SERIES A CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
Dated as of February 8, 2006
Among
NEXUS TECHNOLOGIES GROUP, INC.,
And
HOMELAND SECURITY CAPITAL CORPORATION
SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
This Series A Convertible Preferred Stock Purchase Agreement (the
"Agreement") is dated as of February 8, 2006 by and among Nexus Technologies
Group, Inc., a Delaware corporation (the "Company"), and Homeland Security
Capital Corporation (the "Purchaser").
The parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF PREFERRED STOCK
Section 1.1 Purchase and Sale of Preferred Stock. Upon the following terms
and conditions, the Company shall issue and sell to the Purchaser, and the
Purchaser shall purchase from the Company, up to 9,800,000 shares of the
Company's Series A Convertible Preferred Stock, $1.00 par value per share (the
"Preferred Shares"), at a purchase price of $1.00 per share ("Purchase Price").
The Preferred Shares are convertible into shares of the Company's common stock,
$0.01 par value per share (the "Common Stock"). The Purchaser will initially
purchase 3,400,000 Preferred Shares (the "First Tranche") for an aggregate
purchase price equal to $3,400,000. The Purchaser agrees to purchase on any date
(or dates) prior to February 6, 2008 up to an additional 6,400,000 Preferred
Shares in the aggregate on such dates and in such amounts (the "Additional
Tranches") as the Company (following the approval of its board of directors (the
"Board")) requests upon (10) days prior written notice. The designation, rights,
preferences and other terms and provisions of the Preferred Shares are set forth
in the Certificate of Designation of the Relative Rights and Preferences of the
Series A Convertible Preferred Stock attached hereto as Exhibit A (the
"Certificate of Designation"). The Company and the Purchaser are executing and
delivering this Agreement in accordance with and in reliance upon the exemption
from securities registration afforded by Rule 506 of Regulation D ("Regulation
D") as promulgated by the United States Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act") or Section 4(2) of the Securities Act.
Section 1.2 The Conversion Shares. The Company has authorized and reserved
and covenants to continue to reserve, free of preemptive rights and other
similar contractual rights of stockholders, such number of shares of Common
Stock equal to one hundred twenty percent (120%) of the number of shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all of the issued and outstanding Preferred Shares. Any shares of Common
Stock issuable upon conversion of the Preferred Shares are herein referred to as
the "Conversion Shares." The Preferred Shares and the Conversion Shares are
sometimes collectively referred to as the "Shares." The Preferred Shares may be
converted into Common Stock in accordance with the Certificate of Designation
and pursuant the delivery of a conversion notice in the form attached as Exhibit
B hereto.
Section 1.3 Purchase Price and Closing. The Company agrees to issue and
sell to the Purchaser and, in consideration of and in express reliance upon the
representations, warranties, covenants, terms and conditions of this Agreement,
the Purchaser, agrees to purchase the Preferred Shares. The closing of the
purchase and sale of the Preferred Shares for the First Tranche (a "Closing" and
together with any additional closings of the sale of Preferred Shares, the
"Closings") shall take place at the offices of Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx
Xxxxxx LLP, Miami Center - 20th Floor, 000 Xxxxx Xxxxxxxx Xxxx., Xxxxx, Xxxxxxx
00000 at 1:00 p.m. (eastern time) upon the satisfaction of each of the
conditions set forth in Article IV hereof (the "Closing Date"). Funding with
respect to the Closing shall take place by wire transfer of immediately
available funds on or prior to the Closing Date. Additional Closings for the
sale of the Additional Tranches shall occur at times and places as mutually
agreed by the parties.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties as to the Company. The Company
represents and warrants to Purchaser as follows:
(a) Capitalization. The authorized capital stock of the Company
consists of (i) 40,000,000 shares of Common Stock, of which 100 shares are
issued and outstanding and (ii) 20,000,000 shares of Preferred Stock, none of
which are issued and outstanding. All shares of Common Stock have been duly
authorized and validly issued and are fully paid and non-assessable. All prior
offerings and issuances of Common Stock have been made in accordance with
applicable federal and state securities Laws. Except as disclosed in Schedule
2.1(a), (i) no shares of the Company's capital stock are subject to rights of
first refusal, preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company, (ii) there are no outstanding
debt securities, (iii) there are no outstanding options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into, any shares of capital stock of the
Company, or contracts, commitments, understandings 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 options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company, (iv) there are no outstanding securities or instruments of the Company
which contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company is or may
become bound to redeem a security of the Company, (v) there are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the sale of the common shares of Common Stock as described in this
Agreement and (vi) the Company does not have any stock appreciation rights or
"phantom stock" plans or agreements or any similar plan or agreement. "Laws"
mean material federal, state, local and foreign laws, statutes, ordinances,
rules or regulations, orders and administrative rulings promulgated by any
governmental or regulatory authority.
(b) Organization; Good Standing; Power. The Company is a corporation
duly organized, validly existing and in good standing under the Laws of the
State of Delaware, and has full corporate power and authority to own, lease and
operate its assets and properties and to carry on its business as presently
conducted by it. Schedule 2.1(b) hereto sets forth a true and complete list of
all states and other jurisdictions in which the Company is duly qualified and in
good standing to transact business as a foreign corporation. Except for those
states and jurisdictions set forth on Schedule 2.1(b), there are no other states
or jurisdictions in which the character and location of the properties owned or
leased by the Company and the conduct of its Business make any such
qualification necessary, except any where the failure to be so qualified would
not have a Material Adverse Effect. The Company's minute books contain true and
complete records of all meetings and other material actions, including, without
limitation, actions by vote or written consent of the stockholders and the board
of directors of the Company. "Material Adverse Effect" means an effect that is
more than a minor, de minimis or minimal effect on the Business, operations,
condition (financial or other) or prospects of the Company or the value of its
properties or assets. All references to "Company" in this Sections 2.1 shall
also refer to any Subsidiaries of the Company where applicable.
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(c) Authority; Validity; No Conflicts. The execution and delivery by
the Company of this Agreement, the performance by the Company of its obligations
hereunder, and the consummation of the transactions contemplated hereby, have
been duly authorized by all necessary corporate action on the part of the
Company, and the Company has all necessary corporate power with respect thereto.
This Agreement is the valid and binding obligation of the Company, enforceable
against it in accordance with its terms, except to the extent that
enforceability thereof may be limited by general equitable principles or the
operation of bankruptcy, insolvency, reorganization, moratorium or similar Laws.
Except as set forth in Schedule 2.1(c), neither the execution and delivery by
the Company of this Agreement, nor the consummation of the transactions
contemplated hereby, nor the performance by the Company of its obligations
hereunder, shall (or, with the giving of notice or the lapse of time or both,
would) (i) conflict with or violate any provision of the Company's Certificate
of Incorporation or Bylaws of the Company, as amended; (ii) give rise to a
conflict, breach or default, or any right of termination, cancellation or
acceleration of remedies or rights, or otherwise result in a loss of benefits to
the Company, under the provisions of any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation to which the Company is a
party or by which it or any of its properties or assets is otherwise bound;
(iii) violate any Law applicable to the Company or any of its properties or
assets; (iv) result in the creation or imposition of any Lien upon any of the
properties or assets of the Company or cause the Company to be subject to any
Tax; (v) interfere with or otherwise adversely affect the ability to carry on
the business of the Company as presently conducted; or (vi) contravene, conflict
with, or result in a violation of any of the terms or requirements of, or give
rise to any right to revoke, suspend, terminate or modify any Permit. "Liens"
mean all liens, mortgages, pledges, charges, claims, security interests or
encumbrances of any nature whatsoever. "Permits" means governmental permits,
approvals, licenses, certificates, franchises, authorizations, consents and
orders necessary for the operation of the Business in the manner that it is
presently conducted.
(d) Governmental Authorizations; Third-Party Consents. Except as set
forth on Schedule 2.1(d) hereto, no approval, consent, waiver, exemption, order,
authorization or other action by, or notice to or filing with, any governmental
authority or any Person, and no lapse of a waiting period, is required to be
obtained by the Company in connection with (or in order to permit) the
execution, delivery or performance by any of them of this Agreement or the
consummation of the transactions contemplated hereby or thereby (collectively,
"Consents"). "Subsidiaries" shall mean any corporation or other organization,
whether incorporated or unincorporated, in which the Company owns, directly or
indirectly, any equity or other ownership interest..
