XA, INC. SECURITIES PURCHASE AGREEMENT As of June 22, 2007
Exhibit 10.1
As
of
June 22, 2007
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THIS
SECURITIES PURCHASE AGREEMENT,
dated
as of this 22nd day of June, 2007 (this “Agreement”),
between XA, INC., a Nevada corporation (the “Company”),
and
Sands Brothers Venture Capital LLC, Sands Brothers Venture Capital II LLC,
Sands
Brothers Venture Capital III LLC, Sands Brothers Venture Capital IV LLC and
Katie &
Xxxx Bridge Partners, L.P.
(collectively the “Purchaser”).
W
I T N E S S E T H:
WHEREAS,
the
Company has previously entered into Securities Purchase Agreements on August
8,
2006, September 26, 2006 and October 23, 2006 (the “Prior
Closing”
and
the
“Prior
Purchase Agreements”),
whereby it sold an aggregate of $2,700,000 in 11% Senior Secured Convertible
Promissory Notes (the “Prior
Notes”)
and
392,500 warrants to purchase shares of its common stock at an exercise price
of
$1.10 per share and 433,333 warrants to purchase shares of its common stock
at
an exercise price of $0.30 per share (collectively the “Prior
Warrants”),
to
six entities (including the Purchaser) and two individuals (the “Prior
Purchasers”)
which
Prior Notes were secured by Security Agreements (the “Prior
Security Agreements”).
The
shares of common stock which the Prior Notes were convertible into and the
shares of common stock which the Prior Warrants were convertible into and an
aggregate of 1,000,000 additional warrants previously issued exercisable at
$0.30 per share (collectively the “Prior
Underlying Shares”),
were
granted registration rights pursuant to Registration Rights Agreements (the
“Prior
Registration Agreements”);
WHEREAS,
the
Company desires to issue to the Purchaser, and the Purchaser desires to purchase
from the Company, the additional Securities (as such term is defined below)
as
set forth below (the “Offering”);
and
WHEREAS,
certain
capitalized terms used in this Agreement are defined in Section
9.1
hereof;
NOW,
THEREFORE,
in
consideration of the promises and mutual covenants and agreements hereinafter
contained, and for good and valuable consideration the receipt and adequacy
of
which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Sale
and Purchase of Securities.
1.1 Sale
and Purchase of Securities.
Subject
to the terms and conditions of this Agreement, on the Closing Date (as defined
in Section
3.1
hereof),
the Company shall issue, sell and deliver to the Purchaser, and the Purchaser
shall purchase from the Company for the Purchase Price (as defined in
Section
2.1
hereof)
(i) 11% Senior Subordinated Secured Convertible Promissory Notes in the
aggregate principal amount of $200,000 (the “Notes”)
and
(ii) warrants to purchase Two
Hundred Thousand (200,000) shares (subject to adjustment as described therein),
of the Company’s common stock, par value $0.001 per share (the “Common
Stock”)
at an
exercise price of $0.30 per share (subject to adjustment as described therein),
of the Company’s Common Stock (each a “Warrant”
and
collectively the “Warrants”).
The
Notes and Warrants shall hereinafter sometimes be collectively referred to
as
the “Securities.”
The
names, addresses and principal amount of Notes purchased and Warrants received
by the Purchaser shall be set forth on Schedule
1.1
hereto.
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2. Purchase
Price.
2.1 Purchase
Price.
(i)
The
aggregate purchase price of the Securities to be purchased pursuant to
Section
1.1
shall be
$200,000 (the “Purchase
Price”).
2.2 Payment
of the Purchase Price.
At the
Closing (as defined in Section
3.1
hereof),
the Purchaser shall pay the Purchase Price by wire transfer of immediately
available funds or by such other method as may be reasonably acceptable to
the
Company and the Purchaser, to such account of the Company as shall have been
designated in advance to the Purchaser by the Company.
3. Closing.
3.1 Closing
Date.
The
closing of the sale and purchase of the Securities (the “Closing”)
shall
take place on June 22, 2007, or at such other time, date or place as the parties
hereto may mutually agree; provided,
that
all conditions to the Closing set forth in this Agreement have been satisfied
or
waived by such date. The date on which the Closing is held is referred to in
this Agreement as the “Closing
Date.”
At
the
Closing (i) the Company shall deliver, or cause to be delivered, the Notes
and
Warrants, each executed by the Company and (ii) the documents referred to in
Section
8
hereof.
4. Representations
and Warranties of the Company.
The
Company hereby represents, covenants and warrants as of the date hereof and
as
of the Closing Date to the Purchaser, acknowledging that the Purchaser is
relying upon the accuracy and completeness of the representations and warranties
set forth herein to, among other things, ensure that registration under
Section 5 of the Securities Act is not required in connection with the sale
of the Securities hereby, as follows:
4.1 Organization
and Good Standing; Capitalization.
(a) The
Company (and each Subsidiary) is duly organized, validly existing and in good
standing under the laws of the state of Nevada and has the corporate power
and
authority to own, lease and operate its properties and assets and to carry
on
its business as now conducted and as it is proposed to be conducted. The Company
is in good standing under the laws of each jurisdiction in which the conduct
of
its business or the ownership of its properties or assets requires such
qualification or authorization.
(b) All
the
outstanding shares of capital stock of the Company have been duly authorized,
and are validly issued, fully paid and non-assessable. Except as disclosed
on
Schedule
4.1(b)
(i)
there is no option, warrant, call, right, commitment or other agreement of
any
character to which the Company is a party, (ii) there are no securities of
the
Company outstanding which upon conversion or exchange, and (iii) there are
no
share appreciation rights, or other similar rights based on securities of the
Company which, in the case of clause (i), (ii) or (iii), would require the
issuance, sale or transfer of any additional shares of capital stock or other
equity securities of the Company or other securities convertible into,
exchangeable for or evidencing the right to subscribe for or purchase share
capital or other equity securities of the Company. Other than as contemplated
by
this Agreement or Transaction Documents (as defined in Section
4.2),
the
Company is not a party to, nor is it aware of, any voting trust or other voting,
stockholders or similar agreement with respect to any of the securities of
the
Company or of any agreement relating to the issuance, sale, redemption, transfer
or other disposition of the shares of capital stock on other securities of
the
Company.
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4.2 Authorization
of Agreement; Enforceability.
The
Company has all requisite corporate power and authority to execute and deliver
this Agreement and each other agreement, document, instrument and certificate,
including, but not limited to, Waiver Agreements, the Bank Consent, the Notes,
Warrants, Registration Rights Agreement and Security Agreement, to be executed
by the Company in connection with the consummation of the transactions
contemplated by this Agreement (collectively, the “Transaction
Documents”),
and
to perform fully its obligations hereunder and thereunder. The execution,
delivery and performance by the Company of this Agreement and the Transaction
Documents have been duly authorized by all necessary corporate action on the
part of the Company and its stockholders. This Agreement and each of the
Transaction Documents have been duly and validly executed and delivered by
the
Company and, assuming the due authorization, execution and delivery thereof
by
the Purchaser, this Agreement and each of the Transaction Documents constitutes
the legal, valid and binding obligations of the Company, enforceable against
the
Company in accordance with its respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in
a
proceeding at law or in equity).
4.3
No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated thereby,
do
not and will not (i) conflict with or violate any provision of the
Company’s and/or any Subsidiary’s Articles of Incorporation or by-laws and any
and all amendments thereto (collectively, the “Internal
Documents”),
(ii) conflict with, or constitute a default (or an event that 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 (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or
other
instrument (evidencing a Company or Subsidiary debt or otherwise), or other
understanding to which the Company or any Subsidiary is a party or by which
any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected.
4.4 Subsidiaries,
Joint Ventures, Partnerships, Etc.
(a) As
of the
Closing (i) The Experiential Agency, Inc., (ii) XA Scenes, Inc., (iii) XA
Interactive, Inc., and (iv) Fiori XA, Inc. (collectively the “Subsidiaries”)
are
the only subsidiaries of the Company. Each Subsidiary is wholly owned by the
Company, is duly organized, validly existing and in good standing under the
laws
of the jurisdiction of its incorporation with corporate power and corporate
authority under such laws to own, lease and operate its properties and conduct
its business as currently conducted; and is in good standing (if applicable)
in
each other jurisdiction in which it owns or leases property of a nature, or
transacts business of a type, that would make such qualification necessary
other
than such qualifications which the failure to have would not reasonably be
expected to have a Material Adverse Effect.
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(b) Neither
the Company nor its Subsidiaries is a party to any joint venture, partnership
or
similar arrangement or agreement.
4.5 Consents
of Third Parties.
