SECURITIES PURCHASE AGREEMENT
EXHIBIT
10.1
This
SECURITIES PURCHASE AGREEMENT (this “Agreement”)
is
made and entered into as of August ___1,
2007,
by and between Debt Resolve, Inc., a Delaware corporation (the “Company”)
and
the Investors set forth on the signature pages affixed hereto (each an
“Investor”
and
collectively the “Investors”).
WHEREAS,
the Investors wish to purchase from the Company, and the Company wishes to
sell
and issue to the Investors, upon the terms and conditions stated in this
Agreement, (i) an aggregate of up to 900,000 shares (the “Shares”)
of the
Company’s Common Stock, par value $0.001 per share (together with any securities
into which such shares may be reclassified the “Common
Stock”),
at
purchase price of $2.00 per share, and (ii) warrants (the “Warrants”)
to
purchase an aggregate of up to 450,000 shares of Common Stock (subject to
adjustment) (“Warrant
Shares”)
at an
exercise price of $2.00 per share (subject to adjustment) in the form attached
hereto as Exhibit A upon the terms and conditions set forth in this Agreement;
WHEREAS,
the Shares, the Warrants and the Warrant Shares issued pursuant to this
Agreement are
collectively referred to herein as the “Securities,”
and
the Shares and the Warrants are collectively referred to in the Private
Placement Memorandum as “Units;”
and
WHEREAS,
in connection with the Investors’ purchase of the Shares and Warrants, the
Investors will receive certain rights to participate in public offerings of
Company stock, and will be subject to certain restrictions on the transfer
of
the Shares, all as more fully set forth in this Agreement.
NOW,
THEREFORE, in consideration of the mutual terms, conditions and other agreements
set forth herein and for other good and valuable consideration, the receipt
and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto hereby agree to the sale and purchase of the Shares
and Warrants as set forth herein.
1.
Definitions.
For
purposes of this Agreement, the terms set forth below shall have the
corresponding meanings provided below.
“1933
Act”
means
the 1933 Act of 1933, as amended.
“1934
Act”
means
the Securities Exchange Act of 1934, as amended.
“Affiliate”
shall
mean, with respect to any specified Person, (i)
if such
Person is an individual, the spouse, heirs, executors, or legal representatives
of such individual, or any trusts for the benefit of such individual or such
individual’s spouse and/or lineal descendants, or (ii)
otherwise, another Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with,
the
Person specified. As used in this definition, “control” shall mean the
possession, directly or indirectly, of the sole and unilateral power to cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities or by contract or other written
instrument.
“AMEX”
shall
mean the American Stock Exchange.
“Blue
Sky Application”
as
defined in Section 5.4 hereto.
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“Business
Day”
shall
mean any day on which banks located in New York City are not required or
authorized by law to remain closed.
“Closing”
and
“Closing
Date”
as
defined in Section 2.2 (c).
“Common
Stock”
as
defined in the recitals above.
“Company
Financial Statements”
as
defined in Section 4.5 hereto.
“Company’s
knowledge”
means
the actual knowledge of the executive officers (as defined in Rule 405 under
the
0000 Xxx) of the Company, after due inquiry.
“ERISA”
as
defined in Section 4.17 hereto.
“First
Closing”
and
“First
Closing Date”
as
defined in Section 2.2(a).
“Intellectual
Property”
means
the Company’s and each of its Subsidiaries’ patents, patent applications,
provisional patents, trademarks, service marks, trade names, trademark
registrations, service xxxx registrations, copyrights, licenses, formulae,
mask
works, customer lists, internet domain names, know-how and other intellectual
property, including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems, procedures or registrations
or
applications relating to the same.
“Liens”
means
any mortgage, lien, title claim, assignment, encumbrance, security interest,
adverse claim, contract of sale, restriction on use or transfer or other defect
of title of any kind.
“Material
Adverse Effect”
means
a
material adverse effect on (i) the assets, liabilities, results of operations,
condition (financial or otherwise), business, or prospects of the Company and
its Subsidiaries taken as a whole, or (ii) the ability of the Company to perform
its obligations under the Transaction Documents.
“Person”
shall
mean an individual, entity, corporation, partnership, association, limited
liability company, limited liability partnership, joint-stock company, trust
or
unincorporated organization.
“Piggyback
Registration”
as
defined in Section 5.1 hereto.
“Private
Placement Memorandum”
means
the Company’s Confidential Private Placement Memorandum, dated August 17,
2007,
and
any amendments or supplements thereto.
“Purchase
Price”
shall
mean up to $1,800,000.
"Registrable
Securities"
shall
mean the Shares, the Warrant Shares and any shares issuable upon exercise of
any
warrants issued to registered broker-dealers and their affiliates as
compensation in connection with the transactions contemplated hereby; provided,
that, a security shall cease to be a Registrable Security upon (A) sale pursuant
to a Registration Statement or Rule 144 under the 1933 Act, or (B) such security
becoming eligible for sale by the Investors pursuant to Rule 144(k).
“Registration
Statement”
shall
mean any registration statement of the Company filed under the 1933 Act that
covers the resale of any of the Registrable Securities pursuant to the
provisions of this Agreement, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and all material
incorporated by reference in such Registration Statement.
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“Regulation
D”
as
defined in Section 3.7 hereto.
“Regulation
S”
as
defined in Section 6.1(i)(E) hereto.
“Rule
144”
as
defined in Section 6.1(i)(C) hereto.
“SEC”
means
the United States Securities and Exchange Commission.
“SEC
Documents”
as
defined in Section 4.5 hereto.
“Securities”
as
defined in the recitals above.
“Shares”
as
defined in the recitals above.
“Subsequent
Closing”
and
“Subsequent
Closing Date”
as
defined in Section 2.2(b).
“Subsidiaries”
shall
mean any corporation or other entity or organization, whether incorporated
or
unincorporated, in which the Company owns, directly or indirectly, any equity
or
other ownership interest or otherwise controls through contract or
otherwise.
“Transaction
Documents”
shall
mean this Agreement and the Warrants.
“Transfer”
shall
mean any sale, transfer, assignment, conveyance, charge, pledge, mortgage,
encumbrance, hypothecation, security interest or other disposition, or to make
or effect any of the above.
“Underwriter”
as
defined in Section 5.2 hereto.
“Underwriting
Documents”
shall
mean an underwriting agreement in customary form and all other agreements and
other documents reasonably requested by an underwriter in connection with an
underwritten public offering of equity securities (including, without
limitation, questionnaires, powers of attorney, indemnities, custody agreements
and lock-up agreements).
“Warrant
Shares”
as
defined in the recitals above.