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(e) Financial Statements. The Company has delivered to Purchaser
true and complete copies of its (i) audited balance sheet as of December 31,
2003 and the related audited statements of income (loss), retained earnings and
cash flow for the fiscal year then ended (the "2003 Financial Statements"), (ii)
audited balance sheet as of December 31, 2004 and the related audited statements
of income (loss), retained earnings and cash flow for the fiscal year then ended
(the "2004 Financial Statements") and (iii) unaudited balance sheet as of
December 31, 2005 and the related unaudited statements of income (loss),
retained earnings and cash flow for the fiscal year then ended (the "2005
Financial Statements"). "Financial Statements" means the 2003 Financial
Statements, 2004 Financial Statements and the 2005 Financial Statements,
collectively. The Financial Statements are attached hereto as Schedule 2.1(e).
Except as set forth on Schedule 2.1(e), the Financial Statements, including any
notes thereto, were prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved and fairly present the financial position
of the Company as of the dates indicated and the results of its operations for
the periods covered thereby. The books and records of the Company are, in all
material respects, true and complete, have been maintained in accordance with
good business practices, and accurately reflect the basis for the financial
condition and results of operations of the Company as set forth in its financial
statements. "Affiliate" means, with respect to any Person, a Person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under the common control with, the Person specified (as set
forth in Rule 405 promulgated under the Securities Act of 1933). "Person" or
"Persons" means any stockholder, officer, employee or director of the Company,
or any other natural person, corporation, partnership, limited liability company
or other entity.
(f) Interests in Other Entities. The Company owns all of the capital
stock of each of its Subsidiaries. The Company does not, directly or indirectly,
(i) own, of record or beneficially, any shares of voting stock or any other
equity securities of any Person other than as set forth on Schedule 2.1(f); (ii)
have any other ownership or equity or debt interest, of record or beneficially,
in any Person; or (iii) have any obligation or right, fixed or contingent, to
purchase or subscribe for any interest in, advance or loan monies to, or in any
way make an investment in, any Person or to share any profits or capital
investments in any other Person (other than as set forth on Schedule 2.1(f)).
(g) Title to Properties; Leases. Except as set forth on Schedule
2.1(g), the Company has good and marketable title to all of its properties and
assets, real and personal, including, but not limited to, those reflected in the
unaudited balance sheet contained in the 2005 Financial Statements (the "2005
Balance Sheet") (except as since sold or otherwise disposed of in the ordinary
course of business since December 31, 2004, or as expressly provided for in this
Agreement), free and clear of all encumbrances, liens or charges of any kind or
character except: (a) those securing liabilities of the Company incurred in the
ordinary course (with respect to which no default exists); (b) liens of real
estate and personal property taxes; (c) property leased pursuant to leases
disclosed on any Schedule hereto; and (d) imperfections of title and
encumbrances, if any, which, in the do not have a Material Adverse Effect on the
business, properties or assets of the Company.
(h) Accounts Receivable; Fixed Assets; Inventory.
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(i) Schedule 2.1(h)(i) hereto sets forth a true and complete
list of the Accounts Receivable as of December 31, 2005 and the individual aging
with respect thereto. All of the Accounts Receivable reflected on Schedule
2.1(h)(i) are good and collectible in the ordinary course of business at the
recorded amounts thereof, less the amount of the reserves for bad accounts
reflected thereon (which reserves have been established in accordance with
United States generally accepted accounting principles ("GAAP") on a basis
consistent with past practice), and are not subject to any counterclaims or
offsets "Accounts Receivable" means all of the Company's accounts receivable due
to the Company, including but not limited to obligations owing to the Company
arising from the sale or lease of goods or the rendition of services by the
Company.
(ii) Schedule 2.1(h)(ii) hereto sets forth a true and complete
list of the Inventory. The Inventory is of such quality and quantity as to be
usable and saleable by the Company in the ordinary course of business, has been
priced at the lower of cost or market value using the "first-in, first-out"
method, and is free of any defect or deficiency, subject only to the reserve for
Inventory writedown set forth on the face of the Estimated 2005 Balance Sheet as
adjusted for operations and transactions through the Closing Date.. The level of
Inventory reflected on Schedule 2.1(h)(ii) are not excessive in light of the
Company's normal operations of its business and are adequate to conduct the
Company's operations in the ordinary course of business. "Inventory" means each
item of inventory of the Company (including raw materials, work in progress and
finished goods). "Estimated 2005 Balance Sheet" shall mean the unaudited 2005
balance sheet of the Company's sole subsidiary, Corporate Security Solutions,
Inc., previously delivered to the Purchaser.
(i) Intellectual Property. Schedule 2.1(i) hereto sets forth a true
and complete list of all licenses, patents, patents pending, registered
copyrights, trade names, trademarks and service marks comprising Intellectual
Property. The Company has either all right, title and interest in and to, or
valid and enforceable rights under contract to use, all items of Intellectual
Property material to, or necessary to conduct, the business of the Company as it
is presently conducted or contemplated to be conducted, free and clear of all
Liens other than Permitted Liens. There are no material restrictions on the
direct or indirect transfer of any contract or other agreement, or any interest
therein, held by the Company in respect of any item of Intellectual Property.
The Company is not in default (or, with the giving of notice or lapse of time or
both, would be in default) under any contract or other agreement to use any item
of Intellectual Property required to be set forth on Schedule 2.1(i). To the
knowledge of the Company, none of the Intellectual Property infringes or
conflicts with, and neither the Company has received any notice of infringement
of or conflict with, any license, patent, copyright, trademark, service xxxx or
other intellectual property right of any other Person and, to the knowledge of
the Company, there is no material infringement or material unauthorized use by
any Person of any of the Intellectual Property owned by the Company. Except as
set forth on Schedule 2.1(i), the validity or enforceability of any of the
Intellectual Property or the title of the Company thereto has not been
questioned in any litigation, governmental inquiry or proceeding to which the
Company is party and, to the knowledge of the Company, no such litigation,
governmental inquiry or proceeding is threatened. The Company has taken all
actions necessary and appropriate to preserve the confidentiality of all trade
secrets, proprietary and other confidential information material to the business
and operations of the Company. "Intellectual Property" means all patents and
patent rights, trademarks and trademark rights, trade names and trade name
rights, service marks and service xxxx rights, service names and service name
rights, brand names, inventions, processes, formulae, copyrights and copyright
rights, trade dress, business and product names, logos, slogans, designs, trade
secrets, industrial models, proprietary data, methodologies, computer programs
and software (including all source codes) and related documentation, technical
information, manufacturing, engineering and technical drawings, know-how,
inventions, works of authorship, management information systems, and all pending
applications for and registrations of patents, trademarks, service marks and
copyrights owned by the Company or used by the Company in the conduct of its
business, in each such case, including all forms (e.g., electronic media,
computer disks) in which such items are recorded.
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(j) Bank Accounts; Credit Cards; Corporate Accounts; and Powers of
Attorney. Schedule 2.1(j) hereto sets forth a true and complete list showing (i)
the names of all banks in which the Company has an account or safe deposit box,
the account numbers for each account at such banks and the names of all Persons
authorized to draw thereon and who have access thereto; (ii) the names of all
credit card issuers with whom the Company has an account and the names of all
Persons authorized to use such accounts or who have access thereto; (iii) the
names of all cellular telephone, phone card or other corporate accounts with
whom the Company has an account and the names of all Persons authorized to use
such accounts or who have access thereto; and (iv) the names of all Persons, if
any, holding powers of attorney from the Company. There are no automatic,
periodic or scheduled withdrawals or debits with respect to the bank or
corporate accounts required to be set forth on Schedule 2.1(j) hereto.
