EXHIBIT 99.4
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SECURITIES PURCHASE AGREEMENT
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THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of November
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19, 2004, by and among FALCON NATURAL GAS CORPORATION, a Nevada corporation,
with headquarters located at Westchase Center, 0000 Xxxxxxxx Xxxx - Xxxxx 000,
Xxxxxxx, XX 00000 (the "Company"), and the Buyers listed on Schedule I attached
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hereto (individually, a "Buyer" or collectively "Buyers").
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WITNESSETH:
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WHEREAS, the Company and the Buyer(s) are executing and delivering this
Agreement in reliance upon an exemption from securities registration pursuant to
Section 4(2) and/or Rule 506 of Regulation D ("Regulation D") as promulgated by
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the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act
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of 1933, as amended (the "1933 Act");
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WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Buyer(s),
as provided herein, and the Buyer(s) shall purchase up to One Million Dollars
($1,000,000) of secured convertible debentures (the "Convertible Debentures"),
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which shall be convertible into shares of the Company's common stock, par value
$0.00001 (the "Common Stock") (as converted, the "Conversion Shares") of which
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Five Hundred Thousand Dollars ($500,000) shall be funded on the fifth (5th)
business day following the date hereof (the "First Closing") and Five Hundred
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Thousand Dollars ($500,000) shall be funded on the fifth (5th) business day
following the date the registration statement (the "Registration Statement") is
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filed, pursuant to the Investor Registration Rights Agreement dated the date
hereof, with the United States Securities and Exchange Commission (the "SEC")
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(the "Second Closing") (individually referred to as a "Closing" collectively
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referred to as the "Closings"), for a total purchase price of up to One Million
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Dollars ($1,000,000), (the "Purchase Price") in the respective amounts set forth
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opposite each Buyer(s) name on Schedule I (the "Subscription Amount"); and
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WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement substantially in the form attached hereto as Exhibit A (the "Investor
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Registration Rights Agreement") pursuant to which the Company has agreed to
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provide certain registration rights under the 1933 Act and the rules and
regulations promulgated there under, and applicable state securities laws; and
WHEREAS, the aggregate proceeds of the sale of the Convertible Debentures
contemplated hereby shall be held in escrow pursuant to the terms of an escrow
agreement substantially in the form of the Escrow Agreement attached hereto as
Exhibit B.
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WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering Irrevocable Transfer
Agent Instructions substantially in the form attached hereto as Exhibit C (the
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"Irrevocable Transfer Agent Instructions").
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WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Security Agreement
substantially in the form attached hereto as Exhibit D (the "Security
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Agreement") pursuant to which the Company has agreed to provide the Buyer a
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security interest in Pledged Collateral (as this term is defined in the Security
Agreement dated the date hereof) to secure Company's obligations under this
Agreement, the Convertible Debenture, the Investor Registration Rights
Agreement, the Irrevocable Transfer Agent Instructions, the Security Agreement
or any other obligations of the Company to the Buyer; and
NOW, THEREFORE, in consideration of the mutual covenants and other
agreements contained in this Agreement the Company and the Buyer(s)hereby agree
as follows:
39. PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.
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a. Purchase of Convertible Debentures. Subject to the satisfaction (or
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waiver) of the terms and conditions of this Agreement, each Buyer agrees,
severally and not jointly, to purchase at Closing (as defined herein below)
and the Company agrees to sell and issue to each Buyer, severally and not
jointly, at Closing, Convertible Debentures in amounts corresponding with
the Subscription Amount set forth opposite each Buyer's name on Schedule I
hereto. Upon execution hereof by a Buyer, the Buyer shall wire transfer the
Subscription Amount set forth opposite his name on Schedule I in same-day
funds or a check payable to "Xxxxx Xxxxxxxx, Esq., as Escrow Agent for
Falcon Natural Gas Corporation /Cornell Capital Partners, LP", which
Subscription Amount shall be held in escrow pursuant to the terms of the
Escrow Agreement (as hereinafter defined) and disbursed in accordance
therewith. Notwithstanding the foregoing, a Buyer may withdraw his
Subscription Amount and terminate this Agreement as to such Buyer at any
time after the execution hereof and prior to Closing (as hereinafter
defined).
b. Closing Date. The First Closing of the purchase and sale of the
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Convertible Debentures shall take place at 10:00 a.m. Eastern Standard Time
on the fifth (5th) business day following the date hereof, subject to
notification of satisfaction of the conditions to the First Closing set
forth herein and in Sections 6 and 7 below (or such later date as is
mutually agreed to by the Company and the Buyer(s)) (the "First Closing
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Date") and the Second Closing of the purchase and sale of the Convertible
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Debentures shall take place at 10:00 a.m. Eastern Standard Time on the
fifth (5th) business day following the date the Registration Statement is
filed with the SEC, subject to notification of satisfaction of the
conditions to the Second Closing set forth herein and in Sections 6 and 7
below (or such later date as is mutually agreed to by the Company and the
Buyer(s)) (the "Second Closing Date") (collectively referred to a the
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"Closing Dates"). The Closing shall occur on the respective Closing Dates
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at the offices of Yorkville Advisors, LLC, 0000 Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxx Xxxx, Xxx Xxxxxx 00000 (or such other place as is mutually agreed to
by the Company and the Buyer(s)).
