LINE OF CREDIT AGREEMENT
EXHIBIT
1.1
This
LINE
OF CREDIT AGREEMENT (this "Agreement"
or “Line of Credit Agreement”),
dated
as of May 8, 2008, by and among Alternative Construction Technologies, Inc.,
a
Florida corporation, ("Company"
or “Borrower”),
and
each buyer listed
on
the Schedule of Buyers attached hereto (each,
including its successors and assigns, a “Buyer”
or a “Lender”
and
collectively the “Buyers”
or“Lenders”).
WHEREAS:
A. The
Buyers and the Company have agreed that the Buyers, at their option, may make
advances and extend credit to the Company under the Senior Secured Grid Note
pursuant to the terms hereof, up to a maximum principal amount of $3,000,000
(expandable to $4,500,000, at the option of the Lead Investor), in the aggregate
and the Company has agreed to issue certain Warrants to the Buyers in
consideration hereof;
B. The
Notes
will be guaranteed by each of the Company's subsidiaries pursuant to the
subsidiary guarantee attached hereto as Exhibit
B-1
(the
"Subsidiary Guarantee"),
and
be secured as evidenced by the security agreement attached hereto as
Exhibit
B-2
(the
"Security
Agreement")
and
the intellectual property security agreement attached hereto as Exhibit
B-3
(the
“Intellectual
Property Security Agreement”).
NOW
THEREFORE,
the
Company and each Buyer, severally and not jointly, hereby agree as
follows:
1.
CERTAIN
DEFINITIONS. The
Company and the each Buyer (severally and not jointly) mutually agree to the
terms of each of the Transaction Documents. For purposes hereof:
“1933
Act” shall
mean the Securities Act of 1933, as amended.
“1934
Act”
shall
mean the Securities Exchange Act of 1934.
“Closing
Bring-Down Certificate”
shall
have the meaning set forth in Section 9(c) below.
“Closing
Certificate”
shall
have the meaning set forth in Section 2(c)(ii) below.
“Closing
Legal Opinion”
shall
have the meaning set forth in Section 2(c)(iii) below.
“Collateral”
shall
have the meaning ascribed to it in the Security Agreement.
“Common
Stock” means
the
Company’s shares of Common Stock, par value $0.0001.
“Common
Stock Equivalents”
means
any securities of the Company or the Subsidiaries which would entitle the holder
thereof to acquire, directly or indirectly, at any time Common Stock, including
without limitation, any debt, preferred stock, rights, options, warrants or
other instrument that is at any time convertible into or exercisable or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
“Convertible
Securities”
shall
have the meaning ascribed to it in the Note.
"Eligible
Market" means
the
over the counter Bulletin Board (“OTC-BB”), the New York Stock Exchange, Inc.,
the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select
Market or the American Stock Exchange.
1
“Intellectual
Property”
shall
have the meaning set forth in Section 9(i) below.
“Intellectual
Property Rights”
shall
have the meaning set forth in Section 9(i) below.
“June
2007 Debentures”
shall
mean the Debentures issued to the Original Holders pursuant to the June 2007
Securities Purchase Agreement.
“June
2007 Securities Purchase Agreement” shall
mean the Securities Purchase Agreement dated as of June 30, 2007 by and among
the Company and the Original Holders.
“Lead
Investor”
shall
have the meaning ascribed to it in Section 10(g) below.
“Lien”
shall
have the meaning set forth in Section 11 below.
“Lockbox
Agent”
shall
mean The
PrivateBank and Trust Company.
“Lockbox
Agreement”
shall
mean the Blocked Deposit Account Agreement by and between the Company, the
Lenders and the
Lockbox Agent,
in form
of Exhibit
C
attached
hereto.
"Market
Price,"
for any
security as of any date, shall have the meaning ascribed to it in the applicable
security.
“Material
Adverse Effect”
means a
material adverse effect upon the business, financial condition, results of
operation, properties or operations of the Company and its Subsidiaries (or
an
Eligible Client and its subsidiaries, as applicable or an Eligible Contract)
taken as a whole,
“Material
Adverse Change” shall
mean a material adverse change in the business, financial condition, results
of
operation, properties or operations of the Company and its Subsidiaries (or
an
Eligible Client and its subsidiaries, as applicable or an Eligible Contract)
taken as a whole.
“Maximum
Credit Limit”
shall
have the meaning set forth in Section 3 below.
“Officer’s
Certificate”
shall
have the meaning set forth in Section 13(c) below.
“Original
Holders”
shall
mean BridgePointe Master Fund Ltd., a Cayman Islands Exempted
Company,
CAMOFI
MASTER LDC, a Cayman Islands Limited Duration Company and
CAMHZN
MASTER LDC,
a Cayman
Islands Limited Duration Company.
2
“Options”
shall
have the meaning ascribed to it in the Note.
“Patents”
shall
have the meaning set forth in Section 9(i) below.
“Permitted
Liens” shall
mean: (i) Liens on equipment purchased in the ordinary course of business
consistent with past practice securing only the equipment so purchased and
no
other assets; and further provided that any such Liens shall not secure assets
having a value greater than the fair market value of the equipment so purchased,
and (ii) Liens subordinate to those created by this Agreement as long as the
lienholder enters into a subordination agreement acceptable to the Buyers in
their sole discretion.
“Person”
shall
mean an individual, a limited liability company, a partnership, a joint venture,
an exempted company, a corporation, a trust, an unincorporated organization
and
a government or any department or agency thereof.
“Principal
Market”
shall
have the meaning set forth in Section 10(c) below.
“Required
Holders”
shall
have the meaning ascribed to it in the Note.
“Security
Agreement”
shall
have the meaning ascribed to it in Recital “B” above.
“SEC
Documents”
shall
have the meaning set forth in Section 9(f) below.
“Securities”
shall
have the meaning set forth in Section 8(a) below.
“Security
Documents”
shall
mean the Security Agreement, the Intellectual Property Security Agreement,
the
Subsidiary Guarantee, and any other documents and filing required thereunder
in
order to grant the Buyers a first priority perfected security interest in the
Senior Secured Contracts and a second priority perfected security interest
in
all of the other assets of the Company and the Subsidiaries as provided in
the
Security Agreement, including but not limited to all UCC-1 filing receipts
and
documentation evidencing filing of liens with the United States Patent and
Trademark Office and the Deeds of Trust (or Amended Deeds of Trust, as
applicable) required to be filed pursuant to the Security Agreement.
"Subsidiaries"
means
any
corporation or other organization, whether incorporated or unincorporated,
in
which the Company owns, directly or indirectly, any equity or other ownership
interest.
"Trading
Day"
shall
mean any day on which the Common Stock is traded for any period on the Principal
Market, or on the principal securities exchange or other securities market
on
which the Common Stock is then being traded.
“Trading
Market”
means
the Eligible Market on which the Common Stock is listed or quoted for trading
on
the date in question.
“Transaction
Documents” shall
mean this Line of Credit Agreement, the Note, the Security Documents, the
Warrants, the 2007 Registration Rights Agreement (as defined in the Warrants)
and any other agreements delivered together with this Agreement or in connection
herewith.
“Warrants”
shall
have the meaning set forth in Section 2(b) below.
“Warrant
Amount”
shall
have the meaning set forth in Section 2(b) below.
“Warrant
Shares”
shall
have the meaning set forth in Section 8(a) below.
2. CLOSING;
WARRANTS. As
consideration for entering into this Agreement, on the Closing Date (as defined
below), the Company shall issue to each Buyer a Warrant to purchase a number
of
shares of Common Stock equal to the Warrant Amount (as defined below).
3
(a)
Closing
Date.
Subject
to the satisfaction or waiver of the terms and conditions of this Agreement,
the
"Closing" with respect to a Buyer shall occur when the Company has delivered
the
Company Documents (as defined below) to the Lender and the Lender has delivered
the Lender Documents (as defined below) to the Company. The date of the Closing
shall be referred to herein as the “Closing
Date.”
Unless
otherwise mutually agreed by the parties, the last Closing hereunder shall
occur
not later than May 9,
2008.
The Closing contemplated by this Agreement shall occur on the applicable Closing
Date at the offices of the Company, or at such other location as may be agreed
to by the parties.
(b)
Accompanying
Warrants.
In
consideration of entering into this Agreement, BridgePointe Master Fund Ltd.,
a
Cayman Islands Exempted Company (“BridgePointe”)
and
CAMOFI MASTER LDC, a Cayman Islands Limited Duration Company (“CAMOFI”)
shall
each receive a Warrant (“Warrant”)
to
purchase 900,000 shares of Common Stock of the Company (the “Warrant
Amount”).
In the
event that the Maximum Credit Limit is increased pursuant to Section 3 below,
the Company shall issue additional Warrants to BridgePointe and CAMOFI pro
rata
in accordance with their funding of such increased Maximum Credit Limit, such
that the aggregate Warrant Amount shall be increased to an amount equal to
the
product of (i) 900,000 multiplied by (ii) the quotient of (A) the amount by
which the Maximum Credit Limit is increased divided by (B) $3,000,000. The
Warrants shall be in the form of the Warrant annexed hereto as Exhibit
D,
except
that the “Initial Exercise Price,” as defined therein, shall equal $2.50,
subject
to adjustment as set forth therein. The Warrants shall have a five (5) year
term
from their respective dates of issuance. The Original Holders agree that the
issuance of the Warrants hereunder shall not trigger an adjustment to the
conversion price of the June 2007 Debentures or to the exercise price of the
warrants issued to the Original Holders in conjunction with the June 2007
Debentures.
(c)
Closing
Deliveries.
Closing
deliveries required hereunder may be made to the Company’s outside counsel,
Xxxxxx Xxxx to be held in trust pending the Closing. On the Closing Date, the
Company will deliver or cause to be delivered to each Lender (the “Company
Documents”):
(i)
the
items required to be delivered to Buyer pursuant to Section 13, duly executed
by
the Company where so required,
(ii)
a
certificate ("Closing
Certificate")
signed
by its chief executive officer or chief financial officer (1) attesting to
the
truth and accuracy of all the representations and warranties made by the Company
contained in this Agreement, as of the applicable Closing Date, as if such
representations and warranties were made and given on all such dates, (2)
adopting the covenants and conditions set forth in this Agreement in relation
to
the applicable Notes and Warrants, and (3) certifying that an Event of Default
has not occurred,
(iii)
a
legal opinion of the Company's counsel, dated as of the Closing Date, in form,
scope and substance reasonably satisfactory to the Buyers and in substantially
the same form as Exhibit
E
attached
hereto in relation to the Company, the applicable Note, the applicable Warrant
and the Transaction Documents ("Closing
Legal Opinion"),
(v)
the
Lockbox Agreement, and
(vi)
the
Intercreditor Agreement (as defined in Section 11 below), duly executed by
the
Existing Lienholders (as defined in Section 11(c) hereof).
On
the
Closing Date, each Buyer shall deliver or cause to be delivered to the Company
the following (the “Buyer
Documents”):
this
Line of Credit Agreement and the Security Agreement duly executed by such
Buyer.
3.
LINE
OF CREDIT.
Lender
hereby establishes for a period extending from
the
date hereof until May 1, 2010 (the "Maturity
Date"),
which
period may be extended as to a Buyer for up to five (5) additional one year
periods at the sole option of that Buyer, upon the written approval that Buyer,
a line of credit (the "Credit
Line")
for and
on behalf of Borrower which equals up to three million
4
U.S.
dollars (U.S. $3,000,000)(“Maximum
Credit Limit”).
