CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
Between
UNIVERSAL PET CARE, INC.
and
THE PURCHASER(S) LISTED ON
SCHEDULE 1 HERETO
January 20, 2004
TABLE OF CONTENTS
Article I CERTAIN DEFINITIONS
1.1 Certain Definitions
ARTICLE II PURCHASE AND SALE OF CONVERTIBLE DEBENTURES
2.2 Purchase and Sale; Purchase Price
2.2 Execution and Delivery of Documents; the Closing
2.3 The Post Closing
ARTICLE III REPRESENTATIONS AND WARRANTIES
3.1 Representations, Warranties and Agreements of
the Company
3.2 Representations and Warranties of the Purchaser
ARTICLE IV OTHER AGREEMENTS OF THE PARTIES
4.1 Manner of Offering
4.2 Furnishing Information
4.3 Notice of Certain Events
4.4 Copies and Use of Disclosure Documents and
Non-Public Filings
4.5 Modification to Disclosure Documents
4.6 Blue Sky Laws
4.7 Integration
4.8 Furnishing of Rule 144(c) Materials
4.9 Solicitation Materials
4.10 Subsequent Financial Statements
4.11 Prohibition on Certain Actions
4.12 Listing of Common Stock
4.13 Escrow
4.15 Attorney-in-Fact
4.16 Indemnification
4.17 Exclusivity
4.18 Purchaser's Ownership of Common Stock
4.19 Purchaser's
4.20 No Violation of Applicable Law
4.21 Redemption Restrictions
4.22 No Other Registration Rights
4.23 Merger or Consolidation
4.24 Registration of Escrow Shares
4.25 Liquidated Damages
4.26 Short Sale
4.27 Fees
4.28 Changes to Federal and State Securities Laws
4.29 Merger Agreement
4.30 Future Financing
4.31 Applicability of Agreements After Post Closing
4.32 Companies Right of Redemption
ARTICLE V TERMINATION
5.1 Termination by The Company or the Purchaser
5.2 Remedies
ARTICLE VI LEGAL FEES AND DEFAULT INTEREST RATE
ARTICLE VII MISCELLANEOUS
7.1 Fees and Expenses
7.2 Entire Agreement; Amendments
7.3 Notices
7.4 Amendments; Waivers
7.5 Headings
7.6 Successors and Assigns
7.7 No Third Party Beneficiaries
7.8 Governing Law; Venue; Service of Process
7.9 Survival
7.10 Counterparts Signatures
7.11 Publicity
7.12 Severability
7.13 Limitation of Remedies
7.14 Omnibus Provision
LIST OF SCHEDULES:
Schedule 1 Purchaser(s)
Schedule 3.1(a) Subsidiaries
Schedule 3.1(c) Capitalization and Registration Rights
Schedule 3.1(d) Equity and Equity Equivalent Securities
Schedule 3.1(e) Conflicts
Schedule 3.1(f) Consents and Approvals
Schedule 3.1(g) Litigation
Schedule 3.1(h) Defaults and Violations
Schedule 5.1 Form 8-K Disclosure Obligations
LIST OF EXHIBITS:
Exhibit A First Convertible Debenture A
Exhibit B Second Convertible Debenture
Exhibit C Merger Agreement
Exhibit D Certificate of Merger
Exhibit E Conversion Procedures
Exhibit F Escrow Agreement
Exhibit G Power of Attorney
Exhibit H Legal Opinion
Exhibit I Rule 504 Legal Opinion
Exhibit J Officer's Certificate
Exhibit K Company Certificate
Exhibit L Company Certificate
THIS CONVERTIBLE DEBENTURE PURCHASE AGREEMENT ("Agreement") is
made and entered into as of January 20, 2004, between Universal Pet
Care, Inc., a corporation organized and existing under the laws of the
State of Hawaii (the "Company"), and the purchaser(s) listed on
Schedule 1 hereto (the "Purchaser").
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchaser and
the Purchaser desires to acquire from the Company (i) the Company's
$995,500, 1 percent Convertible Debentures, due January 20, 2009 in the
aggregate amount of Nine Hundred Ninety Five Thousand Five Hundred
Dollars ($995,500), at the aggregate price of Nine Hundred Ninety Five
Thousand Five Hundred Dollars ($995,500) in the forms of Exhibit A
("First Debenture"), annexed hereto and made a part hereof and (ii) the
Company's $4,500, 1 percent Convertible Debenture, due January 20,
2009, at the price of Four Thousand Five Hundred Dollars ($4,500) in
the form of Exhibit B annexed hereto and made a part hereof (the
"Second Debenture"; together, with the First Debenture, the
"Debentures").
IN CONSIDERATION of the mutual covenants contained in this
Agreement, the Company and each Purchaser agree as follows:
ARTICLE I CERTAIN DEFINITIONS
Certain Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the
meanings indicated:
"Affiliate" means, with respect to any Person, any Person that,
directly or indirectly, controls, is controlled by or is under common
control with such Person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlled
by" and "under common control with") shall mean the possession,
directly or indirectly, of the power to direct or cause the direction
of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"Agreement" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"Attorney-in-Fact" shall have the meaning set forth in Section
2.2(a)(iv) hereof.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other government
actions to close.
"Closing" shall have the meaning set forth in Section 2.2(a).
"Closing Date" shall have the meaning set forth in Section 2.2(a).
"Commission" means the Securities and Exchange Commission.
"Common Stock" means shares now or hereafter authorized of the class of
common stock, par value $1.00, of the Company and stock of any other
class into which such shares may hereafter have been reclassified or
changed.
"Company" shall have the meaning set forth in the introductory
paragraph.
"Control Person" shall have the meaning set forth in Section 4.16(a)(i)
hereof.
"Conversion Date" shall have the meaning set forth in the Debentures.
"Debenture Notice" shall have the meaning set forth in Section 4.18
hereof.
"Debentures" shall have the meaning set forth in the recital.
"Default" means any event or condition which constitutes an Event of
Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"Disclosure Documents" means (a) all documents and written materials
provided to the Purchaser and/or its representatives in connection with
the Company and this offering, including, but not limited to, the
Company's unaudited balance sheet as at December 31, 2003 and profit
and loss statement for the period from inception to December 31, 2003
and (b) the Schedules required to be furnished to the Purchaser by or
on behalf of the Company pursuant to Section 3.1 hereof.
"Effective Date" shall mean the date on which certificate of merger
(the "Certificate of Merger") annexed as Exhibit D hereto is filed with
the Secretary of State of the State of [Hawaii] to effect the merger of
[AIDO Acquisition, Inc.] ("Acquisition"), a Hawaii corporation and a
wholly owned subsidiary of Advanced ID Corporation ("AIDO"), a South
Dakota corporation, with and into the Company (the "Merger") pursuant
to the Merger Agreement annexed as Exhibit C hereto.
"Escrow Agent" means Gottbetter & Partners, 000 Xxxxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, XX 00000; Tel: 000-000-0000; Fax: 000-000-0000.
"Escrow Agreement" shall have the meaning set forth in Section 4.13
hereof.
"Escrow Shares" means the certificates representing Fifty Million
(50,000,000) shares of duly issued Common Stock, without restriction
and freely tradable pursuant to Rule 504 of Regulation D of the
Securities Act, in the share denominations specified by the Purchaser,
registered in the name of the Purchaser and/or its assigns to be held
in escrow pursuant to this Agreement and the Escrow Agreement.
"Event of Default" shall have the meaning set forth in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Execution Date" means the date of this Agreement first written above.
"First Debenture" shall have the meaning set forth in the recitals.
"Full Conversion Shares" shall have the meaning set forth in Section
4.14(b) hereof.
"G&P" means Gottbetter & Partners, LLP.
"Indemnified Party" shall have the meaning set forth in Section 4.16(b)
hereof.
"Indemnifying Party" shall have the meaning set forth in Section
4.16(b) hereof.
"Limitation on Conversion" shall have the meaning set forth in Section
4.18 hereof.
"Losses" shall have the meaning set forth in Section 4.16(a) hereof.
"Lump Sum Payment" shall have the meaning set forth in Section 4.31
hereof.
"Material" shall mean having a financial consequence in excess of
$100,000.
"Material Adverse Effect" shall have the meaning set forth in Section
3.1(e).
"Maximum Share Limit" shall have the meaning set forth in Section
4.14(b).
"Merger Agreement" means the Merger Agreement among AIDO, Acquisition
and the Company, annexed as Exhibit C hereto.
"NASD" means the National Association of Securities Dealers, Inc.
"Nasdaq" shall mean the Nasdaq Stock Market, Inc.
"Non-Public Filings" shall have the meaning set forth in Section 4.2
hereof.
"Notice of Conversion" shall have the meaning set forth in paragraph 1
of Exhibit E annexed hereto.
"Original Issuance Date," shall have the meaning set forth in the
Debentures.
"OTCBB" shall mean the NASD over-the counter Bulletin Board or similar
organization or agency succeeding to its functions.
