SECURITIES PURCHASE AGREEMENT
Exhibit
10.1
SECURITIES
PURCHASE AGREEMENT
(the
"Agreement"),
dated
as of December 26, 2006, by and among Pure Vanilla eXchange, Inc., a Nevada
corporation, with headquarters located at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 (the "Company"),
and
the investors listed on the Schedule of Buyers attached hereto (individually,
a
"Buyer"
and
collectively, the "Buyers").
WHEREAS:
A.
The
Company and each Buyer is executing and delivering this Agreement in reliance
upon the exemption from securities registration afforded by Section 4(2) of
the
Securities Act of 1933, as amended (the "1933
Act"),
and
Rule 506 of Regulation D ("Regulation D")
as
promulgated by the United States Securities and Exchange Commission (the
"SEC")
under
the 1933 Act.
B.
The
Company has authorized a new series of senior secured convertible notes of
the
Company which notes shall be convertible into the Company's common stock, par
value $0.001 per share (the "Common
Stock"),
in
accordance with the terms of the Notes (as defined below).
C.
Each
Buyer wishes to purchase, and the Company wishes to sell, upon the terms and
conditions stated in this Agreement, (i) that aggregate principal amount of
the
Notes, in substantially the form attached hereto as Exhibit
A
(the
"Notes"),
set
forth opposite such Buyer's name in column (3) on the Schedule of Buyers
attached hereto (which aggregate amount for all Buyers shall be $1,500,000)
(the
shares of Common Stock issuable upon conversion of the Notes are, collectively,
the "Conversion
Shares"),
and
(ii) warrants, in substantially the form attached hereto as Exhibit
B
(the
"Warrants"),
to
acquire that number of shares of Common Stock set forth opposite such Buyer's
name in column (4) on the Schedule of Buyers (the shares of Common Stock
issuable upon exercise of the Warrants are, collectively, the "Warrant
Shares").
E.
The
Notes will rank senior to all future indebtedness of the Company, subject to
Permitted Senior Indebtedness (as defined in the Notes) and will be secured
by a
perfected security interest in all of the assets of the Company and each of
the
Company's subsidiaries, as evidenced by the security agreement attached hereto
as Exhibit
D
(the
"Security
Agreement").
This
Agreement, the Notes, the Warrants, the Security Agreement, the Irrevocable
Transfer Agent Instructions (as defined in Section
5(b)),
and
each of the other agreements entered into in connection with the transactions
contemplated by this Agreement are collectively referred to herein as the
"Transaction
Documents".
NOW,
THEREFORE,
the
Company and each Buyer hereby agree as follows:
1. PURCHASE
AND SALE OF NOTES AND WARRANTS.
(a) Purchase
of Notes and Warrants.
(b) Subject
to the satisfaction (or waiver) of the conditions set forth in Sections 6 and
7
below, the Company shall issue and sell to each Buyer, and each Buyer severally,
but not jointly, will purchase from the Company on the Closing Date (as defined
below), (x) a principal amount of Notes as is set forth opposite such Buyer's
name in column (3) on the Schedule of Buyers and (y) Warrants to acquire that
number of Warrant Shares as is set forth opposite such Buyer's name in column
(4) on the Schedule of Buyers.
(i) Closing.
The date and time of the closing of the purchase and sale of the Notes and
Warrants under this Agreement (the “Closing”)
shall
be 10:00 a.m., New York City Time, on December 22, 2006 (or such later date
as
is mutually agreed to by the Company and the Required Holders (as defined in
the
Note) (the "Closing
Date"))
after
notification of satisfaction (or waiver) of the conditions to the Closing set
forth in Sections 6 and 7 below at the offices of Gottbetter & Partners,
LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000.
(ii) Purchase
Price.
The aggregate purchase price for the Notes and the Warrants to be
purchased by each Buyer at the Closing (the "Purchase
Price")
shall
be the amount set forth opposite such Buyer's name in column (5) of the Schedule
of Buyers. Each Buyer shall pay $0.945 for each $1.00 of principal amount
of Notes and related Warrants to be purchased by such Buyer at the
Closing.
2. BUYER'S
REPRESENTATIONS AND WARRANTIES.
Each
Buyer represents and warrants with respect to only itself that:
(a) No
Public Sale or Distribution.
Such Buyer is (i) acquiring the Notes and the Warrants and (ii) upon
conversion of the Notes and exercise of the Warrants will acquire the Conversion
Shares and the Warrant Shares, respectively, for its own account and not with
a
view towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempt from registration under
the 1933 Act; provided,
however,
that by
making the representations herein, such Buyer does not agree to hold any of
the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption from registration under the 1933 Act.
Such Buyer is neither a broker dealer registered under Section 15 of the
Securities Exchange Act of 1934, as amended (the “1934
Act”)
nor an
entity engaged in any business that would require it to register as a broker
dealer under Section 15 of the 1934 Act nor a person “associated with” a broker
dealer within the meaning of Section 3(a)(32) of the 1934 Act and is acquiring
the Securities hereunder in the ordinary course of its business. Such
Buyer does not presently have any agreement or understanding, directly or
indirectly, with any Person to distribute any of the
Securities.
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(b) Accredited
Investor Status.
Such
Buyer is (i) an "accredited investor" as that term is defined in Rule 501(a)
under the 1933 Act (ii) experienced in making investments of the kind described
in this Agreement and the other Transaction Documents; (iii) able, by reason
of
the business and financial experience of its officers (if an entity) and
professional advisors (who are not affiliated with or compensated in any way
by
the Company or any of its affiliates or selling agents), to protect its own
interests in connection with the transactions described in this Agreement and
the other Transaction Documents, and to evaluate the merits and risks of an
investment in the Securities, and (iv) able to afford the entire loss of its
investment in the Securities.
(c) Reliance
on Exemptions.
Such Buyer understands that the Securities are being offered and sold to
it in reliance on specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company is relying
in part upon the truth and accuracy of, and such Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings
of
such Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of such Buyer to acquire the
Securities.
(d) Information.
Such Buyer and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company
and
materials relating to the offer and sale of the Securities which have been
requested by such Buyer. Such Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of the Company. Neither such
inquiries
nor any other due diligence investigations conducted by such Buyer or its
advisors, if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's representations and warranties contained
herein. Such Buyer understands that its investment in the Securities
involves a high degree of risk. Such Buyer has sought such accounting,
legal and tax advice as it has considered necessary to make an informed
investment decision with respect to its acquisition of the
Securities.
(e) No
Governmental Review.
Such Buyer understands that no United States federal or state agency or
any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities or the fairness or suitability
of the investment in the Securities nor have such authorities passed upon or
endorsed the merits of the offering of the Securities.
(f) Transfer
or Resale.
Such Buyer understands that except as provided for herein: (i) the
Securities have not been and are not being registered under the 1933 Act or
any
state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder (B) such Buyer shall
have delivered to the Company an opinion of counsel, in a form reasonably
acceptable to counsel to the Company, to the effect that such Securities to
be
sold, assigned or transferred may be sold, assigned or transferred pursuant
to
an exemption from such registration, or (C) such Buyer provides the Company
with
reasonable assurance that such Securities can be sold, assigned or transferred
pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended,
(or a successor rule thereto) (collectively, "Rule
144");
(ii)
any sale of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the Person (as defined in Section 3(s)) through whom the sale is made)
may
be deemed to be an underwriter (as that term is defined in the 0000 Xxx) may
require compliance with some other exemption under the 1933 Act or the rules
and
regulations of the SEC thereunder; and (iii) except as set forth in Section
4(w), neither the Company nor any other Person is under any obligation to
register the Securities under the 1933 Act or any state securities laws or
to
comply with the terms and conditions of any exemption thereunder. The
Securities may be pledged in connection with a bona fide margin account or
other
loan or financing arrangement secured by the Securities and such pledge of
Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and no Buyer effecting a pledge of Securities shall be
required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction
Document (as defined in Section 3(b)), including, without limitation, this
Section 2(f).
3
(g) Legends.
Such Buyer understands that the certificates or other instruments
representing the Notes and the Warrants and, until such time as the resale
of
the Conversion Shares and the Warrant Shares have been registered under the
1933
Act, the stock certificates representing the Conversion Shares and the Warrant
Shares, except as set forth below, shall bear any legend as required by federal
law and the "blue sky" laws of any state and a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):
4
The
legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which
it is
stamped, if, unless otherwise required by federal or state securities laws,
(i)
such Securities are registered for resale under the 1933 Act, (ii) in connection
with a sale, assignment or other transfer, such holder provides the Company
with
an opinion of counsel, in a form reasonably acceptable to counsel to the
Company, to the effect that such sale, assignment or transfer of the Securities
may be made without registration under the applicable requirements of the 1933
Act, or (iii) such holder provides the Company with reasonable assurance that
the Securities can be sold, assigned or transferred pursuant to Rule 144 or
Rule
144A.
