SECURITIES PURCHASE AGREEMENT
SECURITIES
PURCHASE AGREEMENT
(the
"Agreement"),
dated
as of July 7, 2008, by and between Green Screen Interactive Software, Inc.,
a Delaware corporation, with headquarters located at 000 Xxxxxxxx, Xxx Xxxx,
Xxx
Xxxx 00000 (the "Company"),
and
Driftwood Ventures, Inc. ("Buyer").
WHEREAS:
A. The
Company and Buyer are executing and delivering this Agreement in reliance upon
the exemption from securities registration afforded by Section 4(2) of the
Securities Act of 1933, as amended (the "1933
Act"),
and
Rule 506 of Regulation D ("Regulation D")
as
promulgated by the United States Securities and Exchange Commission (the
"SEC")
under
the 1933 Act.
B. The
Company has authorized a new series of senior secured notes of the Company,
in
the form attached hereto as Exhibit
A
(the
“Notes”).
C. Buyer
wishes to purchase, and the Company wishes to sell, upon the terms and
conditions stated in this Agreement, that aggregate principal amount of the
Notes set forth opposite Buyer's name in column (3) on the Schedule of Buyers
attached hereto (which aggregate amount shall be up to $7,000,000).
D. The
Notes
are sometimes referred to herein as the "Securities".
E. The
Notes
will rank senior to all outstanding and future indebtedness of the Company,
subject to Permitted Indebtedness (as defined in the Notes) and will be secured
by a perfected security interest in all of the assets of the Company (subject
only to the security interest granted in connection with Existing Indebtedness)
and the stock and assets of each of the Company's Subsidiaries (as defined
below), as evidenced by the pledge agreement attached hereto as Exhibit
B
(the
"Pledge
Agreement")
and
the Security Agreement attached hereto as Exhibit
C
(the
"Security
Agreement")
and
the guarantee from each Subsidiary in the form attached hereto as Exhibit
D
(the
"Guarantees",
and
together with the Pledge Agreement and the Security Agreement, collectively
the
"Security
Documents").
NOW,
THEREFORE,
the
Company and Buyer hereby agree as follows:
1. PURCHASE
AND SALE OF NOTES; ADVANCES UNDER NOTES.
(a) Purchase
of Notes.
(i) Notes. Subject
to the satisfaction (or waiver) of the conditions set forth in Sections 6 and
7
below, the Company shall issue and sell to Buyer, and Buyer agrees to purchase
from the Company on the Closing Date (as defined below), a principal amount
of
Notes as is set forth opposite Buyer's name in column (3) on the Schedule of
Buyers (the "Closing").
(ii) Closing.
The
date and time of the Closing (the "Closing
Date")
shall
be 10:00 a.m., New York City time, on the date hereof.
(iii) Purchase
Price.
The
aggregate purchase price for the Notes to be purchased by Buyer at the Closing
(the "Purchase
Price")
shall
be the amount set forth opposite Buyer's name in column (5) of the Schedule
of
Buyers.
(b) Form
of Payment.
On the
Closing Date, (i) except as provided herein and in the Note, Buyer shall pay
its
Purchase Price to the Company for the Notes to be issued and sold to Buyer
at
the Closing, by wire transfer of immediately available funds in accordance
with
the Company's written wire instructions and (ii) the Company shall deliver
to Buyer the Notes, duly executed on behalf of the Company and registered in
the
name of such Buyer or its designee. The Company acknowledges receipt of
$3,028,888.89 as its first Advance (as defined below) under the Note, as payment
of the Purchase Price ($1,000,000 of which will be sent to the Company and
the
remaining $2,028,888.89 will be sent by Buyer on behalf of the Company to
Mandalay Media, Inc. for the repayment of the debt owed by the Company to
Mandalay Media, Inc.
(c) Advances.
Notwithstanding anything to the contrary contained herein or in the Notes,
and
subject to the terms and conditions of this Agreement and the Notes, and
provided that no default has been declared under the Transaction Documents,
the
Buyer will lend the Company, from time to time until September 30, 2008 (the
“Termination
Date”),
such
sums as the Company may request, but which shall not exceed, in the aggregate
principal amount $7,000,000 (the “Revolving
Loan”).
Subject to the foregoing limitations, the Company may borrow on a weekly basis,
repay without penalty or premium, and reborrow amounts under this Section 1(c),
from the date of this Agreement until the Termination Date, provided that any
Advance made by the Buyer to the Company is contingent upon a mutually agreed
upon budget for the use of such Advance by the Company, which agreement shall
not be unreasonably withheld by Buyer. Notwithstanding the foregoing, Buyer
may
withhold its agreement if any portion of an Advance will be used for the payment
of bonuses to any employees of the Company or its subsidiaries.
(d) Procedure
for Advances.
The
Company may request Advances hereunder by written notice not later than 10:00
a.m. New York City time on the date the Company proposes to receive an Advance.
The Buyer shall not be required to honor a request for an Advance unless given
by Xxx Xxxxxxxxxx or such other Person or Persons as shall be so authorized
by
duly adopted resolutions of the board of directors of the Company from time
to
time, certified copies of which resolutions shall have been furnished to the
Buyer. Subject to the terms and conditions of this Agreement and the Notes,
and
provided that no default has been declared under the Transaction Documents,
the
Buyer will make available to the Company the amount of such Advance, in United
States Dollars and in immediately available funds on or before the second
business day following the date of such request. For purposes of this Agreement,
an “Advance”
means
each loan of money or credit made to the Company by the Buyer pursuant to
Section 1 of this Agreement.
