EXHIBIT 99.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), is entered into as of
May 5, 2009, by and between MachineTalker, Inc., a Delaware corporation (the
"Company"), and Wings Fund, Inc., a Nevada corporation, and Pearl Innovations,
LLC, a Nevada limited liability company (collectively, the "Purchaser"), with
respect to the following facts:
WITNESSETH:
WHEREAS, the Company wishes to issue and sell to the Purchaser
93,240,094 shares (the "Shares") of the Company's common stock at a price of
$0.0010725 per Share, where each Purchaser would purchase 46,620,047 of the
Shares.
WHEREAS, the Purchaser wishes to purchase said Shares on the terms and
subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and agreements set forth herein, the parties hereto
agree as follows:
ARTICLE I
SALE AND PURCHASE OF SHARES
1.1 AGREEMENT TO PURCHASE AND SELL SHARES. The Company agrees to issue and
sell to the Purchaser, and the Purchaser hereby agrees to purchase from the
Company, 93,240,094 Shares of the Company's common stock at a price of
$0.0010725 per Share. Each Purchaser will purchase 46,620,047 of the total for
an aggregate cash purchase price of $50,000, for a total collective purchase
price of $100,000.
1.2 REVERSE STOCK SPLIT. The Company intends to effect a one-for-one and
one-half (1:1.5) reverse stock split of its outstanding common stock as soon as
practical after the Closing (as defined in Section 2.1 of this Agreement). The
number of Shares referenced in this Agreement for purchase and sale is
pre-reverse split and will be adjusted to be 62,160,062 Shares after the
Closing, with an adjusted per Share purchase price of $0.0016087. The reverse
stock split will not affect the authorized capital stock of the Company.
1.3 BOARD OF DIRECTORS OF COMPANY. At the Closing, two new members may be
added to the Board of Directors of the Company upon the request of the
Purchaser, and the third member of the Company's Board will be Xxxxxx X. Xxxxx.
Any other Board members will resign at the Closing if requested by Xx. Xxxxx.
Xx. Xxxxx will also continue to serve as the Company's Chief Executive Officer
after the Closing on an "at-will" basis. The Company covenants to cooperate to
facilitate the appointment of said Board members, and the formation of an Audit
Committee.
1.4 LOCK-UP AGREEMENTS. At the Closing, the Company covenants to cause the
following existing shareholders of the Company to execute Lock-Up Agreements
with respect to the following shares indicated, in the form of EXHIBIT A to this
Agreement, and to inform the Company's transfer agent of those Lock-Up
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Agreements so it can make the appropriate stop transfer notations in its stock
registry records:
NAME NUMBER OF SHARES (PRE-REVERSE SPLIT)
---- ------------------------------------
Xxxxxx X. Xxxxx 42,533,429
Wings Fund, Inc. 1,900,000
Xxxxx Xxxxxxxx 1,750,000
Xxxx X. Xxxxxxxxxx 6,200,000
ARTICLE II
CLOSING AND PURCHASE PRICE
2.1 CLOSING. The closing of the sale and purchase of the Shares enumerated
in Section 1.1 of this Agreement shall take place at the offices of Xxxxxxxxxx &
Associates, 000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxx Xxxxxx, Xxxxxxxxxx 00000,
on the date all of the conditions for the Closing have been satisfied, as
provided in Article VII of this Agreement (such closing being called the
"Closing"). The date of the Closing is referred to as the "Closing Date."
2.2 PURCHASE PRICE. At the Closing, Purchaser shall pay to the Company for
the Shares the aggregate sum of One Hundred Thousand Dollars ($100,000) (the
"Purchase Price"), paid by certified or cashier's check or wire transfer of
immediately available funds into one or more bank accounts designated in writing
by the Company on or prior to the Closing.
ARTICLE III
CLOSING DELIVERIES
3.1 COMPANY CLOSING DELIVERIES. At the Closing, the Company shall issue and
deliver to each Purchaser a stock certificate in the name of the Purchaser,
representing one-half of the Shares being purchased by the Purchaser at the
Closing. The Company will also deliver the following, which must be reasonably
satisfactory to Purchaser, at or as soon as practicable after the Closing: (a)
resolutions signed by its Board of Directors and, where legally required, the
holders of a majority of the outstanding voting stock of the Company,
authorizing and directing the Company's directors and executive officers to
cause the Company to (i) appoint two designees to the Company's Board of
Directors on the Closing, (ii) execute and implement the terms of this
Agreement, (iii) cause the Company to effect a one-for-one and a half reverse
split of its outstanding common stock; and (b) certified copies of the Company's
amended Articles of Incorporation reflecting the reverse stock split pursuant to
Section 1.2 of this Agreement; and (c) copies of the signed Lock-Up Agreements
referenced in Section 1.4 of this Agreement.