"Per Share Market Value" of the Common Stock means on any particular
date (a) the last sale price of shares of Common Stock on such date or,
if no such sale takes place on such date, the last sale price on the
most recent prior date, in each case as officially reported on the
principal national securities exchange on which the Common Stock is
then listed or admitted to trading, or (b) if the Common Stock is not
then listed or admitted to trading on any national securities exchange,
the closing bid price per share as reported by Nasdaq, or (c) if the
Common Stock is not then listed or admitted to trading on the Nasdaq,
the closing bid price per share of the Common Stock on such date as
reported on the OTCBB or if there is no such price on such date, then
the last bid price on the date nearest preceding such date, or (d) if
the Common Stock is not quoted on the OTCBB, the closing bid price for
a share of Common Stock on such date in the over-the-counter market as
reported by the Pinksheets LLC (or similar organization or agency
succeeding to its functions of reporting prices) or if there is no such
price on such date, then the last bid price on the date nearest
preceding such date, or (e) if the Common Stock is not publicly traded,
the fair market value of a share of the Common Stock as determined by
an Appraiser (as defined in and pursuant to the procedures set forth in
Section 4(c)(iv) of the Debentures) selected in good faith by the
holders of a majority of the Debentures; provided, however, that the
Company, after receipt of the determination by such Appraiser, shall
have the right to select an additional Appraiser, in which case, the
fair market value shall be equal to the average of the determinations
by each such Appraiser.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.
"Post-Closing" shall have the meaning set forth in Section 2.3(a).
"Post-Closing Date" shall have the meaning set forth in Section 2.3(a).
"Power of Attorney" means the power of attorney in the form of Exhibit
G annexed hereto.
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding,
such as a deposition), whether commenced or threatened.
"Purchase Price" shall have the meaning set forth in Section 2.1(a).
"Purchaser" shall have the meaning set forth in the introductory
paragraph.
"Registrable Securities" means the Underlying Shares and the Escrow
Shares entitled to registration pursuant to Section 4.24 and Section
4.29.
"Reporting Issuer" means a company that is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act.
"Required Approvals" shall have the meaning set forth in Section
3.1(f).
"Restriction Period" shall have the meaning set forth in Section
4.17(a).
"Second Debenture" shall have the meaning set forth in the recital.
"Securities" means the Debentures, the Underlying Shares and the Escrow
Shares.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Short Sale" shall have the meaning set forth in Section 4.26 hereof.
"Successors-in-Interest" shall have the meaning set forth in Section
4.31 hereof.
"Trading Day" means (a) a day on which the Common Stock is quoted on
the Nasdaq, the OTCBB or the principal stock exchange on which the
Common Stock has been listed, or (b) if the Common Stock is not quoted
on the Nasdaq, the OTCBB or any stock exchange, a day on which the
Common Stock is quoted in the over-the-counter market, as reported by
the Pinksheets LLC (or any similar organization or agency succeeding
its functions of reporting prices).
"Transaction Documents" means this Agreement and all exhibits and
schedules hereto and all other agreements executed pursuant to this
Agreement.
"Underlying Shares" means the shares of duly issued Common Stock,
without restriction and freely tradable pursuant to Rule 504 of
Regulation D of the Securities Act, into which the First Debenture and
Second Debenture are convertible in accordance with the terms hereof,
the First Debenture and the Second Debenture.
ARTICLE II PURCHASE AND SALE OF CONVERTIBLE DEBENTURES
Purchase and Sale; Purchase Price. (a) Subject to the terms and
conditions set forth herein, the Company shall issue and sell and the
Purchaser shall purchase an aggregate principal amount of One Million
($1,000,000) (the "Purchase Price") of the Debentures, of which Nine
Hundred Ninety Five Thousand Five Hundred Dollars ($995,500) shall be
attributable to the First Debenture and Four Thousand Five Hundred
Dollars ($4,500) shall be attributable to the Second Debenture. The
Debentures shall have the respective rights, preferences and privileges
as set forth in the respective Debentures annexed as Exhibit A and
Exhibit B hereto.
(b) The Purchase Price shall be paid and attributable as
follows:
(i) for the First Debenture substantially in the form of
Exhibit A annexed hereto cash in the amount of Nine Hundred Ninety Five
Thousand Five Hundred Dollars ($995,500);
(ii) for the Second Debenture substantially in the form of
Exhibit B, cash in the amount of Four Thousand Five Hundred Dollars
($4,500).
Execution and Delivery of Documents; The Closing. The Closing of
the purchase and sale of the Debentures (the "Closing") shall take
place simultaneously with the execution and delivery of this Agreement
(the "Closing Date"). On the Closing Date,
the parties shall execute and deliver the Escrow Agreement to
the Escrow Agent;
the Company shall deliver to the Purchaser the (A) the
Disclosure Documents, (B) a duly executed copy of the Merger Agreement
and (B) the legal opinions of counsel to the Company substantially in
the form of Exhibit H and Exhibit I annexed hereto, addressed to the
Purchaser and dated the date hereof;
the Company shall deliver to the Escrow Agent (A) original and
duly executed Debentures (First Debenture and the Second Debenture)
registered in the name of the Purchaser and/or its assigns in the
amount set forth in Schedule 1, (B) an original and duly executed Power
of Attorney and (C) certificates representing the original Escrow
Shares;
the Company shall execute and deliver to the Purchaser a
certificate of its Chief Executive Officer, in the form of Exhibit J
annexed hereto, certifying that attached thereto is a copy of
resolutions duly adopted by the Board of Directors of the Company
authorizing the Company to execute and deliver the Transaction
Documents and to enter into the transactions contemplated thereby and
the appointment, pursuant to Section 4.14 hereof, of the attorney-in-
fact pursuant to the Power of Attorney annexed as Exhibit F hereto (the
"Attorney-in-Fact"); and
the Purchaser shall deliver to the Escrow Agent the Purchase
Price by wire transfer of immediately available funds in the amount of
One Million Dollars ($1,000,000) pursuant to written wire transfer
instructions delivered by the Escrow Agent to the Purchaser at least
three (3) Business Days prior to the Closing.
If this Agreement is terminated pursuant to Section 5.1 hereof,
then, within two (2) Business Days from the date of termination, either
the Company or the Purchaser shall notify the Escrow Agent of same, and
the Escrow Agent shall, within two (2) Business Days of its
receipt of such notice,
return the Purchase Price to the Purchaser;
(B) return the Debentures to the Company; and
(C) return the Escrow Shares to the Company.
The Post-Closing. The post-closing of the purchase and sale of
the Debentures (the "Post-Closing") shall take place immediately after
the Effective Date (the "Post-Closing Date") at the offices of
Gottbetter & Partners, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000;
provided, however, that all of the transactions contemplated by the
Merger Agreement annexed as Exhibit C hereto shall have been
consummated in accordance with the terms of the Merger Agreement prior
to the Post-Closing; and further, provided, that the Post-Closing may
not occur later than ten (10) days after the Closing Date (except if
such 10th day is not a Business Day, then the next Business Day), unless
the Purchaser agrees in writing in advance to an extension, which
writing shall set forth the new Post-Closing Date. The Merger
Agreement shall be executed immediately after the Closing.
At the Post-Closing,
the Escrow Agent shall deliver to the Purchaser and/or its
assigns an original and duly issued First Debenture and Second
Debenture, each registered in the name of the Purchaser and in
denominations specified by the Purchaser in the amounts set forth in
Schedule 1 hereto or with written notice to the Escrow Agent prior to
the Post-Closing;
the Company shall deliver to the Purchaser the following:
certified copies of the Certificate of Merger as filed with
the Secretary of State of the State of Hawaii;
a certificate in the form of Exhibit K annexed hereto, dated the
Post-Closing Date and signed by the Secretary of the Company, certify-
ing (1) that attached thereto are true, correct and complete copies of
(a) the Company's Certificate of Incorporation, as amended to the date
thereof, (b) the Company's by-laws, as amended to the date thereof, and
(c) a certificate of good standing from the Secretary of State of
[Hawaii] and (2) the incumbency of the officer executing this
Agreement;
a certificate of the Company's Chief Executive Officer, dated
the Post-Closing Date, in the form of Exhibit L annexed hereto,
certifying that the representations and warranties of the Company
contained in Article III hereof are true and correct in all material
respects on the Post-Closing Date (except for representations and
warranties that speak of a specific date, which representations and
warrants shall be true, correct and complete in all material respects
as of such date); and
(D) all other documents, instruments and writings required to
have been delivered by the Company at or prior to the Post-Closing
pursuant to this Agreement.
Upon receipt by the Purchaser of those items set forth in
Sections 2.3(b)(i) through (ii) above, the Escrow Agent shall as soon
as practicable deliver the following to or on behalf of AIDO, as
applicable:
the Purchase Price by wire transfer of immediately available
funds in the amount of One Million Dollars ($1,000,000), minus all fees
and expenses due under the Transaction Documents, to AIDO pursuant to
written wire transfer instructions delivered by AIDO to the Escrow
Agent at least three (3) Business Days prior to the Post-Closing Date;
and
all documents, instruments, and writings required to have been
delivered or necessary at or prior to the Post-Closing by the Purchaser
pursuant to this Agreement.
The Escrow Agent shall retain and hold the Escrow Shares,
which shall be held in accordance with the terms of this Agreement and
the Escrow Agreement.