(k) Absence of Undisclosed Liabilities. The Company does not have
any Liabilities, including guarantees and indemnities by the Company of
Liabilities of any other Person, except (i) Liabilities as and to the extent
reflected on the 2005 Balance Sheet; (ii) Liabilities incurred by it in the
ordinary course of business and consistent with past practice since the date of
the 2005 Balance Sheet (none of which is a material Liability for breach of
contract, breach of warranty, tort, infringement, claim, lawsuit or other
proceeding) and adequately reflected on the books and records of the Company;
(iii) obligations not in default under contracts entered into by it in the
ordinary course of business; and (iv) the Liabilities set forth on Schedule
2.1(k) hereto. "Liabilities" mean debts, liabilities, commitments or
obligations, whether absolute or contingent, asserted or unasserted, known or
unknown, liquidated or unliquidated, due or to become due, or fixed or unfixed.
(l) Litigation. Except as set forth on Schedule 2.1(l) hereto, there
are no claims, suits or actions, administrative, arbitration or other
proceedings, or governmental investigations pending or, to the knowledge of the
Company, threatened against or affecting, or reasonably likely to adversely
affect, the Company or any of its properties, assets or business or the
transactions contemplated hereby. No event has occurred and no circumstance
exists that may give rise to or serve as a reasonable basis for any claim, suit,
action or other proceeding to be brought or threatened against the Company.
There are no outstanding judgments, orders, stipulations, injunctions, decrees
or awards against the Company that have not been fully satisfied. For purposes
of clarity, this Section 2.1(l) does not apply, and Section 2.1(q) contains the
sole representation of the Company related to, Tax matters.
6
(m) Material Contracts. Schedule 2.1(m) hereto sets forth a true and
complete list, and brief description, of each Material Contract. True and
complete copies of all Material Contracts required to be set forth on Schedule
2.1(m) have been furnished to Purchaser and, except as set forth on Schedule
2.1(m), each of them is in full force and effect. Except as set forth on
Schedule 2.1(m), neither the Company nor, to the knowledge of the Company, any
other Person that is a party to a Material Contract or is otherwise bound
thereby is in default thereunder, and no event, occurrence, condition or act
exists that, with the giving of notice or the lapse of time or both, would give
rise to any default or right of cancellation thereunder. To the knowledge of the
Company, there have been no threatened cancellations of any of the Material
Contracts and there are no outstanding disputes thereunder. There are no
agreements, understandings or arrangements with any other Person in respect of
the Material Contracts that (i) give any Person the right to renegotiate or
require a reduction in the price paid to the Company or the repayment of any
amount previously paid, (ii) provide for the sharing of any revenues or profits
by or with the Company or (iii) provide for discounts, allowances or extended
payment terms. "Material Contract" means any contract, purchase order,
agreement, mortgage, note, commitment, obligation and undertaking to which the
Company is parties or by which it is otherwise bound that involves in excess of
Twenty Thousand Dollars ($20,000).
(n) Insurance. Schedule 2.1(n) hereto sets forth a true and complete
list of all policies of insurance under which the Company or any of its officers
or directors (in such capacity) is an insured party, beneficiary or loss payable
payee, and the expiration date of each such policy. The Company is current in
all of its premiums for its insurance policies. True and complete copies of all
such policies have been provided to Purchaser. Such policies are in full force
and effect and they will remain in full force and effect and will not terminate
or lapse or otherwise be affected in any way by reason of the transactions
contemplated hereby. The Company is not in default with respect to any provision
contained in any such policy, the Company has not received or given a notice of
cancellation or non-renewal with respect to any such policy and the Company has
not received a reservation of rights letter with respect to any such policy.
Except as set forth on Schedule 2.1(n), no claims have been made by the Company
under any such policy, and no event has occurred and no state of facts exists in
respect of which the Company is entitled to make a claim under any such policy.
(o) Employees. Schedule 2.1(o) hereto sets forth a true and correct
summary of the following information for each current employee of the Company,
including each employee on leave of absence, disability or layoff status: name;
job title; employment status; current compensation rate and any change(s) in
compensation since December 31, 2004; vacation time accrued; and service years
credited for purposes of vesting or eligibility to participate in any Benefit
Plan. Except as set forth on Schedule 2.1(o), the Company has no written or oral
union, collective bargaining, employment, management, severance or consulting
agreements or arrangements to which the Company is a party or by which it is
otherwise bound. No union or other labor organization is seeking to organize, or
to be recognized as, a collective bargaining unit of any group of employees that
includes any employees of the Company. There is no pending or, to the knowledge
of the Company, threatened representation proceeding or petition, strike, work
stoppage, work slowdown, unfair labor practice charge or complaint or other
material labor dispute affecting any employee of the Company. "Benefit Plan"
means each funded or unfunded, written or oral, employee benefit plan, contract,
agreement, incentive, salary, wage or other compensation plan or arrangement,
including, but not limited to, each pension and profit sharing plan, savings
plan, bonus, deferred compensation, incentive compensation, stock purchase,
supplemental retirement, severance, change of control or termination payment,
stock option, hospitalization, medical, life insurance, dental, disability,
salary continuation, vacation, supplemental unemployment benefit, union
contract, employment contract, consulting agreement, retiree health or life
benefit, severance, change of control or termination payment and each other
employee benefit program, plan, policy or arrangement, maintained, contributed
to, or required to be contributed to by the Company for the benefit of
employees, former employees, officers, directors, agents or consultants of the
Company, or for or as to which the Company may be responsible or have any
Liability, whether or not subject to ERISA and whether or not legally binding.
For purposes of the definition of Benefit Plans, references to the term
"Company" shall be deemed also to refer to any entity that is under common
control or affiliated with the Company, within the meaning of Section 4001 of
ERISA and the rules and regulations promulgated thereunder, or Sections 414(b),
(c), (m) or (o) of the Internal Revenue Code of 1986, as amended (together with
the rules and regulations thereunder) (the "Code").
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(p) Employee Arrangements; ERISA.
(i) Schedule 2.1(p) hereto sets forth a true and complete list
of all Benefit Plans. The Company has delivered to Purchaser true and complete
copies of each Benefit Plan (including any related trust agreement), the most
recent summary plan descriptions and all other material employee communications
embodying or relating to any Benefit Plan , the most recent Internal Revenue
Service determination letter (if the plan is intended to be qualified under
Section 401(a) of the Code, and the annual reports filed on Form 5500 (including
all schedules and accountants' opinions) for the two most recent completed plan
years, if such reports were required to be filed. Except as set forth on
Schedule 2.1(p), the Company has not announced or otherwise made a commitment to
create any bonus, option, deferred compensation, pension, profit sharing or
retirement plan or arrangement, severance arrangement or other fringe benefit
plan.
(ii) Each of the Benefit Plans required to be set forth on
Schedule 2.1(p) is and has at all times been in compliance with all applicable
provisions of ERISA, the Code and other applicable Laws.
(iii) Except as set forth on Schedule 2.1(p), the execution
and delivery of, and the performance of the transactions contemplated by, this
Agreement will not (either alone or upon the occurrence of any additional or
subsequent event) constitute an event under any Benefit Plan or individual
agreement that will or may result in any payment (whether of severance pay or
otherwise), acceleration, vesting or increase in benefits with respect to any
employee, former employee, consultant, agent or director of the Company.
(iv) Each Benefit Plan that is a "group health plan" (within
the meaning of Code Section 4980B) has been administered in compliance with the
coverage continuation requirements of COBRA, and as provided under Code Section
4980 and any regulations promulgated or proposed under the Code. The Company and
each Benefit Plan are in compliance with the requirements of the Health
Insurance Portability and Accountability Act.
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(v) At no time has the Company contributed to, been required
to contribute to or incurred any Liability to any Benefit Plan that: is a
multi-employer plan, as defined in Section 3(37) of ERISA; is a multiple
employer welfare arrangement, as defined in Section 3(40) of ERISA; is a
multiple employer plan, as described in Section 210 of ERISA, subject to Title
IV of ERISA; or provides health (other than as required under COBRA), life or
other welfare benefits to former employees, directors or consultants.
(vi) No event has occurred or is threatened that would
constitute a reportable event (for which any applicable notice requirement has
not been waived) within the meaning of Section 4043(b) of ERISA with respect to
any Pension Plan. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and all regulations promulgated thereunder. "Pension Plan"
means any Benefit Plan that is an "employee pension benefit plan," as defined in
Section 3(2) of ERISA.
