COMMON STOCK AND WARRANT PURCHASE AGREEMENT
EXHIBIT
10.1
Common
Stock And Warrant Purchase Agreement
(“Agreement”)
dated
as of July 31, 2006 by and between Adera Mines Limited, a Nevada corporation
(the “Company”),
and
each purchaser identified on Schedule
1
hereto
(each, including its successors and assigns, a “Purchaser”
and
collectively the “Purchasers”).
RECITAL
Subject
to the terms and conditions set forth in this Agreement and pursuant to Section
4(2) of the Securities Act (as defined below), the Company desires to issue
and
sell to the Purchasers, and the Purchasers desire to purchase from the Company,
up to 20,000,000 shares of Common Stock and Warrants to purchase up to
10,000,000 shares of Common Stock (such share numbers not including shares
of
Common Stock and Warrants that may be issued upon adjustment pursuant to Article
VI hereof).
NOW,
THEREFORE, in consideration of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, the Company and the Purchasers agree as
follows:
ARTICLE
I
DEFINITIONS
1.1 Definitions.
In
addition to the terms defined elsewhere in this Agreement, for all purposes
of
this Agreement, the following terms have the meanings indicated in this Section
1.1:
“Action”
shall
have the meaning ascribed to the term in Section 3.1(j).
“Additional
Common Stock”
shall
have the meaning set forth in Section 6.1(i).
“Affiliate”
means
any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as the
terms are used in and construed under Rule 144. With respect to the Purchasers,
any investment fund or managed account that is managed on a discretionary basis
by the same investment manager as a Purchaser will be deemed to be an Affiliate
of that Purchaser.
“Agreement”
shall
have the meaning ascribed to the term in the Preamble.
“Business
Day”
means
any day except Saturday, Sunday and any day which shall be a federal or state
legal holiday or a day on which banking institutions in the State of New York
are authorized or required by law or other governmental action to
close.
“Closing”
shall
have the meaning ascribed to the term in Section 2.1(a).
“Closing
Date”
shall
have the meaning ascribed to the term in Section 2.1(a).
“Commission”
means
the Securities and Exchange Commission.
“Common
Stock”
means
the common stock of the Company, par value $0.00001, and any securities into
which the common stock may hereafter be reclassified.
“Common
Stock Equivalents”
means
any securities of the Company or the Subsidiaries which would entitle the holder
thereof to acquire at any time Common Stock, including without limitation,
any
debt, preferred stock, rights, options, warrants or other instrument that is
at
any time convertible into or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock.
“Company”
shall
have the meaning ascribed to the term in the Preamble.
“Disclosure
Schedules”
means
the Disclosure Schedules concurrently delivered herewith.
“Effective
Date”
means
the date that the Registration Statement is first declared effective by the
Commission.
“Environmental
Laws”
shall
have the meaning ascribed to the term in Section 3.1(y).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Exempt
Issuances”
shall
have the meaning set forth in Section 6.4.
“GAAP”
shall
have the meaning ascribed to the term in Section 3.1(h).
“Governmental
Authorizations”
shall
have the meaning ascribed to the term in Section 3.1(m).
“Hazardous
Substances”
shall
have the meaning ascribed to the term in Section 3.1(y).
“Indemnified
Party”
shall
have the meaning ascribed to the term in Section 5.3.
“Indemnifying
Party”
shall
have the meaning ascribed to the term in Section 5.3.
“Intellectual
Property”
shall
have the meaning ascribed to the term in Section 3.1(o).
“Investor
Rights Agreement”
means
the Investor Rights Agreement, dated as of the date of this Agreement, among
the
Company and the Purchasers, in the form of Exhibit
A
hereto.
“Lien”
means
a
lien, charge, security interest, encumbrance, right of first refusal or other
restriction, except for a lien for current taxes not yet due and payable and
a
minor imperfection of title, if any, not material in nature or amount and not
materially detracting from the value or impairing the use of the property
subject thereto or impairing the operations or proposed operations of the
Company.
“Material
Adverse Effect”
shall
have the meaning ascribed to the term in Section 3.1(b).
“Net
Short Sale”
shall
have the meaning ascribed to such term in Section 4.13.
“Per
Share Purchase Price”
equals
$0.30 subject to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar transactions of the Common
Stock
that occur after the date of this Agreement and prior to Closing.
“Person”
means
an individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind.
“Premises”
shall
have the meaning ascribed to the term in Section 3.1(y).
“Purchaser”
shall
have the meaning ascribed to the term in the Preamble.
“Registration
Statement”
means
a
registration statement meeting the requirements set forth in the Investor Rights
Agreement and covering the resale by the Purchasers of the Shares and the
Warrant Shares.
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“Rights”
shall
have the meaning ascribed to the term in Section 3.1(o).
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as the
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
the
Rule.
“SEC
Reports”
shall
have the meaning ascribed to the term in Section 3.1(h).
“Securities”
means
the Shares, the Warrants and the Warrant Shares (including, without limitation,
shares of Common Stock and Warrants that may be issued upon adjustment pursuant
to Article VI hereof).
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Shares”
means
the shares of Common Stock issued to the Purchasers pursuant to this Agreement
including, without limitation, shares of Common Stock that may be issued upon
adjustment pursuant to Article VI hereof.
“Subscription
Amount”
means,
as to each Purchaser, the amount set forth next to such Purchaser’s name on
Schedule
1
hereto,
in United States dollars and in immediately available funds.
“Subsidiary”
means,
with respect to any entity, any corporation or other organization of which
securities or other ownership interest having ordinary voting power to elect
a
majority of the board of directors or other persons performing similar
functions, are directly or indirectly owned by the entity or of which the entity
is a partner or is, directly or indirectly, the beneficial owner of 50% or
more
of any class of equity securities or equivalent profit participation
interests.
“Trading
Day”
means
(i) a day on which the Common Stock is traded on a Trading Market, or (ii)
in
the event that the Common Stock is not listed or quoted as set forth in (i)
hereof, then Trading Day shall mean a Business Day.
“Trading
Market”
means
the American Stock Exchange, the New York Stock Exchange, the NASDAQ National
Market, the NASDAQ Capital Market or the OTC Bulletin Board, whichever is at
the
time the principal trading exchange or market for the Common Stock.
“Transaction
Documents”
means
this Agreement, the Investor Rights Agreement, the Warrants and any other
documents or agreements executed in connection with the transactions
contemplated hereunder.
“Warrants”
means
five year warrants to purchase Common Stock at an exercise price of $0.40 per
share in the form of Exhibit
B
hereto.
“Warrant
Shares”
means
the shares of Common Stock issued or issuable upon exercise of the
Warrants.
ARTICLE
II
PURCHASE
AND SALE
2.1 Closing.
(a) The
closing of the transactions contemplated under this Agreement (the “Closing”)
will
take place as promptly as practicable, but no later than five (5) Business
Days
following satisfaction or waiver of the conditions set forth in Sections 2.2
and
2.3 (other than those conditions which by their terms are not to be satisfied
or
waived until the Closing), at the offices of Xxxxxxxxxx Xxxxx LLP, 00000
Xxxxxxxx Xxxx., Xxx Xxxxxxx, XX 00000 (or remotely via exchange of documents
and
signatures) or at the other place or day as may be mutually acceptable to the
Purchasers and the Company. The date on which the Closing occurs is the
“Closing
Date”.
(b) On
the
Closing Date, each Purchaser shall purchase from the Company, severally and
not
jointly with the other Purchasers, and the Company shall issue and sell to
each
Purchaser (i) a number of Shares equal to such Purchaser’s Subscription Amount
divided by the Per Share Purchase Price as set forth on Schedule
1
(the
“Share
Amount”)
and
(ii) Warrants to purchase a number of shares of Common Stock equal to 50% of
such Purchaser’s Share Amount,,
provided, however,
if any
Warrants would result in the purchase of a fractional share, the number of
shares covered by such Warrants will be rounded up to the nearest whole share.
The aggregate number of Shares sold hereunder shall be up to 20,000,000
(excluding shares issuable upon exercise of the Warrants and shares of Common
Stock and Warrants issuable upon adjustment pursuant to Article VI
hereof)..
The
Subscription Amount paid by each Purchaser in the Closing together with all
other closing deliverables shall be placed in escrow pending the Closing
pursuant to a Closing Escrow Agreement among the Company, Vision Capital
Advisors, LLC (“Vision”)
and
Xxxxxxxxxx Xxxxx LLP (the “Escrow
Agent”),
which
agreement shall be in the form attached hereto as Exhibit
C
(the
“Closing
Escrow Agreement”).
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2.2 Conditions
to Obligations of Purchasers to Effect the Closing.