c. Escrow Arrangements; Form of Payment. Upon execution hereof by
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Buyer(s) and pending the Closings, the aggregate proceeds of the sale of
the Convertible Debentures to Buyer(s) pursuant hereto shall be deposited
in a non-interest bearing escrow account with Xxxxx Xxxxxxxx, Esq., as
escrow agent (the "Escrow Agent"), pursuant to the terms of an escrow
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agreement between the Company, the Buyer(s) and the Escrow Agent in the
form attached hereto as Exhibit B (the "Escrow Agreement"). Subject to the
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satisfaction of the terms and conditions of this Agreement, on the Closing
Dates, (i) the Escrow Agent shall deliver to the Company in accordance with
the terms of the Escrow Agreement such aggregate proceeds for the
Convertible Debentures to be issued and sold to such Buyer(s), minus the
fees and expenses of Yorkville Advisors Management, LLC of Fifteen Thousand
Dollars ($15,000) referenced in Section 4 herein, which shall be paid
directly from the gross proceeds held in escrow of the First Closing and
the retainer of Xxxxxxxxxxx & Xxxxxxxx LLP of Twelve Thousand Five Hundred
Dollars ($12,500) shall be paid directly from the gross proceeds of the
First Closing and Twelve Thousand Five Hundred Dollars ($12,500) from the
Second Closing by wire transfer of immediately available funds in
accordance with the Company's written wire instructions, and (ii) the
Company shall deliver to each Buyer, Convertible Debentures which such
Buyer(s) is purchasing in amounts indicated opposite such Buyer's name on
Schedule I, duly executed on behalf of the Company.
40. BUYER'S REPRESENTATIONS AND WARRANTIES.
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Each Buyer represents and warrants, severally and not jointly, that:
a. Investment Purpose. Each Buyer is acquiring the Convertible
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Debentures and, upon conversion of Convertible Debentures, the Buyer will
acquire the Conversion Shares then issuable, for its own account for
investment only and not with a view towards, or for resale in connection
with, the public sale or distribution thereof, except pursuant to sales
registered or exempted under the 1933 Act; provided, however, that by
making the representations herein, such Buyer reserves the right to dispose
of the Conversion Shares at any time in accordance with or pursuant to an
effective registration statement covering such Conversion Shares or an
available exemption under the 1933 Act.
b. Accredited Investor Status. Each Buyer is an "Accredited Investor"
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as that term is defined in Rule 501(a)(3) of Regulation D.
c. Reliance on Exemptions. Each Buyer understands that the Convertible
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Debentures are being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal and
state securities laws and that the Company is relying in part upon the
truth and accuracy of, and such Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings
of such Buyer set forth herein in order to determine the availability of
such exemptions and the eligibility of such Buyer to acquire such
securities.
d. Information. Each Buyer and its advisors (and his or, its counsel),
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if any, have been furnished with all materials relating to the business,
finances and operations of the Company and information he deemed material
to making an informed investment decision regarding his purchase of the
Convertible Debentures and the Conversion Shares, which have been requested
by such Buyer. Each Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and its management. Neither
such inquiries nor any other due diligence investigations conducted by such
Buyer or its advisors, if any, or its representatives shall modify, amend
or affect such Buyer's right to rely on the Company's representations and
warranties contained in Section 3 below. Each Buyer understands that its
investment in the Convertible Debentures and the Conversion Shares involves
a high degree of risk. Each Buyer is in a position regarding the Company,
which, based upon employment, family relationship or economic bargaining
power, enabled and enables such Buyer to obtain information from the
Company in order to evaluate the merits and risks of this investment. Each
Buyer has sought such accounting, legal and tax advice, as it has
considered necessary to make an informed investment decision with respect
to its acquisition of the Convertible Debentures and the Conversion Shares.
e. No Governmental Review. Each Buyer understands that no United
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States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the
Convertible Debentures or the Conversion Shares, or the fairness or
suitability of the investment in the Convertible Debentures or the
Conversion Shares, nor have such authorities passed upon or endorsed the
merits of the offering of the Convertible Debentures or the Conversion
Shares.
f. Transfer or Resale. Each Buyer understands that except as provided
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in the Investor Registration Rights Agreement: (i) the Convertible
Debentures have not been and are not being registered under the 1933 Act or
any state securities laws, and may not be offered for sale, sold, assigned
or transferred unless (A) subsequently registered thereunder, or (B) such
Buyer shall have delivered to the Company an opinion of counsel, in a
generally acceptable form, to the effect that such securities to be sold,
assigned or transferred may be sold, assigned or transferred pursuant to an
exemption from such registration requirements; (ii) any sale of such
securities made in reliance on Rule 144 under the 1933 Act (or a successor
rule thereto) ("Rule 144") may be made only in accordance with the terms of
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Rule 144 and further, if Rule 144 is not applicable, any resale of such
securities under circumstances in which the seller (or the person through
whom the sale is made) may be deemed to be an underwriter (as that term is
defined in the 0000 Xxx) may require compliance with some other exemption
under the 1933 Act or the rules and regulations of the SEC thereunder; and
(iii) neither the Company nor any other person is under any obligation to
register such securities under the 1933 Act or any state securities laws or
to comply with the terms and conditions of any exemption thereunder. The
Company reserves the right to place stop transfer instructions against the
shares and certificates for the Conversion Shares.
g. Legends. Each Buyer understands that the certificates or other
instruments representing the Convertible Debentures and or the Conversion
Shares shall bear a restrictive legend in substantially the following form
(and a stop -transfer order may be placed against transfer of such stock
certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.
The legend set forth above shall be removed and the Company within two (2)
business days shall issue a certificate without such legend to the holder
of the Conversion Shares upon which it is stamped, if, unless otherwise
required by state securities laws, (i) in connection with a sale
transaction, provided the Conversion Shares are registered under the 1933
Act or (ii) in connection with a sale transaction, after such holder
provides the Company with an opinion of counsel, which opinion shall be in
form, substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale, assignment or transfer of
the Conversion Shares may be made without registration under the 1933 Act.
h. Authorization, Enforcement. This Agreement has been duly and
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validly authorized, executed and delivered on behalf of such Buyer and is a
valid and binding agreement of such Buyer enforceable in accordance with
its terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or affecting
generally, the enforcement of applicable creditors' rights and remedies.