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2. BUYER'S
REPRESENTATIONS AND WARRANTIES. Buyer represents and warrants that:
(a) No
Sale or Distribution.
Buyer
is acquiring the Notes for its own account and not with a view towards, or
for
resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act; provided, however,
that by making the representations herein, Buyer does not agree to hold any
of
the Securities for any minimum or other specific term and reserves the right
to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act and pursuant to the
applicable terms of the Transaction Documents (as defined in Section 3(b)).
Buyer does not presently have any agreement or understanding, directly or
indirectly, with any Person to distribute any of the Securities.
(b) Reliance
on Exemptions.
Buyer
understands that the Securities are being offered and sold to it in reliance
on
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying in part upon the
truth
and accuracy of, and Buyer's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of such Buyer set forth herein
in
order to determine the availability of such exemptions and the eligibility
of
such Buyer to acquire the Securities.
(c) Information.
Buyer
and its advisors, if any, have been furnished with all materials relating to
the
business, finances and operations of the Company and materials relating to
the
offer and sale of the Securities that have been requested by Buyer. Buyer and
its advisors, if any, have been afforded the opportunity to ask questions of
the
Company. Neither such inquiries nor any other due diligence investigations
conducted by Buyer or its advisors, if any, or its representatives shall modify,
amend or affect Buyer's right to rely on the Company's representations and
warranties contained herein. Buyer understands that its investment in the
Securities involves a high degree of risk and is able to afford a complete
loss
of such investment. Buyer has sought such accounting, legal and tax advice
as it
has considered necessary to make an informed investment decision with respect
to
its acquisition of the Securities.
(d) No
Governmental Review.
Buyer
understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation
or
endorsement of the Securities or the fairness or suitability of the investment
in the Securities nor have such authorities passed upon or endorsed the merits
of the offering of the Securities.
(e) Transfer
or Resale.
Buyer
understands that: (i) the Securities have not been and are not being registered
under the 1933 Act or any state securities laws, and may not be offered for
sale, sold, assigned or transferred unless (A) subsequently registered
thereunder, (B) Buyer shall have delivered to the Company an opinion of counsel,
in a generally acceptable form, to the effect that such Securities to be sold,
assigned or transferred may be sold, assigned or transferred pursuant to an
exemption from such registration, or (C) Buyer provides the Company with
reasonable assurance that such Securities can be sold, assigned or transferred
pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended,
(or a successor rule thereto) (collectively, "Rule
144");
(ii)
any sale of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the Person (as defined in Section 3(s)) through whom the sale is made)
may
be deemed to be an underwriter (as that term is defined in the 0000 Xxx) may
require compliance with some other exemption under the 1933 Act or the rules
and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
Person is under any obligation to register the Securities under the 1933 Act
or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder. The Securities may be pledged in connection with a bona
fide margin account or other loan or financing arrangement secured by the
Securities and such pledge of Securities shall not be deemed to be a transfer,
sale or assignment of the Securities hereunder, and no Buyer effecting a pledge
of Securities shall be required to provide the Company with any notice thereof
or otherwise make any delivery to the Company pursuant to this Agreement or
any
other Transaction Document (as defined in Section 3(b)), including without
limitation, this Section 2(f).
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(f) Validity;
Enforcement.
This
Agreement and the Security Documents to which Buyer is a party have been duly
and validly authorized, executed and delivered on behalf of Buyer and shall
constitute the legal, valid and binding obligations of Buyer enforceable against
Buyer in accordance with their respective terms, except as such enforceability
may be limited by general principles of equity or to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws
relating to, or affecting generally, the enforcement of applicable creditors'
rights and remedies.
(g) No
Conflicts.
The
execution, delivery and performance by Buyer of this Agreement and the Security
Documents to which Buyer is a party and the consummation by Buyer of the
transactions contemplated hereby and thereby will not (i) result in a violation
of the organizational documents of Buyer or (ii) conflict with, or constitute
a
default (or an event which with notice or lapse of time or both would become
a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to
which
Buyer is a party, or (iii) result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws)
applicable to Buyer, except in the case of clauses (ii) and (iii) above, for
such conflicts, defaults, rights or violations which would not, individually
or
in the aggregate, reasonably be expected to have a material adverse effect
on
the ability of Buyer to perform its obligations hereunder.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY. The Company represents and warrants to Buyer
that:
(a) Organization
and Qualification.
