SECURITIES PURCHASE AGREEMENT
This
Securities Purchase Agreement (this "AGREEMENT") is dated as of November 10,
2010, among Sanswire Corp., a Delaware corporation (the "COMPANY"), and the
purchasers identified on the signature pages hereto (each a "PURCHASER" and
collectively the "PURCHASERS"); and
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act (as defined below), and Rule 506 promulgated
thereunder, the Company desires to issue and sell to each Purchaser, and each
Purchaser, severally and not jointly, desires to purchase from the Company the
aggregate number of shares of Common Stock (as defined below) set forth on such
Purchaser’s signature page(s) hereto (which aggregate amount for all Purchasers
shall not exceed $1,000,000 of Common Stock) and Warrants (as defined below) to
purchase the aggregate number of shares of Common Stock set forth as Warrant
Shares (as defined below) on such Purchaser’s signature page(s) hereto, on the
Closing Date(s).
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and each Purchaser agrees as
follows:
ARTICLE
I. DEFINITIONS
1.1
DEFINITIONS. In addition to the terms defined elsewhere in this Agreement, for
all purposes of this Agreement, the following terms have the meanings indicated
in this Section 1.1:
"AFFILIATE"
means, with respect to any Person, any Person that, directly or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with a Person as such terms are used in and construed under Rule
144. With respect to a Purchaser, any investment fund or managed account that is
managed on a discretionary basis by the same investment manager as such
Purchaser will be deemed to be an Affiliate of such Purchaser.
"BUSINESS
DAY" means any day except Saturday, Sunday and any day which shall be a federal
legal holiday or a day on which banking institutions in the State of New York
are authorized or required by law or other governmental action to
close.
"CLOSING(S)"
means each closing of the purchase and sale of Shares and Warrants pursuant to
Sections 2.1 and 2.2.
"CLOSING
DATE(S)" means each Trading Day when all of the Transaction Documents have been
executed and delivered by the applicable parties thereto, and all conditions
precedent to (i) the Purchasers' obligations to pay the Subscription Amount(s)
and (ii) the Company's obligations to deliver the Shares and Warrants have been
satisfied or waived.
"COMMISSION"
means the Securities and Exchange Commission.
"COMMON
STOCK" means the common stock of the Company, $0.00001 par value per share, and
any securities into which such common stock may hereafter be
reclassified.
"EXCHANGE
ACT" means the Securities Exchange Act of 1934, as amended.
"LIENS"
means a lien, charge, security interest, encumbrance, right of first refusal,
preemptive right or other restriction.
"MATERIAL
ADVERSE EFFECT" shall have the meaning ascribed to such term in Section
3.1(b).
"PER
SHARE PURCHASE PRICE" equals $0.075 subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of this
Agreement.
"PERSON"
means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
"PROCEEDING"
means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“PURCHASER”
means a party that executes a signature page(s) hereto and purchases Shares and
Warrants pursuant to the terms and conditions of this Securities Purchase
Agreement at the Initial or Subsequent Closing(s).
"REQUIRED
APPROVALS" shall have the meaning ascribed to such term in Section
3.1(e).
"RULE
144" means Rule 144 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.
"SEC
REPORTS" shall have the meaning ascribed to such term in Section
3.1(h).
"SECURITIES"
means the Shares, the Warrants and the Warrant Shares.
"SECURITIES
ACT" means the Securities Act of 1933, as amended.
"SHARES"
means the shares of Common Stock issued or issuable to each Purchaser pursuant
to this Agreement.
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"SUBSCRIPTION
AMOUNT(S)" means, as to each Purchaser, the amount(s) set forth below such
Purchaser's signature block on the signature page(s) hereto, in United States
dollars and in immediately available funds.
"SUBSIDIARY"
shall mean the subsidiaries of the Company, if any, set forth in the SEC
Reports.
"TRADING
DAY" means (i) a day on which the Common Stock is traded on a Trading Market, or
(ii) if the Common Stock is not quoted on a Trading Market, a day on which the
Common Stock is quoted in the over-the-counter market as reported by Pink OTC
Markets Inc. (or any similar organization or agency succeeding its functions of
reporting prices); provided, that in the event that the Common Stock is not
listed or quoted as set forth in (i) and (ii) hereof, then Trading Day shall
mean a Business Day.
"TRADING
MARKET" means the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: The Pink Sheets, the OTC
Bulletin Board, the New York Stock Exchange, the NASDAQ Global Select Market,
the NASDAQ Global Market or the NASDAQ Capital Market.