The
Maximum Credit Limit may be increased, at the option of the Lead Investor in
its
sole discretion, to an amount equal to four million five hundred thousand U.S.
dollars (U.S. $4,500,000) at any time prior to the Maturity Date upon advance
written notice to the Company; provided, however, that no Buyer shall be
obligated to fund any amount of such increased Maximum Credit Limit unless
it
consents in writing to do so. In connection herewith, upon the first Advance
(as
defined below) Borrower shall execute and deliver to each Lender a Senior
Secured Grid Note (the “Note”)
in the
amount of the Advance, in the form attached hereto as Exhibit
"A".
All
sums advanced on the Credit Line pursuant to the terms of this Agreement (each
an "Advance")
shall
become part of the principal amount of the Note. For purposes of clarification,
if one Buyer extends the Credit Line and another Buyer does not, the Lender’s
Pro Rata Percentage (as defined below) shall remain at the value defined below,
and shall not change as a result in the reduction of the number of Buyers.
4.
ADVANCES.
(a)
Certain
Definitions. For
purposes hereof:
“Available
Credit Line Amount”
shall
mean the Credit Limit, minus the then aggregate amounts of principal and
interest owing under all Notes issued pursuant to this Agreement.
“Credit
Limit”
shall
mean the lesser of (i) sixty percent (60%) of the gross amount of Eligible
Contracts or (ii) the Maximum Credit Limit.
“Eligible
Contract”
shall
mean a bona fide contract or purchase order between the Company and any of
the
clients (“Eligible
Clients”)
listed
on Schedule 4(a-1), provided that such contract is in substantially the same
form as either the sample contract or purchase order in Schedule 4 (a-2) or
Schedule 4(a-3), and provided further that a contract shall cease to be an
“Eligible Contract” if either (i) the Company has not shipped the products
called for in the contract to the applicable customer within thirty (30) days
of
the date of the contract, (ii) any payments from the customer in such contract
to the Company are not made within ninety (90) days of the date that the Company
ships product pursuant to such contract, (iii) there has been a Material Adverse
Change to any customer which is a party to any such contract or purchase order,
or (iv) the contract has been paid off and is no longer outstanding, or has
been
cancelled by either party.
“Lender’s
Pro Rata Percentage”
shall
mean initially fifty percent (50%) for each Lender, provided that if the Maximum
Credit Limit is increased, a Lender’s Pro Rata Percentage shall be subject to a
pro rata adjustment based upon the amount, if any, of each Lender’s
participation in such increase in the Maximum Credit Limit.
(b)
Notice
of Advance Request by Company.
Anytime
prior to the Maturity Date that there exists any Available Credit Line Amount,
the Company may provide each Lender with written notice (each, an “Advance
Request Notice”)
that
the Company requests the Lenders to make an Advance under the Credit
Line. Any
Advance Request Notice shall be made by Borrower in writing, and shall set
forth
(i) the amount of the Advance requested (which shall not exceed the Lender’s Pro
Rata Percentage of the then Available Credit Line Amount)(the “Requested
Advance Amount”),
(ii)
the Credit Limit, and (iii) the Available Credit Line Amount as of the date
of
the notice, shall be signed by a duly authorized officer of Borrower, and shall
be delivered to each Lender. The Advance Request Notice shall also contain
a
certification (the “Pre-Advance
Certification”),
signed
by the Company's President and Chief Executive or Chief Financial Officer on
behalf of the Company, as of the date of such notice, affirming (i) that there
has been no Material Adverse Change to the Company since the date of this
Agreement, (ii) that, to the best of the Company’s knowledge, there has been no
Material Adverse Change to any of the Eligible Clients that are a party to
any
of the purchase orders or contracts that are being counted by the Company as
Eligible Contracts, and (iii) there has been no event of default under the
Notes
or June 2007 Debentures which has not been cured, and the Company has made
all
payments of principal and interest on the Notes and the June 2007 Debentures
which are then due.
5
(c) Funding
of Advance.
Subject
to the provisions of Section 4(e) hereof, upon receipt of a duly completed
and
signed Advance Request Notice, each Lender, shall be obligated to advance funds
in accordance herewith pursuant to an Advance Request Notice by delivering,
not
later than five (5) business days after Lender receives the applicable Advance
Request Notice from the Borrower (the “Funding
Deadline”),
to
Borrower or a depository account designated by Borrower, an amount equal to
the
Lender’s Requested Advance Amount (which shall not exceed the Lender’s Pro Rata
Percentage of the Available Credit Line Amount), in immediately available funds.
(d) Advance
by a Co-Lender.
The
obligation of a Lender (the “Primary Lender”) to Advance funds pursuant to an
Advance Request Notice hereunder shall be satisfied if and to the extent that,
in its sole discretion, it arranges to have another of the Lenders (the
“Co-Lender”) Advance the full amount of such_Primary_Lender’s Advance Request
Notice, in addition to such Co-Lender’s own associated Requested Advance Amount,
toward such Primary Lender’s Requested Advance Amount.
(e)
Conditions
to Obligation to Advance.
Notwithstanding the above, the Lenders shall not be obligated to advance funds
pursuant to an Advance Request Notice, if:
(i)
the
Company fails to provide a duly executed Advance Request Notice which contains
the Pre-Advance Certification or either Lender has a good faith basis to dispute
any item contained in the Pre-Advance Certification; or
(ii)
a
Lender, in its own discretion, makes a good faith determination that there
has
been a Material Adverse Change since the date of this Agreement to any one
or
more of the Eligible Clients that are a party to any of the purchase orders
or
contracts that are being counted by the Company as Eligible Contracts, and
provides written notice of such determination to the Company prior to the
Funding Deadline, provided that notwithstanding any such determination, the
Lender shall remain obligated to Advance the maximum Requested Advance Amount
that the Company could have requested excluding the Eligible Contracts of the
disputed Eligible Client.
(f) Dispute
Resolution.
If the
Company disputes a Lender’s determination that an Eligible Client has undergone
a Material Adverse Change since the date of this Agreement, the Company and
the
Lender shall submit the disputed facts to a Major Accounting Firm (as defined
below), acceptable to the Lender, for resolution within five (5) Business Days
of the date that the Lender notifies the Company of its determination. The
subject Advance shall not be considered due unless and until five (5) Business
Days after the Major Accounting Firm provides the parties with a determination
that the Eligible Client in question has not undergone a Material Adverse
Change. The parties agree to abide by the determination of the Major Accounting
Firm, and the non-prevailing party shall be responsible for the fees of the
Major Accounting Firm. For purposes hereof, a “Major
Accounting Firm”
shall
mean one of the top 5 accounting firms, by annual revenue, in the United States.
5. REDUCTION
OF CREDIT LIMIT.
If
at any
time the Credit Limit is less than the then aggregate amounts of principal
and
interest owing under all Notes issued pursuant to this Agreement, the Company
shall immediately (but in any event within ten (10) business days) redeem an
amount of each of the Notes (pro rata from each Lender, based upon the amount
of
each Lender’s Note then outstanding) such that the aggregate principal and
interest owing under all of the Notes is less than the Credit
Limit.
6.
LOCKBOX.
(a) Lockbox
Account.
The
Company, the Lenders and the Lockbox Agent shall enter into the Lockbox
Agreement, whereby the Lockbox Agent is instructed to set up an account (the
“Lockbox
Account”)
for the
remittance of payments from the customers on the Eligible Contracts.
(b) Lockbox
Invoices to Customers.
The
Company agrees that, promptly upon closing of the Line of Credit Agreement
(with
regard to existing customers under current Eligible Contracts) and promptly
upon
entering into any new Eligible Contract (with respect to future customers),
the
Company will send instructions (each, “Lockbox
Payment Instructions”)
to the
customer requiring that payments on the Eligible Contract be remitted directly
to the Lockbox Account. Upon shipment of product to a customer under any
Eligible Contract, the Company shall provide the customer with an invoice
requiring that payments on the Eligible Contract be remitted directly to the
Lockbox Account (each, a “Lockbox Invoice”). The Company shall promptly provide
each of the Lenders with a copy of each Lockbox Payment Instructions and each
Lockbox Invoice, together with evidence that each has been delivered to the
applicable customer.
6
(c) Sweep
of Funds from Lockbox. The
Company shall provide irrevocable instructions to the Lockbox Agent to follow
instructions provided by the Lead Investor as to disbursement of the funds
out
of the Lockbox Account. The Company agrees that 100% of the funds out of the
Lockbox Account shall be disbursed to the Lenders (pro rata to each Lender,
based upon the amount of each Lender’s Note then outstanding), and such funds
shall be applied first toward interest due on the Notes, next toward reduction
of the principal amount of the Notes, until paid in full, and any remaining
amounts shall be disbursed to the Company.
7. COLLATERAL.
The
payment of all sums advanced pursuant to this Agreement shall be subject to
the
Security Documents dated as of a date even herewith by and among the parties
hereto and shall be secured by, and Borrower hereby grants Lenders a security
interest, pro rata in accordance with their interests in and to the Collateral,
as such term is defined in the Security Agreement.
8. BUYER’S
REPRESENTATIONS AND WARRANTIES.
Each
Buyer represents and warrants to the Company solely as to such Buyer
that:
(a)
Investment
Purpose.
As of
the date hereof, the Buyer is purchasing the Note and the Warrants and the
shares of Common Stock issuable upon exercise thereof (the "Warrant
Shares"
and,
collectively with the Note and Warrants, the "Securities")
for its
own account and not with a present view towards the public sale or distribution
thereof, except pursuant to sales registered or exempted from registration
under
the 1933 Act; PROVIDED, HOWEVER, that by making the representations herein,
the
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 applicable state securities laws.
(b) Accredited
Investor Status.
The
Buyer is an "accredited investor" as that term is defined in Rule 501(a) of
Regulation D promulgated under the 1933 Act (an "Accredited
Investor").
(c) Reliance
On Exemptions.
The
Buyer understands that the Securities are being offered and sold to it in
reliance upon specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying upon
the truth and accuracy of, and the Buyer's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Buyer set
forth herein in order to determine the availability of such exemptions and
the
eligibility of the Buyer to acquire the Securities.
(d) Information.
The
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 which have been requested by the Buyer
or its advisors. The 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 investigation conducted by Buyer or any of its advisors
or
representatives shall modify, amend or affect Buyer's right to rely on the
Company's representations and warranties contained in Section 9 below. The
Buyer
understands that its investment in the Securities involves a significant degree
of risk.
(e) Transfer
Or Re-Sale.
The
Buyer understands that (i) the sale or re-sale of the Securities has not been
and is not being registered under the 1933 Act or any applicable state
securities laws, and the Securities may not be transferred or resold unless
(a)
the Securities are sold pursuant to an effective registration statement under
the 1933 Act, (b) the Buyer shall have delivered to the Company an opinion
of
counsel (which opinion shall be in form, substance and scope reasonably
satisfactory to counsel to the Company) to the effect that the Securities to
be
sold or transferred may be sold or transferred pursuant to an exemption from
such registration, (c) the Securities are sold or transferred to an "affiliate"
(as defined in Rule 144 promulgated under the 1933 Act (or a successor rule)
("Rule
144")
of the
Buyer who agrees to sell or otherwise transfer the Securities only in accordance
with this Section 8(e) and who is an Accredited Investor, or (d) the Securities
are sold pursuant to Rule 144; and (ii) any sale of such Securities made in
reliance on Rule 144 may be made only in accordance with the terms of said
Rule.