“Warrants”
as
defined in the recitals above.
2.
Sale
and Purchase of Shares and Warrants.
2.1. Subscription
for Shares and Warrants by Investors.
Subject
to the terms and conditions of this Agreement, on the Closing Date (as
hereinafter defined) each of the Investors shall severally, and not jointly,
purchase, and the Company shall sell and issue to the Investors, the Shares
and
Warrants, in the respective amounts set forth on the signature pages attached
hereto in exchange for the Purchase Price.
2.2 Closings.
(a)
First
Closing.
Subject
to the terms and conditions set forth in this Agreement, the Company shall
issue
and sell to each Investor, and each Investor shall, severally and not jointly,
purchase from the Company on the First Closing Date, such number of Shares
and
Warrants set forth on the signature pages attached hereto, which will be
reflected opposite such Investor’s name on Exhibit
A-1
(the
“First
Closing”).
The
date of the First Closing is hereinafter referred to as the “First
Closing Date.”
Notwithstanding anything to the contrary in this Agreement, a minimum of 200,000
Shares and a maximum of 900,000 Shares may be issued and sold at the First
Closing.
3
(b)
Subsequent
Closing(s).
The
Company agrees to issue and sell to each Investor listed on the Subsequent
Closing Schedule of Investors, and each Investor agrees, severally and not
jointly, to purchase from the Company on such Subsequent Closing Date such
number of Shares and Warrants set forth on the signature pages attached hereto,
which will be reflected opposite such Investor’s name on Exhibit
A-2
(a
“Subsequent
Closing”).
There
may be more than one Subsequent Closing; provided, however that the final
Subsequent Closing shall take place within the time periods set forth in the
Private Placement Memorandum. The date of any Subsequent Closing is hereinafter
referred to as a “Subsequent
Closing Date”).
Notwithstanding the foregoing, the maximum number of Shares to be sold at the
First Closing and all Subsequent Closings shall be 900,000 Shares.
(c)
Closing.
The
First Closing and any applicable Subsequent Closings are each referred to in
this Agreement as a “Closing.”
The
First Closing Date and any Subsequent Closing Dates are sometimes referred
to
herein as a “Closing
Date.”
All
Closings shall occur within the time periods set forth in the Private Placement
Memorandum at the offices of Xxxxxxxxx Xxxxxxx, LLP, counsel to the Company,
at
000 Xxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000 or remotely via the exchange of documents and
signatures.
2.3. Closing
Deliveries.
At each
Closing, the Company shall deliver to the Investors, against delivery by the
Investor of the Purchase Price (as provided below), duly issued certificates
representing the Shares and the Warrants. At each Closing, each Investor shall
deliver or cause to be delivered to the Company the Purchase Price set forth
in
its counterpart signature page annexed hereto by paying United States dollars
via
bank,
certified or personal check which has cleared prior to the applicable
or
in
immediately available funds, by wire transfer to the following escrow account:
Acct.
Name:
Signature Bank as Escrow Agent for Debt Resolve, Inc.
ABA
Number:
000000000
Acct
Number:
1500
974377
3.
Representations,
Warranties and Acknowledgments of the Investors.
Each
Investor severally and not jointly represents and warrants to the Company solely
as to such Investor that:
3.1 Authorization.
The
execution, delivery and performance by such Investor of the Transaction
Documents to which such Investor is a party have been duly authorized and will
each constitute the valid and legally binding obligation of such Investor,
enforceable against such Investor in accordance with their respective terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability, relating to or affecting
creditors’ rights generally.
3.2 Purchase
Entirely for Own Account.
The
Securities to be received by such Investor hereunder will be acquired for such
Investor’s own account, not as nominee or agent, and not with a view to the
resale or distribution of any part thereof in violation of the 1933 Act, and
such Investor has no present intention of selling, granting any participation
in, or otherwise distributing the same in violation of the 1933 Act,
without
prejudice, however, to such Investor’s right at all times to sell or otherwise
dispose of all or any part of such Securities in compliance with applicable
federal and state securities laws.
Nothing
contained herein shall be deemed a representation or warranty by such Investor
to hold the Securities for any period of time. Such
Investor
is not a broker-dealer registered with the SEC under the 1934 Act or an entity
engaged in a business that would require it to be so registered.
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3.3. Investment
Experience.
Such
Investor acknowledges that the purchase of the Shares and Warrants is a
speculative investment and that it can bear the economic risk and complete
loss
of its investment in the Securities and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment contemplated hereby.
3.4 Disclosure
of Information.
Such
Investor has had an opportunity to receive all information related to the
Company and the Securities requested by it and to ask questions of and receive
answers from the Company regarding the Company, its business and the terms
and
conditions of the offering of the Securities. Neither such inquiries nor any
other due diligence investigation conducted by such Investor shall modify,
amend
or affect such Investor’s right to rely on the Company’s representations and
warranties contained in this Agreement. Such Investor acknowledges that it
has
received and reviewed the Private Placement Memorandum describing the offering
of the Securities. Such Investor acknowledges receipt of copies of the SEC
Filings, either in hard copy or electronically through the SEC’s XXXXX system.
3.5 Restricted
Securities.
Such
Investor understands that the Securities are characterized as “restricted
securities” under the U.S. federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering
and
that under such laws and applicable regulations such securities may be resold
without registration under the 1933 Act only in certain limited
circumstances.
3.6 Legends.
It is
understood that, except as provided below, certificates evidencing the
Securities may bear the following or any similar legend:
(a) “The
securities represented hereby may not be transferred unless (i) such securities
have been registered for sale pursuant to the 1933 Act of 1933, as amended,
(ii)
such securities may be sold pursuant to Rule 144(k), or (iii) the Company has
received an opinion of counsel reasonably satisfactory to it that such transfer
may lawfully be made without registration under the 1933 Act of 1933 or
qualification under applicable state securities laws.”
(b) If
required by the authorities of any state in connection with the issuance of
sale
of the Securities, the legend required by such state authority.
3.7 Accredited
Investor.
Such
Investor is an accredited investor as defined in Rule 501(a) of Regulation
D, as
amended, under the 1933 Act. (“Regulation
D”)
3.8 No
General Solicitation.
Such
Investor did not learn of the investment in the Securities as a result of any
public advertising or general solicitation.
3.9 Brokers
and Finders.
No
Investor will have, as a result of the transactions contemplated by the
Transaction Documents, any valid right, interest or claim against or upon the
Company, any Subsidiary or any other Investor for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of such Investor.
4.
Representations
and Warranties of the Company.
