SECURITIES PURCHASE AGREEMENT
This
Securities Purchase Agreement (this “Agreement”)
is
dated as of August __, 2006, by and among Oxford Media, Inc., a Nevada
corporation (the “Company”),
and
PALISADES MASTER FUND LP ( including its successors and assigns, the
“Purchaser”).
WHEREAS,
the Company and the Purchaser are parties to that certain Bridge Loan Agreement
dated in February 2006 (the “Bridge Loan Agreement”);
WHEREAS,
in connection with the Bridge Loan Agreement, the Company issued its promissory
note in the principal amount of $1,666,667.00 in favor of the Purchaser (the
“Note”);
WHEREAS,
the Company and the Purchaser are parties to a certain Extension Agreement
dated
July 20, 2006 (the “Extension Agreement”), pursuant to which Purchaser extended
the Due Date (as defined in the “Extension Agreement”) on (i) $666,667 of
principal amount of the Note, (ii) plus interest due on the Note, and (iii)
$16,667.68 of liquidated damages (the “Extended Note”);
WHEREAS,
the balance of the Note was exchanged for a new note pursuant to the Exchange
Agreement (as hereinafter defined);
WHEREAS,
the Company and the Purchaser are parties to that certain Exchange Agreement
dated June 30, 2006, pursuant to which the Purchaser exchanged a $1,000,000.00
principal amount note and $3,836.00 of accrued interest, for a $1,003,836.00
principal amount new promissory note (the “New Note”);
WHEAREAS,
payment on all amounts owing under the Extended Note and the New Note are due;
WHEREAS,
the Company issued Purchaser 2,500,000 shares of the Company’s common stock (the
“Purchaser’s Common Stock”);
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant
to
Section 4(2) of the Securities Act (as defined below), and Rule 506 promulgated
thereunder, the Company desires to issue and sell to the Purchaser, and the
Purchaser desires to purchase from the Company in the aggregate $3,857,087
of
Preferred Stock on the Closing Date;
WHEREAS,
the Purchase shall pay the purchase price of the Preferred Stock by delivering
the Extended Note, the New Note and the Purchaser’s Common Stock.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and each Purchaser agree as
follows:
ARTICLE
I
DEFINITIONS
1.1
Definitions.
In
addition to the terms defined elsewhere in this Agreement: (a) capitalized
terms
that are not otherwise defined herein have the meanings given to such terms
in
the Certificate of Designation (as defined herein), and (b) the following terms
have the meanings indicated in this Section 1.1:
“Action”
shall
have the meaning ascribed to such term in Section 3.1(j).
“Actual
Minimum”
means,
as of any date, the maximum aggregate number of shares of Common Stock then
issued or potentially issuable in the future pursuant to the Transaction
Documents, including any Underlying Shares issuable upon conversion in full
of
all shares of Preferred Stock, ignoring any conversion or exercise limits set
forth therein, and assuming that any previously unconverted shares of Preferred
Stock are held until the fifth anniversary of the Closing Date and all dividends
are paid in shares of Common Stock until such third anniversary, subject to
the
limitation on the number of shares of Common Stock issuable hereunder set forth
in Section 5(a)(iii) of the Certificate of Designation.
“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 such
terms are used in and construed under Rule 144 under the Securities Act. With
respect to a Purchaser, any investment fund or managed account that is managed
on a discretionary basis by the same investment manager as such Purchaser will
be deemed to be an Affiliate of such Purchaser.
“Certificate
of Designation”
means
the Certificate of Designation to be filed prior to the Closing by the Company
with the Secretary of State of Nevada, in the form of Exhibit
A
attached
hereto.
“Closing”
means
the closing of the purchase and sale of the Securities pursuant to Section
2.1.
“Closing
Date”
means
the Trading Day when all of the Transaction Documents have been executed and
delivered by the applicable parties thereto, and all conditions precedent to
(i)
each Purchaser’s obligations to pay the Subscription Amount have been satisfied
or waived (ii) and the Company’s obligations to deliver the Securities have been
satisfied or waived.
“Commission”
means
the Securities and Exchange Commission.
“Common
Stock”
means
the common stock of the Company, par value $0.001 per share, and any securities
into which such common stock shall hereinafter been reclassified
into.
“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.
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“Company
Counsel”
means
Spectrum Law Group, LLP
“Disclosure
Schedules”
means
the Disclosure Schedules of the Company delivered concurrently
herewith.
“Discussion
Time”
shall
mean 9 P.M. (New York Time) on such calendar day when the Purchaser was first
contacted regarding an investment in the Company.
“Effective
Date”
means
the date that the Registration Statement is first declared effective by the
Commission.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Exempt
Issuance”
means
the issuance of (a) shares of Common Stock or options to employees, officers
or
directors of the Company pursuant to any stock or option plan duly adopted
by a
majority of the members of the Board of Directors of the Company or a majority
of the members of a committee of directors established for such purpose, (b)
securities upon the exercise of or conversion of any securities issued
hereunder, convertible securities, options or warrants issued and outstanding
on
the date of this Agreement, provided that such securities have not been amended
since the date of this Agreement to increase the number of such securities
and
(c) securities issued pursuant to acquisitions or strategic transactions,
provided any such issuance shall only be to a Person which is, itself or through
its subsidiaries, an operating company in a business synergistic with the
business of the Company and in which the Company receives benefits in addition
to the investment of funds, but shall not include a transaction in which the
Company is issuing securities primarily for the purpose of raising capital
or to
an entity whose primary business is investing in securities.
“GAAP”
shall
have the meaning ascribed to such term in Section 3.1(h).
“Liens”
means
a
lien, charge, security interest, encumbrance, right of first refusal, preemptive
right or other restriction.
“Losses”
means
any and all losses, claims, damages, liabilities, settlement costs and expenses,
including without limitation costs of preparation and reasonable attorneys'
fees.
“Majority
in Interest”
shall
mean, at any time of determination, the majority in interest (based on
then-outstanding Stated Value amounts of Preferred Stock at the time of such
determination) of the Purchasers.
“Market
Price”
shall
mean the average of the 10 VWAPs immediately prior to the date in
question.
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“Material
Adverse Effect”
shall
have the meaning assigned to such term in Section 3.1(b).
“Material
Permits”
shall
have the meaning ascribed to such term in Section 3.1(m).
“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.
“Preferred
Stock”
means
the 3,857 shares of the Company’s Series B Convertible Preferred Stock issued
hereunder having the rights, preferences and privileges set forth in the
Certificate of Designation.
“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Registration
Rights Agreement”
means
the Registration Rights Agreement, dated the date hereof, among the Company
and
the Purchaser, in the form of Exhibit
B.
“Registration
Statement”
means
a
registration statement meeting the requirements set forth in the Registration
Rights Agreement and covering the resale by the Purchasers of the Underlying
Shares.