Notwithstanding the foregoing or anything else contained herein to the contrary,
the Securities may be pledged as collateral in connection with a bona fide
margin account or other lending arrangement.
7
(f)
Organization;
Authorization; Enforcement.
Buyer
is duly organized, validly existing and in good standing under the laws of
the
jurisdiction in which it is organized. Buyer has all requisite power and
authority to enter into and perform this Agreement and the other Transaction
Documents to which Buyer is a signatory and to consummate the transactions
contemplated hereby and thereby in accordance with the terms hereof and thereof.
The execution and delivery of this Agreement and the other Transaction Documents
to which Buyer is a signatory have been duly and validly authorized and no
further consent or authorization of Buyer, its manager or members is required.
This Agreement has been duly executed and delivered on behalf of the Buyer,
and
this Agreement constitutes, and upon execution and delivery by the Buyer of
the
other Transaction Documents to which Buyer is a signatory, such agreements
will
constitute, legal, valid and binding agreements of the Buyer enforceable in
accordance with their terms except (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium
and
other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies, and (iii) insofar
as
indemnification and contribution provisions may be limited by applicable
law.
(g)
Residency.
The
Buyer’s residency is as indicated on its signature page hereto.
(h) Knowledge
And Experience.
Buyer
has such knowledge and experience in financial and business matters that it
is
capable of evaluating the merits and risks of the investment in the
Securities.
(i) Short
Sales Prior To The Date Hereof.
Buyer
and its Affiliates have not from the time that such Buyer first received a
term
sheet (written or oral) from the Company or any other person setting forth
the
material terms of the transactions contemplated hereunder until the date hereof
entered into or effected, or attempted to induce any third party to enter into
or effect, any short sales of the Common Stock, or any hedging transaction
which
establishes a net short position with respect to the Common Stock.
(j) Independent
Investment Decision.
Such
Buyer has independently evaluated the merits of its decision to purchase the
Securities pursuant to the Transaction Documents, and such Buyer confirms that
it has not relied on the advice of any other Buyer's business and/or legal
counsel in making such decision.
9. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
The
Company represents and warrants to each Buyer as of the date hereof and as
of
the date hereof that, except as set forth on the Company’s disclosure schedules
referred to herein and attached hereto or any update thereto prior to the
Closing Date (so long as such schedules do not contain any material adverse
change)(collectively, the “Disclosure
Schedules”):
(a) Organization
And Qualification.
The
Company and each of its Subsidiaries (as defined below), if any, is a
corporation duly organized, validly existing and in good standing under the
laws
of the jurisdiction in which it is incorporated, with full power and authority
(corporate and other) to own, lease, use and operate its properties and to
carry
on its business as and where now owned, leased, used, operated and conducted.
Schedule
9(a)
sets
forth a list of all of the Subsidiaries of the Company and the jurisdiction
in
which each is incorporated. The Company and each of its Subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which its ownership or use of property or the nature
of
the business conducted by it makes such qualification necessary except where
the
failure to be so qualified or in good standing would not have a Material Adverse
Effect.
(b) Authorization;
Enforcement.
(i) The
Company has all requisite corporate power and authority to enter into and
perform this Agreement, the Security Documents, the Note and the Warrants and
to
consummate the transactions contemplated hereby and thereby and to issue the
Securities, in accordance with the terms hereof and thereof, (ii) except as
otherwise set forth in Schedule
9(b),
the
execution and delivery of this Agreement, the Security Documents, the Note
and
the Warrants by the Company and the consummation by it of the transactions
contemplated hereby and thereby (including without limitation, the issuance
of
the Note and the Warrants and the Warrant Shares issuable upon exercise of
or
otherwise pursuant to the Warrants) have been duly authorized by the Company's
Board of Directors and no further consent or authorization of the Company,
its
Board of Directors, or its stockholders is required, (iii) this Agreement,
the
Securities Agreement, the Subsidiary and the Note (to the extent that an Advance
is requested concurrently with the Closing) have each been duly executed and
delivered by the Company, and the Security Agreement and the Subsidiary
Guarantee have been duly executed and delivered by each of the Subsidiaries,
and
(iv) this Agreement constitutes, and upon execution and delivery by the Company
of the Security Documents, the Note and the Warrants, each of such agreements
and instruments will constitute, a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except
(i)
as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or
other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.
8
(c) Capitalization.
As of
the date hereof, the authorized capital stock of the Company is as set forth
on
Schedule
9(c-1).
The authorized capital stock of the Company consists of 100,000,000
shares
of Common Stock, no par value, of which approximately 8,000,000
shares are outstanding as of the date hereof; 1,500,000
Series A
Preferred Stock, par value $1.00 per share, of which all are issued and
outstanding; 1,000,000 shares of Series C Preferred, par value $0.0001 per
share, authorized with 379,358 shares issued and outstanding; and, 44,000,000
shares of “blank check” preferred stock, par value $0.0001 of which none are
issued and outstanding as of the date hereof. There are no
outstanding securities which are convertible into shares of Common Stock, except
the June 2007 Debentures, and as disclosed in Schedule 9(c) attached hereto,
whether such conversion is currently convertible only upon some future date
or
the occurrence of some event in the future, except as disclosed on Schedule
9(c-1).
If any such securities are listed on the Schedule
9(c-1),
the
number or amount of each such outstanding convertible security and the
conversion terms are set forth in said Schedule
9(c-1).
All of such outstanding shares of capital stock set forth in Schedule
9(c-1) are,
or
upon issuance will be, duly authorized, validly issued, fully paid and
nonassessable.
No
shares
of capital stock of the Company are subject to preemptive rights or any other
similar rights of the stockholders of the Company or any liens or encumbrances
imposed through the actions or failure to act of the Company. Except as
disclosed in Schedule
9(c-2),
as of
the date of this Agreement (i) there are no outstanding options, warrants,
scrip, rights to subscribe for, puts, calls, rights of first refusal,
agreements, understandings, claims or other commitments or rights of any
character whatsoever relating to, or securities or rights convertible into
or
exercisable or exchangeable for any shares of capital stock of the Company
or
any of its Subsidiaries, or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries, (ii) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated
to
register the sale of any of its or their securities under the 1933 Act and
(iii)
there are no anti-dilution or price adjustment provisions contained in any
security issued by the Company (or in any agreement providing rights to security
holders) that will be triggered by the issuance of the Note, the Warrants,
or
the Warrant Shares. The Company has furnished to each Buyer true and correct
copies of the Company's and each Subsidiary’s Articles of Incorporation as in
effect on the date hereof ("Articles
Of Incorporation"),
the
Company's By-laws, as in effect on the date hereof (the "By-Laws"),
and
the terms of all securities convertible into or exercisable for Common Stock
of
the Company and the material rights of the holders thereof in respect thereto.
In the event that the date of execution of this Agreement is not the Closing
Date, the Company shall provide each Buyer with a written update of this
representation signed by the Company's President and Chief Executive or Chief
Financial Officer on behalf of the Company as of the Closing Date (“Closing
Bring-Down Certificate”).
No
further approval or authorization of any stockholder, the Board of Directors
of
the Company or others is required for the issuance and sale of the Securities.
There are no stockholders agreements, voting agreements or other similar
agreements with respect to the Company’s capital stock to which the Company is a
party or, to the knowledge of the Company, between or among any of the Company’s
stockholders.
(d) Issuance
of Shares.
Upon
exercise of the Warrants in accordance with their respective terms, and receipt
of the exercise price therefor, the Warrant Shares, along with any other shares
issued pursuant to the terms of the Transaction Documents, will be validly
issued, fully paid and non-assessable, and free from all taxes, liens, claims
and encumbrances and shall not be subject to preemptive rights or other similar
rights of stockholders of the Company and will not impose personal liability
upon the holder thereof.
9
(e) No
Conflicts.
Except
as otherwise set forth in Schedule
9(e),
the
execution, delivery and performance of each 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 and reservation
for issuance of the Warrant Shares) will not (i) conflict with or result in
a
violation of any provision of the Certificate of Incorporation or By-laws,
(ii)
trigger any resets of conversion or exercise prices in other outstanding
convertible securities, warrants or options of the Company, (iii) trigger the
issuance of securities by the Company to any third party, (iv) violate or
conflict with, or result in a breach of any provision of, 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, patent, patent
license or instrument to which the Company or any of its Subsidiaries is a
party, or (v) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations
and regulations of any self-regulatory organizations to which the Company or
its
securities are subject) applicable to the Company or any of its Subsidiaries
or
by which any property or asset of the Company or any of its Subsidiaries is
bound or affected (except, in the case of clauses (i), (iv) and (v) above,
for
such conflicts, defaults, terminations, amendments, accelerations, cancellations
and violations as would not, individually or in the aggregate, have a Material
Adverse Effect). Neither the Company nor any of its Subsidiaries is in violation
of its Articles of Incorporation, By-laws or other organizational documents
and
neither the Company nor any of its Subsidiaries is in default (and no event
has
occurred which with notice or lapse of time or both could put the Company or
any
of its Subsidiaries in default) under, and neither the Company nor any of its
Subsidiaries has taken any action or failed to take any action that would 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 by which any property or assets of the Company or
any
of its Subsidiaries is bound or affected, except for possible defaults as would
not, individually or in the aggregate, have a Material Adverse Effect. The
businesses of the Company and its Subsidiaries, if any, are not being conducted,
and shall not be conducted so long as a Buyer owns any of the Securities, in
violation of any law, ordinance or regulation of any governmental entity, the
violation of which would have a Material Adverse Effect. Except as disclosed
in
Schedule
9(e)
or as
specifically contemplated by this Agreement or as required under the 1933 Act,
the 1934 Act and any applicable state securities laws, the Company is not
required to obtain any consent, authorization or order of, or make any filing
or
registration with, any court, governmental agency, regulatory agency, self
regulatory organization or stock market or any third party in order for it
to
execute, deliver or perform any of its obligations under this Agreement, the
Security Documents, the Notes or the Warrants in accordance with the terms
hereof or thereof or to issue and sell the Notes and Warrants in accordance
with
the terms hereof and to issue the Warrant Shares upon exercise of or otherwise
pursuant to the Warrants. Except as disclosed in Schedule
9(e),
all
consents, authorizations, orders, filings and registrations which the Company
is
required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof. The Company and its Subsidiaries are
unaware of any facts or circumstances which might give rise to any of the
foregoing.
(f) SEC
Documents; Financial Statements.
Since
at least the beginning of the most recent fiscal quarter that began more than
two (2) years prior to the Closing Date, the Company has timely filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the 1934 Act (all
of the foregoing filed prior to the date hereof and since at least the beginning
of the most recent fiscal quarter that began more than two (2) years prior
to
the Closing Date, and all exhibits included therein and financial statements
and
schedules thereto and documents (other than exhibits to such documents)
incorporated by reference therein, being hereinafter referred to herein as
the
"SEC
Documents").
