall be validly issued,
fully paid and non-assessable, and, to our knowledge, free of all taxes, liens,
charges, restrictions, rights of first refusal and preemptive
rights.
(e) No
Conflicts. Except as disclosed in Schedule 4(e), the
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the reservation for issuance and
issuance of the Purchase Shares, the Commitment Shares, the Warrants, the
Warrant Shares, the Preferred Shares and the Conversion Shares) will not (i)
result in a violation of the Articles of Incorporation, any Certificate of
Designations, Preferences and Rights 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 any of its Subsidiaries is a party, or result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of the
Principal Market applicable to the Company or any of its Subsidiaries) or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected, except in the case of conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations under clause (ii), which
could not reasonably be expected to result in a Material Adverse
Effect. Except as disclosed in Schedule 4(e),
neither the Company nor its Subsidiaries is in violation of any term of or in
default under its Articles of Incorporation, any Certificate of Designation,
Preferences and Rights of any outstanding series of preferred stock of the
Company or By-laws or their organizational charter or by-laws,
respectively. Except as disclosed in Schedule 4(e),
neither the Company nor any of its Subsidiaries is in violation of any term of
or is in default under any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its Subsidiaries, except for possible
conflicts, defaults, terminations, amendments or violations which could not
reasonably be expected to have a Material Adverse Effect. The
business of the Company and its Subsidiaries is not being conducted, and shall
not be conducted, in violation of any law, ordinance, regulation of any
governmental entity, except for possible violations, the sanctions for which
either individually or in the aggregate could not reasonably be expected to have
a Material Adverse Effect. Except as specifically contemplated by
this Agreement and as required under the Securities Act or 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 or any regulatory or self-regulatory agency in order for it
to execute, deliver or perform any of its obligations under or contemplated by
the Transaction Documents in accordance with the terms hereof or
thereof. Except as disclosed in Schedule 4(e), all
consents, authorizations, orders, filings and registrations which the Company is
required to obtain pursuant to the preceding sentence shall be obtained or
effected on or prior to the Commencement Date. Except as listed in
Schedule 4(e),
since one year prior to the date hereof, the Company has not received
nor delivered any notices or correspondence from or to the Principal Market to
the Company’s knowledge. The Principal Market has not presently
commenced any delisting proceedings against the Company.
-8-
(f) SEC Documents; Financial
Statements. Except as disclosed in Schedule 4(f) the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by the Company under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the two (2) years
preceding the date hereof (or such shorter period as the Company was required by
law or regulation to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Documents”) on a timely basis or has
received a valid extension of such time of filing and has filed any such SEC
Documents prior to the expiration of any such extension. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act and the Exchange Act, as applicable, and none
of the SEC Documents, when filed, 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. The financial
statements of the Company included in the SEC Documents comply in all material
respects with applicable accounting requirements and the rules and regulations
of the SEC with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis during the periods involved (“GAAP”), except as may be
otherwise specified in such financial statements or the notes thereto and except
that unaudited financial statements may not contain all footnotes required by
GAAP, and fairly present in all material respects the financial position of the
Company and its consolidated Subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then ended, subject, in
the case of unaudited statements, to normal, immaterial, year-end audit
adjustments. Except as listed in Schedule 4(f), the
Company has received no notices or correspondence from the SEC for the one year
preceding the date hereof. The SEC has not
commenced any enforcement proceedings against the Company or any of its
Subsidiaries.
(g) Absence of Certain
Changes. Except as disclosed in Schedule 4(g), since
June 30, 2010, there has been no Material Adverse Effect in the business,
properties, operations, financial condition or results of operations of the
Company or its Subsidiaries. The Company has not taken any steps, and
does not currently expect to take any steps, to seek protection pursuant to any
Bankruptcy Law nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy or
insolvency proceedings.
-9-
(h) Absence of
Litigation. Except as set forth in Schedule 4(h), there is no action,
suit, proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened against or
affecting the Company, the Common Stock, the Company’s preferred stock or any of
the Company's Subsidiaries or any of the Company's or the Company's
Subsidiaries' officers or directors in their capacities as such, which could
reasonably be expected to have a Material Adverse Effect. A
description of each material action, suit, proceeding, inquiry or investigation
before or by any court, public board, government agency, self-regulatory
organization or body which, as of the date of this Agreement, is pending or was
threatened in writing within the last twelve months against or affecting the
Company, the Common Stock, the Company’s preferred stock or any of the Company's
Subsidiaries or any of the Company's or the Company's Subsidiaries' officers or
directors in their capacities as such, is set forth in Schedule
4(h).
(i)
Acknowledgment Regarding
Investor's Status. The Company acknowledges and agrees that
the Investor is acting solely in the capacity of arm's length purchaser with
respect to the Transaction Documents and the transactions contemplated hereby
and thereby. 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 the Transaction Documents and the transactions
contemplated hereby and thereby and any advice given by the Investor or any of
its representatives or agents in connection with the Transaction Documents and
the transactions contemplated hereby and thereby is merely incidental to the
Investor's acquisition of the Commitment Shares, the Purchase Shares, the
Warrants, the Warrant Shares, the Preferred Shares and the Conversion
Shares. The Company further represents to the Investor that the
Company's decision to enter into the Transaction Documents has been based solely
on the independent evaluation by the Company and its representatives and
advisors.