ARTICLE III REPRESENTATIONS AND WARRANTIES
Representations, Warranties and Agreements of the Company. The
Company hereby makes the following representations and warranties to
the Purchaser, all of which shall survive the Post-Closing until the
earlier of the maturity date or the date all Debentures have been
converted or redeemed;
Organization and Qualification. The Company is a corporation,
duly incorporated, validly existing and in good standing under the laws
of the State of Hawaii, with the requisite corporate power and
authority to own and use its properties and assets and to carry on its
business as currently conducted. The Company has no subsidiaries. The
Company is duly qualified to do business and is in good standing as a
foreign corporation 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, would not, individually or in the
aggregate, have a material adverse effect on the results of operations,
assets, prospects, or financial condition of the Company, taken as a
whole (a "Material Adverse Effect").
Authorization, Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated hereby and by each other Transaction Document
and to otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and each of the other
Transaction Documents to which it is a party by the Company and the
consummation by it of the transactions contemplated hereby and thereby
have been duly authorized by all necessary action on the part of the
Company. Each of this Agreement and each of the other Transaction
Documents to which it is a party has been or will be duly executed by
the Company and when delivered in accordance with the terms hereof or
thereof will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general
application.
Capitalization. The authorized, issued and outstanding capital
stock of the Company is set forth on Schedule 3.1(c). No Debentures
have been issued as of the date hereof. No shares of Common Stock are
entitled to preemptive or similar rights, nor is any holder of the
Common Stock entitled to preemptive or similar rights arising out of
any agreement or understanding with the Company by virtue of this
Agreement. Except as described in this Agreement, or disclosed in
Schedule 3.1(c), there are no outstanding options, voting agreements or
merger agreements, arrangements, warrants, script, rights to subscribe
to, registration rights, calls or commitments of any character
whatsoever relating to, or, except as a result of the purchase and sale
of the Debentures hereunder, securities, rights or obligations
convertible into or exchangeable for, or giving any person any right to
subscribe for or acquire, any shares of Common Stock or other
securities, or contracts, commitments, understandings, or arrangements
by which the Company is or may become bound to issue additional shares
of Common Stock or other securities, or securities or rights
convertible or exchangeable into shares of Common Stock or other
securities. The Company is not in violation of any of the provisions
of its Certificate of Incorporation, bylaws or other charter documents.
Issuance of Securities. The Debentures and the Escrow Shares
have been duly and validly authorized for issuance, offer and sale
pursuant to this Agreement and, when issued and delivered as provided
hereunder or in the Debentures against payment in accordance with the
terms hereof, shall be valid and binding obligations of the Company
enforceable against the Company in accordance with their respective
terms. The Company has and at all times while the Debentures are
outstanding will continue to maintain an adequate reserve of shares of
Common Stock to enable it to perform its obligations under this
Agreement and the Debentures except as otherwise permitted in this
Agreement or the Debentures. When issued in accordance with the terms
hereof and the Debentures, the Securities will be duly authorized,
validly issued, fully paid and non-assessable. Except as set forth in
Schedule 3.1(d) or Schedule 3.1(c) hereto, there is no equity, equity
equivalent security, debt or equity lines of credit outstanding that is
substantially similar to the Debentures, including any security having
a floating conversion substantially similar to the Debentures;
provided, however, that, except, as otherwise provided herein, nothing
contained in this Section 3.1(d) shall be deemed to permit the Company
to issue any convertible security or instrument or equity line of
credit.
No Conflicts. The execution, delivery and performance of this
Agreement and the other Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and
thereby do not and will not (i) conflict with or violate any provision
of its Certificate of Incorporation or bylaws (each as amended through
the date hereof) or (ii) be subject to obtaining any of the consents
referred to in Section 3.1(f), 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 is a party, or (iii) result in a violation of any
law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company
is subject (including, but not limited to, those of other countries and
the federal and state securities laws and regulations), or by which any
property or asset of the Company is bound or affected, except in the
case of clause (ii), such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect. The
business of the Company is not being conducted in violation in any
material respect of any law, ordinance or regulation of any
governmental authority.
Consents and Approvals. Other than the approval of its board of
directors and stockholders, which have been obtained, and Except as
specifically set forth in Schedule 3.1(f), the Company is not required
to obtain any consent, waiver, authorization or order of, or make any
filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of this Agreement
and each of the other Transaction Documents, except for the filing of
the Certificate of Merger with the Secretary of State of the State of
[Hawaii] to effect the Merger pursuant to the Merger Agreement, which
shall be filed no later than ten (10) days from the Closing Date
(together with the consents, waivers, authorizations, orders, notices
and filings referred to in Schedule 3.1(f), the "Required Approvals").
Litigation; Proceedings. Except as specifically disclosed in
Schedule 3.1(g), there is no action, suit, notice of violation,
proceeding or investigation pending or, to the best knowledge of the
Company, threatened against the Company or any of its properties before
or by any court, governmental or administrative agency or regulatory
authority (federal, state, county, local or foreign) which (i) relates
to or challenges the legality, validity or enforceability of any of the
Transaction Documents, the Debentures and the Underlying Shares (ii)
could, individually or in the aggregate, have a Material Adverse Effect
or (iii) could, individually or in the aggregate, materially impair the
ability of the Company to perform fully on a timely basis its
obligations under the Transaction Documents.
No Default or Violation. Except as set forth in Schedule 3.1(h)
hereto, the Company (i) is not in default under or in violation of any
indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its
properties is bound, except such defaults or violations as do not have
a Material Adverse Effect, (ii) is not in violation of any order of any
court, arbitrator or governmental body, except for such violations as
do not have a Material Adverse Effect, or (iii) is not in violation of
any statute, rule or regulation of any governmental authority which
could (individually or in the aggregate) (x) adversely affect the
legality, validity or enforceability of this Agreement, (y) have a
Material Adverse Effect or (z) adversely impair the Company's ability
or obligation to perform fully on a timely basis its obligations under
this Agreement.
Certain Fees. No fees or commission will be payable by the
Company to any investment banker, broker, placement agent or bank with
respect to the consummation of the transactions contemplated hereby
except as provided in Section 4.27 hereof.
Disclosure Documents. The Disclosure Documents taken as a whole
are accurate in all material respects and do 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.
Manner of Offering. Assuming the Purchaser's representations
and warranties contained in Section 3.2 are true and correct (a) the
Securities are being offered and sold to the Purchaser without
registration under the Securities Act in a private placement that is
exempt from registration pursuant to Rule 504 of Regulation D of the
Securities Act and without registration under the Colorado Securities
Act of the Colorado Revised Statues (the "Colorado Act") in reliance
upon the exemption provided by Section 00-00-000 of the Colorado Act
and regulation 51-3.13B promulgated thereunder; and (b) accordingly,
the Securities are being issued without restriction and may be freely
traded pursuant to Rule 504 of Regulation D of the Securities Act.
Non-Registered Offering. Neither the Company nor any Person
acting on its behalf has taken or will take any action (including,
without limitation, any offering of any securities of the Company under
circumstances which would require the integration of such offering with
the offering of the Securities under the Securities Act) which might
subject the offering, issuance or sale of the Securities to the
registration requirements of Section 5 of the Securities Act.
Not a Reporting Company; Eligibility to use Exemption under
504(b). The Company is not subject to the reporting requirements of
Section 13 or Section 15(d) of the Exchange Act. The Company has not
sold any securities under Rule 504(b) in the last twelve months. The
Company is eligible to issue securities exempt from registration
pursuant to Rule 504 of Regulation D promulgated under the Securities
Act. The Company is a development stage company that has a specific
business plan that is other than to engage in a merger or acquisition
with an unidentified company or companies.
No Undisclosed Liabilities. Except for the transactions
contemplated in this Agreement and the Merger Agreement, there are no
material liabilities of the Company, whether absolute, accrued,
contingent or otherwise.
The Purchaser acknowledges and agrees that the Company makes no
representation or warranty with respect to itself or the transactions
contemplated hereby other than those specifically set forth in Section
3.1 hereof.
Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Company as follows:
Organization; Authority. The Purchaser is a limited liability
company, duly organized, validly existing and in good standing under
the laws of Colorado with the requisite power and authority to enter
into and to consummate the transactions contemplated hereby and by the
other Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The acquisition of the Debentures to be
purchased by the Purchaser hereunder has been duly authorized by all
necessary action on the part of the Purchaser. This Agreement has been
duly executed and delivered by the Purchaser and constitutes the valid
and legally binding obligation of the Purchaser, enforceable against it
in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to, or affecting generally the
enforcement of, creditors rights and remedies or by other general
principles of equity.
Investment Intent. The Purchaser is acquiring the Debentures to
be purchased by it hereunder, and will acquire the Underlying Shares
relating to such Debentures, for its own account for investment
purposes only and not with a view to or for distributing or reselling
such Debentures or Underlying Shares or any part thereof or interest
therein, without prejudice, however, to such Purchaser's right, subject
to the provisions of this Agreement, at all times to sell or otherwise
dispose of all or any part of such Debentures or Underlying Shares in
compliance with applicable federal and state securities laws.
Purchaser Status. At the time the Purchaser was offered the
Debentures to be acquired by it hereunder, it was, at the date hereof
it is and at the Post-Closing it will be an "accredited investor" as
defined in Rule 501(a) under the Securities Act. Purchaser is a
resident in the State of Colorado and no other jurisdiction.