"TRANSACTION
DOCUMENTS" means this Agreement, the Warrants and any other documents or
agreements executed in connection with the transactions contemplated
hereunder.
"WARRANTS"
means the Common Stock Purchase Warrants, in the form of Exhibit A hereto,
issuable to the Purchasers at the Closing(s), which warrants shall be
exercisable immediately upon issuance for a term of 36 months at a per share
exercise price equal to $0.21.
"WARRANT
SHARES" means the shares of Common Stock issuable upon exercise of the Warrants.
The aggregate number of Warrant Shares to be issued to each Purchaser shall be
equal to 50% of the number of shares of Common Stock purchased by such Purchaser
on the applicable Closing Date(s).
ARTICLE
II. PURCHASE AND SALE
2.1
INITIAL CLOSING.
On the
terms and subject to the conditions set forth in this Agreement, on the initial
Closing Date (the “Initial Closing”), each Purchaser shall purchase from the
Company, severally and not jointly with the other Purchasers, and the Company
shall issue and sell to each Purchaser, (a) a number of Shares equal to such
Purchaser's Subscription Amount divided by the Per Share Purchase Price and (b)
the Warrants as determined pursuant to Section 2.3(a)(iii), each as set forth on
such Purchaser’s initial signature page hereto. Upon satisfaction of the
conditions set forth in Section 2.3, the Initial Closing shall occur at the
offices of the Company or such other location as the parties shall mutually
agree.
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2.2
SUBSEQUENT CLOSING(S).
Subsequent
to the Initial Closing, the Purchasers may purchase additional Shares and
Warrants (up to an aggregate total value of $1,000,000 when combined with the
value of the Shares and Warrants in the Initial Closing) on the same terms and
conditions as the Initial Closing and as set forth herein (each, a “Subsequent
Closing”).
2.3
CLOSING CONDITIONS; DELIVERIES.
(a) As a
condition to each of the Purchaser’s obligations hereunder, on each Closing Date
(unless otherwise noted below), the Company shall deliver or cause to be
delivered to each such Purchaser the following:
(i) this
Agreement duly executed by the Company (on the date of the Initial Closing
only);
(ii) a
certificate evidencing that number of Shares equal to such Purchaser's
Subscription Amount (for that number of Shares as are being purchased by such
Purchaser at such Closing) divided by the Per Share Purchase Price as set forth
on such Purchaser’s signature page hereto, registered in the name of such
Purchaser; and
(iii) a
Warrant, registered in the name of such Purchaser, pursuant to which such
Purchaser shall have the right to acquire that number of Warrant Shares (that
are being purchased by such Purchaser at such Closing), as set forth on such
Purchaser’s signature page hereto.
(b) As a
condition to the Company’s obligations hereunder, on each Closing Date, each
Purchaser shall deliver or cause to be delivered to the Company the
following:
(i) this
Agreement duly executed by such Purchaser; and
(ii) such
Purchaser's Subscription Amount (for that number of Shares as are being
purchased by such Purchaser at such Closing) by wire transfer of immediately
available funds to the account of the Company in accordance with the Company’s
written wire transfer instructions as set forth in Schedule 1
hereto.
(c) As a
condition to a party’s (the Company’s or each Purchaser’s, as the case may be)
obligations hereunder, all representations and warranties of the other party
(the Purchasers or the Company, as the case may be) contained herein shall be
true and correct in all material respects as of each Closing Date.
(d) As a
condition to a party’s (the Company’s or each Purchaser’s, as the case may be)
obligations hereunder, all obligations, covenants and agreements of the other
party (the Purchasers or the Company, as the case may be) required to be
performed, satisfied or complied with at or prior to each Closing Date shall
have been performed, satisfied or complied with as of such Closing
Date.
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(e) As a
condition to the respective obligations hereto of each Purchaser and the
Company, any approvals or authorizations of all United States and other
governmental, regulatory or judicial authorities required for the consummation
of the transactions contemplated hereby shall have been obtained or made and
shall be in full force and effect and all waiting periods required by United
States and other applicable law shall have expired, if any, and no provision of
any applicable United States or other law and no judgment, injunction, order or
decree of any governmental entity shall prohibit the purchase and sale of the
Securities as contemplated by this Agreement on each Closing Date.