(h) Validity;
Enforcement.
The Transaction Documents (as defined below) to which such Buyer is a
party have been duly and validly authorized, executed and delivered on behalf
of
such Buyer and shall constitute the legal, valid and binding obligations of
such
Buyer enforceable against such Buyer in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity
or
to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
and other similar laws relating to, or affecting generally, the enforcement
of
applicable creditors' rights and remedies.
(i) No
Conflicts.
The execution, delivery and performance by such Buyer of the Transaction
Documents to which such Buyer is a party and the consummation by such Buyer
of
the transactions contemplated hereby and thereby will not (i) result in a
violation of the organizational documents of such Buyer or (ii) conflict with,
or constitute a default (or an event which with notice or lapse of time or
both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which such Buyer is a party, or (iii) result in a violation of
any
law, rule, regulation, order, judgment or decree (including federal and
state securities laws) applicable to such Buyer, except in the case of clauses
(ii) and (iii) above, for such conflicts, defaults, rights or violations
which would not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the ability of such Buyer to perform its
obligations hereunder.
(j) Residency.
Such Buyer is a resident of that jurisdiction specified below its address
on the Schedule of Buyers.
(k) Independent
Investment Decision.
Such Buyer has independently evaluated the merits of its decision to
purchase the Securities pursuant to the Transaction Documents, and such Buyer
confirms that it has not relied on the advice of any other Buyer's business,
financial and/or legal counsel in making such decision.
(l) Certain
Trading Activities.
Such Buyer has not directly or indirectly, nor has any Person acting on
behalf of or pursuant to any understanding with such Buyer, engaged in any
transactions in the securities of the Company (including, without limitations,
any Short Sales involving the Company's securities) since the time that such
Buyer was first contacted by the Company regarding the transactions contemplated
hereby. Such Buyer covenants that neither it nor any Person acting on its
behalf or pursuant to any understanding with it will engage in any transactions
in the securities of the Company (including Short Sales (as defined below))
prior to the time that the transactions contemplated by this Agreement are
publicly disclosed. For the purpose of this Agreement,
"Short Sales"
include,
without limitation, all "short sales" as defined in Rule 200 promulgated under
Regulation SHO under the 1934 Act and all types of direct and indirect stock
pledges, forward sale contracts, options, puts, calls, swaps and similar
arrangements (including on a total return basis), and sales and other
transactions through non-US broker dealers or foreign regulated
brokers.
5
(m) Limited
Ownership.
The purchase by such Buyer of the Securities issuable to it at the Closing
will not result in such Buyer or in the aggregate with other Buyers
(individually or together with other Persons with whom such Buyer has
identified, or will have identified, itself as part of a "group" in a public
filing made with the SEC involving the Company's securities) acquiring, or
obtaining the right to acquire, in excess of 19.999% of the outstanding shares
of Common Stock or the voting power of the Company on a post transaction basis
that assumes that the Closing shall have occurred. Such Buyer does not presently
intend to, alone or together with others, make a public filing with the SEC
to
disclose that it has (or that it together with such other Persons have)
acquired, or obtained the right to acquire, as a result of the Closing (when
added to any other securities of the Company that it or they then
own
or have the right to acquire), in excess of 19.999% of the outstanding shares
of
Common Stock or the voting power of the Company on a post transaction basis
that
assumes that the Closing shall have occurred.
(n) General
Solicitation.
Such Buyer is not purchasing the Securities as a result of any
advertisement, article, notice or other communication regarding the Securities
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar.
(o) Organization;
Authority.
Such Buyer is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization.
(p) Authorization;
Enforcement; Validity.
Such Buyer has the requisite corporate, partnership or other entity power
and authority to enter into and perform its obligations under this Agreement
and
the other Transaction Documents under which it has any obligations. The
execution and delivery of this Agreement and the other Transaction Documents
by
such Buyer and the consummation by such Buyer of the transactions contemplated
hereby and thereby have been duly authorized by such Buyer’s board of directors
or general partner and such Buyer is not required. This Agreement and the
other Transaction Documents under which such Buyer has any obligations have
been
duly executed and delivered by such Buyer, and constitute the legal, valid
and
binding obligations of such Buyer, enforceable against such Buyer in accordance
with their respective terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights and
remedies.
(q) No
Conflicts.
The execution, delivery and performance of this Agreement and the other
Transaction Documents under which it has any obligations by such Buyer and
the
consummation by such Buyer of the transactions contemplated hereby and thereby
will not (i) result in a violation of the articles of incorporation or bylaws
of
such Buyer as in effect of the date hereof or (ii) conflict with, or constitute
a default (or an event which with notice or lapse of time or both would become
a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to
which
the Buyer is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree applicable to such Buyer or by which
any
property or asset of the Buyer is bound or affected.
6
(r) Consents.
Such Buyer is not required to obtain any consent, authorization or order
of, or make any filing or registration with, any court, governmental agency
or
any regulatory or self-regulatory agency or any other Person in order for it
to
execute, deliver or perform any of its obligations under or contemplated by
the
Transaction Documents, in each case in accordance with the terms hereof or
thereof. All consents, authorizations, orders, filings and registrations
which such Buyer is required to obtain pursuant to the preceding sentence have
been obtained or effected on or prior to the Closing Date, and such Buyer is
unaware of any facts or circumstances which might prevent such Buyer from
obtaining or effecting any of the registration, application or filings pursuant
to the preceding sentence.
(s) Prohibited
Transactions.
Since
the time the Buyer was first contracted by the Company regarding the
transactions contemplated hereby, including during the last ten (10) days prior
to the
date
hereof, neither such Buyer nor any Person acting on behalf of or pursuant
to any understanding with such Buyer has, directly or indirectly, effected
or agreed to effect any short sale, whether or not against the box, established
any "put equivalent position" (as defined in Rule 16a-1(h) under the Exchange
Act) with respect to the Common Stock, granted any other right (including,
without limitation, any put or call option) with respect to the Common
Stock or with respect to any security that includes, relates to or derived
any significant part of its value from the Common Stock or otherwise sought
to
hedge its position in the Securities (but not including any actions
to secure
available shares to borrow in order to effect short sales or similar transactions
in the future) (each, a "Prohibited
Transaction").
Prior
to the
termination of this Agreement such
Buyer shall not, and shall cause
any
Person acting on behalf of or pursuant to any understanding with
such Buyer
not
to, engage, directly or indirectly, in a Prohibited Transaction.
Such Buyer
acknowledges that the representations, warranties and covenants
contained in
this
Section 2(p) are being made for the benefit of the Buyers as well as
the Company.
(t) Reliance.
In
connection with its purchase of the Securities, such Buyer has not relied on
any
statement or representation by the Company or any of its officers, directors
and
employees or any of its attorneys or agents, except as specifically set forth
herein.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
The
Company represents and warrants to each of the Buyers that, except as set forth
in the Disclosure Schedule attached hereto (the “Disclosure
Schedule”)
or as
disclosed in the SEC Documents:
7
(a) Organization
and Qualification.
The Company and its "Subsidiaries"
(which
for purposes of this Agreement means any joint venture or any entity in which
the Company, directly or indirectly, owns capital stock or holds an equity
or
similar interest) are entities duly organized and validly existing in good
standing under the laws of the jurisdiction in which they are formed, and have
the requisite power and authority to own their properties and to carry on their
business as now being conducted. Each of the Company and its Subsidiaries
is duly qualified as a foreign entity to do business and is in good standing
in
every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not
have
(i) a material adverse effect on the business, properties, assets, operations,
results of operations or condition (financial or otherwise) of the Company
and
its Subsidiaries, taken as a whole, or (ii) on the transactions contemplated
hereby and the other Transaction Documents or by the agreements and instruments
to be entered into in connection herewith or therewith, or (iii) on the
authority or ability of the Company to perform its obligations under the
Transaction Documents (any of the matters described in clauses (i), (ii) or
(iii) are a "Material
Adverse Effect").
The Company has no Subsidiaries except as set forth on Schedule
3(a).
The
Company owns, directly or indirectly, all of the capital stock or other equity
interests of each Subsidiary free and clear of any liens (except as listed
on
Schedule 3(a)), and all the issued and outstanding shares of capital stock
of
each Subsidiary are validly issued and are fully paid, non-assessable and free
of preemptive and similar rights to subscribe for or purchase
securities.
(b) Authorization;
Enforcement; Validity.
The Company has the requisite power and authority to enter into and
perform its obligations under this Agreement and the other Transaction Documents
and to issue the Securities in accordance with the terms hereof and thereof.
