INTEGRATED TECHNOLOGY GROUP
SECURED CONVERTIBLE DEBENTURE
PURCHASE AGREEMENT
FEBRUARY 19, 2002
SECURED CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
THIS SECURED CONVERTIBLE DEBENTURE PURCHASE AGREEMENT (this
"Agreement") is made as of February 19th, 2002 (the "Effective Date"), by and
among Integrated Technology Group Inc., a Nevada Corporation, with its principal
place of business at 000 Xxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000 (the
"Company") and the Brighton Opportunity Fund a California limited partnership
with its principal place of business at 0000 Xxxxxxx Xxxx Xxxx , Xxxxx 0000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000 (the "Purchaser").
AGREEMENT
In consideration of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and the Purchaser hereby agree as follows:
SECTION 1. AUTHORIZATION OF BORROWING AND SALE OF THE SHARES. Subject
to the terms and conditions of this Agreement, the Company has, or before the
Closing (as defined below) will have, authorized the borrowing of $300,000
pursuant to a debenture attached hereto as Exhibit A ("Debenture") and made
reservation of the sale and issuance of Six Hundred Fifty Thousand (650,000)
shares of its common stock to be issued in the event of Conversion of the
Debenture ("Shares") to the Purchaser.
SECTION 2. AGREEMENT TO BORROW AND SELL AND PURCHASE THE SHARES.
2.1. At the Closing (as defined in Section 3.1 hereof), the Company
shall borrow pursuant to the Debenture as follows:
1. An executed copy of the Debenture Dated February 19, 2002; and
2. One Million Three Hundred Thousand (1,300,000) Shares
collateral, with evidence of transfer to the securities account in the name of
Purchaser as specified in Exhibit B hereto prior to Closing ( "The Collateral
Shares"). The Collateral Shares are delivered as collateral for the performance
of the Registration provisions set forth in Paragraphs 8.1 and 8.2 by Xxxxxx X.
Xxxxxx and said Collateral Shares shall be returned to Holden upon the
completion of Registration of the 650,000 shares, set forth in Paragraph 8.2.
3. The term "Shares" shall include the Collateral Shares.
SECTION 3. CLOSING AND DELIVERY.
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3.1. Closing. The closing of the purchase and sale of the Shares
pursuant to this Agreement (the "Closing") shall be held as soon as practicable
after the execution of this Agreement at the law offices of Xxxxxxx Xxxx 0000
Xxxxxxx Xxxx Xxxx, 00xx Xxxxx, Xxx Xxxxxxx, XX 00000, or on such other date and
place as may be agreed to by the Company and the Purchaser. The Company shall
give at least one (1) business day prior written notice to the Purchaser, in a
manner provided for in Section 9.4 hereof, of the date, time and location of the
Closing. At or prior to the Closing, the Purchaser shall execute any related
agreements or other documents required to be executed hereunder, dated as of the
date of the Closing (the "Closing Date").
3.2. Delivery of the Shares at the Closing. At or prior to the
Closing, the Company shall deliver to the Purchaser the Collateral Shares and
Debenture.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
4.1. Organization and Standing. Each of the Company and its
subsidiaries has been duly incorporated and is validly existing as a corporation
in good standing under the laws of the jurisdiction of its incorporation, has
full corporate power and authority to own or lease its properties and conduct
its business as presently conducted.