None of
the execution and delivery by the Company of this Agreement and the Transaction
Documents, the Bank Consent, the consummation of the transactions contemplated
hereby or thereby, or compliance by the Company with any of the provisions
hereof or thereof will (a) conflict with, or result in the breach of, any
provision of the Certificate of Incorporation or Bylaws of the Company (or
any
Subsidiary), (b) conflict with, violate, result in the breach or termination
of,
or constitute a default or give rise to any right of termination or acceleration
or right to increase the obligations or otherwise modify the terms thereof
under
any Permit or Order to which the Company (or any Subsidiary) is a party or
any
Contract to which the Company or its Subsidiaries is bound or by which the
Company or any of its properties or assets is bound, other than such conflicts,
violations, breaches, defaults, termination or accelerations that would not
reasonably be expected to have a Material Adverse Effect, (c) constitute a
violation of any Law applicable to the Company (or any Subsidiary) or (d) result
in the creation of any Lien upon the properties or assets of the Company (or
any
Subsidiary). No consent, waiver, approval, Order, Permit or authorization of,
or
declaration or filing with, or notification to, any Person or Governmental
Body
is required on the part of the Company and/or its Subsidiaries in connection
with the execution and delivery of this Agreement, and/or the Transaction
Documents, or the compliance by the Company with any of the provisions hereof
or
thereof.
4.6 Authorization
of Securities.
(a) On
the
Closing Date, the issuance, sale, and delivery of the Securities to be purchased
pursuant to Section
1.1
will
have been duly authorized by all requisite action of the Company, and, when
issued, sold, delivered and paid for in accordance with this Agreement, the
Securities will be validly issued and outstanding, with no personal liability
attaching to the ownership thereof.
(b) On
the
Closing Date, the issuance and delivery of the shares of Common Stock to be
delivered upon conversion of the Notes (the “Conversion
Shares”)
and
upon exercise of the Warrants (the “Warrant
Shares”)
in
accordance with the terms thereof (collectively, the Conversion Shares and
the
Warrants Shares, the “Underlying
Shares”)
will
have been duly authorized by all requisite action of the Company and, when
issued and delivered in accordance with the terms of the Securities, the
Underlying Shares will be validly issued and outstanding, fully paid and
non-assessable, with no personal liability attaching to the ownership thereof,
and not subject to preemptive or any other similar rights of the stockholders
of
the Company or others.
4.7 [Intentionally
removed.]
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4.8 Capitalization.
Schedule
4.8
hereto
sets forth in detail all outstanding securities of the Company (including the
terms, the holders and the amounts thereof). Other than as disclosed in
Schedule
4.8,
(i) there are no outstanding securities of the Company or any of its
Subsidiaries which contain any preemptive, redemption or similar provisions,
nor
is any holder of securities of the Company or any Subsidiary entitled to
preemptive or similar rights arising out of any agreement or understanding
with
the Company or any Subsidiary by virtue of any of the Transaction Documents,
and
there are no contracts, commitments, understandings or arrangements by which
the
Company or any of its Subsidiaries is or may become bound to redeem a security
of the Company or any of its Subsidiaries; (ii) the Company does not have any
stock appreciation rights or "phantom stock" plans or agreements or any similar
plan or agreement; and (iii) there are no outstanding options, warrants, script
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, except as a result of the purchase and sale of
the
Transaction Securities, or rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings, or
arrangements by which the Company or any Subsidiary is or may become bound
to
issue additional shares of Common Stock, or secur-ities or rights convertible
or
exchangeable into shares of Common Stock.
4.9 SEC
Reports; Financial Statements.
The
Company has filed all reports required to be filed by it under the Securities
Act and the Exchange Act, including pursuant to Section 13(a) or
Section 15(d) of the Exchange Act, for the one (1) year preceding the
date hereof (or such shorter period as the Company was required by law to file
such material) (the foregoing materials, including the exhibits thereto, being
collectively referred to herein as the “SEC
Reports”).
As of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, as applicable, and none
of
the SEC Reports, when filed, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. All material agreements to which the
Company is a party or to which the property or assets of the Company are subject
have been filed as exhibits to the SEC Reports to the extent required. The
financial statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time
of
filing. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments. Additionally, since the adoption of
the
Xxxxxxxx-Xxxxx Act of 2002 (the “New
Act”)
and to
the extent that the Company is subject to the New Act, the Company has complied
in all material respects with the laws, rules and regulation under the New
Act.
4.10 Material
Changes.
Since
December 31, 2006, (i) there has been no event, occurrence or development
that has had or that could reasonably be expected to result in a Material
Adverse Effect, (ii) the Company has not incurred any material liabilities
(contingent or otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice and
(B) liabilities not required to be reflected in the Company's financial
statements pursuant to GAAP or required to be disclosed in filings made with
the
Commission, (iii) the Company has not altered its method of accounting or
the identity of its auditors, (iv) the Company has not declared or made
payment or distribution of any dividend or distribution of cash or other
property to its holders of Common Stock or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock and
(v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option
plans.
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4.11 No
Undisclosed Liabilities.
Other
than as disclosed in the SEC Reports, neither the Company nor its Subsidiaries
has any liabilities (whether accrued, absolute, contingent or otherwise, and
whether due or to become due or asserted or unasserted), except (a) liabilities
provided for in the Financial Statements (other than liabilities which, in
accordance with GAAP, need not be disclosed), (b) liabilities disclosed on
Schedule
4.11
hereto
and (c) liabilities incurred in the ordinary course of business which do not
materially exceed historic levels.
4.12 Absence
of Certain Developments.
In the
ordinary course of business or in the context of the Transactions contemplated
in this Agreement and the Transaction Documents:
(a) there
has
not been any Material Adverse Change nor has any event occurred which could
result in any Material Adverse Change;
(b) there
has
not been any declaration, setting a record date, setting aside or authorizing
the payment of, any dividend or other distribution in respect of any shares
of
capital stock of the Company or its Subsidiaries or any repurchase, redemption
or other acquisition by the Company or its Subsidiaries, of any of the
outstanding shares of capital stock or other securities of, or other ownership
interest in, the Company or its Subsidiaries;
(c) there
has
not been any transfer, issue, sale or other disposition by the Company of any
shares of capital stock or other securities of the Company or its Subsidiaries
or any grant of options, warrants, calls or other rights to purchase or
otherwise acquire shares of such capital stock or such other
securities;
(d) neither
the Company nor its Subsidiaries has (i) awarded or paid any bonuses to
employees or representatives of the Company, (ii) entered into any employment,
deferred compensation, severance or similar agreements (nor amended any such
agreement), other than in the ordinary course of business;
(e) neither
the Company nor its Subsidiaries has made any loans, advances (other than
advances to officers and employees of the Company or its Subsidiaries which
advances are made in the ordinary course of business), or capital contributions
to, or investments in, any Person or paid any fees or expenses to any Affiliate
of the Company other than its Subsidiaries;
(f) neither
the Company nor its Subsidiaries has transferred or granted any rights under
any
Contracts or licenses, used by the Company in its business;
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(g) there
has
not been any damage, destruction or loss, whether or not covered by insurance,
with respect to the property or assets of the Company or its Subsidiaries
having
a replacement cost of more than $10,000 for any single loss or $20,000 for
all
such losses;
(h) neither
the Company nor its Subsidiaries has mortgaged, pledged or subjected to any
Lien
any of its assets, or acquired any assets for a purchase price in excess of
$10,000 in the aggregate or sold, assigned, transferred, conveyed, leased or
otherwise disposed of any assets of the Company or its Subsidiaries for a sale
price in excess of $10,000 in the aggregate except for assets acquired or sold,
assigned, transferred, conveyed, leased or otherwise disposed of in the ordinary
course of business;
(i) neither
the Company nor its Subsidiaries has canceled or compromised any debt or claim,
or amended, canceled, terminated, relinquished, waived or released any Contract
or right, except in the ordinary course of business consistent with past
practice and which, individually or in the aggregate, would not be material
to
the Company or its Subsidiaries;
(j) neither
the Company nor its Subsidiaries has made any binding commitment to make any
capital expenditures or capital additions or betterments in excess of $20,000
individually or $50,000 in the aggregate;
(k) neither
the Company nor its Subsidiaries has incurred any debts, obligations or
liabilities, whether due or to become due, except current liabilities incurred
in the ordinary course of business, none of which current liabilities
(individually or in the aggregate) could result in a Material Adverse
Change;
(l) neither
the Company nor its Subsidiaries has entered into any transaction other than
in
the ordinary course of business except for (in the case of the Company) this
Agreement;
(m)
neither
the Company nor its Subsidiaries has encountered any labor difficulties or
labor
union organizing activities;
(n) neither
the Company nor its Subsidiaries has made any change in the accounting
principles, methods or practices followed by it or depreciation or amortization
policies or rates theretofore adopted;
(o) neither
the Company nor its Subsidiaries has disclosed to any Person any material trade
secrets except for disclosures made to Persons subject to valid and enforceable
confidentiality agreements;
(p) neither
the Company nor its Subsidiaries has suffered or experienced any change in
the
relationship or course of dealings between the Company and/or its Subsidiaries
and any of their suppliers or customers which supply goods or services to the
Company or its Subsidiaries or purchase goods or services from the Company
and
or its Subsidiaries; and
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(q) neither
the Company nor its Subsidiaries has made any payment to, or received any
payment from, or made or received any investment in, or entered into any
transaction or series of related transactions (including without limitation,
the
purchase, sale, exchange or lease of assets, property or services, or the
making
of a loan or guarantee) with any Affiliate in each case, in excess of $10,000
or
its equivalent (other than any transactions between or among the Company
and its
Subsidiaries) (each, an “Affiliate
Transaction”).