“Required
Approvals”
shall
have the meaning ascribed to such term in Section 3.1(e).
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
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
such
Rule.
“SEC
Reports”
shall
have the meaning ascribed to such term in Section 3.1(h).
“Securities”
means
the Preferred Stock and the Underlying Shares.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Set
Price”
shall
have the meaning ascribed to such term in the Certificate of
Designations.
“Shareholder
Approval”
means
such approval as may be required by the applicable rules and regulations of
the
Trading Market (or any successor entity) from the shareholders of the Company
with respect to the transactions contemplated by the Transaction Documents,
including the issuance of all of the Underlying Shares in excess of 19.9% of
the
Company’s issued and outstanding Common Stock on the Closing Date.
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“Short
Sales”
shall
include, without limitation, all “short sales” as defined in Rule 3b-3 of the
Exchange Act.
“Stated
Value”
means
$1,000 per share of Preferred Stock.
“Subscription
Amount”
shall
mean $3,857,087, which the Purchaser shall pay by delivering to the Company
the
Extended Note, the new Note and the Purchaser’s Common Stock.
“Subsidiary”
means
any subsidiary of the Company that is required to be listed in Schedule
3.1(a).
“Trading
Day”
means
any day during which the Trading Market shall be open for business.
“Trading
Market”
means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: OTC Bulletin Board, the American Stock
Exchange, the New York Stock Exchange, the Nasdaq National Market or the Nasdaq
SmallCap Market.
“Transaction
Documents”
means
this Agreement, the Certificate of Designation, the Registration Rights
Agreement and any other documents or agreements executed in connection with
the
transactions contemplated hereunder.
“Underlying
Shares”
means
the shares of Common Stock issuable upon conversion of the Preferred Stock
and
issued and issuable in lieu of the cash payment of dividends on the Preferred
Stock.
“VWAP”
means,
for any date, the price determined by the first of the following clauses that
applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
the daily volume weighted average price of the Common Stock for such date (or
the nearest preceding date) on the Trading Market on which the Common Stock
is
then listed or quoted as reported by Bloomberg Financial L.P. (based on a
Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time); (b) if
the Common Stock is not then listed or quoted on a Trading Market and if prices
for the Common Stock are then quoted on the OTC Bulletin Board, the volume
weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then
listed or quoted on the OTC Bulletin Board and if prices for the Common Stock
are then reported in the “Pink Sheets” published by the National Quotation
Bureau Incorporated (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent bid price per share of the
Common Stock so reported; or (c) in all other cases, the fair market value
of a share of Common Stock as determined by an independent appraiser selected
in
good faith by the Purchasers and reasonably acceptable to the
Company.
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ARTICLE
II
PURCHASE
AND SALE
2.1
Closing.
On the
Closing Date, the Purchaser shall purchase from the Company and the Company
shall issue and sell to the Purchaser, (a) shares of Preferred Stock with an
aggregate Stated Value equal to such Purchaser’s Subscription Amount. The
aggregate number of shares of Preferred Stock sold hereunder shall be 3,857.
The
purchase price of the Preferred Stock sold hereunder shall be paid by the
Purchaser delivering to the Company the New Note, the Extended Note and the
Purchaser’s Common Stock. Upon satisfaction of the conditions set forth in
Section 2.2, the Closing shall occur at the offices of Sichenzia Xxxx Xxxxxxxx
Xxxxxxx LLP or such other location as the parties shall mutually
agree.
2.2
Conditions
to Closing
.
The
Closing is subject to the satisfaction or waiver by the party to be benefited
thereby of the following conditions:
(a) The
Company shall have delivered or caused to be delivered to each Purchaser the
following:
(i) this
Agreement duly executed by the Company;
(ii) a
certificate evidencing a number of shares of Preferred Stock equal to the
Purchaser’s Subscription Amount divided by the Stated Value, registered in the
name of such Purchaser;
(iii)
a
legal
opinion of Company Counsel, in the form of Exhibit
D
attached
hereto, addressed to each Purchaser;
(iv)
the
Registration Rights Agreement duly executed by the Company;
(v)
a
certificate, signed by the Secretary of the Company, attaching (i) the
charter
and By-Laws of the Company, and (ii) resolutions passed by its Board of
Directors to authorize the transactions contemplated hereby and by the
other
Transaction Documents, and certifying that such documents are true and
complete
copies of the originals and that such resolutions have not been amended
or
superseded, it being understood that such Purchaser may rely on such certificate
as a representation and warranty of the Company made
herein;
(vi)
the
Certificate of Designation executed by the Company and accepted by the
Secretary
of State of Nevada;
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(ix)
a
certificate, signed by the Chief Executive Officer of the Company, certifying
that the conditions specified in this Section have been fulfilled as of the
Closing, it being understood that the Purchaser may rely on such certificate
as
though it were a representation and warranty of the Company made
herein;
and
(x)
a
copy of
Press Release or Current Report on Form 8-K describing the Transaction
Documents.
(b)
At
the
Closing, the Purchaser shall have delivered or caused to be delivered to the
Company the following:
(i) this
Agreement duly executed by the Purchaser;
(ii) the
Subscription Amount, which is payable in full by delivering the New Note, the
Extended Note and the Purchaser’s Common Stock to the Company; and
(iii)
the
Registration Rights Agreement duly executed by the Purchaser, including
questionnaire.
(iv)
the Extended Note;
(v)
the New Note;
and
(vi)
the Purchaser’s
Common Stock.
(c)
All
representations and warranties of the other party contained herein shall remain
true and correct as of the Closing Date and all covenants of the other party
shall have been performed if due prior to such date.
(d)
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), and, at any time prior to the Closing Date, trading in securities
generally as reported by Bloomberg Financial Markets shall not have been
suspended or limited, or minimum prices shall not have been established on
securities whose trades are reported by such service, or on any Trading Market,
nor shall a banking moratorium have been declared either by the United States
or
New York State authorities nor shall there have occurred any material outbreak
or escalation of hostilities or other national or international calamity of
such
magnitude in its effect on, or any material adverse change in, any financial
market which, in each case, in the reasonable judgment of each Purchaser, makes
it impracticable or inadvisable to purchase the shares of Preferred Stock at
the
Closing.
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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 which
Disclosure Schedules shall be deemed a part hereof, the Company hereby makes
the
representations and warranties set forth below to the Purchaser as of the date
of the Agreement:
(a)
Subsidiaries.
All of
the direct and indirect subsidiaries of the Company are set forth on
Schedule
3.1(a).
The
Company owns, directly or indirectly, all of the capital stock or other equity
interests of each Subsidiary free and clear of any Liens, and all the issued
and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities. If the Company has no subsidiaries, then
references in the Transaction Documents to the Subsidiaries will be
disregarded.