4.2. Corporate Power; Authorization. The Company has all requisite
corporate power, and has taken all requisite corporate action, to execute and
deliver this Agreement, sell and issue the Shares and carry out and perform all
of its obligations under this Agreement. This Agreement constitutes the legal,
valid and binding obligation of the Company, enforceable in accordance with its
terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium and other laws of general applicability
relating to or affecting creditors' rights, (b) as limited by equitable
principles generally, whether such enforceability is considered in a proceeding
in equity or at law, and (c) as rights to indemnity or contribution hereunder
may be limited by federal or state securities laws or principles of public
policy. Except as would. not individually or in the aggregate have a material
adverse effect on, or result in a material adverse change in, the business,
properties, operations, condition (financial or other) or results of operations
of the Company and its subsidiaries, taken as a whole, or render this Agreement,
or any portion hereof, invalid or unenforceable or impair in any material
respect the ability of the Company to perform fully its obligations hereunder
(any of the foregoing shall be referred to herein as a "Material Adverse
Effect"), the execution and delivery of this Agreement does not, and the
performance of this Agreement and the compliance with the provisions hereof and
the issuance, sale and delivery of the Shares by the Company will not conflict
with, or result in a breach or violation of the terms, conditions or provisions
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of, or constitute a default under, or result in the creation or imposition of
any lien pursuant to the terms of (i) the Certificate of Incorporation or Bylaws
of the Company, (ii) any statute, law, rule or regulation applicable to the
Company, (iii) any state or federal order, judgment or decree applicable to the
Company, or (iv) any indenture, mortgage, lease or other agreement or instrument
to which the Company or any of its properties is subject.
4.3. Issuance and Delivery of the Shares. The Shares have been duly
authorized and, when issued and paid for in compliance with the provisions of
this Agreement, will be validly issued, fully paid and nonassessable. The
issuance and delivery of the Shares is not subject to preemptive, co-sale, right
of first refusal or any other similar rights of the shareholders of the Company
or its subsidiaries or any liens or encumbrances. No holder of any of the
Company's securities has been granted any registration rights other than the
registration rights set forth herein.
4.4. Disclosure Documents; Financial Statements.
(a) Each statement or report included as part of the periodic
reports filed by the Company with the Securities and Exchange Commission ("SEC")
pursuant to Sections 13, 14(a) and (d) of the Securities Exchange Act of 1934
(the "Exchange Act") is true and complete in all respects. The Company has filed
in a timely manner all documents ("Disclosure Documents") that the Company was
required to file with the SEC under Sections 13, 14(a) and 15(d) of the Exchange
Act during the twelve (12) months preceding the date of this Agreement other
than a Form 8-K reporting sale of shares pursuant to Regulation S in January
2002.
(b) As of their respective filing dates (or, if amended, when
amended), the Disclosure Documents complied in all material respects with the
requirements of the Exchange Act and the information contained therein as of the
date thereof did not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances under which they were made not
misleading, except to the extent that information contained in any such document
has been revised or superseded by a later filed SEC document. The Disclosure
Documents, did not contain any untrue statement of fact or omit to state facts
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
(c) The financial statements of the Company and its subsidiaries
included or incorporated by reference in the Disclosure Documents comply in all
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, The Financial Statements have
been prepared in accordance with generally accepted accounting principles
consistently applied ("GAAP") and fairly present the financial position of the
Company and its subsidiaries at the dates thereof and the results of its
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operations and cash flows for the periods then ended (subject, in the case of
the unaudited statements having been prepared in accordance with GAAP for
interim financial information including normal recurring adjustments). Since the
date of the Financial Statements, there has been no material commitment of the
Company or any of its subsidiaries which is not reflected in the Financial
Statements except commitments made in the ordinary course of business.
4.5. Intellectual Property. Each of the Company and its subsidiaries
owns or, to the Company's knowledge, possesses adequate rights to use all
material patents, patent rights, inventions, trade secrets and know-how
described or referred to in the Offering Memorandum as owned or used by it or
that are necessary for the conduct of its lousiness as presently conducted and
as described in the Disclosure Documents. Each of the Company and its
subsidiaries has not received any notice of, nor has any knowledge of, any
infringement of or conflict with asserted rights of others with respect to any
patent, patent right, invention, trade secret or know how that, individually or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a Material Adverse Effect.