3.2 PURCHASER CLOSING DELIVERIES. As payment in full for the Shares being
purchased by the Purchaser at the Closing, on the Closing Date the Purchaser
shall deliver to the Company the Purchase Price by certified or cashier's check
or wire transfer of immediately available funds into the bank account(s)
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designated in writing by the Company on or prior to the Closing. The Purchaser
may also deliver the written list of designees for the two new members of the
Company's Board of Directors and its suggestion for the composition of the
Company's newly formed Audit Committee.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
Except as set forth in the Schedule of Exceptions attached hereto as
Exhibit C, the Company hereby represents and warrants to the Purchaser that:
4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own its properties and assets and to carry on its business as now conducted and
as presently proposed to be conducted. The Company is duly qualified to do
business as a foreign corporation in each jurisdiction where failure to be so
qualified would have a material adverse effect on its condition (financial or
otherwise), business, assets, properties or operations (a "Material Adverse
Effect").
4.2 DUE AUTHORIZATION. Each of (a) the execution and delivery by the
Company of this Agreement and the Lock-Up Agreements ("Lock-Up Agreements")
attached hereto as Exhibit A, (b) the performance by the Company of its
obligations hereunder and under the Lock-Up Agreements, and (c) the issuance,
sale and delivery by the Company of the Shares, has been duly authorized by all
requisite corporate action. Each of the Agreement and the Lock-Up Agreements is
a valid and legally binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject, as to enforcement of remedies, to
(x) applicable bankruptcy, insolvency, moratorium, reorganization and similar
laws affecting the rights of creditors generally, and (y) general equitable
principles.
4.3 CAPITALIZATION. Immediately prior to the Closing, the authorized
capital stock of the Company will consist of the following:
(a) COMMON STOCK. Five hundred million (500,000,000) shares of
common stock, par value $0.001 per share, of which approximately 88,832,099
shares (pre-reverse split) are issued and outstanding. All outstanding shares of
common stock have been duly authorized and validly issued, are fully paid and
nonassessable and were issued in compliance with all applicable federal and
state securities laws.
(b) PREFERRED STOCK. No shares of preferred stock are issued
or outstanding.
(c) OPTIONS, WARRANTS, RESERVED SHARES. The Company has
reserved 4,608,515 shares of its common stock for possible issuance upon the
exercise of warrants. Except as set forth in Section 4.3(c) of the Schedule of
Exceptions or in financial statements and reports filed by the Company with the
Securities and Exchange Commission, there are no written or, to the knowledge of
the Company, oral options, warrants, conversion privileges, preemptive rights,
rights of first refusal or other rights or agreements presently outstanding to
purchase or otherwise acquire any of the capital stock of the Company.
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4.4 VALID ISSUANCE OF SHARES. The Shares, when issued, sold and delivered
in accordance with the terms of this Agreement, will be duly and validly issued,
fully paid and nonassessable, and free and clear of all claims and encumbrances.
Based in part upon the representations of the Purchaser in this Agreement and
subject to the provisions of Section 4.9 below, the Shares will be issued in
compliance with all applicable federal and state securities laws.
4.5 SUBSIDIARIES. Except as set forth in Section 4.5 of the Schedule of
Exceptions or in financial statements and reports filed by the Company with the
Securities and Exchange Commission, the Company does not presently own or
control, directly or indirectly, any interest in any other corporation,
partnership, trust, joint venture, association or other entity.
4.6 LIABILITIES. The Company has not to its knowledge directly or
indirectly created, incurred, assumed or guaranteed any liability except (a) for
liabilities or obligations undertaken in the ordinary course of business, or (b)
a Convertible Note and Interest Due individual holders as set forth in EXHIBIT B
attached hereto, or (c) as set forth in Section 4.6 of the Schedule of
Exceptions, or (d) and as set forth in the Company's financial statements and
reports filed with the Securities and Exchange Commission.