4.13 Taxes.
The
Company and its Subsidiaries have filed all Tax returns (including statements
of
estimated Taxes owed) and reports required to be filed within the applicable
periods (subject to extensions) for such filings and have paid all Taxes
required to be paid, and has established adequate reserves (net of estimated
Tax
payments already made) for the payment of all Taxes payable in respect of the
period subsequent to the last periods covered by such returns. No deficiencies
for any Tax are currently assessed against the Company or any Subsidiary. There
is no Tax Lien, whether imposed by any federal, state or local taxing authority,
outstanding against the assets, properties or business of the Company or its
Subsidiaries other than Liens for Taxes which are not yet due. Neither the
Company nor its Subsidiaries has executed any waiver of the statute of
limitations on the assessment or collection of any Tax or governmental charge.
The Company and its Subsidiaries have properly charged, collected and paid
all
applicable stamp, sales, use and other similar Taxes on or before the Closing
Date.
4.14 Real
Property.
The
Company currently has (i) leased certain locations for office space , and (ii)
owns real property, all of which leases and real property are listed (including
the terms of such leases) on Schedule
4.14.
4.15 Tangible
Personal Property; Assets.
All
material items of personal property and assets owned or leased by the Company
and its Subsidiaries are in good operating condition, normal wear and tear
excepted.
4.16 Intangible
Property.
The
Company and its Subsidiaries own, or possess adequate rights or licenses to
use
all trademarks, trade names, service marks, service xxxx registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and rights necessary to conduct
their
respective businesses as now conducted, the lack of which could reasonably
be
expected to have a Material Adverse Effect. The Company and its Subsidiaries
do
not have any knowledge of any infringement by the Company or its Subsidiaries
of
trademarks, trade name rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service xxxx registrations, trade
secrets or other similar rights of others, or of any such development of similar
or identical trade secrets or technical information by others and no claim,
action or proceeding has been made or brought against, or to the Company's
knowledge, has been threatened against, the Company or its Subsidiaries
regarding trademarks, trade name rights, patents, patent rights, inventions,
copyrights, licenses, service names, service marks, service xxxx registrations,
trade secrets or other infringement, except where such infringement, claim,
action or proceeding would not reasonably be expected to have either
individually or in the aggregate a Material Adverse Effect. None of the
Company’s employees, officers, or consultants are obligated under any contract
(including licenses, covenants, or commitments of any nature) or other
agreement, or subject to any judgment, decree, or order of any court or
administrative agency, that would interfere with the use of such employee’s,
officer’s, or consultant’s commercially reasonable efforts to promote the
interests of the Company or that would conflict with the Company’s business as
conducted. Neither the execution nor delivery of the Transaction Documents,
nor
the carrying on of the Company’s business by the employees of the Company, nor
the conduct of the Company’s business, will, to the Company’s knowledge,
conflict with or result in a breach of the terms, conditions, or provisions
of,
or constitute a default under, any contract, covenant, or instrument under
which
any of such employees, officers or consultants are now obligated.
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4.17 Material
Contracts.
Other
than as set forth on Schedule
4.17,
or
otherwise disclosed in the Company’s Securities and Exchange Commission filings
(a) neither the Company nor its Subsidiaries nor any of their respective
properties or assets is a party to or bound by any (i) Contract not made in
the
ordinary course of business, or involving a commitment or payment by the Company
or any Subsidiary in excess of $10,000 or, in the Company’s belief, otherwise
material to the business of the Company or its Subsidiaries, (ii) Contract
among
members or granting a right of first refusal or for a partnership or a joint
venture or for the acquisition, sale or lease of any assets or share capital
of
the Company or any other Person or involving a sharing of profits,
(iii) mortgage, pledge, conditional sales contract, security agreement,
factoring agreement or other similar Contract with respect to any real or
tangible personal property of the Company or its Subsidiaries, (iv) loan
agreement, credit agreement, promissory note, guarantee, subordination
agreement, letter of credit or any other similar type of Contract, (v) Contract
with any Governmental Body outside the ordinary course of business, (vi)
Contract with respect to the discharge, storage or removal of hazardous
materials or (vii) binding commitment or agreement to enter into any of the
foregoing.
(b) (i) Each
of
the Contracts listed on Schedule
4.17
are
valid and enforceable against the Company or its Subsidiaries in accordance
with
their terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity), and
there
is no default under any Contract listed on Schedule 4.17
by the
Company or any of its Subsidiaries or, to the knowledge of the Company, by
any
other party thereto, which is likely to have a Material Adverse Effect, and
no
event has occurred that with the lapse of time or the giving of notice or both
would constitute a default by the Company thereunder which is likely to have
a
Material Adverse Effect.
(ii) No
previous or current party to any Contract has given written notice to the
Company or any Subsidiary of, or made a claim, verbal or written, with respect
to any breach or default thereunder and the Company has no knowledge of any
notice of or claim with respect to any such breach or default other than such
notices or claims with respect to any such breaches or defaults that would
not,
either individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect.
(c) With
respect to the Contracts listed on Schedule
4.17
that
were assigned to the Company or any Subsidiary by a third party, all necessary
consents to such assignment have been obtained other than such contents which
the failure to obtain would not be reasonably expected to have a Material
Adverse Effect.
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4.18 Employee
Benefits.
Except
as set forth on Schedule
4.18,
neither
the Company nor any of its Subsidiaries has in effect any employment agreements,
consulting agreements, deferred compensation, pension or retirement agreements
or arrangements, bonus, incentive or profit-sharing plans or arrangements,
or
labor or collective bargaining agreements, written or oral. The Company and
its
Subsidiaries are in compliance in all material respects with all applicable
Laws
relating to labor, employment, fair employment practices, terms and conditions
of employment, and wages and hours.
4.19 Employees.
(a) No
key
executive Employee, group of Employees nor independent contractors of the
Company or its Subsidiaries has any plans to terminate his or her employment
or
relationship as an Employee or independent contractor with the Company or its
Subsidiaries.
(b) To
the
best of the Company’s knowledge, no key executive Employee or any other Employee
of the Company or its Subsidiaries is a party to or is otherwise bound by any
agreement or arrangement (including, without limitation, confidentiality
agreements, non-competition agreements, licenses, covenants, or commitments
of
any nature), or subject to any judgment, decree, or Order of any court or
Governmental Body, (i) that would conflict with such employee’s obligation
diligently to promote and further the interest of the Company or its
Subsidiaries or (ii) that would conflict with the Company’s (or its
Subsidiaries’) business as now conducted or as proposed to be
conducted.
(c) Schedule
4.19(c)
sets
forth a list of each of the key executive Employees of the Company who have
entered into an employment and/or confidentiality agreement with the
Company.
4.20 Litigation.
Other
than is set forth on Schedule
4.20,
there
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, currently threatened against or
affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency and/or
regulatory authority (federal, state, county, local or foreign), (collectively,
an “Action”)
which
(i) does and/or could adversely affects or challenges the legality, validity
or
enforceability of any of the Transaction Documents and/or the Securities or
to
consummate the transactions contemplated hereby or thereby or (ii) could,
if there were an unfavorable decision, have or reasonably be expected to result
in, either individually or in the aggregate, a Material Adverse Effect. The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act. The foregoing includes,
without limitation, actions, pending or threatened (or any basis therefor known
to the Company), involving the prior employment of any of the Company’s
employees, their use in connection with the Company’s business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers.
The
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment, or decree of any court or government agency or
instrumentality.
-11-
4.21 Compliance
with Laws; Permits.
Neither
the Company nor any Subsidiary (i) is in default under or in violation of
(and no event has occurred that has not been waived that, with notice or lapse
of time or both, would result in a default by the Company or any Subsidiary
under), nor has the Company or any Subsidiary received notice of a claim that
it
is in default under or that it is in violation of, any indenture, mortgage,
decree, lease, license, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is
in violation of any order of any court, arbitrator or governmental body, or
(iii) is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal,
state
and local laws applicable to its business, except in the case of clauses (i),
(ii) and (iii) as would not result in a Material Adverse Effect.