i. Receipt of Documents. Each Buyer and his or its counsel has
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received and read in their entirety: (i) this Agreement and each
representation, warranty and covenant set forth herein, the Security
Agreement, the Investor Registration Rights Agreement, the Escrow
Agreement, and the Irrevocable transfer Agent Instructions; (ii) all due
diligence and other information necessary to verify the accuracy and
completeness of such representations, warranties and covenants; (iii) the
Company's Form 10-KSB for the fiscal year ended December 31, 2003; (iv) the
Company's Form 10-QSB for the fiscal quarter ended June 30, 2004; and (v)
answers to all questions each Buyer submitted to the Company regarding an
investment in the Company; and each Buyer has relied on the information
contained therein and has not been furnished any other documents,
literature, memorandum or prospectus.
j. Due Formation of Corporate and Other Buyers. If the Buyer(s) is a
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corporation, trust, partnership or other entity that is not an individual
person, it has been formed and validly exists and has not been organized
for the specific purpose of purchasing the Convertible Debentures and is
not prohibited from doing so.
k. No Legal Advice From the Company. Each Buyer acknowledges, that it
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had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with his or its own legal counsel and
investment and tax advisors. Each Buyer is relying solely on such counsel
and advisors and not on any statements or representations of the Company or
any of its representatives or agents for legal, tax or investment advice
with respect to this investment, the transactions contemplated by this
Agreement or the securities laws of any jurisdiction.
41. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
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The Company represents and warrants to each of the Buyers that, except as
set forth in the SEC Documents (as defined herein):
a. Organization and Qualification. The Company and its subsidiaries
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are corporations duly organized and validly existing in good standing under
the laws of the jurisdiction in which they are incorporated, and have the
requisite corporate power to own their properties and to carry on their
business as now being conducted. Each of the Company and its subsidiaries
is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the business
conducted by it makes such qualification necessary, except to the extent
that the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries taken as a
whole.
b. Authorization, Enforcement, Compliance with Other Instruments. (i)
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The Company has the requisite corporate power and authority to enter into
and perform this Agreement, the Security Agreement, the Investor
Registration Rights Agreement, the Escrow Agreement, the Irrevocable
Transfer Agent Instructions, and any related agreements, and to issue the
Convertible Debentures and the Conversion Shares in accordance with the
terms hereof and thereof, (ii) the execution and delivery of this
Agreement, the Security Agreement, the Investor Registration Rights
Agreement, the Escrow Agreement, the Irrevocable Transfer Agent
Instructions (as defined herein) and any related agreements by the Company
and the consummation by it of the transactions contemplated hereby and
thereby, including, without limitation, the issuance of the Convertible
Debentures the Conversion Shares and the reservation for issuance and the
issuance of the Conversion Shares issuable upon conversion or exercise
thereof, have been duly authorized by the Company's Board of Directors and
no further consent or authorization is required by the Company, its Board
of Directors or its stockholders, (iii) this Agreement, the Security
Agreement, the Investor Registration Rights Agreement, the Escrow
Agreement, the Irrevocable Transfer Agent Instructions and any related
agreements have been duly executed and delivered by the Company, (iv) this
Agreement, the Security Agreement, the Investor Registration Rights
Agreement, the Escrow Agreement, the Irrevocable Transfer Agent
Instructions and any related agreements constitute the valid and binding
obligations of the Company enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting
generally, the enforcement of creditors' rights and remedies. The
authorized officer of the Company executing this Agreement, the Security
Agreement, the Investor Registration Rights Agreement, the Escrow
Agreement, the Irrevocable Transfer Agent Instructions and any related
agreements knows of no reason why the Company cannot file the registration
statement as required under the Investor Registration Rights Agreement or
perform any of the Company's other obligations under such documents.
c. Capitalization. The authorized capital stock of the Company
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consists of 200,000,000 shares of Common Stock, par value $0.00001 per
share and no shares of Preferred Stock. As of the date hereof, the Company
has 60,280,000 shares of Common Stock issued and outstanding. All of such
outstanding shares have been validly issued and are fully paid and
nonassessable. Except as disclosed in the SEC Documents (as defined in
Section 3(f)), no shares of Common Stock are subject to preemptive rights
or any other similar rights or any liens or encumbrances suffered or
permitted by the Company. Except as disclosed in the SEC Documents, as of
the date of this Agreement, (i) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, or
contracts, commitments, understandings or arrangements by which the Company
or any of its subsidiaries is or may become bound to issue additional
shares of capital stock of the Company or any of its subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights convertible
into, any shares of capital stock of the Company or any of its
subsidiaries, (ii) there are no outstanding debt securities and (iii) there
are no agreements or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of their securities
under the 1933 Act (except pursuant to the Registration Rights Agreement)
and (iv) there are no outstanding registration statements and there are no
outstanding comment letters from the SEC or any other regulatory agency.
There are no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the Convertible
Debentures as described in this Agreement. The Company has furnished to the
Buyer true and correct copies of the Company's Articles of Incorporation,
as amended and as in effect on the date hereof (the "Articles of
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Incorporation"), and the Company's By-laws, as in effect on the date hereof
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(the "By-laws"), and the terms of all securities convertible into or
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exercisable for Common Stock and the material rights of the holders thereof
in respect thereto other than stock options issued to employees and
consultants.
d. Issuance of Securities. The Convertible Debentures are duly
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authorized and, upon issuance in accordance with the terms hereof, shall be
duly issued, fully paid and nonassessable, are free from all taxes, liens
and charges with respect to the issue thereof. The Conversion Shares
issuable upon conversion of the Convertible Debentures have been duly
authorized and reserved for issuance. Upon conversion or exercise in
accordance with the Convertible Debentures the Conversion Shares will be
duly issued, fully paid and nonassessable.