4.7 CONTRACTS. The Company is not bound by any written or, to the knowledge
of the Company, oral material agreement, contract, lease, license, instrument,
commitment, indebtedness or liability, other than as set forth in Section 4.7 of
the Schedule of Exceptions or as set forth in the Company's financial statements
and reports filed with the Securities and Exchange Commission (each, a
"Contract"). All material provisions of the Contracts are valid and enforceable
obligations of each of the Company and, to the knowledge of the Company, of the
other parties thereto, subject, as to enforcement of remedies, to (a) applicable
bankruptcy, insolvency, moratorium, reorganization and similar laws affecting
the rights of creditors generally and (b) general equitable principles. Except
as set forth in Section 4.7 of the Schedule of Exceptions, neither the Company,
nor to the knowledge of the Company, any other party (x) is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any Contract and (y) has been notified in writing of any
claim that any Contract is not valid and enforceable in accordance with its
terms for the periods stated therein or that there is under any such Contract
any existing default or event of default or event which, with notice or lapse of
time or both, would constitute such a default, in each case other than those
defaults or claims which, if adversely determined, would not be material under
such Contract.
4.8 LITIGATION. There is no action, suit, proceeding, claim, arbitration or
investigation ("Action") pending (or, to the Company's knowledge, currently
threatened) against the Company, that could reasonably be expected to have a
Material Adverse Effect, except as described in reports filed by the Company
with the Securities and Exchange Commission. The Company is not a party to or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality and there is no Action by the
Company currently pending or which the Company intends to initiate.
4.9 GOVERNMENTAL CONSENTS. All consents, approvals, orders, or
authorizations of, or registrations, qualifications, designations, declarations
or filings with, any federal, state or local governmental authority on the part
of the Company required in connection with the consummation of the transactions
contemplated herein have been or will be complied with in accordance with the
time periods required thereby. Based in part on the representations of the
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Purchaser set forth in Section 5 below, the offer, sale and issuance of the
Shares in conformity with the terms of this Agreement are exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933,
as amended (the "Act").
4.10 COMPLIANCE WITH LAWS; OTHER INSTRUMENTS. To its knowledge, the Company
is not in violation of or in default under any provision of its Articles or
Bylaws, each as in effect on and as of the date of this Agreement. To the
Company's knowledge, the Company is not in violation of any provision of any
statute, law, rule or regulation. The execution, delivery and performance of
this Agreement and the Lock-Up Agreements by the Company and the consummation of
the transactions contemplated hereby and thereby will not result in any such
default or violation, or conflict with or constitute, with or without the
passage of time or the giving of notice or both, such a default or violation
under (a) the Company's Articles or Bylaws, (b) any Contract, or (c) any
statutes, laws, rules or regulations applicable to the Company, other than those
defaults, violations or conflicts which, if adversely determined, could not
reasonably be expected to have a Material Adverse Effect.
4.11 TAX MATTERS. The Company has timely filed all federal, state and local
tax returns for income taxes, franchise taxes, sales taxes, withholding taxes,
property taxes and, to the Company's knowledge, all other taxes of every kind
whatsoever required by law to be filed, and all such tax returns are complete
and accurate in all material respects and in accordance with all legal
requirements applicable thereto. All taxes shown to be due and payable on such
returns, any assessments imposed, and, to the Company's knowledge, all other
taxes due and payable by the Company on or before the Closing have been paid or
will be paid prior to the time they become delinquent. The tax returns of the
Company are not being audited by any governmental authorities, and the Company
does not know of any additional tax liabilities, deficiencies or proposed
adjustments for any period for which any such returns have been filed.
4.12 FINANCIAL STATEMENTS. The Company has delivered to the Purchaser (a)
its audited balance sheet as of December 31, 2007 and its audited statements of
operations, stockholders' equity and cash flows for the calendar year then ended
and (b) its unaudited balance sheet as of September 30, 2008 and its unaudited
statement of operations, stockholders' equity and cash flows for the calendar
year then ended (collectively, the "Financial Statements"). The Financial
Statements fairly present, in all material respects, the Company's financial
position as of those dates and the results of operations and changes in its
financial position for such periods then ended, and have been prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis, except that the unaudited Financial Statements may not contain
all footnotes required by GAAP and are subject to normal year-end adjustments.
Except as set forth in the Financial Statements and Section 4.6 of the Schedule
of Exceptions, to the Company's knowledge, the Company has no liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business subsequent to September 30, 2008 and (ii) obligations under
contracts and commitments incurred in the ordinary course of business and not
required under GAAP to be reflected in the Financial Statements, which, in both
cases, individually or in the aggregate, are not material to the financial
condition or operating results of the Company. The Company maintains and will
continue to maintain a standard system of accounting established and
administered in accordance with GAAP.