The
Company and its "Subsidiaries"
(which
for purposes of this Agreement means any entity in which the Company, directly
or indirectly, owns more than 50% of the capital stock or holds an equity or
similar interest) are entities duly organized and validly existing and, to
the
extent legally applicable, in good standing under the laws of the jurisdiction
in which they are formed, and have the requisite power and authorization to
own
their properties and to carry on their business as now being conducted. Each
of
the Company and its Subsidiaries is duly qualified as a foreign entity to do
business and to the extent legally applicable, is in good standing in every
jurisdiction in which its ownership of property or the nature of the business
conducted by it makes such qualification necessary, except to the extent that
the failure to be so qualified or be in good standing would not have a Material
Adverse Effect. As used in this Agreement, "Material
Adverse Effect"
means
any material adverse effect on the business, properties, assets, operations,
results of operations, condition (financial or otherwise) or prospects of the
Company and its Subsidiaries, taken as a whole, or on the transactions
contemplated hereby and the other Transaction Documents or by the agreements
and
instruments to be entered into in connection herewith or therewith, or on the
authority or ability of the Company to perform its obligations under the
Transaction Documents (as defined below). The Company has no Subsidiaries except
as set forth on Schedule
3(a).
4
(b) Authorization;
Enforcement; Validity.
The
Company has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement, the Notes, the Security Documents
and each of the other agreements entered into by the parties hereto in
connection with the transactions contemplated by this Agreement (collectively,
the "Transaction
Documents")
and
the Agreement and Plan of Merger, by and among the Buyer, DFTW Merger Sub,
Inc.
and the Company, dated July 7, 2008 (the “Merger
Agreement”),
and
to issue the Securities in accordance with the terms hereof and thereof. The
execution and delivery of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Notes and the granting of
a
security interest in the Collateral (as defined in the Security Documents)
have
been duly authorized by the Company's Board of Directors and other than as
set
forth in Section 3(e), no further filing, consent or authorization is required
by the Company, its Board of Directors or its stockholders. This Agreement
and
the other Transaction Documents of even date herewith have been duly executed
and delivered by the Company, and constitute the legal, valid and binding
obligations of the Company enforceable against the Company in accordance with
their respective terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally,
the
enforcement of applicable creditors' rights and remedies.
(c) Issuance
of Securities.
The
issuance of the Notes are duly authorized and are free from all taxes, liens
and
charges with respect to the issue thereof. Assuming the accuracy of each of
the
representations and warranties set forth in Section 2 of this Agreement, the
offer and issuance by the Company of the Securities is exempt from registration
under the 1933 Act.
(d) No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby
and
thereby (including, without limitation, the issuance of the Notes and the
granting of a security interest in the Collateral will not (i) result in a
violation of any certificate of incorporation, certificate of formation, any
certificate of designations or other constituent documents of the Company or
any
of is Subsidiaries, any capital stock of the Company or any of its Subsidiaries
or bylaws of the Company or any of its Subsidiaries or (ii) conflict with,
or
constitute a default (or an event which with notice or lapse of time or both
would become a default) in any respect under, or give to others any rights
of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is
a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including foreign, federal and state securities laws and
regulations applicable to the Company or any of its Subsidiaries or by which
any
property or asset of the Company or any of its Subsidiaries is bound or
affected. Buyer acknowledges and agrees that the execution, delivery and
performance of the Transaction Documents themselves shall not be deemed a
violation of the Merger Agreement, except as otherwise set forth in the Merger
Agreement.
5
(e) Consents.
Neither
the Company nor any of its Subsidiaries is required to obtain any consent,
authorization or order of, or make any filing or registration with, any court,
governmental agency or any regulatory or self-regulatory agency or any other
Person in order for it to execute, deliver or perform any of its obligations
under or contemplated by the Transaction Documents, in each case in accordance
with the terms hereof or thereof, except for the following consents,
authorizations, orders, filings and registrations (none of which is required
to
be filed or obtained before the Closing): the filing of appropriate UCC
financing statements with the appropriate states and other authorities pursuant
to the Pledge and Security Agreement.
(f) No
General Solicitation; Placement Agent's Fees.
Neither
the Company, nor any of its affiliates, nor any Person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offer or sale of
the
Securities. The Company shall be responsible for the payment of any placement
agent's fees, financial advisory fees, or brokers' commissions (other than
for
persons engaged by any Buyer or its investment advisor) relating to or arising
out of the transactions contemplated hereby. The Company has not engaged any
placement agent or other agent in connection with the sale of the
Securities.
(g) Absence
of Certain Changes.
Since
December 31, 2007, there has been no material adverse change and no material
adverse development in the business, properties, operations, condition
(financial or otherwise), results of operations or prospects of the Company
or
its Subsidiaries. Except as disclosed in Schedule
3(g),
since
December 31, 2007, the Company has not (i) declared or paid any dividends,
(ii)
sold any assets, individually or in the aggregate, in excess of $100,000 outside
of the ordinary course of business or (iii) had capital expenditures,
individually or in the aggregate, in excess of $100,000. The Company has not
taken any steps to seek protection pursuant to any bankruptcy law nor does
the
Company have any knowledge or reason to believe that its creditors intend to
initiate involuntary bankruptcy proceedings or any actual knowledge of any
fact
that would reasonably lead a creditor to do so. The Company and its
Subsidiaries, individually and on a consolidated basis, are not as of the date
hereof, and after giving effect to the transactions contemplated hereby to
occur
at the Closing, will not be Insolvent (as defined below). For purposes of this
Section 3(g), "Insolvent"
means,
with respect to any Person (as defined in Section 3(l)), (i) the present fair
saleable value of such Person's assets is less than the amount required to
pay
such Person's total Indebtedness (as defined in Section 3(l)), (ii) such Person
is unable to pay its debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured, (iii)
such
Person intends to incur or believes that it will incur debts that would be
beyond its ability to pay as such debts mature or (iv) such Person has
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be
conducted.