ARTICLE
III. REPRESENTATIONS AND WARRANTIES
3.1
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth in the SEC
Reports, the Company hereby makes the following representations and warranties
as of the date hereof and as of each Closing Date to each
Purchaser:
(a)
SUBSIDIARIES. All of the subsidiaries of the Company are set forth in the SEC
Reports. Except as set forth in the SEC Reports, the Company owns, directly or
indirectly, all of the capital stock or other equity interests of each
Subsidiary free and clear of any Liens, 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)
ORGANIZATION. The Company is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted, except as has not and would not reasonably be expected
to have (i) a material adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material adverse effect on
the results of operations, assets, business or financial condition of the
Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company's ability to perform in any material respect on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
a "MATERIAL ADVERSE EFFECT") and no Proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority. The Company is not in violation or
default of any of the provisions of its certificate of incorporation, bylaws or
other organizational documents.
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(c)
AUTHORIZATION; ENFORCEMENT. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each
of the Transaction Documents and otherwise to carry out its obligations
thereunder. The execution and delivery of each of the Transaction Documents by
the Company and the consummation by it of the transactions contemplated thereby
have been duly authorized by all necessary action on the part of the Company and
no further action is required by the Company in connection therewith other than
in connection with the Required Approvals. Each Transaction Document has been
(or upon delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies, and (iii) in so far as indemnification and contribution provisions may
be limited by applicable law.
(d) NO
CONFLICTS. The execution, delivery and performance of the Transaction Documents
by the Company, the issuance and sale of the Shares and the consummation by the
Company of the other transactions contemplated thereby do not and will not (i)
conflict with or violate any provision of the Company's certificate of
incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, result in the creation of any Lien
upon any of the properties or assets of the Company, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company debt or otherwise) or other understanding to
which the Company is a party or by which any property or asset of the Company is
bound or affected, or (iii) subject to the Required Approvals, conflict with or
result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the
Company is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company is bound or
affected; except in the case of each of clauses (ii) and (iii), such as has not
had nor would reasonably be expected to result in a Material Adverse
Effect.
(e)
FILINGS, CONSENTS AND APPROVALS. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other than
(i) filings required pursuant to Sections 4.2 and 4.4 of this Agreement, (ii)
filings pursuant to the Exchange Act, and (iii) the filing of Form D with the
Commission and such filings as are required to be made under applicable state
securities laws (collectively, the "REQUIRED APPROVALS").
(f)
ISSUANCE OF THE SECURITIES. The Securities are duly authorized and, when issued
and paid for in accordance with the Transaction Documents, will be duly and
validly issued, fully paid and nonassessable, free and clear of all Liens. The
issuance of the Shares is not subject to any preemptive or similar rights to
subscribe for or purchase securities. The Company has reserved from its duly
authorized capital stock the maximum number of shares of Common Stock issuable
pursuant to this Agreement and the Warrants.
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(g)
CAPITALIZATION. There are approximately 314 million shares of the Company’s
Common Stock issued and outstanding. All of the outstanding shares of
capital stock of the Company are validly issued, fully paid and nonassessable,
have been issued in compliance with all federal securities laws, and none of
such outstanding shares was issued in violation of any preemptive rights or
similar rights to subscribe for or purchase securities. No further approval or
authorization of any stockholder or the Board of Directors of the Company is
required for the issuance and sale of the Securities. Except as disclosed in the
SEC Reports, there are no stockholders agreements, voting agreements or other
similar agreements with respect to the Company's capital stock to which the
Company is a party or, to the knowledge of the Company, between or among any of
the Company's stockholders.
(h) SEC
REPORTS; FINANCIAL STATEMENTS. The Company has filed all reports required to be
filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the year preceding the date hereof (the foregoing
materials, including the exhibits and schedules thereto, being collectively
referred to herein as the "SEC REPORTS").
(i)
INTERNAL ACCOUNTING CONTROLS. Except as set forth in the SEC Reports, the
Company maintains 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
GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management's general or specific authorization, and (iv)
the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. Except as set forth in the SEC Reports, the Company has established
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the Company and designed such disclosure controls and procedures to
ensure that material information relating to the Company is made known to the
certifying officers by others within the Company, particularly during the period
in which the Company's most recently filed period report under the Exchange Act,
as the case may be, is being prepared. The Company's certifying officers have
evaluated the effectiveness of the Company's controls and procedures as of a
date within 90 days prior to the filing date of the most recently filed periodic
report under the Exchange Act (such date, the "EVALUATION DATE"). The Company
presented in its most recently filed period report under the Exchange Act the
conclusions of the certifying officers about the effectiveness of the disclosure
controls and procedures based on their evaluations as of the Evaluation
Date.