e. No Conflicts. Except as disclosed in the SEC Documents, the
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execution, delivery and performance of this Agreement, the Security
Agreement, the Investors Registration Rights Agreement, the Escrow
Agreement and the Irrevocable Transfer Agent Instructions by the Company
and the consummation by the Company of the transactions contemplated hereby
will not (i) result in a violation of the Articles of Incorporation, any
certificate of designations of any outstanding series of preferred stock of
the Company or the By-laws or (ii) conflict with or constitute a default
(or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to
which the Company or any of its subsidiaries is a party, or result in a
violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules
and regulations of The National Association of Securities Dealers Inc.'s
OTC Bulletin Board on which the Common Stock is quoted) applicable to the
Company or any of its subsidiaries or by which any property or asset of the
Company or any of its subsidiaries is bound or affected. Except as
disclosed in the SEC Documents, neither the Company nor its subsidiaries is
in violation of any term of or in default under its Articles of
Incorporation or By-laws or their organizational charter or by-laws,
respectively, or any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries. The business of
the Company and its subsidiaries is not being conducted, and shall not be
conducted in violation of any material law, ordinance, or regulation of any
governmental entity. Except as specifically contemplated by this Agreement
and as required under the 1933 Act and any applicable state securities
laws, the Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of
its obligations under or contemplated by this Agreement or the Registration
Rights Agreement in accordance with the terms hereof or thereof. Except as
disclosed in the SEC Documents, all consents, authorizations, orders,
filings and registrations which the Company is required to obtain pursuant
to the preceding sentence have been obtained or effected on or prior to the
date hereof. The Company and its subsidiaries are unaware of any facts or
circumstance, which might give rise to any of the foregoing.
f. SEC Documents: Financial Statements. Since January 1, 2003, the
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Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC under of the Securities
Exchange Act of 1934, as amended (the "1934 Act") (all of the foregoing
filed prior to the date hereof or amended after the date hereof and all
exhibits included therein and financial statements and schedules thereto
and documents incorporated by reference therein, being hereinafter referred
to as the "SEC Documents"). The Company has delivered to the Buyers or
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their representatives, or made available through the SEC's website at
xxxx://xxx.xxx.xxx., true and complete copies of the SEC Documents. As of
their respective dates, the financial statements of the Company disclosed
in the SEC Documents (the "Financial Statements") complied as to form in
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all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto. Such
financial statements have been prepared in accordance with generally
accepted accounting principles, consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such Financial
Statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and, fairly present in all material respects the
financial position of the Company as of the dates thereof and the results
of its operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments). No
other information provided by or on behalf of the Company to the Buyer
which is not included in the SEC Documents, including, without limitation,
information referred to in this Agreement, contains any untrue statement of
a material fact or omits to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading.
g. 10(b)-5. The SEC Documents do not include any untrue statements of
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material fact, nor do they omit to state any material fact required to be
stated therein necessary to make the statements made, in light of the
circumstances under which they were made, not misleading.
h. Absence of Litigation. Except as disclosed in the SEC Documents,
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there is no action, suit, proceeding, inquiry or investigation before or by
any court, public board, government agency, self-regulatory organization or
body pending against or affecting the Company, the Common Stock or any of
the Company's subsidiaries, wherein an unfavorable decision, ruling or
finding would (i) have a material adverse effect on the transactions
contemplated hereby (ii) adversely affect the validity or enforceability
of, or the authority or ability of the Company to perform its obligations
under, this Agreement or any of the documents contemplated herein, or (iii)
except as expressly disclosed in the SEC Documents, have a material adverse
effect on the business, operations, properties, financial condition or
results of operations of the Company and its subsidiaries taken as a whole.
i. Acknowledgment Regarding Buyer's Purchase of the Convertible
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Debentures. The Company acknowledges and agrees that the Buyer(s) is acting
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solely in the capacity of an arm's length purchaser with respect to this
Agreement and the transactions contemplated hereby. The Company further
acknowledges that the Buyer(s) is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to this
Agreement and the transactions contemplated hereby and any advice given by
the Buyer(s) or any of their respective representatives or agents in
connection with this Agreement and the transactions contemplated hereby is
merely incidental to such Buyer's purchase of the Convertible Debentures or
the Conversion Shares. The Company further represents to the Buyer that the
Company's decision to enter into this Agreement has been based solely on
the independent evaluation by the Company and its representatives.
j. No General Solicitation. Neither the Company, nor any of its
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affiliates, nor any person acting on its or their behalf, has engaged in
any form of general solicitation or general advertising (within the meaning
of Regulation D under the 0000 Xxx) in connection with the offer or sale of
the Convertible Debentures or the Conversion Shares.
k. No Integrated Offering. Neither the Company, nor any of its
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affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any
offers to buy any security, under circumstances that would require
registration of the Convertible Debentures or the Conversion Shares under
the 1933 Act or cause this offering of the Convertible Debentures or the
Conversion Shares to be integrated with prior offerings by the Company for
purposes of the 1933 Act.
l. Employee Relations. Neither the Company nor any of its subsidiaries
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is involved in any labor dispute nor, to the knowledge of the Company or
any of its subsidiaries, is any such dispute threatened. None of the
Company's or its subsidiaries' employees is a member of a union and the
Company and its subsidiaries believe that their relations with their
employees are good.
m. Intellectual Property Rights. The Company and its subsidiaries own
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or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service xxxx registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their
respective businesses as now conducted. The Company and its subsidiaries do
not have any knowledge of any infringement by the Company or its
subsidiaries of trademark, trade name rights, patents, patent rights,
copyrights, inventions, licenses, service names, service marks, service
xxxx registrations, trade secret or other similar rights of others, and, to
the knowledge of the Company there is no claim, action or proceeding being
made or brought against, or to the Company's knowledge, being threatened
against, the Company or its subsidiaries regarding trademark, trade name,
patents, patent rights, invention, copyright, license, service names,
service marks, service xxxx registrations, trade secret or other
infringement; and the Company and its subsidiaries are unaware of any facts
or circumstances which might give rise to any of the foregoing.
n. Environmental Laws. The Company and its subsidiaries are (i) in
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compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits,
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licenses or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (iii) are in compliance
with all terms and conditions of any such permit, license or approval.
o. Title. Any real property and facilities held under lease by the
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Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries.