(vii) Each Pension Plan that is intended to meet the
requirements of Code Section 401(a) meets, and since its inception has met, the
requirements for qualification under Code Section 401(a) and nothing has
occurred that would adversely affect the qualified status of any such Pension
Plan. The United States Internal Revenue Service ("IRS") has issued a favorable
determination letter with respect to the qualification under the Code of each
Pension Plan and the IRS has not taken any action to revoke or suspend any such
letter.
(viii) Those sections of all annual reports heretofore filed
with the IRS or the Department of Labor by or on behalf of every Benefit Plan
that were required to be so certified were certified without qualification by
the accountants or actuaries of such Benefit Plan.
(ix) The Company has made all contributions required to be
made by it to each Benefit Plan under the terms of the Benefit Plan and
applicable Law. No prohibited transaction (as defined in Code Section 4975 or
Section 406 of ERISA) has occurred with respect to any Benefit Plan that could
subject any Benefit Plan or any related trust, the Company, any Affiliate or any
director, officer or employee of any of them to any material Tax or penalty
imposed under Code Section 4975 or Sections 502(i) or 502(1) of ERISA, directly
or indirectly, and whether by way of indemnity or otherwise.
(q) Tax Matters. Except as set forth on Schedule 2.1(q) hereto:
(i) the Company has filed (on a timely basis, including
applicable extensions) with the appropriate governmental agencies any material
federal, state, local and foreign Tax Returns required to be filed by it and has
timely paid in full all material Taxes due. All such Tax Returns were true and
complete in all material respects. "Tax" 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, capital stock, 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 and including any obligations to indemnify or otherwise assume
or succeed to the Tax liability of any other Person. "Tax Return" means any
return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto, and
any amendment(s) thereof.
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(ii) the Company is not currently the beneficiary of any
extension of time within which to file any Tax Return;
(iii) the Company has provided Purchaser with true and
complete copies of all income Tax Returns filed by it since the inception of the
business;
(iv) there are no filed Tax Liens, and no contemplated Tax
Liens upon any properties or assets of the Company other than any statutory
Liens for Taxes not yet due and payable or which are being contested in good
faith;
(v) the Company has not waived any statute of limitations in
respect of Taxes or executed or filed with any governmental authority any
agreement extending the period for the assessment or collection of any Taxes,
and it is not a party to any pending or, to the knowledge of the Company,
threatened suit, action or proceeding by any governmental authority for the
assessment or collection of Taxes;
(vi) there is no unresolved written claim by a governmental
authority in any jurisdiction where the Company does not file Tax Returns that
the Company is or may be subject to taxation by such jurisdiction;
(vii) there has been no examination or audit or court
proceeding with respect to Taxes with respect to any year since the Company's
inception;
(viii) the Company has timely withheld and paid all material
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor or other Person; (ix)
the unpaid Taxes of the Company (A) did not, as of February 3, 2006 exceed the
reserve for Tax Liabilities (other than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the face of the 2005 Balance Sheet and (B) will not exceed that reserve, as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of the Company in filing its Tax Returns;
(x) the Company has not filed a consent under Code Section
341(f) concerning collapsible corporations;
(xi) the Company has not been a United States real property
holding corporation (within the meaning of Code Section 897(c)(2)) during the
applicable period specified in Code Section 897(c)(1)(A)(ii). The Company is not
a party to or otherwise bound by any Tax indemnification, allocation or sharing
agreement;
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(xii) the Company will not be required to include any item of
income in, or exclude any item of deduction from, its taxable income for any
taxable period (or portion thereof) ending after the Closing Date as a result of
any: (A) change in method of accounting for a taxable period ending on or prior
to the Closing Date, (B) "closing agreement," as described in Code Section 7121
(or any corresponding provision of state, local or foreign Tax Law), (C)
installment sale or open transaction disposition made on or prior to the Closing
Date or (D) prepaid amount received on or prior to the Closing Date;
(xiii) no power of attorney has been granted by the Company
with respect to any matters relating to Taxes that is currently in effect; and
(xiv) since the date of its incorporation, the Company has
always been an S Corporation within the meaning of Code Section 1361(a)(1).
(r) Compliance with Applicable Laws. The Company is and has been in
compliance with all Laws applicable to the Company or to the conduct of its
business or operations or to the use of its properties or assets, including,
without limitation, all Tax, ERISA, privacy, employment and human rights Laws.
The Company has not received written notice of any violation or alleged
violation of any Law by the Company. To the knowledge of the Company, there is
no pending or proposed legislation applicable to the Company or to the conduct
of its business or operations that, if enacted, could reasonably be expected to
have a Material Adverse Effect. No event has occurred and no circumstance exists
that could reasonably be expected to constitute or result in (with or without
notice or lapse of time or both) a violation of or failure to comply with (i) a
material requirement of any Law by the Company or (ii) an order of any court
with respect to which the Company or any of its assets or properties is subject.
For purposes of clarity, this Section 2.1(r) does not apply, and Section 2.1(q)
contains the sole representations of the Company related to, Tax matters.
(s) Regulatory Permits. The Company possesses all material
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, and Company has not received any notice of proceedings relating to
the revocation or modification of any such certificate, authorization or permit.
(t) Domain Names. Schedule 2.1(t) hereto sets forth a true and
complete list of all domain names owned or used by the Company in the conduct of
its business. No officer, director or employee of the Company or any of their
respective Affiliates or Associates has any ownership or other interest in the
domain names. None of the domain names infringes or conflicts with any
trademarks, trademark rights, trade names, trade name rights, service marks or
other rights of any Person. The Company has not obtained rights to any domain
name in violation of any Law, including, without limitation, the
Anticybersquatting Consumer Protection Act. "Associate" means, when used to
indicate a relationship with any Person, (1) a corporation or organization of
which such Person is an officer or partner or is, directly or indirectly, the
beneficial owner of 10 percent or more of any class of equity securities, (2)
any trust or other estate in which such Person has a substantial beneficial
interest or as to which such Person serves as trustee or in a similar capacity,
and (3) any relative or spouse of such Person, or any relative of such spouse,
who has the same home as such Person or who is a director or officer of the
Person or any of its parents or subsidiaries (as set forth in Rule 405
promulgated under the Securities Act).
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(u) Absence of Certain Changes. Except as and to the extent set
forth on Schedule 2.1(u) hereto, since December 31, 2005, the Company has not:
(i) incurred any indebtedness for borrowed money or any other
material Liabilities or obligations, except those which are less than $5,000
individually and $10,000 in the aggregate and incurred in the ordinary course of
business and consistent with past practice, or experienced any increase in, or
change in any underlying assumption or method used in calculating, any bad debt,
contingency or other reserve;
(ii) except for regularly scheduled payments of principal and
interest on indebtedness for borrowed money that were required in accordance
with the express terms thereof, paid, discharged or satisfied any claim,
Liability or obligation (absolute, accrued, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business of
Liabilities and obligations (x) reflected or reserved against on the Estimated
2005 Balance Sheet or (y) incurred since the date thereof in the ordinary course
of business and consistent with past practice;
(iii) caused, permitted or allowed any of its property or
assets (real, personal or mixed, tangible or intangible) to be subjected to any
Lien other than (A) Liens for Taxes not yet due and payable or being contested
in good faith, (B) Liens of materialmen, mechanics, carriers, landlords and like
Persons that are not yet due and payable and (C) those Liens set forth on
Schedule 2.1(u)(iii) hereto, all of which Liens shall be released on or prior to
the Closing (collectively, "Permitted Liens").