Experience of Purchaser. The Purchaser, either alone or
together with its representatives, has such knowledge, sophistication
and experience in business and financial matters so as to be capable of
evaluating the merits and risks of an investment in the Securities to
be acquired by it hereunder, and has so evaluated the merits and risks
of such investment.
Ability of Purchaser to Bear Risk of Investment. The Purchaser
is able to bear the economic risk of an investment in the Securities to
be acquired by it hereunder and, at the present time, is able to afford
a complete loss of such investment.
Prohibited Transactions. The securities to be acquired by the
Purchaser hereunder are not being acquired, directly or indirectly,
with the assets of any "employee benefit plan," within the meaning of
Section 3(3) of the Employment Retirement Income Security Act of 1974,
as amended.
Access to Information. The Purchaser acknowledges receipt of
the Disclosure Documents and further acknowledges that it has been
afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the
Company concerning the terms and conditions of the Securities and the
merits and risks of investing in the Securities; (ii) access to
information about the Company and the Company's financial condition,
results of operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment in the Securities;
and (iii) the opportunity to obtain such additional information which
the Company possesses or can acquire without unreasonable effort or
expense that is necessary to make an informed investment decision with
respect to the investment and to verify the accuracy and completeness
of the information contained in the Disclosure Documents.
Reliance. The Purchaser understands and acknowledges that (i)
the Debentures being offered and sold to it hereunder are being offered
and sold without registration under the Securities Act in a private
placement that is exempt from the registration provisions of the
Securities Act under Rule 504 of Regulation D under the Securities Act
and (ii) the availability of such exemption depends in part on, and
that the Company will rely upon the accuracy and truthfulness of, the
foregoing representations and such Purchaser hereby consents to such
reliance.
The Company acknowledges and agrees that the Purchaser makes no
representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this
Section 3.2.
ARTICLE IV OTHER AGREEMENTS OF THE PARTIES
Manner of Offering. The Securities are being issued pursuant to
Rule 504 (b) of Regulation D of the Securities Act. The Securities
will be exempt from restrictions on transfer, and will carry no
restrictive legend with respect to the exemption from registration
under the Securities Act. The Company will use its best efforts to
insure that it takes no actions that would jeopardize the availability
of the exemption from registration under Rule 504(b) for the Securities
and, if for any reason such exemption becomes unavailable due to the
Company's action or failure to act, the Company shall cause the
Securities to be registered under the Securities Act as required by
Section 4.28.
Furnishing of Information. As long as the Purchaser owns any of
the Securities, and unless and until the Securities are assumed by AIDO
or the Company becomes subject to the reporting requirements under
Section 13(a) or 15(b) of the Exchange Act, the Company will promptly
furnish to the Purchaser financial information similar to that required
to be reported in annual and quarterly reports comparable to those
required by Section 13(a) or 15(d) of the Exchange Act (the "Non-Public
Filings").
Notice of Certain Events. The Company shall, on a continuing
basis, as long as the Purchaser owns any of the Securities, (i) advise
the Purchaser promptly after obtaining knowledge of, and, if requested
by the Purchaser, confirm such advice in writing, of (A) the issuance
by any state securities commission of any stop order suspending the
qualification or exemption from qualification of the Securities, for
offering or sale in any jurisdiction, or the initiation of any
proceeding for such purpose by any state securities commission or other
regulatory authority, or (B) any event that makes any statement of a
material fact made by the Company in Section 3.1 or in the Disclosure
Documents untrue or that requires the making of any additions to or
changes in Section 3.1 or in the Disclosure Documents in order to make
the statements therein, in each case at the time such Disclosure
Documents were delivered to the Purchaser and in the light of the
circumstances under which they were made, not misleading, (ii) use its
commercially reasonable best efforts to prevent the issuance of any
stop order or order suspending the qualification or exemption from
qualification of the Securities under any state securities or Blue Sky
laws, and (iii) if at any time any state securities commission or other
regulatory authority shall issue an order suspending the qualification
or exemption from qualification of the Securities under any such laws,
use its commercially reasonable best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time.
Copies and Use of Disclosure Documents and Non-Public Filings.
The Company (or, following the Post-Closing, AIDO) shall furnish the
Purchaser, without charge, as many copies of the Disclosure Documents
and the Non-Public Filings and any amendments or supplements thereto as
the Purchaser may reasonably request. The Company consents to the use
of the Disclosure Documents and the Non-Public Filings and any
amendments and supplements to any of them by the Purchaser in
connection with resales of the Securities.
Modification to Disclosure Documents. If any event shall occur as
a result of which, in the reasonable judgment of the Company or the
Purchaser, it becomes necessary or advisable to amend or supplement any
of the Disclosure Documents or the Non-Public Filings in order to make
the statements therein, at the time such Disclosure Documents or the
Non-Public Filings were delivered to the Purchaser and in the light of
the circumstances under which they were made, not misleading, or if it
becomes necessary to amend or supplement any of the Disclosure
Documents or the Non-Public Filings to comply with applicable law, the
Company shall as soon as practicable prepare an appropriate amendment
or supplement to each such document in form and substance reasonably
satisfactory to both the Purchaser and Company so that (i) as so
amended or supplemented, each such document will not include an untrue
statement of material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to the Purchaser,
not misleading and (ii) the Disclosure Documents and the Non-Public
Filings will comply with applicable law in all material respects.
Blue Sky Laws. The Company shall cooperate with the Purchaser in
connection with the exemption from registration of the Securities under
the securities or Blue Sky laws of such jurisdictions as the Purchaser
may request; provided, however, that the Company shall be not required
in connection therewith to (a) qualify as a foreign corporation where
they are not now so qualified, or (b) submit to taxation or general
service of process in such jurisdiction. The Company agrees that it
will execute all necessary documents and pay all necessary state filing
or notice fees to enable the Company to sell the Securities to the
Purchaser.
Integration. The Company shall not and shall use its best efforts
to ensure that no Affiliate shall sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated
with the offer or sale of the Securities in a manner that would require
the registration under the Securities Act of the sale of the Securities
to the Purchaser.
Furnishing of Rule 144(c) Materials. The Company shall, for so
long as any of the Securities remain outstanding and during any period
in which the Company is not subject to Section 13 or 15(d) of the
Exchange Act, make available to any registered holder of the Securities
("Holder" or "Holders") in connection with any sale thereof and any
prospective purchaser of such Securities from such Person, such
information in accordance with Rule 144(c)(2) promulgated under the
Securities Act as is required to sell the Securities under Rule 144
promulgated under the Securities Act.
Solicitation Materials. The Company shall not (i) distribute any
offering materials in connection with the offering and sale of the
Debentures or the Underlying Shares other than the Disclosure Documents
and any amendments and supplements thereto prepared in compliance
herewith or (ii) solicit any offer to buy or sell the Debentures or the
Underlying Shares by means of any form of general solicitation or
advertising.
Subsequent Financial Statements. (a) Until the Post-Closing Date,
if not otherwise publicly available, upon the written request of
Purchaser, the Company shall promptly furnish to the Purchaser a copy
of all financial statements for any period subsequent to the period
covered by the financial statements included in the Disclosure
Documents until the full conversion of the Debentures.
(b) After the Post-Closing Date, if not otherwise publicly
available, upon written request of Purchaser, AIDO shall promptly
furnish to the Purchaser a copy of all financial statements relating to
AIDO for any period subsequent to the period covered by the financial
statements included in the Disclosure Documents until the full
conversion of the Debentures.
Prohibition on Certain Actions. From the date hereof through the
Post-Closing Date, the Company shall not, without the prior written
consent of the Purchaser, (i) amend its certificate or articles of
incorporation, by-laws or other charter documents so as to adversely
affect any rights of the Purchaser; (ii) split, combine or reclassify
its outstanding capital stock; (iii) declare, authorize, set aside or
pay any dividend or other distribution with respect to the Common
Stock; (iv) redeem, repurchase or offer to repurchase or otherwise
acquire shares of its Common Stock; or (v) enter into any agreement
with respect to any of the foregoing other than the Merger Agreement.
Listing of Common Stock. Until the Post-Closing Date, if the
Common Stock shall become listed on the OTCBB or on another exchange,
the Company shall (a) use its commercially reasonable best efforts to
maintain the listing of its Common Stock on the OTCBB or such other
exchange on which the Common Stock is then listed until expiration of
each of the periods during which the Debentures may be converted and
(b) shall provide to the Purchaser evidence of such listing. After the
Post-Closing Date, the references in this Section 4.12 to Company and
Common Stock shall be deemed references to AIDO and the common stock of
AIDO, respectively.
Escrow. The Company and the Purchaser agree to execute and
deliver, simultaneously with the execution and delivery of this
Agreement, the escrow agreement attached hereto and made part hereof as
Exhibit F (the "Escrow Agreement"), and to issue into escrow the
certificates to be held by the Escrow Agent, registered in the name of
the Purchaser and without any restrictive legend of any kind, pursuant
to the terms of such escrow.
Conversion Procedures; Maintenance of Escrow Shares. (a) Exhibit
E attached hereto and made a part hereof sets forth the procedures with
respect to the conversion of the Debentures, including the forms of
Notice of Conversion to be provided upon conversion instructions as to
the procedures for conversion and such other information and
instructions as may be reasonably necessary to enable the Purchaser or
its permitted transferee(s) to exercise the right of conversion
smoothly and expeditiously.