The
Company represents, warrants and covenants to the Investors that:
5
4.1. Organization;
Execution, Delivery and Performance.
(a) The
Company and each of its Subsidiaries, if any, is a corporation or other entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated or organized, with full power and
authority (corporate and other) to own, lease, use and operate its properties
and to carry on its business as and where now owned, leased, used, operated
and
conducted. The following lists all direct and indirect Subsidiaries of the
Company and the jurisdiction in which each is incorporated or organized: First
Performance Corporation, a Nevada corporation, First Performance Recovery
Corporation, a Nevada corporation, DRV Capital, LLC, a Delaware limited
liability company and EAR Capital I, LLC, a Delaware limited liability company.
The Company and each of its Subsidiaries is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which its ownership or use of property or the nature of the business conducted
by it makes such qualification necessary except where the failure to be so
qualified or in good standing would not have a Material Adverse Effect.
(b) (i)
The
Company has all requisite corporate power and authority to enter into and
perform the Transaction Documents and to consummate the transactions
contemplated hereby and thereby and to issue the Securities, in accordance
with
the terms hereof and thereof, (ii) the execution and delivery of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including without limitation, the issuance
of
the Shares and the Warrants, and the issuance and reservation for issuance
of
the Warrant Shares) have been duly authorized by the Company’s Board of
Directors and no further consent or authorization of the Company, its Board
of
Directors, or its stockholders, is required, (iii) each of the Transaction
Documents has been duly executed and delivered by the Company by its authorized
representative, and such authorized representative is a true and official
representative with authority to sign each such document and the other documents
or certificates executed in connection herewith and bind the Company
accordingly, and (iv) each of the Transaction Documents constitutes, and upon
execution and delivery thereof by the Company will constitute, a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except to the extent limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors’ rights and general principles of
equity that restrict the availability of equitable or legal remedies.
4.2. Shares
and Warrants Duly Authorized.
The
Shares to be issued to each such Investor pursuant to this Agreement, when
issued and delivered in accordance with the terms of this Agreement, will be
duly and validly issued and will be fully paid and nonassessable and free from
all taxes or Liens with respect to the issue thereof and shall not be subject
to
preemptive rights or other similar rights of stockholders of the Company. The
Warrant Shares will be duly authorized and reserved for future issuance and,
upon exercise of the Warrants in accordance with its terms, will be duly and
validly issued, fully paid and non-assessable, and free from all taxes or Liens
with respect to the issue thereof and shall not be subject to preemptive rights
or other similar rights of stockholders of the Company.
| 4.3 |
No
Conflicts.
|
The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby
and
thereby (including, without limitation, the issuance and reservation for
issuance of the Warrant Shares) will not: (i) conflict with or result in a
violation of any provision of the Certificate of Incorporation or By-laws or
(ii) violate or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which with notice or lapse of time or both
could become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture, patent,
patent license or instrument to which the Company or any of its Subsidiaries
is
a party, except for possible violations, conflicts or defaults as would not,
individually or in the aggregate, have a Material Adverse Effect, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and regulations
of
any self-regulatory organizations to which the Company or its securities are
subject) 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. Neither the Company nor any of its Subsidiaries is in violation of
its
Certificate of Incorporation, By-laws or other organizational documents. Neither
the Company nor any of its Subsidiaries is in default (and no event has occurred
which with notice or lapse of time or both could put the Company or any of
its
Subsidiaries in default) under, and neither the Company nor any of its
Subsidiaries has taken any action or failed to take any action that would 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 by which any property or assets of the Company or
any
of its Subsidiaries is bound or affected, except for possible defaults as would
not, individually or in the aggregate, have a Material Adverse Effect. The
businesses of the Company and its Subsidiaries are not being conducted in
violation of any law, rule ordinance or regulation of any governmental entity,
except for possible violations which would not, individually or in the
aggregate, have a Material Adverse Effect. Except as required under the 1933
Act, the 1934 Act,
the
rules and regulations of the American Stock Exchange
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, governmental agency, regulatory agency, self regulatory organization
or
stock market or any third party in order for it to execute, deliver or perform
any of its obligations under this Agreement or the Warrants in accordance with
the terms hereof or thereof or to issue and sell the Shares and Warrants in
accordance with the terms hereof and to issue the Warrant Shares upon exercise
of the Warrants. 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 or will be obtained
or
effected in a timely manner following the Closing Date.
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4.4. Capitalization.
(a) As
of
August
16,
2007, the authorized capital stock of the Company consists of (i) 100,000,000
shares of Common Stock, of which 7,499,414 shares are issued and outstanding,
4,075,934 shares are reserved for issuance pursuant to options granted under
the
Company’s 2005 Incentive Compensation Plan, and 1,310,959 shares are reserved
for issuance pursuant to securities (other than the Warrants) exercisable for,
or convertible into or exchangeable for shares of Common Stock and (ii)
10,000,000 shares of preferred stock, par value $.001 per share, of which no
shares are issued and outstanding. Except as described above, in the SEC
Documents (as such term is defined below), the Company will not, upon the
consummation of the transactions contemplated hereby (i) there are no
outstanding options, warrants, scrip, rights to subscribe for, puts, calls,
rights of first refusal, agreements, understandings, claims or other commitments
or rights of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for any shares of capital stock of the Company
or any of its Subsidiaries, 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, (ii) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated
to
register the sale of any of its or their securities under the 1933 Act (except
for the registration rights provisions contained herein) and (iii) there are
no
anti-dilution or price adjustment provisions contained in any security issued
by
the Company (or in any agreement providing rights to security holders) that
will
be triggered by the issuance of the Shares the Warrants or the Warrant Shares,
All of such outstanding shares of capital stock are, or upon issuance will
be,
duly authorized, validly issued, fully paid and nonassessable. No shares of
capital stock of the Company are subject to preemptive rights or any other
similar rights of the stockholders of the Company or any Lien imposed through
the actions or failure to act of the Company.
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4.5. SEC
Information.
(a) The
Company has timely filed (subject to 12b-25 filings with respect to certain
periodic filings) all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the 1934 Act (all of the foregoing and all other documents filed with the
SEC
prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents incorporated by reference
therein, being hereinafter referred to herein as the “SEC
Documents”).
