PURCHASE AGREEMENT AND DEBENTURE AMENDMENT AGREEMENT
This PURCHASE AGREEMENT AND DEBENTURE
AMENDMENT AGREEMENT (the “Agreement”), dated as
of April 15, 2010, is between Statmon Technologies Corp., a Nevada corporation
(the “Company”), with its
principal place of business at 0000 Xxxxxxxx Xxxxx, Xxxxx 000 Xxxxx,
Xxxxxxxxxxx, Xxxxxxxx 00000, Gemini Master Fund, Ltd. (“Gemini”), Harborview
Master Fund LP (“Harborview”) and
Monarch Capital Fund Ltd. (“Monarch” and,
collectively with Gemini and Harborview, “Purchasers”).
WHEREAS, pursuant to the Securities
Purchase Agreement, dated as of March 5, 2008, between the Company and the
Purchasers (the “Purchase Agreement”),
the Purchasers purchased from the Company an aggregate of $1,500,000 in
principal amount of Original Issue Discount Senior Secured Convertible
Debentures due March 5, 2010 (“Debentures”), an
aggregate of 1,526,874 warrants (“Warrants”) to
purchase common stock, $0.01 par value per share, of the Company (the “Common Stock”)
pursuant to Section 4(2) of the Securities Act of 1933, as amended (“Securities Act”) and
Rule 506 promulgated thereunder. In the same transaction, the
Purchasers also purchased Additional Investment Rights to purchase up to an
aggregate of $1,500,000 in principal amount of Debentures and 1,526,874 Warrants
(the “Additional
Investment Rights”) but the Additional Investment Rights have
subsequently terminated in accordance with their terms;
WHEREAS, as of the date hereof, Gemini
holds Debentures with a principal amount of $150,000, Harborview holds
Debentures with a principal amount of $800,000 and Monarch holds Debentures with
a principal amount of $200,000;
WHEREAS,
pursuant to the terms and conditions of this Agreement, the Company and the
Purchasers wish to amend the maturity date of the Debentures from March 5, 2010
to May 31, 2010 (the “Extension”) and to
amend certain definitions in the Purchase Agreement; and
WHEREAS,
as consideration for the Extension, the Company wishes to issue to the
Purchasers an aggregate number of shares of Common Stock equal to the sum of (i)
the aggregate principal amount of the Debentures outstanding on the date hereof
multiplied by twenty-five percent (25%), the product of which is then divided by
the Consideration Conversion Price (as defined herein) and (ii) an aggregate
number of shares of Common Stock equal to 191,165 (such shares, the “Consideration Shares”
and such number of Consideration Shares, the “Consideration Share
Number”) pursuant to Section 4(2) of the Securities Act and Rule 506
promulgated thereunder.
NOW, THEREFORE, in consideration of the
mutual promises set forth herein and other valuable consideration, the receipt
of which is hereby acknowledged, the parties hereto agree as
follows:
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1. Definitions. All
initially capitalized, undefined terms used herein shall have the meanings
ascribed to such terms in the Purchase Agreement. For purposes of
this Agreement, the “Consideration Conversion
Price” means $0.25.
2. Amendment to
Debentures. The Company and the Purchasers hereby agree to
amend the definition of Maturity Date in the second paragraph of the Preamble of
the Debentures by deleting in entirety “March 5, 2010” and inserting in its
place “May 31, 2010” (the “Debenture
Amendment”).
3. Amendment to Purchase
Agreement. The Company and the Purchasers hereby agree (i) to
amend the definition of Securities in Section 1.1 of the Purchase Agreement by
inserting immediately following “Underlying Shares” the words “and the
Consideration Shares” and (ii) to amend the definition of Transaction Documents
in Section 1.1 of the Purchase Agreement by inserting immediately following
“Subsidiary Guarantee,” the words “Purchase Agreement and Debenture Amendment
Agreement,”.