(j)
No General
Solicitation. Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the Commitment
Shares, the Purchase Shares, the Warrants, the Warrant Shares or the Preferred
Shares.
(k) Intellectual Property
Rights. The Company and its Subsidiaries own or possess
adequate rights or licenses to use all material trademarks, trade names, service
marks, service xxxx registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, governmental authorizations, trade
secrets and rights necessary to conduct their respective businesses as now
conducted. Except as set forth on Schedule 4(k), none
of the Company's material trademarks, trade names, service marks, service xxxx
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, government authorizations, trade secrets or other
intellectual property rights have expired or terminated needed to presently own
or operate the business of the Company. The Company and its
Subsidiaries do not have any knowledge of any infringement by the Company or its
Subsidiaries of any material trademark, trade name rights, patents, patent
rights, copyrights, inventions, licenses, service names, service marks, service
xxxx registrations, trade secret.
(l)
Environmental
Laws. The Company and its Subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”), (ii) have received all 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, except where, in each of the
three foregoing clauses, the failure to so comply could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect.
-10-
(m) Title. Except
as set forth on Schedule 4(m), the Company and the Subsidiaries have good title
in all personal property owned by them that is material to the business of the
Company and the Subsidiaries, in each case free and clear of all liens,
encumbrances and defects (“Liens”) and, except for Liens as do not materially
affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and the
Subsidiaries, Liens for the payment of federal, state or other taxes, the
payment of which is neither delinquent nor subject to penalties. Any
real property and facilities held under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable leases
with which the Company and the Subsidiaries are in compliance with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company and its
Subsidiaries. Any
real property and facilities held under lease by the Company and any of its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
Subsidiaries.
(n) Insurance. The
Company and each of its Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged.
(o) Regulatory
Permits. The Company and its Subsidiaries possess all material
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such Subsidiary has received any
written notice of proceedings relating to the revocation or modification of any
such certificate, authorization or permit.
(p) Tax
Status. The Company and each of its Subsidiaries has made or
filed all federal and state income and all other material tax returns, reports
and declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know of no basis for any such claim.
(q) Transactions With
Affiliates. Except
as set forth in the SEC Documents, none of the executive officers or directors
of the Company is presently a party to any transaction with the Company or any
Subsidiary (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 entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, in each case in excess of $100,000
other than for (i) payment of salary or consulting fees for services rendered,
(ii) reimbursement for expenses incurred on behalf of the Company and (iii)
other employee benefits, including stock option agreements under any stock
option plan of the Company.
(r) Application of Takeover
Protections. The Company and its board of directors have taken
or will take prior to the Commencement Date all necessary action, if any, in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Articles of Incorporation or
the laws of the state of its incorporation which is or could become applicable
to the Investor as a result of the transactions contemplated by this Agreement,
including, without limitation, the Company's issuance of the Securities and the
Investor's ownership of the Securities.
-11-
(s) Disclosure. Except
with respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, the Company confirms that neither it
nor any other Person acting on its behalf has provided the Investor or its
agents or counsel with any information that it believes constitutes or might
constitute material, non-public information which is not otherwise disclosed in
the Registration Statement (as defined below) or prospectus supplements thereto
or in any SEC Reports. The Company understands and confirms that the
Investor will rely on the foregoing representation in effecting purchases and
sales of securities of the Company. All of the disclosure furnished
by or on behalf of the Company to the Investor regarding the Company, its
business and the transactions contemplated hereby, including the disclosure
schedules to this Agreement, is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading. The press releases disseminated
by the Company during the twelve months preceding the date of this Agreement
taken as a whole do not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made and when made, not misleading. The Company acknowledges and
agrees that the Investor neither makes nor has made any representations or
warranties with respect to the transactions contemplated hereby other than those
specifically set forth in Section 3 hereof.
(t)
Foreign Corrupt
Practices. Neither
the Company, nor to the knowledge of the Company, any agent or other person
acting on behalf of the Company, has (i) directly or indirectly, used any funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to any
foreign or domestic political parties or campaigns from corporate funds, (iii)
failed to disclose fully any contribution made by the Company (or made by any
person acting on its behalf of which the Company is aware) which is in violation
of law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.
(u) Registration
Statements. The Company’s shelf registration statement on Form
S-3 (no. 333-165258) (the “Registration Statement”) has been declared effective
by the SEC and no stop order has been issued or is pending or threatened with
respect thereto.
(v) DTC
Eligible. The Company through its transfer agent currently
participates in the Depository Trust Company Fast Automated Securities Transfer
Program (“DTC FAST System”) and the Company’s Common Stock can be transferred
electronically to third parties via the DTC FAST System.
5.
COVENANTS.