p. Insurance. The Company and each of its subsidiaries are insured by
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insurers of recognized financial responsibility against such losses and
risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
subsidiaries are engaged. Neither the Company nor any such subsidiary has
been refused any insurance coverage sought or applied for and neither the
Company nor any such subsidiary has any reason to believe that it will not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not materially and
adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and its subsidiaries, taken as a
whole.
q. Regulatory Permits. The Company and its subsidiaries possess all
-------------------
material certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, and neither the Company nor any such subsidiary has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.
r. Internal Accounting Controls. The Company and each of its
------------------------------
subsidiaries maintain a system of internal accounting controls sufficient
to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to maintain asset accountability, and (iii) the recorded amounts for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
s. No Material Adverse Breaches, etc. Except as set forth in the SEC
----------------------------------
Documents, neither the Company nor any of its subsidiaries is subject to
any charter, corporate or other legal restriction, or any judgment, decree,
order, rule or regulation which in the judgment of the Company's officers
has or is expected in the future to have a material adverse effect on the
business, properties, operations, financial condition, results of
operations or prospects of the Company or its subsidiaries. Except as set
forth in the SEC Documents, neither the Company nor any of its subsidiaries
is in breach of any contract or agreement which breach, in the judgment of
the Company's officers, has or is expected to have a material adverse
effect on the business, properties, operations, financial condition,
results of operations or prospects of the Company or its subsidiaries.
t. Tax Status. Except as set forth in the SEC Documents, the Company
-----------
and each of its subsidiaries has made and filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject and (unless and only to the extent that
the Company and each of its subsidiaries has set aside on its books
provisions reasonably adequate for the payment of all unpaid and unreported
taxes) has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and
has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and
the officers of the Company know of no basis for any such claim.
u. Certain Transactions. Except as set forth in the SEC Documents, and
--------------------
except for arm's length transactions pursuant to which the Company makes
payments in the ordinary course of business upon terms no less favorable
than the Company could obtain from third parties and other than the grant
of stock options disclosed in the SEC Documents, none of the officers,
directors, or employees of the Company is presently a party to any
transaction with the Company (other than for services as employees,
officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other
entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.
v. Fees and Rights of First Refusal. The Company is not obligated to
--------------------------------
offer the securities offered hereunder on a right of first refusal basis or
otherwise to any third parties including, but not limited to, current or
former shareholders of the Company, underwriters, brokers, agents or other
third parties.
42. COVENANTS.
---------
a. Best Efforts. Each party shall use its best efforts timely to
-------------
satisfy each of the conditions to be satisfied by it as provided in
Sections 6 and 7 of this Agreement.
b. Form D. The Company agrees to file a Form D with respect to the
-------
Conversion Shares as required under Regulation D and to provide a copy
thereof to each Buyer promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Conversion Shares, or obtain an
exemption for the Conversion Shares for sale to the Buyers at the Closing
pursuant to this Agreement under applicable securities or "Blue Sky" laws
of the states of the United States, and shall provide evidence of any such
action so taken to the Buyers on or prior to the Closing Date.
c. Reporting Status. Until the earlier of (i) the date as of which the
----------------
Buyer(s) may sell all of the Conversion Shares without restriction pursuant
to Rule 144(k) promulgated under the 1933 Act (or successor thereto), or
(ii) the date on which (A) the Buyer(s) shall have sold all the Conversion
Shares and (B) none of the Convertible Debentures are outstanding (the
"Registration Period"), the Company shall file in a timely manner all
--------------------
reports required to be filed with the SEC pursuant to the 1934 Act and the
regulations of the SEC thereunder, and the Company shall not terminate its
status as an issuer required to file reports under the 1934 Act even if the
1934 Act or the rules and regulations thereunder would otherwise permit
such termination.
d. Use of Proceeds. The Company will use the proceeds from the sale of
---------------
the Convertible Debentures for general corporate and working capital
purposes.
e. Reservation of Shares. The Company shall take all action reasonably
---------------------
necessary to at all times have authorized, and reserved for the purpose of
issuance, such number of shares of Common Stock as shall be necessary to
effect the issuance of the Conversion Shares. If at any time the Company
does not have available such shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all of the Conversion Shares
of the Company shall call and hold a special meeting of the shareholders
within thirty (30) days of such occurrence, for the sole purpose of
increasing the number of shares authorized. The Company's management shall
recommend to the shareholders to vote in favor of increasing the number of
shares of Common Stock authorized. Management shall also vote all of its
shares in favor of increasing the number of authorized shares of Common
Stock.
f. Listings or Quotation. The Company shall promptly secure the
-----------------------
listing or quotation of the Conversion Shares upon each national securities
exchange, automated quotation system or The National Association of
Securities Dealers Inc.'s Over-The-Counter Bulletin Board ("OTCBB") or
-----
other market, if any, upon which shares of Common Stock are then listed or
quoted (subject to official notice of issuance) and shall use its best
efforts to maintain, so long as any other shares of Common Stock shall be
so listed, such listing of all Conversion Shares from time to time issuable
under the terms of this Agreement. The Company shall maintain the Common
Stock's authorization for quotation on the OTCBB.
g. Fees and Expenses. Each of the Company and the Buyer(s) shall pay
all costs and expenses incurred by such party in connection with the
negotiation, investigation, preparation, execution and delivery of this
Agreement, the Escrow Agreement, the Investor Registration Rights
Agreement, the Security Agreement and the Irrevocable Transfer Agent
Instructions. The Buyer(s) shall be entitled to a ten percent (10%)
discount on the Purchase Price.
h. The costs and expenses of the Buyer(s) and the structuring fee of
Yorkville Advisors Management, LLC of Fifteen Thousand Dollars ($15,000)
shall be paid directly from the proceeds of the First Closing and the
retainer of Xxxxxxxxxxx & Xxxxxxxx LLP of Twenty Five Thousand Dollars
($25,000), of which Twelve Thousand Five Hundred Dollars ($12,500) shall be
paid for by the Company directly form the gross proceeds of the First
Closing and Twelve Thousand Five Hundred Dollars ($12,500) shall be paid
for by the Company directly from the gross proceeds of the Second Closing.