4.6. Capitalization. As of September 30, 2001 (the "Share Date"), the
Company had authorized 20,000,000 shares of $ .01 per share par value common
stock (the "Common Stock") of which 11,225,000 shares were issued and
outstanding and 10,000,000 shares of $ .01 per share par value preferred stock
of which 9,535,000 shares are designated as Series A Cumulative Preferred Stock,
all of which are issued and outstanding . Except for 18,353 shares of Common
Stock issued on January 10, 2002, and approximately 100,000 shares reserved for
issuance to H. Xxxxx Xxxxxx plus 650,000 shares reserved for issuance for Xxxxxx
X. Xxxxxx and another 100,000 incorrectly issued shares which are to be returned
for cancellation, there have been no changes in the outstanding capital stock of
the Company since the Share Date except for, grants of options pursuant to
option plans described in the Disclosure Documents and to the extent that
certain outstanding options, convertible securities and warrants may have been
exercised. The certificates evidencing the Shares are in due and proper legal
form in and have been duly authorized for issuance by the Company. Except as
noted in this Section 4.1, all of the issued and outstanding securities of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable, have been issued in compliance with Federal, state and other
applicable laws and were issued without violation of any preemptive, co-sale or
other right. Except as otherwise disclosed in the Disclosure Documents, there
are no outstanding options, warrant, agreement or other right calling for the
issuance or redemption of, and there is no commitment, plan or arrangement to
issue or redeem, any securities of the Company. The Company owns, beneficially
and of record, all of the securities of each of its subsidiaries. Neither the
Company nor any of its subsidiaries has any binding agreement with respect to
the acquisition or purchase of the securities of or owned by any person or
entity or the acquisition of the business, assets or liabilities of any person
or entity, and neither the Company nor any of its subsidiaries has any agreement
or understanding with respect to the disposition or sale of their business,
assets or property other than in the ordinary course of their business.
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4.7. Litigation. Except as disclosed in the Disclosure Documents,
there is no pending or, to the Company's knowledge, threatened action, suit or
other proceeding to which the Company or its subsidiaries is a party or to which
its property or assets are subject which would have a Material Adverse Effect
other than that which has been formally waived or otherwise acquiesced to in
writing; and no labor disturbance by the employees of the Company or any
subsidiary exists or is imminent which would have a Material Adverse Effect.
4.8. No Defaults. Neither the Company nor any of its subsidiaries is
in violation or default of any provision of its certificate of incorporation or
bylaws, or any organizational documents, or is in breach with respect to any
provision of any agreement, judgment, decree, order, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other instrument to which it is
a party or by which it or any of its properties are bound which violation,
default or breach would have a Material Adverse Effect; and there does not exist
any state of facts which constitutes ail event of default on the part of the
Company or any such subsidiary as defined in such documents or which, with
notice or lapse of time or both, would constitute such an event of default.
4.9. Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state, or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement ("Consents") except for (a) such Consents which
are not material, (b) compliance with the securities and blue sky laws in the
states and other jurisdictions in which Shares are offered and/or sold, which
compliance will be effected in accordance with such laws, and (c) the filing and
effectiveness of a Registration Statement and any amendments thereto with the
SEC as contemplated by Section 8.1 hereof. The Company and its subsidiaries are
conducting business in compliance with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting business, including
but not limited to, all applicable local, state and federal environmental laws
and regulations, except where the failure to so comply would not have a Material
Adverse Effect.
4.10. Taxes. Each of the Company and its subsidiaries have filed all
necessary federal, state and foreign income and franchise tax returns and have
paid or accrued all taxes shown as due thereon except for such taxes as are
being contested in good faith, and the Company has no knowledge of any tax
deficiency winch has been or might be asserted or threatened against the Company
or its subsidiaries which would have a Material Adverse Effect.
4.11. Insurance. The Company and its subsidiaries maintain property,
general liability, directors and officers and errors and omissions insurance
policies of the types and in the amounts generally deemed adequate for its
business covering all risks customarily insured against, all of which insurance
is in full force and effect.
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4.12. Investment Company. The Company is not an "investment company"
within the meaning of the investment Company Act of 1940, as amended.
4.13. Listing; Maintenance of Listing. The Common Stock is traded on
The Nasdaq Over the Counter Bulletin Board (the "Bulletin Board"). For so long
as the Company is obligated to keep in effect the Registration Statement
provided under Section 8 hereof, the Company shall use commercially reasonable
efforts to maintain its authorization to trade on the Bulletin Board or a
national securities exchange, as defined in the Exchange Act.