The execution and delivery of this Agreement and the other Transaction
Documents by the
Company
and the consummation by the Company of the transactions contemplated hereby
and
thereby, including, without limitation, the issuance of the Notes and the
Warrants, the reservation for issuance and the issuance of the Conversion
Shares, the reservation for issuance and issuance of Warrant Shares, and the
granting of a security interest in the Collateral (as defined in the Security
Agreement) have been duly authorized by the Company's Board of Directors and
(other than (i) the filing of appropriate UCC financing statements with the
appropriate states and other authorities pursuant to the Security Agreement,
(ii) the filing of a Form D under Regulation D of the 1933 Act and (iii)
applicable state blue sky laws) no further filing, consent or authorization
is
required by the Company, its Board of Directors or its stockholders. This
Agreement and the other Transaction Documents of even date herewith have been
duly executed and delivered by the Company, and constitute the legal, valid
and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights and
remedies.
(c) Issuance
of Securities.
The issuance of the Notes and the Warrants are duly authorized and the
Notes and the Warrants, when issued in accordance with the terms hereof, will
be
free from all taxes, liens and charges with respect to the issue thereof.
As of the Closing, a number of shares of Common Stock shall have been duly
authorized and reserved for issuance which equals 150% of the maximum number
of
shares Common Stock issuable upon conversion of the Notes and upon exercise
of
the Warrants. Upon conversion in accordance with the Notes or exercise in
accordance with the Warrants, as the case may be, the Conversion Shares and
the
Warrant Shares, respectively, will be validly issued, fully paid and
nonassessable and free from all preemptive or similar rights, taxes, liens
and
charges with respect to the issue thereof, with the holders being entitled
to
all rights accorded to a holder of Common Stock. The offer and issuance by
the Company of the Securities is exempt from registration under the 1933
Act.
8
(d) No
Conflicts.
The execution, delivery and performance of this Agreement and the other
Transaction Documents by the Company and the consummation by the Company of
the
transactions contemplated hereby and thereby (including, without limitation,
the
issuance of the Notes and the Warrants, the granting of a security interest
in
the Collateral and reservation for issuance and issuance of the Conversion
Shares and the Warrant Shares) will not (i) result in a violation of the
Articles of Incorporation (as defined in Section 3(r)) of the Company or any
of
its Subsidiaries or Bylaws (as defined in Section 3(r)) of the Company or any
of
its Subsidiaries or (ii) except as set forth in Schedule
3(d),
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights
of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is
a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations
and the rules and regulations of the Over-The-Counter Bulletin Board (the
"Principal
Market"))
applicable to the Company or any of its Subsidiaries or by which any property
or
asset of the Company or any of its Subsidiaries is bound or
affected.
(f) Acknowledgment
Regarding Buyer's Purchase of Securities.
The Company acknowledges and agrees that each Buyer is acting solely in
the capacity of an arm's length purchaser with respect to the Transaction
Documents and the transactions contemplated hereby and thereby and that no
Buyer
is (i) an officer or director of the Company, (ii) to the knowledge of the
Company, an "affiliate" of the Company (as defined in Rule 144) or (iii) to
the
knowledge of the Company, a "beneficial owner" of more than 10% of the shares
of
Common Stock (as defined for purposes of Rule 13d-3 of the 1934 Act. The
Company further acknowledges that no Buyer is acting as a financial advisor
or
fiduciary of the Company (or in any similar capacity) with respect to this
Agreement and the other Transaction Documents and the transactions contemplated
hereby and thereby, and any advice given by a Buyer or any of its
representatives or agents in connection with this Agreement and the other
Transaction Documents and the transactions contemplated hereby and thereby
is
merely incidental to such Buyer's purchase of the Securities. The Company
further represents to each Buyer that the Company’s decision to enter into the
Transaction Documents has been based solely on the independent evaluation by
the
Company and its representatives.
9
(g) No
General Solicitation.
Neither the Company, nor any of its Subsidiaries or Affiliates, nor, to
the Company’s knowledge, any Person acting on its or their behalf, has engaged
in any form of general solicitation or general advertising (within the meaning
of Regulation D) in connection with the offer or sale of the Securities.
The
Company shall be responsible for the payment of any placement agent’s fees,
financial advisory fees, or brokers’ commissions (other than for persons engaged
by any Buyer or its investment advisor) relating to or arising out of the
transactions contemplated hereby. The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including, without limitation,
attorney’s fees and out-of-pocket expenses) arising in connection with any such
claim (including any claim from the Placement Agent (as defined below)). The
Company acknowledges that it has engaged Xxx XxxXxxxxx, as placement agent
(the
“Placement
Agent”)
in
connection with the sale of the Securities. Other than the Placement Agent,
the
Company has not engaged any placement agent or other agent in connection with
the sale of the Securities.
(h) No
Integrated Offering.
None of the Company, its Subsidiaries, or to its knowledge any of their
affiliates, or any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers
to
buy any security, under circumstances that would require registration of any
of
the Securities under the 1933 Act.
None of the Company, its Subsidiaries, their Affiliates or any Person
acting on its or their behalf will take any action or steps referred to in
the
preceding sentence that would require registration of any of the Securities
under the 1933 Act.
(i) Dilutive
Effect.
The Company understands and acknowledges that the number of Conversion
Shares issuable upon conversion of the Notes and the Warrant Shares issuable
upon exercise of the Warrants will increase in certain circumstances. The
Company further acknowledges that its obligation to issue Conversion Shares
upon
conversion of the Notes in accordance with this Agreement and the Notes and
its
obligation to issue the Warrant Shares upon exercise of the Warrants in
accordance with this Agreement and the Warrant is, in each case, absolute and
unconditional regardless of the dilutive effect that such issuance may have
on
the ownership interests of other stockholders of the Company.
(j) Application
of Takeover Protections; Rights Agreement.
The Company and its board of directors have taken all necessary action, if
any, in order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Articles of Incorporation
or
the laws of the jurisdiction of its formation which is or could become
applicable to any Buyer as a result of the transactions contemplated by this
Agreement, including, without limitation, the Company's issuance of the
Securities and any Buyer's ownership of the Securities. The Company has
not adopted a stockholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of Common Stock or a change in control
of
the Company.
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(k) SEC
Documents; Financial Statements.
Except as disclosed in
Schedule 3(k),
during
the two (2) years prior to the date hereof, the Company has filed all reports,
schedules, forms, statements and other documents required to be filed by it
with
the SEC pursuant to the reporting requirements of the 1934 Act (all of the
foregoing filed prior to the date hereof and all exhibits included therein
and
financial statements, notes and schedules thereto and documents incorporated
by
reference therein being hereinafter referred to as the "SEC
Documents").
All of the SEC Documents are available on the XXXXX system. As of
their respective filing dates, the SEC Documents, as they may have been
subsequently amended by filings made by the Company with the SEC prior to the
date hereof complied in all material respects with the requirements of the
1934
Act and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were
filed
with the SEC, as they may have been subsequently amended by filings made by
the
Company with the SEC prior to the date hereof contained any untrue statement
of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of
the circumstances under which they were made, not misleading. As of their
respective filing dates, the financial statements of the Company included in
the
SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with
respect thereto. Such financial statements have been prepared in
accordance with generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent
they may exclude footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the Company as of
the
dates thereof and the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments). No
other
information provided by or on behalf of the Company to
the
Buyers in connection with the transactions contemplated hereby which is
not
included in the SEC Documents, including, without limitation,
information
referred
to in Section 2(d) of this Agreement or in any disclosure schedules,
contains
any untrue statement of a material fact or omits to state any
material fact
necessary in order to make the statements therein, in the light of
the
circumstance under which they are or were made, not misleading.
(l) Absence
of Certain Changes.
Except
as disclosed in
Schedule 3(l)
or in
the SEC Documents, since December 31, 2005, the date of the Company’s most
recent audited financial statements, there has been no material adverse change
and no material adverse development in the business, assets, properties,
operations, condition (financial or otherwise), or results of operations of
the
Company. Except as disclosed in
Schedule 3(l),
since
December 31, 2005, neither the Company nor any of its Subsidiaries has
(i) declared or paid any dividends on its Common Stock, (ii) except as
disclosed in the SEC Documents, sold any assets, individually or in the
aggregate, in excess of $100,000 outside of the ordinary course of business
or
(iii) except as set forth in
Schedule 3(l)
or in
the SEC Documents, had capital expenditures, individually or in the aggregate,
in excess of $100,000. Except as set forth in Schedule
3(l),
neither
the Company nor any of its Subsidiaries has any intention or has taken any
steps
to seek protection pursuant to any bankruptcy law nor does the Company have
any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact which would
reasonably lead a creditor to do so.
11
(m) No
Undisclosed Events, Liabilities, Developments or Circumstances.
Except as disclosed in the Disclosure Schedule, no event, liability,
development or circumstance has occurred or exists, or is contemplated to occur
with respect to the Company, its Subsidiaries or their respective business,
properties, prospects, operations or financial condition, that would be required
to be disclosed by the Company under the 1934 Act or the Securities Act of
1933
and which has not been so disclosed.
(n) Conduct
of Business; Regulatory Permits.