(j)
INVESTMENT COMPANY. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Shares, will not be or be an
Affiliate of, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
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(k)
APPLICATION OF TAKEOVER PROTECTIONS. The Company and its Board of Directors have
not implemented any poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Company's
Certificate of Incorporation (or similar charter documents) or the laws of its
state of incorporation.
(l)
DISCLOSURE. Other than the terms of the transactions contemplated by this
Agreement, the Company confirms that, neither the Company nor, to its knowledge,
any other Person acting on its behalf, has provided any of the Purchasers or
their agents or counsel with any information that constitutes material,
non-public information. All disclosure provided to the Purchasers
regarding the Company, its business and the transactions contemplated hereby,
including the SEC Reports, furnished by or on behalf of the Company are or were
at the times they were made or filed with the SEC, as the case may be, true and
correct in all material respects and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
(m)
GENERAL SOLICITATION. Neither the Company, nor to the Company’s knowledge, any
Person acting on behalf of the Company, has offered or sold any of the
Securities by any form of general solicitation or general advertising (within
the meaning of Regulation D promulgated pursuant to the Securities Act) or taken
any action which, assuming the accuracy of the Purchasers’ representations and
warranties set forth in Section 3.2 hereof, would subject the offering, issuance
or sale of any of the Securities to the registration requirements of the
Securities Act. The Company has offered the Securities for sale only to the
Purchasers and certain other "accredited investors" within the meaning of Rule
501 under the Securities Act.
(n)
FOREIGN CORRUPT PRACTICES. Neither the Company, nor to the knowledge of the
Company, any agent or other person acting on behalf of the Company, has (i)
directly or indirectly, used any corrupt funds for unlawful contributions,
gifts, entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is in violation of law, or (iv) violated in
any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended.
(o)
ACKNOWLEDGMENT REGARDING PURCHASERS' PURCHASE OF SHARES. The Company
acknowledges and agrees that each of the Purchasers is acting solely in the
capacity of an arm's length purchaser with respect to the Transaction Documents
and the transactions contemplated thereby. The Company further acknowledges
that, to its knowledge, no Purchaser is acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to this
Agreement and the transactions contemplated hereby.
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The
Purchasers each acknowledge and agree that the Company does not make and has not
made any representations and warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section
3.1.
3.2
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser hereby, for
such Purchaser and for no other Purchaser, represents and warrants as of the
date hereof and as of each Closing Date to the Company as follows:
(a)
ORGANIZATION; AUTHORITY. Such Purchaser is an individual or an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with full right, corporate or partnership power
and authority to enter into and to consummate the transactions contemplated by
the Transaction Documents and otherwise to carry out its obligations hereunder
and thereunder. The execution, delivery and performance by such Purchaser of the
Transaction Documents and the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate or similar action on
the part of such Purchaser. Each Transaction Document to which it is party has
been duly executed by such Purchaser, and when delivered by such Purchaser in
accordance with the terms hereof and thereof, will constitute the valid and
legally binding obligation of such Purchaser, enforceable against it in
accordance with its terms, except (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors' rights generally,
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable
law.
(b)
INVESTMENT INTENT. Such Purchaser understands that the Securities are
"restricted securities" and have not been registered under the Securities Act or
any applicable state securities law and may not be offered for sale, sold,
assigned or transferred unless (i) subsequently registered under the Securities
Act, or (ii) such Purchaser shall have delivered to the Company an opinion of
counsel in a form acceptable 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 (iii) such Purchaser
provides the Company with assurances and proper documentation including an
opinion of counsel that such Securities can be sold, assigned or transferred
pursuant to Rule 144 or Rule 144A promulgated under the Securities Act (or a
successor rule thereto). Such Purchaser is acquiring the Securities
as principal for its own account for investment purposes only and not with a
view to or for distributing or reselling such Securities or any part thereof,
has no present intention of distributing any of such Securities and has no
arrangement or understanding with any other Persons regarding the distribution
of such Securities (this representation and warranty not limiting such
Purchaser's right to sell the Securities in compliance with applicable federal
and state securities laws). Such Purchaser is acquiring the Securities hereunder
in the ordinary course of its business. Such Purchaser does not have any
agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities (this representation and warranty not limiting
such Purchaser's right to sell the Securities in compliance with applicable
federal and state securities laws).