4.13 CHANGES. Since September 30, 2008, except as set forth in Section 4.13
of the Schedule of Exceptions or in reports filed with the Securities and
Exchange Commission, there has not been:
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(a) any material change in the assets, liabilities, financial
condition or operating results of the Company from that reflected in the
Financial Statements, except changes in the ordinary course of business that
have not been, or are not expected to be, in the aggregate, materially adverse;
(b) any material damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the assets, properties,
financial condition or business of the Company (as such business is presently
conducted);
(c) any cancellation, waiver or compromise by the Company of a
material right or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except (i) in the
ordinary course of business and (ii) that is not material to the assets,
properties, financial condition or business of the Company (as such business is
presently conducted);
(e) any change to a material contract or arrangement by which
the Company or any of its assets or properties is bound or subject;
(f) any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder;
(g) any sale, assignment, or transfer of any material patents,
trademarks, copyrights, trade secrets, or other intangible assets of the
Company;
(h) any resignation or termination of employment of any
officer or key employee of the Company;
(i) any loans or guarantees made by the Company to or for the
benefit of its employees, officers or directors, or any members of their
immediate families, other than advances made in the ordinary course of its
business;
(j) any mortgage, pledge, transfer of a security interest in,
or lien, created by the Company, with respect to any of its material properties
or assets, except liens for taxes not yet due or payable;
(k) any declaration or payment or other distribution in
respect to any of the Company's capital stock, or any direct or indirect
purchase, redemption or other acquisition of any of such stock by the Company;
(l) any sale, transfer or lease of any of the assets of the
Company, except in the ordinary course of business;
(m) any issuance or sale of any shares of the capital stock or
other securities of the Company or grant of any options with respect thereto
(other than options issued pursuant to the Company's stock option plans), or any
modification of any of the capital stock of the Company;
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(n) any agreement or commitment by the Company to do any of
the things described in this Section 4.13; or
(o) to the Company's knowledge, any other event or condition
of any character that might materially and adversely affect the assets,
properties, operations, condition (financial or otherwise) or business of the
Company (as such business is presently conducted and as it is presently proposed
to be conducted).
4.14 INTELLECTUAL PROPERTY. To its knowledge, the Company owns or possesses
sufficient legal rights to all patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information and proprietary rights and
processes ("Proprietary Assets") necessary for its business as presently
conducted and, to the knowledge of the Company, as presently proposed to be
conducted, without, to the knowledge of the Company, any conflict with, or
infringement of, the rights of others. Except as set forth in Section 4.14 of
the Schedule of Exceptions or in reports filed with the Securities and Exchange
Commission, the Company is not bound by or a party to any options, licenses or
agreements of any kind with respect to the Proprietary Assets, nor does it
currently intend to enter into any such agreement. The Company has not received
any written communications alleging that the Company has violated or, by
conducting its business as presently proposed, would violate any Proprietary
Assets of any other person or entity.
4.15 PERMITS. To its knowledge, the Company has all material franchises,
permits and licenses necessary for the conduct of its business as now being
conducted by it ("Permits"). To its knowledge, the Company is not in default
under any Permits and neither the execution, delivery nor performance of this
Agreement or the Lock-Up Agreements or the consummation of the transactions
contemplated hereby and thereby will result in any suspension, revocation,
impairment, forfeiture or nonrenewal of any Permit.
4.16 TITLE TO PROPERTY AND ASSETS. The Company to its knowledge has good
and marketable title to its owned properties and assets, in each case subject to
no mortgage, pledge, lien, encumbrance, security interest or charge of any kind,
other than Permitted Liens. With respect to the property and assets it leases,
the Company to its knowledge is in compliance with such leases and the Company
to its knowledge holds valid leasehold interests in such assets free of any
liens, encumbrances, security interests or claims of any party. "Permitted
Liens" means (a) mechanics', carriers', workmen's, warehousemen's, repairmen's
or other like liens arising in the ordinary course of business, (b) liens
arising under conditional sale contracts and equipment leases with third parties
entered into in the ordinary course, (c) liens for taxes and other governmental
obligations and (d) other imperfections of title, restrictions or encumbrances,
if any, which liens, imperfections of title, restrictions or other encumbrances
do not materially impair the continued use in the business of the respective
owner thereof, and operation of the specific assets to which they relate. The
Company does not own any real property.