(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 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 or default 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 such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in (i) a material adverse effect on
the
legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business,
prospects 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”)
and no
Proceeding has been instituted in any such jurisdiction revoking, limiting
or
curtailing or seeking to revoke, limit or curtail such power and authority
or
qualification.
(c)
Authorization;
Enforcement.
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 hereunder or thereunder. The
execution and delivery of each of the Transaction Documents by the Company
and
the consummation by it of the transactions contemplated hereby or thereby have
been duly authorized by all necessary action on the part of the Company and
no
further consent or action is required by the Company other than Required
Approvals. Each of the Transaction Documents has been (or upon delivery will
be)
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
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally
and general principles of equity. Neither the Company nor any Subsidiary is
in
violation of any of the provisions of its respective certificate or articles
of
incorporation, by-laws or other organizational or charter documents except
where
such violation could not, individually or in the aggregate, constitute a
Material Adverse Effect.
-8-
(d)
No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by the Company,
the issuance and sale of the Securities and the consummation by the Company
of
the other 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, result in the
creation of any Lien upon any of the properties or assets of the Company or
any
Subsidiary, 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) subject to the Required Approvals,
conflict with or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company 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, or (iv) conflict with or violate
the terms of any agreement by which the Company or any Subsidiary is bound
or to
which any property or asset of the Company or any Subsidiary is bound or
affected; except in the case of each of clauses (ii) and (iii), such as could
not have or reasonably be expected to result in a Material Adverse
Effect.
(e)
Filings,
Consents and Approvals.
Neither
the Company nor any Subsidiary is 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
(i) the filings required under Section 4.9, (ii) the filing with the Commission
of the Registration Statement, (iii) the application(s) to each applicable
Trading Market for the listing of the Underlying Shares for trading thereon
in
the time and manner required thereby, (iv) the filing with the Commission of
a
Form D pursuant to Commission Regulation D, and (v) applicable Blue Sky filings
(collectively, the “Required
Approvals”).
(f)
Issuance
of the Securities.
The
Securities are duly authorized and, when issued and paid for in accordance
with
the applicable Transaction Documents, will be duly and validly issued, fully
paid and nonassessable, free and clear of all Liens. The Company has reserved
from its duly authorized capital stock a number of shares of Common Stock for
issuance of the Underlying Shares at least equal to the Actual Minimum on the
date hereof.
-9-
(g)
Capitalization.
Other
than as disclosed on Schedule 3.1(g), attached hereto and incorporated herein
by
reference: The capitalization of the Company is as described in the Company’s
most recent periodic report filed with the Commission. The Company has not
issued any capital stock since such filing other than pursuant to the exercise
of employee stock options under the Company’s stock option plans, the issuance
of shares of Common Stock to employees pursuant to the Company’s employee stock
purchase plan and pursuant to the conversion or exercise of outstanding Common
Stock Equivalents. 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 a result of the purchase
and sale of the Securities, there are no outstanding options, warrants, script
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, of Common Stock Equivalents. The
issuance 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 such
securities. All of the outstanding shares of capital stock of the Company are
validly issued, fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws, and none of such outstanding shares
was issued in violation of any preemptive rights or similar rights to subscribe
for or purchase securities. No further approval or authorization of any
stockholder, the Board of Directors of the Company or others is required for
the
issuance and sale of the shares of Preferred Stock. Except as disclosed in
the
SEC Reports, there are no stockholders agreements, voting agreements or other
similar agreements with respect to the Company’s capital stock to which the
Company is a party or, to the knowledge of the Company, between or among any
of
the Company’s stockholders.
(h)
SEC
Reports; Financial Statements.
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) thereof,
for the two years preceding the date hereof (or such shorter period as the
Company was required by law to file such material) (the foregoing materials,
including the exhibits thereto, being collectively referred to herein as the
“SEC
Reports”)
on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension. As
of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, 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. The financial statements of the Company included
in the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements have
been
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved
(“GAAP”),
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries 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,
immaterial, year-end audit adjustments.
-10-
(i) Material
Changes.
Since
the date of the latest audited financial statements included within the SEC
Reports, except as specifically disclosed herein or in the SEC Reports, (i)
there has been no event, occurrence or development that has had or that could
reasonably be expected to result in a Material Adverse Effect, (ii) the Company
has not incurred any liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected
in the Company's financial statements pursuant to GAAP or required to be
disclosed in filings made with the Commission, (iii) the Company has not altered
its method of accounting, (iv) the Company has not declared or made any dividend
or distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option plans.
The Company does not have pending before the Commission any request for
confidential treatment of information.
(j) Litigation.
There
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting
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
(i) adversely affects or challenges the legality, validity or enforceability
of
any of the Transaction Documents or the Securities or (ii) could, if there
were
an unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any Subsidiary, nor 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. There has not been, and to the knowledge of the
Company, 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.
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(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 reasonably
be
expected to 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 such 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 each case as could not have a Material Adverse Effect.
(m)
Regulatory
Permits.
The
Company and the Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in
the
SEC Reports, except where the failure to possess such permits could not,
individually or in the aggregate, have or reasonably be expected to result
in a
Material Adverse Effect (“Material
Permits”),
and
neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.
(n) Title
to Assets.
The
Company and the Subsidiaries have good and marketable title in fee simple to
all
real property owned by them that is material to the business of the Company
and
the Subsidiaries and good and marketable title in all personal property owned
by
them that is material to the business of the Company and the Subsidiaries,
in
each case free and clear of all Liens, except for Liens as do not materially
affect the value of such property and do not materially interfere with the
use
made and proposed to be made of such property by the Company and the
Subsidiaries and Liens for the payment of federal, state or other taxes, the
payment of which is neither delinquent nor subject to penalties. Any real
property and facilities held under lease by the Company and the Subsidiaries
are
held by them under valid, subsisting and enforceable leases of which the Company
and the Subsidiaries are in compliance.
(o)
Patents
and Trademarks.
The
Company and the Subsidiaries have, or have rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names,
copyrights, licenses and other similar rights that are necessary or material
for
use in connection with their respective businesses as described in the SEC
Reports and which the failure to so have could have a Material Adverse Effect
(collectively, the “Intellectual
Property Rights”).
Neither the Company nor any Subsidiary has received a written notice that the
Intellectual Property Rights used by the Company or any Subsidiary violates
or
infringes upon the rights of any Person. To the knowledge of the Company, all
such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights of
others.
-12-
(p)
Insurance.
The
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged. Directors and officers insurance coverage at least equal to the
aggregate Subscription Amount will be purchase with the proceeds from the
Closing no later than 30 days from the date of the Agreement. To the best of
Company’s knowledge, such insurance contracts and policies are accurate and
complete. 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 such
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.