The
obligation of the Purchasers to effect the Closing and the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions, any of which may be waived,
in writing, by the Purchasers:
(a) At
the
Closing (unless otherwise specified below) the Company shall deliver or cause
to
be delivered to each of the Purchasers the following:
(i) this
Agreement duly executed by the Company;
(ii) one
or
more original certificates evidencing the aggregate number of Shares duly
authorized, issued, fully paid and non-assessable, equal to such Purchaser’s
Subscription Amount divided by the Per Share Purchase Price as set forth on
Schedule
1,
registered in the name of such Purchaser;
(iii) one
or
more original certificates evidencing the Warrants, registered in the name
of
such Purchaser and as set forth on Schedule
1;
(iv) the
Investor Rights Agreement duly executed by the Company;
(v) the
Closing Escrow Agreement duly executed by the Company;
(vi) A
certificate of the Secretary of the Company (the “Secretary’s
Certificate”),
in
form and substance satisfactory to the Purchasers, certifying as
follows:
(A) that
attached to the Secretary’s Certificate is a true and complete copy of the
Certificate of Incorporation of the Company, as amended to the Closing
Date;
(B) that
attached to the Secretary’s Certificate is a true and complete copy of the
Bylaws of the Company, as amended to the Closing Date;
(C) that
attached to the Secretary’s Certificate are true and complete copies of the
resolutions of the Board of Directors of the Company (the “Board
of Directors”)
authorizing the execution, delivery and performance of this Agreement and the
other Transaction Documents, instruments and certificates required to be
executed by it in connection herewith and approving the consummation of the
transactions in the manner contemplated hereby and by the other Transaction
Documents including, but not limited to, the authorization and issuance of
the
Shares, Warrants and Warrant Shares;
(E) such
other matters as the Purchasers may reasonably request;
(vii) a
legal
opinion of Xxxxxxxxxx Xxxxx LLP, counsel to the Company in the form attached
hereto as Exhibit
D;
and
(viii) A
certificate of good standing of the Company as of a recent date.
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(b) All
representations and warranties of the Company contained herein shall remain
true
and correct as of the Closing Date as though the representations and warranties
were made on the Closing Date (except those representations and warranties
that
address matters only as of a particular date will remain true and correct as
of
the applicable date).
(c) Effective
as of the Closing, Xxxxxx Xxxxx and Maryna Bilynaska shall have duly resigned
from the Board of Directors of the Company and from all offices of the Company
held by them and the Company shall have provided written evidence, satisfactory
to the Purchasers, of the effectiveness of such resignations; provided that
the
resignation of Ms. Bilynaska from the Board of Directors shall be effective
as
of the date that is 10 days following the filing and transmittal of the Rule
14f-1 Statement (as defined below). Notwithstanding the foregoing proviso,
Ms.
Bilynaska’s resignation from all offices of the Company shall be effective as of
the Closing.
(d) Effective
as of the Closing, Sydney X. Xxxxxxxx, shall
have been duly elected or appointed to the Board of Directors of the Company,
Xx. Xxxxxxxx, Xx. X. Xxxxxxx Xxxxxx III and Xx. Xxxxxxx Xxxxxxx, shall have
been
duly employed as Executive Director, President and Chief Financial Officer,
respectively of
the
Company pursuant to executive employment agreements on terms and conditions
satisfactory to the Purchasers and the Company shall have provided written
evidence, satisfactory to the Purchasers, of the effectiveness of such
appointments and employment.
(e) The
Board
of Directors of the Company shall have passed resolutions duly electing or
appointing Xxxxx Xxxxxxx, Lain Xxxxxxxx, Xxxx Nihon and Xxxxxxx Xxxxxxxx to
the
Board of Directors of the Company, which election or appointment shall be
effective as of the date that is 10 days following the filing and transmittal
of
the Rule 14f-1 Statement.
(f) Each
of
Sydney X. Xxxxxxxx, Xxxxxxx Xxxxxx III, Xxxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx and
[
], together with any person or entity through which such persons beneficially
own shares of the Company’s Common Stock, shall have entered into a lock-up
agreement in the form attached as Exhibit
E
hereto,
pursuant to which each such person shall have agreed not to sell securities
of
the Company until the registration statement filed pursuant to the Investor
Rights Agreement has been effective for six months.
(g) The
Company shall have presented to Vision and any other Purchaser requesting such
document, a final draft of the financial statements and pro forma financial
information required under Item 9.01 of Form 8-K with respect to Chatsworth
Data
Corporation, a California corporation (“Chatsworth”)
and
such Current Report on Form 8-K (the “Chatsworth
8-K”)
shall
be in compliance with the requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder and such financial
statements shall not differ materially from the financial statements of
Chatsworth provided to the Purchasers.
(h) As
of the
Closing Date, there shall have been no Material Adverse Effect with respect
to
the Company since the date hereof.
(i) From
the
date hereof to the Closing Date, trading in the Common Stock shall not have
been
suspended by the Commission (except for any suspension of trading of limited
duration agreed to by the Company, which suspension shall be terminated prior
to
the Closing).
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2.3. Conditions
to Obligations of the Company to Effect the Closing.
(a) The
obligations of the Company to effect the Closing and the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions, any of which may be waived,
in writing, by the Company. At the Closing, each Purchaser shall deliver or
cause to be delivered to the Company the following:
(i) this
Agreement duly executed by such Purchaser;
(ii) such
Purchaser’s Subscription Amount by wire transfer to the Company pursuant to the
Closing Escrow Agreement; and
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(iii) the
Investor Rights Agreement duly executed by such Purchaser.
(b) All
representations and warranties of the Purchasers contained herein shall remain
true and correct as of the Closing Date as though the representations and
warranties were made on the Closing Date.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES
3.1 Representations
and Warranties of the Company.
Except
as
set forth under the corresponding section of the Disclosure Schedules delivered
concurrently herewith, the Company hereby makes the following representations
and warranties as of the date hereof and as of the Closing Date to each
Purchaser. The Company hereby acknowledges and agrees that the following
representations and warranties are made regarding the Company and its
Subsidiaries as constituted immediately following the consummation of the
Chatsworth Acquisition (as defined below).
(a)
Subsidiaries.
Except
as listed in Schedule 3.1(a), the Company has no direct or indirect
Subsidiaries.
(b)
Organization
and Qualification.
Each of
the Company and the Subsidiaries is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the
requisite corporate power and authority to own and use its properties and assets
and to carry on its business as currently conducted. Neither the Company nor
any
Subsidiary is in violation of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries is duly qualified
to
conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes the qualification necessary, except where the failure
to be so qualified or in good standing, as the case may be, would not have
or
result in (i) a material adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material adverse effect
on
the business or financial condition of the Company and the Subsidiaries, taken
as a whole, or (iii) a material adverse effect on the Company's ability to
perform in any material respect on a timely basis its obligations under any
Transaction Document (any of (i), (ii) or (iii), a “Material
Adverse Effect”).
(c)
Authorization;
Enforceability.
The
Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by each of the Transaction Documents
and otherwise to carry out its obligations thereunder. The execution and
delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company and no further
action is required by the Company in connection therewith. Each Transaction
Document has been (or upon delivery will have been) duly executed by the Company
and, when delivered in accordance with the terms hereof, will constitute the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, subject to laws of general application relating
to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors’ rights generally and rules of law governing specific
performance, injunctive relief, or other equitable remedies.
(d)
No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated thereby
do
not and will not (i) conflict with or violate any provision of the Company's
or
any Subsidiary'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, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both)
of,
any agreement, credit facility, debt or other instrument (evidencing a Company
or Subsidiary debt or otherwise) or other understanding to which the Company
or
any Subsidiary is a party or by which any property or asset of the Company
or
any Subsidiary is bound or affected, or (iii) 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 or a Subsidiary is
subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company or a Subsidiary is bound or affected,
except, in the cases of clause (ii), where the conflict, default or violation
would not have or result in a Material Adverse Effect.
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(e)
Filings,
Consents and Approvals.
The
Company is not required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court
or
other federal, state, local or other governmental authority or other Person
in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (a) the filing with the Commission of the
Registration Statement, the application(s) to each Trading Market for the
listing of the Shares and Warrant Shares for trading thereon in the time and
manner required thereby, Form D and applicable Blue Sky filings and (b) as
have
already been obtained or exemptive filings as are required to be made under
applicable securities laws.
(f)
Issuance
of the Securities.
The
Securities are duly authorized and, when issued and paid for in accordance
with
the Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens, other than any Liens created by
or
imposed on the holders thereof through no action of the Company. The Company
has
reserved from its duly authorized capital stock the maximum number of shares
of
Common Stock issuable pursuant to this Agreement and the Warrants.
(g)
Capitalization.
(i) Including
shares issued in connection with the acquisition of all of the capital stock
of
Chatsworth, the entire authorized capital stock of the Company consists of
100,000,000 shares of Common Stock, 19,250,000 of which are issued and
outstanding. All shares of the Company’s issued and outstanding capital stock
have been duly authorized, are validly issued and outstanding, and are fully
paid and nonassessable. No securities issued by the Company from the date of
its
incorporation to the date hereof were issued in violation of any statutory
or
common law preemptive rights. There are no dividends which have accrued or
been
declared but are unpaid on the capital stock of the Company. All taxes required
to be paid by the Company in connection with the issuance and any transfers
of
the Company’s capital stock have been paid. All securities of the Company have
been issued in all material respects in accordance with the provisions of all
applicable securities and other laws.
(ii) No
Person
has any right of first refusal, preemptive right, right of participation, or
any
similar right to participate in the transactions contemplated by the Transaction
Documents. Except as set forth on Schedule 3.1(g) and as a result of the
purchase and sale of the Securities and except for employee and director stock
options under the Company's equity compensation plans and outstanding warrants
to purchase shares of Common Stock described in the Xxxxxxxxxx 0-X, there are
no
outstanding options, warrants, rights to subscribe to, calls or commitments
of
any character whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or
may
become bound to issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock. The issue and sale
of
the Securities will not obligate the Company to issue shares of Common Stock
or
other securities to any Person (other than the Purchasers) and will not result
in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under any Company securities.
(h) SEC
Reports; Financial Statements; Liabilities.