The
SEC Documents have been made available to the Investors via the SEC’s XXXXX
system. As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and regulations
of
the SEC promulgated thereunder applicable to the SEC Documents, and none of
the
SEC Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to
be
stated therein or necessary in order to make the statements therein, in light
of
the circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included in the SEC
Documents (“Company
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. The Company Financial Statements have been prepared in accordance
with
United States 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 not include footnotes or may be
condensed or summary statements) and fairly present in all material respects
the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in the
Company Financial Statements, the Company has no liabilities, contingent or
otherwise, other than: (i) liabilities incurred in the ordinary course of
business subsequent to December 31, 2006 and (ii) obligations under contracts
and commitments incurred in the ordinary course of business and not required
under generally accepted accounting principles to be reflected in such financial
statements, which, individually or in the aggregate, are not material to the
financial condition or operating results of the Company.
(b) The
shares of Common Stock are currently listed on the AMEX. The Company has not
received notice (written or oral) from the AMEX to the effect that the Company
is not in compliance with the continued listing and maintenance requirements
of
such trading market. The Company is, and has no reason to believe that it will
not in the foreseeable future continue to be, in compliance with all such
listing and maintenance requirements.
4.6 Intellectual
Property.
The
Company owns valid title, free and clear of any Liens, or possesses the
requisite valid and current licenses or rights, free and clear of any Liens,
to
use all Intellectual Property in connection with the conduct its business as
now
operated (and, to the best of the Company’s knowledge, as presently contemplated
to be operated in the future). There is no claim or action by any person
pertaining to, or proceeding pending, or to the Company’s knowledge threatened,
which challenges the right of the Company or of a Subsidiary with respect to
any
Intellectual Property necessary to enable it to conduct its business as now
operated (and, to the best of the Company’s knowledge, as presently contemplated
to be operated in the future). To the best of the Company’s knowledge, the
Company’s or its Subsidiaries’ current and intended products, services and
processes do not infringe on any Intellectual Property or other rights held
by
any person, and the Company is unaware of any facts or circumstances which
might
give rise to any of the foregoing. The Company has not received any notice
of
infringement of, or conflict with, the asserted rights of others with respect
to
the Intellectual Property. The Company and each of its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of their Intellectual Property.
4.7 Permits;
Compliance.
The
Company and each of its Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exemptions, consents,
certificates, approvals and orders necessary to own, lease and operate its
properties and to carry on its business as it is now being conducted
(collectively, the “Company
Permits”),
and
there is no action pending or, to the knowledge of the Company, threatened
regarding suspension or cancellation of any of the Company Permits. Neither
the
Company nor any of its Subsidiaries is in conflict with, or in default or
violation of, any of the Company Permits, except for any such conflicts,
defaults or violations which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. Since December 31,
2006, neither the Company nor any of its Subsidiaries has received any
notification with respect to possible conflicts, defaults or violations of
applicable laws, except for notices relating to possible conflicts, defaults
or
violations, which conflicts, defaults or violations would not have a Material
Adverse Effect.
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4.8 Absence
of Litigation.
Except
as set forth in the SEC Documents, there is no action, suit, claim, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of
the
Company or any of its Subsidiaries, threatened against or affecting the Company
or any of its Subsidiaries, or their respective businesses, properties or assets
or their officers or directors in their capacity as such, that would have a
Material Adverse Effect. The Company is unaware of any facts or circumstances
which might give rise to any of the foregoing.
4.9 No
Materially Adverse Contracts, etc.
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. Neither the Company nor any of its
Subsidiaries is a party to any contract or agreement which has or is reasonably
expected to have a Material Adverse Effect.
4.10 No
Material Changes.
(a) Since
December 31, 2006, except as set forth in the SEC Documents, there has not
been:
(i) Any
material adverse change in the financial condition, operations or business
of
the Company from that shown on the Company Financial Statements, or any material
transaction or commitment effected or entered into by the Company outside of
the
ordinary course of business;
(ii) Any
effect, change or circumstance which has had, or could reasonably be expected
to
have, a Material Adverse Effect; or
(iii) Any
incurrence of any material liability outside of the ordinary course of
business.
4.11 Litigation.
Except
as set forth in the SEC Documents, there is no action, suit, claim, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of
the
Company, threatened against or affecting the Company or any of its Subsidiaries,
or their respective businesses, properties or assets or their officers or
directors in their capacity as such, that would have a Material Adverse Effect.
The Company is unaware of any facts or circumstances which might give rise
to
any of the foregoing.
4.12 Tax
Matters.
The
Company and each of its Subsidiaries has made or filed all federal, state and
foreign income and all other tax returns, reports and declarations required
by
any jurisdiction to which it is subject and 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 provisions
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. The Company has not executed a waiver with respect to the statute of
limitations relating to the assessment or collection of any foreign, federal,
state or local tax. The Company has not received notice that any of its tax
returns is presently being audited by any taxing authority.
9
4.13 Certain
Transactions.
Except
as set forth in the SEC Documents, there are no loans, leases, royalty
agreements or other transactions between: (i) the Company or any of its
Subsidiaries or any of their respective customers or suppliers, and (ii) any
officer, employee, consultant or director of the Company or any person owning
five percent (5%) or more of the capital stock of the Company or five percent
(5%) or more of the ownership interests of the Company or any of its
Subsidiaries or any member of the immediate family of such officer, employee,
consultant, director, stockholder or owner or any corporation or other entity
controlled by such officer, employee, consultant, director, stockholder or
owner, or a member of the immediate family of such officer, employee,
consultant, director, stockholder or owner.
4.14 No
General Solicitation.
Neither
the Company nor any person participating on the Company’s behalf in the
transactions contemplated hereby has conducted any “general solicitation,” as
such term is defined in Regulation D promulgated under the 1933 Act, with
respect to any of the Securities being offered hereby.
4.15 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 in any security
or
solicited any offers to buy any security under circumstances that would require
registration under the 1933 Act of the issuance of the Securities to the
Investors. The issuance of the Securities to the Investors will not be
integrated with any other issuance of the Company’s securities (past, current or
future) for purposes of any stockholder approval provisions applicable to the
Company or its securities.
4.16 No
Brokers.
Except
as set forth in Section 9.1, the Company has taken no action which would give
rise to any claim by any person for brokerage commissions, transaction fees
or
similar payments relating to this Agreement or the transactions contemplated
hereby.
4.17 ERISA.
Neither
the Company nor any of its Subsidiaries has made or currently makes any
contributions to any employee pension benefit plan for its employees which
plan
is subject to the Employee Retirement Income Security Act of l974, as amended
from time to time (“ERISA”).
4.18 Title
to Property.
The
Company and its Subsidiaries hold no title in fee simple to any real property.
The Company and its Subsidiaries hold good and marketable title to all personal
property owned by them which is material to the business of the Company and
its
Subsidiaries, in each case free and clear of all Liens, except such as are
described in the SEC Documents. Any real property and facilities held under
lease by the Company and its Subsidiaries are held by them under valid,
subsisting and enforceable leases.
