EXHIBIT 10.6
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as
of April 22, 2004, by and among MAXIMUM DYNAMICS INC., a Colorado
corporation, with headquarters located at 0 Xxxxx Xxxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000 (the "Company"), and the Buyers
listed on Schedule I attached hereto (individually, a "Buyer" or
collectively "Buyers").
WITNESSETH:
WHEREAS, the Company and the Buyer(s) are executing and
delivering this Agreement in reliance upon an exemption from
securities registration pursuant to Section 4(2) and/or Rule 506 of
Regulation D ("Regulation D") as promulgated by the U.S. Securities
and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act");
WHEREAS, the parties desire that, upon the terms and subject to
the conditions contained herein, the Company shall issue and sell to
the Buyer(s), as provided herein, and the Buyer(s) shall purchase up
to Five Hundred Thousand Dollars ($500,000) of secured convertible
debentures (the "Convertible Debentures"), which shall be convertible
into shares of the Company's common stock, no par value (the "Common
Stock") (as converted, the "Conversion Shares") of which Two Hundred
Fifty Thousand Dollars ($250,000) shall be funded on the fifth (5th)
business day following the date hereof (the "First Closing"), One
Hundred Twenty Five Thousand Dollars ($125,000) on the fifth (5th)
business day following the date the registration statement (the
"Registration Statement") is filed, pursuant the Investor Registration
Rights Agreement dated the date hereof, with the United States
Securities and Exchange Commission (the "SEC") (the "Second Closing"),
and One Hundred Twenty Five Thousand Dollars ($125,000) on the fifth
(5th) business day following the date the Registration Statement is
declared effective by the SEC (the "Third Closing") (collectively
referred to as the "Closings"), for a total purchase price of up to
Five Hundred Thousand Dollars ($500,000), (the "Purchase Price") in
the respective amounts set forth opposite each Buyer(s) name on
Schedule I (the "Subscription Amount"); and
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, the parties hereto are executing and delivering a
Registration Rights Agreement substantially in the form attached
hereto as Exhibit A (the "Investor Registration Rights Agreement")
pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations
promulgated there under, and applicable state securities laws; and
WHEREAS, the aggregate proceeds of the sale of the Convertible
Debentures contemplated hereby shall be held in escrow pursuant to the
terms of an escrow agreement substantially in the form of the Escrow
Agreement attached hereto as Exhibit B.
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, the parties hereto are executing and delivering
Irrevocable Transfer Agent Instructions substantially in the form
attached hereto as Exhibit C (the "Irrevocable Transfer Agent
Instructions").
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, the parties hereto are executing and delivering a
Security Agreement substantially in the form attached hereto as
Exhibit D (the "Security Agreement") pursuant to which the Company has
agreed to provide the Buyer a security interest in Pledged Collateral
(as this term is defined in the Security Agreement dated the date
hereof) to secure Company's obligations under this Agreement, the
Convertible Debenture, the Investor Registration Rights Agreement, the
Irrevocable Transfer Agent Instructions, the Security Agreement or any
other obligations of the Company to the Investor; and
NOW, THEREFORE, in consideration of the mutual covenants and
other agreements contained in this Agreement the Company and the
Buyer(s)hereby agree as follows:
1. PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.
(a) Purchase of Convertible Debentures. Subject to the
satisfaction (or waiver) of the terms and conditions of this
Agreement, each Buyer agrees, severally and not jointly, to purchase
at Closing (as defined herein below) and the Company agrees to sell
and issue to each Buyer, severally and not jointly, at Closing,
Convertible Debentures in amounts corresponding with the Subscription
Amount set forth opposite each Buyer's name on Schedule I hereto.
Upon execution hereof by a Buyer, the Buyer shall wire transfer the
Subscription Amount set forth opposite his name on Schedule I in same-
day funds or a check payable to "Xxxxxx Xxxxxxxx LLP, as Escrow Agent
for Maximum Dynamics Inc/Cornell Capital Partners, LP", which
Subscription Amount shall be held in escrow pursuant to the terms of
the Escrow Agreement (as hereinafter defined) and disbursed in
accordance therewith. Notwithstanding the foregoing, a Buyer may
withdraw his Subscription Amount and terminate this Agreement as to
such Buyer at any time after the execution hereof and prior to Closing
(as hereinafter defined).
(b) Closing Date. The First Closing of the purchase and
sale of the Convertible Debentures shall take place at 10:00 a.m.
Eastern Standard Time on the fifth (5th) business day following the
date hereof, subject to notification of satisfaction of the conditions
to the First Closing set forth herein and in Sections 6 and 7 below
(or such later date as is mutually agreed to by the Company and the
Buyer(s)) (the "First Closing Date"), the Second Closing of the
purchase and sale of the Convertible Debentures shall take place at
10:00 a.m. Eastern Standard Time on the fifth (5th) business day
following the date the Registration Statement is filed with the SEC,
subject to notification of satisfaction of the conditions to the
Second Closing set forth herein and in Sections 6 and 7 below (or such
later date as is mutually agreed to by the Company and the Buyer(s))
(the "Second Closing Date") and the Third Closing of the purchase and
sale of the Convertible Debentures shall take place at 10:00 a.m.
Eastern Standard Time on the fifth (5th) business day following the
date the Registration Statement is declared effective by the SEC,
subject to notification of satisfaction of the conditions to the Third
Closing set forth herein and in Sections 6 and 7 below (or such later
date as is mutually agreed to by the Company and the Buyer(s)) (the
"Third Closing Date")(collectively referred to a the "Closing Dates").