4.14. No Registration. Assuming the accuracy of the representations
and warranties made by, and compliance with the covenants of, the Purchaser in
Section 5 hereof, no registration of the shares under the Securities Act is
required in connection with the sale of the shares to the Purchaser as
contemplated by this Agreement.
4.15. Subsidiaries. All of the issued and outstanding securities of
each of the Company's subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable, have been issued in compliance with Federal,
state and other applicable laws and were issued without violation of any
preemptive, co-sale or other right.
4.16. Material Adverse Effect. There has not been, since the date of
the latest Disclosure Document any change or any development involving or which
may reasonably be expected to involve a change in the condition (financial or
other), business, operations, properties, or results of operations of the
Company or its subsidiaries that could reasonably be expected to have a Material
Adverse Effect.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
5.1. The Purchaser represents and warrants to and covenants with the
Company that:
(a) Purchaser is knowledgeable, sophisticated and experienced in
making, and is qualified to make, decisions with respect to investments in
shares presenting an investment decision like that involved in the purchase of
the Shares and lending under the Debenture, including investments in securities
issued by the Company. Purchaser has had the opportunity to meet with
representatives of the Company in order to ask questions regarding the Company
and the terms of this Agreement, and Purchaser has requested, received, reviewed
and considered all information Purchaser deems relevant in making an informed
decision to purchase the Shares and to lend pursuant to the Debenture.
(b) Purchaser is purchasing the Shares and investing in the
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Debenture in the ordinary course of its business for its own account and with no
present intention of distributing the Shares or interests in the Debenture or
any arrangement or understanding with any other persons regarding the
distribution of the Shares or interests in the Debenture.
(c) Purchaser shall not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the securities purchased
hereunder except in compliance with the Securities Act, applicable blue sky
laws, and the rules and regulations promulgated thereunder.
(d) Purchaser has, in connection with its decision to purchase
the Shares and invest in the Debenture, relied with respect to the Company and
its affairs solely upon the Disclosure Documents and the representations and
warranties of the Company contained herein.
(e) Purchaser is an "accredited investor" within the meaning of
Rule 501 (a) (1), (2) or (3) of Regulation D promulgated under the Securities
Act.
(f) Purchaser has full right, power, authority and capacity to
enter into this Agreement and to consummate the transactions contemplated hereby
and has taken all necessary action to authorize the execution, delivery and
performance of this Agreement. Upon the execution and delivery of this Agreement
by Purchaser, this Agreement shall constitute a valid and binding obligation of
Purchaser, enforceable in accordance with its terms.
5.2. Purchaser is able to bear the economic risk of holding the Shares
and the Debenture for an indefinite period, including the loss of Purchaser's
entire investment. The Shares and the Debenture were not offered, or sold to
Purchaser by any form of general solicitation or advertising, provided that the
Purchaser and the Company are aware that the Purchaser may elect to sell any or
all of the Shares or interest in the Debenture as soon as possible after the
Closing.
5.3. Purchaser understands that each of the representations and
warranties of Purchaser may be relied upon by the Company in connection with the
preparation and filing of the Registration Statement (as defined in Section 8.1
below).
5.4. Purchaser understands that the Debenture and Shares shall not be
transferable in the absence of a registration under the Securities Act or an
exemption therefrom or in the absence of compliance with any term of this
Agreement; the Company shall provide stop transfer instructions to its transfer
agent with respect to the Debenture and Shares in order to enforce the
restrictions contained in this Section 5.4 and to confirm that Purchaser has
complied with its obligations contained in Section 8.2 hereof, and (c) to the
extent not covered by an effective registration statement under the Securities
Act, each certificate representing Debenture or Shares shall be in the name of
Purchaser and shall bear substantially the following legend (in addition to any
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legend required under applicable securities laws):
"THE SECURITIES REPRESENTED BY THIS, CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR QUALIFIED UNDER THE CALIFORNIA CORPORATE
SECURITIES LAW OF 1968, AS AMENDED, OR REGISTERED OR QUALIFIED
UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTION, AND MAY
ONLY BE SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSE) OF BY
AN INVESTOR IF SUBSEQUENTLY REGISTERED UNDER THE SECURITIES
ACT AND REGISTERED OR QUALIFIED UNDER ANY APPLICABLE STATE
SECURITIES LAWS, UNLESS THE COMPANY DETERMINES THAT EXEMPTIONS
FROM SUCH REGISTRATION AND QUALIFICATION REQUIREMENTS ARE
AVAILABLE."