(h) Conduct
of Business; Regulatory Permits.
Neither
the Company nor its Subsidiaries is in violation of any term of or in default
under its Certificate of Incorporation, any certificate of designations of
any
outstanding series of preferred stock of the Company or Bylaws or their
organizational charter or bylaws, respectively. Neither the Company nor any
of
its Subsidiaries is in violation of any judgment, decree or order or any
statute, ordinance, rule or regulation applicable to the Company or its
Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct
its business in violation of any of the foregoing, except for possible
violations which could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Company and its Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
regulatory authorities necessary to conduct their respective businesses, except
where the failure to possess such certificates, authorizations or permits would
not have, individually or in the aggregate, a Material Adverse Effect, and
neither the Company nor any such Subsidiary has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit.
6
(i) Foreign
Corrupt Practices.
Neither
the Company, nor any of its Subsidiaries, nor any director, officer, agent,
employee or other Person acting on behalf of the Company or any of its
Subsidiaries has, in the course of its actions for, or on behalf of, the Company
or any of its Subsidiaries (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign
or
domestic government official or employee.
(j) Transactions
With Affiliates.
None of
the officers, directors or employees of the Company or any of its Subsidiaries
is presently a party to any transaction with the Company or any of its
Subsidiaries (other than for ordinary course services as employees, officers
or
directors), including any contract, agreement or other arrangement providing
for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
officer, director or employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer, director,
trustee or partner.
(k) Equity
Capitalization.
As of
the date hereof, the authorized capital stock of the Company consists of
50,000,000 shares of common stock, par value $0.0001 per share (“Common
Stock”)
of
which as of the date hereof, 3,694,737 are issued and outstanding, 10,000,000
shares of preferred stock, of which as of the date hereof, no shares are issued
and outstanding, 354,605 shares are reserved for issuance pursuant to the
Company's stock option and purchase plans and 246,243 shares are reserved for
issuance pursuant to securities (other than the aforementioned options and
the
Notes) exercisable or exchangeable for, or convertible into, shares of Common
Stock. All of such outstanding shares have been, or upon issuance will be,
validly issued and are fully paid and nonassessable. Except as disclosed in
Schedule
3(k):
(i)
none of the Company's capital stock is subject to preemptive rights or any
other
similar rights or any liens or encumbrances suffered or permitted by the
Company; (ii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or
securities or rights convertible into, or exercisable or exchangeable for,
any
capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of
its
Subsidiaries is or may become bound to issue additional capital stock of the
Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or
securities or rights convertible into, or exercisable or exchangeable for,
any
capital stock of the Company or any of its Subsidiaries; (iii) there are no
outstanding debt securities, notes, credit agreements, credit facilities or
other agreements, documents or instruments evidencing Indebtedness of the
Company or any of its Subsidiaries or by which the Company or any of its
Subsidiaries is or may become bound; (iv) there are no financing statements
securing obligations in any material amounts, either singly or in the aggregate,
filed in connection with the Company or any of its Subsidiaries; (v) there
are
no agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of their securities under the 1933
Act;
(vi) there are no outstanding securities or instruments of the Company or any
of
its Subsidiaries which contain any redemption or similar provisions, and there
are no contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to redeem a security
of the Company or any of its Subsidiaries; (vii) there are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities; (viii) the Company does not have
any stock appreciation rights or "phantom stock" plans or agreements or any
similar plan or agreement; and (ix) the Company and its Subsidiaries have no
liabilities or obligations, other than those incurred in the ordinary course
of
the Company's or its Subsidiaries' respective businesses and which, individually
or in the aggregate, do not or would not have a Material Adverse Effect. The
Company has furnished to the Buyer true, correct and complete copies of the
Company's Certificate of Incorporation, as amended and as in effect on the
date
hereof (the "Certificate
of Incorporation"),
and
the Company's Bylaws, as amended and as in effect on the date hereof (the
"Bylaws"),
and
the terms of all securities convertible into, or exercisable or exchangeable
for, shares of Common Stock and the material rights of the holders thereof
in
respect thereto.
7
(l) Indebtedness
and Other Contracts.
Except
as disclosed in Schedule
3(l),
neither
the Company nor any of its Subsidiaries (i) has any outstanding Indebtedness
(as
defined below), (ii) is a party to any contract, agreement or instrument, the
violation of which, or default under which, by the other party(ies) to such
contract, agreement or instrument could reasonably be expected to result in
a
Material Adverse Effect, (iii) is in violation of any term of or in default
under any contract, agreement or instrument relating to any Indebtedness, except
where such violations and defaults would not result, individually or in the
aggregate, in a Material Adverse Effect, or (iv) is a party to any contract,
agreement or instrument relating to any Indebtedness, the performance of which,
in the judgment of the Company's officers, has or is expected to have a Material
Adverse Effect. Schedule
3(l)
provides
a detailed description of the material terms of any such outstanding
Indebtedness. For purposes of this Agreement: (x) "Indebtedness"
of any
Person means, without duplication (A) all indebtedness for borrowed money,
(B)
all obligations issued, undertaken or assumed as the deferred purchase price
of
property or services, including (without limitation) "capital leases" in
accordance with generally accepted accounting principles (other than trade
payables entered into in the ordinary course of business), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and
other
similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect
to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in
the
event of default are limited to repossession or sale of such property), (F)
all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment
of
such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through (G)
above; (y) "Contingent
Obligation"
means,
as to any Person, any direct or indirect liability, contingent or otherwise,
of
that Person with respect to any indebtedness, lease, dividend or other
obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against loss
with respect thereto; and (z) "Person"
means
an individual, a limited liability company, a partnership, a joint venture,
a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
8
(m) Absence
of Litigation.