(i) The
Company has filed all reports required to be filed by it under the Securities
Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) of the
Exchange Act, for the 12 months preceding the date hereof (the foregoing
materials, including the exhibits thereto and including, without limitation,
the
Xxxxxxxxxx 0-X, being collectively referred to herein as the “SEC
Reports”)
on a
timely basis or has received a valid extension of the time of filing and has
filed all SEC Reports prior to the expiration of any extension. As of their
respective filing dates, the SEC Reports complied in all material respects
with
the requirements of the Securities Act and the Exchange Act, as the case may
be,
and the rules and regulations of the Commission promulgated thereunder, as
applicable, and none of the SEC Reports, as of their respective filing dates,
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.
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(ii) The
financial statements of the Company included in the SEC Reports comply with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing. These
financial statements have been prepared in accordance with generally accepted
accounting principles in the United States, applied on a consistent basis during
the periods involved (“GAAP”),
except as may be otherwise specified in the financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, subject to normal year-end audit adjustments. These
financial statements fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries, if any, as of and
for
the dates thereof and the results of operations and cash flows for the periods
then ended, subject, in the case of unaudited statements, to normal year-end
audit adjustments.
(iii) Except
as
set forth in the SEC Reports, and except for liabilities and obligations
incurred in the ordinary course of business, consistent with past practice,
as
of the date hereof: (i) the Company and its Subsidiaries do not have any
material liabilities or obligations (absolute, accrued, contingent or otherwise)
and (ii) there has not been any aspect of the prior or current conduct of the
business of the Company or its Subsidiaries which may form the basis for any
material claim by any third party which if asserted could result in a Material
Adverse Effect.
(i)
Material
Changes.
Except
for the termination of business relating to the mine exploration business
immediately prior to the Closing and the amendment to its bylaws included in
the
Xxxxxxxxxx 0-X, since December 31, 2005, the Company has conducted its business
only in the ordinary course, consistent with past practice, and there has not
occurred:
(i) any
event
that could have a Material Adverse Effect on the Company or any of its
Subsidiaries;
(ii) any
amendments or changes in the charter documents of the Company and its
Subsidiaries;
(iii) any
damage, destruction or loss, whether or not covered by insurance, that would,
individually or in the aggregate, have or would be reasonably likely to have,
a
Material Adverse Effect on the Company and its Subsidiaries;
(iv) any:
(A)
incurrence, assumption or guarantee by the Company or its Subsidiaries of any
debt for borrowed money other than (i) equipment leases made in the ordinary
course of business, consistent with past practice and (ii) any incurrence,
assumption or guarantee with respect to an amount of $25,000 or less that has
been disclosed in the SEC Reports;
(B)
issuance or sale of any securities convertible into or exchangeable for
securities of the Company other than to directors, employees and consultants
as
disclosed in the Xxxxxxxxxx 0-X.
(C)
issuance or sale of options or other rights to acquire from the Company or
its
Subsidiaries, directly or indirectly, securities of the Company or any
securities convertible into or exchangeable for any of the foregoing securities,
other than options issued to directors, employees and consultants as disclosed
in the Xxxxxxxxxx 0-X.
(D)
issuance or sale of any stock, bond or other corporate security other than
to
directors, employees and consultants pursuant to existing equity compensation
or
stock purchase plans of the Company and as disclosed in the Xxxxxxxxxx
0-X.
(E)
discharge or satisfaction of any material Lien;
(F)
declaration or making any payment or distribution to stockholders or purchase
or
redemption of any share of its capital stock or other security other than to
directors, officers and employees of the Company or its Subsidiaries as
compensation for services rendered to the Company or its Subsidiary (as
applicable) or for reimbursement of expenses incurred on behalf of the Company
or its Subsidiary (as applicable);
9
(G)
sale,
assignment or transfer of any of its intangible assets except in the ordinary
course of business, consistent with past practice, or cancellation of any debt
or claim except in the ordinary course of business, consistent with past
practice;
(H)
waiver of any right of substantial value whether or not in the ordinary course
of business;
(I)
material change in officer compensation, except in the ordinary course of
business and consistent with past practice; or
(J)
other
commitment (contingent or otherwise) to do any of the foregoing.
(v) any
creation, sufferance or assumption by the Company or any of its Subsidiaries
of
any Lien on any asset or any making of any loan, advance or capital contribution
to or investment in any Person, in an aggregate amount which exceeds $25,000
outstanding at any time;
(vi) any
entry
into, amendment of, relinquishment, termination or non-renewal by the Company
or
its Subsidiaries of any material contract, license, lease, transaction,
commitment or other right or obligation, other than in the ordinary course
of
business, consistent with past practice; or
(vii)
any
transfer or grant of a right with respect to the patents, trademarks, trade
names, service marks, trade secrets, copyrights or other intellectual property
rights owned or licensed by the Company or its Subsidiaries, except as among
the
Company and its Subsidiaries.
(j)
Litigation.
There
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against the Company,
any
Subsidiary or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”)
which
adversely affects or challenges the legality, validity or enforceability of
any
of the Transaction Documents or the Securities. Except as disclosed in the
SEC
Reports, there is no Action that could, if there were an unfavorable decision,
have or result in a Material Adverse Effect. Neither the Company nor any
Subsidiary, nor, to the knowledge of the Company, any director or officer
thereof, is or has been the subject of any Action involving a claim of violation
of or liability under federal or state securities laws or a claim of breach
of
fiduciary duty. To the knowledge of the Company, there has not been and there
is
not pending or contemplated, any investigation by the Commission involving
the
Company or any current or former director or officer of the Company. The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.
(k)
Labor
Relations.
No
material labor dispute exists or, to the knowledge of the Company, is imminent
with respect to any of the employees of the Company which could have or result
in a Material Adverse Effect.
(l)
Compliance.
Neither
the Company nor any Subsidiary (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim that it is
in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not the default or
violation has been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is or has been in violation of any
statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws applicable to its
business, except in the case of clauses (i) and (iii) as would not have or
reasonably be expected to result in a Material Adverse Effect.
10
(m)
Licenses;
Compliance With Regulatory Requirements. The
Company holds all material authorizations, consents, approvals, franchises,
licenses and permits required under applicable law or regulation for the
operation of the business of the Company and its Subsidiaries as presently
operated (the “Governmental
Authorizations”).
All
the Governmental Authorizations have been duly issued or obtained and are in
full force and effect, and the Company and its Subsidiaries are in material
compliance with the terms of all the Governmental Authorizations. The Company
and its Subsidiaries have not engaged in any activity that, to their knowledge,
would cause revocation or suspension of any of the Governmental Authorizations.
The Company has no knowledge of any facts which could reasonably be expected
to
cause the Company to believe that the Governmental Authorizations will not
be
renewed by the appropriate governmental authorities in the ordinary course.
Neither the execution, delivery nor performance of this Agreement shall
adversely affect the status of any of the Governmental
Authorizations.
(n)
Title
to Assets.
The
Company and the Subsidiaries do not own any real property, and have good and
marketable title to all personal property owned by them that is material to
the
business of the Company and the Subsidiaries, taken as a whole, in each case
free and clear of all Liens, except those, if any, reflected in the Company’s
financial statements. Any real property and facilities held under lease by
the
Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases (subject to laws of general application relating to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors’ rights generally and rules of law governing specific
performance, injunctive relief, or other equitable remedies) with which the
Company and the Subsidiaries are in material compliance.
(o) Intellectual
Property.
(i) The
Company or a Subsidiary thereof has the right to use or is the sole and
exclusive owner of all right, title and interest in and to all foreign and
domestic patents, patent rights, trademarks, service marks, trade names, brands
and copyrights (whether or not registered and, if applicable, including pending
applications for registration) owned, used or controlled by the Company and
its
Subsidiaries (collectively, the “Rights”)
and in
and to each material invention, software, trade secret, technology, product,
composition, formula and method of process used by the Company or its
Subsidiaries (the Rights and the other items, the “Intellectual
Property”),
and,
to the Company’s knowledge, has the right to use the same, free and clear of any
claim or conflict with the rights of others;
(ii) other
than as set forth in the SEC Reports, no material royalties or fees (license
or
otherwise) are payable by the Company or its Subsidiaries to any Person by
reason of the ownership or use of any of the Intellectual Property;
(iii) there
have been no claims made against the Company or its Subsidiaries asserting
the
invalidity, abuse, misuse, or unenforceability of any of the Intellectual
Property, and, to the best of the Company’s knowledge, there are no reasonable
grounds for any of the foregoing claims;
(iv) neither
the Company nor its Subsidiaries have made any claim of any violation or
infringement by others of its rights in the Intellectual Property, and to the
best of the Company’s knowledge, no reasonable grounds for the foregoing claims
exist; and
(v) neither
the Company nor its Subsidiaries have received notice that it is in conflict
with or infringing upon the asserted rights of others in connection with the
Intellectual Property.
(p) Insurance.
The
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against the losses and risks and in the amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged. All of the insurance policies of the Company and its Subsidiaries
are
in full force and effect and are valid and enforceable in accordance with their
terms, and the Company and its Subsidiaries have complied with all material
terms and conditions thereof. Neither the Company nor any Subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when the coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without a
significant increase in cost.
(q) Transactions
With Affiliates and Employees.
None of
the officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is presently a party to any transaction
with the Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of
real
or personal property to or from, or otherwise requiring payments to or from
any
officer, director or employee or, to the knowledge of the Company, any entity
in
which any officer, director, or any employee has a substantial interest or
is an
officer, director, trustee or partner, other than (a) for payment of salary
or
consulting fees for services rendered, (b) reimbursement for expenses incurred
on behalf of the Company and (c) for other employee benefits, including stock
option agreements and other stock awards under any equity compensation plan
of
the Company.
11
(r)
Internal
Accounting Controls.