SECTION 6. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING. The
Company's obligations to complete the sale and issuance of the Debenture and, as
required, the Shares and to deliver the Debenture and Shares to the Purchaser
shall be subject to the following Conditions (to the extent not waived by the
Company)
6.1. Representations and Warranties Correct. The representations and
Warranties made by the Purchaser in Section 5 hereof shall be true and correct
when made, and shall be true and correct on the Closing Date and the obligations
of the Purchaser which are to be performed or complied with on or prior to the
Closing Date, have been so performed or complied with
This Agreement may be terminated by the Company if the Closing has not
transpired by the third day after the Effective Date for reasons other than a
breach of this Agreement by the Company.
SECTION 7. CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE CLOSING. The
Purchaser's obligation to accept delivery of the Shares and to lend pursuant to
the Debenture for the Shares shall be subject to the following conditions (to
the extent not waived by the Purchaser):
7.1. Representations and Warranties Correct. The representations and
warranties made, by the Company in Section 4 hereof shall be true and correct
when made and as of the Closing Date and the obligations of the Company which
are to be performed or complied with on or prior to the Closing Date have been
so performed or complied with, and the Purchaser shall have received a
certificate signed by the chief executive officer and chief financial officer of
the Company, or such other officers of the Company, as agreed upon by the
parties hereto, that each of such representations and warranties, as
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appropriate, is true and correct in all material respects on and as of the
Closing Date with the same effect as though such representations and warranties
had been made or given on and as of the Closing Date, and that the Company has
performed and complied with all of its obligations under this Agreement which
are to be performed or complied with on or prior to the Closing Date.
7.2. Legal Opinions. The Purchaser shall have received an opinion
letter from Xxxxxx X. Xxxxxxxxx, Esq., counsel to the Company, without
qualification, stating that the Debenture and Shares have been duly and validly
issued by the Company to the Purchaser; (ii) the Agreement constitutes a valid
binding and enforceable agreement against Purchaser in accordance with its terms
(iii) the Company is eligible to file a registration statement for registration
of the Restricted Shares in the manner provided in Paragraph 8 hereof and there
are no SEC restrictions or policies, to the best of the knowledge of the
attorney, with respect to the Company's ability to effectuate the registration
statement and achieve SEC registration as soon as practicable; (iv) that the
Collateral Shares, upon transfer to the account of Purchaser are freely saleable
by the Purchaser in open market transactions after August 16, 2002, should the
company fail to register the Shares within 120 days of the Closing Date without
restriction and that the attorney covenants to issue appropriate instructions to
the transfer agent, if necessary, to authorize transfer of the Restricted Shares
or the Collateral Shares immediately upon the written request of the Purchaser.
7.3. Material Adverse Effect. There shall not have been, since the
date of this Agreement, a change in the business, properties, operations,
condition (financial or other) or results of operations of the Company or its
subsidiaries, that could reasonably be expected to have a Material Adverse
Effect.
This Agreement may be terminated by the Purchaser if the Closing has
not transpired by the third day after the Effective Date for reasons other than
a breach of this Agreement by the Purchaser.
SECTION 8. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES
ACT.