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Such
Purchaser understands that 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 through whom the sale is made) may be deemed to
be an underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the SEC promulgated thereunder. Such Purchaser further
understands that neither the Company nor any other Person is under any
obligation whatsoever to register the Securities under the Securities Act or any
state securities laws or to comply with the terms and conditions of any
exemption thereunder.
(c)
PURCHASER STATUS. At the time such Purchaser was offered the Securities, it was,
and at the date hereof and as of each Closing Date, it is, an "accredited
investor" as defined in Rule 501(a) under the Securities Act. Such Purchaser is
not required to be registered as a broker-dealer under Section 15 of the
Exchange Act.
(d)
EXPERIENCE OF SUCH PURCHASER. Such Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment. Such Purchaser is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford a
complete loss of such investment.
(e)
GENERAL SOLICITATION. Such Purchaser is not purchasing the Securities as a
result of any advertisement, article, notice, website posting or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television, internet or radio or presented at
any seminar or any other general solicitation or general
advertisement.
(f)
RELIANCE ON EXEMPTIONS. Such Purchaser understands that the Securities are
being offered and sold to it in reliance on specific exemptions from the
registration requirements of the United States federal and state securities laws
and that the Company is relying on the truth and accuracy of, and such
Purchaser’s compliance with, the representations, warranties, agreements,
acknowledgements and understandings of such Purchaser set forth herein in order
to determine the availability of such exemptions and the eligibility
of such Purchaser to acquire the Securities.
(g)
INFORMATION. Such Purchaser and its advisors have been furnished with all
materials relating to the business, finances and operations of the Company and
all materials relating to the offer and sale of the Securities which have been
requested by such Purchaser. Such Purchaser and its advisor have been
afforded the opportunity to ask questions of the Company. Such Purchaser
understands that its investment in the Securities involves a high degree of
risk. Such Purchaser 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.
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(h) NO
GOVERNMENTAL REVIEW. Such Purchaser 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.
(i) NO
CONFLICTS. The execution, delivery and performance by such Purchaser of
this Agreement and the Transaction Documents and the consummation by such
Purchaser of the transactions contemplated hereby and thereby will not (i)
conflict with or result in a violation of the organizational documents of such
Purchaser, (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 (with or
without notice, the lapse of time or both) of, any agreement, indenture or
instrument to which such Purchaser 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 Purchaser, except in the case of
clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations
which have not had and would not, individually or in the aggregate, reasonably
be expected to have a material adverse effect on the ability of such Purchaser
to perform its obligations hereunder.
(j)
CERTAIN TRADING ACTIVITIES. Such Purchaser has not directly or indirectly, nor
has any Person acting on behalf of or pursuant to any understanding with such
Purchaser, engaged in any transaction in the securities of the Company
(including without limitation, any short sales (as defined in Rule 200
promulgated under the Exchange Act) involving the Company’s securities) during
the period commencing as of the time that such Purchaser was first contacted by
the placement agent or the Company, as the case may be, regarding the specific
investment in the Company contemplated by this Agreement and ending immediately
prior to the execution of this Agreement by such Purchaser.
The
Company acknowledges and agrees that each Purchaser does not make or has not
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section
3.2.
ARTICLE
IV. OTHER AGREEMENTS OF THE PARTIES
4.1
TRANSFER RESTRICTIONS.
(a) The
Purchasers hereby agree that the Securities may only be disposed of in
compliance with state and federal securities laws. In connection with any
transfer of Securities other than pursuant to an effective registration
statement or Rule 144, to the Company or to an Affiliate of a Purchaser, the
Company shall require the transferor thereof to provide to the Company an
opinion of counsel, the form and substance of which opinion shall be
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act. As a
condition of transfer, any such transferee shall agree in writing to be bound by
the terms of this Agreement and shall have the rights and obligations of a
Purchaser under this Agreement.
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(b) The
Purchasers agree to the imprinting, so long as is required by this Section
4.1(b), of a legend on any of the Securities in the following form:
THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE TRANSFERRED, OFFERED, SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION
OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
ACCEPTABLE TO THE COMPANY.
In
addition, the Purchasers agree that all certificates or other instruments
representing the Warrant will also bear a legend substantially to the following
effect:
THIS
INSTRUMENT IS ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER
PROVISIONS OF A SECURITIES PURCHASE AGREEMENT BETWEEN THE ISSUER OF THESE
SECURITIES AND THE PURCHASER REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE
WITH THE ISSUER. THE SECURITIES REPRESENTED BY THIS INSTRUMENT MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID AGREEMENT.
ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT WILL BE
VOID.
(c)
Certificates evidencing the Shares and Warrant Shares shall not be required to
contain any legend (including the legend set forth in Section 4.1(b)), (i) while
a registration statement covering the resale of such security is effective under
the Securities Act, or (ii) following any sale of such Shares or Warrant Shares
pursuant to Rule 144 (assuming the transferor is not an affiliate of the
Company), or (iii) if such Shares or Warrant Shares are eligible for sale under
Rule 144 (provided that a Purchaser provides the Company with reasonable
assurances and proper documentation including an opinion of counsel that such
Securities are eligible for sale, assignment or transfer under Rule 144), or
(iv) if such legend is not required under applicable requirements of the
Securities Act (including judicial interpretations and pronouncements issued by
the Staff of the Commission). If all or any portion of a Warrant is exercised at
a time when there is an effective registration statement to cover the resale of
the Warrant Shares, such Warrant Shares shall be issued free of all legends. The
Company agrees that following such time as such legend is no longer required
under this Section 4.1(c), it will, following the delivery by a Purchaser to the
Company or the Company's transfer agent of a certificate representing Shares or
Warrant Shares, as the case may be, issued with a restrictive legend (such date,
the "LEGEND REMOVAL DATE") (endorsed or with stock powers attached, signature
guaranteed, and otherwise in a form necessary to affect the reissuance and/or
transfer, if applicable) and proper documentation, including an opinion of
counsel when required, related thereto, deliver or cause to be delivered to such
Purchaser a certificate representing such Securities that is free from all
restrictive and other legends. The Company may not make any notation on its
records or give instructions to any transfer agent of the Company that enlarge
the restrictions on transfer set forth in this Section.
12
(d) Each
Purchaser, severally and not jointly with the other Purchasers, agrees that the
removal of the restrictive legend from certificates representing Securities as
set forth in this Section 4.1 is predicated upon the Company's reliance that the
Purchaser will sell any Securities pursuant to either the registration
requirements of the Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom, and that such legends will be removed
only with proper documentation, including an opinion of counsel when required,
provided to the Company or its transfer agent.
4.2
FURNISHING OF INFORMATION. As long as any Purchaser owns Securities, the Company
covenants to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act. As long as any
Purchaser owns Securities, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell the Securities under Rule 144.
4.3
INTEGRATION. The Company shall not sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in Section 2 of
the Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Purchasers or that would be integrated
with the offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market such that it would require shareholder
approval prior to the closing of such other transaction unless shareholder
approval is obtained before the closing of such subsequent
transaction.
4.4
SECURITIES LAWS DISCLOSURE; PUBLICITY. If required by the rules promulgated
under the Exchange Act or other securities laws or those of a Trading Market,
the Company shall issue a press release or file a Current Report on Form 8-K
relating to the transactions contemplated hereby. No Purchaser shall issue
any press release or otherwise make any public statement regarding the
Transaction Documents or the transactions contemplated hereby without the prior
written consent of the Company, except if such disclosure is required by law, in
which case such Purchaser shall promptly provide the Company with prior notice
of such public statement or communication. Notwithstanding the foregoing, the
Company shall not publicly disclose the name of any Purchaser, or include the
name of any Purchaser in any filing with the Commission or any regulatory agency
or Trading Market, without the prior written consent of such Purchaser, except
(i) as required by federal securities law and (ii) to the extent such disclosure
is required by law or Trading Market regulations.
13
4.5
SHAREHOLDERS RIGHTS PLAN. No claim will be made or enforced by the Company or,
to the knowledge of the Company, any other Person that any Purchaser is an
"Acquiring Person" under any shareholders rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that any Purchaser
could be deemed to trigger the provisions of any such plan or arrangement, by
virtue of receiving Securities under the Transaction Documents. The Company
shall conduct its business in a manner so that it will not become subject to the
Investment Company Act.
4.6
NON-PUBLIC INFORMATION. The Company covenants and agrees that neither it nor, to
its knowledge, any other Person acting on its behalf will provide any Purchaser
with any information that the Company believes constitutes material non-public
information, unless prior thereto such Purchaser shall have consented thereto or
executed a written agreement regarding the confidentiality and use of such
information.
4.7 USE
OF PROCEEDS. The Company shall use the net proceeds from the sale of the
Securities hereunder for working capital purposes.