The
Company and each of the Subsidiaries maintains a system of internal accounting
controls sufficient in the judgment of the Company’s management 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 Exchange Act Rules 13a-14 and 15d-14) for the Company and designed
the disclosure controls and procedures to ensure that material information
relating to the Company, including its Subsidiaries, is made known to the
certifying officers by others within those entities, particularly during the
period in which the Company's Form 10-K or 10-Q, as the case may be, is being
prepared.
(s)
Certain
Fees.
Except
as set forth on Schedule
3.1(s),
no
brokerage or finder's fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Purchasers shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section that may be due in
connection with the transactions contemplated by this Agreement.
(t)
Private
Placement; Integrated Offering.
Assuming the accuracy of the Purchasers’ representations and warranties set
forth in Section 3.2, no registration under the Securities Act is required
for
the offer and sale of the Securities by the Company to the Purchasers as
contemplated hereby. The issuance and sale of the Securities hereunder does
not
contravene the rules and regulations of the Trading Market. Neither the Company,
nor any of its Affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company
for purposes of the Securities Act and would as a result require registration
under the Securities Act or trigger any applicable shareholder approval
provisions, including, without limitation, under the rules and regulations
of
any exchange or automated quotation system on which any of the securities of
the
Company are listed or designated.
(u)
Charter,
Bylaws and Corporate Records.
The
minute books of the Company and its Subsidiaries contain in all material
respects complete and accurate records of all meetings and other corporate
actions of the board of directors, committees of the board of directors,
incorporators and stockholders of the Company and its Subsidiaries from the
date
of incorporation of each entity to the date hereof. All material corporate
decisions and actions have been validly made or taken. All corporate books,
including without limitation the share transfer register, comply in all material
respects with applicable laws and regulations and have been regularly
updated.
(v)
Registration
Rights.
Except
as set forth in Schedule 3.1(v), no Person has any right to cause the Company
to
effect the registration under the Securities Act of any securities of the
Company.
(w)
Listing
and Maintenance Requirements.
The
Company has not, in the 12 months preceding the date hereof, received notice
from any Trading Market on which the Common Stock is or has been listed or
quoted to the effect that the Company is not in compliance with the listing
or
maintenance requirements of the 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 applicable listing and maintenance
requirements.
12
(x)
Taxes. All
tax
returns and tax reports required to be filed with respect to the income,
operations, business or assets of the Company and its Subsidiaries have been
timely filed (or appropriate extensions have been obtained) with the appropriate
governmental agencies in all jurisdictions in which the returns and reports
are
required to be filed, and all of the foregoing as filed are, in all material
respects, correct and complete and, in all material respects, reflect accurately
all liability for taxes of the Company and its Subsidiaries for the periods
to
which the returns relate, and all amounts shown as owing thereon have been
paid.
All income, profits, franchise, sales, use, value added, occupancy, property,
excise, payroll, withholding, FICA, FUTA and other taxes (including interest
and
penalties), if any, collectible or payable by the Company and its Subsidiaries
or relating to or chargeable against any of its material assets, revenues or
income or relating to any employee, independent contractor, creditor,
stockholder or other third party through the Closing Date, were fully collected
and paid by the applicable date if due by the applicable date or provided for
by
adequate reserves in the financial statements contained in the SEC Reports
(other than taxes accruing after the date) and all similar items due through
the
Closing Date will have been fully paid by that date or provided for by adequate
reserves, whether or not any taxes were reported or reflected in any tax returns
or filings. No taxation authority has sought to audit the records of the Company
or any of its Subsidiaries for the purpose of verifying or disputing any tax
returns, reports or related information and disclosures provided to the taxation
authority, or for the Company’s or any of its Subsidiaries’ alleged failure to
provide any tax returns, reports or related information and disclosure. No
material claims or deficiencies have been asserted against or inquiries raised
with the Company or any of its Subsidiaries with respect to any taxes or other
governmental charges or levies which have not been paid or otherwise satisfied,
including claims that, or inquiries whether, the Company or any of its
Subsidiaries has not filed a tax return that it was required to file, and,
to
the best of the Company’s knowledge, there exists no reasonable basis for the
making of any claims or inquiries. Neither the Company nor any of its
Subsidiaries has waived any restrictions on assessment or collection of taxes
or
consented to the extension of any statute of limitations relating to
taxation.
(y) Environmental
Matters. None
of
the premises or any properties owned, occupied or leased by the Company or
its
Subsidiaries (the “Premises”)
has
been used by the Company or the Subsidiaries or, to the Company’s knowledge, by
any other Person, to manufacture, treat, store, or dispose of any substance
that
has been designated to be a “hazardous substance” under applicable Environmental
Laws (hereinafter defined) (“Hazardous
Substances”)
in
violation of any applicable Environmental Laws. To its knowledge, the Company
has not disposed of, discharged, emitted or released any Hazardous Substances
which would require, under applicable Environmental Laws, remediation,
investigation or similar response activity. No Hazardous Substances are present
as a result of the actions of the Company or, to the Company’s knowledge, any
other Person, in, on or under the Premises which would give rise to any
liability or clean-up obligations of the Company under applicable Environmental
Laws. The Company and, to the Company’s knowledge, any other Person for whose
conduct it may be responsible pursuant to an agreement or by operation of law,
are in compliance with all laws, regulations and other federal, state or local
governmental requirements, and all applicable judgments, orders, writs, notices,
decrees, permits, licenses, approvals, consents or injunctions in effect on
the
date of this Agreement relating to the generation, management, handling,
transportation, treatment, disposal, storage, delivery, discharge, release
or
emission of any Hazardous Substance (the “Environmental
Laws”).
Neither the Company nor, to the Company’s knowledge, any other Person for whose
conduct it may be responsible pursuant to an agreement or by operation of law
has received any written complaint, notice, order, or citation of any actual,
threatened or alleged noncompliance with any of the Environmental Laws, and
there is no proceeding, suit or investigation pending or, to the Company’s
knowledge, threatened against the Company or, to the Company’s knowledge, any
Person with respect to any violation or alleged violation of the Environmental
Laws, and, to the knowledge of the Company, there is no basis for the
institution of any proceeding, suit or investigation.
(z) Chatsworth.
The
Company has deposited into escrow a fully-executed Stock Acquisition Agreement
and related agreements with respect to the acquisition of all of the issued
and
outstanding capital stock of Chatsworth concurrent with the effective time
of
the Closing hereunder (the “Chatsworth
Acquisition”).
The
Company had the requisite corporate power and authority to consummate the
Chatsworth Acquisition. The Chatsworth Acquisition will be consummated with
the
funds invested by the Purchasers hereunder. There is no action, suit, inquiry,
notice of violation, proceeding or investigation pending or, to the knowledge
of
the Company or its Subsidiaries, threatened against the Company, any Subsidiary
or any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state,
county, local or foreign) which adversely affects or challenges the legality,
validity or enforceability of the Chatsworth Acquisition or any agreement or
contract entered into in connection therewith.
13
(aa)
Disclosure.
The
Company confirms that neither the Company nor any other Person acting on its
behalf and at the direction of the Company, has provided any Purchaser or its
agents or counsel with any information that in the Company’s reasonable
judgment, at the time the information was furnished, constitutes material,
non-public information. The Company understands and confirms that the Purchasers
will rely on the foregoing representations and covenants in effecting
transactions in securities of the Company. All disclosure provided to the
Purchasers regarding the Company, its business and the transactions contemplated
hereby, including the Disclosure Schedules to this Agreement, furnished by
or on
behalf of the Company are true and correct and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading.
Each
Purchaser acknowledges and agrees that the Company does not make or has not
made
any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Agreement and the
Disclosure Schedules hereto and in the other Transaction Documents.
3.2
Representations
and Warranties of the Purchasers.
Each
Purchaser hereby, for itself and for no other Purchaser, represents and warrants
as of the date hereof and as of the Closing Date to the Company as
follows:
(a)
Organization;
Authority; Enforceability.
The
Purchaser (if other than a natural person) is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with full power and authority to enter into and to consummate
the
transactions contemplated by the Transaction Documents and otherwise to carry
out its obligations thereunder. The execution, delivery and performance by
the
Purchaser of the transactions contemplated by this Agreement has been duly
authorized by all necessary corporate or similar action on the part of the
Purchaser. Each Transaction Document to which it is a party has been duly
executed by the Purchaser, and when delivered by the Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding obligation
of the Purchaser, enforceable against it in accordance with its terms, subject
to laws of general application relating to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors’ rights
generally and rules of law governing specific performance, injunctive relief,
or
other equitable remedies.
(b)
General
Solicitation.
The
Purchaser is not purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities 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.
(c)
No
Public Sale or Distribution.
The
Purchaser is acquiring the Shares and Warrants for its own account and not
with
a view towards, or for resale in connection with, the public sale or
distribution thereof; provided,
however,
that by
making the representations herein, the Purchaser does not agree to hold any
of
the Securities for any minimum or other specific term and reserves the right
to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the Securities Act. The Purchaser
is acquiring the Securities hereunder in the ordinary course of its business.
The Purchaser does not have any agreement or understanding, directly or
indirectly, with any Person to distribute any of the Securities.
(d)
Accredited
Investor Status.
The
Purchaser is an “accredited investor” as that term is defined in Rule 501(a) of
Regulation D.
(e)
Reliance
on Exemptions.
The
Purchaser understands that the Shares and Warrants are being offered and sold
to
it in reliance on specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company is relying
in part upon the truth and accuracy of, and the Purchaser's compliance with,
the
representations, warranties, agreements, acknowledgments and understandings
of
the Purchaser set forth herein in order to determine the availability of the
exemptions and the eligibility of the Purchaser to acquire the Common Stock
and
Warrants.