Except
as set forth in Schedule
3(m),
there
is no action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the Company, threatened against or affecting the Company
or any of its Subsidiaries, the Common Stock or any of the Company's
Subsidiaries or any of the Company's or its Subsidiaries' officers or directors.
(n) Insurance.
The
Company and each of its Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged. Neither the Company
nor
any such Subsidiary has been refused any insurance coverage sought or applied
for and neither the Company nor any such Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as
may
be necessary to continue its business at a cost that would not have a Material
Adverse Effect.
(o) Employee
Relations.
Neither
the Company nor any of its Subsidiaries is a party to any collective bargaining
agreement or employs any member of a union. The Company and its Subsidiaries
believe that their relations with their employees are good. No executive officer
of the Company or any of its Subsidiaries (as defined in Rule 501(f) of the
0000
Xxx) has notified the Company or any of such Subsidiary that such officer
intends to leave the Company or any of such Subsidiary or otherwise terminate
such officer's employment with the Company or any of such Subsidiary. No
executive officer of the Company or any of its Subsidiaries, is, or is now
expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does
not
subject the Company or any of its Subsidiaries to any liability with respect
to
any of the foregoing matters.
9
(ii) The
Company and its Subsidiaries are in compliance with all federal, state, local
and foreign laws and regulations respecting labor, employment and employment
practices and benefits, terms and conditions of employment and wages and hours,
except where failure to be in compliance would not, either individually or
in
the aggregate, reasonably be expected to result in a Material Adverse
Effect.
(p) Title.
The
Company and its Subsidiaries have good and marketable title in fee simple to
all
real property and good and marketable title to all personal property owned
by
them which is material to the business of the Company and its Subsidiaries,
in
each case free and clear of all liens, encumbrances and defects such as are
described in Schedule
3(p)
or such
as do not materially affect the value of such property and do not interfere
with
the use made and proposed to be made of such property by the Company and any
of
its Subsidiaries. Any real property and facilities held under lease by the
Company and any of its Subsidiaries are held by them under valid, subsisting
and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by
the
Company and its Subsidiaries.
(q) Intellectual
Property Rights.
The
Company and its Subsidiaries own or possess adequate rights or licenses to
use
all trademarks, service marks and all applications and registrations therefor,
trade names, patents, patent rights, copyrights, original works of authorship,
inventions, trade secrets and other intellectual property rights ("Intellectual
Property Rights")
necessary to conduct their respective businesses as now conducted. None of
the
Company's registered, or applied for, Intellectual Property Rights have expired
or terminated or have been abandoned, or are expected to expire or terminate
or
expected to be abandoned, within three years from the date of this Agreement.
The Company does not have any knowledge of any infringement by the Company
or
its Subsidiaries of Intellectual Property Rights of others. There is no claim,
action or proceeding being made or brought, or to the knowledge of the Company,
being threatened, against the Company or its Subsidiaries regarding its
Intellectual Property Rights. The Company is unaware of any facts or
circumstances which might give rise to any of the foregoing infringements or
claims, actions or proceedings. The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of all of their Intellectual Property Rights.
(r) Environmental
Laws.
The
Company and its Subsidiaries (i) are in compliance with any and all
Environmental Laws (as hereinafter defined), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental
Laws
to conduct their respective businesses and (iii) are in compliance with all
terms and conditions of any such permit, license or approval where, in each
of
the foregoing clauses (i), (ii) and (iii), the failure to so comply could be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect. The term "Environmental
Laws"
means
all federal, state, local or foreign laws relating to pollution or protection
of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, "Hazardous
Materials") into
the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved
thereunder.
10
(s) Subsidiary
Rights.
The
Company or one of its Subsidiaries has the unrestricted right to vote, and
(subject to limitations imposed by applicable law) to receive dividends and
distributions on, all capital securities of its Subsidiaries as owned by the
Company or such Subsidiary.
(t) Tax
Status.
The
Company and each of its Subsidiaries (i) has made or filed all foreign, federal
and state income and all other tax returns, reports and declarations required
by
any jurisdiction to which it is subject, (ii) has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and (iii) has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to
the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority
of
any jurisdiction, and the officers of the Company know of no basis for any
such
claim.
(u) Internal
Accounting and Disclosure Controls.
The
Company and each of its Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to
maintain asset and liability accountability, (iii) access to assets or
incurrence of liabilities is permitted only in accordance with management's
general or specific authorization and (iv) the recorded accountability for
assets and liabilities is compared with the existing assets and liabilities
at
reasonable intervals and appropriate action is taken with respect to any
difference.