4.17 RELATED-PARTY TRANSACTIONS. Except as set forth in Section 4.17 of the
Schedule of Exceptions or in reports filed with the Securities and Exchange
Commission, no employee, officer or director of the Company or member of his or
her immediate family is indebted to the Company, nor is the Company indebted (or
committed to make loans or extend or guarantee credit) to any such persons. To
the Company's knowledge, none of such persons has any direct or indirect
ownership interest in any firm or corporation or with which the Company has a
business relationship, or any firm or corporation that competes with the
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Company, except that employees, officers or directors of the Company and members
of their immediate families may own stock in publicly-traded companies that may
compete with the Company; provided that no officer of the Company owns more than
5% in any publicly-traded company that competes with the Company. Except as set
forth on Section 4.17 of the Schedule of Exceptions or in reports filed with the
Securities and Exchange Commission, none of the officers or directors of the
Company or any members of their immediate families are, directly or indirectly,
interested in any Contract with the Company.
4.18 ENVIRONMENTAL LAWS. To the Company's knowledge, the Company is not in
violation of, nor has the Company received written notice of any potential
violation of, any applicable environmental statute, law or regulation.
4.19 EMPLOYEE BENEFIT PLANS. The Company is not a party to or bound by any
currently effective deferred compensation agreement, bonus plan, incentive plan,
profit sharing plan or retirement agreement, nor has the Company contracted or
agreed to establish any such plan. The Company does not have any Employee
Benefit Plan as defined in the Employee Retirement Income Security Act of 1974,
as amended.
4.20 INSURANCE. The Company has in full force and effect fire and casualty
insurance policies, with extended coverage, sufficient in amount (subject to
reasonable deductibles) to allow it to replace any of its properties that might
be damaged or destroyed.
4.21 SHAREHOLDER AGREEMENTS. Except as set forth in the Lock-Up Agreements
or in reports filed with the Securities and Exchange Commission, there are no
agreements or arrangements between the Company and any of the Company's
shareholders, or to the Company's knowledge, between or among any of the
Company's shareholders, which grant special rights with respect to any shares of
the Company's capital stock or which in any way affect any shareholder's ability
or right to freely alienate or vote such shares.
4.22 USE OF PROCEEDS. Section 4.22 of the Schedule of Exceptions sets forth
the estimated use of funds with respect to the sale of the Shares by the
Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company that:
5.1 DUE AUTHORIZATION. Purchaser has all requisite power, authority and
approvals required to enter into, execute and deliver this Agreement and to
perform fully Purchaser's obligations hereunder. Purchaser has taken all actions
necessary to authorize it to enter into and perform fully its obligations under
this Agreement and to consummate the transactions contemplated herein. This
Agreement is, and as of the Closing, will be, the legal, valid and binding
obligation of Purchaser, enforceable in accordance with its terms.
5.2 NO VIOLATION. Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated herein will (a) violate,
conflict with, or constitute a default under any contract or other instrument to
which Purchaser is a party or by which Purchaser or its property is bound; (b)
require the consent of any party to any material contract or other agreement to
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which Purchaser is a party or by which it or its property is bound; or (c)
violate any laws or orders to which Purchaser or its property is subject.
5.3 NO BROKER. No broker, finder, agent or similar intermediary has acted
for or on behalf of Purchaser or is entitled to a fee or commission in
connection with this Agreement or the transactions contemplated hereby.
5.4 SECURITIES REPRESENTATIONS.
(a) Purchaser is able to bear the economic risk of an
investment in the Shares for an indefinite period of time, can afford the loss
of the entire investment in the Shares, and will, after making an investment in
the Shares, have sufficient means of providing for Purchaser's current needs and
possible future contingencies. Additionally, Purchaser's overall commitment to
investments which are not readily marketable is not disproportionate to
Purchaser's net worth and this Agreement will not cause such overall commitment
to become excessive.
(b) The Shares will not be sold by Purchaser without
registration under applicable securities acts or a proper exemption from such
registration.
(c) The Shares are being acquired by Purchaser for Purchaser's
own account and risk, for investment purposes, and not on behalf of any other
person or with a view to, or for resale in connection with, any distribution
thereof within the meaning of the Securities Act of 1933. Purchaser is aware
that there are substantial restrictions on the transferability of the Shares.
(d) Purchaser has had access to any and all information
concerning the Company that Purchaser and Purchaser's financial, tax and legal
advisors required or considered necessary to make a proper evaluation of this
investment. The available information included all information filed by the
Company with the Securities and Exchange Commission. In making the decision to
purchase the Shares herein agreed to, Purchaser and Purchaser's advisors have
relied upon their own independent investigations, and fully understand that
there are no guarantees, assurances or promises in connection with any
investment hereunder and understand that the particular tax consequences arising
from this investment in the Company will depend upon the individual
circumstances of Purchaser.