(b) Subject to a maximum of 3,000,000 Escrow Shares (the
"Maximum Share Limit"), the Company agrees that, at any time the
conversion price of the Debentures is such that the number of Escrow
Shares for the Debentures is less than 200 percent of the number of
shares of Common Stock that would be needed to satisfy full conversion
of all of such Debentures then outstanding, given the then current
conversion price (the "Full Conversion Shares"), upon five (5) Business
Days written notice of such circumstance to the Company by the
Purchaser and/or the Escrow Agent, the Company shall issue additional
share certificates in the name of the Purchaser and/or its assigns in
denominations specified by the Purchaser, and deliver same to the
Escrow Agent, such that the new number of Escrow Shares with respect to
the Debentures is equal to 200 percent of the Full Conversion Shares.
(c) The Purchaser shall not be entitled to convert the First
Debenture and the Second Debenture into a number of shares of Common
Stock exceeding the Maximum Share Limit.
(d) If the Per Share Market Value of the Common Stock is such
that the aggregate number of shares of Common Stock issued and then
issuable upon conversion of the Debentures would exceed 3,000,000
shares (as adjusted for stock splits, reverse stock splits, and the
like), then the Company may, at its option, (a) increase the Maximum
Share Limit to comply with Section 4.14(b) or (b) redeem the
unconverted amount of the Debentures in whole or in part at one hundred
twenty five percent (125%) of the unconverted amount of the Debentures
being redeemed plus accrued interest thereon.
Attorney-in-Fact. To effectuate the terms and provisions of this
Agreement, the Escrow Agreement, the Company hereby agrees to give a
power of attorney as is evidenced by Exhibit G annexed hereto. All
acts done under such power of attorney are hereby ratified and approved
and neither the Attorney-in-Fact nor any designee or agent thereof
shall be liable for any acts of commission or omission, for any error
of judgment or for any mistake of fact or law, as long as the Attorney-
in-Fact is operating within the scope of the power of attorney and this
Agreement and its exhibits. The power of attorney, being coupled with
an interest, shall be irrevocable while any of the Debentures remain
unconverted or any portion of this Agreement or the Escrow Agreement
remains unsatisfied. In addition, the Company shall give the Attorney-
in-Fact resolutions executed by the Board of Directors of the Company
which authorize transfers of the Debentures, future issuances of the
Underlying Shares for the Debentures, and which resolutions state that
they are irrevocable while any of the Debentures remain unconverted, or
any portion of this Agreement or the Escrow Agreement remains
unsatisfied.
Indemnification The Company shall, notwithstanding termination of
this Agreement, indemnify and hold harmless the Purchaser and its
officers, directors, agents, employees and affiliates, each Person who
controls the Purchaser (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) (each such Person, a
"Control Person") and the officers, directors, agents, employees and
affiliates of each such Control Person, to the fullest extent permitted
by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, costs of
preparation and reasonable attorneys' fees) and expenses (collectively,
"Losses"), as incurred, arising out of, or relating to, a breach or
breaches of any representation, warranty, covenant or agreement by the
Company under this Agreement or any other Transaction Document.
The Purchaser shall, notwithstanding termination of this
Agreement, indemnify and hold harmless the Company, its officers,
directors, agents and employees, each Control Person of the Company and
the officers, directors, agents and employees of each Control Person,
to the fullest extent permitted by applicable law, from and against any
and all Losses, as incurred, arising out of, or relating to, a breach
or breaches of any representation, warranty, covenant or agreement by
the Purchaser under this Agreement or any other Transaction Documents.
Conduct of Indemnification Proceedings. If any Proceeding shall
be brought or asserted against any Person entitled to indemnity
hereunder (an "Indemnified Party"), such Indemnified Party promptly
shall notify the Person from whom indemnity is sought (the
"Indemnifying Party") in writing, and the Indemnifying Party shall
assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent
that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or further
review) that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such] Proceeding and to participate in, but not control,
the defense thereof, but the fees and expenses of such counsel shall be
at the expense of such Indemnified Party or Parties unless: (1) the
Indemnifying Party has agreed to pay such fees and expenses; or (2) the
Indemnifying Party shall have failed promptly to assume the defense of
such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to
any such Proceeding (including any impeded parties) include both such
Indemnified Party and the Indemnifying Party, and such Indemnified
Party shall have been advised by counsel that a conflict of interest is
likely to exist if the same counsel were to represent such Indemnified
Party and the Indemnifying Party (in which case, if such Indemnified
Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense of
the claim against the Indemnified Party but will retain the right to
control the overall Proceedings out of which the claim arose and such
counsel employed by the Indemnified Party shall be reasonably
acceptable to the Indemnifying Party and shall be at the expense of the
Indemnifying Party). The Indemnifying Party shall not be liable for
any settlement of any such Proceeding effected without its written
consent. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified
Party from all liability on claims that are the subject matter of such
Proceeding, provided, however, the Indemnifying Party may settle or
compromise any asserted liability without the consent of the Indemnitee
so long as such settlement or compromise releases the Indemnitee and
does not include any admission or statement of fault against the
Indemnitee.
All fees and expenses of the Indemnified Party to which the
Indemnified Party is entitled hereunder (including reasonable fees and
expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with
this Section) shall be paid to the Indemnified Party, as incurred,
within ten (10) Business Days of written notice thereof to the
Indemnifying Party.
No right of indemnification under this Section 4.16 shall be
available as to a particular Indemnified Party if there is a non-
appealable final judicial determination that such Losses arise solely
or substantially out of the negligence or bad faith of such Indemnified
Party in performing the obligations of such Indemnified Party under
this Agreement or a breach by such Indemnified Party of its obligations
under this Agreement.
Contribution. If a claim for indemnification under Section
4.16(a) is unavailable to an Indemnified Party or is insufficient to
hold such Indemnified Party harmless for any Losses in respect of which
this Section 4.16 would apply by its terms (other than by reason of
exceptions provided in this Section 4.16), then each Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute
to the amount paid or payable by such Indemnified Party as a result of
such Losses in such proportion as is appropriate to reflect the
relative benefits received by the Indemnifying Party on the one hand
and the Indemnified Party on the other and the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions
or omissions that resulted in such Losses as well as any other relevant
equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among
other things, whether there was a judicial determination that such
Losses arise in part out of the negligence or bad faith of the
Indemnified Party in performing the obligations of such Indemnified
Party under this Agreement or the Indemnified Party's breach of its
obligations under this Agreement. The amount paid or payable by a
party as a result of any Losses shall be deemed to include any
attorneys' or other fees or expenses incurred by such party in
connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided
for in this Section was available to such party.
Non-Exclusivity. The indemnity and contribution agreements
contained in this Section are in addition to any obligation or
liability that the Indemnifying Parties may have to the Indemnified
Parties.
Exclusivity. During the five year period commencing on the Post-
Closing Date (the "Restriction Period"), (A) the Company and its
Affiliates shall not issue or offer (i) any convertible security and
(ii) any security issued pursuant to Rule 504 of Regulation D
promulgated under the Securities Act and (B) the Company and its
Affiliates shall not offer any equity lines of credit. The Company may
request that the restrictions in this Section 4.17 be waived. Except
as specifically set forth above, the Company may engage in any other
debt or equity financing during the Restriction Period.
Notwithstanding anything contained herein to the contrary, the
Restriction Period shall end upon the earlier of (i) the full
conversion of the Debenture and (ii) the redemption of the outstanding
principal amount of the Debentures.
Purchaser's Ownership of Common Stock. In addition to and not in
lieu of the limitations on conversion set forth in the Debentures, the
conversion rights of the Purchaser set forth in the Debentures shall be
limited, solely to the extent required, from time to time, such that,
unless the Purchaser gives written notice 75 days in advance to the
Company of the Purchaser's intention to exceed the Limitation on
Conversion as defined herein, with respect to all or a specified amount
of the Debentures and the corresponding number of the Underlying Shares
in no instance shall the Purchaser (singularly, together with any
Persons who in the determination of the Purchaser, together with the
Purchaser, constitute a group as defined in Rule 13d-5 of the Exchange
Act) be entitled to convert the Debentures to the extent such
conversion would result in the Purchaser beneficially owning more than
five percent (5%) of the outstanding shares of Common Stock of the
Company. For these purposes, beneficial ownership shall be defined and
calculated in accordance with Rule 13d-3, promulgated under the
Exchange Act (the foregoing being herein referred to as the "Limitation
on Conversion"); provided, however, that the Limitation on Conversion
shall not apply to any forced or automatic conversion pursuant to this
Agreement or the Debentures; and provided, further that if the
Purchaser shall have declared an Event of Default and, if a cure period
is provided, the Company shall not have properly and fully cured such
Event of Default within any such cure period, the provisions of this
Section 4.18 shall be null and void from and after such date. The
Company shall, promptly upon its receipt of a Notice of Conversion
tendered by the Purchaser (or its sole designee) for the Debentures, as
applicable, notify the Purchaser by telephone and by facsimile (the
"Debenture Notice") of the number of shares of Common Stock outstanding
on such date and the number of Underlying Shares, which would be
issuable to the Purchaser (or its sole designee, as the case may be) if
the conversion requested in such Notice of Conversion were effected in
full and the number of shares of Common Stock outstanding giving full
effect to such conversion whereupon, in accordance with the Debentures,
notwithstanding anything to the contrary set forth in the Debentures,
the Purchaser may, by notice to the Company within one (1) Business Day
of its receipt of the Debenture Notice by facsimile, revoke such
conversion to the extent (in whole or in part) that such Purchaser
determines that such conversion would result in the ownership by such
Purchaser of shares of Common Stock in excess of the Limitation on
Conversion. The Debenture Notice shall begin the 75 day advance notice
required in this Section 4.18.