Neither the Company nor any of the Subsidiaries has received any written notice
of any violation of or noncompliance with, any federal, state, local or foreign
laws, ordinances, regulations and orders (including, without limitation, those
relating to environmental protection, occupational safety and health, federal
securities laws, equal employment opportunity, consumer protection, credit
reporting, “truth-in-lending”, and warranties and trade practices) applicable to
its business or to the business of any Subsidiary, the violation of, or
noncompliance with, which would have a materially adverse effect on either
the
Company’s business or operations, or that of any Subsidiary, and the Company
knows of no facts or set of circumstances which would give rise to such a
notice. The execution, delivery, and performance of the Transaction Documents
and the consummation of the transactions contemplated thereby will not result
in
any such violation or be in conflict with or constitute, with or without the
passage of time and giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree or contract, or an event which results
in the creation of any lien, charge, or encumbrance upon any assets of the
Company or the suspension, revocation, impairment, forfeiture, or nonrenewal
of
any material permit, license, authorization, or approval applicable to the
Company, its business or operations, or any of its assets or properties, except
as would not reasonably be expected to have a Material Adverse
Effect.
4.22 Environmental
and Safety Laws.
Neither
the Company nor its Subsidiaries are in violation of any applicable Laws
relating to the environment or occupational health and safety where the failure
to so comply could have a Material Adverse Effect and no material expenditures
are or will be required in order to comply with any such existing
Laws.
4.23 Investment
Company Act.
The
Company is not, nor is it directly or indirectly controlled by or acting
on
behalf of, any Person that is an investment company within the meaning of
the
Investment Company Act of 1940, as amended.
4.24 Financial
Advisors.
Except
for Xxxxxxx,
no
agent, broker, investment banker, finder, financial advisor or other Person
is
or will be entitled to any broker’s or finder’s fee or any other commission or
similar fee from the Company, directly or indirectly, in connection with
the
transactions contemplated by this Agreement or any Transaction Document and
no
Person is entitled to any fee or commission or like payment from the Company
in
respect thereof based in any way on agreements, arrangements or understandings
made by or on behalf of the Company.
4.25 Condition
of Properties.
All
facilities, machinery, equipment, fixtures, vehicles and other properties
owned,
leased or used by the Company and its Subsidiaries are in good operating
condition and repair, are reasonably fit and usable for the purposes for
which
they are being used, are adequate and sufficient for the Company and its
Subsidiaries respective businesses and conform in all material respects with
all
applicable Laws.
-12-
4.26 Pending
Changes.
The
Company has no knowledge of any development which might reasonably be expected
to result in a material adverse affect on the operations or financial condition
of the Company or its Subsidiaries.
4.27 Securities
Laws.
The
Company has complied in all material respects with all applicable U.S. federal
and state securities laws in connection with (i) all offers, issuances and
sales
of its securities prior to the date hereof and (ii) the offer, issuance and
sale
of the Securities. All sales and issuances of currently outstanding securities
by the Company have been to accredited investors within the meaning of Rule
501
of Regulation D under the Securities Act. Prior to the Closing, neither the
Company nor anyone acting on its behalf has sold, offered to sell or solicited
offers to buy the Securities or similar securities to, or solicited offers
with
respect thereto from, or entered into any preliminary conversations or
negotiations relating thereto with, any Person, so as to bring the issuance
and
sale of the Securities under the registration provisions of the Securities
Act,
and applicable state securities laws. Neither the Company nor any Person acting
on its behalf has offered the Securities to any Person by means of general
or
public solicitation or general or public advertising, such as by newspaper
or
magazine advertisements, by broadcast media, or at any seminar or meeting whose
attendees were solicited by such means.
4.28 Registration
Rights.
Except
for any rights granted under the Transaction Documents and the Prior
Registration Agreements, no Person has demand or other rights to cause the
Company to file any registration statement under the Securities Act relating
to
any securities of the Company or any right to participate in any such
registration statement.
4.29 Disclosure;
Survival.
There
is no fact which has not been disclosed to the Purchaser of which the Company
has knowledge and which has had or could reasonably be anticipated to result
in
a Material Adverse Change. All representations and warranties set forth in
this
Agreement or in any of the Transaction Documents or in any writing or
certificate delivered in connection with this Agreement shall survive the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby for a period of two (2) years (except where
expressly stated otherwise) (the “Survival
Period”)
and
shall not be affected by any examination made for or on behalf of the Purchaser,
the knowledge of the Purchaser, or the acceptance by the Purchaser of any
certificate or opinion.
4.30
No
General Solicitation.
Neither
the Company, its Subsidiaries, any of their affiliates nor any person acting
on
their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act)
in connection with the offer or sale of the Notes and the Warrants.
4.31 Insurance.
The
Company has in full force and effect fire and casualty insurance policies,
with
extended coverage, sufficient in amount (subject to reasonable deductibles)
to
allow it to replace any of its properties that might be damaged or destroyed,
and the Company has insurance against other hazards, risks, and liabilities
to
persons and property to the extent and in the manner customary for companies
in
similar businesses similarly situated.
-13-
4.32 Regulatory
Permits.
The
Company and the Subsidiaries possess all licenses, certificates, authorizations
and permits issued by the appropriate federal, state, local or foreign
regulatory authorities necessary to conduct their respective businesses, except
where the failure to possess such permits would not have or reasonably be
expected to result in a Material Adverse Effect (“Material
Permits”),
and
believes it can obtain, without undue burden or expense, any similar authority
for the conduct of its business as planned to be conducted, and neither the
Company nor any Subsidiary has received any notice of proceedings relating to
the revocation or modification of any Material Permit.
4.33 Title
to Property and Assets.
The
Company (and each Subsidiary) owns its property and assets free and clear of
all
mortgages, liens, loans, pledges, security interests, claims, equitable
interests, charges, and encumbrances, except such encumbrances and liens which
arise in the ordinary course of business and do not materially impair the
Company’s (and each Subsidiary’s) ownership or use of such property or assets
and/or any such liens, encumbrances and security interests which arose in
connection with the Prior Security Agreement. With respect to the property
and
assets it leases, the Company (and each Subsidiary) is in compliance with such
leases and, to its knowledge, holds a valid leasehold interest free of any
liens, claims, or encumbrances.
4.34 Foreign
Assets Control Legislation.
Neither
the sale of the Notes nor the Warrants by the Company hereunder nor its use
of
the proceeds thereof will violate the Trading with the Enemy Act, as amended,
or
any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto. Without limiting the foregoing,
neither the Company nor any of its Subsidiaries (a) is a person whose property
or interests in property are blocked pursuant to Section 1 of
Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)) or (b) engages in any dealings or transactions,
or
be otherwise associated, with any such person. The Company and its Subsidiaries
are in compliance with the USA Patriot Act of 2001 (signed into law October
26,
2001).
4.35 Solvency.
Based
on the financial condition of the Company as of the Closing Date (after giving
effect to the transactions contemplated herein and in the other Transaction
Documents), the Company’s assets do not constitute unreasonably small capital to
carry on its business for the current fiscal year as now conducted and as
proposed to be conducted including its capital needs taking into account
the
particular capital requirements of the business conducted by the Company,
and
projected capital requirements and capital availability thereof. The Company
does not intend to incur debts beyond its ability to pay such debts as they
mature (taking into account the timing and amounts of cash to be payable
on or
in respect to its debt).
-14-
5. Representations
and Warranties of the Purchaser.
Each
Purchaser hereby represents and warrants as of the date hereof and as of the
Closing Date to the Company, acknowledging that the Company is relying upon
the
accuracy and completeness of the representations and warranties set forth herein
to, among other things, ensure that registration under Section 5 of the
Securities Act is not required in connection with the sale of the Securities
hereby, as follows:
5.1 Organization;
Authority.
Such
Purchaser is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with full right,
corporate or limited liability company power and authority to enter into and
to
consummate the transactions contemplated by the Transaction Documents and
otherwise to carry out its obligations thereunder. The execution, delivery
and
performance by such Purchaser of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate or similar action on the
part of such Purchaser. Each Transaction Document to which it is a party has
been duly executed by such Purchaser, and when delivered by such Purchaser
in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance with its
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors’ rights generally and (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies.
5.2 Investment
Intent.
The
Purchaser represents and warrants to the Company that it is (a) an
“accredited investor” as defined in Rule 501 of Regulation D of the Securities
Act; and (b) acquiring the Purchased Securities to be purchased by it pursuant
to this Agreement for investment and not with a view to the distribution
thereof.
5.3 Investment
Purposes.