(a) Filing of Form 8-K and
Registration Statement. The Company agrees that it shall,
within the time required under the Exchange Act file a Report on Form 8-K
disclosing this Agreement and the transactions contemplated hereby. The Company shall also
file within ten (10) Business Days from the date hereof prospectus supplements
to the Registration Statement covering the sale of the Purchase Shares,
Commitment Shares and any shares of Common Stock issuable upon conversion of the
Preferred Shares (“Conversion Shares”) in accordance with the terms of the
Registration Rights Agreement between the Company and the Investor, dated as of
the date hereof (“Registration Rights Agreement”). The Company shall
use best efforts to keep the Registration Statement effective pursuant to Rule
415 under the Securities Act and available for sale of all of the Purchase
Shares, Conversion Shares, and Commitment Shares (“Registrable
Securities”). The Company shall not register any securities
under the Registration Statement other than the Registrable Securities, via
prospectus supplement or otherwise, if the registration of such other securities
would, in any way, limit, prevent or restrict any of the Registerable Securities
from being covered by the Registration Statement. Any securities issuable under
this Agreement that have not been registered under the Securities Act shall bear
the following restrictive legend (the “Restrictive Legend”):
-12-
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, UNLESS SOLD PURSUANT TO: (1) RULE 144 UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (2) AN OPINION OF HOLDER’S COUNSEL,
IN A CUSTOMARY FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS.
(b) Blue Sky. The Company
shall take such action, if any, as is reasonably necessary in order to obtain an
exemption for or to qualify (i) the initial sale of the Commitment Shares, the
Warrants, the Preferred Shares and any Purchase Shares to the Investor under
this Agreement and (ii) any subsequent resale of the Commitment Shares,
Conversion Shares, Warrant Shares and any Purchase Shares by the Investor, in
each case, under applicable securities or “Blue Sky” laws of the states of the
United States in such states as is reasonably requested by the Investor from
time to time, and shall provide evidence of any such action so taken to the
Investor.
(c) Listing/DTC. The
Company shall promptly secure the listing of all of the Purchase Shares,
Conversion Shares, Warrant Shares and Commitment Shares upon each national
securities exchange and 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 all such securities from time to time issuable under the terms of the
Transaction Documents. The Company shall use its reasonable best
efforts to maintain the Common Stock's authorization for quotation on the
Principal Market. Neither the Company nor any of its Subsidiaries
shall take any action that would be reasonably expected to result in the
delisting or suspension of the Common Stock on the Principal
Market. The Company shall promptly, and in no event later than the
following Business Day, provide to the Investor copies of any notices it
receives from the Principal Market regarding the continued eligibility of the
Common Stock for listing on such automated quotation system or securities
exchange. The Company shall pay all fees and expenses in connection
with satisfying its obligations under this Section. The Company shall
take all action necessary to ensure that its Common Stock can be transferred
electronically via the DTC FAST System.
(d) Limitation on Short Sales
and Hedging Transactions. The Investor agrees that beginning
on the date of this Agreement and ending on the date of termination of this
Agreement as provided in Section 11, the Investor and its agents,
representatives and affiliates shall not in any manner whatsoever enter into or
effect, directly or indirectly, any (i) “short sale” (as such term is defined in
Section 242.200 of Regulation SHO of the Exchange Act) of the Common Stock or
(ii) hedging transaction, which establishes a net short position with respect to
the Common Stock.
(e) Issuance of Commitment
Shares. Immediately upon the execution of this Agreement, the
Company shall pay to the Investor a structuring fee of $26,250 as consideration
for the Investor entering into this Agreement. Upon the earlier of
the Commencement or twenty (20) days from the date hereof, the Company shall pay
to the Investor a commitment fee payable in 50,000 shares of Common Stock (the
“Commitment Shares”).
-13-
(f) Due
Diligence. The Investor shall have the right, from time to
time as the Investor may reasonably deem appropriate, to perform reasonable due
diligence on the Company during normal business hours. The Company
and its officers and employees shall provide information and reasonably
cooperate with the Investor in connection with any reasonable request by the
Investor related to the Investor's due diligence of the Company. Each
party hereto agrees not to disclose any Confidential Information of the other
party to any third party and shall not use the Confidential Information for any
purpose other than in connection with, or in furtherance of, the transactions
contemplated hereby. Each party hereto acknowledges that the
Confidential Information shall remain the property of the disclosing party and
agrees that it shall take all reasonable measures to protect the secrecy of any
Confidential Information disclosed by the other party. The Company
confirms that neither it nor any other Person acting on its behalf shall provide
the Investor or its agents or counsel with any information that it believes
constitutes or might constitute material, non-public information which is not
otherwise disclosed in the Registration Statement or prospectus supplements
thereto.
(g) Purchase Records. The
Investor and the Company shall each maintain records showing the remaining
Available Amount at any given time and the dates and Purchase Amounts for each
purchase or shall use such other method, reasonably satisfactory to the Investor
and the Company.
(h) Taxes. The Company
shall pay any and all transfer, stamp or similar taxes that may be payable with
respect to the issuance and delivery of the Warrants, any Preferred Shares or
any shares of Common Stock to the Investor made under this
Agreement.