Purchaser's Rights if Trading in Common Stock is Suspended. If
the Common Stock is listed on any exchange, then at any time after the
Post-Closing if trading in the shares of the Common Stock is suspended
(and not reinstated within ten (10) Trading Days) on such stock
exchange or market upon which the Common Stock is then listed for
trading (other than as a result of the suspension of trading in
securities on such market generally or temporary suspensions pending
the release of material information), or the Common Stock is delisted
from the OTCBB (and not reinstated within ten (10) Trading Days), then,
at the option of the Purchaser exercisable by giving written notice to
the Company (the "Redemption Notice"), the Company shall redeem, as
applicable, all of the Debentures and Underlying Shares owned by such
Purchaser within seven (7) Business Days at an aggregate purchase price
equal to the sum of:
the product of (1) the average Per Share Market Value for the
five (5) Trading Days immediately preceding (a) the date of the
Redemption Notice, (b) the date of payment in full of the repurchase
price under this Section 4.19 recalculated as of such payment date, or
(c) the day when the Common Stock was suspended, delisted or deleted
from trading, whichever is greater, multiplied by (2) the aggregate
number of Underlying Shares then held and owned by such Purchaser;
the greater of (A) the outstanding principal amount and accrued
and unpaid interest on the Debentures owned by such Purchaser and (B)
the product of (1) the average Per Share Market Value for the five (5)
Trading Days immediately preceding (a) the date of the Redemption
Notice, (b) the date of payment in full of the repurchase price under
this Section 4.19 recalculated as of such payment date, or (c) the day
when the Common Stock was suspended, delisted or deleted from trading,
whichever is greater, and (2) the aggregate number of Underlying Shares
issuable upon the conversion of the outstanding Debentures then held
and owned by the Purchaser utilizing the conversion procedures
contained in the Debentures (without taking into account the Limitation
on Conversion described in Section 4.18 hereof); and
interest on such amounts set forth in (i) and (ii) above
accruing from the seventh (7th) Business Day after the date of the
Redemption Notice until the repurchase price under this Section 4.19 is
paid in full, at the rate of eight percent (8%) per annum.
No Violation of Applicable Law. Notwithstanding any provision of
this Agreement to the contrary, if the redemption of the Debentures or
the Underlying Shares otherwise required under this Agreement or the
Debentures would be prohibited by the relevant provisions of Hawaii
law, such redemption shall be effected as soon as it is permitted under
such law; provided, however, that interest payable by the Company with
respect to any such redemption shall accrue in accordance with Section
4.19.
Redemption Restrictions. Notwithstanding any provision of this
Agreement to the contrary, if any redemption of the Debentures or the
Underlying Shares otherwise required under this Agreement or the
Debentures would be prohibited in the absence of consent from any
lender to the Company, or by the holders of any class of securities of
the Company, the Company shall use its best efforts to obtain such
consent as promptly as practicable after any such redemption is
required. Interest payable by the Company with respect to any such
redemption shall accrue in accordance with Section 4.19 until such
consent is obtained. Nothing contained in this Section 4.21 shall be
construed as a waiver by the Purchaser of any rights it may have by
virtue of any breach of any representation or warranty of the Company
herein as to the absence of any requirement to obtain any such consent.
No Other Registration Rights. During the period commencing on the
date hereof and ending on the Post-Closing Date, the Company shall not
file any registration statement that provides for the registration of
shares of Common Stock to be sold by security holders of the Company,
other than the Purchaser and/or its respective Affiliates or assigns,
without the prior written consent of the Purchaser or its assigns,
provided, however, that the limitation on the right to file
registration statements contained in this Section 4.22 shall not apply
to registration statements relating solely to (i) employee benefit
plans, notwithstanding the inclusion of a resale prospectus for
securities received under any such employee benefit plan, or (ii)
business combinations not otherwise prohibited by the terms of this
Agreement or the other Transaction Documents. This registration
restriction is in addition to the Company's registration restrictions
set forth in Section 4.24.
Merger or Consolidation. Until the earlier of (a) the full
conversion of the Debentures and (b) the Maturity Date of the
Debentures (as that term is defined in the Debentures), the Company
will not, in a single transaction or a series of related transactions
(other than the Merger), (i) consolidate with or merge with or into any
other Person, or (ii) permit any other Person to consolidate with or
merge into it, unless (w) either (A) the Company shall be the survivor
of such merger or consolidation or (B) the surviving Person shall
expressly assume by supplemental agreement all of the obligations of
the Company under the Debentures, this Agreement and the other
Transaction Documents; (x) immediately before and immediately after
giving effect to such transactions (including any indebtedness incurred
or anticipated to be incurred in connection with the transactions), no
Event of Default shall have occurred and be continuing; (y) if the
Company is not the surviving entity, such surviving entity's common
shares will be listed on either The New York Stock Exchange, American
Stock Exchange, Nasdaq National Market or Nasdaq SmallCap Market, or
the OTCBB on or prior to the closing of such transaction(s) and (z) the
Company shall have delivered to the Purchaser an officer's certificate
and opinion of counsel, each stating that such consolidation, merger
(other than the Merger) or transfer complies with this Agreement, that
the agreements relating to such transaction(s) provide that the
surviving Person agrees to be bound by this Agreement and that all
conditions precedent in this Agreement relating to such transaction(s)
have been satisfied.
Registration of Escrow Shares. (a) So long as the Purchaser
and/or its assigns owns any of the Securities and the Underlying Shares
would not be freely transferable without registration, the Company
agrees not to file a registration statement with the SEC without
Purchaser's express written consent, other than on Form 10, Form S-4
(except for a public reoffering or resale) or Form S-8 without first
having registered (or simultaneous registering) the Registrable
Securities for resale under the Securities Act and in such states of
the United States as the holders thereof shall reasonably request.
(b) If the Company shall propose to file with the SEC any
registration statement other than a Form 10, Form S-4 (except for a
public reoffering or resale) or Form S-8 which would cause, or have the
effect of causing, the Company to become a Reporting Issuer or to take
any other action, other than the sale of the Debentures to the
Purchaser hereunder, the effect of which would be to cause the
Underlying Shares to be restricted securities (as such term is defined
in Rule 144 promulgated under the Securities Act), the Company agrees
to give written notification of such to the holders of the Securities
at least two weeks prior to such filing or taking of the proposed
action. If any of the Securities are then outstanding, the Company
agrees to include in such registration statement the Registrable
Securities unless the Underlying Shares would be freely transferable
upon conversion of the Debentures without such registration, so as to
permit the public resale thereof.
If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company will
so advise the holders of the Securities. In such event, these
registration rights shall be conditioned upon such holder's
participation in such underwriting and the inclusion of such holder's
Registrable Securities in the underwriting to the extent provided
herein. All holders proposing to distribute their Registrable
Securities through such underwriting shall enter into an underwriting
agreement in customary form with the underwriter selected by the
Company. In the event that the lead or managing underwriter in its
good faith judgment determines that material adverse market factors
require a limitation on the number of shares to be underwritten, the
underwriter may limit the number of Registrable Securities. In such
event, the Company shall so advise all holders of securities requesting
registration, and the number of shares of the Registrable Securities
that are entitled to be included in the registration and underwriting
shall be allocated pro rata among all holders and other participants,
including the Company, in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities and other securities which
they had requested to be included in such registration statement at the
time of filing the registration statement. If any holder disapproves
of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the underwriter,
provided such notice is delivered within sixty (60) days of full
disclosure of such terms to such holder, without thereby affecting the
right of such holder to participate in subsequent offerings hereunder.
(c) Notwithstanding the foregoing, if the Company for any
reason shall have taken any action, other than the sale of the
Debentures to the Purchaser hereunder, the effect of which would be to
cause the Registrable Securities to be restricted securities (as such
term is defined in Rule 144 promulgated under the Securities Act), the
Company agrees to use its best efforts to file a registration statement
with the SEC and use its best efforts to have such registration
statement declared effective by the SEC which would permit the public
resale of the Registrable Securities under the Securities Act and in
such states of the United States as the holders thereof shall
reasonably request.
(d) The Company agrees to keep any registration required
pursuant to this Section 4.24 continuously effective under the
Securities Act and with such states of the United States as the holders
of the Registrable Securities shall reasonably request until the
earlier of (i) the date on which all of the Registrable Securities
covered by any such registration have been sold, (ii) two (2) years
from the effective date of any such registration, or (iii) the date on
which all of the Registrable Securities may be sold without restriction
pursuant to Rule 144 of the Securities Act. All costs and expenses of
any such registration and related Blue Sky filings and maintaining
continuous effectiveness of such registration and filings shall be
borne by the Company, other than underwriters and brokers, fees and
commissions.