Neither the Company nor any of its Subsidiaries is in violation of any
term of or in default under its Articles of Incorporation or Bylaws or their
organizational charter or certificate of incorporation or bylaws, respectively.
Neither the Company nor any of its Subsidiaries is in violation of any
judgment, decree or order or any law, statute, ordinance, rule or regulation
applicable to the Company or its Subsidiaries, and neither the Company nor
any
of its Subsidiaries will conduct its business in violation of any of the
foregoing, except for possible violations which would not, individually or
in
the aggregate, have a Material Adverse Effect. Without limiting the
generality of the foregoing, the Company is not in violation of any of the
rules, regulations or requirements of the Principal Market and has no knowledge
of any facts or circumstances which would reasonably lead to suspension of
the
Common Stock from trading by the Principal Market in the foreseeable future.
Except as set forth in Schedule
3(n),
since
December 15, 2006 (i) the Common Stock has been designated for quotation on
the
Principal Market, (ii) trading
in the Common Stock has not been suspended by the SEC or the Principal Market
and (iii) the Company has received no communication, written or oral, from
the
SEC or the Principal Market regarding the suspension of the Common Stock from
trading on the Principal Market. The Company and its Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate
regulatory authorities necessary to conduct their respective businesses, except
where the failure to possess such certificates, authorizations or permits would
not have, individually or in the aggregate, a Material Adverse Effect, and
neither the Company nor any such Subsidiary has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit.
(o) Foreign
Corrupt Practices.
Neither the Company, nor any of its Subsidiaries, nor, to their knowledge,
any director, officer, agent, employee or other Person acting on behalf of
the
Company or any of its Subsidiaries has, in the course of its actions for, or
on
behalf of, the Company or any of its Subsidiaries (i) used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the
U.S.
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment
to
any foreign or domestic government official or employee.
(p) Xxxxxxxx-Xxxxx
Act.
The Company is in compliance with any and all applicable requirements of
the Xxxxxxxx-Xxxxx Act of 2002 that are effective as of the date hereof, and
any
and all applicable rules and regulations promulgated by the SEC thereunder
that
are effective as of the date hereof.
12
(q) Transactions
With Affiliates.
Except as set forth in the SEC Documents filed at least two days prior to
the date hereof and other than the grant of stock options disclosed
on
Schedule 3(q),
none of
the officers, directors or employees of the Company or any of its Subsidiaries
is presently a party to any transaction with the Company or any of its
Subsidiaries (other than for ordinary course services as employees, officers
or
directors), including any contract, agreement or other arrangement providing
for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
officer, director or employee or, to the knowledge of the Company or any of
its
Subsidiaries, any corporation, partnership, trust or other entity in which
any
such officer, director, or employee has a substantial interest or is an officer,
director, trustee or partner.
(r) Equity
Capitalization.
As of immediately prior to Closing, the authorized capital stock of the
Company consists of 500,000,000 shares of Common Stock, of which as of the
date
hereof, 54,080,031
are
issued and outstanding, 32,567,584 shares have been reserved for issuance to
stockholders of Nimble Group, Inc. (“Nimble”)
and
holders of securities convertible into or exercisable for shares of Nimble
common stock pursuant to the Agreement and Plan of Merger dated as of December
15, 2006 (the “Merger
Agreement”)
by and
between the Company, PVNX Acquisition Corp. and Nimble, up to 7,500,000 shares
are reserved for issuance pursuant to the Company's 2006 Stock Option Plan
(the
“2006
Option Plan”),
902,625
shares
are reserved for issuance pursuant to warrants (other than the Warrants and
the
options granted under the 2006 Option Plan) exercisable for shares of Common
Stock, 1,287,000 shares of Common Stock issuable upon conversion of outstanding
convertible debt, 3,000,000
shares are reserved for issuance pursuant to an employment agreement that the
Company contemplates entering into with Xxxx Xxxxxxx.
All of such outstanding shares have been, or upon issuance will be,
validly issued and are fully paid and nonassessable. Except as disclosed
herein or in the SEC Documents or as disclosed in Schedule
3(r):
(i)
none of the Company's capital stock is subject to preemptive rights or any
other
similar rights or any liens or encumbrances suffered or permitted by the
Company; (ii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or
securities or rights convertible into, or exercisable or exchangeable for,
any
capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of
its
Subsidiaries is or may become bound to issue additional capital stock of the
Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or
securities or rights convertible into, or exercisable or exchangeable for,
any
capital stock of the Company or any of its Subsidiaries; (iii) there are no
outstanding debt securities, notes, credit or loan agreements, credit facilities
or other agreements, documents or instruments evidencing Indebtedness (as
defined below) of the Company or any of its Subsidiaries or by which the Company
or any of its Subsidiaries is or may become bound; (iv) there are no financing
statements securing obligations in any material amounts, either singly or in
the
aggregate, filed in connection with the Company or any of its Subsidiaries;
(v)
there are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act; (vi) there are no outstanding securities or instruments of the
Company or any of its Subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to purchase, repurchase, retire or redeem a security of the Company or
any
of its Subsidiaries; (vii) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance
of
the Securities; (viii) the Company does not have any stock appreciation rights
or "phantom stock" plans or agreements or any similar plan or agreement; and
(ix) the Company and its Subsidiaries have no liabilities or obligations
required to be disclosed in the SEC Documents but not so disclosed in the SEC
Documents, other than those which, individually or in the aggregate, do not
or
would not have a Material Adverse Effect. The Company has furnished to the
Buyer true, correct and complete copies of the Company's Articles of
Incorporation, as amended and as in effect on the date hereof (the "Articles
of Incorporation"),
and
the Company's Bylaws, as amended and as in effect on the date hereof (the
"Bylaws"),
and
the terms of all securities convertible into, or exercisable or exchangeable
for, shares of Common Stock and the material rights of the holders thereof
in
respect thereto are disclosed in the SEC Filings.
13
(s) Indebtedness
and Other Contracts.
Except as disclosed in Schedule
3(s)
or in
the SEC Documents, neither the Company nor any of its Subsidiaries (i) has
any
outstanding Indebtedness (as defined below), (ii) is a party to any contract,
agreement or instrument, the violation of which, or default under which, by
the
other party(ies) to such contract, agreement or instrument would result in
a
Material Adverse Effect, (iii) is in violation of any term of or in default
under any contract, agreement or instrument relating to any Indebtedness, except
where such violations and defaults would not result, individually or in the
aggregate, in a Material Adverse Effect, or (iv) is a party to any contract,
agreement or instrument relating to any Indebtedness, the performance of which,
in the judgment of the Company's officers, has or is expected to have a Material
Adverse Effect. Schedule
3(s)
provides
a detailed description of the material terms of any such outstanding
Indebtedness. For purposes of this Agreement: (x) "Indebtedness"
of
any
Person
means, without duplication (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services including (without limitation) “Capital Leases” in
accordance with generally accepted accounting principles (other than trade
payables entered into in the ordinary course of business), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and
other
similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect
to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in
the
event of default are limited to repossession or sale of such property), (F)
all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment
of
such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through (G)
above; (y) "Contingent
Obligation"
means,
as to any Person, any direct or indirect liability, contingent or otherwise,
of
that Person with respect to any indebtedness, lease, dividend or other
obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against loss
with respect thereto; and (z) "Person"
means
an individual, a limited liability company, a partnership, a joint venture,
a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
14
(t) Absence
of Litigation.
There is no action, suit, proceeding, inquiry or investigation before or
by the Principal Market, any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries,
the Common Stock or any of the Company's Subsidiaries or any of the Company's
or
its Subsidiaries' officers or directors, except as set forth in Schedule
3(t).
(u) Insurance.
The Company and each of its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as management of the Company believes to be prudent and customary in
the
businesses in which the Company and its Subsidiaries are engaged. Neither
the Company nor any such Subsidiary has been refused any insurance coverage
sought or applied for and neither the Company nor any such Subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.
(i)
Neither the Company nor any of its Subsidiaries is a party to any
collective bargaining agreement or employs any member of a union. The
Company and its Subsidiaries believe that their relations with their employees
are good. Except as disclosed in Schedule 3(v), no executive officer of
the Company or any of its Subsidiaries (as defined in Rule 501(f) of the 0000
Xxx) has notified the Company or any such Subsidiary that such officer intends
to leave the Company or any such Subsidiary or otherwise terminate such
officer's employment with the Company or any such Subsidiary. No executive
officer of the Company or any of its Subsidiaries, to the knowledge of the
Company or any such Subsidiary, is, or is now expected to be, in violation
of
any material term of any employment contract, confidentiality, disclosure or
proprietary information agreement, non-competition agreement, or any other
contract or agreement or any restrictive covenant, and, to the Company’s
knowledge, the continued employment of each such executive officer does not,
in
any material respect, subject the Company or any of its Subsidiaries to any
liability with respect to any of the foregoing matters.