14
(f)
Information.
The
Purchaser and its advisors, if any, have been furnished with all publicly
available materials relating to the business, finances and operations of the
Company and the other publicly available materials relating to the offer and
sale of the Shares and Warrants as have been requested by the Purchaser. The
Purchaser and its advisors, if any, have been afforded the opportunity to ask
questions of the Company. Neither the inquiries nor any other due diligence
investigations conducted by the Purchaser or its advisors, if any, or its
representatives shall modify, amend or affect the Purchaser's right to rely
on
the Company's representations and warranties contained herein. The Purchaser
understands that its investment in the Shares and Warrants involves a high
degree of risk.
(g)
No
Governmental Review.
The
Purchaser understands that no United States federal or state agency or any
other
government or governmental agency has passed on or made any recommendation
or
endorsement of the Shares and Warrants or the fairness or suitability of the
investment in the Shares and Warrants, nor have these authorities passed upon
or
endorsed the merits of the offering of the Shares and Warrants.
(h)
Experience
of The Purchaser.
The
Purchaser, either alone or together with its representatives, has the knowledge,
sophistication and experience in business and financial matters, including
investing in companies engaged in the business in which the Company is engaged,
so as to be capable of evaluating the merits and risks of the prospective
investment in the Shares and Warrants, and has so evaluated the merits and
risks
of the investment. The Purchaser is able to bear the economic risk of an
investment in the Shares and Warrants and, at the present time, is able to
afford a complete loss of its investment.
The
Company acknowledges and agrees that the Purchaser does not make or has not
made
any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2 and in
Section 4.13.
ARTICLE
IV
OTHER
AGREEMENTS OF THE PARTIES
4.1 Transfer
Restrictions.
(a) The
Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Securities other than
pursuant to an effective registration statement, to the Company, to an Affiliate
of the Purchaser (who is an accredited investor and executes a customary
representation letter) or in connection with a pledge as contemplated in Section
4.1(b), the Company may require the transferor thereof to provide to the Company
an opinion of counsel selected by the transferor, the form and substance of
which opinion shall be reasonably satisfactory to the Company, to the effect
that the transfer does not require registration of the transferred Securities
under the Securities Act,
provided, however,
that in
the case of a transfer pursuant to Rule 144, no opinion shall be required if
the
transferor provides the Company with a customary seller’s representation letter,
and if the sale is not pursuant to subsection (k) of Rule 144, a customary
broker’s representation letter and a Form 144.
Any
transferee that agrees in writing to be bound by the terms of this Agreement
and
the Investor Rights Agreement shall have the rights of a Purchaser under this
Agreement and the Investor Rights Agreement. Except as required by federal
securities laws and the securities law of any state or other jurisdiction within
the United States, the Securities may be transferred, in whole or in part,
by a
Purchaser at any time. The Company shall reissue certificates evidencing the
Securities upon surrender of certificates evidencing the Securities being
transferred in accordance with this Section 4.1(a).
(b) Each
Purchaser agrees to the imprinting, so long as is required by this Section
4.1(b), of a legend on any of the Securities in substantially the following
form:
THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”),
AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO
THIS EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN “ACCREDITED
INVESTOR”
AS
DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.
15
The
Company acknowledges and agrees that each Purchaser may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and, if required under the terms of the arrangement, each
Purchaser may transfer pledged or secured Securities to the pledgees or secured
parties. The a pledge or transfer would not be subject to approval of the
Company and no legal opinion of legal counsel of the pledgee, secured party
or
pledgor shall be required in connection therewith; provided, however, that
the
Purchaser shall provide the Company with the documentation as is reasonably
requested by the Company to ensure that the pledge is pursuant to a bona fide
margin agreement with a registered broker-dealer or a security interest in
some
or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act. The Company will
execute and deliver the documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or transfer of
the
Securities, including the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) under the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of selling
stockholders thereunder.
(c) Certificates
evidencing the Shares and Warrant Shares shall not contain any legend (including
the legend set forth in Section 4.1(b)), (i) following any sale of the Shares
or
Warrant Shares pursuant to Rule 144, or (ii) if the Shares or Warrant Shares
are
eligible for sale under Rule 144(k), or (iii) if the 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 Company's
transfer agent promptly upon the occurrence of any of the events in clauses
(i),
(ii) or (iii) above to effect the removal of the legend hereunder and shall
also
cause its counsel to issue a “blanket” legal opinion to the Company's transfer
agent promptly after the Effective Date, if required by the Company's transfer
agent, to allow sales pursuant to an effective Registration Statement. The
Company agrees that at the time as the legend is no longer required under this
Section 4.1(c), it will, no later than three Trading Days following the delivery
by the Purchaser to the Company or the Company's transfer agent of a certificate
representing Shares or Warrant Shares, as the case may be, issued with a
restrictive legend, deliver or cause to be delivered to the Purchaser a
certificate representing the Securities that is free from all restrictive and
other legends. The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section.
(d) Each
Purchaser agrees that the removal of the restrictive legend from certificates
representing Securities as set forth in this Section 4.1 is predicated upon
the
Company's reliance on, and such Purchaser’s agreement that it will not sell any
Securities except pursuant to either the registration requirements of the
Securities Act, including any applicable prospectus delivery requirements,
or an
exemption therefrom.
4.2 Furnishing
of Information.
As
long
as any Purchaser owns Securities, the Company covenants to timely file (or
obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act. Upon the request of any holder of Securities,
the
Company shall deliver to the holder a written certification of a duly authorized
officer as to whether it has complied with the preceding sentence. As long
as
any Purchaser owns Securities, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to each Purchaser
and
make publicly available in accordance with Rule 144(c), the information as
is
required for the Purchaser to sell the Securities under Rule 144. The Company
further covenants that it will take further action as any holder of Securities
may reasonably request, all to the extent required from time to time to enable
the Person to sell the Securities without registration under the Securities
Act
within the limitation of the exemptions provided by Rule 144.
16
4.3 Integration.
The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Securities in a
manner that would require the registration under the Securities Act of the
sale
of the Securities to the Purchasers or that would be integrated with the offer
or sale of the Securities for purposes of the rules and regulations of any
Trading Market.
4.4 Publicity.
The
Company shall, within four Business Days following the Closing Date, file a
Current Report on Form 8-K, disclosing the transactions contemplated hereby
and
make the other filings and notices in the manner and time required by the
Commission.
4.5 Shareholders
Rights Plan.
No
claim
will be made or enforced by the Company or any other Person that a Purchaser
is
an “acquiring person” under any shareholders rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that the Purchaser
could be deemed to trigger the provisions of any the plan or arrangement, by
virtue of receiving Securities under the Transaction Documents or under any
other agreement between the Company and the Purchaser.
4.6 Non-Public
Information.
The
Company covenants and agrees that neither it nor any other Person acting on
its
behalf will provide any Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto the Purchaser shall have executed a written agreement regarding
the confidentiality and use of the information. The Company understands and
confirms that the Purchasers shall be relying on the foregoing covenant and
representations in effecting transactions in securities of the
Company.
4.7 Use
of Proceeds.
The
Company covenants and agrees that the proceeds from the sale of the Common
Stock
and Warrants shall be used by the Company to consummate the Chatsworth
Acquisition (including payment of fees and expenses related thereto) and the
excess shall be used for working capital purposes.
4.8 Reservation
of Common Stock.
As
of the
date hereof, the Company has reserved and the Company shall continue to reserve
and keep available at all times, free of preemptive rights, a sufficient number
of shares of Common Stock for the purpose of enabling the Company to issue
Shares pursuant to this Agreement and Warrant Shares pursuant to the
Warrants.
4.10 Listing
of Common Stock.
The
Company hereby agrees to use commercially reasonable efforts to maintain the
listing of the Common Stock on any applicable Trading Market, and agrees, as
soon as reasonably practicable following the Closing to list the applicable
Shares and Warrant Shares on any applicable Trading Market. The Company further
agrees, if the Company applies to have the Common Stock traded on any other
Trading Market, it will include in the application the Shares and the Warrant
Shares, and will take any other action as is necessary to cause the Shares
and
Warrant Shares to be listed on the other Trading Market as promptly as
possible.
17
4.11 Business
Operations.
For as
long as any Purchaser holds Securities, the Company shall comply with the
following covenants:
(a) Insurance.
The
Company and its Subsidiaries shall maintain insurance policies so that the
representations contained in the first sentence of Section 3.1(p) hereof
continue to be true and correct and shall, from time to time upon the written
request of any Purchaser, promptly furnish or cause to be furnished to the
Purchaser evidence, in form and substance reasonably satisfactory to the
Purchaser, of the maintenance of all insurance maintained by it.
(b) Corporate
Existence; Licenses.
The
Company shall preserve and maintain and cause its Subsidiaries to preserve
and
maintain their corporate existence and good standing in the jurisdiction of
their incorporation and the rights, privileges and franchises of the Company
and
its Subsidiaries (except, in each case, in the event of a merger or
consolidation in which the Company or its Subsidiaries, as applicable, is not
the surviving entity) in each case where the failure to so preserve or maintain
could have a Material Adverse Effect on the financial condition, business or
operations of the Company and its Subsidiaries taken as a whole. The Company
shall, and shall cause its Subsidiaries to, maintain at all times all material
licenses or permits necessary to the conduct of its business and as required
by
any governmental agency or instrumentality thereof.
(c) Taxes
and Claims.