(iv) written off as uncollectible any notes or Accounts
Receivable, except for write-offs in the ordinary course of business and
consistent with past practice, none of which is material and all of which
together do not exceed $10,000 in the aggregate;
(v) canceled any debts or waived or suffered to lapse any
claims or rights of material value, or sold, transferred or otherwise disposed
of any of its tangible properties or assets, except in the ordinary course of
business and consistent with past practice;
(vi) made any single capital expenditure or commitment in
excess of Ten Thousand Dollars ($10,000) for additions to property, equipment or
intangible assets or made aggregate capital expenditures or commitments in
excess of Twenty-Five Thousand Dollars ($25,000) for additions to property,
equipment or intangible assets;
(vii) issued, granted, redeemed or repurchased any shares of
its capital stock or any options, warrants or other rights to acquire its
capital stock, or declared, paid or set aside for payment any dividend or other
distribution in respect of any of its capital stock;
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(viii) made any change in any of its methods of accounting or
accounting practices or principles;
(ix) paid, loaned or advanced any amount, or sold, transferred
or leased any properties or assets (real, personal or mixed, tangible or
intangible) to, or entered into any agreement or arrangement with, any Affiliate
or Associate;
(x) disposed of or suffered to lapse any right to use any
domain name, web address or item of Intellectual Property, or disposed of or
disclosed to any Person any trade secret, formula, process or know-how or any
other confidential information relating to the Company;
(xi) acquired any assets or properties other than in the
ordinary course of its business;
(xii) suffered any material adverse change in its Business,
operations, assets, prospects or condition (financial or otherwise);
(xiii) granted any increase in the compensation (including any
increase pursuant to any bonus, pension, profit-sharing or other plan) payable
or to become payable to any officer or employee, and no such increase is
customary or required by any agreement or understanding;
(xiv) agreed, in writing or otherwise, to take any action
described in this Section 2.1(u).
(v) Brokers. Except as set forth on Schedule 2.1(v) hereto, no
agent, broker, firm or other Person acting on behalf of the Company, or under
the authority of any of the foregoing, is or shall be entitled to a brokerage
commission, finder's fee or similar payment in connection with any of the
transactions contemplated hereby from the Company. The Company shall have the
sole obligation and responsibility to pay any Person identified on Schedule
2.1(v).
(w) Disclosure. No representation or warranty made by the Company
herein contains or will contain any untrue statement of a material fact or omits
a material fact necessary in order to make the statements herein or therein not
misleading.
(x) Affiliated Transactions. Except as set forth on Schedule 2.1(x)
hereto, no director or officer of the Company (or any of their respective
Affiliates) (i) is a party to or otherwise a beneficiary of any agreement,
transaction or arrangement (oral or written) with or involving the Company or
(ii) has any claim, monetary or otherwise, against the Company.
(y) Disclosure Schedules. The Schedules are integral parts of this
Agreement. Nothing in a Schedule shall be deemed adequate to disclose an
exception to a representation or warranty made herein, unless the Schedule
identifies the exception with reasonable particularity and describes the
relevant facts in reasonable detail, including by explicit cross-reference to
another Schedule to this Agreement. Without limiting the generality of the
foregoing, the mere listing, or inclusion of a copy, of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein, unless the representation or warranty is being made as to
the existence of the document or other item itself. The Company is responsible
for preparing and arranging the Schedules corresponding to the lettered and
numbered sections contained herein. Disclosure made in a specific Schedule shall
be deemed not to have been disclosed with respect to any other Schedule unless
an explicit cross-reference is appropriately made.
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(z) Issuance of Shares. The Preferred Shares to be issued at the
Closing have been duly authorized by all necessary corporate action and the
Preferred Shares, when paid for or issued in accordance with the terms hereof,
shall be validly issued and outstanding, fully paid and nonassessable and
entitled to the rights and preferences set forth in the Certificate of
Designation. When the Conversion Shares are issued and paid for in accordance
with the terms of the Certificate of Designation, such shares will be duly
authorized by all necessary corporate action and validly issued and outstanding,
fully paid and nonassessable, and the holders shall be entitled to all rights
accorded to a holder of Common Stock..
Section 2.2 Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants as of the date hereof and as of the Closing Date
to the Company as follows:
(a) Capacity; Validity; No Conflicts. The Purchaser has the legal
capacity to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. Neither the execution and delivery by the
Purchaser of this Agreement nor the consummation of the transactions
contemplated hereby, nor the performance by the Purchaser (to the extent that
they are parties thereto) of its obligations hereunder, shall (or, with the
giving of notice or the lapse of time or both, would) (i) give rise to a
conflict or default, or any right of termination or cancellation, under the
provisions of any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which the Purchaser is a party or by which the
Purchaser is otherwise bound; (ii) violate any order, writ, injunction, decree,
law, statute, rule or regulation applicable to the Purchaser; or (iii) result in
the creation or imposition of any Lien upon any of the properties or assets of
the Purchaser.
(b) Organization; Authority. The Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the State of
Delaware with full right, corporate or partnership power and authority to enter
into and to consummate the transactions contemplated by this Agreement and
otherwise to carry out its obligations hereunder. The execution, delivery and
performance by the Purchaser of the transactions contemplated by the Agreement
have been duly authorized by all necessary corporate or similar action on the
part of the Purchaser. The Agreement has been duly executed by the Purchaser,
and when delivered by the Purchaser in accordance with the terms hereof, will
constitute the valid and legally binding obligation of the Purchaser,
enforceable against it 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.
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(c) Investment Intent. The Purchaser is acquiring the Shares as
principal for its own account for investment purposes only and not with a view
to or for distributing or reselling the Shares or any part thereof, without
prejudice, however, to the Purchaser's right at all times to sell or otherwise
dispose of all or any part of the Shares in compliance with applicable federal
and state securities laws. Subject to the immediately preceding sentence,
nothing contained herein shall be deemed a representation or warranty by the
Purchaser to hold the Shares for any period of time. The Purchaser is acquiring
the Shares hereunder in the ordinary course of its business. The Purchaser does
not have any agreement or understanding, directly or indirectly, with any Person
to distribute any of the Shares.
(d) Purchaser Status. At the time the Purchaser was offered the
Shares it was, and at the date hereof it will be either: (i) an "accredited
investor" as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under
the Securities Act or (ii) a "qualified institutional buyer" as defined in Rule
144A(a) under the Securities. The Purchaser is not required to be registered as
a broker-dealer under Section 15 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
(e) Experience of the Purchaser. The Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Shares, and has so
evaluated the merits and risks of such investment. The Purchaser is able to bear
the economic risk of an investment in the Shares and, at the present time, is
able to afford a complete loss of such investment.
(f) General Solicitation. The Purchaser is not purchasing the Shares
as a result of any advertisement, article, notice or other communication
regarding the Shares published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
ARTICLE III
COVENANTS
The Company covenants with the Purchaser as follows, which covenants are
for the benefit of the Purchaser and its permitted assignees:
Section 3.1 Securities Compliance. The Company shall notify the Commission
in accordance with its rules and regulations, of the transactions contemplated
by this Agreement, including filing a Form D with respect to the Preferred
Shares and Conversion Shares as required under Regulation D, and shall take all
other necessary action and proceedings as may be required and permitted by
applicable law, rule and regulation, for the legal and valid issuance of the
Preferred Shares and the Conversion Shares to the Purchaser or subsequent
holders.
Section 3.2 Inspection Rights. The Company shall permit, during normal
business hours and upon reasonable request and reasonable notice, the Purchaser
or any employees, agents or representatives thereof, so long as the Purchaser
shall be obligated hereunder to purchase the Preferred Shares or shall
beneficially own any Preferred Shares, or shall own Conversion Shares which, in
the aggregate, represent more than 2% of the total combined voting power of all
voting securities then outstanding, for purposes reasonably related to the
Purchaser's interests as a stockholder, to examine and make reasonable copies of
and extracts from the records and books of account of, and visit and inspect the
properties, assets, operations and business of the Company and any subsidiary,
and to discuss the affairs, finances and accounts of the Company and any
subsidiary with any of its officers, consultants, directors, and key employees.
15
Section 3.3 Compliance with Laws. The Company shall comply, and cause each
subsidiary to comply, with all applicable laws, rules, regulations and orders,
noncompliance with which could have a Material Adverse Effect.
Section 3.4 Keeping of Records and Books of Account. The Company shall
keep and cause each subsidiary to keep adequate records and books of account, in
which complete entries will be made in accordance with GAAP consistently
applied, reflecting all financial transactions of the Company and its
subsidiaries, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made.
Section 3.5 Amendments. So long as the Preferred Shares remain outstanding
or the Company has the right to require the Purchaser to purchase Preferred
Shares pursuant to the Agreement, the Company shall not amend or waive any
provision of the Certificates of Incorporation or Bylaws in any way that would
adversely affect the liquidation preferences, dividends rights, conversion
rights, voting rights or redemption rights of the Preferred Shares; provided,
however, that any creation and issuance of another series of Junior Stock (as
defined in the Certificate of Designation) shall not be deemed to materially and
adversely affect such rights, preferences or privileges.