(v) Ranking
of Notes.
Except
as set forth on Schedule
3(v),
no
Indebtedness of the Company is senior to or ranks pari
passu
with the
Notes in right of payment, whether with respect of payment of redemptions,
interest, damages or upon liquidation or dissolution or otherwise.
(w) Investment
Company Status.
The
Company is not, and upon consummation of the sale of the Securities will not
be,
an "investment company," a company controlled by an "investment company" or
an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company" as such terms are defined in the Investment Company Act
of
1940, as amended.
(x) Disclosure.
The
Company understands and confirms that the Buyer will rely on the foregoing
representations in effecting transactions in securities of the Company. All
disclosure provided to the Buyer regarding the Company, its business and the
transactions contemplated hereby, including the Schedules to this Agreement,
furnished by or on behalf of the Company is true and correct and does not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of
the
circumstances under which they were made, not misleading.
11
4. COVENANTS.
(a) Form
D
and Blue Sky.
The
Company agrees to file a Form D with respect to the Securities as required
under
Regulation D and to provide a copy thereof to Buyer promptly after such filing.
The Company shall, on or before the Closing Date, take such action as the
Company shall reasonably determine is necessary in order to obtain an exemption
for or to qualify the Securities for sale to the Buyer at the Closing pursuant
to this Agreement under applicable securities or "Blue Sky" laws of the states
of the United States (or to obtain an exemption from such qualification), and
shall provide evidence of any such action so taken to the Buyers on or prior
to
the Closing Date. The Company shall make all filings and reports relating to
the
offer and sale of the Securities required under applicable securities or "Blue
Sky" laws of the states of the United States following the Closing
Date.
(b) Use
of
Proceeds; Budget.
The
Company will use the proceeds from the sale of the Securities solely as
contemplated under Section 1(c) and for the repayment of the debt owed to
Mandalay Media, Inc.
(c) Financial
Information.
The
Company shall deliver to the Buyer quarterly financial statements within 45
days after quarter-end, and annual financial statements within 90 days of
year-end. In addition, Buyer shall receive monthly statements of cash flow
for the immediately preceding month and projections of cash flow for the next
month within 10 days of the end of each calendar month.
(d) Restriction
on Redemption and Cash Dividends.
So long
as any Notes are outstanding, the Company shall not, directly or indirectly,
redeem, or declare or pay any cash dividend or distribution on, the Common
Stock
without the prior express written consent of the holders of Notes representing
not less than a majority of the aggregate principal amount of the then
outstanding Notes.
(e) Additional
Notes; Variable Securities.
So long
as Buyer beneficially owns any Securities, the Company will not issue any Notes
other than to the Buyer as contemplated hereby and the Company shall not issue
any other securities that would cause a breach or default under the Notes.
Except as contemplated by the Merger Agreement, for so long as any Notes remain
outstanding, the Company shall not, in any manner, issue or sell any rights,
warrants or options to subscribe for or purchase Common Stock or directly or
indirectly convertible into or exchangeable or exercisable for Common Stock.
(f) Corporate
Existence.
So long
as Buyer beneficially owns any Securities, and except with respect to the Merger
Agreement, the Company shall not be party to any Fundamental Transaction (as
defined in the Notes) unless the Company is in compliance with the applicable
provisions governing Fundamental Transactions set forth in the
Notes.
(g) Conduct
of Business.
The
business of the Company and its Subsidiaries shall not be conducted in violation
of any law, ordinance or regulation of any governmental entity, except where
such violations would not result, either individually or in the aggregate,
in a
Material Adverse Effect.
12
(h) Additional
Issuances of Securities.
(i) For
purposes of this Section 4(i), the following definitions shall
apply.
(A) "Convertible
Securities"
means
any stock or securities (other than Options) convertible into or exercisable
or
exchangeable for shares of Common
Stock.
(B) "Options"
means
any rights, warrants or options to subscribe for or purchase shares of
Common
Stock or
Convertible Securities.
(C) "Common
Stock Equivalents"
means,
collectively, Options and Convertible Securities.
(ii) From
the
date hereof until the Notes are paid in full, except to the extent as
contemplated by the Merger Agreement, the Company will not, directly or
indirectly, offer, sell, grant any option to purchase, or otherwise dispose
of
(or announce any offer, sale, grant or any option to purchase or other
disposition of) any of its or its Subsidiaries' equity or equity equivalent
securities, including without limitation any debt, preferred stock or other
instrument or security that is, at any time during its life and under any
circumstances, convertible into or exchangeable or exercisable for shares of
Common Stock or Common Stock Equivalents (any such offer, sale, grant,
disposition or announcement being referred to as a "Subsequent
Placement").
(i) Incurrence
of Liens.
So long
as any Notes are outstanding, the Company shall not, directly or indirectly,
allow or suffer to exist any Lien, other than Permitted Liens (as defined in
the
Notes), upon any property or assets (including accounts and contract rights)
owned by the Company.
5. [INTENTIONALLY
LEFT BLANK].
6. CONDITIONS
TO THE COMPANY'S OBLIGATION TO SELL. The obligation of the Company hereunder
to issue and sell the Notes to Buyer at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion by providing
Buyer with prior written notice thereof:
(a) Buyer
shall have executed each of the Transaction Documents to which it is a party
and
delivered the same to the Company
(b) Buyer
shall have delivered to the Company the Purchase Price, in accordance with
the
terms hereof and the Note by wire transfer of immediately available funds
pursuant to the wire instructions provided by the Company.