Except
as set forth in the SEC Reports, 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 such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest
or
is an officer, director, trustee or partner, in each case in excess of $60,000
other than (i) for payment of salary or consulting fees for services rendered,
(ii) reimbursement for expenses incurred on behalf of the Company and (iii)
for
other employee benefits, including stock option agreements under any stock
option plan of the Company.
(r) Xxxxxxxx-Xxxxx;
Internal Accounting Controls.
The
Company is in material compliance with all provisions of the Xxxxxxxx-Xxxxx
Act
of 2002 which are applicable to it as of the Closing Date. The
Company and the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general
or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. The Company has established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and designed such 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 most recently
filed periodic report under the Exchange Act, as the case may be, is being
prepared. The Company's certifying officers have evaluated the effectiveness
of
the Company's controls and procedures as of the date prior to the filing date
of
the most recently filed periodic report under the Exchange Act (such date,
the
“Evaluation
Date”).
The
Company presented in its most recently filed periodic report under the Exchange
Act the conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no significant
changes in the Company's internal controls (as such term is defined in Item
307(b) of Regulation S-K under the Exchange Act) or, to the Company's knowledge,
in other factors that could significantly affect the Company's internal
controls.
-13-
(s)
Certain
Fees.
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.
Assuming the accuracy of the Purchaser’s 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 Purchaser as
contemplated hereby. The issuance and sale of the Securities hereunder does
not
contravene the rules and regulations of the Trading Market.
(u)
Investment
Company.
The
Company is not, and is not an Affiliate of, and immediately after receipt of
payment for the shares of Preferred Stock, will not be or be an Affiliate of,
an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended. The Company shall conduct its business in a manner so that it will
not become subject to the Investment Company Act.
(v)
Registration
Rights.
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’s Common Stock is registered pursuant to Section 12(g) of the Exchange
Act, and the Company has taken no action designed to, or which to its knowledge
is likely to have the effect of, terminating the registration of the Common
Stock under the Exchange Act nor has the Company received any notification
that
the Commission is contemplating terminating such registration. 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 such Trading Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements.
-14-
(x)
Application
of Takeover Protections.
The
Company and its Board of Directors have taken all necessary action, if any,
in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company's Certificate of
Incorporation (or similar charter documents) or the laws of its state of
incorporation that is or could become applicable to the Purchasers as a result
of the Purchasers and the Company fulfilling their obligations or exercising
their rights under the Transaction Documents, including without limitation
the
Company's issuance of the Securities and the Purchasers’ ownership of the
Securities.
(y)
Disclosure.
The
Company confirms that, neither the Company nor, to the best knowledge of the
Company any other Person acting on its behalf, has provided the Purchaser or
its
agents or counsel with any information that constitutes or might constitute
material, non-public information. The Company understands and confirms that
the
Purchaser will rely on the foregoing representations and covenants in effecting
transactions in securities of the Company. All disclosure provided to the
Purchaser regarding the Company, its business and the transactions contemplated
hereby, including the Schedules to this Agreement, furnished by or on behalf
of
the Company with respect to the representations and warranties made herein
are
true and correct with respect to such representations and warranties 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. The Company
acknowledges and agrees that the Purchaser does not make and has not made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 3.2
hereof.
(z)
No
Integrated Offering.
Neither
the Company, nor any of its Affiliates, nor any Person acting on its or their
behalf has, directly or indirectly, made any offers or sales 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 or which could violate any applicable
shareholder approval provisions, including, without limitation, under the rules
and regulations of the Trading Market.
(aa)
Solvency/Indebtedness.
Based
on the financial condition of the Company as of the Closing Date: (i) the fair
saleable market value of the Company’s assets exceeds the amount that will be
required to be paid on or in respect of the Company's existing debts and other
liabilities (including known contingent liabilities) as they mature; (ii) the
Company's assets do not constitute unreasonably small capital to carry on its
business for the current fiscal year as now conducted and as proposed to be
conducted including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected capital
requirements and capital availability thereof; and (iii) the current cash flow
of the Company, together with the proceeds the Company would receive, were
it to
liquidate all of its assets, after taking into account all anticipated uses
of
the cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid. The Company does not intend to incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its debt).
The
Company has no knowledge of any facts or circumstances which lead it to believe
that it will file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the Closing Date.
The SEC Reports set forth as of the dates thereof all outstanding secured and
unsecured Indebtedness of the Company or any Subsidiary, or for which the
Company or any Subsidiary has commitments. For the purposes of this Agreement,
“Indebtedness”
shall
mean (a) any liabilities for borrowed money or amounts owed in excess of $50,000
(other than trade accounts payable incurred in the ordinary course of business),
(b) all guaranties, endorsements and other contingent obligations in respect
of
Indebtedness of others, whether or not the same are or should be reflected
in
the Company's balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (c) the present value
of
any lease payments
in excess of $50,000 due under leases required to be capitalized in accordance
with GAAP. Neither
the Company nor any Subsidiary is in default with respect to any
Indebtedness.
-15-
(bb)
Tax
Status.
The
Company and each of its Subsidiaries has made or filed all federal, state and
foreign income and all other tax returns, reports and declarations required
by
any jurisdiction to which it is subject (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) and
has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside
on
its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due by
the
taxing authority of any jurisdiction, and the officers of the Company know
of no
basis for any such claim. The Company has not executed a waiver with respect
to
the statute of limitations relating to the assessment or collection of any
foreign, federal, statue or local tax. None of the Company’s tax returns is
presently being audited by any taxing authority.
(cc)
No
General Solicitation or Advertising in Regard to this
Transaction.
Neither
the Company nor, to the knowledge of the Company, any of its directors or
officers (i) has conducted or will conduct any general solicitation (as that
term is used in Rule 502(c) of Regulation D) or general advertising with respect
to the sale of the Preferred Stock, or (ii) made any offers or sales of any
security or solicited any offers to buy any security under any circumstances
that would require registration of the Preferred Stock, the Underlying Shares
under the Securities Act or made any “directed selling efforts” as defined in
Rule 902 of Regulation S.
(dd)
Foreign
Corrupt Practices.
Neither
the Company, nor to the knowledge of the Company, any agent or other person
acting on behalf of the Company, has (i) directly or indirectly, used any
corrupt funds for unlawful contributions, gifts, entertainment or other unlawful
expenses related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or
to
any foreign or domestic political parties or campaigns from corporate funds,
(iii) failed to disclose fully any contribution made by the Company (or made
by
any person acting on its behalf of which the Company is aware) which is in
violation of law, or (iv) violated in any material respect any provision of
the
Foreign Corrupt Practices Act of 1977, as amended.
-16-
(ee)
Acknowledgment
Regarding Purchasers’ Purchase of Securities.