4.19 Insurance.
The
Company and each of its Subsidiaries, officers and directors, assets and
properties are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as management of the Company
believes to be prudent and customary in the businesses in which the Company
and
its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has
any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.
10
4.20 Internal
Controls.
The
Company is
in
material compliance with the provisions of the Xxxxxxxx-Xxxxx Act of 2002
currently applicable to the Company. The Company and
the
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 GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared
with
the existing assets at reasonable intervals and appropriate action is taken
with
respect to any differences. The Company has established disclosure controls
and
procedures (as defined in 1934 Act Rules 13a-14 and 15d-14) for the Company
and
designed such disclosure controls and procedures to ensure that material
information relating to the Company, including the Subsidiaries, is made known
to the certifying officers by others within those entities, particularly during
the period in which the Company’s most recently filed period report under the
1934 Act, as the case may be, is being prepared. The Company's certifying
officers have evaluated the effectiveness of the Company's controls and
procedures as of the end of the period covered by the most recently filed
periodic report under the 1934 Act (such date, the "Evaluation Date"). The
Company presented in its most recently filed periodic report under the 1934
Act
the conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no significant
changes in the Company's internal controls (as such term is defined in Item
308
of Regulation S-K) or, to the Company's Knowledge, in other factors that could
significantly affect the Company's internal controls. The Company maintains
and
will continue to maintain a standard system of accounting established and
administered in accordance with GAAP and the applicable requirements of the
1934
Act.
4.21 Books
and Records.
The
books of account, ledgers, order books, records and documents of the Company
and
its subsidiaries accurately and completely reflect all material information
relating to the business of the Company and its Subsidiaries, the location
and
collection of their respective assets, and the nature of all transactions giving
rise to the obligations or accounts receivable of the Company or any of its
Subsidiaries.
4.22 FCPA
Matters.
Neither
the Company, nor any of its Subsidiaries, nor any director, officer, agent,
employee or other person acting on behalf of the Company or any Subsidiary
has,
in the course of his or her actions for, or on behalf of, the Company: (i)
used
any corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity, (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds, (iii) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or
(iv)
made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic governmental or private official or
person.
4.23 Disclosure.
All
information relating to or concerning the Company or any of its Subsidiaries,
officers, directors, employees, customers or clients (including, without
limitation, all information regarding the Company’s internal financial
accounting controls and procedures): (i) set forth in this Agreement and/or
(ii)
as disclosed in any SEC Document or exhibit or certification thereto and/or
is
true and correct in all material respects and the Company has not omitted to
state any material fact necessary in order to make the statements made herein
or
therein, in light of the circumstances under which they were made, not
misleading.
4.24 Form
D; Blue Sky Laws.
The
Company agrees to file a Form D with respect to the Securities as required
under
Regulation D and to provide a copy thereof to National Securities Corporation
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 Securities for sale to the Investors t the applicable closing
pursuant to this Agreement under applicable securities or “blue sky” laws of the
states of the United States (or to obtain an exemption from such qualification),
and shall provide evidence of any such action so taken to National Securities
Corporation on or prior to the Closing Date.
11
4.25 Most
Favored Nations.
If, at
any time and from time to time during the period commencing August
17, 2007
and ending on the first anniversary of such date, the Company issues, in a
financing or series of related financings, additional shares of Common Stock
or
other equity or equity-linked securities that exceed an aggregate of 100,000
shares (the “Additional Shares”) at a purchase, exercise or conversion price
less than $2.00 (subject to adjustment for splits, recapitalizations,
reorganizations), then the Company shall: (a) issue additional shares of Common
Stock to the Investors so that the effective purchase price per Share shall
be
the same per share purchase, exercise or conversion price of the Additional
Shares and (b) the exercise price of the Warrants shall be reduced to the per
share purchase, exercise or conversion price of such Additional Shares.
Notwithstanding the foregoing, (i) no adjustment will be made in respect of
shares of Common Stock or options to employees, directors or consultants issued
at the then fair market value, not to exceed 5% of the shares then outstanding,
and (ii) nothing herein shall require the Company to take any action which
would
violate the rules or regulations of the AMEX. In that regard, the Company
covenants to promptly take all necessary action to obtain shareholder approval
with respect to the provisions of this Section 4.25 as more particularly
described in the Private Placement Memorandum.
5. Registration
Rights.
5.1. Participation
in Registrations.
Whenever the Company proposes to register any of its securities under the 1933
Act, whether for its own account or for the account of another stockholder
(except for the registration of securities (A) to be offered pursuant to an
employee benefit plan on Form S-8 or (B) pursuant to a registration made on
Form
S-4, or any successor forms then in effect) at any time and the registration
form to be used may be used for the registration of the Registrable Securities
(a “Piggyback
Registration”),
it
will so notify in writing all holders of Registrable Securities no later than
the earlier to occur of (i) the tenth (10th)
day
following the Company’s receipt of notice of exercise of other demand
registration rights, or (ii) thirty (30) days prior to the anticipated filing
date. Subject to the provisions of this Agreement, the Company will include
in
the Piggyback Registration all Registrable Securities, on a pro rata basis
based
upon the total number of Registrable Securities with respect to which the
Company has received written requests for inclusion within fifteen (15) business
days after the applicable holder’s receipt of the Company’s notice.
5.2. Underwritten
Offerings.
In the
event a registration giving rise to the Investors’ rights pursuant to Section
5.1 relates to an underwritten offering of securities, the Investors’ right to
registration pursuant to Section 5.1 shall be conditioned upon its (i)
participation in such underwriting, (ii) inclusion of the Registrable Securities
therein and (iii) execution of all underwriting documents requested by the
underwriter with respect thereto (the “Underwriter”).
If
the managing underwriter gives the Company its written opinion that the total
number or dollar amount of securities requested to be included in the
registration exceeds the number or dollar amount of securities that can be
sold,
the Company will include the securities in the registration in the following
order of priority: (A) first, all securities the Company proposes to sell;
and
(B) second, pro rata among all other holders of securities (including the
holders of Registrable Securities) that have registration rights, if any, in
each case, on the basis of the dollar amount or number of securities requested
to be included, as the case may be.
12
5.3. Expenses.
All
fees and expenses incident to the performance of or compliance with this
Agreement by the Company shall be borne by the Company whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The
fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with the
trading market on which the Common Stock is then listed for trading, and (B)
in
compliance with applicable state securities or Blue Sky laws, (ii) printing
expenses, (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel and independent public accountants for the Company,
(v)
fees and disbursements of one counsel to the Investors not to exceed $7,500
and
(vi) filing fees and counsel fees of National Securities Corporation if a
determination is made that a NASD Rule 2710 filing is required to be made with
respect to the Registration Statement.