(c) The
representations and warranties of Buyer shall be true and correct in all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects) as of the date when made and as of the Closing Date
as
though made at that time (except for representations and warranties that speak
as of a specific date), and Buyer shall have performed, satisfied and complied
in all material respects with the covenants, agreements and conditions required
by this Agreement to be performed, satisfied or complied with by Buyer at or
prior to the Closing Date.
13
7. CONDITIONS
TO BUYER'S OBLIGATION TO PURCHASE. The obligation of Buyer hereunder to
purchase the Notes at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions, provided that these
conditions are for Buyer's sole benefit and may be waived by Buyer at any time
in its sole discretion by providing the Company with prior written notice
thereof:
(a) The
Company shall have duly executed and delivered to Buyer (i) each of the
Transaction Documents and (ii) the Notes, being purchased by Buyer at the
Closing pursuant to this Agreement.
(b) Such
Buyer shall have received the opinion of the Company's outside counsel, dated
as
of the Closing Date, in substantially the form of Exhibit
E
attached
hereto.
(c) The
Company shall have delivered to such Buyer a certificate evidencing the
formation and good standing of the Company and each of its Subsidiaries in
such
entity's jurisdiction of formation issued by the Secretary of State (or
comparable office) of such jurisdiction, as of a date within 10 days of the
Closing Date.
(d) The
Company shall have delivered to such Buyer a certificate evidencing the
Company's qualification as a foreign corporation and good standing issued by
the
Secretary of State of the State of Delaware (or comparable office) of each
jurisdiction in which the Company conducts business, each as of a date within
10
days of the Closing Date.
(e) The
Company shall have delivered to such Buyer a certificate, executed by the
Secretary of the Company and dated as of the Closing Date, as to (i) the
resolutions consistent with Section 3(b) as adopted by the Company's Board
of
Directors in a form reasonably acceptable to such Buyer, (ii) the Certificate
of
Incorporation and (iii) the Bylaws, each as in effect at the Closing in the
form
attached hereto as Exhibit
F.
(f) The
representations and warranties of the Company shall be true and correct in
all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects) as of the date when made and as of the Closing Date
as
though made at that time (except for representations and warranties that speak
as of a specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by the Company at or prior to the Closing Date. Buyer shall have received
a
certificate, executed by the Chief Executive Officer of the Company, dated
as of
the Closing Date, to the foregoing effect and as to such other matters as may
be
reasonably requested by Buyer in the form attached hereto as Exhibit
G.
(g) The
Company shall have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the sale of the Securities.
14
(h) In
accordance with the terms of the Security Documents, the Company shall
have:
(i) filed
such financing statements and other documents in such offices as the Buyer
may
request to perfect the security interests granted by the Security Agreement
(it
being understood that in no event shall financing statements be filed against
fixtures in the local jurisdictions of their location); and
(ii) delivered
to the Buyer all certificates evidencing any of the Pledged Shares (as defined
in the Pledge Agreement), accompanied by undated stock or other powers duly
executed in blank.
(i) The
Company shall have delivered to Buyer such other documents relating to the
transactions contemplated by this Agreement as Buyer or its counsel may
reasonably request.
8. INTENTIONALL
LEFT BLANK.
9. MISCELLANEOUS.
(a) Governing
Law; Jurisdiction; Jury Trial.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision
or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State
of
New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of
the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction
of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
(b) Counterparts.
This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if
the
signature were an original, not a facsimile signature.
15
(c) Headings.
The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
(d) Severability.
If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or
the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
(e) Entire
Agreement; Amendments.
This
Agreement and the other Transaction Documents supersede all other prior oral
or
written agreements between the Buyers, the Company, their affiliates and Persons
acting on their behalf with respect to the matters discussed herein, and this
Agreement, the other Transaction Documents and the instruments referenced herein
and therein contain the entire understanding of the parties with respect to
the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and Buyer. No provision hereof may be waived other than by an instrument
in writing signed by the party against whom enforcement is sought. No such
amendment shall be effective to the extent that it applies to less than all
of
the holders of the applicable Securities then outstanding.
(f) Notices.
Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business Day after deposit with an overnight courier service,
in
each case properly addressed to the party to receive the same. The addresses
and
facsimile numbers for such communications shall be:
If
to the
Company:
000
Xxxxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone:
(000) 000-0000
Attention: Chief
Executive Officer
with
a
copy to:
Xxxx
Xxxx, Esq.
Xxxxxxxxx,
Xxxxxx & Xxxxxx, LLC
0
Xxxxxx
Xxxxxx
Xxxxxxxx,
Xxxxxxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
16
If
to
Buyer, to its address and facsimile number set forth on the Schedule of Buyers,
with copies to such Buyer's representatives as set forth on the Schedule of
Buyers
or
to
such other address and/or facsimile number and/or to the attention of such
other
Person as the recipient party has specified by written notice given to each
other party five (5) days prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated
by
the sender's facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided
by an
overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from an overnight courier service in accordance
with clause (i), (ii) or (iii) above, respectively.