4. Issuance of
Shares. In consideration for the Debenture Amendment, the
Company shall issue and deliver to each Purchaser a Consideration Share Number
equal to the sum of (i) the outstanding principal amount of such Purchaser’s
Debenture multiplied by twenty-five percent (25%), the product of which is then
divided by the Consideration Conversion Price and (ii) such Purchaser’s pro-rata
portion of 191,165 shares of Common Stock based on the outstanding principal
amount of such Purchaser’s Debenture, as such Consideration Share Number shall
be set forth on Exhibit A attached
hereto.
5. Transfer
Restrictions. The Consideration Shares may only be disposed of
in compliance with state and federal securities laws. In connection
with any transfer of Consideration Shares other than pursuant to an effective
registration statement or Rule 144, to the Company or to an Affiliate of a
Purchaser, the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Consideration Shares under the
Securities Act. The Purchasers agree to the imprinting of a legend on the stock
certificates evidencing the Consideration Shares in the following
form:
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933. AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR
COMPLIANCE WITH AN AVAILABLE EXEMPTION FROM REGISTRATION. THE COMPANY
MAY REFUSE TO AUTHORIZE ANY TRANSFER OF THE SECURITIES IN RELIANCE ON AN
EXEMPTION FROM REGISTRATION UNTIL IT HAS RECEIVED AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.
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Certificates
evidencing the Consideration Shares shall not contain any legend (including the
legend set forth in this Section 5), (i) while a registration statement covering
the resale of such security is effective under the Securities Act, (ii)
following any sale of such Consideration Shares pursuant to Rule 144, (iii) if
such Consideration Shares are eligible for sale under Rule 144, without the
requirement for the Company to be in compliance with the current public
information required under Rule 144 as to such Consideration Shares and without
volume or manner-of-sale restrictions, or (iv) if such legend is not required
under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the
Commission). The Company shall cause its counsel to issue a legal
opinion to the Transfer Agent promptly after any event in (i)-(iv) herein if
required by the Transfer Agent to effect the removal of the legend
hereunder. The Company may not make any notation on its records or
give instructions to the Transfer Agent that enlarge the restrictions on
transfer set forth in this Section 5. Consideration Share
Certificates (as defined below) subject to legend removal hereunder shall be
transmitted by the Transfer Agent to the Purchaser by crediting the account of
the Purchaser’s prime broker with the Depository Trust Company System as
directed by such Purchaser.
6. Furnishing of Information;
Public Information. As long as any Purchaser holds any
Consideration Shares, the Company covenants to maintain the registration of the
Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file
(or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act even if the Company is not then subject to the
reporting requirements of the Exchange Act. As long as any Purchaser
holds any Consideration Shares, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell the Consideration Shares, including without
limitation, under Rule 144. The Company further covenants that it
will take such further action as any Purchaser may reasonably request, to the
extent required from time to time to enable such Purchaser to sell such
Consideration Shares without registration under the Securities Act, including
without limitation, within the requirements of the exemption provided by Rule
144.
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7. Closing. This
Agreement, including, without limitation, the Debenture Amendment, shall be
effective as of the Closing Date. For purposes herein, “Closing Date” means
the Trading Day on which the Company delivers share certificates evidencing the
Consideration Shares (such certificates, the “Consideration Share
Certificates”) to each Purchaser, in the respective share amounts set
forth on Exhibit
A attached hereto, in accordance with the delivery instructions provided
to the Company by each Purchaser. The Company shall use commercially
reasonable efforts to deliver the Consideration Shares to each Purchaser within
three Trading Days of the date of this Agreement.
8. Securities Law Disclosure;
Form D and Blue Sky Filings. The Company shall, by 8:30 a.m.
(New York City time) on the Trading Day immediately following the date hereof,
issue a Current Report on Form 8-K disclosing the material terms of the
transactions contemplated herein, and including this Agreement as an exhibit
thereto. The Company agrees to timely file a Form D with respect to
the Securities as required under Regulation D and to provide a copy thereof,
promptly upon request of any Purchaser. The Company shall take such action as
the Company shall reasonably determine is necessary in order to obtain an
exemption for, or to qualify the Consideration Shares for sale to the Purchasers
at the Closing under applicable securities or “Blue Sky” laws of the states of
the United States, and shall provide evidence of such actions promptly upon
request of any Purchaser.