The Closing shall occur on the respective Closing Dates at the offices
of Xxxxxx Xxxxxxxx, LLP, 0000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxx, XX
00000 (or such other place as is mutually agreed to by the Company and
the Buyer(s)).
(c) Escrow Arrangements; Form of Payment. Upon execution
hereof by Buyer(s) and pending the Closings, the aggregate proceeds of
the sale of the Convertible Debentures to Buyer(s) pursuant hereto
shall be deposited in a non-interest bearing escrow account with
Xxxxxx Xxxxxxxx LLP, as escrow agent (the "Escrow Agent"), pursuant to
the terms of an escrow agreement between the Company, the Buyer(s) and
the Escrow Agent in the form attached hereto as Exhibit B (the "Escrow
Agreement"). Subject to the satisfaction of the terms and conditions
of this Agreement, on the Closing Dates, (i) the Escrow Agent shall
deliver to the Company in accordance with the terms of the Escrow
Agreement such aggregate proceeds for the Convertible Debentures to be
issued and sold to such Buyer(s), minus the fees and expenses of
Xxxxxx Xxxxxxxx LLP of which Ten Thousand Dollars ($10,000) shall be
paid directly from the gross proceeds held in escrow of the First
Closing and the retainer of Xxxxxxxxxxx & Xxxxxxxx LLP of Twenty Two
Thousand Five Hundred Dollars ($22,500) shall be paid from the gross
proceeds held in escrow of the First Closing by wire transfer of
immediately available funds in accordance with the Company's written
wire instructions, and (ii) the Company shall deliver to each Buyer,
Convertible Debentures which such Buyer(s) is purchasing in amounts
indicated opposite such Buyer's name on Schedule I, duly executed on
behalf of the Company.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants, severally and not jointly,
that:
(a) Investment Purpose. Each Buyer is acquiring the
Convertible Debentures and, upon conversion of Convertible Debentures,
the Buyer will acquire the Conversion Shares then issuable, for its
own account for investment only and not with a view towards, or for
resale in connection with, the public sale or distribution thereof,
except pursuant to sales registered or exempted under the 1933 Act;
provided, however, that by making the representations herein, such
Buyer reserves the right to dispose of the Conversion Shares at any
time in accordance with or pursuant to an effective registration
statement covering such Conversion Shares or an available exemption
under the 1933 Act.
(b) Accredited Investor Status. Each Buyer is an
"Accredited Investor" as that term is defined in Rule 501(a)(3) of
Regulation D.
(c) Reliance on Exemptions. Each Buyer understands that
the Convertible Debentures 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 such securities.
(d) Information. Each Buyer and its advisors (and his or,
its counsel), if any, have been furnished with all materials relating
to the business, finances and operations of the Company and
information he deemed material to making an informed investment
decision regarding his purchase of the Convertible Debentures and the
Conversion Shares, which have been requested by such Buyer. Each
Buyer and its advisors, if any, have been afforded the opportunity to
ask questions of the Company and its management. 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 in Section 3 below. Each
Buyer understands that its investment in the Convertible Debentures
and the Conversion Shares involves a high degree of risk. Each Buyer
is in a position regarding the Company, which, based upon employment,
family relationship or economic bargaining power, enabled and enables
such Buyer to obtain information from the Company in order to evaluate
the merits and risks of this investment. Each 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 Convertible Debentures and the Conversion Shares.
(e) No Governmental Review. Each 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 Convertible Debentures or the Conversion Shares, or
the fairness or suitability of the investment in the Convertible
Debentures or the Conversion Shares, nor have such authorities passed
upon or endorsed the merits of the offering of the Convertible
Debentures or the Conversion Shares.
(f) Transfer or Resale. Each Buyer understands that
except as provided in the Investor Registration Rights Agreement: (i)
the Convertible Debentures 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, or (B) such Buyer shall have
delivered to the Company an opinion of counsel, in a generally
acceptable form, 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 requirements; (ii) any sale of
such securities made in reliance on Rule 144 under the 1933 Act (or a
successor rule thereto) ("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 such 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 0000 Xxx) may require
compliance with some other exemption under the 1933 Act or the rules
and regulations of the SEC thereunder; and (iii) neither the Company
nor any other person is under any obligation to register such
securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder. The
Company reserves the right to place stop transfer instructions against
the shares and certificates for the Conversion Shares.
(g) Legends. Each Buyer understands that the certificates
or other instruments representing the Convertible Debentures and or
the Conversion Shares shall bear a restrictive legend in substantially
the following form (and a stop transfer order may be placed against
transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TOWARD RESALE AND MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS.
The legend set forth above shall be removed and the Company within two
(2) business days shall issue a certificate without such legend to the
holder of the Conversion Shares upon which it is stamped, if, unless
otherwise required by state securities laws, (i) in connection with a
sale transaction, provided the Conversion Shares are registered under
the 1933 Act or (ii) in connection with a sale transaction, after such
holder provides the Company with an opinion of counsel, which opinion
shall be in form, substance and scope customary for opinions of
counsel in comparable transactions, to the effect that a public sale,
assignment or transfer of the Conversion Shares may be made without
registration under the 1933 Act.