Section 3.6 Other Agreements. The Company shall not enter into any
agreement in which the terms of such agreement would restrict or impair the
right or ability to perform of the Company or any subsidiary.
Section 3.7 Distributions. So long as any Preferred Shares remain
outstanding, the Company agrees that it shall not (i) declare or pay any
dividends or make any distributions to any holder(s) of Common Stock or (ii)
purchase or otherwise acquire for value, directly or indirectly, any Common
Stock or other equity security of the Company.
Section 3.8 Use of Proceeds. The proceeds from the sale of the Preferred
Shares will be used by the Company for general corporate purposes, including,
without limitation, acquisitions and the retirement of indebtedness owed to the
lenders set forth on Schedule 2.11 hereto (the "Indebtedness").
Section 3.9 Reservation of Shares. So long as any of the Preferred Shares
remain outstanding, the Company shall take all action necessary to at all times
have authorized, and reserved for the purpose of issuance, no less than the
aggregate number of shares of Common Stock needed to provide for the issuance of
the Conversion Shares.
16
Section 3.10 Disposition of Assets. So long as the Preferred Shares remain
outstanding, neither the Company nor any of its subsidiaries shall sell,
transfer or otherwise dispose of any of its properties, assets and rights
including, without limitation, its software and to any person except for sales
to customers in the ordinary course of business or with the prior written
consent of the holders of a majority of the Preferred Shares then outstanding.
Section 3.11 Board of Directors. So long as the Preferred Shares remain
outstanding, a majority of the holders of the Preferred Shares shall have the
right to appoint a majority of the directors to the Board.
ARTICLE IV
CONDITIONS
Section 4.1 Conditions Precedent to the Obligation of the Company to Sell
the Preferred Shares. The obligation hereunder of the Company to issue and sell
the Preferred Shares to the Purchaser is subject to the satisfaction or waiver,
at or before any of the Closings, of each of the conditions set forth below.
These conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion.
(a) Accuracy of the Purchaser's Representations and Warranties. The
representations and warranties of the Purchaser 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 are
expressly made as of a particular date, which shall be true and correct in all
material respects as of such date.
(b) Performance by the Purchaser. The Purchaser shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Purchaser at or prior to a Closing.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(d) Delivery of Purchase Price. The applicable purchase price for
the Preferred Shares shall have been delivered to the Company on or prior to the
applicable Closing Date.
Section 4.2 Conditions Precedent to the Obligation of the Purchaser to
Purchase the Preferred Shares. The obligation hereunder of the Purchaser to
acquire and pay for the Preferred Shares is subject to the satisfaction or
waiver, at or before any of the Closings, of each of the conditions set forth
below. These conditions are for the Purchaser's sole benefit and may be waived
by the Purchaser at any time in its sole discretion.
(a) Accuracy of the Company's Representations and Warranties. Except
for any breaches of representations and warranties of the Company that would not
in the aggregate result in a material adverse effect on the business,
operations, or financial condition of the Company, each of the representations
and warranties of the Company in this Agreement 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 are
expressly made as of a particular date), which shall be true and correct in all
material respects as of such date.
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(b) Performance by the Company. The Company shall have performed,
satisfied and complied in all respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to a Closing.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(d) No Proceedings or Litigation. No action, suit or proceeding
before any arbitrator or any governmental authority shall have been commenced,
and no investigation by any governmental authority shall have been threatened,
against the Company or any subsidiary, or any of the officers, directors or
affiliates of the Company or any subsidiary seeking to restrain, prevent or
change the transactions contemplated by this Agreement, or seeking damages in
connection with such transactions.
(e) Certificate of Designation of Rights and Preferences. Prior to
the Closing for the First Tranche, the Certificate of Designation shall have
been executed by the Company and filed with the Secretary of State of Delaware.
(f) Certificates. The Company shall have executed and delivered to
the Purchaser the certificates (in such denominations as the Purchaser shall
request) for the Preferred Shares being acquired by the Purchaser at such
Closing.
(g) Reservation of Shares. As of each Closing Date, the Company
shall have reserved out of its authorized and unissued Common Stock, solely for
the purpose of effecting the conversion of the Preferred Shares, a number of
shares of Common Stock equal to one hundred twenty percent (120%) of the
aggregate number of Conversion Shares issuable upon conversion of the Preferred
Shares issued on the Closing Date.
(h) Secretary's Certificate. The Company shall have delivered to the
Purchaser a secretary's certificate, dated as of each Closing Date, as to (i)
the Certificate of Incorporation, (ii) the Bylaws, (iii) the Certificate of
Designation, each as in effect at the Closing, and (iv) the authority and
incumbency of the officers of the Company executing the Agreement and any other
documents required to be executed or delivered in connection with this
Agreement.
(i) Officer's Certificate. The Company shall have delivered to the
Purchaser a certificate of an executive officer of the Company, dated as of each
Closing Date, confirming the accuracy of the Company's representations,
warranties and covenants as such Closing Date and confirming the compliance by
the Company with the conditions precedent set forth in this Section 4.2 as of
the applicable Closing Date.
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(j) Material Adverse Effect. No material adverse effect shall have
occurred with respect to the business, assets, liabilities, operations, or
financial condition of the Company at or before the applicable Closing Date.
ARTICLE V
STOCK CERTIFICATE LEGEND
Section 5.1 Legend. Each certificate representing the Shares shall be
stamped or otherwise imprinted with a legend substantially in the following form
(in addition to any legend required by applicable state securities or "blue sky"
laws):
THESE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES") HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR NEXUS
TECHNOLOGIES GROUP, INC. SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT
REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.
ARTICLE VI
INDEMNIFICATION
Section 6.1 General Indemnity. The Company agrees to indemnify and hold
harmless the Purchaser (and its respective directors, officers, affiliates,
agents, successors and assigns) from and against any and all losses,
liabilities, deficiencies, costs, damages and expenses (including, without
limitation, reasonable attorneys' fees, charges and disbursements) incurred by
the Purchaser or any such other persons as a result of any inaccuracy in or
breach of the representations, warranties or covenants made by the Company
herein. The Purchaser agrees to indemnify and hold harmless the Company and its
directors, officers, affiliates, agents, successors and assigns from and against
any and all losses, liabilities, deficiencies, costs, damages and expenses
(including, without limitation, reasonable attorneys' fees, charges and
disbursements) incurred by the Company as result of any inaccuracy in or breach
of the representations, warranties or covenants made by the Purchaser herein.
The maximum aggregate liability of the Purchaser pursuant to its indemnification
obligations under this Article VI shall not exceed the portion of the aggregate
purchase price paid by Purchaser hereunder.
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Section 6.2 Indemnification Procedure. Any party entitled to
indemnification under this Article VI (an "indemnified party") will give written
notice to the indemnifying party of any matters giving rise to a claim for
indemnification; provided, that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Article VI except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any action, proceeding or claim is brought against an
indemnified party in respect of which indemnification is sought hereunder, the
indemnifying party shall be entitled to participate in and, unless in the
reasonable judgment of the indemnified party a conflict of interest between it
and the indemnifying party may exist with respect of such action, proceeding or
claim, to assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. In the event that the indemnifying party advises an
indemnified party that it will contest such a claim for indemnification
hereunder, or fails, within thirty (30) days of receipt of any indemnification
notice to notify, in writing, such person of its election to defend, settle or
compromise, at its sole cost and expense, any action, proceeding or claim (or
discontinues its defense at any time after it commences such defense), then the
indemnified party may, at its option, defend, settle or otherwise compromise or
pay such action or claim. In any event, unless and until the indemnifying party
elects in writing to assume and does so assume the defense of any such claim,
proceeding or action, the indemnified party's costs and expenses arising out of
the defense, settlement or compromise of any such action, claim or proceeding
shall be losses subject to indemnification hereunder. The indemnified party
shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the indemnified party which relates to such action or claim. The indemnifying
party shall keep the indemnified party fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. If
the indemnifying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense. The indemnifying party shall not be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent. Notwithstanding anything in this Article VI to the
contrary, the indemnifying party shall not, without the indemnified party's
prior written consent, settle or compromise any claim or consent to entry of any
judgment in respect thereof which imposes any future obligation on the
indemnified party or which does not include, as an unconditional term thereof,
the giving by the claimant or the plaintiff to the indemnified party of a
release from all liability in respect of such claim. The indemnification
required by this Article VI shall be made by periodic payments of the amount
thereof during the course of investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred, so long as the
indemnified party irrevocably agrees to refund such moneys if it is ultimately
determined by a court of competent jurisdiction that such party was not entitled
to indemnification. The indemnity agreements contained herein shall be in
addition to (a) any cause of action or similar rights of the indemnified party
against the indemnifying party or others, and (b) any liabilities the
indemnifying party may be subject to pursuant to the law. The indemnification
procedures set forth in this Section 6.2 shall govern all indemnification
matters arising pursuant to Section 7.5.