(i)
No Variable Rate
Transactions. From the date hereof until the later of (i) the
Maturity Date and (ii) one year from the date hereof, the Company shall be
prohibited from effecting or entering into an agreement to effect any issuance
by the Company or any of its Subsidiaries of Common Stock or Common Stock
Equivalents for cash consideration (or a combination of units thereof) involving
a Variable Rate Transaction other than in connection with an Exempt
Issuance. “Variable Rate Transaction” means a transaction in which
the Company (i) issues or sells any debt or equity securities that are
convertible into, exchangeable or exercisable for, or include the right to
receive additional shares of Common Stock either (A) at a conversion price,
exercise price or exchange rate or other price that is based upon and/or varies
with the trading prices of or quotations for the shares of Common Stock at any
time after the initial issuance of such debt or equity securities, or (B) with a
conversion, exercise or exchange price that is subject to being reset at some
future date after the initial issuance of such debt or equity security or upon
the occurrence of specified or contingent events directly or indirectly related
to the business of the Company or the market for the Common Stock or (ii) enters
into any agreement, including, but not limited to, an equity line of credit,
whereby the Company may sell securities at a future determined price. “Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees,
officers, directors or vendors of the Company pursuant to any stock or option
plan duly adopted for such purpose, by a majority of the non-employee members of
the Board of Directors or a majority of the members of a committee of
non-employee directors established for such purpose, (b) securities upon the
exercise or exchange of or conversion of any Securities issued hereunder and/or
other securities exercisable or exchangeable for or convertible into shares of
Common Stock issued and outstanding on the date of this Agreement, provided that
such securities have not been amended since the date of this Agreement to
increase the number of such securities or to decrease the exercise price,
exchange price or conversion price of such securities (other than as a result of
stock split or similar transaction), and (c) securities issued pursuant to
acquisitions or strategic transactions approved by a majority of the
“independent” directors of the Company, which acquisitions or strategic
transactions can have a Variable Rate Transaction component, provided
that any such issuance shall only be to a Person (or to the equity holders of a
Person) which is, itself or through its subsidiaries, an operating company or an
asset in a business synergistic with the business of the Company and shall
provide to the Company additional benefits in addition to the investment of
funds, but shall not include a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to an entity whose
primary business is investing in securities.
-14-
(j)
Reserve. The
Company shall maintain a reserve from its duly authorized shares of Common Stock
for issuance pursuant to the Transaction Documents in such amount as may be
required to fulfill its obligations in full under the Transaction
Documents.
(k)
Participation
Rights. From the date hereof until the later of (i) the Maturity
Date and (ii) one year from the date hereof, the Company hereby grants to the
Investor a right to participate in the purchase of any New Securities (as
defined below) that the Company may, from time to time, propose to issue and
sell in connection with any financing transaction, as follows. Not later
than 3 Business Days prior to the execution of any definitive documentation
relating to the sale of any New Securities to any persons or entities other than
the Investor or an Affiliate of the Investor (a “New Person”), the Company shall
deliver written notice to Investor of its intent to enter into any such
transaction, describing each of the New Persons and the type of New Securities
in reasonable detail, and attaching to such notice copies of such definitive
documentation. The Investor shall have 3 Business Days after receipt of
such notice to purchase up to 50% of such New Securities or any portion thereof,
at the price and on the terms specified in such notice by giving written notice
to the Company specifying the amount of New Securities to be purchased by the
Investor. In the event the Company has not sold such New Securities to the
New Persons within 30 Business Days after notice thereof to the Investor, the
Company shall not thereafter issue or sell any New Securities to any New Persons
without first again complying with this Section. “New Securities” shall
mean any shares of Common Stock, preferred stock or any other equity securities
of the Company or Common Stock Equivalents, provided, however, that New
Securities shall not include, (i) shares of Common Stock issuable upon
conversion or exercise of any securities outstanding as of the date hereof, (ii)
shares, options or warrants for Common Stock granted to officers, directors and
employees and consultants of the Company pursuant to incentive compensation
plans approved by the Board of Directors of the Company, (iii) shares of Common
Stock or securities convertible or exchangeable for Common Stock issued pursuant
to the acquisition of another company by consolidation, merger, or purchase of
all or substantially all of the assets of such company and pursuant to any related acquisition
financing or
(iv) shares of Common Stock or securities convertible or exchangeable into
shares of Common Stock issued in connection with a strategic transaction
involving the Company and issued to an entity or an affiliate of such
entity that is engaged in the same or substantially related business as the
Company. The Investor’s rights hereunder shall not prohibit or limit the
Company from selling any New Securities so long as the Company makes the same
offer to the Investor as provided herein. Otherwise the Company shall be
prohibited from selling any New Securities to any New Person until it fully
complies herewith
6.
TRANSFER AGENT
INSTRUCTIONS.
On the
Commencement Date, the Company shall issue the Initial Purchase Shares and
Commitment Shares without restrictive legend, and any Purchase Shares, Warrant
Shares and Conversion Shares to be issued under this Agreement or pursuant to
the Warrants or Certificate of Designation shall be issued without any
restrictive legend unless the Investor expressly consents
otherwise. The Company shall issue irrevocable instructions to the
Transfer Agent, and any subsequent transfer agent, to issue the Commitment
Shares, Purchase Shares, Conversion Shares, and Warrant Shares in the name of
the Investor (the “Irrevocable Transfer Agent Instructions”). Except
as required by applicable Securities laws, the Company warrants to the Investor
that no instruction other than the Irrevocable Transfer Agent Instructions
referred to in this Section 6, will be given by the Company to the Transfer
Agent with respect to the Commitment Shares, Purchase Shares, Warrant Shares and
Conversion Shares and that the Purchase Shares, Warrant Shares, Conversion
Shares and Commitment Shares shall otherwise be freely transferable on the books
and records of the Company as and to the extent provided in this
Agreement.
-15-
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7.
|
CONDITIONS
TO THE COMPANY'S RIGHT TO COMMENCE SALES OF SHARES OF COMMON
STOCK.
|
The right
of the Company hereunder to commence sales of the Purchase Shares is subject to
the satisfaction of each of the following conditions:
(a) The
Investor shall have executed each of the Transaction Documents and delivered the
same to the Company; and
(b) No
stop order with respect to the Registration Statement shall be pending or
threatened by the SEC.