For
purposes of this Agreement, “Timely
Filed”
shall
mean that the applicable document was filed (i) by its original due date under
the 1934 Act, or, if a request for an extension was timely filed, (ii) by such
extended due date. True and complete copies of the SEC Documents are available
on the SEC’s internet website (xxx.xxx.xxx), except for such exhibits and
incorporated documents. Upon the request of a Buyer, the Company will promptly
provide copies of the SEC Documents to such Buyer. As of their respective dates,
the SEC Documents complied in all material respects with the requirements of
the
1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time
they
were filed with the SEC, contained any untrue statement of a material fact
or
omitted to state a material fact required to be stated therein or necessary
in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. None of the statements made in any such SEC
Documents is, or has been, required to be amended or updated under applicable
law (except for such statements as have been amended or updated in subsequent
filings prior to the date hereof). As of their respective dates, the financial
statements of the Company (and the Buyers thereto) included in the SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto. Such financial statements have been prepared in accordance with United
States generally accepted accounting principles, consistently applied, during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed
or
summary statements) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth in the financial
statements of the Company included in the SEC Documents, the Company has no
liabilities, contingent or otherwise, other than (i) liabilities incurred in
the
ordinary course of business subsequent to the date of the Company’s most recent
10-QSB or 10-KSB and (ii) obligations under contracts and commitments incurred
in the ordinary course of business and not required under generally accepted
accounting principles to be reflected in such financial statements, which,
individually or in the aggregate, are not material to the financial condition
or
operating results of the Company.
10
(g) Absence
Of Certain Changes.
Except
for losses incurred in the ordinary course of business consistent with prior
practice that have been publicly disclosed at least five (5) days prior to
the
date hereof or as set forth on Schedule
9(g)
hereof,
since the date of the Company’s most recent 10-QSB or 10-KSB, there has been no
material adverse change and no material adverse development in the assets,
liabilities, business, properties, operations, financial condition, results
of
operations or prospects of the Company or any of its Subsidiaries. For purposes
of this Section 9(g), the terms "Material
Adverse Change"
and
"Material
Adverse Development"
shall
exclude continuing losses that are consistent with the Company's historical
losses. Except
as
disclosed in
Schedule 9(g),
since the
date
of the Company’s most recent audited financial statements contained in a Form
10-KSB, neither the Company nor any of its Subsidiaries has
(i)
declared or paid any dividends on its Common Stock;
(ii)
sold
any assets, individually or in the aggregate, in excess of $100,000 outside
of
the ordinary course of business consistent
with prior practice;
(iii)
except as set forth in
Schedule 9(g),
had
capital expenditures, individually or in the aggregate, in excess of
$100,000;
(iv)
issued
any stock, bonds or other corporate securities or any rights, options or
warrants with respect thereto;
(v)
borrowed any amount or incurred or become subject to any liabilities (absolute
or contingent) except current liabilities incurred in the ordinary course of
business which are comparable in nature and amount to the current liabilities
incurred in the ordinary course of business during the comparable portion of
its
prior fiscal year, as adjusted to reflect the current nature and volume of
the
Company's or such subsidiary's business;
(vi)
discharged or satisfied any lien or encumbrance or paid any obligation or
liability (absolute or contingent), other than current liabilities paid in
the
ordinary course of business consistent with prior practice;
(vii)
declared or made any payment or distribution of cash or other property to
stockholders with respect to its stock, or purchased or redeemed, or made any
agreements so to purchase or redeem, any shares of its capital
stock;
(viii)
sold, assigned or transferred any other tangible assets, or canceled any debts
or claims, except in the ordinary course of business consistent with prior
practice;
(ix)
sold, assigned or transferred any patent rights, trademarks, trade names,
copyrights, trade secrets or other intangible assets or intellectual property
rights, or disclosed any proprietary confidential information to any person
except to customers in the ordinary course of business consistent with prior
practice;
(x)
suffered any material losses or waived any rights of material value, whether
or
not in the ordinary course of business, or suffered the loss of any material
amount of prospective business;
(xi)
made
any changes in employee compensation except in the ordinary course of business
and consistent with past practices;
11
(xii)
made capital expenditures or commitments therefor that aggregate in excess
of
$50,000;
(xiii)
entered into any other transaction other than in the ordinary course of
business, or entered into any other material transaction, whether or not in
the
ordinary course of business consistent with prior practice;
(xiv)
made charitable contributions or pledges in excess of $10,000;
(xv)
suffered any material damage, destruction or casualty loss, whether or not
covered by insurance;
(xvi)
experienced any material problems with labor or management in connection with
the terms and conditions of their employment;
(xvii)
effected any two or more events of the foregoing which in the aggregate would
be
material to the Company or its subsidiaries; or
(xviii)
entered into an agreement, written or otherwise, to take any of the foregoing
actions.
Except
as
set forth in Schedule
9(g),
neither
the Company nor any of its Subsidiaries has 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 which would reasonably lead
a
creditor to do so.
(h) Absence
Of Litigation.
Except
as disclosed in Schedule
9(h-1),
to the
best knowledge of the Company or any of its Subsidiaries, there is no action,
suit, claim, proceeding, inquiry or investigation before or by any court, public
board, government agency, self-regulatory organization or body pending or,
to
the best knowledge of the Company or any of its Subsidiaries, threatened against
or affecting the Company or any of its Subsidiaries, or their officers or
directors in their capacity as such. Schedule
9(h-2)
contains
a complete list and summary description of any known pending or threatened
proceeding against or affecting the Company or any of its Subsidiaries, without
regard to whether it, if adversely decided, would have a Material Adverse
Effect. The Company and its Subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.
(i) Patents,
Copyrights, Etc.
All of
the Company’s material patents, patent applications, Patents (as defined below),
patent rights, inventions, know-how, trade secrets, trademarks, trademark
applications, service marks, service names, trade names and copyrights
("Intellectual
Property")
are set
forth in Schedule
9(i-1)
hereof. The
Company and its Subsidiaries own or possess adequate rights or licenses to
use
all of the Intellectual property and
the
rights to receive proceeds from patent licensing agreements, patent infringement
litigation or other litigation related to such intellectual property
(collectively, the “Intellectual
Property Rights”).
Any
Liens, encumbrances or licenses that have been granted against the Intellectual
Property are listed in Schedule
9(i-2).
Except
as
set forth in Schedule
9(i-2),
none of
the Company's Intellectual Property Rights have expired or terminated, or are
expected to expire or terminate, within three years from the date of this
Agreement. Except
as
otherwise set forth on Schedule
9(i-2),
the
Company owns all right and title to the Intellectual Property free and clear
of
any Liens or encumbrances and has not granted any licenses or rights to use
any
of the Patents to any third party. The Company and each of its Subsidiaries
owns
or possesses the requisite licenses or rights to use all Intellectual Property
necessary to enable it to conduct its business as now operated, including but
not limited to the intellectual property set forth in Schedule
9(i-1)
hereof
(and, except as otherwise set forth in Schedule
9(i-2) hereof,
to the best of the Company's knowledge, as presently contemplated to be operated
in the future), except for such licenses or rights the failure of which to
own
or possess would not, individually or in the aggregate, have a Material Adverse
Effect; there is no claim or action by any person pertaining to, or proceeding
pending, or to the Company's knowledge threatened, which challenges the right
of
the Company or of a Subsidiary with respect to any Intellectual Property
necessary to enable it to conduct its business as now operated (and, except
as
otherwise set forth in Schedule
9(i-2) hereof,
to the best of the Company's knowledge, as presently contemplated to be operated
in the future), except for actions or claims which, if adversely decided, would
not have a Material Adverse Effect; to the best of the Company's knowledge,
the
Company's or its Subsidiaries' current and intended products, services and
processes do not infringe on any Intellectual Property Rights or other rights
held by any person, and the Company is unaware of any facts or circumstances
which might give rise to any of the foregoing. The Company and each of its
Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of their Intellectual Property.
12
For
purposes hereof, "Patents"
means
all domestic and foreign letters patent, design patents, utility patents,
industrial designs, inventions, trade secrets, ideas, concepts, methods,
techniques, processes, proprietary information, technology, know-how, formulae,
rights of publicity and other general intangibles of like nature, now existing
or hereafter acquired (including, without limitation, all domestic and foreign
letters patent, design patents, utility patents, industrial designs, inventions,
trade secrets, ideas, concepts, methods, techniques, processes, proprietary
information, technology, know-how and formulae described in Schedule
9(i-1)
hereof),
all applications, registrations and recordings thereof (including, without
limitation, applications, registrations and recordings in the United States
Patent and Trademark Office, or in any similar office or agency of the United
States or any other country or any political subdivision thereof), and all
reissues, divisions, continuations, continuations in part and extensions or
renewals thereof, in each case owned by the Company or an of its
Subsidiaries.
(j) No
Materially Adverse Contracts, Etc.
Neither
the Company nor any of its Subsidiaries is subject to any charter, corporate
or
other legal restriction, or any judgment, decree, order, rule or regulation
which in the judgment of the Company's officers has or is reasonably likely
in
the future to have a Material Adverse Effect. Neither the Company nor any of
its
Subsidiaries is a party to any contract or agreement, or has knowledge of a
breach of any contract or agreement to which the Company or any of its
Subsidiaries is a party, either of which in the judgment of the Company's
officers has or is reasonably likely to have a Material Adverse
Effect.
(k) Tax
Status.
Except
as set forth on Schedule
9(k),
the
Company and each of its Subsidiaries has timely made or filed all federal,
state
and foreign income and all other tax returns, reports and declarations required
by any jurisdiction to which it is subject (unless and only to the extent that
the Company and each of its Subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and
has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside
on
its books provisions 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. The Company has not executed a waiver with respect
to
the statute of limitations relating to the assessment or collection of any
foreign, federal, state or local tax. Except as set forth on Schedule
9(k),
none of
the Company's tax returns is presently being audited by any taxing
authority.
(l) Transactions
With And Obligations To Affiliates.
Other
than the grant of stock options disclosed on Schedule
9(l),
none
of
the officers, directors, or employees of the Company is presently a party to
any
transaction with the Company or any of its Subsidiaries (other than customary
employment contracts for ordinary course services as employees, officers and
directors), including any contract, agreement or other arrangement providing
for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner. Schedule
9(l)
sets
forth any loans, payables, payments, transactions, debt or equity securities,
or
similar agreements or obligations between the Company and any officers,
directors, management or Affiliates of the Company.
(m) Acknowledgment
Regarding Buyer’s Purchase Of Securities.
The
Company acknowledges and agrees that each Buyer is acting (i) solely in the
capacity of arm's length purchaser and (ii) severally, and not jointly, with
respect to this Agreement and the transactions contemplated hereby. The Company
further acknowledges that each Buyer is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to this
Agreement and the transactions contemplated hereby and that any statement made
by each Buyer or any of its respective representatives or agents in connection
with this Agreement and the transactions contemplated hereby is not advice
or a
recommendation and is merely incidental to such Buyer’s purchase of the
Securities and has not been relied upon by the Company, its officers or
directors in any way. The Company further represents to each Buyer that the
Company's decision to enter into this Agreement has been based solely on the
independent evaluation of the Company and its representatives.
13
(n) No
Integrated Offering.
Neither
the Company, nor any of its Affiliates, or any Person acting on its or their
behalf, has directly or indirectly made any offers or sales of any security
or
solicited any offers to buy any security under circumstances that would require
registration under the 1933 Act of the issuance of the Securities to any Buyer.
The issuance of the Securities to each Buyer will not be integrated with any
other issuance of the Company's securities (past, current or future) for
purposes of any stockholder approval provisions applicable to the Company or
its
securities.