(e) Purchaser also understands and agrees that stop transfer
instructions relating to the Shares will be placed in the Company's transfer
ledger, and that the certificates evidencing the Shares sold will bear legends
in substantially the following form:
The Shares represented by this Certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act") and are "restricted securities" as that term is defined
in Rule 144 under the Act. The securities may not be offered
for sale, sold or otherwise transferred except pursuant to an
effective registration statement under the Act or pursuant to
an exemption from registration under the Act, the availability
of which is to be established to the satisfaction of the
Company.
(f) Purchaser knows that the Shares are offered and sold
pursuant to exemptions from registration under the Securities Act of 1933, as
amended, and state securities law based, in part, on these warranties and
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representatives, which are the very essence of this Agreement, and constitute a
material part of the bargained-for consideration without which this Agreement
would not have been executed. Purchaser agrees to indemnify and hold the Company
harmless for any damages suffered by the Company as a result of any
misrepresentation or breach of any representation or warranty of Purchaser.
(g) By reason of Purchaser's business or financial experience
or the business or financial experience of Purchaser's professional advisors,
Purchaser has the capacity to protect Purchaser's own interest in connection
with this transaction or has a pre-existing personal or business relationship
with the Company or one or more of its officers, directors or controlling
persons consisting of personal or business contacts of a nature and duration
such as would enable a reasonably prudent purchaser to be aware of the
character, business acumen and general business and financial circumstances of
such person with whom such relationship exists.
(h) Purchaser is an "accredited investor" as defined under
Rule 501 of Regulation D as promulgated under the Securities Act of 1933, as
amended.
5.5 PURCHASER COUNSEL. Purchaser acknowledges that Purchaser has had the
opportunity to review this Agreement and the Exhibits attached hereto, the
Lock-Up Agreements, the Company's reports filed with the Securities and Exchange
Commission, and the transactions contemplated hereby and thereby with
Purchaser's own legal counsel. Purchaser is relying solely on Purchaser's legal
counsel and not on any statements or representations of the Company or any of
the Company's representatives, including Xxxxxxxxxx & Associates, for legal
advice with respect to this investment or the transactions contemplated hereby
or thereby.
ARTICLE VI
INDEMNIFICATION
6.1 INDEMNITY OF THE COMPANY. The Company shall indemnify and hold harmless
Purchaser from and against, and shall reimburse Purchaser with respect to, all
liabilities, losses, costs and expenses, including, without limitation,
reasonable attorneys' fees and disbursements (collectively the "Losses")
asserted against or incurred by Purchaser by reason of, arising out of, or in
connection with any material breach of any representation or warranty contained
in this Agreement made by the Company.
6.2 INDEMNITY OF THE PURCHASER. The Purchaser agree to defend, indemnify
and hold harmless the Company from and against, and to reimburse the Company
with respect to, all liabilities, losses, costs and expenses, including, without
limitation, reasonable attorneys' fees and disbursements (collectively, the
"Losses") asserted against or incurred by the Company by reason of, arising out
of, or in connection with any material breach of any representation or warranty
contained in this Agreement made by Purchaser.
6.3 INDEMNIFICATION PROCEDURE. A party (an "Indemnified Party") seeking
indemnification shall give prompt notice to the other party (the "Indemnifying
Party") of any claim for indemnification arising under this Article VI. The
Indemnifying Party shall have the right to assume and to control the defense of
any such claim with counsel reasonably acceptable to such Indemnified Party, at
the Indemnifying Party's own cost and expense, including the cost and expense of
reasonable attorneys' fees and disbursements in connection with such defense, in
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which event the Indemnifying Party shall not be obligated to pay the fees and
disbursements of separate counsel for such in such action. In the event,
however, that such Indemnified Party's legal counsel shall determine that
defenses may be available to such Indemnified Party that are different from or
in addition to those available to the Indemnifying Party, in that there could
reasonably be expected to be a conflict of interest if such Indemnifying Party
and the Indemnified Party have common counsel in any such proceeding, or if the
Indemnified Party has not assumed the defense of the action or proceedings, then
such Indemnifying Party may employ separate counsel to represent or defend such
Indemnified Party, and the Indemnifying Party shall pay the reasonable fees and
disbursements of counsel for such Indemnified Party. No settlement of any such
claim or payment in connection with any such settlement shall be made without
the prior consent of the Indemnifying Party which consent shall not be
unreasonably withheld.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE. The Purchaser's
obligation to close the purchase and sale of the Shares is conditioned on the
occurrence of the following events on or prior to the Closing in accordance with
Section 3.1 of this Agreement, to the reasonable satisfaction of the Purchaser,
any of which may be waived by the Purchaser in writing at or prior to the
Closing:
(a) Delivery at Closing of stock certificates evidencing the Shares.