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ARTICLE VII
REGISTRATION RIGHTS
Section 7.1 Registration Rights. The Company hereby grants the following
registration rights to holders of the Preferred Shares.
(a) On one occasion after February 6 2007, upon a written request
therefor from holders of more than 50% of the Conversion Shares issued or
issuable upon conversion of the outstanding Preferred Shares, the Company shall
prepare and file with the Commission a registration statement under the
Securities Act (on Form SB-2 registration statement or such other form that it
is eligible to use) registering the Registrable Securities which are the subject
of such request for unrestricted public resale by the holder thereof. Upon the
receipt of such request, the Company shall promptly give written notice to all
other record holders of the Registrable Securities that such registration
statement is to be filed and shall include in such registration statement
Registrable Securities for which it has received written requests within ten
(10) days after the Company gives such written notice. The Company will register
not less than a number of shares of Common Stock in the aforedescribed
registration statement that is equal to 120% (or if such percentage is not
permitted under the Securities Act, the maximum amount permitted under the
Securities Act)of the Conversion Shares (collectively the "Registrable
Securities") of the Conversion Shares (collectively the "Registrable
Securities") for which registration is requested pursuant to this Section 7.
Except with the written consent of the Purchaser and other than the Series A
Convertible Prefered Stock of the Company issued to Xxxx Xxxxxxxx and Xxxxxxx
and Xxxxxxx Xxxxxxxx (all pursuant to their respective Series A Convertible
Preferred Stock Purchase Agreement entered into with the Company, dated February
6, 2006), no securities of the Company other than the Registrable Securities
will be included in the Registration Statement. In addition, the Company may
defer a registration under this Section7.1 (a) for up to six months if (i) the
Board determines it would not be in the best interests of the Company to
register such Common Stock at this time or (ii) the Company is advised by its
counsel that undertaking the registration under this Section 7.1(a) would
accelerate the disclosure of a material development involving the Company.
(b) If the Company at any time proposes to register any of its
securities under the Securities Act for sale to the public, whether for its own
account or for the account of other security holders or both, except with
respect to registration statements on Forms X-0, X-0 or another form not
available for registering the Registrable Securities for sale to the public,
provided the Registrable Securities are not otherwise registered for resale by
the Purchaser pursuant to an effective registration statement, each such time it
will give at least fifteen (15) days' prior written notice to the record holder
of the Registrable Securities of its intention so to do. Upon the written
request of the holder, received by the Company within ten (10) days after the
giving of any such notice by the Company, to register any of the Registrable
Securities not previously registered, the Company will cause such Registrable
Securities as to which registration shall have been so requested to be included
with the securities to be covered by the registration statement proposed to be
filed by the Company, all to the extent required to permit the sale or other
disposition of the Registrable Securities so registered by the holder of such
Registrable Securities (the "Seller" or "Sellers"). In the event that any
registration pursuant to this Section 7.1(b) shall be, in whole or in part, an
underwritten public offering of common stock of the Company, the number of
shares of Registrable Securities to be included in such an underwriting may be
reduced by the managing underwriter if and to the extent that the Company and
the underwriter shall reasonably be of the opinion that such inclusion would
adversely affect the marketing of the securities to be sold by the Company
therein; provided, however, that the Company shall notify the Seller in writing
of any such reduction. Notwithstanding the foregoing provisions, or Section 7.4
hereof, the Company may withdraw or delay or suffer a delay of any registration
statement referred to in this Section 7.1(b) without thereby incurring any
liability to the Seller.
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(c) If, at the time any written request for registration is received
by the Company pursuant to Section 7.1(a), the Company has determined to proceed
with the actual preparation and filing of a registration statement under the
Securities Act in connection with the proposed offer and sale for cash of any of
its securities for the Company's own account and the Company actually does file
such other registration statement, such written request shall be deemed to have
been given pursuant to Section 7.1(b) rather than Section 7.1(a), and the rights
of the holders of Registrable Securities covered by such written request shall
be governed by Section 7.1(b).
Section 7.2 Registration Procedures. If and whenever the Company is
required by the provisions of Section 7.1(a) or 7.1(b) to effect the
registration of any Registrable Securities under the Securities Act, the Company
will, as expeditiously as possible.
(a) subject to the timelines provided in this Agreement, prepare and
file with the Commission a registration statement required by Section 7, with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become and remain effective for the period of the
distribution contemplated thereby (determined as herein provided), promptly
provide to the holders of the Registrable Securities copies of all filings and
Commission letters of comment and notify Purchaser (by telecopier and by e-mail
addresses provided by Purchaser) on or before 6:00 PM EST on the same business
day that the Company receives notice that (i) the Commission has no comments or
no further comments on the Registration Statement, and (ii) the registration
statement has been declared effective;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
until such registration statement has been effective for a period of two (2)
years, and comply with the provisions of the Securities Act with respect to the
disposition of all of the Registrable Securities covered by such registration
statement in accordance with the Sellers' intended method of disposition set
forth in such registration statement for such period;
(c) furnish to the Sellers, at the Company's expense, such number of
copies of the registration statement and the prospectus included therein
(including each preliminary prospectus) as such persons reasonably may request
in order to facilitate the public sale or their disposition of the securities
covered by such registration statement or make them electronically available;
(d) use its commercially reasonable best efforts to register or
qualify the Registrable Securities covered by such registration statement under
the securities or "blue sky" laws of New York and such jurisdictions as the
Sellers shall request in writing, provided, however, that the Company shall not
for any such purpose be required to qualify generally to transact business as a
foreign corporation in any jurisdiction where it is not so qualified or to
consent to general service of process in any such jurisdiction;
22
(e) if applicable, list the Registrable Securities covered by such
registration statement with any securities exchange on which the Common Stock is
then listed;
(f) notify the Seller within one (1) business day of the Company's
becoming aware that a prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event of which the Company has
knowledge as a result of which the prospectus contained in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing or which becomes subject to a Commission, state or other governmental
order suspending the effectiveness of the registration statement covering any of
the Shares; and
(g) provided same would not be in violation of the provision of
Regulation FD under the Exchange Act, make available for inspection by the
Sellers, and any attorney, accountant or other agent retained by the Seller or
underwriter, all publicly available, non-confidential financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all publicly
available, non-confidential information reasonably requested by the Seller,
attorney, accountant or agent in connection with such registration statement.
Section 7.3 Provision of Documents. In connection with each registration
described in this Section 7, each Seller will furnish to the Company in writing
such information and representation letters with respect to itself and the
proposed distribution by it as reasonably shall be necessary in order to assure
compliance with federal and applicable state securities laws.
Section 7.4 Expenses. All expenses incurred by the Company in complying
with Section 7, including, without limitation, all registration and filing fees,
printing expenses (if required), fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses (including
reasonable counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association of Securities
Dealers, Inc., transfer taxes, and fees of transfer agents and registrars, are
called "Registration Expenses." All underwriting discounts and selling
commissions applicable to the sale of Registrable Securities are called "Selling
Expenses." The Company will pay all Registration Expenses in connection with the
registration statement under Section 7. Each Seller shall be responsible for the
Selling Expenses related to the Registrable Securities it owns.
Section 7.5 Indemnification and Contribution.