(o) No
Brokers.
The
identity of any brokers or placement agents (each, a “Placement Agent”) that are
receiving compensation in respect to this Offering, along with the amount of
cash, warrants or other consideration that compose any compensation to each
such
broker or placement agent, are disclosed in Schedule
9(o) hereto.
Other than as set forth on Schedule
9(o),
the
Company has taken no action which would give rise to any claim by any person
for
brokerage commissions, finder's fees or similar payments relating to this
Agreement or the transactions contemplated hereby. The
Company shall indemnify and hold harmless each of Buyer, its employees,
officers, directors, agents, and partners, and their respective Affiliates,
from
and against all claims, losses, damages, costs (including the costs of
preparation and attorney's fees) and expenses suffered in respect of any such
claimed or existing fees.
(p) Conduct
of Business; Regulatory Permits; Compliance.
The
Company and each of its Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exemptions, consents,
certificates, approvals and orders necessary to own, lease and operate its
properties and to carry on its business as it is now being conducted
(collectively, the "Company
Permits"),
except
where the failure to so possess any such Company Permits would not have a
Material Adverse Effect, and there is no action pending or, to the knowledge
of
the Company, threatened regarding suspension or cancellation of any of the
Company Permits. Neither the Company nor any of its Subsidiaries is in conflict
with, or in default or violation of, any of the Company Permits, except for
any
such conflicts, defaults or violations which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect. Neither
the
Company nor any of its Subsidiaries is in violation of any term of or in default
under its respective Certificates or Articles of Incorporation or its Bylaws
or
their organizational charter or bylaws, respectively. Since the beginning of
the
most recent fiscal quarter that began more than two (2) years prior to the
Closing Date,
neither
the Company nor any of its Subsidiaries has received any notification with
respect to possible conflicts, defaults or violations of applicable laws, except
for notices relating to possible conflicts, defaults or violations, which
conflicts, defaults or violations would not have a Material Adverse Effect.
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. To the best of the Company’s knowledge, 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. Without limiting the generality
of
the foregoing, the Company is not in violation of any of the rules, regulations
or requirements of the Principal Market and has no knowledge of any facts or
circumstances that would reasonably lead to delisting or suspension of the
Common Stock by its Principal Market in the foreseeable future.
(q) Title
To Property.
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 except such
as
are described in Schedule
9(q)
or such
as would not have a Material Adverse Effect. Any real property and facilities
held under lease by the Company and its Subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as would not
have
a Material Adverse Effect.
(r) 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 Subsidiary
has,
in the course of his actions for, or on behalf of, the Company, used any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or employee
from
corporate funds; violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
14
(s) Solvency.
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) and
currently the Company has no information that would lead it to reasonably
conclude that the Company or any Subsidiary would not have the ability to,
nor
does it intend to take any action that would impair its ability to, pay its
debts from time to time incurred in connection therewith as such debts mature.
Except as disclosed in Schedule
9(s),
the
Company did not receive a qualified opinion from its auditors with respect
to
its most recent fiscal year end and does not anticipate or know of any basis
upon which its auditors might issue a qualified opinion in respect of its
current fiscal year. For purposes of this Section 9(s), “Insolvent”
means
(i) the present fair saleable value of the Company’s assets is less than the
amount required to pay the Company’s total Indebtedness, (ii) the Company is
unable to pay its debts and liabilities, subordinated, contingent or otherwise,
as such debts and liabilities become absolute and matured, (iii) the Company
intends to incur or believes that it will incur debts that would be beyond
its
ability to pay as such debts mature or (iv) the Company 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.
(t) No
Investment Company.
The
Company is not, and upon the issuance and sale of the Securities as contemplated
by this Agreement will not be, an "investment company" required to be registered
under the Investment Company Act of 1940 (an "Investment
Company").
The
Company is not controlled by an Investment Company.
(u) No
Undisclosed Liabilities.
The
Company has no liabilities or obligations which are material, individually
or in
the aggregate, other than those incurred in the ordinary course of the Company's
businesses consistent with prior practice which have been disclosed in the
Company’s SEC Documents and which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect other than as set
forth
in Schedule
9(u).
(v) No
Disagreements With Accountants And Lawyers.
There
are no disagreements of any kind presently existing, or reasonably anticipated
by the Company or any Subsidiary to arise, between the Company or any Subsidiary
and the accountants and lawyers formerly or presently employed by the Company
or
any Subsidiary, including but not limited to disputes or conflicts over payment
owed to such accountants and lawyers.
(w) Company
Acknowledgment.
The
Company hereby acknowledges that each Buyer may elect to hold its Note and
the
Warrants for various periods of time, as permitted by the terms of the
Transaction Documents and the Company further acknowledges that no Buyer has
made any representations or warranties, either written or oral, as to how long
the Securities will be held by such Buyer or regarding Buyer’s trading history
or investment strategies.
(x) Disclosure.
The
Company confirms that neither it nor any other Person acting on its behalf
has
provided any of the Buyers or their agents or counsel with any information
that
constitutes material, nonpublic information concerning the Company or its
Subsidiaries other than the existence of the transactions contemplated by this
Agreement or the other Transaction Documents. The Company understands and
confirms that each of the Buyers will rely on the foregoing representations
in
effecting transactions in securities of the Company. All disclosure provided
to
the Buyers 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. Each press release issued by the Company or any of its
Subsidiaries during the twelve (12) months preceding the date of this Agreement
did not at the time of release contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. No event or circumstance has occurred
or
information exists with respect to the Company or any of its Subsidiaries or
its
or their business, properties, prospects, operations or financial conditions,
which, under applicable law, rule or regulation, requires public disclosure
or
announcement by the Company but which has not been so publicly announced or
disclosed, or that would be required to be disclosed by the Company or any
Subsidiary under applicable securities laws on a registration statement on
Form
S-1 or any other appropriate form filed with the SEC relating to an issuance
and
sale by the Company of its Common Stock, but which has not been so disclosed,
in
each case other than the transactions contemplated by this Agreement and by
the
other Transaction Documents.
15
(y) Absence
Of Certain Company Control Person Actions Or Events.
To the
Company’s knowledge, during the past five (5) years:
(i)
No
petition under the federal bankruptcy laws or any state insolvency law was filed
by or against, and no receiver, fiscal agent or similar officer was appointed
by
a court for the business or property of such Company Control Person, or any
partnership in which he was a general partner at or within two years before
the
time of such filing, or any corporation or business association of which he
was
an executive officer at or within two years before the time of such
filing;
(ii)
No
Company Control Person was convicted in a criminal proceeding or is a named
subject of a pending criminal proceeding (excluding traffic violations and
other
minor offenses);
(iii)
No
Company Control Person has been the subject of any order, judgment or decree,
that was not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining him from, or
otherwise limiting, the following activities:
(A)
acting, as an investment advisor, underwriter, broker or dealer in securities,
or as an affiliated person, director or employee of any investment company,
bank, savings and loan association or insurance company, as a futures commission
merchant, introducing broker, commodity trading advisor, commodity pool
operator, floor broker, any other Person regulated by the Commodity Futures
Trading Commission (“CFTC”)
or
engaging in or continuing any conduct or practice in connection with such
activity;
(B)
engaging in any type of business practice; or
(C)
engaging in any activity in connection with the purchase or sale of any security
or commodity or in connection with any violation of federal or state securities
laws or federal commodities laws;
(iv)
No
Company Control Person has been the subject of any order, judgment or decree,
not subsequently reversed, suspended or vacated, of any federal or state
authority barring, suspending or otherwise limiting for more than sixty (60)
days the right of such Company Control Person to engage in any activity
described in paragraph (3) of this item, or to be associated with Persons
engaged in any such activity; or
(v)
No
Company Control Person was found by a court of competent jurisdiction in a
civil
action or by the CFTC or SEC to have violated any federal or state securities
law, and the judgment in such civil action or finding by the CFTC or SEC has
not
been subsequently reversed, suspended, or vacated.
For
purposes hereof, “Company
Control Person”
means
each director, executive officer, promoter, and such other Persons as may be
deemed in control of the Company pursuant to Rule 405 under the 1933 Act or
Section 20 of the 1934 Act.
(z) Xxxxxxxx-Xxxxx;
Internal Accounting Controls.
The
Company is in material compliance with all provisions of the Xxxxxxxx-Xxxxx
Act
of 2002, as amended to date, which are applicable to it as of the Closing
Date.
(aa) Off
Balance Sheet Arrangements.
There
is no transaction, arrangement, or other relationship between the Company or
any
Subsidiary and an unconsolidated or other off balance sheet entity that is
required to be disclosed by the Company in its SEC Documents and is not so
disclosed or that otherwise would be reasonably likely to have a Material
Adverse Effect.
16
(bb) Indebtedness
And Other Contracts.
Except
as
disclosed in Schedule
9(bb),
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 would 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, 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
9(bb)
provides
a detailed description of the material terms of any such outstanding
Indebtedness.
(cc) Conduct
Of Business.
Neither
the Company nor its Subsidiaries is in violation of any term of or in default
under its Articles of Incorporation, Bylaws or their organizational charter
or
bylaws, respectively. Except as disclosed in Schedule
9(cc),
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 would not, individually or in the aggregate, have a Material
Adverse Effect. Without limiting the generality of the foregoing, the Company
is
not in violation of any of the rules, regulations or requirements of the
Principal Market other
than violations which could not reasonably be expected, individually or in
the
aggregate, to have a Material Adverse Effect and has no knowledge of any facts
or circumstances which would reasonably lead to delisting or suspension of
the
Common Stock by the Principal Market in the foreseeable future. Except as
disclosed on Schedule
9(cc)
since
April 3, 2008, (i) the Common Stock has been designated for quotation on the
Principal Market, (ii) trading in the Common Stock has not been suspended by
the
SEC or the Principal Market and (iii) the Company has received no communication,
written or oral, from the SEC or the Principal Market regarding the suspension
or delisting of the Common Stock from the Principal Market, and the Company
has
not received any letters of inquiry from the SEC Division of Enforcement or
state securities regulators in the past 24 months related to any potential
or
alleged violation of state or federal securities laws. 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.
(dd)
Neither
the Company nor any of its Subsidiaries nor, to the best knowledge of the
Company, any director, officer, agent, employee, or Affiliate of the Company
or
any of its Subsidiaries is currently subject to any sanctions administered
by
the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”),
and the Company will not directly or indirectly use the proceeds of any Advance
or lend, contribute or otherwise make available such proceeds to any Subsidiary,
joint venture partner or other Person for the purpose of financing the
activities of any Person currently subject to any U.S. sanctions administered
by
OFAC.
10. COVENANTS.
Notwithstanding anything to the contrary herein, with respect to the covenants
in this Agreement applicable to the Company the Company’s obligations to follow
such covenants shall continue until such time as any and all amounts outstanding
under all of he Notes have been paid in full.
(a) Reporting
Status.
The
Company's Common Stock is registered under Section 12(b) or 12(g) of the 1934
Act. So long as any Buyer beneficially owns any of the Securities, the Company
shall timely file all SEC Documents required to be filed under the 1934 Act,
and
the Company shall not terminate its status as an issuer required to file reports
under the 1934 Act even if the 1934 Act or the rules and regulations thereunder
would permit such termination.
(b) Buyers’
Right of Participation in Future Financings.