(b) Delivery of the Board and shareholder resolutions in accordance
with Section 3.1(a) of this Agreement.
(c) Delivery of signed Lock-Up Agreements in accordance with Section
3.1(c) of this Agreement.
(d) The representations and warranties of the Company in Article VI
of this Agreement remain true and correct at the Closing, except
to the extent a modification is consistent with the intent of
this Agreement.
7.2 CONDITIONS TO COMPANY'S OBLIGATIONS TO CLOSE. The Company's obligation
to close the purchase and sale of the Shares is conditioned on the occurrence of
the following events at the Closing: (a) Delivery by the Purchaser of the
Purchase Price to the Company in accordance with Section 3.2 of this Agreement;
and (b) the representations and warranties of the Company in Article V of this
Agreement remain true and correct at the Closing, except to the extent a
modification is consistent with the intent of this Agreement.
ARTICLE VIII
MISCELLANEOUS
8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations and warranties and statements made by a party to this Agreement
or in any document or certificate delivered pursuant hereto shall survive the
date of Closing for two years. Each of the parties hereto is executing and
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carrying out the provisions of this Agreement in reliance upon the
representations, warranties and covenants and agreements contained in this
Agreement or at the closing of the transactions herein provided for and not upon
any investigation which it might have made or any representations, warranty,
agreement, promise or information, written or oral, made by the other party or
any other person other than as specifically set forth herein.
8.2 FURTHER ASSURANCES. If, at any time after the Closing, the parties
shall consider or be advised that any further deeds, assignments or assurances
in law or any other things are necessary, desirable or proper to complete the
transactions contemplated herein or to vest, perfect or confirm, of record or
otherwise, the title to any property or rights of the parties hereto, the
parties agree that their proper officers and directors shall execute and deliver
all such proper deeds, assignments and assurances in law and do all things
necessary, desirable or proper to vest, perfect or confirm title to such
property or rights and otherwise to carry out the purpose of this Agreement, and
that the proper officers and directors of the parties are fully authorized to
take any and all such action.
8.3 NOTICE. All communications, notices, requests, consents or demands
given or required under this Agreement shall be in writing and shall be deemed
to have been duly given when delivered to, or received by prepaid registered or
certified mail or recognized overnight courier addressed to, or upon receipt of
a facsimile sent to, the party for whom intended, as follows, or to such other
address or facsimile number as may be furnished by such party by notice in the
manner provided herein:
IF TO THE COMPANY:
MachineTalker, Inc.
000 Xx Xx Xxxx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
IF TO THE PURCHASER:
Pearl Innovations, LLC
000 Xxxxxxxxx Xxxxx, Xxxxx X
Xxxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxx Xxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Wings Fund, Inc.
0000 Xxxxx Xxxx, #000
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx III, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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8.4 ENTIRE AGREEMENT. This Agreement, and any instruments and agreements to
be executed pursuant to this Agreement, sets forth the entire understanding of
the parties hereto with respect to the Agreement's subject matter, merges and
supersedes all prior and contemporaneous understandings with respect to its
subject matter and may not be waived or modified, in whole or in part, except by
a writing signed by each of the parties to this Agreement. No waiver of any
provision of this Agreement in any instance shall be deemed to be a waiver of
the same or any other provision in any other instance. Failure of any party to
enforce any provision of this Agreement shall not be construed as a waiver of
its rights under such provision.
8.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon,
enforceable against and inure to the benefit of, the parties hereto and their
respective heirs, administrators, executors, personal representatives,
successors and assigns, and nothing herein is intended to confer any right,
remedy or benefit upon any other person.
8.6 GOVERNING LAW AND VENUE. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California, excluding
its choice of law rules. The parties consent to jurisdiction in the Federal and
state courts of California for all actions arising under or in connection with
this Agreement.