(h) Authorization, Enforcement. This Agreement has been
duly and validly authorized, executed and delivered on behalf of such
Buyer and is a valid and binding agreement of such Buyer enforceable
in accordance with its terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar
laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
(i) Receipt of Documents. Each Buyer and his or its
counsel has received and read in their entirety: (i) this Agreement
and each representation, warranty and covenant set forth herein, the
Security Agreement, the Investor Registration Rights Agreement, the
Escrow Agreement, and the Irrevocable transfer Agent Instructions;
(ii) all due diligence and other information necessary to verify the
accuracy and completeness of such representations, warranties and
covenants; (iii) the Company's Form 10-KSB for the fiscal year ended
December 31, 2003; (iv) the Company's Form 10-QSB for the fiscal
quarter ended September 30, 2003 and (v) answers to all questions each
Buyer submitted to the Company regarding an investment in the Company;
and each Buyer has relied on the information contained therein and has
not been furnished any other documents, literature, memorandum or
prospectus.
(j) Due Formation of Corporate and Other Buyers. If the
Buyer(s) is a corporation, trust, partnership or other entity that is
not an individual person, it has been formed and validly exists and
has not been organized for the specific purpose of purchasing the
Convertible Debentures and is not prohibited from doing so.
(k) No Legal Advice From the Company. Each Buyer
acknowledges, that it had the opportunity to review this Agreement and
the transactions contemplated by this Agreement with his or its own
legal counsel and investment and tax advisors. Each Buyer is relying
solely on such counsel and advisors and not on any statements or
representations of the Company or any of its representatives or agents
for legal, tax or investment advice with respect to this investment,
the transactions contemplated by this Agreement or the securities laws
of any jurisdiction.
(l) Each Buyer represents and warrants that neither it nor
any of its Affiliates has an open short position in the Common Stock
of the Company and each Buyer agrees that it will not, and that it
will cause its Affiliates not to engage in any short sales of or
hedging transactions with respect to the Common Stock.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that,
except as set forth in the SEC Documents (as defined herein):
(a) Organization and Qualification. The Company and its
subsidiaries are corporations duly organized and validly existing in
good standing under the laws of the jurisdiction in which they are
incorporated, and have the requisite corporate power 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 corporation to do business and is in good standing in every
jurisdiction in which 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 a material
adverse effect on the Company and its subsidiaries taken as a whole.
(b) Authorization, Enforcement, Compliance with Other
Instruments. (i) The Company has the requisite corporate power and
authority to enter into and perform this Agreement, the Security
Agreement, the Investor Registration Rights Agreement, the Escrow
Agreement, the Irrevocable Transfer Agent Instructions, and any
related agreements, and to issue the Convertible Debentures and the
Conversion Shares in accordance with the terms hereof and thereof,
(ii) the execution and delivery of this Agreement, the Security
Agreement, the Investor Registration Rights Agreement, the Escrow
Agreement, the Irrevocable Transfer Agent Instructions (as defined
herein) and any related agreements by the Company and the consummation
by it of the transactions contemplated hereby and thereby, including,
without limitation, the issuance of the Convertible Debentures the
Conversion Shares and the reservation for issuance and the issuance
of the Conversion Shares issuable upon conversion or exercise thereof,
have been duly authorized by the Company's Board of Directors and no
further consent or authorization is required by the Company, its Board
of Directors or its stockholders, (iii) this Agreement, the Security
Agreement, the Investor Registration Rights Agreement, the Escrow
Agreement, the Irrevocable Transfer Agent Instructions and any related
agreements have been duly executed and delivered by the Company, (iv)
this Agreement, the Security Agreement, the Investor Registration
Rights Agreement, the Escrow Agreement, the Irrevocable Transfer Agent
Instructions and any related agreements constitute the valid and
binding obligations of the Company enforceable against the Company in
accordance with their 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 creditors'
rights and remedies. The authorized officer of the Company executing
this Agreement, the Security Agreement, the Investor Registration
Rights Agreement, the Escrow Agreement, the Irrevocable Transfer Agent
Instructions and any related agreements knows of no reason why the
Company cannot file the registration statement as required under the
Investor Registration Rights Agreement or perform any of the Company's
other obligations under such documents.
(c) Capitalization. The authorized capital stock of the
Company consists of 200,000,000 shares of Common Stock, no par value
per share and 20,000,000 shares of Preferred Stock. As of the date
hereof the Company has 78,185,833 shares of Common Stock and 0 shares
of Preferred Stock were issued and outstanding. All of such
outstanding shares have been validly issued and are fully paid and
nonassessable. Except as disclosed in the SEC Documents (as defined
in Section 3(f)), no shares of Common Stock are subject to preemptive
rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company. Except as disclosed in the SEC
Documents, as of the date of this Agreement, (i) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into, any shares of capital stock of the Company or
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 shares of 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, any shares of
capital stock of the Company or any of its subsidiaries, (ii) there
are no outstanding debt securities and (iii) 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 (except pursuant to the Registration Rights Agreement) and
(iv) there are no outstanding registration statements and there are no
outstanding comment letters from the SEC or any other regulatory
agency. There are no securities or instruments containing anti-
dilution or similar provisions that will be triggered by the issuance
of the Convertible Debentures as described in this Agreement. The
Company has furnished to the Buyer true and correct copies of the
Company's Certificate of Incorporation, as amended and as in effect on
the date hereof (the "Certificate of Incorporation"), and the
Company's By-laws, as in effect on the date hereof (the "By-laws"),
and the terms of all securities convertible into or exercisable for
Common Stock and the material rights of the holders thereof in respect
thereto other than stock options issued to employees and consultants.