(i)
From
the date hereof and during the period that any amount of any Note is
outstanding, upon any financing by the Company or any of its Subsidiaries (each,
a “Subsequent
Financing”)
of
Common Stock or Common Stock Equivalents (as defined in Section 1), excluding
any securities issued pursuant to the Offering described in this Agreement,
each
Buyer shall have the right to participate (the “Buyer’s
Right of Participation”)
in up
to such Buyer’s Participation Maximum (as defined below) of the Subsequent
Financing, provided that any securities issued to the Buyer hereunder, and
any
securities issuable pursuant to the conversion or exercise of such securities,
shall be subject to the Beneficial Ownership Limitation (as defined in the
Warrant).
17
(ii)
At
least ten (10) days prior to the closing of the Subsequent Financing, the
Company shall deliver to each Buyer a written notice of its intention to effect
a Subsequent Financing (an “Advance
Notice Of Financing”),
which
Advance Notice of Financing shall ask such Buyer if it wants to review the
details of such financing (such additional notice, a “Subsequent
Financing Notice”).
Upon
the request of a Buyer, and only upon a request by such Buyer, for a Subsequent
Financing Notice, the Company shall promptly, but no later than one (1) Trading
Day after such request, deliver a Subsequent Financing Notice to such Buyer.
The
Subsequent Financing Notice shall describe in reasonable detail the proposed
terms of such Subsequent Financing, the amount of proceeds intended to be raised
thereunder, the Person with whom such Subsequent Financing is proposed to be
effected, and attached to which shall be a term sheet or similar document
relating thereto and complete, definitive legal documentation (“Legal
Documents”)
for the
proposed Subsequent Financing.
(iii)
Any
Buyer desiring to participate in such Subsequent Financing must provide written
notice (“Participation
Notice”)
to the
Company within five (5) Trading Days after such Buyer has received the
Subsequent Financing Notice that the Buyer is willing to participate in the
Subsequent Financing on the same terms and conditions of such Subsequent
Financing, the amount of the Buyer’s participation, and that the Buyer has such
funds ready, willing, and available for investment on the terms set forth in
the
Subsequent Financing Notice. If the Company receives no timely notice from
a
Buyer, such Buyer shall be deemed to have notified the Company that it does
not
elect to participate. Buyer shall not be obligated to participate in a
Subsequent Financing after delivering a Participation Notice to the Company
until after the Buyer has reviewed and agreed to the final Legal Documents
for
such offering.
(iv)
If
by 5:30 p.m. (New York City time) on the fifth (5th) Trading Day after all
of
the requesting Buyers have received the Subsequent Financing Notice,
notifications by the Buyers of their willingness to participate in the
Subsequent Financing account for, in the aggregate, less than the total amount
of the Subsequent Financing, then the Company may effect the remaining portion
of such Subsequent Financing on the terms and to the Persons set forth in the
Subsequent Financing Notice; provided,
however, if such participation by the Buyers causes the parties providing
Subsequent Financing to withdraw such Subsequent Financing, then the Buyers
(in
the aggregate, on a pro rata basis) will be permitted, at their option, to
either (i) participate in amounts representing one hundred percent (100%)(in
the
aggregate, for all such Buyers) of such Subsequent Financing, or (ii)
participate in amounts representing not more than twenty percent (20%) (in
the
aggregate, for all such Buyers) of such Subsequent Financing.
(v)
If by
5:30 p.m. (New York City time) on the tenth (10th) Trading Day after all of
the
Buyers have received the Subsequent Financing Notice, the Company receives
responses to a Subsequent Financing Notice from Buyers seeking to purchase
more
than the aggregate amount of the Subsequent Financing, each such Buyer shall
have the right to purchase up to (the “Buyer’s
Participation Maximum”)
(a) the
applicable Lender’s Pro Rata Portion of the Subsequent Financing, plus (b) a pro
rata amount of the aggregate of the unused Lender’s Pro Rata Portions of the
other Buyers.
(vi)
For
purposes of clarity, in the event that there is any amount of a Subsequent
Financing that is not requested to be purchased by a Buyer, then any other
Buyer
shall have the right to purchase such remaining amount of the Subsequent
Financing.
(vii)
The
Company must provide the Buyers with a second Subsequent Financing Notice,
and
the Buyers will again have the right of participation set forth above in this
Section 10(b)(vii), if the Subsequent Financing subject to the initial
Subsequent Financing Notice is not consummated for any reason on the terms
set
forth in such Subsequent Financing Notice within thirty (30) Trading Days after
the date of the initial Subsequent Financing Notice.
(viii)
The Company and the Buyers agree that if any Buyer elects to participate in
the
Subsequent Financing, (x) neither the agreement regarding the Subsequent
Financing nor any other transaction documents related thereto (collectively,
the
"Subsequent
Placement Documents")
shall
include any term or provisions whereby any Buyer shall be required to agree
to
any restrictions in trading as to any securities of the Company owned by such
Buyer prior to such Subsequent Financing, and (y) the Buyers shall be entitled
to the same registration rights provided to other investors in the Subsequent
Financing.
18
(ix)
Injunctive Relief. The remedies provided in this Agreement shall be cumulative
and in addition to all other remedies available under this Agreement and any
of
the other Transaction Documents at law or in equity (including a decree of
specific performance and/or other injunctive relief), and nothing herein shall
limit the Holder's right to pursue actual and consequential damages for any
failure by the Company to comply with the terms of this Agreement or any of
the
Transaction Documents. The Company acknowledges that a breach by it of its
obligations under this Agreement or the other Transaction Documents, including
but not limited to a breach of its obligations under this subsection 10(b)
hereof, will cause irreparable harm to each Buyer, by vitiating the intent
and
purpose of the transactions contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Agreement or the other Transaction Documents, including but not limited to
a
breach of its obligations under this Subsection 10(b) hereof, will be inadequate
and agrees, in the event of a breach or threatened breach by the Company of
the
provisions of this Agreement or the other Transaction Documents, that each
Buyer
shall be entitled, in addition to all other available remedies in law or in
equity, to an injunction or injunctions to prevent or cure any breaches of
the
provisions of this Agreement or the other Transaction Documents, including
but
not limited to a breach of its obligations under this Subsection 10(b), and
to
enforce specifically the terms and provisions of this Agreement and the other
Transaction Documents, including but not limited to its obligations under this
subsection 10(b), without the necessity of showing economic loss and without
any
bond or other security being required. Specifically, a Buyer shall be entitled
to injunctive relief to cause the court to rescind any financing or financings
or other transactions between the Company and a third party that are in
violation of this Subsection 10(b).
(c)
Listing.
The
Company shall use its best efforts to promptly secure the listing of the Warrant
Shares upon each national securities exchange or automated quotation system,
if
any, upon which shares of Common Stock are then listed (subject to official
notice of issuance) and, so long as any Buyer owns any of the Securities, shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all Warrant Shares from time to time issuable upon exercise of or
otherwise pursuant to the Warrants. The Company will use its best efforts to
obtain and, so long as any Buyer owns any of the Securities, maintain the
listing and trading of its Common Stock on an Eligible Market (whichever
Eligible Market is at the time the principal trading exchange or market for
the
Common Stock is referred to herein as the "Principal
Market"),
and
will comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Financial Industry of Regulatory
Authority (“FINRA”) and such exchanges, as applicable. The Company shall
promptly provide to Buyer copies of any notices it receives from the Principal
Market and any other exchanges or quotation systems on which the Common Stock
is
then listed regarding the continued eligibility of the Common Stock for listing
on such exchanges and quotation systems.
(d) Corporate
Existence.
So long
as a Buyer beneficially owns any portion of the Notes, Warrants or Warrant
Shares, the Company shall maintain its corporate existence in good standing
and
remain a “Reporting
Issuer”
(defined
as a Company which files periodic reports under the 1934 Act).
(e) No
Integration.
The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the 0000 Xxx)
that would be integrated with the offer or sale of the Securities to the Buyers
in a manner that would require the registration under the 1933 Act of the sale
of the Securities to the Buyers or that would be integrated with the offer
or
sale of the Securities for purposes of the rules and regulations of any Trading
Market.
(f) Equal
Treatment of Buyers.
The
terms of the Securities issued to Buyers per the terms of this Agreement and
the
Transaction Documents shall be identical in all material respects. In addition,
neither the Company nor any of its Affiliates shall, directly or indirectly,
pay
or cause to be paid any consideration (immediate or contingent), whether by
way
of interest, fee, payment for the redemption, exercise of the Warrants, or
otherwise, to any Buyer or holder of Securities, for or as an inducement to,
or
in connection with the solicitation of, any consent, waiver or amendment. of
any
terms or provisions of the Transaction Documents, unless such consideration
is
required to be paid to all Buyers or holders of Securities bound by such
consent, waiver or amendment. The Company shall not, directly or indirectly,
redeem any Securities unless such offer of redemption is made pro rata to all
Buyers or holders of Securities, as the case may be, on identical terms. For
clarification purposes, this provision constitutes a separate right granted
by
the Company to each Buyer of Securities and negotiated separately by each Buyer,
is intended for the Company to treat the Buyers as a class, and shall not in
any
way be construed as the Buyers acting in concert or as a group with respect
to
the purchase, disposition or voting of Securities or otherwise.
19
(g)
Legal
and Due Diligence Fees.
The
Company shall pay a non-accountable cash fee of $10,000 to
BridgePointe Master Fund Ltd. (the “Lead
Investor”)
and a
non-accountable cash fee of $10,000 to
Centrecourt Asset Management, each at closing, as reimbursement for legal
services rendered by its attorneys in connection with this Agreement and the
purchase and sale of the Notes and Warrants and as reimbursement for due
diligence expenses. The Lead Investor may withhold such amount, in the
aggregate, out of any one or more Advances, and such withheld amount shall
be
credited toward the principal amount of its Note.
(h) Non-Public
Information.
The
Company covenants and agrees that from and after the date hereof, neither it
nor
any other Person acting on its behalf will provide any Buyer or its agents
or
counsel with any information that constitutes material non-public information,
unless prior thereto such Buyer shall have executed a written agreement
regarding the confidentiality and use of such information. The Company
understands and confirms that each Buyer shall be relying on the foregoing
representations in effecting transactions in securities of the Company. In
the
event of a breach of the foregoing covenant by the Company, or any of its
Subsidiaries, or any of its or their respective officers, directors, employees
and agents, in addition to any other remedy provided herein or in the
Transaction Documents, the Company shall publicly disclose any material,
non-public information in a Form 8-K within two (2) Business Days of the date
that it discloses such information to the Buyer. In the event that the Company
discloses any material, non-public information to the Buyer and fails to
publicly file a Form 8-K in accordance with the above, a Buyer shall have the
right to make a public disclosure, in the form of a press release, public
advertisement or otherwise, of such material, nonpublic information without
the
prior approval by the Company, its Subsidiaries, or any of its or their
respective officers, directors, employees or agents. No Buyer shall have any
liability to the Company, its Subsidiaries, or any of its or their respective
officers, directors, employees, stockholders or agents, for any such disclosure.
The Company understands and confirms that each Buyer shall be relying on the
foregoing representations in effecting transactions in securities of the
Company.
(i) Appointment
of Directors.