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8.
|
CONDITIONS
TO THE INVESTOR'S OBLIGATION TO
PURCHASE.
|
The
obligation of the Investor to buy Purchase Shares, Warrants and Preferred Shares
under this Agreement is subject to the satisfaction of each of the following
conditions and once such conditions have been initially satisfied, there shall
not be any ongoing obligation to satisfy such conditions after the Commencement
has occurred:
(a) The
Company shall have executed each of the Transaction Documents and delivered the
same to the Investor and shall have filed the Certificate of Designation in the
form of Exhibit
F hereto with the Secretary of State of the State of
Florida;
(b) The
Company shall have issued to the Investor the Commitment Shares and Initial
Purchase Shares without restrictive legend by crediting the Investor’s account
with DTC through its Deposit Withdrawal At Custodian (“DWAC”) system and shall
have issued the Warrants and Preferred Shares to the Investor;
(c) The
Common Stock shall be authorized for quotation on the Principal Market, trading
in the Common Stock shall not have been within the last 365 days suspended by
the SEC or the Principal Market and the Purchase Shares, the Warrant Shares, the
Conversion Shares and the Commitment
Shares shall be approved for listing upon the Principal Market;
(d) The
Investor shall have received the opinions of the Company's legal counsel dated
as of the Commencement Date substantially in the form of Exhibit
A attached hereto;
(e) The
representations and warranties of the Company shall be true and correct in all
material respects (except to the extent that any of such representations and
warranties is already qualified as to materiality in Section 4 above, in which
case, such representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the Commencement 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 with the covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by the Company
at or prior to the Commencement Date. The Investor shall have
received a certificate, executed by the CEO, President or CFO of the Company,
dated as of the Commencement Date, to the foregoing effect in the form attached
hereto as Exhibit
B;
-16-
(f) The
Board of Directors of the Company shall have adopted resolutions in the form
attached hereto as Exhibit
C which shall be in full force and effect without any amendment or
supplement thereto as of the Commencement Date;
(g) As
of the Commencement Date, the Company shall have reserved out of its authorized
and unissued Common Stock, (A) solely for the purpose
of effecting purchases of Purchase Shares hereunder, 1,130,000 shares of Common
Stock, (B) as Warrant Shares 540,000 shares of Common Stock and (C) as
Conversion Shares 420,000 shares of Common Stock;
(h) The
Irrevocable Transfer Agent Instructions, in form acceptable to the Investor
shall have been delivered to and acknowledged in writing by the Company and the
Company's Transfer Agent;
(i)
The Company shall have delivered
to the Investor a certificate evidencing the incorporation and good standing of
the Company in the State of Florida issued by the Secretary of State of the
State of Florida as of a date within ten (10) Business Days prior to the
Commencement Date;
(j)
The Company shall have delivered
to the Investor a certified copy of the Articles of Incorporation as certified
by the Secretary of State of the State of Florida within ten (10) Business Days
prior to the Commencement Date and that reflect the filing of the Certificate of
Designation with the Secretary of State of the State of Florida;
(k) The
Company shall have delivered to the Investor a secretary's certificate executed
by the Secretary of the Company, dated as of the Commencement Date, in the form
attached hereto as Exhibit D;
(l)
The Registration Statement shall continue to be
effective and a prospectus supplement shall have been filed with the SEC
covering the sale by the Company to the Investor of all of the Purchase Shares,
Conversion Shares, and Commitment Shares and no stop order with respect to the
Registration Statement shall be pending or threatened by the SEC. The
Company shall have prepared and delivered to the Investor a final and complete
form of prospectus supplement, dated and current as of the Commencement Date, to
be used by the Company in connection with any sales of any Purchase Shares,
Conversion Shares or Commitment Shares to the Investor, and to be filed by the
Company. The Company shall have made all filings under all applicable federal
and state securities laws necessary to consummate the issuance of the Commitment
Shares, Purchase Shares, the Warrants, the Warrant Shares, the Preferred Shares
and the Conversion Shares pursuant to this Agreement in compliance with such
laws;
(m) No
Event of Default as defined in Section 10 has occurred, or any event which,
after notice and/or lapse of time, would become an Event of Default has
occurred;
(n) On
or prior to the Commencement Date, the Company shall take all necessary action,
if any, and such actions as reasonably requested by the Investor, in order to
render inapplicable any control share acquisition, business combination,
shareholder rights plan or poison pill (including any distribution under a
rights agreement) or other similar anti-takeover provision under the Articles of
Incorporation or the laws of the state of its incorporation which is or could
become applicable to the Investor as a result of the transactions contemplated
by this Agreement, including, without limitation, the Company's issuance of the
Securities and the Commitment Shares and the Investor's ownership of the
Securities and the Commitment Shares; and
(o) The
Company shall have provided the Investor with the information requested by the
Investor in connection with its due diligence requests made prior to, or in
connection with, the Commencement, in accordance with the terms of Section 5(f)
hereof.