(d) Issuance of Securities. The Convertible Debentures
are duly authorized and, upon issuance in accordance with the terms
hereof, shall be duly issued, fully paid and nonassessable, are free
from all taxes, liens and charges with respect to the issue thereof.
The Conversion Shares issuable upon conversion of the Convertible
Debentures have been duly authorized and reserved for issuance. Upon
conversion or exercise in accordance with the Convertible Debentures
the Conversion Shares will be duly issued, fully paid and
nonassessable.
(e) No Conflicts. Except as disclosed in the SEC
Documents, the execution, delivery and performance of this Agreement,
the Security Agreement, the Investors Registration Rights Agreement,
the Escrow Agreement and the Irrevocable Transfer Agent Instructions
by the Company and the consummation by the Company of the transactions
contemplated hereby will not (i) result in a violation of the
Certificate of Incorporation, any certificate of designations of any
outstanding series of preferred stock of the Company or the By-laws 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
Company or any of its subsidiaries is a party, or 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 National Association of Securities
Dealers Inc.'s OTC Bulletin Board on which the Common Stock is quoted)
applicable to the Company or any of its subsidiaries or by which any
property or asset of the Company or any of its subsidiaries is bound
or affected. Except as disclosed in the SEC Documents, neither the
Company nor its subsidiaries is in violation of any term of or in
default under its Certificate of Incorporation or By-laws or their
organizational charter or by-laws, respectively, or any material
contract, agreement, mortgage, indebtedness, indenture, instrument,
judgment, decree or order or any statute, rule or regulation
applicable to the Company or its subsidiaries. The business of the
Company and its subsidiaries is not being conducted, and shall not be
conducted in violation of any material law, ordinance, or regulation
of any governmental entity. Except as specifically contemplated by
this Agreement and as required under the 1933 Act and any applicable
state securities laws, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under or contemplated by
this Agreement or the Registration Rights Agreement in accordance with
the terms hereof or thereof. Except as disclosed in the SEC
Documents, all consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the
preceding sentence have been obtained or effected on or prior to the
date hereof. The Company and its subsidiaries are unaware of any
facts or circumstance, which might give rise to any of the foregoing.
(f) SEC Documents: Financial Statements. Since January 1,
2003, the Company has filed all reports, schedules, forms, statements
and other documents required to be filed by it with the SEC under of
the Securities Exchange Act of 1934, as amended (the "1934 Act") (all
of the foregoing filed prior to the date hereof or amended after the
date hereof and all exhibits included therein and financial statements
and schedules thereto and documents incorporated by reference therein,
being hereinafter referred to as the "SEC Documents"). The Company
has delivered to the Buyers or their representatives, or made
available through the SEC's website at xxxx://xxx.xxx.xxx., true and
complete copies of the SEC Documents. As of their respective dates,
the financial statements of the Company disclosed in the SEC Documents
(the "Financial Statements") 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 Buyer which is not included in the SEC
Documents, including, without limitation, information referred to in
this Agreement, 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 circumstances under which they
were made, not misleading.
(g) 10(b)-5. The SEC Documents do not include any untrue
statements of material fact, nor do they omit to state any material
fact required to be stated therein necessary to make the statements
made, in light of the circumstances under which they were made, not
misleading.
(h) Absence of Litigation. Except as disclosed in the SEC
Documents, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending against or affecting the
Company, the Common Stock or any of the Company's subsidiaries,
wherein an unfavorable decision, ruling or finding would (i) have a
material adverse effect on the transactions contemplated hereby (ii)
adversely affect the validity or enforceability of, or the authority
or ability of the Company to perform its obligations under, this
Agreement or any of the documents contemplated herein, or (iii) except
as expressly disclosed in the SEC Documents, have a material adverse
effect on the business, operations, properties, financial condition or
results of operations of the Company and its subsidiaries taken as a
whole.
(i) Acknowledgment Regarding Buyer's Purchase of the
Convertible Debentures. The Company acknowledges and agrees that the
Buyer(s) is acting solely in the capacity of an arm's length purchaser
with respect to this Agreement and the transactions contemplated
hereby. The Company further acknowledges that the Buyer(s) is not
acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by the Buyer(s) or any of
their respective representatives or agents in connection with this
Agreement and the transactions contemplated hereby is merely
incidental to such Buyer's purchase of the Convertible Debentures or
the Conversion Shares. The Company further represents to the Buyer
that the Company's decision to enter into this Agreement has been
based solely on the independent evaluation by the Company and its
representatives.
(j) No General Solicitation. Neither the Company, nor any
of its affiliates, nor 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 under the 0000 Xxx) in connection
with the offer or sale of the Convertible Debentures or the Conversion
Shares.
(k) No Integrated Offering. Neither the Company, nor any
of its affiliates, nor 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 the Convertible Debentures or the
Conversion Shares under the 1933 Act or cause this offering of the
Convertible Debentures or the Conversion Shares to be integrated with
prior offerings by the Company for purposes of the 1933 Act.
(l) Employee Relations. Neither the Company nor any of
its subsidiaries is involved in any labor dispute nor, to the
knowledge of the Company or any of its subsidiaries, is any such
dispute threatened. None of the Company's or its subsidiaries'
employees is a member of a union and the Company and its subsidiaries
believe that their relations with their employees are good.