Anytime
after the Closing of the Credit Line hereunder until the Maturity Date, the
Buyers, at their option, may recommend two nominees to be mutually agreed to
by
the Original Holders (the “Buyers’
Nominees”)
for the
Company’s Board of Directors. The Company agrees that its Board of Directors, or
the Nominating Committee of the Board, as applicable, shall appoint as members
of the Company’s Board of Directors the Buyers’ Nominees. After such
appointment, the Company and its Board of Directors shall use their best efforts
to obtain shareholder ratification of the appointment of the Buyers’ Nominees at
the next shareholder meeting. After any and all amounts due and owing under
all
of the Notes have been repaid in full or after the Maturity Date, whichever
is
later, the Company may allow the Buyers’ Nominees to rotate off of the Company’s
Board of Directors after they serve out the remainder of their term (but the
Buyers’ Nominees shall not be required to resign). The Company shall execute
Conflict Waiver and Acknowledgement that the 2 nominees, after named directors,
shall be subject to a “Chinese Wall”, meaning that inside nonpublic information
that the directors shall possess will not be imputed in any way whatsoever
to
the buyer.
(j) From
the
date hereof and during the period that any amount of any Note is outstanding,
the Company shall not issue or sell, or agree to issue or sell “Highly
Dilutive Equity Securities” (as defined in the June 2007 Securities Purchase
Agreement), without
obtaining the prior written approval of each of the Buyers.
(k) In
exchange for Common Stock Purchase Warrants “A” in the amounts of 200,000,
150,000 and 50,000, respectively, and Common Stock Purchase Warrants “B” in the
amounts of 250,000, 187,500 and 62,500, respectively, to be issued by the
Company in each of their respective names, BridgePointe, CAMOFI and CAMHZN
Master LDC, a Cayman Islands limited duration company hereby waive any defaults
under the June 2007 Securities Purchase Agreement or the June 2007 Debentures
caused by the Company’s issuance of securities pursuant to its December 2007
equity securities transaction with T Squared Partners LLC. In exchange for
100,000 shares of Common Stock to be issued to BridgePointe, 75,000 shares
of
Common Stock to be issued to CAMOFI and 25,000 shares of Common Stock to be
issued to CAMHZN, each of. BridgePointe, CAMOFI and CAMHZN agree to waive all
currently existing registration defaults (but no protective defaults) pursuant
to the June 2007 Securities Purchase Agreement and the associated Registration
Rights Agreement (all of the warrants and Common Stock referred to in this
section shall be referred to as the “Default
Compensation Securities”).
20
11.
SECURITY;
SENIOR DEBT.
(a) The
Notes
are secured by the Security Documents of even date herewith.
(b) As
of the
Closing Date, no indebtedness or other equity of the Company is senior to or
pari passu with the Notes in right of payment, whether with respect to interest
or upon liquidation or dissolution, except that the Notes shall be pari passu
in
right of payment with the June 2007 Debentures.
(c) The
Lenders agree and acknowledge that their security interest in the property,
described in Schedule 11(c) hereof (the “BB&T
Secured Property”),
owned
by the Company’s Subsidiary, Alternative Construction by Ionian, Inc.
(“Ionian”),
shall
be junior and subordinate to the currently existing Lien in the BB&T Secured
Property in favor of BB&T Bank Branch Banking & Trust, Co. (“BB&T”),
which
secures debts in the amount of $11,579, $400,188 and $149,992, respectively,
owed to BB&T by Ionian. It is understood by the parties that Ionian utilizes
BB&T to build homes under contract. The line of credit is for up to
$1,000,000 and may only be used to fund the construction of homes. Unless
expressly prohibited by BB&T’s loan documents (in which case, Ionian shall
seek to obtain the consent of BB&T), the Company shall file an Amended Deed
of Trust pursuant to Section 3(b) of the Security Agreement with respect to
the
BB&T Secured Property.
(d) The
Lenders shall have a first priority senior security interest in the Collateral
(as defined in the Security Agreement), provided that the Lenders’ security
interest in the Collateral shall
be
pari passu with to the security interests of the holders of the June 2007
Debentures (the
“Existing
Lienholders”),
provided further that the Secured Parties’ security interest in contracts with
Eligible Clients (the “Senior
Secured Contracts”)
shall
be a first priority security interest senior to all current or future liens
on
the Senior Secured Contracts, including the liens of the Existing Lienholders,
and provided further that the Lenders each hereby agree to relinquish their
respective security interests in the Collateral, other than the Senior Secured
Contracts and agree to file an amended UCC-1 form in any appropriate
jurisdiction(s) to reflect the reduced Collateral after any and all amounts
outstanding under the June 2007 Debentures have been paid in full.
(e) As
a
condition to closing, the Lenders shall obtain a duly completed and signed
intercreditor agreement (the “Intercreditor
Agreement”)
from
the Existing Lienholders binding them to the priorities specified above.
(f) Except
as
otherwise set forth on Schedule
11
annexed
hereto, the Company hereby represents that the Holder has a senior lien on
the
Collateral (as defined in the Security Agreement), and agrees not to grant
any
liens on the Collateral, except for Permitted Liens. From the Original Issue
Date (as defined in the Notes) of the Notes through the date that all of the
Notes have been paid in full, will not issue nor permit any Subsidiary to issue
any securities or incur any indebtedness that is senior to or pari passu with
the Notes and, before entering into any future debt with a third party or
permitting any Subsidiary to enter into any future debt with a third party
(unless the issuance of such debt is otherwise prohibited under the terms of
the
Transaction Documents), the Company shall first obtain a subordination
agreement, satisfactory to Buyer, from the proposed debt holder. The Company
agrees to take all necessary actions to assist the Holder in perfecting the
Holder’s lien on each piece of Collateral within fifteen (15) days of the date
hereof, including but not limiting to signing and delivering the appropriate
forms.
(g) The
Company hereby represents that, except as otherwise set forth on Schedule
11
annexed
hereto, there are no liens or encumbrances on the Intellectual Property (as
defined in Section 10(i)) or the Collateral. The Company agrees that from the
Original Issue Date of the Notes through the date that all of the Notes have
been paid in full (the “Covered
Period”),
the
Company shall not enter into, create, incur, assume or suffer to exist any
mortgage, lien, pledge, charge, security interest or other encumbrance
(collectively, “Liens”)
upon or
in the Intellectual Property or the Collateral owned by the Company or any
of
its Subsidiaries and shall not assign or transfer any interest in the Patents
owned by the Company or any of its Subsidiaries. In the event that the Company
attempts to place any Lien or Liens on the Intellectual Property or the
Collateral or attempts to assign or transfer any interest in the Intellectual
Property or the Collateral during the Covered Period, the Buyer shall have
the
right to apply for an injunction in any state or federal courts sitting in
the
City of New York, borough of Manhattan to prevent such Lien or transfer. Before
entering into any future debt with a third party, the Company shall first obtain
a subordination agreement, satisfactory to Buyer, from the proposed debt holder.
21
12. CONDITIONS
TO THE COMPANY'S OBLIGATION TO SELL.
The
obligations of the Company hereunder are subject to the satisfaction, at or
before the Closing Date, of each of the following conditions thereto, 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:
(a) The
Buyer
shall have executed each of the Transaction Documents which requires Buyer’s
signature, and delivered the same to the Company or its designated escrow
agent.
(b) The
representations and warranties of the Buyer shall be true and correct in all
material respects as of the date when made and as of the applicable Closing
Date
as though made at that time (except for representations and warranties that
speak as of a specific date, which representations and warranties shall be
true
and correct as of such date), and the 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 the
Buyer at or prior to the Closing Date.
(c) No
litigation, statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by or
in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.
13. CONDITIONS
TO BUYER'S OBLIGATION TO PURCHASE.
The
obligations of each Buyer hereunder are subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that
these conditions are for such Buyer's sole benefit and may be waived by such
Buyer at any time in its sole discretion:
(a) The
Company and its Subsidiaries, as applicable, shall have executed this Agreement,
and the Security Documents and the Notes, in
the
name of each Buyer, in the initial face amount of any funds Advanced by such
Buyer,
and
delivered the same to the Buyers.
(b) The
Company shall have delivered to such Buyer the duly executed Warrants in
accordance with Section 2(b) above, plus the Default Compensation Securities
(as
described in Section 10(k) in the names of BridgePointe, CAMOFI and CAMHZN,
as
applicable).
(c) The
representations and warranties of the Company contained in this Agreement,
as
modified by the Exhibits and Schedules hereto, shall be true and correct in
all
material respects as of the date when made and as of the Closing Date as though
made at such time (except for representations and warranties that speak as
of a
specific date, which representations and warranties shall be true and correct
as
of such date) and the Company shall have performed, satisfied and complied
in
all material respects with the covenants, agreements and conditions required
by
this Agreement to be performed, satisfied or complied with by the Company at
or
prior to the Closing Date. The Buyer shall have received a certificate or
certificates (the “Officer’s
Certificate”),
executed by the President and Chief Executive Officer of the Company, dated
as
of the applicable Closing Date, to the foregoing effect and as to such other
matters as may be reasonably requested by such Buyer including, but not limited
to certificates with respect to the Company's Certificate of Incorporation,
By-laws and Board of Directors' resolutions relating to the transactions
contemplated hereby.
(d) No
litigation, statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by or
in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.
(e) Trading
in the Common Stock on the Principal Market shall not have been suspended by
the
SEC or the Nasdaq and, within two (2) Business Days of the Closing, the Company
will make application to the Principal Market, if legally required by Nasdaq,
to
have the Warrant Shares authorized for quotation.
22
(f) The
Buyers shall have received a Closing Legal Opinion as further described in
Section 2(c)(iii) hereof.
(g) The
Buyers shall have received a Closing Certificate described in Section 2(c)(ii)
above, dated as of the Closing Date.
(h) In
accordance with the terms of the Security Documents, the Company shall have
delivered to the Buyer (i) the Security Agreement and the Intellectual Property
Security Agreement, each signed by the Company and each of its subsidiaries,
(ii) the Subsidiary Guarantee, duly executed by each of the Company’s
subsidiaries, (iii) certificates representing the Subsidiaries' shares of
capital stock, along with duly executed blank stock powers, and (iv) appropriate
financing statements on Form UCC-1 to be duly filed in such office or offices
as
may be necessary or, in the opinion of the Collateral Agent, desirable to
perfect the security interests purported to be created by each Security
Document.
(i) Prior
to
the Closing, the Company shall have delivered or caused to be delivered to
each
Buyer (A) certified copies of UCC search results, listing all effective
financing statements which name as debtor the Company or any of its Subsidiaries
filed in the prior five (5) years to perfect an interest in any assets thereof,
together with copies of such financing statements, none of which, except as
otherwise agreed in writing by the Buyers, shall cover any of the Collateral
(as
defined in the Security Documents) and the results of searches for any tax
lien
and judgment lien filed against such Person or its property, which results,
except as otherwise agreed to in writing by the Buyers shall not show any such
Liens (as defined in the Security Documents); and (B) a perfection certificate,
duly completed and executed by the Company and each of its Subsidiaries, in
form
and substance satisfactory to the Buyers.
(j) Promptly
following the Closing, the Company shall cause the Intellectual Property
Security Agreement to be duly filed with the United States Patent and Trademark
Office.
(k) No
Material Adverse Changes shall have occurred since the date that the Buyers
executed this Agreement.
14. GOVERNING
LAW; MISCELLANEOUS.