8.7 COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
8.8 CONSTRUCTION. Headings contained in this Agreement are for convenience
only and shall not be used in the interpretation of this Agreement. As used
herein, the singular includes the plural, and the masculine, feminine and neuter
gender each includes the others where the context so indicates.
8.9 SEVERABILITY. If any provision of this Agreement is held to be invalid
or unenforceable by a court of competent jurisdiction, this Agreement shall be
interpreted and enforceable as if such provision were severed or limited, but
only to the extent necessary to render such provision and this Agreement
enforceable.
8.10 CONFIDENTIALITY AND NON-DISCLOSURE. Each party hereto agrees to use
its best efforts to insure that its authorized representatives use the same
degree of care as such party uses to protect its own confidential information to
keep confidential any information furnished to it which any other party
identifies as being confidential or proprietary (so long as such information is
not in the public domain), except that Purchaser may disclose such proprietary
or confidential information to any representative of Purchaser for the purpose
of evaluating its investment in the Company as long as such representative is
advised of the confidentiality provisions of this Section 8.10.
8.11 "KNOWLEDGE." Whenever any representation or warranty of the Company
contained in this Agreement or in any certificate or other document delivered in
connection with this Agreement is qualified to the "knowledge" of the Company,
such qualification shall mean the actual knowledge of the officers of the
Company.
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IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date first above written.
COMPANY: MachineTalker, Inc.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------------
Xxxxxx X. Xxxxx, Chief Executive Officer
PURCHASER: Pearl Innovations, LLC
By: /s/
----------------------------------------------
Xxxxxx Xxx, Chief Executive Officer
Wings Fund, Inc.
By: /s/
----------------------------------------------
Xxxxx X. Xxxxxxxx III, President
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EXHIBIT A
FORM OF LOCK-UP AGREEMENT
EXHIBIT B
OUTSTANDING NOTES AND INTEREST DUE
1. CONVERTIBLE NOTE FOR $65,000 OWED TO XXXX XXXXXXX CARRIED AT 12% SIMPLE
INTEREST
---------------------------------------------------------------------------
2. INTEREST DUE IN THE AMOUNT OF $11,997 OWED TO XXXX XXXXXXX AS OF 30 APRIL
2009
---------------------------------------------------------------------------
3. INTEREST DUE IN THE AMOUNT OF $105,400 OWED TO XXXXXX X. XXXXX AS OF 30
APRIL 2009
---------------------------------------------------------------------------
EXHIBIT C
SCHEDULE OF EXCEPTIONS
I. SCHEDULE 4.3 (C): LIST OF OUTSTANDING WARRANTS AND STOCK OPTIONS NOT OTHERWISE DISCLOSED
----------------- ----------------------------------------------------------------------
None.
II. SCHEDULE 4.5: LIST OF SUBSIDIARIES NOT OTHERWISE DISCLOSED
------------- --------------------------------------------
None.
III. SCHEDULE 4.6: ADDITIONAL LIABILITIES NOT OTHERWISE DISCLOSED
------------- ----------------------------------------------
None, except for 95,400 (pre reverse split) shares to be issued to Xxxx
Xxxxxxx for prior services performed.
IV. SCHEDULE 4.7: ADDITIONAL CONTRACTS AND DEFAULTS THEREON NOT OTHERWISE DISCLOSED
------------- -----------------------------------------------------------------
None.
V. SCHEDULE 4.13: MATERIAL CHANGES
-------------- ----------------
See current reports on Form 8-K filed by the Company with the Securities and Exchange Commission.
VI. SCHEDULE 4.14: ENCUMBRANCES ON PROPRIETARY ASSETS NOT OTHERWISE DISCLOSED.
-------------- -----------------------------------------------------------
None.
VII. SCHEDULE 4.17: RELATED PARTY TRANSACTIONS NOT OTHERWISE DISCLOSED
-------------- --------------------------------------------------
Loans owed by the Company to Xxxxxx X. Xxxxx
-------------- ------------------------ ----------------------- -------------------------------------------
DATE LOAN OR PAY OUT RUNNING TOTAL COMMENT
-------------- ------------------------ ----------------------- -------------------------------------------
No outstanding principal. Outstanding accrued but unpaid interest is approximately $105,400, which will
not accrue any further interest.
-------------- ------------------------ ----------------------- -------------------------------------------
VIII. SCHEDULE 4.22: USE OF FUNDS
-------------- ------------
The funds will be utilized to (a) pay accounts payable of approximately
$67,750 and in particular amounts owed to the Company's auditors and
accounting consultants supporting the auditors' work, and (b) for
general working capital.