i. Corporate Existence. So long as any of the Convertible Debentures
--------------------
remain outstanding, the Company shall not directly or indirectly consummate
any merger, reorganization, restructuring, reverse stock split
consolidation, sale of all or substantially all of the Company's assets or
any similar transaction or related transactions (each such transaction, an
"Organizational Change") unless, prior to the consummation an
----------------------
Organizational Change, the Company obtains the written consent of each
Buyer. In any such case, the Company will make appropriate provision with
respect to such holders' rights and interests to insure that the provisions
of this Section 4(h) will thereafter be applicable to the Convertible
Debentures.
j. Transactions With Affiliates. So long as any Convertible Debentures
----------------------------
are outstanding, the Company shall not, and shall cause each of its
subsidiaries not to, enter into, amend, modify or supplement, or permit any
subsidiary to enter into, amend, modify or supplement any agreement,
transaction, commitment, or arrangement with any of its or any subsidiary's
officers, directors, person who were officers or directors at any time
during the previous two (2) years, stockholders who beneficially own five
percent (5%) or more of the Common Stock, or Affiliates (as defined below)
or with any individual related by blood, marriage, or adoption to any such
individual or with any entity in which any such entity or individual owns a
five percent (5%) or more beneficial interest (each a "Related Party"),
-------------
except for (a) customary employment arrangements and benefit programs on
reasonable terms, (b) any investment in an Affiliate of the Company, (c)
any agreement, transaction, commitment, or arrangement on an arms-length
basis on terms no less favorable than terms which would have been
obtainable from a person other than such Related Party, (d) any agreement
transaction, commitment, or arrangement which is approved by a majority of
the disinterested directors of the Company, for purposes hereof, any
director who is also an officer of the Company or any subsidiary of the
Company shall not be a disinterested director with respect to any such
agreement, transaction, commitment, or arrangement. "Affiliate" for
---------
purposes hereof means, with respect to any person or entity, another person
or entity that, directly or indirectly, (i) has a ten percent (10%) or more
equity interest in that person or entity, (ii) has ten percent (10%) or
more common ownership with that person or entity, (iii) controls that
person or entity, or (iv) shares common control with that person or entity.
"Control" or "controls" for purposes hereof means that a person or entity
------ --------
has the power, direct or indirect, to conduct or govern the policies of
another person or entity.
k. Transfer Agent. The Company covenants and agrees that, in the event
--------------
that the Company's agency relationship with the transfer agent should be
terminated for any reason prior to a date which is two (2) years after the
Closing Date, the Company shall immediately appoint a new transfer agent
and shall require that the new transfer agent execute and agree to be bound
by the terms of the Irrevocable Transfer Agent Instructions (as defined
herein).
l. Restriction on Issuance of the Capital Stock. So long as any
--------------------------------------------------
Convertible Debentures are outstanding, the Company shall not, without the
prior written consent of the Buyer(s), issue or sell shares of Common Stock
or Preferred Stock (i) without consideration or for a consideration per
share less than the Bid Price of the Common Stock determined immediately
prior to its issuance, (ii) issue any warrant, option, right, contract,
call, or other security instrument granting the holder thereof, the right
to acquire Common Stock without consideration or for a consideration less
than such Common Stock's Bid Price value determined immediately prior to
it's issuance, (iii) enter into any security instrument granting the holder
a security interest in any and all assets of the Company, or (iv) file any
registration statement on Form S-8.
43. TRANSFER AGENT INSTRUCTIONS.
-----------------------------
The Company shall issue the Irrevocable Transfer Agent Instructions to its
transfer agent irrevocably appointing Xxxxx Xxxxxxxx, Esq. as its agent for
purpose of having certificates issued, registered in the name of the Buyer(s) or
its respective nominee(s), for the Conversion Shares representing such amounts
of Convertible Debentures as specified from time to time by the Buyer(s) to the
Company upon conversion of the Convertible Debentures, for interest owed
pursuant to the Convertible Debenture, and for any and all Liquidated Damages
(as this term is defined in the Investor Registration Rights Agreement).
Yorkville Advisors Management, LLC shall be paid a cash fee of Fifty Dollars
($50) for every occasion they act pursuant to the Irrevocable Transfer Agent
Instructions. The Company shall not change its transfer agent without the
express written consent of the Buyer(s), which may be withheld by the Buyer(s)
in its sole discretion. Prior to registration of the Conversion Shares under
the 1933 Act, all such certificates shall bear the restrictive legend specified
in Section 2(g) of this Agreement. The Company warrants that no instruction
other than the Irrevocable Transfer Agent Instructions referred to in this
Section 5, and stop transfer instructions to give effect to Section 2(g) hereof
(in the case of the Conversion Shares prior to registration of such shares under
the 0000 Xxx) will be given by the Company to its transfer agent and that the
Conversion Shares shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement and the
Investor Registration Rights Agreement. Nothing in this Section 5 shall affect
in any way the Buyer's obligations and agreement to comply with all applicable
securities laws upon resale of Conversion Shares. If the Buyer(s) provides the
Company with an opinion of counsel, in form, scope and substance customary for
opinions of counsel in comparable transactions to the effect that registration
of a resale by the Buyer(s) of any of the Conversion Shares is not required
under the 1933 Act, the Company shall within two (2) business days instruct its
transfer agent to issue one or more certificates in such name and in such
denominations as specified by the Buyer. The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the Buyer by
vitiating the intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section 5 will be inadequate and agrees, in the event of
a breach or threatened breach by the Company of the provisions of this Section
5, that the Buyer(s) shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach and requiring immediate
issuance and transfer, without the necessity of showing economic loss and
without any bond or other security being required.
44. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
----------------------------------------------------
The obligation of the Company hereunder to issue and sell the Convertible
Debentures to the Buyer(s) at the Closings is subject to the satisfaction, at or
before the Closing Dates, of each of the following conditions, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion:
a. Each Buyer shall have executed this Agreement, the Security
Agreement, the Escrow Agreement and the Investor Registration Rights
Agreement and the Irrevocable Transfer Agent Instructions and delivered the
same to the Company.
b. The Buyer(s) shall have delivered to the Escrow Agent the Purchase
Price for Convertible Debentures in respective amounts as set forth next to
each Buyer as outlined on Schedule I attached hereto and the Escrow Agent
shall have delivered the net proceeds to the Company by wire transfer of
immediately available U.S. funds pursuant to the wire instructions provided
by the Company.
c. The representations and warranties of the Buyer(s) shall be true
and correct in all material respects as of the date when made and as of the
Closing Dates as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyer(s) shall have
performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Buyer(s) at or prior to the
Closing Dates.
d. The Company shall have filed a form UCC-1 with regard to the
Pledged Property and Pledged Collateral as detailed in the Security
Agreement dated the date hereof and provided proof of such filing to the
Buyer(s).
45. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
------------------------------------------------------
The obligation of the Buyer(s) hereunder to purchase the Convertible
Debentures at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions:
a. The Company shall have executed this Agreement, the Security
Agreement, the Convertible Debenture, the Escrow Agreement, the Irrevocable
Transfer Instructions and the Investor Registration Rights Agreement, and
delivered the same to the Buyer(s).
b. The Common Stock shall be authorized for quotation on the OTCBB,
trading in the Common Stock shall not have been suspended for any reason
and all of the Conversion Shares issuable upon conversion of the
Convertible Debentures shall be approved the OTCBB.
c. The representations and warranties of the Company shall be true and
correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in
Section 3 above, in which case, such representations and warranties shall
be true and correct without further qualification) as of the date when made
and as of the Closing Dates as though made at that time (except for
representations and warranties that speak as of a specific date) and the
Company shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or
prior to the Closing Dates. If requested by the Buyer, the Buyer shall have
received a certificate, executed by the President of the Company, dated as
of the Closing Dates, to the foregoing effect and as to such other matters
as may be reasonably requested by the Buyer including, without limitation
an update as of the Closing Dates regarding the representation contained in
Section 3(c) above.
d. The Company shall have executed and delivered to the Buyer(s) the
Convertible Debentures in the respective amounts set forth opposite each
Buyer(s) name on Schedule I attached hereto.
e. The Buyer(s) shall have received an opinion of counsel from counsel
to the Company in a form satisfactory to the Buyer(s).
f. The Company shall have provided to the Buyer(s) a certificate of
good standing from the secretary of state from the state in which the
company is incorporated.
g. As of the Closing Date, the Company shall have reserved out of its
authorized and unissued Common Stock, solely for the purpose of effecting
the conversion of the Convertible Debentures, shares of Common Stock to
effect the conversion of all of the Conversion Shares then outstanding.
h. The Irrevocable Transfer Agent Instructions, in form and substance
satisfactory to the Buyer, shall have been delivered to and acknowledged in
writing by the Company's transfer agent.
i. The Company shall have provided to the Buyer an acknowledgement, to
the satisfaction of the Buyer, from Xxxxxxxx & Xxxxxxx, X.X. as to its
ability to provide all consents required in order to file a registration
statement in connection with this transaction.
j. The Company shall have filed a form UCC-1 or such other forms as
may be required to perfect the Buyer's interest in the Pledged Property and
Pledged Collateral as detailed in the Security Agreement dated the date
hereof and provided proof of such filing to the Buyer(s).
46. INDEMNIFICATION.
---------------
a. In consideration of the Buyer's execution and delivery of this
Agreement and acquiring the Convertible Debentures and the Conversion
Shares hereunder, and in addition to all of the Company's other obligations
under this Agreement, the Company shall defend, protect, indemnify and hold
harmless the Buyer(s) and each other holder of the Convertible Debentures
and the Conversion Shares, and all of their officers, directors, employees
and agents (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"Buyer Indemnitees") from and against any and all actions, causes of
------------------
action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any
such Buyer Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and
disbursements (the "Indemnified Liabilities"), incurred by the Buyer
------------------------
Indemnitees or any of them as a result of, or arising out of, or relating
to (a) any misrepresentation or breach of any representation or warranty
made by the Company in this Agreement, the Convertible Debentures or the
Investor Registration Rights Agreement or any other certificate, instrument
or document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in this Agreement, or the
Investor Registration Rights Agreement or any other certificate, instrument
or document contemplated hereby or thereby, or (c) any cause of action,
suit or claim brought or made against such Indemnitee and arising out of or
resulting from the execution, delivery, performance or enforcement of this
Agreement or any other instrument, document or agreement executed pursuant
hereto by any of the Indemnities, any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of
the issuance of the Convertible Debentures or the status of the Buyer or
holder of the Convertible Debentures the Conversion Shares, as a Buyer of
Convertible Debentures in the Company. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities, which is permissible under applicable law.
b. In consideration of the Company's execution and delivery of this
Agreement, and in addition to all of the Buyer's other obligations under
this Agreement, the Buyer shall defend, protect, indemnify and hold
harmless the Company and all of its officers, directors, employees and
agents (including, without limitation, those retained in connection with
the transactions contemplated by this Agreement) (collectively, the
"Company Indemnitees") from and against any and all Indemnified Liabilities
-------------------
incurred by the Indemnitees or any of them as a result of, or arising out
of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Buyer(s) in this Agreement,
instrument or document contemplated hereby or thereby executed by the
Buyer, (b) any breach of any covenant, agreement or obligation of the
Buyer(s) contained in this Agreement, the Investor Registration Rights
Agreement or any other certificate, instrument or document contemplated
hereby or thereby executed by the Buyer, or (c) any cause of action, suit
or claim brought or made against such Company Indemnitee based on material
misrepresentations or due to a material breach and arising out of or
resulting from the execution, delivery, performance or enforcement of this
Agreement, the Investor Registration Rights Agreement or any other
instrument, document or agreement executed pursuant hereto by any of the
Company Indemnities. To the extent that the foregoing undertaking by each
Buyer may be unenforceable for any reason, each Buyer shall make the
maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities, which is permissible under applicable law.