(g) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns, including any purchasers of the Notes.
The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Buyer. Buyer may assign
some
or all of its rights hereunder without the consent of the Company, in which
event such assignee shall be deemed to be Buyer hereunder with respect to such
assigned rights
(h) No
Third Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.
(i) Survival.
The
representations and warranties of the Company and the Buyer contained in
Sections 2 and 3, and the agreements and covenants set forth in Sections 4,
5
and 9 shall survive the Closing. Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
(j) Further
Assurances.
Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
17
(k) Indemnification.
In
consideration of Buyer's execution and delivery of the Transaction Documents
and
acquiring the Securities thereunder and in addition to all of the Company's
other obligations under the Transaction Documents, the Company shall defend,
protect, indemnify and hold harmless each Buyer and each other holder of the
Securities and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing
Persons' agents or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees")
from
and against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "Indemnified
Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to
(a)
any misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents
or
any other certificate, instrument or document contemplated hereby or thereby
or
(c) any cause of action, suit or claim brought or made against such Indemnitee
by a third party (including for these purposes a derivative action brought
on
behalf of the Company) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (ii) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, (iii) any
disclosure made by Buyer pursuant to Section 4(h), or (iv) the status of Buyer
or holder of the Securities as an investor in the Company pursuant to the
transactions contemplated by the Transaction Documents. To the extent that
the
foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction
of
each of the Indemnified Liabilities that is permissible under applicable
law.
(l) No
Strict Construction.
The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent, and no rules of strict construction
will
be applied against any party.
(m) Remedies.
Each
Buyer and each holder of the Securities shall have all rights and remedies
set
forth in the Transaction Documents and all rights and remedies which such
holders have been granted at any time under any other agreement or contract
and
all of the rights which such holders have under any law. Any Person having
any
rights under any provision of this Agreement shall be entitled to enforce such
rights specifically (without posting a bond or other security), to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. Furthermore, the Company recognizes
that in the event that it fails to perform, observe, or discharge any or all
of
its obligations under the Transaction Documents, any remedy at law may prove
to
be inadequate relief to the Buyers. The Company therefore agrees that the Buyers
shall be entitled to seek temporary and permanent injunctive relief in any
such
case without the necessity of proving actual damages and without posting a
bond
or other security.
(n) Rescission
and
Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting
any
similar provisions of) the Transaction Documents, whenever Buyer exercises
a
right, election, demand or option under a Transaction Document and the Company
does not timely perform its related obligations within the periods therein
provided, then Buyer may rescind or withdraw, in its sole discretion from time
to time upon written notice to the Company, any relevant notice, demand or
election in whole or in part without prejudice to its future actions and
rights.
18
(o) Payment
Set Aside.
To the
extent that the Company makes a payment or payments to Buyer hereunder or
pursuant to any of the other Transaction Documents or the Buyer enforces or
exercises its rights hereunder or thereunder, and such payment or payments
or
the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company, a trustee, receiver or any other Person under any
law
(including, without limitation, any bankruptcy law, foreign, state or federal
law, common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment
had
not been made or such enforcement or setoff had not occurred.
[Signature
Page Follows]
19
IN
WITNESS WHEREOF,
Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
COMPANY:
|
|
|
GREEN
SCREEN INTERACTIVE SOFTWARE, INC.
By:
/s/
Xxx Xxxxxxxxxx
Name:
Xxx
Xxxxxxxxxx
Title:
Chief Executive Officer
|
IN
WITNESS WHEREOF,
Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.
|
BUYER:
|
|
|
By:
/s/
Xxxxxxx Xxxxx
Name:
Xxxxxxx
Xxxxx
Title:
Chief
Financial Officer
|
SCHEDULE
OF BUYERS
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
|||||||||
|
Buyer
|
Address
and Facsimile Number
|
Principal
Amount of Notes
|
Purchase
Price
|
Legal
Representative's
Address
and Facsimile Number
|
|||||||||
|
0000
Xxxxxx xx xxx Xxxxx, 00xx
Xxxxx
Xxx
Xxxxxxx, XX 00000
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
$
|
7,000,000
|
$
|
7,000,000
|
Xxxxx
Xxxxx
000
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxx Xxxx, Esq.
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
||||||||
EXHIBITS
| Exhibit A |
Form
of Notes
|
| Exhibit B |
Form
of Pledge Agreement
|
| Exhibit C |
Form
of Security Agreement
|
| Exhibit D |
Form
of Guarantee
|
| Exhibit E |
Form
of Opinion of Company’s Counsel
|
| Exhibit F |
Form
of Secretary's Certificate
|
| Exhibit G |
Form
of Officers Certificate
|
SCHEDULES
| Schedule 3(a) |
Subsidiaries
|
| Schedule 3(l) |
Absence
of Certain Changes
|
| Schedule 3(q) |
Transactions
with Affiliates
|
| Schedule 3(r) |
Equity
Capitalization
|
| Schedule 3(s) |
Indebtedness
and Other Contracts
|
| Schedule 3(t) |
Absence
of Litigation
|
| Schedule 3(w) |
Title
|
| Schedule 3(cc) |
Ranking
of Notes
|
| Schedule 4(d) |
Use
of Proceeds
|