The
Company and its Subsidiaries shall duly pay and discharge (a) all taxes,
assessments and governmental charges upon or against the Company or its
properties or assets prior to the date on which penalties attach thereto, unless
and to the extent that the taxes are being diligently contested in good faith
and by appropriate proceedings, and appropriate reserves therefor have been
established, and (b) all lawful claims, whether for labor, materials, supplies,
services or anything else which might or could, if unpaid, become a lien or
charge upon the properties or assets of the Company or its Subsidiaries, unless
and to the extent only that the same are being contested in good faith and
by
appropriate proceedings and appropriate reserves therefor have been
established.
(d) Affiliate
Transactions.
Except
as disclosed in the Chatsworth 8-K and for transactions approved by a majority
of the disinterested members of the board of directors of the Company, neither
the Company nor any of its Subsidiaries shall enter into any transaction with
any (i) director, officer, employee or holder of more than 5% of the outstanding
capital stock of any class or series of capital stock of the Company or any
of
its Subsidiaries, (ii) member of the immediate family of any such person, or
(iii) corporation, partnership, trust or other entity in which any such person,
or member of the immediate family of any such person, is a director, officer,
trustee, partner or holder of more than 5% of the outstanding capital stock
thereof.
4.12 Securities
Law Compliance.
(a) Securities
Act.
The
Company shall timely prepare and file with the Securities and Exchange
Commission the form of notice of the sale of securities pursuant to the
requirements of Regulation D regarding the sale of the Common Stock and Warrants
under this Agreement.
(b) State
Securities Law Compliance -- Sale.
The
Company shall timely prepare and file the applications, consents to service
of
process (but not including a general consent to service of process) and similar
documents and take the other steps and perform the further acts as shall be
required by the state securities law requirements of the jurisdiction where
each
Purchaser resides with respect to the sale of the Common Stock and Warrants
under this Agreement.
(c) State
Securities Law Compliance --Resale.
Beginning no later than 30 days following the Closing Date and continuing until
either (i) the Purchasers have sold all of their Shares and Warrant Shares
under
a registration statement pursuant to the Investor Rights Agreement or (ii)
the
Common Stock becomes a “covered security” under Section 18(b)(1)(A) of the
Securities Act, the Company shall use its best efforts to maintain within either
Xxxxx’x Industrial Manual or Standard and Poor’s Standard Corporation
Descriptions (or any successors to these manuals which are similarly qualified
as “recognized securities manuals” under state Blue Sky laws) an updated listing
containing (i) the names of the officers and directors of the Company, (ii)
a
balance sheet of the Company as of a date that is at no time older than eighteen
months and (iii) a profit and loss statement of the Company for either the
preceding fiscal year or the most recent year of operations.
4.13 Net
Short Sales by Purchasers.
Each
Purchaser represents that it has not, and agrees that it shall not make any
Net
Short Sale of the Company’s Common Stock for the period beginning on the
fifteenth (15th)
day
prior to the date of this Agreement and ending on the date that is two (2)
years
following the Effective Date. For purposes of this Agreement, a “Net
Short Sale”
by
any
Purchaser shall mean a sale of Common Stock by such Purchaser that is marked
as
a short sale and that is made at a time when there is no equivalent offsetting
long position in Common Stock held by such Purchaser, where an “equivalent
offsetting long position” includes all shares of Common Stock held by such
Purchaser and all underlying shares of Common Stock which are issuable upon
conversion, exercise or exchange of convertible securities, warrants, options
or
other rights to subscribe for or to purchase or exchange for shares of Common
Stock.
18
4.14 Rule
14f-1 Statement.
The
Company shall, promptly, but in no case later than 10 days following the Closing
Date, duly file with the Commission and transmit to the Company’s shareholders
an information statement in accordance with Exchange Act Rule 14f-1 and other
applicable laws, rules and regulations (the “Rule
14f-1 Statement”).
Such
Rule 14f-1 Statement shall contain all of the information required to permit
the
resignation of Ms. Bilynaska from the Board of Directors to become effective
10
days following the date of filing and transmittal thereof.
ARTICLE
V
INDEMNIFICATION,
TERMINATION AND DAMAGES
5.1 Survival
of Representations.
Except
as
otherwise provided herein, the representations and warranties of the Company
and
each of the Purchasers contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing Date and
shall continue in full force and effect for a period of two (2) years from
the
Closing Date; provided,
however,
that
the Company’s warranties and representations under Sections 3.1(a)
(Subsidiaries), 3.1(g) (Capitalization), 3,1(x) (Taxes) and 3.1(y)
(Environmental Matters) shall survive the Closing Date and continue in full
force and effect until the expiration of all applicable statutes of limitation.
The Company’s and each of the Purchaser’s warranties and representations shall
in no way be affected or diminished in any way by any investigation of (or
failure to investigate) the subject matter thereof made by or on behalf of
the
Company or any Purchaser.
5.2 Indemnification.
(a) The
Company agrees to indemnify and hold harmless each Purchaser, its Affiliates,
each of their officers, directors, employees and agents and their respective
successors and assigns, from and against any losses, damages, or expenses which
are caused by or arise out of (i) any breach or default in the performance
by
the Company of any covenant or agreement made by the Company in this Agreement
or in any of the Transaction Documents; (ii) any breach of warranty or
representation made by the Company in this Agreement or in any of the
Transaction Documents; and/or (iii) any and all third party actions, suits,
proceedings, claims, demands, judgments, costs and expenses (including
reasonable legal fees and expenses) incident to any of the
foregoing.
(b) Each
Purchaser, severally and not jointly with the other Purchasers, agrees to
indemnify and hold harmless the Company, its Affiliates, each of their officers,
directors, employees and agents and their respective successors and assigns,
from and against any losses, damages, or expenses which are caused by or arise
out of (A) any breach or default in the performance by such Purchaser of any
covenant or agreement made by the Purchaser in this Agreement or in any of
the
Transaction Documents; (B) any breach of warranty or representation made by
the
Purchaser in this Agreement or in any of the Transaction Documents; and (C)
any
and all third party actions, suits, proceedings, claims, demands, judgments,
costs and expenses (including reasonable legal fees and expenses) incident
to
any of the foregoing; provided,
however,
that
any Purchaser’s liability under this Section 5.2(b) shall not exceed the
Subscription Amount paid by the Purchaser hereunder.
5.3 Indemnity
Procedure.
A
party
or parties hereto agreeing to be responsible for or to indemnify against any
matter pursuant to this Agreement is referred to herein as the “Indemnifying
Party”
and
the
other party or parties claiming indemnity is referred to as the “Indemnified
Party”.
An
Indemnified Party under this Agreement shall, with respect to claims asserted
against such party by any third party, give written notice to the Indemnifying
Party of any liability which might give rise to a claim for indemnity under
this
Agreement within sixty (60) Business Days of the receipt of any written claim
from any such third party, but not later than twenty (20) days prior to the
date
any answer or responsive pleading is due, and with respect to other matters
for
which the Indemnified Party may seek indemnification, give prompt written notice
to the Indemnifying Party of any liability which might give rise to a claim
for
indemnity; provided,
however,
that
any failure to give the notice will not waive any rights of the Indemnified
Party except to the extent the rights of the Indemnifying Party are materially
prejudiced.
19
The
Indemnifying Party shall have the right, at its election, to take over the
defense or settlement of the claim by giving written notice to the Indemnified
Party at least fifteen (15) days prior to the time when an answer or other
responsive pleading or notice with respect thereto is required. If the
Indemnifying Party makes the election, it may conduct the defense of the claim
through counsel of its choosing (subject to the Indemnified Party’s approval of
the counsel, which approval shall not be unreasonably withheld), shall be solely
responsible for the expenses of the defense and shall be bound by the results
of
its defense or settlement of the claim. The Indemnifying Party shall not settle
the claim without prior notice to and consultation with the Indemnified Party,
and no settlement involving any equitable relief or which might have an adverse
effect on the Indemnified Party may be agreed to without the written consent
of
the Indemnified Party (which consent shall not be unreasonably withheld). So
long as the Indemnifying Party is diligently contesting any the claim in good
faith, the Indemnified Party may pay or settle the claim only at its own expense
and the Indemnifying Party will not be responsible for the fees of separate
legal counsel to the Indemnified Party, unless the named parties to any
proceeding include both parties or representation of both parties by the same
counsel would be inappropriate in the reasonable opinion of the Indemnified
Party, due to conflicts of interest or otherwise. If the Indemnifying Party
does
not make the election, or having made the election does not, in the reasonable
opinion of the Indemnified Party proceed diligently to defend the claim, then
the Indemnified Party may (after written notice to the Indemnifying Party),
at
the expense of the Indemnifying Party, elect to take over the defense of and
proceed to handle the claim in its discretion and the Indemnifying Party shall
be bound by any defense or settlement that the Indemnified Party may make in
good faith with respect to the claim. In connection therewith, the Indemnifying
Party will fully cooperate with the Indemnified Party should the Indemnified
Party elect to take over the defense of the claim. The parties agree to
cooperate in defending the third party claims and the Indemnified Party shall
provide cooperation and access to its books, records and properties as the
Indemnifying Party shall reasonably request with respect to any matter for
which
indemnification is sought hereunder; and the parties hereto agree to cooperate
with each other in order to ensure the proper and adequate defense
thereof.
With
regard to claims of third parties for which indemnification is payable
hereunder, the indemnification shall be paid by the Indemnifying Party upon
the
earlier to occur of: (i) the entry of a judgment against the Indemnified Party
and the expiration of any applicable appeal period, or if earlier, five (5)
days
prior to the date that the judgment creditor has the right to execute the
judgment; (ii) the entry of an unappealable judgment or final appellate decision
against the Indemnified Party; or (iii) a settlement of the claim.