47. GOVERNING LAW: MISCELLANEOUS.
------------------------------
a. Governing Law. This Agreement shall be governed by and interpreted
-------------
in accordance with the laws of the State of Nevada without regard to the
principles of conflict of laws. The parties further agree that any action
between them shall be heard in Xxxxxx County, New Jersey, and expressly
consent to the jurisdiction and venue of the Superior Court of New Jersey,
sitting in Xxxxxx County and the United States District Court for the
District of New Jersey sitting in Newark, New Jersey for the adjudication
of any civil action asserted pursuant to this Paragraph.
b. Counterparts. This Agreement may be executed in two or more
------------
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party. In the event any signature
page is delivered by facsimile transmission, the party using such means of
delivery shall cause four (4) additional original executed signature pages
to be physically delivered to the other party within five (5) days of the
execution and delivery hereof.
c. Headings. The headings of this Agreement are for convenience of
-------
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be invalid
------------
or unenforceable in any jurisdiction, such invalidity or unenforceability
shall not affect the validity or enforceability of the remainder of this
Agreement in that jurisdiction or the validity or enforceability of any
provision of this Agreement in any other jurisdiction.
e. Entire Agreement, Amendments. This Agreement supersedes all other
-----------------------------
prior oral or written agreements between the Buyer(s), the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No
provision of this Agreement may be waived or amended other than by an
instrument in writing signed by the party to be charged with enforcement.
f. Notices. Any notices, consents, waivers, or other communications
-------
required or permitted to be given under the terms of this Agreement must be
in writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon confirmation of receipt, when sent by
facsimile; (iii) three (3) days after being sent by U.S. certified mail,
return receipt requested, or (iv) one (1) day after deposit with a
nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be:
If to the Company, to: Falcon Natural Gas Corporation
Westchase Center
0000 Xxxxxxxx Xxxx - Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Massimiliano Pozzoni
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx - Xxxxx 0000
Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Transfer Agent, to: Pacific Stock Transfer Company
000 Xxxx Xxxx Xxxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Attention: Xx. Xxxxx Xxxxxxx
Telephone:
Facsimile:
With Copy to: Xxxxx Xxxxxxxx, Esq.
000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Buyer(s), to its address and facsimile number on Schedule I, with
copies to the Buyer's counsel as set forth on Schedule I. Each party shall
provide five (5) days' prior written notice to the other party of any change in
address or facsimile number.
g. Successors and Assigns. This Agreement shall be binding upon and
------------------------
inure to the benefit of the parties and their respective successors and
assigns. Neither the Company nor any Buyer shall assign this Agreement or
any rights or obligations hereunder without the prior written consent of
the other party hereto.
h. No Third Party Beneficiaries. This Agreement is intended for the
------------------------------
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
i. Survival. Unless this Agreement is terminated under Section 9(l),
-------
the representations and warranties of the Company and the Buyer(s)
contained in Sections 2 and 3, the agreements and covenants set forth in
Sections 4, 5 and 9, and the indemnification provisions set forth in
Section 8, shall survive the Closing for a period of two (2) years
following the date on which the Convertible Debentures are converted in
full. The Buyer(s) shall be responsible only for its own representations,
warranties, agreements and covenants hereunder.
j. Publicity. The Company and the Buyer(s) shall have the right to
---------
approve, before issuance any press release or any other public statement
with respect to the transactions contemplated hereby made by any party;
provided, however, that the Company shall be entitled, without the prior
approval of the Buyer(s), to issue any press release or other public
disclosure with respect to such transactions required under applicable
securities or other laws or regulations (the Company shall use its best
efforts to consult the Buyer(s) in connection with any such press release
or other public disclosure prior to its release and Buyer(s) shall be
provided with a copy thereof upon release thereof).
k. Further Assurances. Each party shall do and perform, or cause to be
------------------
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. Termination. In the event that the Closing shall not have occurred
-----------
with respect to the Buyers on or before five (5) business days from the
date hereof due to the Company's or the Buyer's failure to satisfy the
conditions set forth in Sections 6 and 7 above (and the non-breaching
party's failure to waive such unsatisfied condition(s)), the non-breaching
party shall have the option to terminate this Agreement with respect to
such breaching party at the close of business on such date without
liability of any party to any other party; provided, however, that if this
Agreement is terminated by the Company pursuant to this Section 9(l), the
Company shall remain obligated to reimburse the Buyer(s) for the fees and
expenses of Yorkville Advisors Management, LLC described in Section 4
above.
m. No Strict Construction. The language used in this Agreement will be
----------------------
deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any
party.
IN WITNESS WHEREOF, the Buyers and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.
COMPANY:
FALCON NATURAL GAS CORPORATION
By: /s/Massimiliano Pozzoni
-----------------------
Name: Massimiliano Pozzoni
Title: Vice-President
EXHIBIT A
FORM OF INVESTOR REGISTRATION RIGHTS AGREEMENT
----------------------------------------------
EXHIBIT B
FORM OF ESCROW AGREEMENT
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EXHIBIT C
TRANSFER AGENT INSTRUCTIONS
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SCHEDULE I
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SCHEDULE OF BUYERS
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ADDRESS/FACSIMILE AMOUNT OF
NAME SIGNATURE NUMBER OF BUYER SUBSCRIPTION
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Cornell Capital Partners, LP By: Yorkville Advisors, LLC 000 Xxxxxx Xxxxxx - Xxxxx 0000 $ 1,000,000
Its: General Partner Xxxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
Its: Portfolio Manager
With a copy to: Xxxxx Xxxxxxxx, Esq. 000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