(m) 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
rights necessary to conduct their respective businesses as now
conducted. The Company and its subsidiaries do not have any knowledge
of any infringement by the Company or its subsidiaries of trademark,
trade name rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service xxxx registrations,
trade secret or other similar rights of others, and, to the knowledge
of the Company there is no claim, action or proceeding being made or
brought against, or to the Company's knowledge, being threatened
against, the Company or its subsidiaries regarding trademark, trade
name, patents, patent rights, invention, copyright, license, service
names, service marks, service xxxx registrations, trade secret or
other infringement; and the Company and its subsidiaries are unaware
of any facts or circumstances which might give rise to any of the
foregoing.
(n) Environmental Laws. The Company and its subsidiaries
are (i) in compliance with any and all applicable foreign, federal,
state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental
Laws"), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval.
(o) Title. Any real property and facilities held under
lease by the Company and its subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are
not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its
subsidiaries.
(p) Insurance. The Company does not currently maintain
insurance.
(q) Regulatory Permits. The Company and its subsidiaries
possess all material certificates, authorizations and permits issued
by the appropriate federal, state or foreign regulatory authorities
necessary to conduct their respective businesses, 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.
(r) Internal Accounting 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 accountability,
and (iii) the recorded amounts for assets is compared with the
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(s) No Material Adverse Breaches, etc. Except as set
forth in the SEC Documents, neither the Company nor any of its
subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which
in the judgment of the Company's officers has or is expected in the
future to have a material adverse effect on the business, properties,
operations, financial condition, results of operations or prospects of
the Company or its subsidiaries. Except as set forth in the SEC
Documents, neither the Company nor any of its subsidiaries is in
breach of any contract or agreement which breach, in the judgment of
the Company's officers, has or is expected to have a material adverse
effect on the business, properties, operations, financial condition,
results of operations or prospects of the Company or its subsidiaries.
(t) Tax Status. Except as set forth in the SEC Documents,
the Company and each of its subsidiaries has made and filed all
federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject and
(unless and only to the extent that the Company and each of its
subsidiaries has set aside on its books provisions reasonably adequate
for the payment of all unpaid and unreported taxes) has paid all taxes
and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set
aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any
such claim.
(u) Certain Transactions. Except as set forth in the SEC
Documents, and except for arm's length transactions pursuant to which
the Company makes payments in the ordinary course of business upon
terms no less favorable than the Company could obtain from third
parties and other than the grant of stock options disclosed in the SEC
Documents, none of the officers, directors, or employees of the
Company is presently a party to any transaction with the Company
(other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or
from any officer, director or such employee or, to the knowledge of
the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner.
(v) Fees and Rights of First Refusal. The Company is not
obligated to offer the securities offered hereunder on a right of
first refusal basis or otherwise to any third parties including, but
not limited to, current or former shareholders of the Company,
underwriters, brokers, agents or other third parties.
4. COVENANTS.
(a) Best Efforts. Each party shall use its best efforts
timely to satisfy each of the conditions to be satisfied by it as
provided in Sections 6 and 7 of this Agreement.
(b) Form D. The Company agrees to file a Form D with
respect to the Conversion Shares as required under Regulation D and to
provide a copy thereof to each Buyer promptly after such filing. The
Company shall, on or before the Closing Date, take such action as the
Company shall reasonably determine is necessary to qualify the
Conversion Shares, or obtain an exemption for the Conversion Shares
for sale to the Buyers at the Closing pursuant to this Agreement under
applicable securities or "Blue Sky" laws of the states of the United
States, and shall provide evidence of any such action so taken to the
Buyers on or prior to the Closing Date.
(c) Reporting Status. Until the earlier of (i) the date
as of which the Buyer(s) may sell all of the Conversion Shares without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or
successor thereto), or (ii) the date on which (A) the Buyer(s) shall
have sold all the Conversion Shares and (B) none of the Convertible
Debentures are outstanding (the "Registration Period"), the Company
shall file in a timely manner all reports required to be filed with
the SEC pursuant to the 1934 Act and the regulations of the SEC
thereunder, 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.
(d) Use of Proceeds. The Company will use the proceeds
from the sale of the Convertible Debentures for general corporate and
working capital purposes.
(e) Reservation of Shares. The Company shall take all
action reasonably necessary to at all times have authorized, and
reserved for the purpose of issuance, such number of shares of Common
Stock as shall be necessary to effect the issuance of the Conversion
Shares. If at any time the Company does not have available such
shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all of the Conversion Shares of the Company
shall call and hold a special meeting of the shareholders within sixty
(60) days of such occurrence, for the sole purpose of increasing the
number of shares authorized. The Company's management shall recommend
to the shareholders to vote in favor of increasing the number of
shares of Common Stock authorized. Management shall also vote all of
its shares in favor of increasing the number of authorized shares of
Common Stock.
(f) Listings or Quotation. The Company shall promptly
secure the listing or quotation of the Conversion Shares upon each
national securities exchange, automated quotation system or The
National Association of Securities Dealers Inc.'s Over-The-Counter
Bulletin Board ("OTCBB") or other market, if any, upon which shares of
Common Stock are then listed or quoted (subject to official notice of
issuance) and shall use its best efforts to maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all
Conversion Shares from time to time issuable under the terms of this
Agreement. The Company shall maintain the Common Stock's
authorization for quotation on the OTCBB.
(g) Fees and Expenses. Each of the Company and the
Buyer(s) shall pay all costs and expenses incurred by such party in
connection with the negotiation, investigation, preparation, execution
and delivery of this Agreement, the Escrow Agreement, the Investor
Registration Rights Agreement, the Security Agreement and the
Irrevocable Transfer Agent Instructions. The Buyer(s) shall be
entitled to a ten percent (10%) discount on the Purchase Price.