5.4. Indemnification.
(a) Indemnification
by the Company.
The
Company will indemnify and hold harmless each Investor and its officers,
directors, members, employees and agents, successors and assigns, and each
other
person, if any, who controls such Investor within the meaning of the 1933 Act,
against any losses, claims, damages or liabilities, joint or several, to which
they may become subject under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or
are based upon: (i) any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof; (ii) any blue sky application or other document executed by the Company
specifically for that purpose or based upon written information furnished by
the
Company filed in any state or other jurisdiction in order to qualify any or
all
of the Registrable Securities under the securities laws thereof (any such
application, document or information herein called a “Blue
Sky Application”);
(iii)
the omission or alleged omission to state therein a material fact required
to be
stated therein or necessary to make the statements therein not misleading;
(iv)
any violation by the Company or its agents of any rule or regulation promulgated
under the 1933 Act applicable to the Company or its agents and relating to
action or inaction required of the Company in connection with such registration;
or (v) any failure to register or qualify the Registrable Securities included
in
any such Registration in any state where the Company or its agents has
affirmatively undertaken or agreed in writing that the Company will undertake
such registration or qualification on an Investor’s behalf and will reimburse
such Investor, and each such officer, director or member and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided,
however,
that
the Company will not be liable in any such case if and to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made
in
conformity with information furnished by such Investor or any such controlling
person in writing specifically for use in such Registration Statement or
Prospectus.
(b) Indemnification
by the Investors.
Each
Investor agrees, severally but not jointly, to indemnify and hold harmless,
to
the fullest extent permitted by law, the Company, its directors, officers,
employees, stockholders and each person who controls the Company (within the
meaning of the 0000 Xxx) against any losses, claims, damages, liabilities and
expense (including reasonable attorney fees) resulting from any untrue statement
of a material fact or any omission of a material fact required to be stated
in
the Registration Statement or Prospectus or preliminary prospectus or amendment
or supplement thereto or necessary to make the statements therein not
misleading, to the extent, but only to the extent that such untrue statement
or
omission is contained in any information furnished in writing by such Investor
to the Company specifically for inclusion in such Registration Statement or
Prospectus or amendment or supplement thereto. In no event shall the liability
of an Investor be greater in amount than the dollar amount of the proceeds
(net
of all expense paid by such Investor in connection with any claim relating
to
this Section 5.4 and the amount of any damages such Investor has otherwise
been
required to pay by reason of such untrue statement or omission) received by
such
Investor upon the sale of the Registrable Securities included in the
Registration Statement giving rise to such indemnification
obligation.
13
(c) Conduct
of Indemnification Proceedings.
Any
person entitled to indemnification hereunder shall (i) give prompt notice to
the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) permit such indemnifying party to assume the defense of such claim
with
counsel reasonably satisfactory to the indemnified party; provided
that any
person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such person unless
(a)
the indemnifying party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such person or (c) in the reasonable
judgment of any such person, based upon written advice of its counsel, a
conflict of interest exists between such person and the indemnifying party
with
respect to such claims (in which case, if the person notifies the indemnifying
party in writing that such person elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such claim on behalf of such person); and
provided,
further,
that
the failure of any indemnified party to give notice as provided herein shall
not
relieve the indemnifying party of its obligations hereunder, except to the
extent that such failure to give notice shall materially adversely affect the
indemnifying party in the defense of any such claim or litigation. It is
understood that the indemnifying party shall not, in connection with any
proceeding in the same jurisdiction, be liable for fees or expenses of more
than
one separate firm of attorneys at any time for all such indemnified parties.
No
indemnifying party will, except with the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect of such
claim or litigation.
(d) Contribution.
If for
any reason the indemnification provided for in the preceding paragraphs (a)
and
(b) is unavailable to an indemnified party or insufficient to hold it harmless,
other than as expressly specified therein, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result
of
such loss, claim, damage or liability in such proportion as is appropriate
to
reflect the relative fault of the indemnified party and the indemnifying party,
as well as any other relevant equitable considerations. No person guilty of
fraudulent misrepresentation within the meaning of Section 11(f) of the 1933
Act
shall be entitled to contribution from any person not guilty of such fraudulent
misrepresentation. In no event shall the contribution obligation of a holder
of
Registrable Securities be greater in amount than the dollar amount of the
proceeds (net of all expenses paid by such holder in connection with any claim
relating to this Section 5.4 and the amount of any damages such holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission) received by it upon the sale of
the
Registrable Securities giving rise to such contribution obligation.
5.5. Cooperation
by Investor.
Each
Investor shall furnish to the Company or the Underwriter, as applicable, such
information regarding the Investor and the distribution proposed by it as the
Company may reasonably request in connection with any registration or offering
referred to in this Section 5. Each Investor shall cooperate as reasonably
requested by the Company in connection with the preparation of the registration
statement with respect to such registration, and for so long as the Company
is
obligated to file and keep effective such registration statement, shall provide
to the Company, in writing, for use in the registration statement, all such
information regarding the Investor and its plan of distribution of the Shares
included in such registration as may be reasonably necessary to enable the
Company to prepare such registration statement, to maintain the currency and
effectiveness thereof and otherwise to comply with all applicable requirements
of law in connection therewith.
6. Transfer
Restrictions.
14
6.1. Transfer
or Resale.
Each
Investor understands that:
(i) Except
as
provided in the registration rights provisions set forth above, the sale or
resale of all or any portion or component of the Securities has not been and
is
not being registered under the 1933 Act or any applicable state securities
laws,
and the all or any portion or component of Securities may not be transferred
unless:
(A) the
Securities are sold pursuant to an effective registration statement under the
1933 Act,
(B) the
Investor shall have delivered to the Company, at the cost of the Company, a
customary opinion of counsel that shall be in form, substance and scope
reasonably acceptable to the Company, to the effect that the Securities to
be
sold or transferred may be sold or transferred pursuant to an exemption from
such registration,
(C) the
Securities are sold or transferred to an “affiliate” (as defined in Rule 144
promulgated under the 1933 Act (or a successor rule) (“Rule
144”))
of
the Investor who agrees to sell or otherwise transfer the Securities only in
accordance with this Section 6.1 and who is an Accredited Investor,
(D) the
Securities are sold pursuant to Rule 144, or
(E) the
Securities are sold pursuant to Regulation S under the 1933 Act (or a successor
rule) (“Regulation
S”),
and,
in
each case, the Investor shall have delivered to the Company, at the cost of
the
Company, a customary opinion of counsel, in form, substance and scope reasonably
acceptable to the Company. Notwithstanding the foregoing or anything else
contained herein to the contrary, the Securities may be pledged as collateral
in
connection with a bona fide
margin
account or other lending arrangement.