9. Representations and
Warranties of the Company. The Company hereby makes the
following representations and warranties set forth below to the Purchasers as of
the date of this Agreement:
(a) Authorization;
Enforcement. The Company has the requisite power and authority
to enter into and to consummate the transactions contemplated by this Agreement
and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of such Company and no
further action is required by such Company, its board of directors or its
stockholders in connection therewith. This Agreement has been duly
executed by the Company and, when delivered in accordance with the terms hereof
will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms except (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
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(b) No
Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby do not and will not: (i) conflict with or violate any
provision of the Company’s certificate or articles of incorporation, bylaws or
other organizational or charter documents, or (ii) conflict with, or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, result in the creation of any lien upon any of the properties or
assets of the Company, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any material agreement, credit facility, debt or other material instrument
(evidencing Company debt or otherwise) or other material understanding to which
the Company is a party or by which any property or asset of the Company is bound
or affected, or (iii) conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company is subject (including
federal and state securities laws and regulations), or by which any property or
asset of the Company is bound or affected.
(c) Issuance of Consideration
Shares. When issued in accordance with the terms of this
Agreement, the Consideration Shares shall be duly authorized, validly issued,
fully paid and nonassessable, and free and clear of all Liens imposed by the
Company other than restrictions on transfer provided for in the Transaction
Documents. The Company has reserved from its duly authorized capital
a number of shares of Common Stock for issuance equal to the number of
Consideration Shares to be issued pursuant to this Agreement.
(d) Other Representations,
Warranties and Covenants. Except as disclosed in the SEC
Reports, the Company hereby makes the representations, warranties and covenants
set forth in the Purchase Agreement as though fully set forth herein as of the
date hereof, and all such representations, warranties and obligations are
incorporated herein by reference.
10. Representations and
Warranties of the Purchasers. Each Purchaser hereby, for
itself and for no other Purchaser, represents and warrants as of the date hereof
to the Company as follows:
(a) Authority. The
execution, delivery and performance by such Purchaser of this Agreement have
been duly authorized by all necessary corporate or similar action on the part of
such Purchaser. This Agreement has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such
Purchaser, enforceable against it in accordance with its terms, except (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
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(b) Own
Account. Such Purchaser understands that the Consideration
Shares are “restricted securities” and have not been registered under the
Securities Act or any applicable state securities law and is acquiring the
Consideration Shares as principal for its own account and not with a view to or
for distributing or reselling such Consideration Shares or any part thereof in
violation of the Securities Act or any applicable state securities law, has no
present intention of distributing any of such Consideration Shares in violation
of the Securities Act or any applicable state securities law and has no
arrangement or understanding with any other persons regarding the distribution
of such Consideration Shares (this representation and warranty not limiting such
Purchaser’s right to sell the Consideration Shares pursuant to a registration
statement or otherwise in compliance with applicable federal and state
securities laws) in violation of the Securities Act or any applicable state
securities law. Such Purchaser is acquiring the Consideration Shares
hereunder in the ordinary course of its business. Such Purchaser does not have
any agreement or understanding, directly or indirectly, with any Person to
distribute any of the Consideration Shares.
(c) Purchaser
Status. Such Purchaser is an “accredited investor” as defined
in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities
Act. Such Purchaser is not required to be registered as a
broker-dealer under Section 15 of the Exchange Act.
(d) Experience of Such
Purchaser. Such Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Consideration Shares, and has so evaluated the
merits and risks of such investment. Such Purchaser is able to bear the economic
risk of an investment in the Consideration Shares and, at the present time, is
able to afford a complete loss of such investment. Each Purchaser represents
that, if it deems legal representation necessary, it has retained its own legal
counsel separate and apart from any other Purchaser.
(e) General
Solicitation. Such Purchaser is not acquiring the
Consideration Shares as a result of any advertisement, article, notice or other
communication regarding the Consideration Shares published in any newspaper,
magazine or similar media or broadcast over television or radio or presented at
any seminar or any other general solicitation or general
advertisement.