8.1. Registration Procedures and Expenses. The Company is obligated to
do the following:
(a) As soon as practicable following the Effective Date and in
any event no later than forty five (45) business days following the Effective
Date, the Company shall prepare and file with the SEC one or more registration
statements in order to register with the SEC the continuous resale by the
Purchaser, from time to time, of the Shares into which the Debenture is
convertible through the Bulletin Board or the facilities of any national
securities exchange on which Common Stock is then traded, or in
privately-negotiated transactions (a "Registration Statement"). The Company
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shall use its reasonable best efforts to cause such Registration Statement to be
declared effective as soon thereafter as reasonably possible.
(b) The Company shall prepare and file with the SEC (i) such
amendments and supplements to the Registration Statement and the prospectus used
in connection therewith, and (ii) such other filings required by the SEC, in
each case as may be necessary to keep the Registration Statement continuously
effective and not misleading until the earlier of (A) the second anniversary
date of the Closing, or (B) such date as all of the Shares have been resold.
(c) In order to facilitate the public sale or other disposition
of all or any of the Shares by the Purchaser, the Company shall furnish to the
Purchaser with respect to the Shares registered under the Registration Statement
such number of copies of prospectuses, prospectus supplements and preliminary
prospectuses as such Purchaser reasonably requests in conformity with the
requirements of the Securities Act.
(d) The Company shall file any documents reasonably required of
the Company for normal blue sky clearance in states specified in writing by the
Purchaser; provided, however, that the Company shall not be required to qualify
to do business or consent to service of process in any jurisdiction in which it
is not now so qualified or has not so consented.
(e) The Company shall bear all expenses in connection with the
procedures in paragraphs (a) through (d) of this Section 8. 1.
(f) With a view to making available to the Purchaser the benefits
of Rule 144 promulgated under the Securities Act ("Rule 144") and any other rule
or regulation of the SEC that may at any time permit the Purchaser to sell
Shares to the public without registration or pursuant to registration, the
Company covenants and agrees to: (i) make and keep public information available,
and those terms arc understood and defined in Rule 144, until the earlier of (A)
the second anniversary of the Closing Date or (B) such date as all of the Shares
shall have been resold; (ii) file with the SEC in a timely manner all reports
and other documents required of the Company under the Exchange Act; and (iii)
furnish to the Purchaser upon request, as long as the Purchaser owns any Shares,
(A) a written statement by the Company that it has complied with the reporting
requirements of the Exchange Act, and (B) such other information as may be
reasonably requested in order to avail the Purchaser of any rule or regulation
of the SEC that permits the selling of any such Shares without registration
under the Securities Act.
(g) The Purchaser acknowledges that there may occasionally be
times when the Company determines the use of the prospectus forming a part of
the Registration Statement (the "Prospectus") should be suspended until such
time as an amendment or supplement to the Registration statement or the
Prospectus has been filed by the Company and any such amendment to the
Registration Statement is declared effective by the SEC, or until such time as
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the Company has filed an appropriate report with the SEC pursuant to the
Exchange Act. The Purchaser hereby covenants that it will not sell any Shares
pursuant to the Prospectus during the period commencing at the time at which the
Company gives the Purchaser written notice of the suspension of the use or the
Prospectus and ending at the time the Company gives the Purchaser written notice
that the Purchaser may thereafter effect sales pursuant to the Prospectus. The
Company may, upon written notice to the Purchaser, suspend the use of the
Prospectus for two 30-day periods in any 365-day period based on the reasonable
determination of the Company's Board of Directors that there is a significant
business purpose for such determination, such as pending corporate developments,
public filings with the SEC or similar events. The Company shall in no event be
required to disclose the business purpose for which it has suspended the use of
the Prospectus if the Company determines in its good faith judgment that the
business purpose should remain confidential. The Company shall use its
reasonable best efforts to minimize the length of the suspension period.
8.2. Return of Shares. In the event that the Registration Statement is
declared effective by the SEC on or before sixty days (60) from the Closing Date
in a manner which enables the Purchaser to resale immediately all of the Shares,
Purchaser will transfer to Xxxxxx X. Xxxxxx, a share certificate for One Million
Three Hundred Thousand (1,300,000).