-17-
|
|
9.
|
INDEMNIFICATION.
|
In
consideration of the Investor's execution and delivery of the Transaction
Documents and acquiring the Securities hereunder and in addition to all of the
Company's other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless the Investor and all of its
affiliates, shareholders, officers, directors, employees and direct or indirect
investors and any of the foregoing person's agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the “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 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
any Indemnitee 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 the Transaction Documents 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 the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby, or
(c) any cause of action, suit or claim brought or made against such Indemnitee
and arising out of or resulting from the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument
or document contemplated hereby or thereby, other than with respect
to Indemnified Liabilities which directly and primarily result from the gross
negligence or willful misconduct of the Indemnitee. 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. Payment under this indemnification shall be made
within thirty (30) days from the date Investor makes written request for it. A
certificate containing reasonable detail as to the amount of such
indemnification submitted to the Company by Investor shall be conclusive
evidence, absent manifest error, of the amount due from the Company to
Investor. The Company shall have no liability for any special,
consequential, punitive, treble or similar Indemnifiable Damages.
|
10.
|
EVENTS
OF DEFAULT.
|
An “Event
of Default” shall be deemed to have occurred at any time as any of the following
events occurs:
(a) the
effectiveness of a registration statement registering the Purchase Shares,
Conversion Shares or Commitment Shares lapses for any reason (including, without
limitation, the issuance of a stop order) or is unavailable to the Investor for
sale of any or all of the Purchase Shares, Conversion Shares or Commitment
Shares, and such lapse or unavailability continues for a period of twenty (20)
consecutive Business Days or for more than an aggregate of forty (40) Business
Days in any 365-day period;
(b) the
suspension from trading or failure of the Common Stock to be listed on the
Principal Market for a period of two (2) consecutive Business Days;
(c) the
delisting of the Company’s Common Stock from the Principal Market, provided,
however, that the Common Stock is not immediately thereafter trading on the New
York Stock Exchange, the Nasdaq Global Market, the Nasdaq Global Select Market,
the OTC Bulletin Board, or NYSE Amex;
(d) the
failure for any reason by the Transfer Agent to issue Purchase Shares to the
Investor within five (5) Business Days after the applicable Purchase Date which
the Investor is entitled to receive;
-18-
(e) the
Company breaches any representation, warranty, covenant or other term or
condition under any Transaction Document if such breach would have a Material
Adverse Effect and except, in the case of a breach of a covenant which is
reasonably curable, only if such breach continues for a period of at least five
(5) Business Days;
(f)
if any Person commences a proceeding against the
Company pursuant to or within the meaning of any Bankruptcy Law;
(g) if
the Company pursuant to or within the meaning of any Bankruptcy Law; (A)
commences a voluntary case, (B) consents to the entry of an order for relief
against it in an involuntary case, (C) consents to the appointment of a
Custodian of it or for all or substantially all of its property, (D) makes a
general assignment for the benefit of its creditors or is generally unable to
pay its debts as the same become due;
(h) a
court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that (A) is for relief against the Company in an involuntary case, (B)
appoints a Custodian of the Company or for all or substantially all of its
property, or (C) orders the liquidation of the Company or any
Subsidiary;
(i)
If at any time the Company is not eligible
to transfer its Common Stock electronically via the DTC FAST System as well as
the continued lack of such eligibility for three (3) Business Days;
(j)
a Material Adverse Effect occurs in the
Company; or
(k) if
at any time after the Commencement Date, there are insufficient shares of Common
Stock, either pursuant to the Company’s charter documents or the regulations of
the Principal Market, to effect the issuance of the Conversion Shares or the
Warrant Shares.
In
addition to any other rights and remedies under applicable law and this
Agreement, including the Investor termination rights under Section 11 hereof, so
long as an Event of Default has occurred and is continuing, or if any event
which, after notice and/or lapse of time, would become an Event of Default, has
occurred and is continuing, or so long as the Purchase Price is below the Floor
Price, the Investor shall not be permitted or obligated to purchase any shares
of Common Stock under this Agreement. If pursuant to or within the
meaning of any Bankruptcy Law, the Company commences a voluntary case or any
Person commences a proceeding against the Company, a Custodian is appointed for
the Company or for all or substantially all of its property, or the Company
makes a general assignment for the benefit of its creditors, (any of which would
be an Event of Default as described in Sections 10(f), 10(g) and 10(h) hereof) this Agreement
shall automatically terminate without any liability or payment to the Company
without further action or notice by any Person. No such termination
of this Agreement under Section 11(a) or 11(d) shall affect the Company's or the
Investor's obligations under this Agreement with respect to pending purchases
and the Company and the Investor shall complete their respective obligations
with respect to any pending purchases under this Agreement.
-19-
|
11.
|
TERMINATION
|
This
Agreement may be terminated only as follows:
(a) By
the Investor any time an Event of Default exists, and continues to exist after
any notice or cure period provided, without any liability or payment to the
Company. However, if pursuant to or within the meaning of any
Bankruptcy Law, the Company commences a voluntary case or any Person commences a
Proceeding against the Company a Custodian is appointed for the Company or for
all or substantially all of its property, or the Company makes a general
assignment for the benefit of its creditors, (any of which would be an Event of
Default as described in Sections 10(f), 10(g) and 10(h) hereof) this Agreement
shall automatically terminate without any liability or payment to the Company
without further action or notice by any Person. No such termination
of this Agreement under this Section 11(a) shall affect the Company's or the
Investor's obligations under this Agreement with respect to pending purchases
and the Company and the Investor shall complete their respective obligations
with respect to any pending purchases under this Agreement.