(a) The
Purchaser is acquiring the Securities for investment purposes only, for its
own
account, and not as nominee or agent for any other Person, and not with a view
to, or for resale in connection with, any distribution thereof within the
meaning of the Securities Act, (b) it understands and acknowledges that the
Securities have not been registered under the Securities Act or any other
securities laws, (c) it is not an “affiliate” (as defined in Rule 144 under the
Securities Act) of the Company, (d) it has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its investment, (e) it is an “accredited investor” within the meaning
of Rule 501 of Regulation D under the Securities Act, (f) the Company has made
available to it the opportunity to ask questions and to receive answers, and
to
obtain information necessary to evaluate the merits and risks of this
investment, and (g) it understands, acknowledges and agrees that the Securities
have not been registered under (and that the Company has no present intention
to
register the Securities under) the Securities Act or applicable state securities
laws, and may not be sold or otherwise transferred by the Purchaser to a United
States person unless the Securities have been registered under the Securities
Act and applicable U.S. state securities laws or are sold or transferred in
a
transaction exempt therefrom.
5.4 Short
Selling.
The
Purchaser hereby represents to the Company that the Purchaser will not make
or
maintain a “short” position in the Company's securities while any Notes or Prior
Notes held by the Purchaser are outstanding.
-15-
5.5 Prior
Warrants and Prior Notes.
Purchaser agrees that the $1,250,000 in Prior Notes previously sold to Purchaser
by the Company on August 8, 2006, shall have their Conversion Price (as defined
therein) re-priced to the Conversion Price as defined in the Notes dated as
of
the date of this Agreement. Purchaser also agrees to waive any anti-dilution
and/or reset rights that Purchaser may have pursuant to the Prior Warrants
(as
provided by Section 4 therein) granted to Purchaser in connection with the
applicable Prior Closing, in connection with any of the Warrants granted to
Purchaser herein, and/or any other Warrants granted to any purchasers in
connection with the offering, of which this Agreement is a part.
6. Further
Agreements of the Parties.
6.1 Reserved
Shares.
For so
long as the Securities are outstanding, the Company shall reserve that number
of
shares of Common Stock issuable upon conversion of the Notes and exercise of
the
Warrants, which shares shall not be subject to any preemptive or other similar
rights.
6.2 Access
to Information.
The
Purchaser and its representatives shall be entitled, upon reasonable notice,
to
make such investigation of the properties, business and operations of the
Company and such examination of the books, records and financial condition
of
the Company as it reasonably requests to make extracts and copies of such books
and records, upon reasonable notice during regular business hours. Any such
investigation and examination shall be conducted during regular business hours
and under reasonable circumstances without material interference with the
Company’s normal business operations, and the Company and its representatives
shall cooperate fully therein. No investigation by a Purchaser or its
Representatives prior to or after the date of this Agreement shall diminish
or
obviate any of the representations, warranties, covenants or agreements of
the
Company contained in this Agreement or the Transaction Documents. In order
for
Purchaser to have full opportunity to make such physical, business, accounting
and legal review, examination of the affairs of the Company and investigation
as
may be reasonably requested, the Company shall cause its Representatives to
cooperate fully with the Representatives of the Purchaser in connection with
such review and examination.
6.3 Confidentiality.
Except
as may be required by applicable Law or as otherwise agreed among the parties
hereto, neither the Company, the Purchaser nor any of its Affiliates shall
at
any time divulge, disclose, disseminate, announce or release any information
to
any Person concerning this Agreement, the Transaction Documents, the
transactions contemplated hereby or thereby, any trade secrets or other
confidential information of the Company or the Purchaser, without first
obtaining the prior written consent of the other parties hereto.
6.4 Other
Actions.
The
Company and the Purchaser agree to execute and deliver such other documents
and
take such other actions as the other parties may reasonably request for the
purpose of carrying out the intent of this Agreement and the Transaction
Documents.
-16-
6.5
Indemnification.
The
Company shall indemnify and hold harmless each Purchaser, the officers,
directors, agents and employees of each of them, each Person who controls
any
such Purchaser (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent permitted
by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable attorneys'
fees)
and expenses (including the cost (including without limitation, reasonable
attorneys’ fees) and expenses relating to an Indemnified Party’s (as defined
below) actions to enforce the provisions of this Section
6.5)
(collectively, “Losses”),
as
incurred, to the extent arising out of or relating to (i) any material
misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents, or (ii) any material breach of any
covenant, agreement or obligation of the Company contained in the Transaction
Documents, or (iii) any cause of action, suit or claim brought or made against
such Indemnified Party and arising out of or resulting from the execution,
delivery, performance or enforcement of the Transaction Documents executed
pursuant hereto by any of the Indemnified Parties. If the indemnification
provided for in this Section
6.5
is held
by a court of competent jurisdiction to be unavailable to an Indemnified
Party
with respect to any Losses, then the Indemnifying Party (as defined below),
in
lieu of indemnifying such Indemnified Party hereunder, shall contribute to
the
amount paid or payable by such Indemnified Party as a result of Losses in
such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection
with the actions or omissions that resulted in such Losses as well as any
other
relevant equitable considerations. The Company shall notify the Purchaser
promptly of the institution, threat or assertion of any proceeding of which
the
Company is aware in connection with the transactions contemplated by this
Agreement.
(b)
Conduct
of Indemnification Proceedings.
If any
proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified
Party”),
such
Indemnified Party shall promptly notify the other party (the “Indemnifying
Party”)
in
writing, and the Indemnifying Party shall have the right to assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided,
however,
that
the failure of any Indemnified Party to give such notice shall not relieve
the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that such failure shall have materially and
adversely prejudiced the Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any
such
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees
and
expenses; (2) the Indemnifying Party shall have failed promptly to assume
the
defense of such proceeding and to employ counsel reasonably satisfactory
to such
Indemnified Party in any such proceeding; or (3) the named parties to any
such
proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing
that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense thereof
and the reasonable fees and expenses of one separate counsel for all Indemnified
Parties in any matters related on a factual basis shall be at the expense
of the
Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such proceeding affected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall,
without
the prior written consent of the Indemnified Party, effect any settlement
of any
pending proceeding in respect of which any Indemnified Party is a party,
unless
such settlement includes an unconditional release of such Indemnified Party
from
all liability on claims that are the subject matter of such
proceeding.
-17-
The
indemnification obligations under this Section
6.5
are in
addition to any indemnification or similar obligations under any other
Transaction Document.
(d) The
provisions of this Section
6.5
shall
survive the termination of this Agreement for a period of three (3)
years.
(e) All
payments to be made to Purchaser pursuant to this Section
6.5,
shall
be paid no later than five (5) business days after request for payment is sent
to the Company.
6.6 Co-Investment
Rights.
Each
Purchaser hereby shall have the pro rata right of first refusal (which right
shall be shared with the other Purchasers, who purchase Notes in connection
with
the Company’s current offering or Prior Closing) to invest (in such amounts that
all of such Purchasers (including the Prior Purchasers and other Purchasers
who
invest during the offering to which this Agreement is a part) shall so elect)
in
any and all future financings (“Future
Financings”)
of the
Company for thirty-six (36) months from the date of this Agreement on the
identical terms offered to other investors. The Company shall provide each
Purchaser with (i) express prior written notice of a Future Financing, and
(ii) all required documentation requested by the Purchaser related to any
Future Financing all no later than ten (10) business days prior to the final
date of the offering period (or other applicable investment period) for any
such
Future Financings. Such Co-Investment rights shall continue even if a Purchaser
elects not to invest in one or more Future Financing.
6.7 [Internationally
removed].
6.8 Board
Representation. The
Company, effective on the Closing, hereby grants Purchaser, which right shall
be
shared with all of the Purchasers (including the Prior Purchasers and other
Purchasers who invest during the offering to which this Agreement is a part),
the right to appoint one Director, or if it so elects, a Board Advisory Seat
(with both the Prior Purchasers and current Purchaser electing as a group,
one
Director or Board Advisory Seat), and to receive all financial and other
information provided to board members and to observe at all board meetings.
The
Purchaser nominee shall be immediately included and maintained in the Company’s
Director and Officer insurance coverage. In the event Purchaser exercises
its
right to appoint a board member, the Company shall nominate an additional
board
member so that the total number of board members will be five (5). The Company
shall provide to the Purchaser and any then designated observer, concurrently
with, and by the same method of, transmission to the Board or any committee
thereof, any notice of meeting, agenda and other materials.
6.9 Bank
Consent.
The
Company, prior to the Closing Date shall obtain the express written consent
and/or necessary waivers from LaSalle Bank Nation Association (the “Bank”)
and
any other person, so as to approve and/or waive, as the case may be (i) this
Agreement; (ii) the Notes and Warrants; (iii) any defaults or event of default
that may have or will have occurred; and (iv) all other such
Transaction Documents as may be deemed necessary (the “Bank
Consent”).