(f) Affirmation of Prior
Representations and Warranties. Such Purchaser hereby
represents and warrants to the Company that its representations and warranties
listed in Section 3.2 of the Purchase Agreement are true and correct as of the
date hereof.
11. Amendments and
Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and each
Purchaser.
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12. Notices. Any and all
notices or other communications or deliveries required or permitted to be
provided hereunder shall be delivered as set forth in the applicable Purchase
Agreement.
13. Successors and
Assigns. This Agreement shall inure to the benefit of and be binding upon
the successors and permitted assigns of each of the parties and shall inure to
the benefit of each Purchaser. The Company may not assign (except by merger) its
rights or obligations hereunder without the prior written consent of all of the
Purchasers. Each Purchaser may assign their respective rights hereunder in the
manner and to the Persons as permitted under Section 5.7 of the applicable
Purchase Agreement.
14. Execution and
Counterparts. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf” signature page were an original
thereof.
15. Governing
Law. This Amendment and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed pursuant to
the internal laws of the State of New York in accordance with Section 5.9 of the
Purchase Agreement.
16. Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
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17. Effect on Transaction
Documents. Except as expressly set forth herein, all of the
terms and conditions of the Purchase Agreement, the Debentures, the Warrants,
the Security Agreement and the other Transaction Documents shall continue in
full force and effect after the execution of this Amendment, and shall not be in
any way changed, modified or superseded by the terms set forth herein and the
provisions of this Agreement, if not expressly set forth herein, shall otherwise
be subject to the provisions of the Purchase Agreement and other Transaction
Documents.
18. Independent Nature of
Holders’ Obligations and Rights. The obligations of each
Purchaser under this Agreement are several and not joint with the obligations of
any other Purchaser, and no Purchaser shall be responsible in any way for the
performance of the obligations of any other Purchaser under this
Agreement. Nothing contained herein or in this Agreement, and no
action taken by any Purchaser pursuant thereto, shall be deemed to constitute
the Purchasers as a partnership, an association, a joint venture or any other
kind of entity, or create a presumption that the Purchasers are in any way
acting in concert or as a group with respect to such obligations or the
transactions contemplated by this Agreement. Each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. Each Purchaser has been represented by
its own separate legal counsel in their review and negotiation of this
Agreement. For reasons of administrative convenience only, Purchasers
and their respective counsel have chosen to communicate with the Company through
Xxxxxxxxx Xxxxx LLP (“WS”). WS
does not represent all of the Purchasers but only Harborview. The
Company has elected to provide all Purchasers with the same terms under this
Agreement for the convenience of the Company and not because it was required or
requested to do so by the Purchasers.
[Remainder
of Page Intentionally Blank]
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IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the
date set forth above.
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By:
__________________________
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Name:
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Title:
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GEMINI
MASTER FUND, LTD.
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By:
__________________________
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Name:
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Title:
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HARBORVIEW
MASTER FUND LP
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By:
__________________________
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Name:
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Title:
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MONARCH
CAPITAL FUND LTD.
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By:
__________________________
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Name:
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Title:
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9
Exhibit
A
Issuance of Consideration
Shares of Common Stock as Extension Fee
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OID
Principal
Amount
of
Debenture
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Multiply
(a) by
25%
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Divide
(b) by
$0.25
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Consideration
Shares on
Principal
Amount of
Debenture
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Additional
Number of
Consideration
Shares (pro-
rata portion
of 191,165
shares)
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Total
Consideration
Shares
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Issue
Date
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|||||||||||||||||||
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Tranche
I Purchaser
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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(g)
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Harborview
Master Fund
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$ | 800,000 | 200,000 | 800,000 | 800,000 | 133,332 | 933,332 |
April
15, 2010
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|||||||||||||||||
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Gemini
Master Fund
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$ | 150,000 | 37,500 | 150,000 | 150,000 | 25,000 | 175,000 |
April
15, 2010
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Monarch
Capital Fund Ltd.
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$ | 200,000 | 50,000 | 200,000 | 200,000 | 33,333 | 233,333 |
April
15,
2010
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