(b) In
the event that the Commencement shall not have occurred, the Company shall have
the option to terminate this Agreement for any reason or for no reason without
any liability whatsoever of any party to any other party under this Agreement
(provided that the Company has paid Investor all amounts owed under Section 5(e)
of this Agreement).
(c) In
the event that the Commencement shall not have occurred on or before September
30, 2010, due to the failure to satisfy the conditions set forth in Sections 7
and 8 above with respect to the Commencement, the non-breaching party shall have
the option to terminate this Agreement at the close of business on such date or
thereafter without liability of any party to any other party.
(d)
At any time one (1) year after the Commencement Date, the Company shall have the
option to terminate this Agreement for any reason or for no reason by delivering
notice (a “Company Termination Notice”) to the Investor electing to terminate
this Agreement without any liability whatsoever of any party to any other party
under this Agreement. The Company Termination Notice shall not be
effective until ten (10) Business Days after it has been received by the
Investor. No such termination of this Agreement under this Section 11(d) shall
affect the Company's or the Investor's obligations under this Agreement with
respect to pending purchases and the Company and the Investor shall complete
their respective obligations with respect to any pending purchases under this
Agreement.
(e) This
Agreement shall automatically terminate on the date that the Company sells and
the Investor purchases the full Available Amount as provided herein, without any
action or notice on the part of any party and without any liability whatsoever
of any party to any other party under this Agreement.
(f) If
by the Maturity Date for any reason or for no reason the full Available Amount
under this Agreement has not been purchased as provided for in Section 2 of this
Agreement, this Agreement shall automatically terminate on the Maturity Date,
without any action or notice on the part of any party and without any liability
whatsoever of any party to any other party under this Agreement.
(g) By
the Company at any time if Investor has failed to perform its purchase
obligations hereunder by failing to purchase the Purchase Shares in accordance
with the terms hereof.
Except as
set forth in Sections 11(a) (in respect of an Event of Default under Sections
10(f), 10(g) and 10(h)) and 11(f), any termination of this Agreement pursuant to
this Section 11 shall be effected by written notice from the Company to the
Investor, or the Investor to the Company, as the case may be, setting forth the
basis for the termination hereof. The representations and warranties
and covenants of the Company and the Investor contained in Sections 3, 4, 5, and
6 hereof, the indemnification provisions set forth in Section 9 hereof and the
agreements and covenants set forth in Sections 10 and 11, shall survive
the Commencement and any termination of this Agreement. No
termination of this Agreement shall affect the Company's or the Investor's
rights or obligations under (i) the Registration Rights Agreement which shall
survive any such termination or (ii) under this Agreement with respect to
pending purchases and the Company and the Investor shall complete their
respective obligations with respect to any pending purchases under this
Agreement.
-20-
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12.
|
MISCELLANEOUS.
|
(a) Governing Law; Jurisdiction;
Jury Trial. The corporate laws of the State of Florida shall
govern all issues concerning the relative rights of the Company and its
shareholders. All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement and the other Transaction
Documents shall be governed by the internal laws of the State of Illinois,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Illinois or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of
Illinois. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of Chicago, for
the adjudication of any dispute hereunder or under the other Transaction
Documents or in connection herewith or therewith, or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(b) Counterparts. This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature or signature delivered by e-mail in a “.pdf”
format data file shall be considered due execution and shall be binding upon the
signatory thereto with the same force and effect as if the signature were an
original, not a facsimile signature or a signature in a “.pdf” format data
file.
(c) Headings. The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
(d) Severability. If
any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
(e) Entire
Agreement. 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, the other Transaction Documents 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. The
Company acknowledges and agrees that is has not relied on, in any manner
whatsoever, any representations or statements, written or oral, other than as
expressly set forth in this Agreement.
-21-
(f) Notices. Any
notices, consents or other communications required or permitted to be given
under the terms of this Agreement must be in writing and will be deemed to have
been delivered: (i) upon receipt when delivered personally; (ii) upon receipt
when sent by facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or (iii) one
(1) Business 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:
Onstream
Media Corporation
0000 XX
00xx
Xxxxxx
Xxxxxxx
Xxxxx, XX 00000
Telephone: 954-917-6655
Facsimile: 000-000-0000
Attention: Chief
Executive Officer
With a
copy to:
Xxxxxxx
& Xxxxxxx, LPA
000 Xxxx
Xxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxx
Xxxxxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 954-462-4260
Attention: Xxxx
X. Xxxxxxxxx, Esq.
If to the
Investor:
Lincoln
Park Capital Fund, LLC
000 Xxxxx
Xxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
Telephone: 312-822-9300
Facsimile: 000-000-0000
Attention: Xxxx
Xxxxxxxxxx/Xxxxxxxx Xxxx
With a
copy to:
K&L
Gates LLP
000 Xxxxx
Xxxxxxxx Xxxx.
Xxxxx, XX
00000
Telephone: 000-000-0000
Facsimile: 305-358-7095
Attention:
Xxxxxxx Xxxxxx, Esq.
If to the
Transfer Agent:
Interwest
Transfer Co.