-18-
6.10 Fees
and Expenses.
Each
party shall pay the fees and expenses of its advisors, counsel, accountants
and
other experts, if any, and all other expenses, incurred by such party incident
to the negotiation, preparation, execution, delivery and performance of this
Agreement. Notwithstanding the foregoing sentence, the Company shall pay to
Sadis & Xxxxxxxx LLP fifteen thousand dollars ($15,000), which amount may be
withheld from the Purchase Price paid upon closing.
7. Other
Obligations of the Parties.
7.1 Public
Announcements.
The
Company hereby agrees not to, and not to permit its Subsidiaries to, issue
any
press release, or otherwise make any public statements (collectively,
“Press
Releases”)
with
respect to the transactions contemplated hereby without the prior written
consent of the Purchaser, except as may be required by law. Furthermore, where
the Company desires to issue any such Press Release, the parties agree to
cooperate in good faith in order to prepare such Press Release in such form
and
substance as is agreeable to both parties.
7.2 Furnishing
Information.
Each of
the parties hereto will, as soon as practicable after reasonable request
therefor, furnish all the information concerning it required for inclusion
in
any statement or application made by any of them to any governmental or
regulatory body in connection with the transactions contemplated by this
Agreement.
7.3
Transfer
Restrictions.
(a)The
Underlying Shares may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of the Underlying Shares
other
than pursuant to an effective registration statement, or in connection with
a
pledge, as contemplated in Section 7.3(c)
hereof,
the Company may require the transferor thereof to provide to the Company
an
opinion of counsel selected by the transferor, the form and substance of
which
opinion shall be reasonably satisfactory to the Company, to the effect that
such
transfer does not require registration of such transferred Underlying Shares
under the Securities Act. As a condition of transfer, any such transferee
shall
agree in writing to be bound by the terms of this Agreement and shall have
the
rights of a Purchaser under this Agreement and the Registration Rights
Agreement.
(b)The
Purchaser agrees to the imprinting, so long as is required by Section 7.3(b),
of a
legend on any of the Underlying Shares in the following form:
THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”),
AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT,
THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
-19-
(c)Certificates
evidencing the Underlying Shares shall not contain any legend (including the
legend set forth in Section 7.3(b))
(i)
subsequent to the date the Commission declares effective a registration
statement covering the resale of the Underlying Shares, (ii) following any
sale of the Underlying Shares pursuant to Rule 144, or (iii) if such
Underlying Shares are eligible for sale under Rule 144(k). The Company
agrees that at such time as such legend is no longer required under and pursuant
to this Section 7.3(c),
it
will, no later than two (2) Trading Days following the delivery by a Purchaser
to the Company or the Company’s transfer agent of a Note for conversion, a
Warrant that for exercise, a restricted stock certificate or a lost securities
affidavit, if any, of such securities are lost, as the case may be, deliver
to
such Purchaser a certificate representing Underlying Shares that is free from
all restrictive and other legends (the “Deadline”).
The
Company may not make any notation on its records or give instructions to any
transfer agent of the Company that enlarge the restrictions on transfer set
forth in this Section.
7.4
Underlying
Share Delivery Damages.
In the
event that a non-legended certificate for Underlying Shares is not received
by a
Purchaser by the Deadline, as partial compensation to the Purchaser for such
loss as a result of such delivery delay, the Company shall pay (as liquidated
damages and not a penalty) to the Purchaser for late issuance of the Underlying
Shares an amount of $100 per business day after the Deadline for each $10,000
of
principal amount of the Note being converted, and/or or $10,000 of market
value
(based upon the then stock price of the Company) of Underlying Shares of
the
Warrant being exercised for, as the case may be, which are not timely delivered.
The penalties in this Section
7.4
are in
addition to and shall not limit any other penalty provisions in the Transaction
Documents and shall not limit the Purchaser’s right to collect other damages
and/or remedies.
7.5
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
Securities Act) that would be integrated with the offer or sale of any of
the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Purchaser or that would be integrated
with the offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market. The Purchaser and the Company agree that
the
current Registration Statement which has been filed with the SEC will be
withdrawn and refiled.
7.6
Use
of
Proceeds.
The
Company covenants and agrees that the net proceeds that it receives from
the
sale of the Notes and Warrants pursuant to this Agreement, shall be used
to
repay portions of amounts owed to LaSalle Bank National Association in
connection with the $800,000 construction loan and $750,000 revolver, with
the
balance to be utilized for working capital.
-20-
7.7
Form D
and Blue Sky.
The
Company shall file a Form D with respect to the Securities as required
under Regulation D under the Securities Act and, upon written request,
provide a copy thereof to each Purchaser promptly after such filing. The Company
shall, on or before the Closing, take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for or to
qualify any Securities for sale to the Purchaser pursuant to this Agreement
under applicable securities or “Blue Sky” laws of the states of the United
States, and shall provide evidence of any such action so taken to the Purchaser
on or prior to the Closing. The Company shall make all filings and reports
relating to the offer and sale of the Securities required under applicable
securities or “Blue Sky” laws of the states of the United States following the
Closing.
7.8
Reservation
of Common Stock.
As of
the date hereof, the Company has reserved and the Company shall continue to
reserve and keep available at all times, free of preemptive rights, a sufficient
number of shares of Common Stock for the purpose of enabling the Company to
issue the Conversion Shares and the Warrant Shares.
7.9
Securities
Laws Disclosure.
The
Company shall, by the end of business on the fourth (4th)
Business Day following the Closing, use its best efforts to issue a press
release or file a Current Report on Form 8-K, disclosing the transactions
contemplated hereby and make such other filings and notices in the manner and
time required by the Commission.
8.
Conditions
to Closing.
8.1 Conditions
of Obligations of the Purchaser.
The
obligation of the Purchaser to purchase and pay for the Securities is subject
to
the fulfillment prior to or on the Closing Date of the following conditions,
any
of which may be waived in whole or in part by the Purchaser:
(a) Representations,
Warranties and Covenants.
The
representations and warranties of the Company under this Agreement shall
be
deemed to have been made again on the Closing Date (other than those
representations and warranties made expressly as of a date prior to the Closing
Date) and shall then be true and correct. The Company shall represent to
the
Purchaser that all
of
the information contained herein does not contain any untrue statement of
a
material fact, or contain any omission of a material fact relating to such
information that is necessary in order to make the information, in light
of the
circumstances under which the information is provided, not
misleading.
(b) Compliance
with Agreement.
The
Company shall have performed and complied with all covenants, agreements
and
conditions required by this Agreement to be performed or complied with by
the
Company on or before the Closing Date.
(c) Approvals.
The
Company shall have obtained any and all consents, waivers, approvals or
authorizations, with or by any Governmental Body or any other Person required
for the valid execution of this Agreement and the transactions contemplated
hereby.
-21-
(d) No
Injunction.
No
Governmental Body or any other Person shall have issued an Order which shall
then be in effect restraining or prohibiting the completion of the transactions
contemplated hereby, nor shall any such Order be threatened or
pending.
(e) No
Material Adverse Change.
Since
March 31, 2007, there shall not have been a Material Adverse
Change.
(f) Certificate
of Officer.
The
Company shall have delivered to the Purchaser a certificate dated the Closing
Date, executed by its Chief Executive Officer and Chief Financial Officer,
certifying the satisfaction of the conditions specified in paragraphs (a),
(b),
(c), (d) and (e) of this Section
8.1.
(g) Opinion
of the Company’s Counsel.
The
Purchaser shall have received from Company counsel, in a form satisfactory
to
the Purchaser and its counsel, an opinion dated the Closing Date.
(h) Certificate
of Incorporation and By-Laws.
The
Certificate of Incorporation, as amended, and the By-Laws, shall be in full
force and effect as of the Closing under the laws of the State of Nevada and
shall not have been further amended or modified. A certified copy of the
Certificate of Incorporation, as so amended, shall have been delivered to
counsel for the Purchaser.
(i) Closing
Documents Provided By Company.
The
Purchaser (or such other person as referred to herein) shall have received
the
following:
(i) a
Note in
favor of each Purchaser, duly executed by the Company, entitling the Purchaser
to payment in the amount as stated in Schedule
1.1
herein;
(ii) Warrants
in the name of the Purchaser, duly executed by the Company, entitling the
Purchaser to purchase such amount of Warrant Shares as stated in Schedule
1.1
herein;
(iii)
the
Registration Rights Agreement duly executed by the Company;
(iv) the
Security Agreement duly executed by the Company and all documents necessary
to
perfect the security interest of the Purchaser;
(v) this
Agreement duly executed by the Company;
(vi) Secretary’s
Certificate in a form reasonably acceptable to Purchaser,
with the Officer’s Certificate and good standing certificates of the Company and
each Subsidiary as of a recent date;
(vii)
Legal
Opinion;
(viii)
Copy of
the Bank Consent for the Company to enter into this new debt and all necessary
waivers of Bank covenants prohibiting such action;
-22-
(ix) Copies
of
all Uniform Commercial Code Financing Statements filed in the State of Nevada,
California, Illinois, New Jersey and New York in connection with the Security
Agreement; and
(x) such
other documents as the Purchaser and/or its legal counsel may request and/or
deem necessary (including, but not limited to, a Good Standing Certificate
of
recent date from the Secretary of State of the State of Nevada).