15
7. Conditions
to Closing of the Investors.
The
obligation of each Investor to purchase the Shares and the Warrants at the
Closing is subject to the fulfillment to such Investor’s satisfaction, on or
prior to the Closing Date, of the following conditions, any of which may be
waived by such Investor (as to itself only):
7.1. Representations
and Warranties.
The
representations and warranties made by the Company in Section 4 hereof qualified
as to materiality shall be true and correct at all times prior to and on the
Closing Date, except to the extent any such representation or warranty expressly
speaks as of an earlier date, in which case such representation or warranty
shall be true and correct as of such earlier date, and, the representations
and
warranties made by the Company in Section 4 hereof not qualified as to
materiality shall be true and correct in all material respects at all times
prior to and on the Closing Date, except to the extent any such representation
or warranty expressly speaks as of an earlier date, in which case such
representation or warranty shall be true and correct in all material respects
as
of such earlier date. The Company shall have performed in all material respects
all obligations and covenants herein required to be performed by it on or prior
to the Closing Date.
7.2.
Approvals.
The
Company shall have obtained any and all consents, permits, approvals,
registrations and waivers necessary or appropriate for consummation of the
purchase and sale of the Securities and the consummation of the other
transactions contemplated by the Transaction Documents, all of which shall
be in
full force and effect.
7.3.
Judgments,
Etc.
No
judgment, writ, order, injunction, award or decree of or by any court, or judge,
justice or magistrate, including any bankruptcy court or judge, or any order
of
or by any governmental authority, shall have been issued, and no action or
proceeding shall have been instituted by any governmental authority, enjoining
or preventing the consummation of the transactions contemplated hereby or in
the
other Transaction Documents.
7.4 Stop
Orders.
No
stop
order or suspension of trading shall have been imposed by the SEC or any other
governmental or regulatory body with respect to public trading in the Common
Stock.
7.5 Company
CEO/CFO Certificate.
The
Company shall have delivered a Certificate, executed on behalf of the Company
by
its Chief Executive Officer or its Chief Financial Officer, dated as of the
Closing Date, certifying to the fulfillment of the conditions specified in
subsections 7.1, 7.2, 7.3 and 7.4.
7.6 Company
Secretary Certificate.
The
Company shall have delivered a Certificate, executed on behalf of the Company
by
its Secretary, dated as of the Closing Date, certifying the resolutions adopted
by the Board of Directors of the Company approving the transactions contemplated
by this Agreement and the other Transaction Documents and the issuance of the
Securities, certifying the current versions of the Articles of Incorporation
and
Bylaws of the Company and certifying as to the signatures and authority of
persons signing the Transaction Documents and related documents on behalf of
the
Company. The foregoing certificate shall only be required to be delivered on
the
First Closing Date, unless any information contained in the certificate has
changed.
16
7.7 Opinion
of Counsel.
The
Investors shall have received an opinion from Xxxxxxxxx Xxxxxxx, LLP, the
Company's counsel, dated as of the Closing Date, in form and substance
reasonably acceptable to National Securities Corporation.
8.
Conditions
to Closing of the Company.
The
obligations of the Company to effect the transactions contemplated by this
Agreement are subject to the fulfillment at or prior to each Closing Date of
the
conditions listed below.
8.1.
Representations
and Warranties.
The
representations and warranties made by the Investor in Section 3 shall be true
and correct in all material respects at the time of Closing as if made on and
as
of such date.
8.2.
Corporate
Proceedings.
All
corporate and other proceedings required to be undertaken by the Investor in
connection with the transactions contemplated hereby shall have occurred and
all
documents and instruments incident to such proceedings shall be reasonably
satisfactory in substance and form to the Company.
9. Miscellaneous.
9.1. Compensation
of Brokers.
The
Investor acknowledges that it is aware that National Securities Corporation
will
receive from the Company, in consideration of its services as placement agent
in
respect of the transactions contemplated hereby, (i) a success fee of 10% of
the
Purchase Price of the Shares and Warrants sold at each closing, payable in
cash
(the “Success Fee”) and (ii) a warrant to purchase a number of shares of Common
Stock equal to 10% of the Shares sold at each closing at an exercise price
of
$2.00 per share.
9.2. Notices.
All
notices, requests, demands and other communications provided in connection
with
this Agreement shall be in writing and shall be deemed to have been duly given
at the time when hand delivered, delivered by express courier, or sent by
facsimile (with receipt confirmed by the sender’s transmitting device) in
accordance with the contact information provided below or such other contact
information as the parties may have duly provided by notice.
The
Company:
|
Debt
Resolve, Inc.
000
Xxxxxxxxxxx Xxxxxx, Xxxxx X-0
Xxxxx
Xxxxxx, Xxx Xxxx 00000
Telephone:
000-000-0000
Facsimile:
000-000-0000
Attention:
Xx. Xxxxx X. Xxxxxxxxx,
Chief
Executive Officer
|
With
a copy to:
|
Xxxxxxxxx
Xxxxxxx, LLP
000
Xxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx, XX 00000
Telephone:
000-000-0000
Facsimile:
212-801-6400
Attention:
Xxxxxxx X. Xxxxxxx, Esq.
|
17
The
Investors:
As
per
the contact information provided on the signature page hereof.
National
Securities Corporation:
|
National
Securities Corporation
000
X. Xxxxxxxx Xxxxxx, Xxxxx 0000 Xxxxxxx, XX 00000
Facsimile.
000-000-0000
Attention:
Xxxxx Xxxxxxxx,
Managing
Director
|
With
a copy to:
|
Xxxxxxx
Krooks, LLP
000
Xxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx, XX 00000
Facsimile:
212-490-2990
Attention:
Xxxxxx X. Xxxxxxx, Esq.
|
9.3 Survival
of Representations and Warranties.
Each
party hereto covenants and agrees that the representations and warranties of
such party contained in this Agreement shall survive the Closing.
9.4 Indemnification.
(a) The
Company agrees to indemnify and hold harmless each Investor and its Affiliates
and their respective directors, officers, employees and agents from and against
any and all losses, claims, damages, liabilities and expenses (including without
limitation reasonable attorney fees and disbursements and other expenses
incurred in connection with investigating, preparing or defending any action,
claim or proceeding, pending or threatened and the costs of enforcement thereof)
(collectively, “Losses”)
to
which such Person may become subject as a result of any breach of
representation, warranty, covenant or agreement made by or to be performed
on
the part of the Company under the Transaction Documents, and will reimburse
any
such Person for all such amounts as they are incurred by such
Person.