(e) The Escrow Shares shall be registered by the Company under
the Securities Act if required by Section 4.29 and subject to the
conditions stated therein.
(f) Each holder of Registrable Securities agrees to cooperate
and assist the Company in preparing and filing any registration
statement required to be filed pursuant to this Agreement, including,
without limitation, providing the Company with such information about
the holder and answering such questions as deemed reasonably necessary
by the Company in order to complete such registration statement. Until
such time as the Company is no longer required to keep the registration
statement effective, each holder of Registrable Securities agrees to
immediately notify the Company of any change to the information
provided to the Company in connection with the preparation or
maintenance of the registration statement, and each such holder agrees
to certify to the accuracy and completeness of all information provided
by it to the Company or its representatives in connection with such
registration statement.
Liquidated Damages. The Company understands and agrees that a
breach by the Company of Section 4.1, Section 4.24, Section 4.28,
Section 4.29 or an Event of Default as contained in this Agreement
and/or any other Transaction Document will result in substantial
economic loss to the Purchaser, which loss will be extremely difficult
to calculate with precision. Therefore, if, for any reason the Company
breaches Sections 4.1, Section 4.24, Section 4.28, Section 4.29 or
fails to cure any Event of Default under Section 5.1 (a) (iii), (v),
(vi) and (viii) within the time, if any, given to cure such Event of
Default, as compensation and liquidated damages for such breach or
default, and not as a penalty, the Company agrees to pay the Purchaser
an amount equal to the Purchase Price and the Purchaser, upon receipt
of such payment, shall return any unconverted Debentures to the
Company. The Company shall, upon demand, pay the Purchaser such
liquidated damages by wire transfer of immediately available funds to
an account designated by the Purchaser. Nothing herein shall limit the
right of the Purchaser to pursue actual damages (less the amount of any
liquidated damages received pursuant to the foregoing) for the
Company's breach of Section 4.1, Section 4.24, Section 4.28, Section
4.29 or failure to cure an Event of Default under Section 5.1 (a) (iii)
(v) (vi) and (viii), consistent with the terms of this Agreement.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT OR
THE OTHER TRANSACTION DOCUMENTS, THE COMPANY'S OBLIGATIONS UNDER THIS
SECTION SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT OR THE OTHER
TRANSACTION DOCUMENTS.
Short Sales. The Purchaser agrees it will not enter into any
Short Sales (as hereinafter defined) until the earlier to occur of the
date that the Purchaser no longer owns the Debentures and the Maturity
Date. For purpose hereof, a "Short Sale" shall mean a sale of Common
Stock by the Purchaser that is marked as a short sale and that is made
at a time when there is no equivalent offsetting long position in the
Common Stock by the Purchaser. For the purposes of determining whether
there is an equivalent offsetting long position in the Common Stock
held by the Purchaser, shares of Common Stock issuable upon conversion
of the Debentures shall be deemed to be held long by the Purchaser with
respect to the Underlying Shares for which a Notice of Conversion is
delivered within two (2) Trading Days following the Trading Day that
such Short Sale is entered into.
Fees. The Company will pay the following fees and expenses in
connection with the transactions contemplated hereby: (a) to G&P (i)
legal fees for document production in the amount of $20,000 and (ii)
all reasonable out-of-pocket expenses incurred in connection with such
document production, (b) to the Escrow Agent, $5,000 for the escrow
agent fee, and (c) to Hand & Hand (i) legal fees in the amount of
$5,000 and (ii) all reasonable out-of-pocket expenses incurred. Unless
paid prior, all fees and expenses will be paid at Post-Closing and the
Company and the Purchaser hereby authorize and direct the Escrow Agent
to deduct such fees and expenses directly from escrow prior to
distributing any funds to the Company. Except with respect to the fees
set forth in part (a) of this Section 4.27 and except as otherwise set
forth in the Retainer Agreement, all fees and expenses shall be paid
regardless of whether the transactions contemplated hereby are closed
or otherwise completed. All fees to be paid hereunder shall have no
offsets, are non-refundable and non-cancelable.
4.28 Changes to Federal and State Securities Laws. If any of the
Securities require registration with or approval of any governmental
authority under any federal (including but not limited to the
Securities Act or similar federal statute then in force) or state law,
or listing on any national securities exchange, before they may be
resold or transferred without any restrictions on their resale or
transfer for reasons including, but not limited to, a material change
in Rule 504 of Regulation D promulgated under the Securities Act or a
change to the exemption for sales made to Accredited Investors in the
state in which the Purchaser resides, the Company will, at its expense,
(a) as expeditiously as possible cause the Registerable
Securities to be duly registered or approved or listed on the relevant
national securities exchange, as the case may be, and (b) keep such
registration, approval or listing, as the case may be, continuously
effective until the earlier of (i) the date on which all of the
Registerable Securities have been sold, (ii) two (2) years from the
effective date of any such registration, or (iii) the date on which all
of the Securities may be sold without restriction pursuant to Rule 144
of the Securities Act; subject to the terms and limitations set forth
in section 4.24. The Registerable Securities shall be registered by
the Company under the Securities Act if required by Section 4.24 and
subject to the conditions stated therein.
4.29 Merger Agreement. Immediately upon the Effective Date, all
of the transactions contemplated by the Merger Agreement annexed hereto
as Exhibit C shall be consummated in accordance with the terms thereof.
4.30 Future Financing. If, at any time any of the Debentures are
outstanding, the Company, or its successors in interest due to mergers,
consolidations and/or acquisitions (the "Successors-in-Interest"), is
funded an amount equal to or exceeding Five Million United States
Dollars ($5,000,000), the Company or the Successors-in-Interest, as the
case may be, agrees to pay the Purchaser an amount equal to One Hundred
Fifty Percent (150%) of the then outstanding Debentures (the "Lump Sum
Payment"). Upon the Purchaser's receipt of the Lump Sum Payment, any
and all remaining obligations then outstanding between the Company or
the Successors-in-Interest, as the case may be, and Purchaser in
connection with this Agreement and the Debentures shall be deem
satisfied, and the Agreement and the Debentures shall be terminated.
This provision shall survive both Closing and Post-Closing.
4.31 Applicability of Agreements after Post-Closing. At the
Effective Date or upon the consummation of any other merger or other
transaction pursuant to which the Company's obligations under the
Debentures are assumed by another party (whether or not such assumption
is joint and several), the Company shall be released from, and have no
further obligation pursuant to Sections 4.1 through 4.6, 4.8, 4.10,
4.12, 4.14, 4.16 through 4.27 hereof, and any reference to the Company
in such sections shall instead be deemed to refer solely to the party
that assumes the Debentures.
4.32 Company's Right of Redemption. In addition to any right of
the Company to redeem any unconverted amount of the Debentures, in
whole or in parts set forth in this Agreement, the Company shall have
any redemption right set forth in the Debentures.
ARTICLE V TERMINATION
Termination by the Company or the Purchaser. This Agreement shall
be terminated as follows upon the occurrence of any of the following
events (each an "Event of Default"):
Automatically terminated prior to Post-Closing if:
there shall be in effect any statute, rule, law or regulation,
including an amendment to Regulation D or an interpretive release
promulgated or issued thereunder, that prohibits the consummation of
the Post-Closing or if the consummation of the Post-Closing would
violate any non-appealable final judgment, order, decree, ruling or
injunction of any court of or governmental authority having competent
jurisdiction;
the Post-Closing shall not have occurred by the Post-Closing
Date through no fault of the Company;
the common stock of AIDO is not registered under Section 12 of
the Exchange Act;
AIDO is not current in its reporting obligations under Section
13 or 15(d) of the Exchange Act;
an event occurs prior to the Post-Closing requiring AIDO to
report such event to the SEC on Form 8-K and not otherwise set forth in
Schedule 5.1, provided, however, such event shall only include the
following items under Form 8-K: Item 1; Item 2 to the extent that any
event is reported under Item 2 that involves a change in the nature of
AIDO's business; Item 3; Item 4 (provided further, that as to Item 4,
only if the event requires disclosure under Item 304 (a)(1)(iv) or
under Regulation S-K); Item 9; or Item 12;
the Company causes the Post-Closing to not occur by the Post-
Closing Date;
trading in the common stock of AIDO has been suspended,
delisted, or otherwise ceased by the Commission or the NASD or other
exchange or the Nasdaq (whether the National Market or otherwise),
except for (a) any suspension of trading of limited duration solely to
permit dissemination of material information regarding AIDO, and not
reinstated within ten (10) Trading Days and (b) any general suspension
of trading for all companies trading on such exchange or market or
OTCBB; or
the Company fails to deliver or cause to be delivered the
Debentures and Escrow Shares as required by and by the date set forth
in Section 2.2 hereof.
Prior to Post-Closing by the Purchaser, by giving written notice
of such termination to the Company, if the Company has materially
breached any representation, warranty, covenant or agreement contained
in this Agreement or the other Transaction Documents and such breach is
not cured within five (5) Business Days following receipt by the
Company of notice of such breach.