23
(a) In the event of a registration of any Registrable Securities
under the Securities Act pursuant to Section 7, the Company will, to the extent
permitted by law, indemnify and hold harmless the Seller, each officer of the
Seller, each director of the Seller, each underwriter of such Registrable
Securities thereunder and each other person, if any, who controls such Seller or
underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which the Seller, or such
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Registrable Securities was registered under the Securities Act
pursuant to Section 7, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances when made, and will subject to the provisions of
Section 7.6(c) reimburse the Seller, each such underwriter and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable to
the Seller to the extent that any such damages arise out of or are based upon an
untrue statement or omission (A) made in any preliminary prospectus if (i) the
Seller failed to send or deliver a copy of the final prospectus delivered by the
Company to the Seller with or prior to the delivery of written confirmation of
the sale by the Seller to the person asserting the claim from which such damages
arise and (ii) the final prospectus would have corrected such untrue statement
or alleged untrue statement or such omission or alleged omission, or (B) to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by any such Seller, or
any such controlling person in writing specifically for use in such registration
statement or prospectus.
(b) In the event of a registration of any of the Registrable
Securities under the Securities Act pursuant to Section 7, the Seller will, to
the extent permitted by law, indemnify and hold harmless the Company, and each
person, if any, who controls the Company within the meaning of the Securities
Act, each officer of the Company who signs the registration statement, each
director of the Company, each underwriter and each person who controls any
underwriter within the meaning of the Securities Act, against all losses,
claims, damages or liabilities, joint or several, to which the Company or such
officer, director, underwriter or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the registration statement under which such Registrable Securities were
registered under the Securities Act pursuant to Section 7, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse the Company and each
such officer, director, underwriter and controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action, provided, however,
that the Seller will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information pertaining to
such Seller, as such, furnished in writing to the Company by such Seller
specifically for use in such registration statement or prospectus, and provided,
further, however, that the liability of the Seller hereunder shall be limited to
the net proceeds actually received by the Seller from the sale of Registrable
Securities covered by such registration statement.
24
(c) In order to provide for just and equitable contribution in the
event of joint liability under the Securities Act in any case in which either
(i) a Seller, or any controlling person of a Seller, makes a claim for
indemnification pursuant to this Section 7.6 but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 7.6 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of the Seller
or controlling person of the Seller in circumstances for which indemnification
is not provided under this Section 7.5; then, and in each such case, the Company
and the Seller will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion so that the Seller is responsible only for the portion
represented by the percentage that the public offering price of its securities
offered by the registration statement bears to the public offering price of all
securities offered by such registration statement, provided, however, that, in
any such case, (y) the Seller will not be required to contribute any amount in
excess of the public offering price of all such securities sold by it pursuant
to such registration statement; and (z) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses. The Company shall pay (i) its fees and
expenses, (ii) the reasonable fees and expenses of the Purchaser, (iii) and the
reasonable fees and expenses of their respective advisors, counsel, accountants
and other experts, if any, and (iv) all other reasonable expenses, incurred by
such parties incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. In addition, the Company shall pay all reasonable
fees and expenses incurred by the Purchaser in connection with the enforcement
of this Agreement, including, without limitation, all attorneys' fees and
expenses. The Company shall pay all stamp or other similar taxes and duties
levied in connection with issuance of the Shares pursuant hereto.
Section 8.2 Specific Enforcement, Consent to Jurisdiction.
The Company and the Purchaser acknowledge and agree that irreparable
damage would occur in the event that any of the provisions of this Agreement or
the Certificate of Designation were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof or thereof, this being in addition to any other
remedy to which any of them may be entitled by law or equity.
25
Each of the Company and the Purchaser (i) hereby irrevocably submits to
the jurisdiction of the United States District Court sitting in Delaware and the
courts of the State of Delaware located in Kent County for the purposes of any
suit, action or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby or thereby and (ii) hereby waives, and agrees
not to assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Each of the Company and the Purchaser consents
to process being served in any such suit, action or proceeding by mailing a copy
thereof 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 in this Section 8.2 shall affect
or limit any right to serve process in any other manner permitted by law.
Section 8.3 Entire Agreement; Amendment. This Agreement and the
Certificate of Designation contain the entire understanding and agreement of the
parties with respect to the matters covered hereby and, except as specifically
set forth herein or in the Certificate of Designation, neither the Company nor
the Purchaser makes any representations, warranty, covenant or undertaking with
respect to such matters and they supersede all prior understandings and
agreements with respect to said subject matter, all of which are merged herein.
No provision of this Agreement may be waived or amended other than by a written
instrument signed by the Company, holders (excluding the Purchaser) of at least
a majority of the Common Stock and the holders of at least three-fourths (3/4)
of the Preferred Shares then outstanding, and no provision hereof may be waived
other than by an a written instrument signed by the party against whom
enforcement of any such amendment or waiver is sought. No such amendment shall
be effective to the extent that it applies to less than all of the holders of
the Preferred Shares then outstanding.
Section 8.4 Notices. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery, telecopy or facsimile at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second
business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be:
If to the Company: Nexus Technologies Group, Inc.
0000 Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 000000
Attn: C. Xxxxxx XxXxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
26
If to any Purchaser: Homeland Security Capital Corporation
0000 Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 000000
Attn: C. Xxxxxx XxXxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party hereto may from time to time change its address for notices by giving
at least ten (10) days written notice of such changed address to the other party
hereto.
Section 8.5 Waivers. No waiver by either party of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any other provisions,
condition or requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter.
Section 8.6 Headings. The article, section and subsection headings in this
Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any
of the provisions hereof.
Section 8.7 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and assigns.
Section 8.8 No Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
Section 8.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware, without
giving effect to any of the conflicts of law principles which would result in
the application of the substantive law of another jurisdiction. This Agreement
shall not be interpreted or construed with any presumption against the party
causing this Agreement to be drafted.
Section 8.10 Waiver of Jury Trial. Each party hereto hereby waives to the
fullest extent permitted by applicable law, any right it may have to a trial by
jury in respect of any litigation directly or indirectly arising out of, under,
or in connection with, this Agreement. Each party hereto (A) certifies that no
representative, agent or attorney of any other party has represented expressly
or otherwise, that such other party would not, in the event of litigation, seek
to enforce the foregoing waiver and (B) acknowledges that it and the other
parties hereto have been induced to enter into this Agreement, by among other
things, the mutual waivers and certifications in this Section 8.10.
Section 8.11 Survival. The representations and warranties of the Company
contained in Sections 2.1(a) and (v) should survive indefinitely and those
contained in Article II, with the exception of Sections 2.1(a) and (v), shall
survive the execution and delivery hereof and the Closing until the date
eighteen (18) months from the Closing Date, and the agreements and covenants set
forth in Articles I, III, VI and VII of this Agreement shall survive the
execution and delivery hereof and the Closing hereunder; provided, that Sections
3.1, 3.2, 3.4, 3.5, 3.7, 3.8, 3.9, 3.10 and 3.11 shall not expire until the
registration statement filed pursuant to Section 7 is no longer required to be
effective under the terms and conditions of this Agreement.
27
Section 8.12 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and shall become effective when counterparts have been signed by each
party and delivered to the other parties hereto, it being understood that all
parties need not sign the same counterpart. In the event any signature is
delivered by facsimile transmission, the party using such means of delivery
shall cause four additional executed signature pages to be physically delivered
to the other parties within five days of the execution and delivery hereof.
Section 8.13 Severability. The provisions of this Agreement and the
Certificate of Designation are severable and, in the event that any court of
competent jurisdiction shall determine that any one or more of the provisions or
part of the provisions contained in this Agreement or the Certificate of
Designation shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision or part of a provision of this Agreement or
the Certificate of Designation shall be reformed and construed as if such
invalid or illegal or unenforceable provision, or part of such provision, had
never been contained herein, so that such provisions would be valid, legal and
enforceable to the maximum extent possible.
Section 8.14 Further Assurances. From and after the date of this
Agreement, upon the request of the Purchaser or the Company, each of the Company
and the Purchaser shall execute and deliver such instrument, documents and other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement, the Preferred
Shares, the Conversion Shares and the Certificate of Designation.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.
NEXUS TECHNOLOGIES GROUP, INC.
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
HOMELAND SECURITY CAPITAL CORPORATION
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
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I-1-11