(a) Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement and the other Transaction Documents shall be governed by
and
construed and enforced in accordance with the internal laws of the State of
New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
Affiliates, directors, officers, shareholders, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the City 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 (including with respect
to the enforcement of any of the Transaction Documents), 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 improper or is an inconvenient venue for
such
proceeding. 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 via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for 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 other
manner permitted by law. If either party shall commence an action or proceeding
to enforce any provisions of the Transaction Documents, then the prevailing
party in such action or proceeding shall be reimbursed by the other party for
its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.
THE
PARTIES HEREBY WAIVE ALL RIGHTS TO, AND AGREES NOT TO REQUEST, A TRIAL BY JURY
FOR ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING
OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR BY ANY OF THE
TRANSACTION DOCUMENTS.
23
(b) Counterparts;
Signatures By Facsimile.
This
Agreement may be executed in one or more 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.
This Agreement, once executed by a party, may be delivered to the other party
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
(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 or the validity or
enforceability of this Agreement in any other jurisdiction.
(e) Entire
Agreement; Amendments.
This
Agreement and the instruments referenced herein contain the entire understanding
of the parties with respect to the matters covered herein and therein and
supersede all previous communication, representation, or Agreements whether
oral
or written, between the parties with respect to the matters covered herein.
Except as specifically set forth herein or therein, neither the Company nor
any
Buyer makes any representation, warranty, covenant or undertaking with respect
to such matters. The Agreement may not be orally modified. Only a modification
in writing, signed by authorized representatives of each Buyer will be
enforceable. The parties waive the right to rely on any oral representations
made by the other party, whether in the past or in the future, regarding the
subject matter of the Agreement, the instruments referenced herein or any other
dealings between the parties related to investments or potential investments
into the Company or any securities transactions or potential securities
transactions with the Company.
(f) Independent
Nature Of Buyers’ Obligations And Rights. The
obligations of each Buyer under any Transaction Document are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible
in any way for the performance of the obligations of any other Buyer under
any
Transaction Document. Nothing contained herein or in any Transaction Document,
and no action taken by any Buyer pursuant thereto, shall be deemed to constitute
the Buyers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Buyers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents. Each Buyer shall be entitled to
independently protect and enforce its rights, including without limitation,
the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Buyer to be joined as an additional
party in any proceeding for such purpose. Each Buyer has been represented by
its
own separate legal counsel in its review and negotiation of the Transaction
Documents.
(g) Notices.
Any
notices required or permitted to be given under the terms of this Agreement
shall be sent by certified or registered mail (return receipt requested) or
delivered personally or by courier (including a recognized overnight delivery
service) or by facsimile and shall be effective five (5) days after being placed
in the mail, if mailed by regular United States mail, or upon receipt, if
delivered personally or by courier (including a recognized overnight delivery
service) or by facsimile, in each case addressed to a party. The addresses
for
such communications shall be:
If
to the
Company, to:
| Attn: |
Xxxxxxx
X. Xxxxxxx, CEO & President
Alternative
Construction Technologies, Inc.
0000
Xxxx Xxxxx
Xxxxxxxxx,
XX 00000
Xxxxxx
Xxxxxx - Map
Phone:
000-000-0000
Fax:
000-000-0000
Web
Site:
xxxx://xxx.xxxxxxxxxxx.xxx
|
24
With
a
copy to:
Xxxxxx
X.
Xxxx
Law
Offices of Xxxxxx X. Xxxx
000
Xxxx
00xx
Xxxxxx,
Xxxxx 0000
Xxx
Xxxx,
XX 00000
Tel:
000-000-0000
Fax:
000-000-0000
If
to a
Buyer:
To
the
address set forth immediately below such Buyer's
name on the signature pages hereto.
Each
party shall provide notice to the other party of any change in
address.
(h) Successors
And Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and assigns. Neither the Company nor any Buyer shall assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the other. Notwithstanding the foregoing, subject to compliance
with
applicable securities laws, any Buyer may assign its rights hereunder to any
person that purchases Securities in a private transaction from a Buyer or to
any
of its "Affiliates,"
as that
term is defined under the 1934 Act, without the consent of the
Company.
(i) 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.
(j) Survival.
The
representations and warranties of the parties hereto contained in this Agreement
shall survive the closing hereunder for the maximum period permitted by
applicable law notwithstanding any due diligence investigation conducted by
or
on behalf of the Buyer.
(k) Indemnification.
The
Company (the “Indemnifying
Party”)
agrees
to indemnify and hold harmless Buyer and all its respective officers, directors,
employees, investors, agents, members and managers (the “Indemnified
Party”)
for
any loss or damage, including, without limitation, the fees, costs and
disbursements of legal counsel, arising as a result of or related to any breach
or alleged breach by the Company of any of its representations, warranties
and
covenants set forth in Sections 9 and 10 hereof or any of its covenants and
obligations under this Agreement, including advancement of expenses as they
are
incurred with respect to claims by third parties.
Promptly
after receipt of notice of the commencement of any action against an Indemnified
Party, such Indemnified Party shall notify the Indemnifying Party in writing
of
the commencement thereof and the basis hereunder upon which a claim for
indemnification is asserted, but the failure to do so shall not relieve the
Indemnifying Party of its obligations hereunder except to the extent the
Indemnifying Party is materially prejudiced by such failure. In the event of
the
commencement of any such action, the Indemnifying Party shall be entitled to
participate therein and to assume the defense thereof with counsel satisfactory
to the Indemnified Party, and, after notice from the Indemnifying Party to
the
Indemnified Party of its election so to assume the defense thereof, the
Indemnifying Party shall not be liable to the Indemnified Party hereunder for
any legal expenses (including attorneys' fees, costs and disbursements)
subsequently incurred by such Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with counsel
so selected, PROVIDED, HOWEVER, that, if the defendants in any such action
include both the Indemnified Party and the Indemnifying Party and the
Indemnified Party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to the Indemnifying Party or if the interests of the Indemnified
Party
reasonably may be deemed to conflict with the interests of the Indemnifying
Party, the Indemnified Party shall have the right to select one separate counsel
and to assume such legal defenses and otherwise to participate in the defense
of
such action, with the reasonable expenses and fees of such separate counsel
and
other expenses related to such participation to be reimbursed by the
Indemnifying Party as incurred.
25
As
to
cases in which the Indemnifying Party has assumed and is providing the defense
for the Indemnified Party, the control of such defense shall be vested in the
Indemnifying Party; provided that the consent of the Indemnified Party shall
be
required prior to any settlement of such case or action, which consent shall
not
be unreasonably withheld. As to any action, the party which is controlling
such
action shall provide to the other party reasonable information (including
reasonable advance notice of all proceedings and depositions in respect thereto)
regarding the conduct of the action and the right to attend all proceedings
and
depositions in respect thereto through its agents and attorneys, and the right
to discuss the action with counsel for the party controlling such action.
(l) Publicity.
The
Company and the Buyer shall have the right to review a reasonable period of
time
before issuance of any press releases, filings with the SEC, FINRA or any stock
exchange or interdealer quotation system, or any other public statements with
respect to the transactions contemplated hereby; PROVIDED, HOWEVER, that the
Company shall be entitled, without the prior approval of the Buyer, to make
any
press release or public filings with respect to such transactions as is required
by applicable law and regulations (although the Buyer shall be consulted by
the
Company in connection with any such press release prior to its release and
shall
be provided with a copy thereof and be given an opportunity to comment thereon).
The Company agrees that it will not disclose, and will not include in any public
announcement, the name of the Buyers without the consent of the Buyers unless
and until such disclosure is required by law or applicable regulation, and
then
only to the extent of such requirement.
(m) Further
Assurances.
Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement, the Transaction Documents and the consummation of the transactions
contemplated hereby.
(n) 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.
(o) Liquidated
Damages.
The
Company’s obligations to pay any partial liquidated damages or other amounts
owing under the Transaction Documents is a continuing obligation of the Company
and shall not terminate until all unpaid partial liquidated damages and other
amounts have been paid notwithstanding the fact that the instrument or security
pursuant to which such partial liquidated damages or other amounts are due
and
payable shall have been canceled.
(p) Remedies.
The
Company acknowledges that a breach by it of its obligations hereunder will
cause
irreparable harm to Buyer, by vitiating the intent and purpose of the
transactions contemplated hereby. Accordingly, the Company acknowledges that
the
remedy at law for a breach of its obligations under this Agreement will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Agreement, that Buyer shall be entitled,
in
addition to all other available remedies in law or in equity, to seek an
injunction or injunctions to prevent or cure any breaches of the provisions
of
this Agreement and to enforce specifically the terms and provisions of this
Agreement, without the necessity of showing economic loss and without any bond
or other security being required.
[INTENTIONALLY
LEFT BLANK]
26
IN
WITNESS WHEREOF, the undersigned Buyer does represent and certify under penalty
of perjury that the foregoing statements are true and correct and that Buyer
by
the following signature(s) executed this Agreement.
Dated
this 8th
day of
May, 2008.
|
|
|
|
|
Your
Signature
|
PRINT
EXACT NAME IN WHICH YOU WANT THE SECURITIES TO BE
REGISTERED
|
|
Buyer’s
Entity Type and Residency:
|
|
|
DELIVERY
INSTRUCTIONS:
|
|
|
Name:
Please Print
|
Please
type or print address where your security is to be delivered
|
|
|
ATTN.:
|
||
|
Title/Representative
Capacity (if applicable)
|
|
||
|
|
|
|
|
Name
of Company You Represent (if applicable)
|
Street
Address
|
|
|
|
|
|
Place
of Execution of this Agreement
|
City,
State or Province, Country, Offshore Postal
Code
|
|
|
|
|
|
|
Phone
Number (For Federal Express) and Fax
Number (re: Notice)
|
|
THIS
AGREEMENT IS ACCEPTED BY THE COMPANY ON THE 8th
DAY OF
MAY, 2008.
|
Alternative
Construction Technologies, Inc.
|
|
|
By:____________________________________
|
|
|
Print
Name:______________________________
|
|
|
Title:___________________________________
|
27
SCHEDULE
OF BUYERS OF ALTERNATIVE CONSTRUCTION TECHNOLOGIES, INC. GRID
NOTE
|
(1)
|
|
(2)
|
|
(3)
|
|
(4)
|
|
(5)
|
|
(6)
|
|
Buyer
|
|
Address
and
Facsimile
Number
|
|
Pro
Rata Percentage of Credit Limit Commitment
|
|
Aggregate
Number
of
Warrant
Shares
|
|
Purchase
Price
|
|
Legal
Representative’s
Address
and
Facsimile
Number
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BridgePointe
Master Fund Ltd.
|
0000
Xxxxxxxxx Xxxxxxx
Xxxxx
000
Xxxxxxxxxx,
XX 00000
Facsimile:
000-000-0000
|
50%
|
_________
|
$_______
|
P.
Xxxxxxxx Xxxxxxx, Esq.
Roswell
Capital Partners, LLC
0000
Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
Facsimile:
000-000-0000
|
|||||
|
CAMOFI
MASTER LDC, a Cayman Islands Limited Duration Company
|
c/o
Centrecourt Asset Management
000
Xxxxxxx Xxxxxx
0xx
Xxxxx
Xxx
Xxxx Xxxx, XX 00000
Facsimile:
000-000-0000
|
50%
|
Xxxxxxx
Xxxx, Esq.
General
Counsel
Facsimile:
000-000-0000
|
|||||||
|
Total:
|
$_________
|
________
|
$_______
|
28