(h) The costs and expenses of the Buyer(s) and Xxxxxx
Xxxxxxxx LLP, of which Ten Thousand Dollars ($10,000) shall be paid
directly from the proceeds held in escrow of the First Closing and the
retainer of Xxxxxxxxxxx & Xxxxxxxx LLP of Twenty Two Thousand Five
Hundred Dollars ($22,500) shall be paid for by the Company from the
gross proceeds held in escrow of the First Closing.
(i) Corporate Existence. So long as any of the
Convertible Debentures remain outstanding, the Company shall not
directly or indirectly consummate any merger, reorganization,
restructuring, reverse stock split consolidation, sale of all or
substantially all of the Company's assets or any similar transaction
or related transactions (each such transaction, an "Organizational
Change") unless, prior to the consummation an Organizational Change,
the Company obtains the written consent of each Buyer. In any such
case, the Company will make appropriate provision with respect to such
holders' rights and interests to insure that the provisions of this
Section 4(h) will thereafter be applicable to the Convertible
Debentures.
(j) Transactions With Affiliates. So long as any
Convertible Debentures are outstanding, the Company shall not, and
shall cause each of its subsidiaries not to, enter into, amend, modify
or supplement, or permit any subsidiary to enter into, amend, modify
or supplement any agreement, transaction, commitment, or arrangement
with any of its or any subsidiary's officers, directors, person who
were officers or directors at any time during the previous two (2)
years, stockholders who beneficially own five percent (5%) or more of
the Common Stock, or Affiliates (as defined below) or with any
individual related by blood, marriage, or adoption to any such
individual or with any entity in which any such entity or individual
owns a five percent (5%) or more beneficial interest (each a "Related
Party"), except for (a) customary employment arrangements and benefit
programs on reasonable terms, (b) any investment in an Affiliate of
the Company, (c) any agreement, transaction, commitment, or
arrangement on an arms-length basis on terms no less favorable than
terms which would have been obtainable from a person other than such
Related Party, (d) any agreement transaction, commitment, or
arrangement which is approved by a majority of the disinterested
directors of the Company, for purposes hereof, any director who is
also an officer of the Company or any subsidiary of the Company shall
not be a disinterested director with respect to any such agreement,
transaction, commitment, or arrangement. "Affiliate" for purposes
hereof means, with respect to any person or entity, another person or
entity that, directly or indirectly, (i) has a ten percent (10%) or
more equity interest in that person or entity, (ii) has ten percent
(10%) or more common ownership with that person or entity, (iii)
controls that person or entity, or (iv) shares common control with
that person or entity. "Control" or "controls" for purposes hereof
means that a person or entity has the power, direct or indirect, to
conduct or govern the policies of another person or entity.
(k) Transfer Agent. The Company covenants and agrees
that, in the event that the Company's agency relationship with the
transfer agent should be terminated for any reason prior to a date
which is two (2) years after the Closing Date, the Company shall
immediately appoint a new transfer agent and shall require that the
new transfer agent execute and agree to be bound by the terms of the
Irrevocable Transfer Agent Instructions (as defined herein).
(l) Restriction on Issuance of the Capital Stock. So long
as any Convertible Debentures are outstanding, the Company shall not,
without the prior written consent of the Buyer(s), issue or sell
shares of Common Stock or Preferred Stock (i) without consideration or
for a consideration per share less than the Bid Price of the Common
Stock determined immediately prior to its issuance, (ii) 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 such Common Stock's Bid
Price value determined immediately prior to it's issuance, (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 registering in excess of Two Million Five
Hundred Thousand (2,500,000) shares individually or in the aggregate.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue the Irrevocable Transfer Agent
Instructions to its transfer agent irrevocably appointing Xxxxxx
Xxxxxxxx LLP as its agent for purpose of having certificates issued,
registered in the name of the Buyer(s) or its respective nominee(s),
for the Conversion Shares representing such amounts of Convertible
Debentures as specified from time to time by the Buyer(s) to the
Company upon conversion of the Convertible Debentures, for interest
owed pursuant to the Convertible Debenture, and for any and all
Liquidated Damages (as this term is defined in the Investor
Registration Rights Agreement). Xxxxxx Xxxxxxxx LLP shall be paid a
cash fee of Fifty Dollars ($50) for every occasion they act pursuant
to the Irrevocable Transfer Agent Instructions. The Company shall not
change its transfer agent without the express written consent of the
Buyer(s), which may be withheld by the Buyer(s) in its sole
discretion. Prior to registration of the Conversion Shares under the
1933 Act, all such certificates shall bear the restrictive legend
specified in Section 2(g) of this Agreement. The Company warrants
that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5, and stop transfer
instructions to give effect to Section 2(g) hereof (in the case of the
Conversion Shares prior to registration of such shares under the 0000
Xxx) will be given by the Company to its transfer agent and that the
Conversion Shares shall otherwise be freely transferable on the books
and records of the Company as and to the extent provided in this
Agreement and the Investor Registration Rights Agreement. Nothing in
this Section 5 shall affect in any way the Buyer's obligations and
agreement to comply with all applicable securities laws upon resale of
Conversion Shares. If the Buyer(s) provides the Company with an
opinion of counsel, in form, scope and substance customary for
opinions of counsel in comparable transactions to the effect that
registration of a resale by the Buyer(s) of any of the Conversion
Shares is not required under the 1933 Act, the Company shall within
two (2) business days instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by
the Buyer. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Buyer by
vitiating the intent and purpose of the transaction contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law
for a breach of its obligations under this Section 5 will be
inadequate and agrees, in the event of a breach or threatened breach
by the Company of the provisions of this Section 5, that the Buyer(s)
shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without
any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the
Convertible Debentures to the Buyer(s) at the Closings is subject to
the satisfaction, at or before the Closing Dates, 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:
(a) Each Buyer shall have executed this Agreement, the
Security Agreement, the Escrow Agreement and the Investor Registration
Rights Agreement and the Irrevocable Transfer Agent Instructions and
delivered the same to the Company.