Notwithstanding the foregoing, the reasonable expenses of counsel to the
Indemnified Party shall be reimbursed on a current basis by the Indemnifying
Party. With regard to other claims for which indemnification is payable
hereunder, the indemnification shall be paid promptly by the Indemnifying Party
upon demand by the Indemnified Party.
ARTICLE
VI
ANTI-DILUTION
6.1 Issuance
of Additional Shares of Common Stock.
(i) If
the
Company shall issue or sell, on or prior to the first anniversary of the Closing
Date, any additional shares of Common Stock (“Additional
Common Stock”),
other
than in an Exempt Issuance (as defined below), in exchange for consideration
in
an amount per additional share of Common Stock less than the Per Share Purchase
Price at the time the additional shares of Common Stock are issued or sold,
then:
(A) the
Per
Share Purchase Price immediately prior to such issue or sale shall be reduced
to
equal the sale price of such Additional Common Stock; and
20
(B) each
Purchaser shall receive for no additional consideration a number of shares
of
Common Stock determined as follows:
(1) multiplying
the Per Share Purchase Price in effect immediately prior to such issue or sale
by the number of shares of Common Stock purchased by such Purchaser pursuant
to
this Agreement and
(2) dividing
the product thereof by the Per Share Purchase Price resulting from the
adjustment made pursuant to clause (A) of this Section 6.1(i) and
(3) subtracting
from such amount the number of shares of Common Stock purchased by such
Purchaser pursuant to this Agreement.
(ii) No
adjustment of the number of shares of Common Stock acquirable hereunder shall
be
made under paragraph 6.1(i) upon the issuance of any additional shares of Common
Stock which are issued pursuant to the exercise of any warrants or other
subscription or purchase rights or pursuant to the exercise of any conversion
or
exchange rights in any convertible securities, if any such adjustment shall
previously have been made upon the issuance of such warrants or other rights
or
upon the issuance of such convertible securities (or upon the issuance of any
warrant or other rights therefor) pursuant to Section 6.2.
(iii) For
avoidance of doubt, the computations provided in this Section 6.1 shall not
impact, retroactively or otherwise, the consideration already paid by a
Purchaser for the Shares. The Per Share Purchase Price adjustment is made solely
to calculate the number of additional shares of Common Stock to be issued
pursuant to this Section 6.1.
6.2. Issuance
of Common Stock Equivalents.
If the
Company shall issue or sell, on or prior to the second anniversary of the
Closing Date, any Common Stock Equivalents, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the effective
price per share for which Common Stock is issuable upon the exercise, exchange
or conversion of such Common Stock Equivalents shall be less than the Per Share
Purchase Price in effect immediately prior to the time of such issue or sale,
then the number of additional shares of Common Stock to be issued and the Per
Share Purchase Price shall be adjusted as provided in Section 6.1 on the basis
that the maximum number of additional shares of Common Stock issuable pursuant
to all such Common Stock Equivalents shall be deemed to have been issued and
outstanding and the Company shall have received all of the consideration payable
therefor, if any, as of the date of the actual issuance of such Common Stock
Equivalents. No further adjustments shall be made under this Section 6.2 upon
the actual issue of such Common Stock upon the exercise, conversion or exchange
of such Common Stock Equivalents.
6.3. Other
Provisions Applicable to Adjustments.
The
following provisions shall be applicable to the making of adjustments provided
for in Article VI:
(a)
When
Adjustments to Be Made.
The
adjustments required by Article VI shall be made whenever and as often as any
specified event requiring an adjustment shall occur.
(b)
Fractional
Interests.
In
computing adjustments under this Article VI, fractional interests in Common
Stock shall be rounded up or down to the nearest whole share.
6.4 Exempt
Issuances.
“Exempt
Issuances”
means
the issuance of: (A) Common Stock upon the exercise of the Warrants, (B) Common
Stock in connection with an adjustment pursuant this Article VI of the Purchase
Agreement, (C) Common Stock upon the exercise of any warrants or options
outstanding as of the effective time of the Closing, (D) Common Stock (at
issuance or exercise prices at or above fair market value), stock awards or
options under, or the exercise of any options granted pursuant to, any
stock-based compensation plans of the Company approved by the Board of Directors
of the Company, (E) securities to financial institutions in connection with
commercial credit arrangements, equipment financings, service agreements or
similar transactions approved by the Board of Directors of the Company and
the
primary purpose of which is not equity financing, (F) securities or rights
to
acquire securities in connection with strategic collaborations, development
agreements, joint ventures or licensing transactions, the terms of which are
approved by the Board of Directors of the Company, (G) Common Stock pursuant
to
a stock split, combination or subdivision of the outstanding shares of Common
Stock, or (H) securities issued in connection with services provided to the
Company.
21
ARTICLE
VII
MISCELLANEOUS
7.1 Fees
and Expenses.
The
Company shall be responsible for the payment of the Purchasers’ reasonable and
documented legal fees and other third-party expenses relating to the
preparation, negotiation and execution of this Agreement and the Transaction
Documents and the consummation of the transactions contemplated herein up to
$20,000 or such greater amount as may be agreed in writing by the
Company.
7.2 Entire
Agreement.
The
Transaction Documents, together with the exhibits and schedules thereto, contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements and understandings, oral or written,
with respect to the matters, which the parties acknowledge have been merged
into
the documents, exhibits and schedules.
7.3 Notices.
Any
and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if the notice or communication
is delivered via facsimile at the facsimile number specified on the signature
pages attached hereto prior to 5:00 p.m. (New York City time) on a Trading
Day,
(b) the next Trading Day after the date of transmission, if the notice or
communication is delivered via facsimile at the facsimile number on the
signature pages attached hereto on a day that is not a Trading Day or later
than
5:00 p.m. (New York City time) on any Trading Day, (c) the Trading Day following
the date of mailing, if sent by U.S. nationally recognized overnight courier
service, or (d) upon actual receipt by the party to whom the notice is required
to be given. The address for the notices and communications shall be as
follows:
If
to the
Purchasers, at each Purchaser’s address set forth under its name on Schedule
1
attached
hereto and if to the Company, addressed to:
Adera
Mines Limited
00000
Xxxxxx Xxxxxx
Xxxxxxxxxx,
XX 00000
Attention:
Chief Financial Officer
Facsimile
No.: 000-000-0000
Copy
to:
Xxxxxxxxxx
Xxxxx LLP
00000
Xxxxxxxx Xxxx.
Xxx
Xxxxxxx, XX 00000
Attention:
Xxxx Xxxxx, Esq.
Facsimile
No.: 000-000-0000
or
to the other address or addresses or facsimile number or numbers as any the
party may most recently have designated in writing to the other parties hereto
by proper notice. Copies of notices to any Purchaser shall be sent to the copy
addresses, if any, listed on Schedule
1
attached
hereto.
22
7.4 Amendments;
Waivers.
No
provision of this Agreement may be waived or amended except in a written
instrument signed, in the case of an amendment, by the Company and each of
the
Purchasers or, in the case of a waiver, by the party against whom enforcement
of
the waiver is sought. No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any right.
7.5 Construction.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party. Any references herein to
“dollars” or use herein of the symbol “$” shall refer to the currency of the
United States of America.
7.6 Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of each of the Purchaser. The Purchasers may assign any or all of its
rights under this Agreement to any Person, provided the transferee agrees in
writing to be bound, with respect to the transferred Securities, by the
provisions hereof that apply to the Purchaser.
7.7 No
Third-Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except as otherwise set
forth
in Article V.
7.8 Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of the Transaction Documents shall be governed by and construed and enforced
in
accordance with the internal laws of the State of New York, without regard
to
the principles of conflicts of law thereof.
7.9
Jurisdiction;
Venue; Service of Process
This
Agreement shall be subject to the exclusive jurisdiction of the Xxxxxxx Xxxxxxxx
Xxxxx, Xxxxxxxx Xxxxxxxx of New York and if such court does not have proper
jurisdiction, the State Courts of New York County, New York. The parties to
this
Agreement agree that any breach of any term or condition of this Agreement
shall
be deemed to be a breach occurring in the State of New York by virtue of a
failure to perform an act required to be performed in the State of New York
and
irrevocably and expressly agree to submit to the jurisdiction of the Xxxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxxx of New York and if such court does not have
proper jurisdiction, the State Courts of New York County, New York for the
purpose of resolving any disputes among the parties relating to this Agreement
or the transactions contemplated hereby. The parties irrevocably waive, to
the
fullest extent permitted by law, any objection which they may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of
or
relating to this Agreement, or any judgment entered by any court in respect
hereof brought in New York County, New York, and further irrevocably waive
any
claim that any suit, action or proceeding brought in Xxxxxxx Xxxxxxxx Xxxxx,
Xxxxxxxx Xxxxxxxx of New York and if such court does not have proper
jurisdiction, the State Courts of New York County, New York has been brought
in
an inconvenient forum. Each of the parties hereto consents to process being
served in any such suit, action or proceeding, by mailing a copy thereof to
such
party at the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing in this Section 6.9 shall affect or limit any right
to
serve process in any other manner permitted by law.
23
7.10
Execution.
This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to
the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, the signature shall create a valid and binding obligation of
the
party executing (or on whose behalf the signature is executed) with the same
force and effect as if the facsimile signature page were an original
thereof.
7.11
Severability.