8.2 Conditions
of Company’s Obligations.
The
Company’s obligation to issue and sell the Securities to the Purchaser on the
Closing Date is subject to the fulfillment prior to or on the Closing Date
of
the following conditions, any of which may be waived in whole or in part
by the
Company:
(a) Representations
and Warranties.
The
representations and warranties of the Purchaser under this Agreement shall
be
deemed to have been made again on the Closing Date and shall then be true
and
correct in all material respects.
(b) Compliance
with Agreement.
The
Purchaser shall have performed and complied with all agreements and conditions
required by this Agreement to be performed or complied with by such Purchaser
on
or before the Closing.
(c) Approvals.
The
Purchaser shall have obtained any and all consents, waivers, approvals, Permits
or authorizations, with or by any Governmental Body or any other Person required
for the valid execution of this Agreement and the transactions contemplated
hereby including, but not limited to the approval by.
(d) Payment
of Purchase Price.
The
Purchaser shall have delivered to the Company the Purchase Price specified
in
Section
2.1
hereof.
(e) No
Injunction.
No
Governmental Body or any other Person shall have issued an Order which
shall
then be in effect restraining or prohibiting the completion of the transactions
contemplated hereby, nor shall any such Order be threatened or
pending.
(f) Closing
Documents Provided By Purchaser.
The
Company shall have received the following:
(i)
this
Agreement duly executed by the Purchaser;
(ii)
the
Registration Rights Agreement duly executed by the Purchaser; and
(iii)
the
Security Agreement executed by the Purchaser.
-23-
8.3 Post
Closing Obligations.
Following the Closing Date:
(i) the
Company shall file all necessary documents in accordance with their obligations
under the Security Agreement;
(ii)Company’s
Counsel shall file all post closing Form D Filings and Blue Sky filings
in the
necessary jurisdictions.
9. Miscellaneous.
9.1 Certain
Definitions.
“Action”
shall
have the meaning ascribed to such term in Section 4.20.
“Affiliate”
of
any
Person means any Person that directly or indirectly controls, or is under
control with, or is controlled by, such Person. As used in this definition,
“control”
(including with its correlative meanings, “controlled
by”
and
“under
control with”)
shall
mean the possession, directly or indirectly, of the power to direct or
cause the
direction of the management or policies of a Person (whether through
ownership
of securities or partnership or other ownership interests, by contract
or
otherwise).
“Business
Day”
means
any day except Saturday, Sunday and any day which shall be a federal
legal
holiday or a day on which banking institutions in the State of New York
are
authorized or required by law or other governmental action to
close.
“Closing”
means
the closing of the purchase and sale of the Notes and the Warrants pursuant
to
Section 3.1 on
June __, 2007, or such other date as mutually agreed to by the
parties.
“Closing
Date”
means
the date of the Closing.
“Code”
means
the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder.
“Commission”
means
the Securities and Exchange Commission.
“Common
Stock”
means
the shares of common stock, par value $0.001 per share, of the
Company.
“Company
Counsel”
means
Xxxxx X. Xxxx, Esq.
“Contract”
means
any contract, agreement, indenture, note, bond, loan, instrument, lease,
conditional sales contract, mortgage, license, franchise, insurance policy,
commitment or other arrangement or agreement, whether written or
oral.
“Conversion
Shares”
means
all
shares of Common Stock issuable upon conversion of the Notes.
“Employee”
means
any current employee, office consultant, agent, officer or director of
the
Company.
-24-
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Exhibits”
shall
mean the following exhibits attached hereto and made a part of this
Agreement:
|
Exhibit
A
-
|
Registration
Rights Agreement
|
|
Exhibit
B
-
|
Form
of Warrants
|
|
Exhibit
C
-
|
Form
of Note
|
|
Exhibit
D
-
|
Security
Agreement
|
“Governmental
Body”
means
any government or governmental or regulatory body thereof, or political
subdivision thereof, whether federal, state, local or foreign, or any
agency,
instrumentality or authority thereof, or any court or arbitrator (public
or
private).
“Law”
means
any federal, state, local or foreign law, statute, code, ordinance, rule,
regulation or other requirement or guideline.
“Legal
Proceeding”
means
any judicial, administrative or arbitral actions, suits, proceedings
(public or
private), claims or governmental proceedings.
“Lien”
means
any mortgage, pledge, security interest, encumbrance, lien or charge
of any
kind, including, without limitation, any conditional sale or other title
retention agreement, any lease in the nature thereof and the filing of
or
agreement to give any financing statement under the Uniform Commercial
Code (or
similar laws) of any jurisdiction and including any lien or charge arising
by
statute or other law.
“Material
Adverse Change”
means
any material adverse change in the business, assets, liabilities, prospects,
properties, results of operations or condition (financial or otherwise)
of the
Company and its Subsidiaries, taken as a whole.
“Material
Adverse Effect”
means
any event, circumstance, condition, fact, effect, or other matter which
has had
or could reasonably be expected to have a material adverse effect (i)
on the
business, assets, liabilities, prospects, properties, results of operations
or
condition (financial or otherwise) of the Company and its Subsidiaries
taken as
a whole or (ii) on the ability of the Company or its Subsidiaries to
perform on
a timely basis any material obligation under this Agreement or to consummate
the
transactions contemplated hereby.
“Notes”
shall
have the meaning ascribed to such term in Section 1.1.
“Order”
means
any order, injunction, judgment, decree, ruling, writ, assessment or
arbitration
award.
“Permits”
means
any approvals, authorizations, consents, licenses, permits or certificates
by or
of any Governmental Body.
“Person”
means
any individual, corporation, partnership, firm, joint venture, association,
joint-stock company, trust, unincorporated organization, Governmental
Body or
other entity.
-25-
“Registration
Statement”
means
a
registration statement meeting the requirements set forth in the Registration
Rights Agreement and covering, among other items, the resale by the Purchaser
of
the Underlying Shares.
“Registration
Rights Agreement”
means
the Registration Rights Agreement, dated as of the date of this Agreement,
among
the Company and the Purchaser, in the form of Exhibit A
hereto.
“Rule 144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the
same
effect as such Rule.
“SEC
Reports”
shall
have the meaning ascribed to such term in Section 4.9.
“Securities
Act”
means
the Securities Act of 1933, as amended, or any similar federal statute,
and the
rules and regulations of the Securities and Exchange Commission thereunder,
all
as the same shall be in effect at the time.
“Subsidiary”
shall
have the meaning ascribed to such term in Section 4.4.
“Taxes”
means
any federal, state, local or foreign income, gross receipts, license,
payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Section 59A of the Code), customs
duties,
share capital, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value-added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty,
or
addition thereto, whether disputed or not.
“Trading
Day”
means
(a) a day on which the Common Stock is traded on a Trading Market, or
(b) if the Common Stock is not quoted on a Trading Market, a day on which
the Common Stock is quoted in the over-the-counter market as reported
by the
National Quotation Bureau Incorporated (or any similar organization or
agency
succeeding to its functions of reporting price); provided, that in the
event
that the Common Stock is not listed or quoted as set forth in (a), and
(b) hereof, then Trading Day shall mean a Business Day.
“Trading
Market”
means
the following markets or exchanges on which the Common Stock is listed
or quoted
for trading on the date in question: the OTC Bulletin Board, the American
Stock
Exchange, the New York Stock Exchange, the Nasdaq National Market or
the Nasdaq
SmallCap Market.
“Warrant
Shares”
means
all
shares of Common Stock issuable upon exercise of the Warrants.
“Warrants”
shall
have the meaning ascribed to such term in Section 1.1.
-26-
9.2 Further
Assurances.
The
Company and the Purchaser agree to execute and deliver such other documents
or
agreements as may be necessary or desirable for the implementation of
this
Agreement and the consummation of the transactions contemplated
hereby.
9.3 Entire
Agreement; Amendments and Waivers.