(ii)
The
Company and its Subsidiaries are in compliance with all federal, state, local
and foreign laws and regulations respecting labor, employment and employment
practices and benefits, terms and conditions of employment and wages and hours,
except where failure to be in compliance would not, either individually or
in
the aggregate, reasonably be expected to result in a Material Adverse
Effect.
15
(w) Title.
The Company and its Subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal
property owned by them which is material to the business of the Company and
its
Subsidiaries, in each case, except as disclosed in Schedule
3(w),
free
and clear of all liens, encumbrances and defects except such as do not
materially affect the value of such property and do not interfere with the
use
made and proposed to be made of such property by the Company and any of its
Subsidiaries. Any real property and facilities held under lease by
the Company and any of its Subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
facilities by the Company and its Subsidiaries.
(x) Intellectual
Property Rights.
The Company and its Subsidiaries own or possess adequate rights or
licenses to use all trademarks, trade names, service marks, service xxxx
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and other
intellectual property rights necessary to conduct their respective businesses
as
now conducted ("Intellectual
Property Rights").
Except as set forth in Schedule
3(x),
none of
the Company's Intellectual Property Rights have expired or terminated, or are
expected to expire or terminate, within three years from the date of this
Agreement. The Company does not have any knowledge of any infringement by the
Company or its Subsidiaries of Intellectual Property Rights of others.
There is no claim, action or proceeding being made or brought, or to the
knowledge of the Company, being threatened, against the Company or any of its
Subsidiaries regarding its Intellectual Property Rights. The Company is
unaware of any facts or circumstances which might give rise to any of the
foregoing infringements or claims, actions or proceedings. The Company and
its
Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their Intellectual Property
Rights.
16
(z) Subsidiary
Rights.
The Company or one of its Subsidiaries has the unrestricted right to vote,
and (subject to limitations imposed by applicable law) to receive dividends
and
distributions on, all capital securities of its Subsidiaries as owned by the
Company or such Subsidiary.
(aa) Investment
Company.
The Company is not, and is not an affiliate of, an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended.
(bb) Tax
Status.
Except
as
disclosed on Schedule
3(bb),
the
Company and each of its Subsidiaries (i) has made or filed all foreign, federal
and state income and all other tax returns, reports and declarations required
by
any jurisdiction to which it is subject, (ii) has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and (iii) has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to
the
periods to which such returns, reports or declarations apply. Except as
disclosed on Schedule
3(bb),
there
are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim. Except as disclosed on Schedule
3(bb),
no
liens
have been filed and no claims are being asserted by or against the Company
or
any of its Subsidiaries with respect to any taxes (other than liens for taxes
not yet due and payable). Neither the Company nor it Subsidiaries has received
notice of assessment or proposed assessment of any taxes of a material amount
claimed to be owed by it or any other Person on its behalf. Except as disclosed
on Schedule
3(bb),
neither
the Company nor any Subsidiary is a party to any tax sharing or tax indemnity
agreement or any other agreement of a similar nature that remains in effect.
Except
as
disclosed on Schedule
3(bb),
each
of
the Company and its Subsidiaries has complied in all material respects with
all
applicable legal requirements relating to the payment and withholding of taxes
and, within the time and in the manner prescribed by law, has withheld from
wages, fees and other payments and paid over to the proper governmental or
regulatory authorities all amounts required.
(cc) Internal
Accounting and Disclosure Controls.
The Company and each of its Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset and liability accountability, (iii)
access to assets or incurrence of liabilities is permitted only in accordance
with management's general or specific authorization and (iv) the recorded
accountability for assets and liabilities is compared with the existing assets
and liabilities at reasonable intervals and appropriate
action is taken with respect to any difference (the "Internal
Accounting Controls").
The Company maintains disclosure controls and procedures (as such term is
defined in Rule 13a-14 under the 0000 Xxx) that are effective in ensuring that
information required to be disclosed by the Company in the reports that it
files
or submits under the 1934 Act is recorded, processed, summarized and reported,
within the time periods specified in the rules and forms of the SEC, including,
without limitation, controls and procedures designed in to ensure that
information required to be disclosed by the Company in the reports that it
files
or submits under the 1934 Act is accumulated and communicated to the Company's
management, including its principal executive officer and its principal
financial officer, as appropriate, to allow timely decisions regarding required
disclosure.
17
(dd) Off
Balance Sheet Arrangements.
There is no transaction, arrangement, or other relationship between the
Company or any of its Subsidiaries and an unconsolidated or other off balance
sheet entity that is required to be disclosed by the Company in its Exchange
Act
filings and is not so disclosed or that otherwise would be reasonably likely
to
have a Material Adverse Effect.
(ee) Ranking
of Notes.
Except as set forth on
Schedule (ee),
no
Indebtedness of the Company is senior to or ranks
pari
passu
with the
Notes in right of payment, whether with respect of payment of redemptions,
interest, damages or upon liquidation or dissolution or otherwise.
(ff) Transfer
Taxes.
On the Closing Date, all stock transfer or other taxes (other than income
or similar taxes) which are required to be paid in connection with the sale
and
transfer of the Securities to be sold to each Buyer hereunder will be, or will
have been, fully paid or provided for by the Company, and all material laws
imposing such taxes will be or will have been complied with.
(gg) Manipulation
of Price.
The Company and its Subsidiaries have not, and to its knowledge no one
acting on its behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result or that could reasonably be expected to cause or result
in
the stabilization or manipulation of the price of any security of the Company
to
facilitate the sale or resale of any of the Securities, (ii) other than the
Placement Agent, sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) other than the
Placement Agent, paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(hh) U.S.
Real Property Holding Corporation.
The Company is not, nor has ever been, a U.S. real property holding
corporation within the meaning of Section 897 of the Internal Revenue Code
of
1986, as amended, and the Company shall so certify upon Buyer's
request.
(ii) Disclosure.
The Company confirms that neither it nor any other Person acting on its
behalf has provided any of the Buyers or their agents or counsel with any
information that constitutes or could reasonably be expected to constitute
material, nonpublic information other than the existence of the transactions
contemplated by this Agreement or the other Transaction Documents. The
Company understands and confirms that each of the Buyers will rely on the
foregoing representations in effecting transactions in the Securities. All
disclosure provided to the Buyers regarding the Company, its business and the
transactions contemplated by this Agreement and the other Transaction Documents,
including the Schedules and Exhibits hereto and thereto, furnished by or on
behalf of the Company is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made herein or herein, in the light of the
circumstances under which they were made, not misleading. Each press
release issued by the Company or its Subsidiaries during the twelve (12) months
preceding the date of this Agreement did not at the time of release contain
any
untrue statement of a material fact or omit to state a material fact required
to
be stated therein or necessary in order to make the statements therein, in
the
light of the circumstances under which they were made, not misleading. No
event or circumstance has occurred or information exists with respect to the
Company or any of its Subsidiaries or its or their business, assets,
liabilities, properties, prospects, operations or financial conditions
(financial or otherwise), which, under applicable law, rule or regulation,
requires public disclosure or announcement by the Company but which has not
been
so publicly announced or disclosed.
18
(jj) Lien
Searches.
Within
6 Business Days prior to the date hereof, the Company shall have delivered
or
caused to be delivered to each Buyer certified copies of UCC financing statement
search results listing any and all effective financing statements filed within
five years prior to such date in any applicable jurisdiction that name the
Company or any of its Subsidiaries as a debtor to perfect an interest in any
of
the assets thereof, together with copies of such financing statements, none
of
which financing statements, except for any financing statements filed with
respect to the Senior Indebtedness and as otherwise agreed to in writing by
the
Buyers, shall cover any of the “Collateral” (as defined in the Security
Agreement), and the results of searches for any effective tax liens and judgment
liens filed against any such Person or its property in any applicable
jurisdiction, which results, except as otherwise agreed to in writing by the
Buyers, shall not show any such effective tax liens and judgment
liens.
4. COVENANTS.
(a) Commercially
Reasonable Efforts.
Each party shall use commercially reasonable efforts timely to satisfy
each of the conditions to be satisfied by it as provided in Sections 6 and
7 of
this Agreement.
(c) Reporting
Status.
Until the date on which the Buyers first cease to beneficially own at
least 50% of the Conversion Shares and Warrant Shares (the "Reporting
Period"),
the
Company shall file all reports required to be filed with the SEC pursuant to
the
1934 Act, and the Company shall not terminate its status as an issuer required
to file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.
19
(d) Use
of
Proceeds.
The Company will use the proceeds from the sale of the Securities as set
forth on Schedule
4(d).
(e) Financial
Information.
The Company agrees to send the following to the Buyer during the Reporting
Period copies of any notices and other information made available or given
to
the stockholders of the Company generally, contemporaneously with the making
available or giving thereof to the stockholders.
(f) Listing.