Prior to Post-Closing by the Company, by giving written notice
of such termination to the Purchaser, if the Purchaser has materially
breached any representation, warranty, covenant or agreement contained
in this Agreement or the other Transaction Documents and such breach is
not cured within five (5) Business Days following receipt by the
Purchaser of notice of such breach.
Remedies. Notwithstanding anything else contained herein to the
contrary, if an Event of Default has occurred pursuant to Section 5.1,
and only with respect to Section 5.1(b) has not been cured within the
cure period provided for therein, the defaulting party shall be deemed
in default hereof and the non-defaulting party shall be entitled to
pursue all available rights without further notice. The defaulting
party shall pay all attorney's fees and costs incurred in enforcing
this Agreement and the other Transaction Documents. In addition, all
unpaid amounts shall accrue interest at a rate of 8 percent per annum.
ARTICLE VI LEGAL FEES AND DEFAULT INTEREST RATE In the event any
party hereto commences legal action to enforce its rights under this
Agreement or any other Transaction Document, the non-prevailing party
shall pay all reasonable costs and expenses (including but not limited
to reasonable attorney's fees, accountant's fees, appraiser's fees and
investigative fees) incurred in enforcing such rights. In the event of
an uncured Event of Default by any party hereunder, interest shall
accrue on all unpaid amounts due the aggrieved party at the rate of 8
percent per annum, compounded annually.
ARTICLE VII MISCELLANEOUS
Fees and Expenses. Except as set forth in this Agreement each
party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred
by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay the
fees of $5,000 to the Escrow Agent as set forth in Section 4.27 hereto
and all stamp and similar taxes and duties levied in connection with
the issuance of the Debentures (and, upon conversion, the Underlying
Shares) pursuant hereto. The Purchaser shall be responsible for any
taxes (other than income taxes) payable by the Purchaser that may arise
as a result of the investment hereunder or the transactions
contemplated by this Agreement or any other Transaction Document.
Whether or not the transactions contemplated hereby and thereby are
consummated or this Agreement is terminated. The Company shall pay (i)
all costs, expenses, fees and all taxes incident to and in connection
with: (A) the preparation, printing and distribution of any
registration statement required hereunder and all amendments and
supplements thereto (including, without limitation, financial
statements and exhibits), and all preliminary and final Blue Sky
memoranda and all other agreements, memoranda, correspondence and other
documents prepared and delivered in connection herewith, (B) the
issuance and delivery of the Securities, (C) the exemption from
registration of the Securities for offer and sale to the Purchaser
under the securities or Blue Sky laws of the applicable jurisdiction,
(D) furnishing such copies of any registration statement required
hereunder, the preliminary and final prospectuses and all amendments
and supplements thereto, as may reasonably be requested for use in
connection with resales of the Securities, and (E) the preparation of
certificates for the Securities (including, without limitation,
printing and engraving thereof), (ii) all fees and expenses of counsel
and accountants of the Company and (iii) all expenses and fees of
listing on securities exchanges, if any.
Entire Agreement; Amendments. This Agreement, together with all
of the Exhibits and Schedules annexed hereto, and any other Transaction
Document contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters. This
Agreement shall be deemed to have been drafted and negotiated by both
parties hereto and no presumptions as to interpretation, construction
or enforceability shall be made by or against either party in such
regard.
Notices. Any notice, request, demand, waiver, consent, approval,
or other communication which is required or permitted to be given to
any party hereunder shall be in writing and shall be deemed to have
been duly given only if delivered to the party personally or sent to
the party by facsimile upon electronic confirmation and receipt
(promptly followed by a hard-copy delivered in accordance with this
Section 7.3) or three days after being mailed by registered or
certified mail (return receipt requested), with postage and
registration or if sent by nationally recognized overnight courier, one
day after being mailed certification fees thereon prepaid, addressed to
the party at its address set forth below:
If to the Company, Universal Pet Care, Inc.
Prior to the Post 00000 Xxxxx Xxxx, Xxxxx X
Closing Date: Xxxx Xxxxx, XX 00000
Attn: Jehu Hand, President
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Company, Universal Pet Care, Inc.
after the Post c/o Advanced ID Corporation
Closing Date: 0000 - 0 Xxxxxx XX, Xxxxx 00
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attn: President
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Xxxx Xxxxxx
0000 Xxxxx Xxxxxxxx Xxx
Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Purchaser: See Schedule 1 attached hereto
With copies to: Gottbetter & Partners, LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Escrow Agent: Gottbetter & Partners, LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
or such other address as may be designated hereafter by notice given
pursuant to the terms of this Section 7.3.
Amendments; Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an
amendment, by both the Company and the Purchaser, or, in the case of a
waiver, by the party against whom enforcement of any such waiver is
sought. No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the
exercise of any such right accruing to it thereafter.
Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement and any of the rights, interests or
obligations hereunder may be assigned by the Purchaser to an accredited
investor without the consent of the Company as long as such assignee
agrees to be bound by this Agreement. This Agreement and any of the
rights, interests or obligations hereunder may not be assigned by the
Company without the prior written consent of the Purchaser. It is
agreed that the Company may assign all of the rights, interests and
obligations hereunder to AIDO pursuant to the Merger Agreement.
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.
Governing Law; Venue; Service of Process. The parties hereto
acknowledge that the transactions contemplated by this Agreement and
the exhibits hereto bear a reasonable relation to the State of New
York. The parties hereto agree that the internal laws of the State of
New York shall govern this Agreement and the exhibits hereto,
including, but not limited to, all issues related to usury. Any action
to enforce the terms of this Agreement or any of its exhibits shall be
brought exclusively in the state and/or federal courts situated in the
County and State of New York. Service of process in any action by the
Purchaser to enforce the terms of this Agreement may be made by serving
a copy of the summons and complaint, in addition to any other relevant
documents, by commercial overnight courier to the Company at its
principal address set forth in this Agreement.
Survival. The agreements and covenants of the parties contained
in Article IV and this Article VII shall survive the Post-Closing (or
any earlier termination of this Agreement).
Counterpart Signatures. This Agreement may be executed in two or
more counterparts, all of which when taken together 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, it
being understood that both parties need not sign the same counterpart.
In the event that any signature is delivered by facsimile transmission,
such signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature page were an
original thereof.
Publicity. The Company and the Purchaser shall consult with each
other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and
neither party shall issue any such press release or otherwise make any
such public statement without the prior written consent of the other,
which consent shall not be unreasonably withheld or delayed, unless
counsel for the disclosing party deems such public statement to be
required by applicable federal and/or state securities laws. Except as
otherwise required by applicable law or regulation, the Company will
not disclose to any third party the names of the Purchaser.
Severability. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the
validity and enforceability of the remaining terms and provisions of
this Agreement shall not in any way be affected or impaired thereby and
the parties will attempt to agree upon a valid and enforceable
provision which shall be a reasonable substitute therefore, and upon so
agreeing, shall incorporate such substitute provision in this
Agreement.
Limitation of Remedies. With respect to claims by the Company or
the Purchaser or any person acting by or through the Company or the
Purchaser for remedies at law or at equity relating to or arising out
of a breach of this Agreement, liability, if any, shall, in no event,
include loss of profits or incidental, indirect, exemplary, punitive,
special or consequential damages of any kind.
Omnibus Provision. Anything contained herein or in the other
Transaction Documents notwithstanding, in the event that the Common
Stock shall become listed on the American Stock Exchange and
subsequently ceases to be listed for trading on the American Stock
Exchange, then any reference thereto in this Agreement or the other
Transaction Documents shall be deemed to be a reference to (a) the
principal national securities exchange on which the Common Stock is
then listed or admitted to trading, or (b) if the Common Stock is not
then listed or admitted to trading on any national securities exchange,
Nasdaq, or (c) if the Common Stock is not then listed or admitted to
trading on Nasdaq, OTCBB, or (d) if the Common Stock is not then listed
or admitted to trading on OTCBB, then the over-the-counter market
reported by the Pinksheets LLC (or similar organization or agency
succeeding to its functions of reporting prices).
(Signature Page Follows)
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first indicated above.
Company:
UNIVERSAL PET CARE, INC.
By:
Name: Jehu Hand
Title: Chief Executive Officer
Purchaser:
HEM MUTUAL ASSURANCE LLC
By:
Name: Xxxxxx Xxxxxxxx
Title: Manager
Schedule 1
Purchaser(s)
Name and Address Amount of Debentures
of Purchaser Full to be Purchased
HEM Mutual Assurance LLC $1,000,000
One Xxxxx Center
0000 00xx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Schedule 3.1(c)
Capitalization and Registration Rights
The certificate of incorporation authorize [1,000] shares of Common
Stock to be outstanding at one time. [1,000] shares of Common Stock
are outstanding.
Schedule 3.1(d)
Equity and Equity Equivalent Securities
(None.)
Schedule 3.1(e)
Conflicts
(None.)
Schedule 3.1(f)
Consents and Approvals
SEC Filing - Form D
Colorado Blue Sky Filing (or exemption therefrom)
Schedule 3.1(g)
Litigation
(None.)
Schedule 3.1(h)
Defaults and Violations
(None.)
Schedule 5.1
Form 8-K Disclosure Obligations
(None.)
{00047101.2 / 0112-061}