(b) Promptly
after receipt by any Investor (the “Indemnified Person”) of notice of any
demand, claim or circumstances which would or might give rise to a claim or
the
commencement of any action, proceeding or investigation in respect of which
indemnity may be sought pursuant to Section 9.4, such Indemnified Person shall
promptly notify the Company in writing and the Company shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to such
Indemnified Person, and shall assume the payment of all fees and expenses;
provided,
however,
that
the failure of any Indemnified Person so to notify the Company shall not relieve
the Company of its obligations hereunder except to the extent that the Company
is materially prejudiced by such failure to notify. In any such proceeding,
any
Indemnified Person shall have the right to retain its own counsel, but the
fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless: (i) the Company and the Indemnified Person shall have mutually agreed
to
the retention of such counsel; or (ii) in the reasonable judgment of counsel
to
such Indemnified Person representation of both parties by the same counsel
would
be inappropriate due to actual or potential differing interests between them.
The Company shall not be liable for any settlement of any proceeding effected
without its written consent, which consent shall not be unreasonably withheld,
but if settled with such consent, or if there be a final judgment for the
plaintiff, the Company shall indemnify and hold harmless such Indemnified Person
from and against any loss or liability (to the extent stated above) by reason
of
such settlement or judgment. Without the prior written consent of the
Indemnified Person, which consent shall not be unreasonably withheld, the
Company shall not effect any settlement of any pending or threatened proceeding
in respect of which any Indemnified Person is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Person
from all liability arising out of such proceeding.
18
9.5. Entire
Agreement.
This
Agreement contains the entire agreement between the parties hereto in respect
of
the subject matter contained herein and supersedes all prior agreements and
understandings of the parties, oral and written, with respect to the subject
matter contained herein.
9.6 Third
Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and, except for NSC and the Other BDs, if
any,
who are specifically agreed to be and acknowledged by each party as third party
beneficiaries hereof, is not for the benefit of, nor may any provision hereof
be
enforced by, any other person.
9.7. Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and assigns. Neither the Company nor any Investor shall assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the other. Notwithstanding the foregoing, but subject to the
provisions of Section 6.1 hereof, any Investor may, without the consent of
the
Company, assign its rights hereunder to any person that purchases Securities
in
a private transaction from an Investor or to any of its “affiliates,” as that
term is defined under the 1934 Act.
9.8. Publicity.
The
Company and NSC shall have the right to review a reasonable period of time
before issuance of any press releases or SEC or other regulatory filings, or
any
other public statements with respect to the transactions contemplated hereby;
provided,
however,
that
the Company shall be entitled, without the prior approval of the Placement
Agents or the Purchasers, to make any press release or SEC or other regulatory
filings with respect to such transactions as is required by applicable law
and
regulations (although the Placement Agents shall be consulted by the Company
in
connection with any such press release prior to its release and shall be
provided with a copy thereof and be given an opportunity to comment thereon).
9.9. Binding
Effect; Benefits.
This
Agreement and all the provisions hereof shall be binding upon and inure to
the
benefit of the parties hereto and their respective successors and permitted
assigns; nothing in this Agreement, expressed or implied, is intended to confer
on any persons other than the parties hereto or their respective successors
and
permitted assigns, any rights, remedies, obligations or liabilities under or
by
reason of this Agreement.
9.10. Amendment;
Waivers.
All
modifications, amendments or waivers to this Agreement shall require the written
consent of both the Company and a majority in interest of the Investors (based
on the number of Shares purchased hereunder).
9.11. Applicable
Law; Disputes.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York without giving effect to the conflict of law provisions
thereof, and the parties hereto irrevocably submit to the exclusive jurisdiction
of the United States District Court for the Southern District of New York,
or,
if jurisdiction in such court is lacking, the Supreme Court of the State of
New
York, New York County, in respect of any dispute or matter arising out of or
connected with this Agreement
9.12. Further
Assurances.
Each
party hereto shall do and perform or cause to be done and performed all such
further acts and shall execute and deliver all such other agreements,
certificates, instruments and documents as any other party hereto reasonably
may
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
19
9.13. Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed to be an original and all of which taken together shall constitute one
and the same instrument. This Agreement may also be executed via facsimile,
which shall be deemed an original.
[SIGNATURE
PAGES IMMEDIATELY FOLLOW]
20
IN
WITNESS WHEREOF,
the
undersigned Investors and the Company have caused this Securities Purchase
Agreement to be duly executed as of the date first above written.
|
DEBT
RESOLVE, INC.
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| By: | ||
|
Name: Xxxxx X. Xxxxxxxxx |
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| Title: Co-chairman, President and CEO | ||
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INVESTORS:
The
Investors executing the Signature Page in the form attached hereto
as
Annex
A
and delivering the same to the Company or its agents shall be deemed
to
have executed this Agreement and agreed to the terms
hereof.
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21
Annex
A
Investor
Counterpart Signature Page
The
undersigned, desiring to: (i) enter into this Securities Purchase Agreement
dated as of August ___2,
2007
(the “Agreement”),
between the undersigned, Debt Resolve, Inc., a Delaware corporation (the
“Company”),
and
the other parties thereto, in or substantially in the form furnished to the
undersigned and (ii) purchase the securities of the Company as set forth below,
hereby agrees to purchase such securities from the Company as of the Closing
and
further agrees to join the Agreement as a party thereto, with all the rights
and
privileges appertaining thereto, and to be bound in all respects by the terms
and conditions thereof. The undersigned specifically acknowledges having read
the representations in the Purchase Agreement section entitled “Representations,
Warranties and Acknowledgments of the Investors,” and hereby represent that the
statements contained therein are complete and accurate with respect to the
undersigned as an Investor.
|
Name
of Investor:
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|
If
an entity:
|
|
|
Print
Name of Entity:
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|
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By:
|
|
|
Name:
|
|
|
Title:
|
|
|
If
an individual:
|
|
|
Print
Name:
|
|
|
Signature:
|
|
|
All
Investors:
|
|
|
Address:
|
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Telephone
No.:
|
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Facsimile
No.:
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|
Email
Address:
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The
Investor hereby elects to purchase ______ Shares (to be completed
by
Investor) under the Securities Purchase Agreement at a price of
$2.00 per
Share for a total Purchase Price of $_________ (to be completed
by
Investor). Investor will also receive 50% warrant coverage with
respect to
said investment.
|
22