This
Agreement (including the Schedules and Exhibits hereto) represents the
entire
understanding and agreement among the parties hereto with respect to
the subject
matter hereof and can be amended, supplemented or changed, and any provision
hereof can be waived, only by written instrument making specific reference
to
this Agreement signed by the parties hereto. No action taken pursuant
to this
Agreement, including without limitation, any investigation by or on behalf
of
any party, shall be deemed to constitute a waiver by the party taking
such
action of compliance with any representation, warranty, covenant or agreement
contained herein. The waiver by any party hereto of a breach of any provision
of
this Agreement shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent breach.
No
failure on the part of any party to exercise, and no delay in exercising,
any
right, power or remedy hereunder shall operate as a waiver thereof, nor
shall
any single or partial exercise of such right, power or remedy by such
party
preclude any other or further exercise thereof or the exercise of any
other
right, power or remedy. All remedies hereunder are cumulative and are
not
exclusive of any other remedies provided by law.
9.4 Construction.
The
headings herein are for convenience only, do not constitute a part of
this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. 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.
9.5 Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties
and
their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of each Purchaser. Any Purchaser, however, may assign any or
all of its
Securities and/or rights under any of the Transaction Documents to any
Person,
provided such transferee agrees in writing to be bound, with respect
to the
transferred Securities and otherwise, by the provisions hereof that apply
to the
“Purchaser.”
9.6 No
Third-Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their
respective
successors and permitted assigns and is not for the benefit of, nor may
any
provision hereof be enforced by, any other Person.
9.7 Governing
Law.
This
Agreement shall be governed by and construed exclusively in accordance
with the
internal laws of the State of New York without regard to the conflicts
of laws
principles thereof. The parties hereto hereby irrevocably agree that
any suit or
proceeding arising directly and/or indirectly pursuant to or under this
Agreement, shall be brought solely in a federal or state court located
in the
City, County and State of New York. By its execution hereof, the parties
hereby
covenant and irrevocably submit to the in personam
jurisdiction of the federal and state courts located in the City, County
and
State of New York and agree that any process in any such action may be
served
upon any of them personally, or by certified mail or registered mail
upon them
or their agent, return receipt requested, with the same full force and
effect as
if personally served upon them in New York City. The parties hereto waive
any
claim that any such jurisdiction is not a convenient forum for any such
suit or
proceeding and any defense or lack of in personam
jurisdiction with respect thereto. In the event of any such action or
proceeding, the party prevailing therein shall be entitled to payment
from the
other party hereto of all of its reasonable legal fees and
expenses.
-27-
9.8 Headings;
Interpretive Matters.
The
section headings of this Agreement are for reference purposes only and
are to be
given no effect in the construction or interpretation of this Agreement.
No
provision of this Agreement will be interpreted in favor of, or against,
any of
the parties hereto by reason of the extent to which any such party or
its
counsel participated in the drafting thereof or by reason of the extent
to which
any such provision is inconsistent with any prior draft hereof or
thereof.
9.9 Confidentiality.
Each
party hereto covenants and agrees to treat any non-public information
provided
to it by the Company concerning the business and finances of the Company
(“Corporate
Information”)
as
confidential and agrees further that it will not use, exploit, reproduce,
disclose or provide Corporate Information to any third-party (other than
any
agents of the parties who are bound by substantially similar obligations
of
confidentiality) on its own behalf or otherwise, except with the consent
of the
Company or as required by law, legal process or any federal or state
regulatory
body having jurisdiction over such party. The provisions of this Section
9.9
shall
not apply to any information which:
(a) was
within the public domain prior to the time of disclosure of Corporate
Information to the receiving party or which comes into the public domain
other
than as a result of a breach by the party of this Section
9.9;
(b) was
rightfully acquired by the receiving party from a third party without,
to the
knowledge of the receiving party, any restriction or any obligation of
confidentiality; or
(c) was
independently developed by the receiving party without any use or reference
to
the Corporate Information.
The
provisions of this Section
9.9
shall
survive the termination of this Agreement, either in whole or as to any
party,
for a period of two (2) years.
9.10
Notices.
Any
and
all notices or other communications or deliveries required or permitted
to be
provided hereunder shall be in writing and shall be deemed given and
effective
on (a) the next Business Day, if sent by U.S. nationally recognized
overnight courier service, or (b) upon actual receipt by the party to whom
such notice is required to be given. The address for such notices and
communications to the Company shall be as set forth below and for each
Purchaser
shall be as set forth on the signature pages attached hereto.
-28-
If
to the
Company:
000
Xxxxx
Xxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx,
XX 00000
Attention:
Xxxxxx Xxxxxx, President
Telephone:
000-000-0000
With
a
copy to:
Xxxxx
X.
Xxxx
The
Loev
Law Firm, PC
0000
Xxxx
Xxxx Xxxxx, Xxxxx 000
Xxxxxxxx,
Xxxxx 00000
Telephone:
000-000-0000
If
to the
Purchaser:
______________________
______________________
______________________
______________________
______________________
With
a
copy to:
|
______________________
|
______________________
______________________
______________________
______________________
______________________
All
notices are effective upon receipt or upon refusal if properly
delivered.
9.11 Severability.
If any
provision of this Agreement is invalid or unenforceable, the balance
of this
Agreement shall remain in effect.
9.12 Binding
Effect; Assignment.
This
Agreement shall be binding upon and insure to the benefit of the parties
and
their respective successors and permitted assigns. No assignment of this
Agreement or of any rights or obligations hereunder may be made by the
Company
or the Purchaser (by operation of law or otherwise) without the prior
written
consent of the other parties hereto and any attempted assignment without
the
required consents shall be void.
-29-
9.13 Counterparts.
This
Agreement may be executed simultaneously in two or more counterparts,
each of
which shall be deemed an original but all of which together shall constitute
one
and the same instrument.
9.14 Incorporation
by Reference; Breach of Security Agreement.
Any
default and/or breach of the Security Agreement shall be considered a
breach
and/or default of this Agreement. All covenants, agreements and obligations
of
the Company in the Security Agreement shall be expressly incorporated
by
reference herein as if made directly herein and shall survive termination
of
this Agreement.
[The
rest
of this page has been intentionally left blank]
-30-
IN
WITNESS WHEREOF,
the
parties hereto have executed or have caused this Agreement to be executed
by
their respective officers thereunto duly authorized, as of the date first
written above.
By:
/s/ Xxxxxx Xxxxxx
Xxxxxx
Xxxxxx
Chief
Executive Officer
-31-
PURCHASER’S
SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT
Sands
Brothers Venture Capital LLC
By:
/s/ Xxxxx Xxxxx
Name:
Xxxxx Xxxxx
Title:
COO
00
Xxxx Xxx. 00xx Xxxxx XX, XX 00000
Address
000-000-0000
Facsimile
Number
$4,000
Sands
Brothers Venture Capital II LLC
By:
/s/ Xxxxx Xxxxx
Name:
Xxxxx Xxxxx
Title:
COO
00
Xxxx Xxx. 00xx Xxxxx XX, XX 00000
Address
000-000-0000
Facsimile
Number
$16,000
Sands
Brothers Venture Capital III LLC
By:
/s/ Xxxxx Xxxxx
Name:
Xxxxx Xxxxx
Title:
COO
00
Xxxx Xxx. 00xx Xxxxx XX, XX 00000
Address
000-000-0000
Facsimile
Number
$124,000
-32-
Sands
Brothers Venture Capital IV LLC
By:
/s/ Xxxxx Xxxxx
Name:
Xxxxx Xxxxx
Title:
COO
00
Xxxx Xxx. 00xx Xxxxx XX, XX 00000
Address
000-000-0000
Facsimile
Number
$40,000
Katie
& Xxxx Bridge Partners, L.P.
By:
/s/ Xxxxx Xxxxx
Name:
Xxxxx Xxxxx
Title:
COO
00
Xxxx Xxx. 00xx Xxxxx XX, XX 00000
Address
000-000-0000
Facsimile
Number
$16,000
-33-
Schedule
1.1
Purchaser
|
NAME
AND ADDRESS
OF
EACH PURCHASER
|
PRINCIPAL
NOTE
AMOUNT
PURCHASED
|
WARRANT
SHARES
TO
BE RECEIVED
|
|||||
|
Sands
Brothers
|
|||||||
|
Venture
Capital LLC
|
$
|
4,000
|
4,000
at $0.30
|
||||
|
Sands
Brothers
|
|||||||
|
Venture
Capital II LLC
|
$
|
16,000
|
16,000
at $0.30
|
||||
|
Sands
Brothers
|
|||||||
|
Venture
Capital III LLC
|
$
|
124,000
|
124,000
at $0.30
|
||||
|
Sands
Brothers
|
|||||||
|
Venture
Capital IV LLC
|
$
|
40,000
|
40,000
at $0.30
|
||||
|
Katie
& Xxxx
|
|||||||
|
Bridge
Partners, L.P.
|
$
|
16,000
|
16,000
at $0.30
|
||||
-34-