The
Company acknowledges and agrees that the Purchaser is acting solely in the
capacity of arm’s length purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that the
Purchaser 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 statement made by the Purchaser or any of its
respective representatives or agents in connection with this Agreement and
the
transactions contemplated hereby is not advice or a recommendation and is merely
incidental to the Purchaser’s purchase of the Securities. The Company further
represents to each Purchaser that the Company’s decision to enter into this
Agreement has been based solely on the independent evaluation of the Company
and
its representatives.
(ff)
Seniority.
As of
the date of this Agreement, no other equity of the Company is senior to the
Preferred Stock in right of payment, whether with respect to interest or upon
liquidation or dissolution, or otherwise.
(gg)
Accountants.
The
Company’s accountants are set forth on Schedule 3.1(ff) of the Disclosure
Schedule. To the Company’s knowledge, such accountants, who expressed their
opinion with respect to the financial statements to be included in the Company’s
Annual Report on Form 10-KSB for the year ending December 31, 2005 are a
registered public accounting firm as required by the Securities
Act.
(hh)
No
Disagreements with Accountants and Lawyers.
There
are no disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the accountants and lawyers formerly or
presently employed by the Company and the Company is current with respect to
any
fees owed to its accountants and lawyers.
(ii)
Acknowledgement
Regarding Purchaser’s Trading Activity.
Anything in this Agreement or elsewhere herein to the contrary notwithstanding
(except for Section 4.16 hereof), it is understood and agreed by the Company
(i)
that the Purchaser has not been asked to agree, nor has the Purchaser agreed,
to
desist from purchasing or selling, long and/or short, securities of the Company,
or “derivative” securities based on securities issued by the Company or to hold
the Securities for any specified term; (ii) that past or future open market
or
other transactions by any Purchaser, including Short Sales, and specifically
including, without limitation, Short Sales or “derivative” transactions, before
or after the closing of this or future private placement transactions, may
negatively impact the market price of the Company’s publicly-traded securities;
(iii) that any Purchaser, and counter parties in “derivative” transactions to
which any such Purchaser is a party, directly or indirectly, presently may
have
a “short” position in the Common Stock, and (iv) that the Purchaser shall not be
deemed to have any affiliation with or control over any arm’s length
counter-party in any “derivative” transaction.
-17-
3.2
Representations
and Warranties of the Purchaser.
The
Purchaser hereby, represents and warrants as of the date hereof and as of the
Closing Date to the Company as follows:
(a)
Organization;
Authority.
The
Purchaser is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with full right,
corporate or partnership 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
such
Purchaser of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate or similar action on the part of such
Purchaser. Each Transaction Document to which it is a party has been duly
executed by such Purchaser, and when delivered by such Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding obligation
of such Purchaser, enforceable against it in accordance with its terms, except
(i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or
other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.
(b)
No
View to Distribute.
Such
Purchaser understands that the Securities are “restricted securities” and have
not been registered under the Securities Act or any applicable state securities
law and is acquiring the Securities as principal for its own account and not
with a view to or for distributing or reselling such Securities or any part
thereof, has no present intention of distributing any of such Securities and
has
no arrangement or understanding with any other persons regarding the
distribution of such Securities (this representation and warranty not limiting
such Purchaser’s right to sell the Securities pursuant to the Registration
Statement or otherwise in compliance with applicable federal and state
securities laws). Such Purchaser is acquiring the Securities hereunder in the
ordinary course of its business. Such Purchaser does not have any agreement
or
understanding, directly or indirectly, with any Person to distribute any of
the
Securities.
(c)
Purchaser
Status.
At the
time such Purchaser was offered the Securities, it was, and at the date hereof
it is either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2),
(a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified
institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such
Purchaser is not required to be registered as a broker-dealer under Section
15
of the Exchange Act.
-18-
(d)
Experience
of Such Purchaser.
Such
Purchaser, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters
so as
to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment.
Such Purchaser is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of such
investment.
(e)
General
Solicitation.
Such
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.
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.
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 or Rule 144, to the Company
or
to an Affiliate of a Purchaser 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 and reasonably
acceptable to the Company, the form and substance of which opinion and shall
be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Securities under the Securities
Act. As a condition of transfer, any such transferee shall agree in writing
to
be bound by the terms of this Agreement and shall have the rights of a Purchaser
under this Agreement and the Registration Rights Agreement.
(b)
Each
Purchaser agrees to the imprinting, so long as is required by this Section
4.1(b), of the following legend on any certificate evidencing Securities:
NEITHER
THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE 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
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER
LOAN SECURED BY SUCH SECURITIES.
-19-
The
Company acknowledges and agrees that the 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 who agrees to be bound by the provisions of this Agreement
and the Registration Rights Agreement and, if required under the terms of such
arrangement, such Purchaser may transfer pledged or secured Securities to the
pledgees or secured parties. Such 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. Further,
no
notice shall be required of such pledge. At the appropriate Purchaser’s expense,
the Company will execute and deliver such reasonable documentation as a pledgee
or secured party of Securities may reasonably request in connection with a
pledge or transfer of the Securities, including, if the Securities are subject
to registration pursuant to the Registration Rights Agreement, 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 Underlying Shares shall not contain any legend (including the legend
set forth in Section 4.1(b)): (i) while a registration statement (including
the
Registration Statement) covering the resale of such Underlying Shares is
effective under the Securities Act, or (ii) following any sale of such
Underlying Shares pursuant to Rule 144, or (iii) if such Securities are eligible
for sale under Rule 144(k), or (iv) if such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the Staff of the Commission).
The
Company shall cause its counsel to issue a legal opinion to the Company’s
transfer agent promptly after the Effective Date if required by the Company’s
transfer agent to effect the removal of the legend hereunder. If all or any
shares of Preferred Stock is converted or exercised (as applicable) at a time
when there is an effective registration statement to cover the resale of the
Underlying Shares, or if such Underlying Shares may be sold under Rule 144(k)
or
if such legend is not otherwise required under applicable requirements of the
Securities Act (including judicial interpretations thereof) then such Underlying
Shares shall be issued free of all legends. The Company agrees that following
the Effective Date or at such time as such 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 Securities issued with a restrictive legend (such
date,
the “Legend
Removal Date”),
deliver or cause to be delivered to such Purchaser a certificate representing
such Underlying Shares 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. Certificates for Securities subject to legend removal
hereunder shall be transmitted by the transfer agent of the Company to the
Purchaser by crediting the account of the Purchaser’s prime broker with the
Depository Trust Company System.
-20-
(d)
In
addition to such Purchaser’s other available remedies, the Company shall pay to
a Purchaser, in cash, as partial liquidated damages and not as a penalty, for
each $1,000 of Underlying Shares (based on the VWAP on the date such Securities
are submitted to the Company’s transfer agent) delivered for removal of the
restrictive legend and subject to this Section 4.1(c), $10 per Trading Day
(increasing to $20 per Trading Day five (5) Trading Days after such damages
have
begun to accrue) for each Trading Day after the Legend Removal Date until such
certificate is delivered. Nothing herein shall limit such Purchaser’s right to
pursue actual damages for the Company’s failure to deliver certificates
representing any Securities as required by the Transaction Documents, and such
Purchaser shall have the right to pursue all remedies available to it at law
or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief.