Upon
the filing of a registration statement pursuant to Section 4(w), the Company
shall promptly secure the listing of all of the Piggyback Securities (as defined
herein) upon each national securities exchange and automated quotation system,
if any, upon which the Common Stock is then listed (subject to official notice
of issuance) and shall maintain such listing of all Piggyback Securities from
time to time issuable under the terms of the Transaction Documents. The
Company shall maintain the Common Stock’s authorization for
quotation on the Principal Market. Neither the Company nor any of its
Subsidiaries shall take any action which would be reasonably expected to result
in the delisting or suspension of the Common Stock on the Principal Market.
The Company shall pay all fees and expenses in connection with satisfying
its obligations under this Section 4(f).
(g) Fees.
The Company shall (i) pay Gottbetter & Partners, LLP (“G&P”)
$40,000 in legal fees plus reasonable expenses and (ii) shall pay Gottbetter
Capital Master, Ltd. (a Buyer) ("GCM")
or its
designee(s) $10,000 for due diligence and all reasonable expenses incurred
in
connection with the transactions contemplated by the Transaction Documents
(including all reasonable legal fees and disbursements in connection therewith,
documentation and implementation of the transactions contemplated by the
Transaction Documents and due diligence in connection therewith), which amounts
shall be withheld by such Buyer from its Purchase Price at the Closing. GCM
and
G&P acknowledge receipt of $20,000 delivered prior to the date hereof as an
advance against GCM and G&P fees. The Company shall be responsible for the
payment of any placement agent's fees, financial advisory fees, or broker's
commissions (other than for Persons engaged by any Buyer) relating to or arising
out of the transactions contemplated by the Transaction Documents including,
without limitation, any fees or commission payable to the Placement Agent.
The
Company shall pay, and hold each Buyer harmless against, any liability, loss or
expense (including, without limitation, reasonable attorney's fees and
out-of-pocket expenses) arising in connection with any claim against a Buyer
relating to any such payment. Except as otherwise set forth in the
Transaction Documents, each party to this Agreement shall bear its own expenses
in connection with the sale of the Securities to the Buyers.
(h) Pledge
of Securities.
The Company acknowledges and agrees that the Securities may be pledged by
a Buyer in connection with a bona fide margin agreement or other loan or
financing arrangement that is secured by the Securities. The pledge of
Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and no Investor effecting a pledge of Securities shall
be
required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction
Document, including, without limitation, Section 2(f) hereof; provided that
an
Investor and its pledgee shall be required to comply with the provisions of
Section 2(f) hereof in order to effect a sale, transfer or assignment of
Securities to such pledgee. The Company hereby agrees to execute and
deliver such documentation as a pledgee of the Securities may reasonably request
in connection with a pledge of the Securities to such pledgee by an
Investor.
20
(i) Disclosure
of Transactions and Other Material Information.
On or before 5:00 p.m., New York Time, on the first Business Day (as
defined below) following the date of this Agreement, the Company shall file
a
Current Report on Form 8-K describing the terms of the transactions contemplated
by the Transaction Documents in the form required by the 1934 Act and attaching
the material Transaction Documents (including, without limitation, this
Agreement, the form of each of the Notes, the form of Warrant, and the Security
Agreement) as exhibits to such filing (the "8-K
Filing").
As used herein “Business Day” means any other day other than a Saturday,
Sunday, or other day on which commercial banks in The City of New York are
authorized or required by law to remain closed. The
Company shall not, and shall not cause any of its Subsidiaries and its and
each
of their respective officers, directors, employees and agents, not to, provide
any Buyer with any material, nonpublic information regarding the Company or
any
of its Subsidiaries from and after the filing of the 8-K Filing with the SEC
without the express written consent of such Buyer. In
the
event of a breach of the foregoing covenant by the Company, any of their
Subsidiaries, or any of their respective officers, directors, employees and
agents, in addition to any other remedy provided herein or in the Transaction
Documents, a Buyer shall have the right to make a public disclosure, in the
form
of a press release, public advertisement or otherwise, of such
material, nonpublic information without
the prior approval by the Company, their Subsidiaries, or any of their
respective officers, directors, employees or agents.
No Buyer
shall have any liability to the Company, its Subsidiaries, or any of its or
their respective officers, directors, employees, stockholders or agents for
any
such disclosure. Subject to the foregoing, none of the Company, its
Subsidiaries or any Buyer shall issue any press releases or any other public
statements with respect to the transactions contemplated hereby without the
approval of all of the Buyers; provided,
however,
that
the Company shall be entitled, without the prior approval of any Buyer, to
make
any press release or other public disclosure with respect to such transactions
(i) in substantial conformity with the 8-K Filing and contemporaneously
therewith or (ii) as is required by applicable law and regulations (provided
that in the case of clause (i) the Required Holders shall be consulted by the
Company in connection with any such press release or other public disclosure
prior to its release). Without the prior written consent of any applicable
Buyer, the Company shall not disclose the name of any Buyer in any filing,
announcement, release or otherwise.
(j) Restriction
on Redemption and Cash Dividends.
So long as any Notes are outstanding, the Company shall not, directly or
indirectly, redeem, or declare or pay any cash dividend or distribution on,
the
Common Stock without the prior express written consent of the Required Holders
(as defined in the Notes).
(k) Additional
Notes; Variable Securities; Dilutive Issuances.
So long as any Buyer beneficially owns any Securities, the Company will
not issue any Notes (other than to the Buyers as contemplated hereby) and the
Company shall not issue any other securities that would cause a breach or
default under the Notes. For long as any Notes or Warrants remain
outstanding, the Company shall not, in any manner, issue or sell any rights,
warrants or options to subscribe for or purchase Common Stock or other
securities directly or indirectly convertible into or exchangeable or
exercisable for Common Stock at a price which varies or may vary with the market
price of the Common Stock, including by way of one or more reset(s) to any
fixed
price unless the conversion, exchange or exercise price of any such security
cannot be less than the then applicable Conversion Price (as defined in the
Notes) with respect to the Common Stock into which any Note is convertible
or
the then applicable Exercise Price (as defined in the Warrants) with respect
to
the Common Stock into which any Warrant is exercisable. For long as any
Notes or Warrants remain outstanding, the Company shall not, in any manner,
enter into or affect any Dilutive Issuance (as defined in the Notes) if the
effect of such Dilutive Issuance is to cause the Company to be required to
issue
upon conversion of any Note or exercise of any Warrant any shares of Common
Stock in excess of that number of shares of Common Stock which the Company
has
authorized and reserved for purposes of such conversions or exercises or which
the Company may issue upon conversion of the Notes and exercise of the Warrants
without breaching the Company's obligations under the rules or regulations
of
the Principal Market.
21
(m) Reservation
of Shares.
So long as any Buyer owns any Securities, the Company shall take all
action necessary to at all times have authorized, and reserved for the purpose
of issuance, no less than 150% of the number of shares of Common Stock issuable
upon conversion of all of the Notes and issuable upon exercise of the Warrants
then outstanding (without taking into account any limitations on the conversion
of the Notes or exercise of the Warrants set forth in the Notes and Warrants,
respectively).
(n) Conduct
of Business.
The business of the Company and its Subsidiaries shall not be conducted in
violation of any law, ordinance or regulation of any government, or any
department or agency thereof or governmental entity, except where such
violations would not result, either individually or in the aggregate, in a
Material Adverse Effect.
(o) [Intentionally
Omitted].
(p) No
Short Position.
Each of
the Buyers and any of its Affiliates do not have an open short position in
the
Common Stock.
22
(t) Restriction
on Issuance of the Capital Stock. Except for Excluded Securities (as defined
in
the Convertible Debentures), the Company shall not, without the prior written
consent of the Buyer, (i) issue or sell shares of Common Stock or preferred
stock without consideration or for a consideration per share less than the
greater of the Closing Bid Price (as defined below) of the Common Stock
determined immediately prior to its issuance or $.001, if the Common Stock
is
not traded or quoted on the Principal Market or any national exchange, (ii)
issue any warrant, option, right, contract, call, or other security instrument
granting the holder thereof, the right to acquire Common Stock without
consideration or for a consideration less than the greater of such Common
Stock’s Closing Bid Price value determined immediately prior to its issuance or
$.001, if the Common Stock is not traded on the Principal Market or any national
exchange, (iii) enter into any security instrument granting the holder a
security interest in any and all assets of the Company. or (iv) file
any
registration statement on Form S-8
for
shares that are issued without consideration or for a consideration less than
the greater of the Common Stock’s Closing Bid Price on the date of issuance or
$.001, if the Common Stock is not traded or quoted on the Principal Market
or
any national exchange (the
“Minimum Consideration”); provided that the Corporation may file a registration
statement on Form S-8 with respect to shares representing in the aggregate
not
more than five percent (5%) of the fully diluted number of outstanding
and
reserved shares
of
the Corporation as set forth in Section 3(r) hereof for less than the Minimum
Consideration to (x) employees of the Corporation in connection with the
rendering by them of services to the Corporation and (y) persons other than
employees who render services to the Corporation that are substantially similar
to the services rendered by employees of the Corporation in the ordinary course
of their employment with the Corporation..