(b) The Buyer(s) shall have delivered to the Escrow Agent
the Purchase Price for Convertible Debentures in respective amounts as
set forth next to each Buyer as outlined on Schedule I attached hereto
and the Escrow Agent shall have delivered the net proceeds to the
Company by wire transfer of immediately available U.S. funds pursuant
to the wire instructions provided by the Company.
(c) The representations and warranties of the Buyer(s)
shall be true and correct in all material respects as of the date when
made and as of the Closing Dates as though made at that time (except
for representations and warranties that speak as of a specific date),
and the Buyer(s) shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with
by the Buyer(s) at or prior to the Closing Dates.
(d) The Company shall have filed a form UCC -1 with regard
to the Pledged Property and Pledged Collateral as detailed in the
Security Agreement dated the date hereof and provided proof of such
filing to the Buyer(s).
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer(s) hereunder to purchase the
Convertible Debentures 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 Buyer's sole benefit and
may be waived by the Buyer(s) at any time in its sole discretion:
(a) The Company shall have executed this Agreement, the
Security Agreement, the Convertible Debenture, the Escrow Agreement,
the Irrevocable Transfer Instructions and the Investor Registration
Rights Agreement, and delivered the same to the Buyer(s).
(b) The Common Stock shall be authorized for quotation on
the OTCBB, trading in the Common Stock shall not have been suspended
for any reason.
(c) The representations and warranties of the Company
shall be true and correct in all material respects (except to the
extent that any of such representations and warranties is already
qualified as to materiality in Section 3 above, in which case, such
representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the Closing
Dates 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 this Agreement to
be performed, satisfied or complied with by the Company at or prior to
the Closing Dates. If requested by the Buyer, the Buyer shall have
received a certificate, executed by the President of the Company,
dated as of the Closing Dates, to the foregoing effect and as to such
other matters as may be reasonably requested by the Buyer including,
without limitation an update as of the Closing Dates regarding the
representation contained in Section 3(c) above.
(d) The Company shall have executed and delivered to the
Buyer(s) the Convertible Debentures in the respective amounts set
forth opposite each Buyer(s) name on Schedule I attached hereto.
(e) The Buyer(s) shall have received an opinion of counsel
from Xxxxxxxxxxx & Xxxxxxxx, LLP in a form satisfactory to the
Buyer(s).
(f) The Company shall have provided to the Buyer(s) a
certificate of good standing from the secretary of state of Colorado.
(g) As of the Closing Date, the Company shall have
reserved out of its authorized and unissued Common Stock, solely for
the purpose of effecting the conversion of the Convertible Debentures,
shares of Common Stock to effect the conversion of all of the
Conversion Shares then outstanding.
(h) The Irrevocable Transfer Agent Instructions, in form
and substance satisfactory to the Buyer, shall have been delivered to
and acknowledged in writing by the Company's transfer agent.
(i) The Company shall have provided to the Investor an
acknowledgement, to the satisfaction of the Investor, from Xxxxxxxxx &
Xxxxxx as to its ability to provide all consents required in order to
file a registration statement in connection with this transaction.
(j) The Company shall have filed a form UCC -1 with regard
to the Pledged Property and Pledged Collateral as detailed in the
Security Agreement dated the date hereof and provided proof of such
filing to the Buyer(s).
8. INDEMNIFICATION.
(a) In consideration of the Buyer's execution and delivery
of this Agreement and acquiring the Convertible Debentures and the
Conversion Shares hereunder, and in addition to all of the Company's
other obligations under this Agreement, the Company shall defend,
protect, indemnify and hold harmless the Buyer(s) and each other
holder of the Convertible Debentures and the Conversion Shares, and
all of their officers, directors, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "Buyer
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 Buyer 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 the Buyer Indemnitees or any of them 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 this Agreement,
the Convertible Debentures or the Investor Registration Rights
Agreement 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 this Agreement, or
the Investor Registration Rights Agreement 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
and arising out of or resulting from the execution, delivery,
performance or enforcement of this Agreement or any other instrument,
document or agreement executed pursuant hereto by any of the
Indemnities, any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of the issuance of the
Convertible Debentures or the status of the Buyer or holder of the
Convertible Debentures the Conversion Shares, as a Buyer of
Convertible Debentures in the Company. 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.