(e)
Each
Purchaser, severally and not jointly with the other Purchasers, 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 that the
Purchaser will sell any Securities pursuant to either the registration
requirements of the Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom.
(f)
Until
the
date that each Purchaser holds less than 20% of the shares of Preferred Stock
initially purchased hereunder by such Purchaser, the Company shall not undertake
a reverse or forward stock split or reclassification of the Common Stock without
the prior written consent of the Purchasers holding a majority in interest
of
the shares of Preferred Stock.
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 Purchaser, the Company
shall deliver to such Purchaser 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 such laws, it will prepare and furnish to each Purchaser and make
publicly available in accordance with Rule 144(c) such information as is
required for each Purchaser to sell the Securities under Rule 144. The Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, all to the extent required from time to
time
to enable such Person to sell such Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule
144.
-21-
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 such that it would require shareholder approval prior to the
closing of such other transaction unless shareholder approval is obtained before
the closing of such subsequent transaction.
4.4
Securities
Laws Disclosure;
Publicity.
The
Company shall, by 8:30 a.m. Eastern time on the Trading Day following the date
hereof, issue a press release or file a Current Report on Form 8-K, in each
case
reasonably acceptable to Palisades Master Fund LP disclosing the material terms
of the transactions contemplated hereby. The Company and Palisades Master Fund
LP shall consult with each other in issuing any press releases with respect
to
the transactions contemplated hereby, and neither the Company nor Palisades
Master Fund LP shall issue any such press release or otherwise make any such
public statement without the prior consent of the Company, with respect to
any
press release of any Purchaser, or without the prior consent of Palisades Master
Fund LP, with respect to any press release of the Company, which consent shall
not unreasonably be withheld, except if such disclosure is required by law,
in
which case the disclosing party shall promptly provide the other party with
prior notice of such public statement or communication. Notwithstanding the
foregoing, the Company shall not publicly disclose the name of any Purchaser,
or
include the name of any Purchaser in any filing with the Commission or any
regulatory agency or Trading Market, without the prior written consent of such
Purchaser, except (i) as required by federal securities law in connection with
the registration statement contemplated by the Registration Rights Agreement
and
(ii) to the extent such disclosure is required by law or Trading Market
regulations, in which case the Company shall provide the Purchasers with prior
notice of such disclosure permitted under subclause (i) or (ii).
4.5
Shareholders
Rights Plan.
No
claim will be made or enforced by the Company or, to the knowledge of the
Company, any other Person that the 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 any Purchaser could be deemed to trigger the
provisions of any such plan or arrangement, by virtue of receiving Securities
under the Transaction Documents or under any other agreement between the Company
and the Purchasers. The Company shall conduct its business in a manner so that
it will not become subject to the Investment Company Act.
4.6
Non-Public
Information.
The
Company covenants and agrees that neither it nor to the best of the Company’s
knowledge any other Person acting on its behalf will provide the Purchaser
or
its agents or counsel with any information that the Company believes constitutes
material non-public information, unless prior thereto such Purchaser shall
have
executed a written agreement regarding the confidentiality and use of such
information. The Company understands and confirms that the Purchaser shall
be
relying on the foregoing representations in effecting transactions in securities
of the Company.
-22-
4.7
Use
of
Proceeds.
The net
proceeds received by the Company hereunder shall be used solely for working
capital and general corporate purposes, which shall specifically include the
purchase of directors and officers insurance coverage pursuant to Section 3.1(p)
above.
4.8
Reimbursement.
If the
Purchaser becomes involved in any capacity in any Proceeding by or against
any
Person who is a stockholder of the Company (except as a result of sales,
pledges, margin sales and similar transactions by such Purchaser to or with
any
current stockholder), solely as a result of such Purchaser’s acquisition of the
Securities under this Agreement, the Company will reimburse such Purchaser
for
its reasonable legal and other expenses (including the cost of any investigation
preparation and travel in connection therewith) incurred in connection
therewith, as such expenses are incurred. The reimbursement obligations of
the
Company under this paragraph shall be in addition to any liability which the
Company may otherwise have, shall extend upon the same terms and conditions
to
any Affiliates of the Purchaser who are actually named in such action,
proceeding or investigation, and partners, directors, agents, employees and
controlling persons (if any), as the case may be, of the Purchaser and any
such
Affiliate, and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Company, the Purchaser and
any such Affiliate and any such Person. The Company also agrees that neither
the
Purchaser nor any such Affiliates, partners, directors, agents, employees or
controlling persons shall have any liability to the Company or any Person
asserting claims on behalf of or in right of the Company solely as a result
of
acquiring the Securities under this Agreement.
4.9 Indemnification
of Purchasers.
Subject
to the provisions of this Section 4.9, the Company will indemnify and hold
the
Purchaser and their directors, officers, shareholders, partners, employees
and
agents (each, a “Purchaser
Party”)
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of
investigation that any such Purchaser Party may suffer or incur as a result
of
or relating to (a) any breach of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in the other
Transaction Documents or (b) any action instituted against a Purchaser, or
any
of them or their respective Affiliates, by any stockholder of the Company who
is
not an Affiliate of such Purchaser, with respect to any of the transactions
contemplated by the Transaction Documents (unless such action is based upon
a
breach of such Purchaser’s representation, warranties or covenants under the
Transaction Documents or any agreements or understandings such Purchaser may
have with any such stockholder or any violations by the Purchaser of state
or
federal securities laws or any conduct by such Purchaser which constitutes
fraud, gross negligence, willful misconduct or malfeasance). If any action
shall
be brought against any Purchaser Party in respect of which indemnity may be
sought pursuant to this Agreement, such Purchaser Party shall promptly notify
the Company in writing, and the Company shall have the right to assume the
defense thereof with counsel of its own choosing. Any Purchaser Party shall
have
the right to employ separate counsel in any such action and participate in
the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the
Company has failed after a reasonable period of time to assume such defense
and
to employ counsel or (iii) in such action there is, in the reasonable opinion
of
such separate counsel, a material conflict on any material issue between the
position of the Company and the position of such Purchaser Party. The Company
will not be liable to any Purchaser Party under this Agreement (i) for any
settlement by an Purchaser Party effected without the Company’s prior written
consent, which shall not be unreasonably withheld or delayed; or (ii) to the
extent, but only to the extent that a loss, claim, damage or liability is
attributable to any Purchaser Party’s breach of any of the representations,
warranties, covenants or agreements made by the Purchasers in this Agreement
or
in the other Transaction Documents.