“Closing Bid Price” on any day shall be the closing bid price for a share of
Common Stock on such date on the Principal Market (or such other exchange,
market, or other system that the Common Stock is then traded on), as reported
on
Bloomberg, L.P. (or similar organization or agency succeeding to its functions
of reporting prices).
(u) Removal
of Legend.
In
addition to the Buyer’s other available remedies, the Company shall pay to the
Buyer, in cash, as partial liquidated damages and not as a penalty, for each
$1,000 of Warrant Shares and/or Conversion Shares (based on the closing price
of
the Common Stock on the date such Warrant Shares and/or Conversion Shares are
submitted to the Company’s transfer agent), $3 per trading day (increasing to $7
per trading day five (5) trading days after such damages have begun to accrue)
for each trading day after the third (3rd)
trading
day following delivery by a Buyer to the Company or the Company’s transfer agent
of a certificate representing Warrant Shares and/or Conversion Shares issued
with a restrictive legend, until such certificate is delivered to the Buyer
with
such legend removed. Nothing herein shall limit the Buyer’s right to pursue
actual damages for the failure of the Company and its transfer agent to deliver
certificates representing any securities as required hereby or by the
Irrevocable Transfer Agent Instructions, and the Buyer shall have the right
to
pursue all remedies available to it at law or in equity, including, without
limitation, a decree of specific performance and/or injunctive
relief.
23
(v) Conduct
of Business.
Neither
the Company nor its Subsidiaries will conduct its business in material violation
of any term of or in default under its Certificate or Articles of Incorporation
or Bylaws. Neither the Company nor any of its Subsidiaries will conduct its
business in material violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to the Company or its Subsidiaries,
except for possible violations which would not, individually or in the
aggregate, have a Material Adverse Effect.
(w) Piggyback
Registration.
If the
Company shall determine to register any of its Common Stock, for its own account
or for the account of others, other than (i) a registration relating solely
to
employee benefit plans or securities issued or issuable to employees or
consultants (to the extent the securities owned or to be owned by such
consultants could be registered on Form S-8) or (ii) a registration relating
solely to a Commission Rule 145 transaction, a registration on Form S-4 in
connection with a merger, acquisition, divestiture, reorganization, or similar
event, the Company shall promptly give to the Buyers written notice thereof
(and
in no event shall such notice be given less than 20 calendar days prior to
the
filing of such registration statement), and shall, include as a Piggyback
Registration all of Piggyback Securities, specified in a written request
delivered by the Buyer within 10 calendar days after receipt of such written
notice from the Company. However, the Company may, without the consent of the
Buyers, withdraw such registration statement prior to its becoming effective
if
the Company or such other stockholders have elected to abandon the proposal
to
register the securities proposed to be registered thereby. “Piggyback
Securities”
means
(i) 175% of the Conversion Shares issued or issuable upon conversion of the
Notes, (ii) 175% of the Warrant Shares issued or issuable upon exercise of
the Warrants and (iii) any capital stock of the Company issued or issuable
with
respect to the Conversion Shares, the Notes, the Warrant Shares or the Warrants
as a result of any stock split, stock dividend, recapitalization, exchange
or
similar event or otherwise, without regard to any limitations on conversions
of
the Notes or exercises of the Warrants.
5. REGISTER;
TRANSFER AGENT INSTRUCTIONS.
(a) Register.
The Company shall maintain at its principal executive offices (or such
other office or agency of the Company as it may designate by notice to each
holder of Securities), a register for the Notes and the Warrants in which the
Company shall record the name and address of the Person in whose name the Notes
and the Warrants have been issued (including the name and address of each
transferee), the principal amount of Notes held by such Person, the number
of
Conversion Shares issuable upon conversion of the Notes and the number of
Warrant Shares issuable upon exercise of the Warrants held by such Person.
The Company shall keep the register open and available at all times during
business hours for inspection of any Buyer or its legal representatives
following reasonable written notice of not less than two Business
Days.
24
6. CONDITIONS
TO THE COMPANY'S OBLIGATION TO SELL.
Closing
Date.
The obligation of the Company hereunder to issue and sell the Notes and
the related Warrants to each Buyer at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion by providing
each Buyer with prior written notice thereof:
(i) Such
Buyer shall have executed each of the Transaction Documents to which it is
a
party and delivered the same to the Company.
25
(ii) Such
Buyer and each other Buyer shall have delivered to the Company or the Escrow
Agent (as set forth in the Escrow Agreement) the Purchase Price as set forth
in
Section 1(c) (less, in the case of GCM, the amounts withheld pursuant to Section
4(g)) for the Notes and the related Warrants being purchased by such
Buyer at the Closing by wire transfer of immediately available funds pursuant
to
the wire instructions provided by the Company.
(iii) The
representations and warranties of such Buyer shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as
of a
specific date), and such Buyer shall have performed, satisfied and complied
in
all material respects with the covenants, agreements and conditions required
by
this Agreement to be performed, satisfied or complied with by such Buyer at
or
prior to the Closing Date.
7. CONDITIONS
TO EACH BUYER'S OBLIGATION TO PURCHASE.
Closing
Date.
The obligation of each Buyer hereunder to purchase the Notes and the
related Warrants at the Closing is subject to the satisfaction, at or before
the
Closing Date, of each of the following conditions, provided that these
conditions are for each Buyer's sole benefit and may be waived by such Buyer
at
any time in its sole discretion by providing the Company with prior written
notice thereof:
(i) The
Company shall have executed and delivered to such Buyer or the Escrow Agent
(A) each of the Transaction Documents, (B) the Notes (in such principal
amounts as such Buyer shall request) being purchased by such Buyer at the
Closing pursuant to this Agreement, and (C) the Warrants (in such amounts
as such Buyer shall request) being purchased by such Buyer at the Closing
pursuant to this Agreement.
(ii) Such
Buyer shall have received the opinion of Boylan, Brown, Code, Xxxxxx &
Xxxxxx, LLP, the Company's outside counsel, dated as of the Closing Date, in
substantially the form of Exhibit F
attached
hereto and a letter stating that the Company is in good standing with its
attorneys.
(iii) The
Company shall have delivered to such Buyer a true copy of the Irrevocable
Transfer Agent Instructions, in the form of Exhibit E
attached
hereto, which instructions shall have been delivered to and acknowledged in
writing by the Company's transfer agent.
(v) The
representations and warranties of the Company shall be true and correct in
all
material respects (other than representations and warranties that are already
qualified by materiality or Material Adverse Effect which shall be true and
correct in all respects) as of the date when made and as of the Closing Date
as
though made at that time (except for representations and warranties that speak
as of a specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by the Company at or prior to the Closing Date. Such Buyer shall have
received a certificate, executed by the Chief Executive Officer of the Company,
dated as of the Closing Date, to the foregoing effect and as to such other
matters as may be reasonably requested by such Buyer in the form attached hereto
as
Exhibit H
.
26
(vi) The
Company shall have delivered to such Buyer a letter from the Company's transfer
agent certifying the number of shares of Common Stock outstanding as of a date
within five days of the Closing Date.
(vii) The
Common Stock (I) shall be designated for quotation on the Principal Market
and
(II) shall not have been suspended, as of the Closing Date, by the SEC or the
Principal Market from trading on the Principal Market nor shall suspension
by
the SEC or the Principal Market have been threatened, as of the Closing Date,
either (A) in writing by the SEC or the Principal Market.
(viii) The
Company shall have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the sale of the Securities.
(xii) The
Company shall have delivered to such Buyer such other documents relating to
the
transactions contemplated by this Agreement as such Buyer or its counsel may
reasonably request.
27
9. MISCELLANEOUS.
(a) Governing
Law; Jurisdiction; Jury Trial.
All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of
the
State of New York, without giving effect to any choice of law or conflict of
law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than
the
State of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding
is
improper. Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding
by
mailing a copy thereof to such party at the address for such notices to it
under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner permitted
by
law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT
TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
(b) Counterparts.
This Agreement may be executed in two or more identical counterparts, all
of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to
the
other party; provided that a facsimile signature shall be considered due
execution and shall be binding upon the signatory thereto with the same force
and effect as if the signature were an original, not a facsimile
signature.
(c) Headings.
The headings of this Agreement are for convenience of reference and shall
not form part of, or affect the interpretation of, this Agreement.
(e) Entire
Agreement; Amendments.