4.8
RESERVATION OF COMMON STOCK. As of the date hereof, the Company has reserved and
the Company shall continue to reserve and keep available at all times, free of
preemptive rights, a sufficient number of shares of Common Stock for the purpose
of enabling the Company to issue Shares pursuant to this Agreement and Warrant
Shares pursuant to any exercise of the Warrants.
4.09
LISTING OF COMMON STOCK. The Company hereby agrees to use commercially
reasonable efforts to maintain the listing of the Common Stock on a Trading
Market if necessary. The Company further agrees, if the Company applies to have
the Common Stock traded on any other Trading Market, it will include in such
application all of the Shares and Warrant Shares, and will take such other
action as is necessary to cause all of the Shares and Warrant Shares to be
listed on such other Trading Market as promptly as possible. The Company will
take all action reasonably necessary to continue the listing and trading of its
Common Stock on a Trading Market and will comply in all respects with the
Company's reporting, filing and other obligations under the bylaws or rules of
the Trading Market.
4.10
COMMERCIALLY REASONABLE EFFORTS. Subject to the terms and conditions of
this Agreement, each of the parties will use its commercially reasonable efforts
in good faith to take, or cause to be taken, all actions, and to do, or cause to
be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of the transactions contemplated
hereby as promptly as practicable and otherwise to enable consummation of the
transactions contemplated hereby and shall use commercially reasonable efforts
to cooperate with the other party to that end.
14
ARTICLE
V. MISCELLANEOUS
5.1 FEES
AND EXPENSES. Unless otherwise provided herein or in the Transaction Documents,
each party shall pay all the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement and the Transaction Documents and the consummation
of the transactions contemplated hereby and thereby. The Company shall pay all
stamp and other taxes and duties levied in connection with the sale of the
Securities.
5.2
ENTIRE AGREEMENT. The Transaction Documents, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
Except as specifically set forth herein or in any of the Transaction Documents,
neither the Company nor any Purchaser makes any representations, warranties,
covenants and undertakings with respect to the matters set forth
herein.
5.3
NOTICES. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given
and effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto prior to 6:30 p.m. (New York City time) on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number set
forth on the signature pages attached hereto on a day that is not a Trading Day
or later than 6:30 p.m. (New York City time) on any Trading Day, (c) the second
Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom such
notice is required to be given. The address for such notices and communications
shall be as set forth on the signature pages attached hereto.
5.4
AMENDMENTS; WAIVERS. No provision of this Agreement may be waived or amended
except in a written instrument signed, in the case of an amendment, by the
Company and each Purchaser or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right.
15
5.5
CONSTRUCTION. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party. Each and every reference
to share prices, shares of Common Stock and any other numbers in this Agreement
that relate to the Common Stock, shall automatically be adjusted for stock
splits, stock combinations and other similar transactions that occur with
respect to the Common Stock after the date of this Agreement.
5.6
SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and permitted assigns.
The Company may not assign this Agreement, any Transaction Document or all or
any of its rights or obligations hereunder and thereunder without the prior
written consent of each Purchaser, except an assignment in the case of a
business combination where the Company is not the surviving entity, or a sale of
all or substantially all of the assets of the Company, to the entity which is
the survivor of such business combination or the purchaser in such sale. No
Purchaser may assign this Agreement, any Transaction Document or any or all of
its rights or obligations hereunder and thereunder without the prior written
consent of the Company; provided, however, that any Purchaser may assign any or
all of its rights under this Agreement or the Transaction Documents to any
Person to whom such Purchaser assigns or transfers any Securities, provided such
transfer is in compliance with all federal and state securities laws and the
transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions hereof and of the Transaction Documents that apply
to the "Purchasers".
5.7 NO
THIRD-PARTY BENEFICIARIES. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not
for the benefit of, nor may any provision hereof be enforced by, any other
Person.
5.8
GOVERNING LAW. All questions concerning the construction, validity, enforcement
and interpretation of the Transaction Documents shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Delaware, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in
Brevard County, Florida. Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in Brevard
County, Florida, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of any of the Transaction Documents),
and hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is improper. Each party
hereto hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by delivering a copy
thereof via overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto (including
its affiliates, agents, officers, directors and employees) hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this
Agreement, any of the Transaction Documents or the transactions contemplated
hereby. If either party shall commence an action or proceeding to enforce any
provisions of a Transaction Document, then the prevailing party in such action
or proceeding shall be reimbursed by the other party for its attorneys' fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.
16
5.9
SURVIVAL. The representations and warranties herein shall survive each Closing
and delivery of the Shares and Warrant Shares.