-23-
4.10 Reservation
and Listing of Securities.
(a) The
Company shall maintain a reserve from its duly authorized shares of Common
Stock
for issuance pursuant to the Transaction Documents in such amount as may be
required to fulfill its obligations in full under the Transaction Documents.
(b) If,
on
any date, the number of authorized but unissued (and otherwise unreserved)
shares of Common Stock is less than 130% of (i) the Actual Minimum on such
date, minus (ii) the number of shares of Common Stock previously issued pursuant
to the Transaction Documents, then the Board of Directors of the Company shall
use commercially reasonable efforts to amend the Company's certificate or
articles of incorporation to increase the number of authorized but unissued
shares of Common Stock to at least the Actual Minimum at such time (minus the
number of shares of Common Stock previously issued pursuant to the Transaction
Documents), as soon as possible and in any event not later than the 75th day
after such date; provided that the Company will not be required at any time
to
authorize a number of shares of Common Stock greater than the maximum remaining
number of shares of Common Stock that could possibly be issued after such time
pursuant to the Transaction Documents.
(c) The
Company shall: (i) in the time and manner required by the Trading Market,
prepare and file with such Trading Market an additional shares listing
application covering a number of shares of Common Stock at least equal to the
Actual Minimum on the date of such application, (ii) take all steps necessary
to
cause such shares of Common Stock to be approved for listing on the Trading
Market as soon as possible thereafter, (iii) provide to each Purchaser evidence
of such listing, and (iv) use reasonable efforts to maintain the listing of
such
Common Stock on such Trading Market or another Trading Market. In addition,
the
Company shall hold a special meeting of shareholders (which may also be at
the
annual meeting of shareholders) at the earliest practical date, for the purpose
of obtaining Shareholder Approval, with the recommendation of the Company’s
Board of Directors that such proposal be approved, and the Company shall solicit
proxies from its shareholders in connection therewith in the same manner as
all
other management proposals in such proxy statement and all management-appointed
proxyholders shall vote their proxies in favor of such proposal.
-24-
4.11 Conversion
and Exercise Procedures.
The
forms of Conversion Notice included in the Certificate of Designation set forth
the totality of the procedures required in order to convert the Preferred Stock.
No additional legal opinion or other information or instructions shall be
necessary to enable the Purchaser to convert their Preferred Stock. The Company
shall honor the conversions of the Preferred Stock and shall deliver Underlying
Shares in accordance with the terms, conditions and time periods set forth
in
the Transaction Documents. The Company acknowledges that the issuance of the
Securities may result in dilution of the outstanding shares of Common Stock,
which dilution may be substantial under certain market conditions. The Company
further acknowledges that its obligations under the Transaction Documents,
including its obligation to issue the Underlying Shares pursuant to the
Transaction Documents, are unconditional and absolute and not subject to any
right of set off, counterclaim, delay or reduction, regardless of the effect
of
any such dilution or any claim the Company may have against any Purchaser and
regardless of the dilutive effect that such issuance may have on the ownership
of the other stockholders of the Company.
4.12 ________________.
RESERVED
4.13 Participation
in Future Financing.
From
the date hereof until 12 months after such date, upon any financing by the
Company of its Common Stock or Common Stock Equivalents (a “Subsequent
Financing”),
the
Purchaser shall have the right to participate in up to 100% of such Subsequent
Financing, with the express exception of the proposed acquisition of SVI Hotel
Corporation and all financing transactions directly related thereto. At least
5
Trading Days prior to the closing of the Subsequent Financing, the Company
shall
deliver to the Purchaser a written notice of its intention to effect a
Subsequent Financing (“Pre-Notice”),
which
Pre-Notice shall ask such Purchaser if it wants to review the details of such
financing (such additional notice, a “Subsequent
Financing Notice”).
Upon
the request of the Purchaser, and only upon a request by such Purchaser, for
a
Subsequent Financing Notice, the Company shall promptly, but no later than
1
Trading Day after such request, deliver a Subsequent Financing Notice to such
Purchaser. The Subsequent Financing Notice shall describe in reasonable detail
the proposed terms of such Subsequent Financing, the amount of proceeds intended
to be raised thereunder, the Person with whom such Subsequent Financing is
proposed to be effected, and attached to which shall be a term sheet or similar
document relating thereto. If by 6:30 p.m. (New York City time) on the
5th
Trading
Day after the Purchaser has received the Pre-Notice, notifications of the
Purchaser of their willingness to participate in the Subsequent Financing (or
to
cause their designees to provide) is, in the aggregate, less than the total
amount of the Subsequent Financing, then the Company may effect the remaining
portion of such Subsequent Financing on the terms and to the Persons set forth
in the Subsequent Financing Notice. If the Company receives no notice from
a
Purchaser as of such 5th
Trading
Day, such Purchaser shall be deemed to have notified the Company that it does
not elect to participate. The Company must provide the Purchaser with a second
Subsequent Financing Notice, and the Purchaser will again have the right of
participation set forth above in this Section 4.13, if the Subsequent Financing
subject to the initial Subsequent Financing Notice is not consummated for any
reason on the terms set forth in such Subsequent Financing Notice within 60
Trading Days after the date of the initial Subsequent Financing Notice. In
the
event the Company receives responses to Subsequent Financing Notices from the
Purchaser seeking to purchase more than the aggregate amount of the Subsequent
Financing, such Purchaser shall have the right to purchase its Pro Rata Portion
(as defined below) of the Subsequent Financing. “Pro
Rata Portion”
is
the
ratio of (x) the Subscription Amount of a participating Purchaser and (y) the
sum of the aggregate Subscription Amount of all participating Purchaser.
Notwithstanding the foregoing, this Section 4.13 shall not apply in respect
of
an Exempt Issuance.
-25-
4.14 Future
Financings.
From
the date hereof until 90 days after the Effective Date, other than as
contemplated by this Agreement, neither the Company nor any Subsidiary (with
respect to Common Stock Equivalents) shall issue or sell any Common Stock or
Common Stock Equivalents entitling any Person to acquire shares of Common Stock,
with the express exception of the proposed acquisition of SVI Hotel Corporation
and all financing transactions directly related thereto. Notwithstanding
anything herein to the contrary, the 90 day period set forth in this Section
4.14 shall be extended for the number of Trading Days during such period in
which (i) trading in the Common Stock is suspended by any Trading Market, or
(ii) following the Effective Date, the Registration Statement is not effective
or the prospectus included in the Registration Statement may not be used by
the
Purchaser for the resale of the Underlying Shares. Notwithstanding anything
to
the contrary herein, this Section 4.14 shall not apply in respect of an Exempt
Issuance. In addition to the limitations set forth herein, from the date hereof
until such time as the Purchaser does not hold any of the Preferred Stock,
the
Company shall be prohibited from effecting or enter into an agreement to effect
any Subsequent Financing involving a “Variable
Rate Transaction”
or
an
“MFN
Transaction”
(each
as defined below). The term “Variable
Rate Transaction”
shall
mean a transaction in which the Company issues or sells (i) any debt or equity
securities that are convertible into, exchangeable or exercisable for, or
include the right to receive additional shares of Common Stock either (A) at
a
conversion, exercise or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations for the shares of Common Stock
at any time after the initial issuance of such debt or equity securities, or
(B)
with a conversion, exercise or exchange price that is subject to being reset
at
some future date after the initial issuance of such debt or equity security
or
upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common Stock.