If
any
provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and
the
parties will attempt to agree upon a valid and enforceable provision that is
a
reasonable substitute therefor, and upon so agreeing, shall incorporate the
substitute provision in this Agreement.
7.12 Replacement
of Securities.
If
any
certificate or instrument evidencing any Shares or Warrant Shares is mutilated,
lost, stolen or destroyed, the Company shall issue or cause to be issued in
exchange and substitution for and upon cancellation thereof, or in lieu of
and
substitution therefor, a new certificate or instrument, but only upon receipt
of
evidence reasonably satisfactory to the Company of the loss, theft or
destruction and customary and reasonable indemnity, if requested by the
Company.
7.13
Remedies.
In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, the Purchasers and the Company will be
entitled to specific performance under the Transaction Documents. The parties
agree that monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance
of
any obligation the defense that a remedy at law would be adequate.
7.14 Payment
Set Aside.
To
the
extent that the Company makes a payment or payments to any Purchaser pursuant
to
any Transaction Document or any Purchaser enforces or exercises its rights
thereunder, and the payment or payments or the proceeds of the enforcement
or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other person under any law (including, without limitation,
any
bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any restoration the obligation or part thereof originally
intended to be satisfied shall, to the extent permissible under applicable
law,
be revived and continued in full force and effect as if the payment had not
been
made or the enforcement or setoff had not occurred.
7.15 Waiver
of Trial by Jury.
THE
PARTIES HERETO IRREVOCABLY WAIVE TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
7.16 Further
Assurances.
Each
party agrees to cooperate fully with the other party and to execute any further
instruments, documents and agreements and to give any further written assurances
as may be reasonably requested by any other party to better evidence and reflect
the transactions described herein and contemplated hereby and to carry into
effect the intents and purposes of this Agreement, and further agrees to take
promptly, or cause to be taken, all actions, and to do promptly, or cause to
be
done, all things necessary, proper or advisable under applicable law to
consummate and make effective the transactions contemplated hereby, to obtain
all necessary waivers, consents and approvals, to effect all necessary
registrations and filings, and to remove any injunctions or other impediments
or
delays, legal or otherwise, in order to consummate and make effective the
transactions contemplated by this Agreement for the purpose of securing to
the
parties hereto the benefits contemplated by this Agreement.
24
7.17 Independent
Nature of Purchasers' Obligations and Rights.
The
obligations of each Purchaser under any Transaction Document are several and
not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association,
a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out
of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose. Each Purchaser has been represented by its own separate legal counsel
in their review and negotiation of the Transaction Documents. For reasons of
administrative convenience only, Purchasers and their respective counsel have
chosen to communicate with the Company through Xxxxxx and Xxxx LLP, but such
counsel does not represent any of the Purchasers in this transaction other
than
Vision Opportunity Master Fund, Ltd. The Company has elected to provide all
Purchasers with the same terms and Transaction Documents for the convenience
of
the Company and not because it was required or requested to do so by the
Purchasers.
[Signature
Page Follows]
25
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first above written.
COMPANY:
ADERA
MINES LIMITED
By:
Name: X.
Xxxxxxx Xxxxxx III
Title: President
26
PURCHASERS:
Print
Exact Name:________________________________
By:____________________________________________
Name:
Title:
Address:________________________________________
_______________________________________________
_______________________________________________
Telephone:______________________________________
Facsimile:_______________________________________
Email:__________________________________________
SSN/EIN:_______________________________________
Amount
of
Investment:$___________________________
[Omnibus
Adera Mines Limited Common Stock and Warrant Purchase Agreement Signature
Page]
27
Schedule
1
Adera
Mines Limited
Purchasers
and Shares of Common Stock and Warrants
|
Name,
Address and
Fax
Number of
Purchaser
|
Copies
of Notices to
|
Shares
of
Common
Stock
Purchased
|
Common
Stock
Underlying
Warrants
|
Purchase
Price
|
||||
|
X.
Xxxxxxx Xxxxxx III
00000
Xxxxxxxxx Xxxxx
Xxxxxxxxxx,
XX 00000
|
X.
Xxxxxxx Xxxxxx III
|
100,000
|
50,000
|
$25,000
|
||||
|
Xxxxxxx
Capital Partners Corp.
000
Xxxxxxx Xxx.
00xx
Xxxxx
Xxx
Xxxx, XX 00000
Fax:
(000) 000-0000
|
Xxxx
Xxxxx
|
400,000
|
200,000
|
$100,000
|
||||
|
Xxxxxxx
Opportunity Fund, L.P.
000
Xxxxxxx Xxx.
00xx
Xxxxx
Xxx
Xxxx, XX 00000
Fax:
(000) 000-0000
|
Xxxx
Xxxxx
|
200,000
|
100,000
|
$50,000
|
||||
|
Xxxx
X. Xxxxxx
000
Xxxxxx
Xxxxxxxxx,
XX 00000
Fax:
(000) 000-0000
|
Xxxx
X. Xxxxxx
|
140,000
|
70,000
|
$35,000
|
||||
|
Vintage
Filings, LLC
000
Xxxx 0xx
Xxxxxx
0xx
Xxxxx
Xxx
Xxxx, XX 00000
Fax:
(000) 000-0000
|
Xxxx
Xxxxxxx
|
100,000
|
50,000
|
$25,000
|
||||
|
MPFV,
LLC
00
Xxxxxxx Xxxxx
Xxxxx
Xxxx, XX 00000
Fax:
(000) 000-0000
|
Xxxxxx
Xxxxxxxxxxxxx
|
240,000
|
120,000
|
$60,000
|
||||
|
FHFV,
LLC
00
Xxxxxxx Xxxxx
Xxxxx
Xxxx, XX 00000
Fax:
(000) 000-0000
|
Xxxxxx
Xxxxxxxxxxxxx
|
60,000
|
30,000
|
$15,000
|
||||
|
Xxxxx
Xxxxxxx Xxxxx
X.X.
Xxx 000
Xxxxxxx,
XX 00000
Fax:
(000) 000-0000
|
Xxxxx
Xxxxxxx
Xxxxx
|
100,000
|
50,000
|
$25,000
|
||||
|
Sound
Capital
0000
Xxxxxx Xxxxxxxxx
Xxxxx
0000
Xxxxxxxx,
XX 00000
Fax:
(000) 000-0000
|
Xxxxxxx
Xxxxxxx
|
240,000
|
120,000
|
$60,000
|
|
Name,
Address and
Fax
Number of
Purchaser
|
Copies
of Notices to
|
Shares
of
Common
Stock
Purchased
|
Common
Stock
Underlying
Warrants
|
Purchase
Price
|
||||
|
Caramat,
Ltd.
New
Moon House
P.O.
Box
Nassau,
Bahamas
Fax:
(000) 000-0000
|
Xxxxxxx
Nihon
|
2,000,000
|
1,000,000
|
$500,000
|
||||
|
Nite
Capital
000
Xxxx Xxxx Xxx.
Xxxxx
000
Xxxxxxxxxxxx,
XX 00000
Fax:
(000) 000-0000
|
Xxxxx
Xxxxxxx
|
1,200,000
|
600,000
|
$300,000
|
||||
|
Xxxxxxx
X. Xxxxxxx
000
X. Xxxxxx #000
Xxxxx,
XX 00000
Fax:
(000) 000-0000
|
Xxxxxxx
X. Xxxxxxx
|
120,000
|
60,000
|
$30,000
|
||||
|
Ashcrete
Research &
Development,
LLC
0000
X. 00xx
Xxxxx
Xxxxx,
XX 00000
Fax:
(000) 000-0000
|
Xxxxxx
Xxxxxxxxxx
|
1,200,000
|
600,000
|
$300,000
|
||||
|
Iroquois
Master Fund
000
Xxxxxxxxx Xxx.
00xx
Xxxxx
Xxx
Xxxx, XX 00000
Fax:
(000) 000-0000
|
Xxxxxx
Xxxxxxxxx
|
800,000
|
400,000
|
$200,000
|
||||
|
Vision
Opportunity Master Fund, Ltd.
00
Xxxx 00xx
Xx.
0xx
Xxxxx
Xxx
Xxxx, XX 00000
Fax:
(000) 000-0000
|
Xxxx
Xxxxxxxx
|
11,600,000
|
5,800,000
|
$2,900,000
|
||||
|
XxXxxxxxx
Investment
Company,
LLC
0000
Xx. Xxxxxxxxxxx
Xxxxx,
XX 00000
Fax:
(000) 000-0000
|
Xxx
X. XxXxxxxxx
|
1,000,000
|
500,000
|
$250,000
|
||||
|
Whalehaven
Capital Fund Limited
0xx
Xxxxx, 00 Xxx-Xx-Xxxxx Xxxx
P.O.
Box HM 1027
Xxxxxxxx,
HMDX Bermuda
Fax:
(000) 000-0000
|
Xxxx
Xxxxxxxxxxx
|
2,000,000
|
1,000,000
|
$500,000
|
||||
|
Xxxxxx
X. Xxxxxxxxx
00
0xx
Xxxxxx
Xxxxxxxx,
XX 00000
Fax:
(000) 000-0000
|
Xxxxxx
X. Xxxxxxxxx
|
400,000
|
200,000
|
$100,000
|
||||
|
Xxxxxx
Xxxx
0000
X. Xxxxxxxx Xxxxx X
Xxxxxxxxxx,
XX 00000
Fax:
(000) 000-0000
|
Xxxxxx
Xxxx
|
100,000
|
50,000
|
$25,000
|
||||
|
Totals:
|
22,000,000
|
11,000,000
|
$5,500,000
|