(a) In the event that the Registration Statement is not declared
effective by the SEC within sixty one (61) days, from the Closing Date in a
manner which enables the Purchaser to immediately resale all of the Shares,
650,000 of the Collateral Shares shall be kept by Purchaser, fully paid, with no
additional consideration required with no additional consideration required.
(b) In the event that the Registration Statement is not declared
effective by the SEC within one hundred twenty (120) days, from the Closing Date
in a manner which enables the Purchaser to immediately resale all of the Shares,
the remaining 650,000 Collateral Shares shall be kept by Purchaser, fully paid,
with no additional consideration required.
8.3. Indemnification. As used in this Section 8.3 the following terms
shall have the following respective meanings:
(a) "Registration Statement" shall mean the Registration
Statement referred to in Section 8.1 hereof, including any exhibit and amendment
thereto, and any preliminary or final prospectus, and any supplement thereto;
and
(b) "Untrue Statement" shall include any untrue statement or
alleged untrue statement, or any omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
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The Company agrees to indemnify and hold harmless the Purchaser, in
respect of the Shares purchased pursuant to this Agreement, from and against any
losses, claims, damages or liabilities to which such Purchaser may become
subject (under the Securities Act or otherwise) insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of, or are based upon any Untrue Statement, or arise out of any failure by the
Company to fulfill any undertaking included in the Registration Statement and
the Company shall reimburse as incurred such Purchaser for any reasonable legal
or other expenses reasonably incurred in investigating, defending or preparing
to defend any such action, proceeding or claim; provided, however, that the
Company shall not be liable to such Purchaser in any such case to the extent
that such loss, claim, damage or liability arises out of, or is based upon, an
Untrue Statement made in such Registration Statement in reliance upon and in
conformity with written information furnished to, the Company by or on behalf of
such Purchaser specifically for use in preparation of the Registration
Statement.
The Purchaser agrees to indemnify and hold harmless the Company (and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act, each officer of the Company who signs the Registration
Statement and each director of the Company) from and against any losses, claims,
damages or liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any Untrue
Statement contained in the Registration Statement if such Untrue Statement was
made in reliance upon and in conformity with written information furnished by or
on behalf of such Purchaser specifically for use in preparation of the
Registration Statement, and such Purchaser shall reimburse as incurred the
Company (or such officer, director or controlling person), as the case may be,
for any legal or other expenses reasonably incurred in investigating, defending
or preparing to defend any such action, proceeding or claim; provided, however,
that in no event shall any indemnity by a Purchaser under this Section 8.3
exceed the gross proceeds received by such Purchaser from the sale of Shares
covered by such Registration Statement.
Promptly after receipt by any indemnified person of a notice of a claim
or the beginning of any action in respect of which indemnity is to be sought
against an indemnifying person pursuant to this Section 8.3, such indemnified
person shall notify the indemnifying person in writing of such claim or of the
commencement of such action, and, subject to the provisions hereinafter stated,
in case any such action shall be brought against an indemnified person and such
indemnifying person shall have been notified thereof, such indemnifying person
shall be entitled to participate theorem, and, to the extent it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified person. After notice from the indemnifying person to such
indemnified person of its election to assume the defense thereof, such
indemnifying person shall not be liable to such indemnified person for all
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legal expenses subsequently incurred by such indemnified person in connection
with the defense thereof; provided, however, that if there exists or shall exist
a conflict of interest that would make it inappropriate, in the opinion of
counsel to the indemnified person, for the same counsel to represent both the
indemnified person and such indemnifying person or any affiliate or associate
thereof, the indemnified person shall be entitled to retain its own counsel at
the expense of such indemnifying person; provided, however, that no indemnifying
person shall be responsible for the fees and expenses or more than one separate
counsel for each indemnified party, it being understood that the Company shall
not be responsible for the fees and expenses of more than one counsel for the
Purchaser and the Other Purchasers as a group, unless the Purchaser and any
Other Purchasers can not be represented by the same counsel because of a
conflict of interest.