5.10
EXECUTION. This Agreement may be executed in two or more counterparts, all of
which when taken together 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, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission or by an email which contains a portable document format
(.pdf) file of an executed signature page, such signature shall create a valid
and binding obligation of the party executing (or on whose behalf such signature
is executed) with the same force and effect as if such facsimile or .pdf file
signature page were an original thereof.
5.11
SEVERABILITY. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the provision that would otherwise be invalid or
unenforceable shall be deemed amended to apply to the broadest extent that it
would be valid and enforceable and the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby.
5.12
REPLACEMENT OF SECURITIES. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefore, a new certificate or
instrument, but only upon receipt of evidence satisfactory to the Company of
such loss, theft or destruction and customary and reasonable indemnity, if
requested. The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs associated with
the issuance of such replacement Securities.
5.13
REMEDIES. In addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, each of the Purchasers and the
Company will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
described in the foregoing sentence and hereby agrees to waive in any action for
specific performance of any such obligation the defense that a remedy at law
would be adequate.
17
5.14
HEADINGS; GENDER. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of this
Agreement. Unless the context clearly indicates otherwise, each
pronoun herein shall be deemed to include the masculine, feminine, neuter,
singular and plural forms thereof. The terms “including,” “includes,”
“include” and words of like import shall be construed as broadly as if followed
by the words “without limitation.” The terms “herein,” “hereunder,”
“hereof” and words of like import refer to this entire Agreement instead of just
the provision in which they are found.
5.15
INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The obligations of
each Purchaser under any Transaction Document are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for the performance of the obligations of any other Purchaser under any
Transaction Document. Nothing contained herein or in any Transaction Document,
and no action taken by any Purchaser pursuant thereto, shall be deemed to
constitute the Purchasers as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Purchasers are in any
way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. Each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation, the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose. Each
Purchaser has been represented by its own separate legal counsel in its review
and negotiation of the Transaction Documents
5.16
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 Transaction Documents and the consummation of
the transactions contemplated.
(SIGNATURE
PAGES FOLLOW)
18
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
By:
/s/ Xxxxx X.
Xxxxxxxx
Name: Xxxxx
Xxxxxxxx
Title: President
and Chief Executive Officer
Address
for Notice:
00000
Xxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx,
XX 00000
Attn:
General Counsel
Fax:
000-000-0000
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK - SIGNATURE PAGES FOR PURCHASERS
FOLLOW]
19
IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.
PURCHASER
NAME:
XXXXX X.
XXXXXXXX
By:
/s/ Xxxxx X.
Xxxxxxxx
Name:
Xxxxx X. Xxxxxxxx
Title:
ADDRESS
FOR NOTICE
0000
Xxxxxxxx Xxxxx
Xxxx
Xxxxxxxx, XX 00000
Attn:
Fax:
Subscription
Amount:
$
100,000.05
Shares:
1,333,334
Warrant
Shares: @ $0.21 = 666,667
20
IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.
PURCHASER
NAME:
EASTCOR
ENGINEERING, LLC
By:
/s/ Xxxxx X.
Xxxx
Name: Xxxxx
X. Xxxx
Title: General
Manager
ADDRESS
FOR NOTICE
0000
Xxxxxx Xxxxx
Xxxxxx,
XX 00000
Attn:
Xxxxxx Xxxxxxx
Fax:
000-000-0000
Subscription
Amount:
$
100,000.05
Shares:
1,333,334
Warrant
Shares: @ $0.21 = 666,667
21
IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.
PURCHASER
NAME: ROSE NOMINEES LIMITED A/C 21432
|
For
and on behalf of
|
For
and on behalf of
|
|
ROSE
NOMINEES LIMITED
|
ROSE
NOMINEES LIMITED
|
|
By:
/s/ Xxxxxx
Xxxxxxxxx
|
By:
/s/ Xxxxxx Xx
Xxxxxxx
|
|
Name:
AUTHORISED SIGNATORY
|
Name:
AUTHORISED SIGNATORY
|
|
Title:
|
Title:
|
ADDRESS
FOR NOTICE
ROSE
NOMINEES LIMITED
X.X.XXX
00,
XXXXXXX
XXXXX
GLATEGNY
XXXXXXXX
XX. XXXXX
XXXX
XXXXXXXX,
XX0 0XX
Attn:
Xxxxx Lemoignan
Fax: 00
00 0000 000000
Subscription
Amount:
$
49,999.95
Shares:
666,666
Warrant
Shares: @ $0.21 = 333,333
22