The
term “MFN
Transaction”
shall
mean a transaction in which the Company issues or sells any securities in a
capital raising transaction or series of related transactions which grants
to an
investor the right to receive additional shares based upon future transactions
of the Company on terms more favorable than those granted to such investor
in
such offering. In addition, unless Shareholder Approval has been obtained and
deemed effective in accordance with Section 4.10(c), the Company shall not
make
any issuance whatsoever of Common Stock or Common Stock Equivalents which would
cause any adjustment of the Set Price to the extent the holders of Preferred
Stock would not be permitted, pursuant to Section 5(a) (iii) of the Certificate
of Designations, to convert their respective outstanding Preferred Stock in
full.
4.15 Short
Sales.
The
Purchaser covenants that neither it nor any affiliates acting on its behalf
or
pursuant to any understanding with it will execute
any Short Sales during the period from the Discussion Time until prior to the
time that the transactions contemplated by this Agreement are first publicly
announced as described in Section 4.4. Notwithstanding the foregoing, the
Purchaser does not make any representation, warranty or covenant hereby that
it
will not engage in Short Sales in the securities of the Company after the time
that the transactions contemplated by this Agreement are first publicly
announced as described in Section 4.4.
-26-
ARTICLE
V
MISCELLANEOUS
5.1
Fees
and Expenses.
Except
as otherwise set forth in this Agreement, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all stamp and other taxes and duties levied in connection with the
sale of the Securities.
5.2
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 such matters, which the parties acknowledge have been merged
into such documents, exhibits and schedules.
5.3
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 such notice or communication
is delivered via facsimile at the facsimile number specified on the signature
page prior to 5:30 p.m. (New York City time) on a Trading Day and an electronic
confirmation of delivery is received by the sender, (b) the next Trading Day
after the date of transmission, if such notice or communication is delivered
via
facsimile at the facsimile number specified in this Section on a day that is
not
a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day,
(c) three Trading Days 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 such notice is required to be given. The addresses for such notices and
communications are those set forth on the signature pages hereof, or such other
address as may be designated in writing hereafter, in the same manner, by such
Person.
5.4
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
Purchaser or, in the case of a waiver, by the party against whom enforcement
of
any such 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 such right.
5.5
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.
-27-
5.6
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 Purchaser. The Purchaser may assign any or all of its rights
under this Agreement to any Person to whom such Purchaser assigns or transfers
any Securities, provided such transferee agrees in writing to be bound, with
respect to the transferred Securities, by the provisions hereof that apply
to
the “Purchasers”.
5.7
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 Section 4.9.
5.8
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. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced exclusively
in
the state and federal courts sitting in the City of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect
to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) 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 contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. The parties hereby waive all rights to a trial by jury. If
either party shall commence an action or proceeding to enforce any provisions
of
the Transaction Documents, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its attorneys’ fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.
5.9 Survival.
The
representations and warranties contained herein shall survive the Closing and
the delivery, exercise and/or conversion of the Securities, as
applicable.
5.10 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, such signature shall create a valid and binding obligation of
the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original
thereof.
-28-
5.11 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 such
substitute provision in this Agreement.
5.12 Rescission
and Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting
any
similar provisions of) the Transaction Documents, whenever the Purchaser
exercises a right, election, demand or option under a Transaction Document
and
the Company does not timely perform its related obligations within the periods
therein provided, then such Purchaser may rescind or withdraw, in its sole
discretion from time to time upon written notice to the Company, any relevant
notice, demand or election in whole or in part without prejudice to its future
actions and rights; provided,
however,
in the
case of a rescission of a conversion of the Preferred Stock, the Purchaser
shall
be required to return any shares of Common Stock subject to such conversion
notice.
5.13 Replacement
of Securities.
If any
certificate or instrument evidencing any Securities 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 such loss, theft or destruction and
customary and reasonable indemnity, if requested. The applicants for a new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement
Securities.
5.14 Remedies.
In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, each of the Purchaser 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 such obligation the defense that a remedy at law would be
adequate.
5.15 Payment
Set Aside.
To the
extent that the Company makes a payment or payments to the Purchaser pursuant
to
any Transaction Document or a Purchaser enforces or exercises its rights
thereunder, and such payment or payments or the proceeds of such 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 such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full
force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred.
-29-
5.16 Liquidated
Damages.
The
Company’s obligations to pay any partial liquidated damages or other amounts
owing under the Transaction Documents is a continuing obligation of the Company
and shall not terminate until all unpaid partial liquidated damages and other
amounts have been paid notwithstanding the fact that the instrument or security
pursuant to which such partial liquidated damages or other amounts are due
and
payable shall have been canceled.
5.17 Construction.
The
parties agree that each of them and/or their respective counsel has reviewed
and
had an opportunity to revise the Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments hereto.
[SIGNATURE
PAGE FOLLOWS]
-30-
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
|
Address
for Notice:
|
||
|
By:
|
_________________________________________
|
|
|
Name:
|
One
Technology Drive, Building H
|
|
|
Title:
|
Xxxxxx,
XX 00000
Tel
000.000.0000
|
|
With
a
copy to (which shall not constitute notice):
Xxxxx
X.
Xxxxxxxxx
SPECTRUM
LAW GROUP, LLP
0000
Xxxx
Xxxxxx
Xxxxx
000
Xxxxxx,
Xxxxxxxxxx 00000
Tel.
000-000-0000 (ext.212)
Fax:
000-000-0000
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR PURCHASER FOLLOWS]
-31-
[PURCHASER
SIGNATURE PAGES TO OXMI SECURITIES PURCHASE AGREEMENT]
IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.
Name
of
Purchaser: __________________________
Signature
of Authorized Signatory of Purchaser:
__________________________
Name
of
Authorized Signatory: _________________________
Title
of
Authorized Signatory: __________________________
Email
Address of Authorized Signatory:________________________________
Address
for Notice of Investing Entity:
Address
for Delivery of Securities for Investing Entity (if not same as
above):
Subscription
Amount:
Shares
of
Preferred Stock:
EIN
Number: [PROVIDE
THIS UNDER SEPARATE COVER]
[SIGNATURE
PAGES CONTINUE]
-32-