(b) In consideration of the Company's execution and
delivery of this Agreement, and in addition to all of the Buyer's
other obligations under this Agreement, the Buyer shall defend,
protect, indemnify and hold harmless the Company and all of its
officers, directors, employees and agents (including, without
limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "Company
Indemnitees") from and against any and all Indemnified Liabilities
incurred by the Indemnitees or any of them as a result of, or arising
out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Buyer(s) in this Agreement, ,
instrument or document contemplated hereby or thereby executed by the
Buyer, (b) any breach of any covenant, agreement or obligation of the
Buyer(s) contained in this Agreement, the Investor Registration
Rights Agreement or any other certificate, instrument or document
contemplated hereby or thereby executed by the Buyer, or (c) any cause
of action, suit or claim brought or made against such Company
Indemnitee based on material misrepresentations or due to a material
breach and arising out of or resulting from the execution, delivery,
performance or enforcement of this Agreement, the Investor
Registration Rights Agreement or any other instrument, document or
agreement executed pursuant hereto by any of the Company Indemnities.
To the extent that the foregoing undertaking by each Buyer may be
unenforceable for any reason, each Buyer shall make the maximum
contribution to the payment and satisfaction of each of the
Indemnified Liabilities, which is permissible under applicable law.
9. GOVERNING LAW: MISCELLANEOUS.
(a) Governing Law. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of Colorado
without regard to the principles of conflict of laws. The parties
further agree that any action between them shall be heard in Xxxxxx
County, New Jersey, and expressly consent to the jurisdiction and
venue of the Superior Court of New Jersey, sitting in Xxxxxx County
and the United States District Court for the District of New Jersey
sitting in Newark, New Jersey for the adjudication of any civil action
asserted pursuant to this Paragraph.
(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. In
the event any signature page is delivered by facsimile transmission,
the party using such means of delivery shall cause four (4) additional
original executed signature pages to be physically delivered to the
other party within five (5) days of the execution and delivery hereof.
(c) Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
(d) Severability. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other
jurisdiction.
(e) Entire Agreement, Amendments. This Agreement
supersedes all other prior oral or written agreements between the
Buyer(s), the Company, their affiliates and persons acting on their
behalf with respect to the matters discussed herein, and this
Agreement and the instruments referenced herein 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 waived or amended other than by an
instrument in writing signed by the party to be charged with
enforcement.
(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
confirmation of receipt, when sent by facsimile; (iii) three (3) days
after being sent by U.S. certified mail, return receipt requested, or
(iv) one (1) day after deposit with a nationally recognized overnight
delivery 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, to:
Maximum Dynamics Inc.
0 X. Xxxxxxx Xxxxxx - Xxxxx 0000
Xxxxxxxx Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Secretary and Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx - Xxxxx 0000
Xxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Transfer Agent,
to:
Computer Trust Company, Inc.
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With Copy to:
Xxxxxx Xxxxxxxx LLP
0000 Xxxxxx Xxxxxx - Xxxxx 000
Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Buyer(s), to its address and facsimile number on
Schedule I, with copies to the Buyer's counsel as set forth on
Schedule I. Each party shall provide five (5) days' prior written
notice to the other party of any change in address or facsimile
number.
(g) Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their
respective successors and assigns. Neither the Company nor any Buyer
shall assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other party hereto.
(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 9(l), the representations and warranties of the Company and
the Buyer(s) contained in Sections 2 and 3, the agreements and
covenants set forth in Sections 4, 5 and 9, and the indemnification
provisions set forth in Section 8, shall survive the Closing for a
period of two (2) years following the date on which the Convertible
Debentures are converted in full. The Buyer(s) shall be responsible
only for its own representations, warranties, agreements and covenants
hereunder.
(j) Publicity. The Company and the Buyer(s) shall have
the right to approve, before issuance any press release or any other
public statement with respect to the transactions contemplated hereby
made by any party; provided, however, that the Company shall be
entitled, without the prior approval of the Buyer(s), to issue any
press release or other public disclosure with respect to such
transactions required under applicable securities or other laws or
regulations (the Company shall use its best efforts to consult the
Buyer(s) in connection with any such press release or other public
disclosure prior to its release and Buyer(s) shall be provided with a
copy thereof upon release thereof).
(k) Further Assurances. Each party shall do and perform,
or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request
in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
(l) Termination. In the event that the Closing shall not
have occurred with respect to the Buyers on or before five (5)
business days from the date hereof due to the Company's or the Buyer's
failure to satisfy the conditions set forth in Sections 6 and 7 above
(and the non-breaching party's failure to waive such unsatisfied
condition(s)), the non-breaching party shall have the option to
terminate this Agreement with respect to such breaching party at the
close of business on such date without liability of any party to any
other party; provided, however, that if this Agreement is terminated
by the Company pursuant to this Section 9(l), the Company shall remain
obligated to reimburse the Buyer(s) for the fees and expenses of
Xxxxxx Xxxxxxxx described in Section 4(g) above.
(m) 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.
[REMAINDER PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first
written above.
COMPANY:
MAXIMUM DYNAMICS INC.
By:
Name Xxxxxx Xxxxxxx
Title: Secretary and Chief
Financial Officer
EXHIBIT A
FORM OF INVESTOR REGISTRATION RIGHTS AGREEMENT
EXHIBIT B
FORM OF ESCROW AGREEMENT
EXHIBIT C
TRANSFER AGENT INSTRUCTIONS
EXHIBIT D
SECURITY AGREEMENT
SCHEDULE I
SCHEDULE OF BUYERS
Name Signature Address/Facsimile Amount of
Number of Buyer Subscription
Cornell Capital By: Yorkville Advisors LLC (000) 000-0000 $500,000
Partners, LP Its General Partner 000 Xxxxxx Xxxxxx -
Xxxxx 0000
Xxxxxx Xxxx, XX
00000
By:--------------------
Name: Xxxx X. Xxxxxx
Its: Portfolio Manager