This Agreement and the other Transaction Documents supersede all other
prior oral or written agreements between the Buyers, the Company, their
Affiliates and Persons acting on their behalf with respect to the matters
discussed herein, and this Agreement, the other Transaction Documents and the
instruments referenced herein and therein contain the entire understanding
of
the parties with respect to the matters covered herein and therein and, except
as specifically set forth herein or therein, neither the Company nor any Buyer
makes any representation, warranty, covenant or undertaking with respect to
such
matters. No provision of this Agreement may be amended other than by an
instrument in writing signed by the Company and the Required Holders, and any
amendment to this Agreement made in conformity with the provisions of this
Section 9(e) shall be binding on all Buyers and holders of Securities, as
applicable. No provision hereof may be waived other than by an instrument
in writing signed by the party against whom enforcement is sought. No such
amendment shall be effective to the extent that it applies to less than all
of
the holders of the applicable Securities then outstanding. No
consideration shall be offered or paid to any Person to amend or consent to
a
waiver or modification of any provision of any of the Transaction Documents
unless the same consideration also is offered to all of the parties to the
Transaction Documents, holders of Notes or holders of the Warrants, as the
case
may be. The Company has not, directly or indirectly, made any agreements
with any Buyers relating to the terms or conditions of the transactions
contemplated by the Transaction Documents except as set forth in the Transaction
Documents.
28
(f) Notices.
Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii)
upon receipt, when sent by facsimile (provided confirmation of transmission
is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business Day after deposit with an overnight courier service,
in
each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
|
If
to the Company:
|
Pure
Vanilla eXchange, Inc.
000
Xxxxx Xxxxxx
Xxx
Xxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxxx
Xxxxxx, Chairman
|
||
|
Boylan,
Brown, Code, Xxxxxx Xxxxxx, LLP
0000
Xxxxx Xxxxxx
Xxxxxxxxx,
XX 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention: Xxxxxx
X. Xxxxxx, Esq.
|
|||
| If to the Transfer Agent: | American Stock Transfer Company
00
Xxxxxx Xxxx
Xxx
Xxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
fax
|
||
29
If
to a
Buyer, to its address and facsimile number set forth on the Schedule of Buyers,
with copies to such Buyer's representatives as set forth on the Schedule of
Buyers, with a copy (for informational purposes only) to:
|
Gottbetter
& Partners, LLP
000
Xxxxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention: Xxxxx
X. Xxxxxxx, Esq.
|
or
to
such other address and/or facsimile number and/or to the attention of such
other
Person as the recipient party has specified by written notice given to each
other party five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or
(C)
provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (i), (ii) or (iii) above,
respectively.
(g) Successors
and Assigns.
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns, including any purchasers
of
the Notes or the Warrants. The Company shall not assign this Agreement or
any rights or obligations hereunder without the prior written consent of the
Required Holders (unless the Company is in compliance with the applicable
provisions governing Fundamental Transactions set forth in the Notes and the
Warrants). A Buyer may assign some or all of its rights hereunder without
the consent of the Company, in which event such assignee shall be deemed to
be a
Buyer hereunder with respect to such assigned rights; provided that such
assignee agrees in writing to be bound by all of the provisions contained
herein.
(h) No
Third Party Beneficiaries.
This Agreement is intended for the benefit of the parties hereto and their
respective permitted successors and assigns, and is not for the benefit of,
nor
may any provision hereof be enforced by, any other Person.
(i) Survival.
Unless this Agreement is terminated under Section 8, the representations
and warranties of the Company and the Buyers contained in Sections 2 and 3
and
the agreements and covenants set forth in Sections 4, 5 and 9 shall survive
the
Closing. Each Buyer shall be responsible only for its own representations,
warranties, agreements and covenants hereunder.
30
(j) Further
Assurances.
Each party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as any other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated
hereby.
(k) Indemnification.
In consideration of each Buyer's execution and delivery of the Transaction
Documents and acquiring the Securities thereunder and in addition to all of
the
Company's other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless each Buyer and each other holder
of
the Securities and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing
Persons' agents or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees")
from
and against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "Indemnified
Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to
(a)
any misrepresentation or breach
of
any representation or warranty made by the Company in the Transaction Documents
or any other certificate, instrument or document contemplated hereby or thereby,
(b) any breach of any covenant, agreement or obligation of the Company contained
in the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby or (c) any cause of action, suit or claim brought
or made against such Indemnitee by a third party (including for these purposes
a
derivative action brought on behalf of the Company) and arising out of or
resulting from (i) the execution, delivery, performance or enforcement of the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (ii) any transaction financed or to be financed
in whole or in part, directly or indirectly, with the proceeds of the issuance
of the Securities, (iii) any disclosure made by such Buyer pursuant to Section
4(i), or (iv) the status of such Buyer or holder of the Securities as an
investor in the Company pursuant to the transactions contemplated by the
Transaction Documents. To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
(l) No
Strict Construction.
The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
(m) Remedies.
Each Buyer and each holder of the Securities shall have all rights and
remedies set forth in the Transaction Documents and all rights and remedies
which such holders have been granted at any time under any other agreement
or
contract and all of the rights which such holders have under any law. Any
Person having any rights under any provision of this Agreement shall be entitled
to enforce such rights specifically (without posting a bond or other security),
to recover damages by reason of any breach of any provision of this Agreement
and to exercise all other rights granted by law. Furthermore, the Company
recognizes that in the event that it fails to perform, observe, or discharge
any
or all of its obligations under the Transaction Documents, any remedy at law
may
prove to be inadequate relief to the Buyers. The Company therefore agrees
that the Buyers shall be entitled to seek temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages and
without posting a bond or other security.
31
(n) Rescission
and Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting
any
similar provisions of) the Transaction Documents, whenever any Buyer exercises
a
right, election, demand or option under a Transaction Document and the Company
does not timely perform its related obligations within the periods therein
provided, then such Buyer may rescind or withdraw, in its sole discretion from
time to time upon written notice to the Company, any relevant notice, demand
or
election in whole or in part without prejudice to its future actions and
rights.
(o) Payment
Set Aside.
To the extent that the Company makes a payment or payments to the Buyers
hereunder or pursuant to any of the other Transaction Documents or the Buyers
enforce or exercise their rights hereunder or thereunder, and such payment
or
payments or the proceeds of such enforcement or exercise or any part thereof
are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company, a trustee, receiver or any other Person under any
law
(including, without limitation, any bankruptcy law, foreign, state or federal
law, common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such enforcement or setoff had not
occurred.
[Signature
Page Follows]
32
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written
above.
|
COMPANY:
PURE
VANILLA EXCHANGE, INC.
|
||
| |
|
|
| By: | /s/ Xxxxxx Xxxxxx | |
|
Name: Xxxxxx
Xxxxxx
|
||
|
Title:
Chairman
|
||
33
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written
above.
|
BUYERS:
GOTTBETTER
CAPITAL MASTER, LTD.
|
||
| |
|
|
| By: | /s/ Xxxx X. Xxxxxxxxxx | |
|
Name: Xxxx
X. Xxxxxxxxxx
|
||
|
Title:
Director
|
||
34
SCHEDULE
OF BUYERS
|
(1)
|
|
(2)
|
|
(3)
|
|
(4)
|
|
(5)
|
|
(6)
|
|
Buyer
|
|
Address
and Facsimile Number
|
|
Aggregate
Principal of Note
|
|
Aggregate
Number of Warrant Shares
|
|
Purchase
Price
|
|
Legal
Representative’s Address and Facsimile Number
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gottbetter
Capital Master, Ltd.
|
000
Xxxxxxx Xxxxxx
00xx
Xxxxx
Xxx
Xxxx, XX 00000
Facsimile:
212.400.6999
|
1,500,000
|
450,000
|
$1,417,500
|
Xxxxx
X. Xxxxxxx, Esq.
Xxxxxxxxxx
& Partners, LLP
000
Xxxxxxx Xxxxxx
00xx
Xxxxx
Xxx
Xxxx, XX 00000
Facsimile:
212.400.6901
|
35
EXHIBITS
Exhibit
A Form
of
Notes
Exhibit
B Form
of
Warrants
Exhibit
C [Intentionally
left blank]
Exhibit
D Form
of
Security Agreement
Exhibit
E Irrevocable
Transfer Agent Instructions
Exhibit
F Form
of
Opinion Letter
Exhibit
G Form
of
Resolutions, Articles of Incorporation and By-Laws
Exhibit
H Form
of
Officer’s Certificate
SCHEDULES
Schedule
3(a) Subsidiaries
Schedule
3(b) Authorization,
Enforcement, Validity
Schedule
3(d) No
Conflicts
Schedule
3(e) Consents
Schedule
3(k) SEC
Documents; Financial Statements
Schedule
3(l) Absence
of Certain Changes
Schedule
3(q) Transactions
with Affiliates
Schedule
3(r) Equity
Capitalization
Schedule
3(s) Indebtedness
and Other Contracts
Schedule
3(t) Litigation
Schedule
3(v) Employee
Relations
Schedule
3(w) Title
Schedule
3(x) Intellectual
Property Rights
Schedule
3(z) Subsidiary
Rights
Schedule
3(bb) Tax
Status
Schedule
3(ee) Ranking
of Notes
Schedule
4(d) Use
of
Proceeds
Schedule
4(p) Additional
Registered Securities
36