8.4. Termination of Conditions and Obligations. The conditions
precedent imposed by Section 5.4 hereof or this Section 8 upon the
transferability of the Shares shall cease and or terminate as to any particular
number of the Shares when such Shares shall have been otherwise disposed of in
accordance with the intended method of disposition set forth in the Registration
Statement covering such Shares or at such time as an opinion of counsel
satisfactory to the Company shall have been rendered to the effect that such
conditions are not necessary in order to comply with the Securities Act.
SECTION 9. MISCELLANEOUS.
9.1. Waivers and Amendments. Neither this Agreement nor any provision
hereof may be changed, waived, discharged, terminated, modified or amended
except upon the written consent of the Company and Purchaser.
9.2. Headings. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.
9.3. Severability. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
9.4. Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be sent by confirmed facsimile or mailed by
first-class registered or certified airmail, or nationally recognized overnight
express courier, postage prepaid, and shall be deemed given when sent in the
case of facsimile transmission, or when so received in the case of mail or
courier, and addressed as follows:
(a) if to the Purchaser, to:
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Xxxxxxxx Xxxxxxxxxxx Fund
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxx Xxxxxxxxx
with a copy so mailed to:
Jeffer, Mangels, Xxxxxx & Marmaro LLP
2121 Avenue of the Stars, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq
or to such other person at such other place as the Company shall designate to
the Purchaser in writing; and
(b) if to the Company, at the address as set forth in the
Disclosure Document.
9.5. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California as applied to contracts
entered into and performed entirely in California by California residents,
without regard to conflicts of law principles.
9.6. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
9.7. Survival of Representations, Warranties and Agreements,
Definition of "Knowledge". Notwithstanding any investigation made by any party
to this Agreement, all covenants, agreements, representations and warranties
made by the Company and the Purchaser herein and in the certificates for the
securities delivered pursuant hereto shall survive the execution of this
Agreement, the delivery to the Purchaser of the Shares and the payment therefor;
provided, however, all representations and warranties of the Company shall
survive for a period of two years after the Closing Date. Any claim of a breach
of representation or warranty made prior to the end of the applicable survival
period which has not been finally resolved before the expiration of such period
shall survive and remain a basis for such claim until finally resolved.
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9.8. Successors and Assigns. Except as otherwise expressly provided
herein the provisions hereof shall inure to the benefit of, and be binding upon,
the successors, assigns, heirs, executors and administrators of the parties
hereto. Neither the terms "successors" nor "assigns" as used herein shall
include any entity or person who purchases Shares from the Purchaser after the
Closing Date.
9.9. Entire Agreement. This Agreement and other documents delivered
pursuant hereto, including the exhibits and appendices, constitute the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof.
9.10. Payment of Fees and Expenses. Each of the Company and the
Purchaser shall bear its own expenses with legal fees incurred on its behalf
with respect to this Agreement and the transactions contemplated hereby
provided, however, that the Company shall bear the costs described in Section 8.
If any action at law or in equity is necessary to enforce or interpret the terms
of this Agreement, the prevailing party shall be entitled to reasonable
attorney's fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled.
9.11. Confidentiality. Purchaser acknowledges and agrees that any
information or data it has acquired from the Company, not otherwise properly in
the public domain, was received in confidence. Purchaser agrees not to divulge,
communicate or disclose, except as may be required by law or for the performance
of this Agreement, or use to the detriment of the Company or for the benefit of
any other person or persons, or misuse in any way, any confidential information
of the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly Authorized representatives as of the day and year first
above written.
the "Company"
Integrated Technology Group Incorporated
By: ________________________________________
Xxxxx Xxxxxx
CEO
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"PURCHASER"
Brighton Opportunity Fund, L.P., a California
limited partnership
By: Brighton Advisors, a California limited
liability company, its General Partner
By:____________________________________
Xxxxx Xxxxxxxxx, President
Address: 0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
__________________________________
___________, Esq., as to
Paragraph 7.2 only
Address: ____________________________
____________________________
(Phone)
____________________________
(Facsimile)
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