0000 X
0000 Xxxxx, Xxx. 000
Xxxx Xxxx
Xxxx, XX 00000
Telephone: 801-272-9294
Facsimile: 801-277-3147
Attention:
Xxxxxxx Xxxx
-22-
or at
such other address and/or facsimile number and/or to the attention of such other
person as the recipient party has specified by written notice given to each
other party three (3) Business Days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of
such notice, consent or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, and
recipient facsimile number or (C) provided by a nationally recognized overnight
delivery service, shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.
(g) Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and
assigns. The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Investor,
including by merger or consolidation. The Investor may not assign its
rights or obligations under this Agreement.
(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)
Publicity. The
Investor shall have the right to approve before issuance any press release, SEC
filing or any other public disclosure made by or on behalf of the Company
whatsoever with respect to, in any manner, the Investor, its purchases hereunder
or any aspect of this Agreement or the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior
approval of the Investor, to make any press release or other public disclosure
(including any filings with the SEC) with respect to such transactions as is
required by applicable law and regulations so long as the Company and its
counsel consult with the Investor in connection with any such press release or
other public disclosure at least two (2) Business Days prior to its
release. The Investor must be provided with a copy thereof at least
two (2) Business Days prior to any release or use by the Company
thereof.
(j)
Further
Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(k) No Financial Advisor,
Placement Agent, Broker or Finder. The Company
represents and warrants to the Investor that it has not engaged any financial
advisor, placement agent, broker or finder in connection with the transactions
contemplated hereby. The Investor represents and warrants to the
Company that it has not engaged any financial advisor, placement agent, broker
or finder in connection with the transactions contemplated
hereby. The Company shall be responsible for the payment of any fees
or commissions, if any, of any financial advisor, placement agent, broker or
finder relating to or arising out of the transactions contemplated
hereby. The Company shall pay, and hold the Investor harmless
against, any liability, loss or expense (including, without limitation,
attorneys' fees and out of pocket expenses) arising in connection with any such
claim.
(l)
No Strict
Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any
party.
-23-
(m) Remedies, Other Obligations,
Breaches and Injunctive Relief. The Investor’s remedies
provided in this Agreement shall be cumulative and in addition to all other
remedies available to the Investor under this Agreement, at law or in equity
(including a decree of specific performance and/or other injunctive relief), no
remedy of the Investor contained herein shall be deemed a waiver of compliance
with the provisions giving rise to such remedy and nothing herein shall limit
the Investor's right to pursue actual damages for any failure by the Company to
comply with the terms of this Agreement. The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to
the Investor and that the remedy at law for any such breach may be
inadequate. The Company therefore agrees that, in the event of any
such breach or threatened breach, the Investor shall be entitled, in addition to
all other available remedies, to an injunction restraining any breach, without
the necessity of showing economic loss and without any bond or other security
being required.
(n) Enforcement
Costs. If: (i) this Agreement is placed by the Investor or the
Company in the hands of an attorney for enforcement or is enforced by the
Investor or the Company through any legal proceeding; or (ii) an attorney is
retained to represent the Investor or the Company in any bankruptcy,
reorganization, receivership or other proceedings affecting creditors' rights
and involving a claim under this Agreement; or (iii) an attorney is retained to
represent the Investor or the Company in any other proceedings whatsoever in
connection with this Agreement, then the non-prevailing party shall pay to the
prevailing party, as incurred by the prevailing party, all reasonable costs and
expenses including attorneys' fees incurred in connection therewith, in addition
to all other amounts due hereunder.
(o) Failure or Indulgence Not
Waiver. No failure or delay in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or
privilege.
* * * * *
-24-
IN WITNESS WHEREOF, the
Investor and the Company have caused this Purchase Agreement to be duly executed
as of the date first written above.
|
THE COMPANY:
|
|
|
ONSTREAM
MEDIA CORPORATION
|
|
|
By:
|
/s/ Xxxxx X. Xxxxxx
|
|
Name:
Xxxxx X. Xxxxxx
|
|
|
Title: CEO
|
|
|
INVESTOR:
|
|
|
LINCOLN
PARK CAPITAL FUND, LLC
|
|
|
BY:
LINCOLN PARK CAPITAL, LLC
|
|
|
BY:
ROCKLEDGE CAPITAL CORPORATION
|
|
|
By:
|
/s/ Xxxx Xxxxxxxxxx
|
|
Name:
Xxxx Xxxxxxxxxx
|
|
|
Title:
President
|
|
-25-
|
SCHEDULES
|
|
|
Schedule
4(a)
|
Subsidiaries
|
|
Schedule
4(c)
|
Capitalization
|
|
Schedule
4(e)
|
Conflicts
|
|
Schedule
4(f)
|
Exchange
Act Filings
|
|
Schedule
4(g)
|
Material
Changes
|
|
Schedule
4(h)
|
Litigation
|
|
Schedule
4(k)
|
Intellectual
Property
|
|
Schedule
4(m)
|
Liens
|
|
EXHIBITS
|
|
|
Exhibit
A
|
Form
of Company Counsel Opinion
|
|
Exhibit
B
|
Form
of Officer’s Certificate
|
|
Exhibit
C
|
Form
of Resolutions of Board of Directors of the Company
|
|
Exhibit
D
|
Form
of Secretary’s Certificate
|
|
Exhibit
E
|
Form
of Certificate of Designation
|
|
Exhibit
F
|
Form
of Warrant
|
The above
Schedules and Exhibits have been redacted from this Exhibit
10.1.
