SECURITIES PURCHASE AGREEMENT
EXHIBIT
10.1
This
Securities Purchase Agreement (“Agreement”) is entered into as
of February 15, 2010 by and between CDEX Inc., a corporation organized under the
laws of the State of Nevada (the “Company”), on the one hand,
and each Person set forth on the signature page hereto as a “Purchaser”
hereunder (each a “Purchaser” and collectively
the “Purchasers”), on
the other hand.
WHEREAS,
subject to the terms and conditions set forth in this Agreement, the Company
desires to issue and sell to each Purchaser, and each Purchaser, severally and
not jointly, desires to purchase from the Company, Notes of the Company in a
PIPE Transaction as set forth herein;
WHEREAS,
Gemini Master Fund, Ltd. (“Gemini”) holds that certain
12% Senior Convertible Note of the Company issued to it on or about June 25,
2008 in the original principal amount $1,086,956.52 (as amended to date, the
“Gemini Note”), which
Gemini Note currently has an outstanding principal balance, together with all
accrued and unpaid interest thereon, equal to $1,151,100.33 as of the date
hereof;
WHEREAS,
an entity controlled by Xxxxxxx X. Xxxxxxx, Xx., Chief Executive Officer of the
Company (“Philips”),
holds those certain promissory notes of the Company, issued to him at various
times for various principal amounts (as amended to date, the “Philips Notes”), which Philips
Notes currently have an aggregate outstanding principal balance, together with
all accrued and unpaid interest thereon, equal to $247,114.82 as of the date
hereof;
WHEREAS,
certain other Persons (“Creditors”) hold either
promissory notes of the Company, issued to them at various times for various
principal amounts (as amended to date, the “Other Notes”), or trade claims
against the Company for amounts past due to such Person from the Company (“Creditor
Claims”);
WHEREAS,
Gemini wishes to exchange its Gemini Note, Philips wishes to exchange his
Philips Notes, and certain Creditors wish to exchange their Other Notes or
Creditor Claims, for the new Notes being issued hereunder; and
WHEREAS,
the remaining Purchasers hereunder (and Philips in addition to the
above-referenced exchange) wish to purchase Notes in exchange for cash
hereunder;
NOW THEREFORE, in consideration of the
foregoing premise and the covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and each Purchaser agree as follows:
1.
Incorporation by Reference; Definitions.
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(a)
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Incorporation. This
Agreement incorporates by reference, as if set forth herein in its
entirety and including without limitation all terms, conditions and
provisions set forth therein, the PipeFund Services Organization Standard
Transaction Document labeled GTC 1-10 (General Terms and Conditions)
available and accessible at xxx.xxxxxxxx.xxx
(“PST Document
GTC”); provided,
however, that (1) all terms and conditions are to be read and
interpreted in light of this Agreement including all schedules, enclosures
and attachments hereto, and (2) to the extent any of the terms,
conditions or provisions of this Agreement (without such incorporation)
contradict or conflict with the terms, conditions or provisions of PST
Document GTC, this Agreement shall
control.
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1
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(b)
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Defined
Terms. Each initially capitalized term used but not
defined in this Agreement (including PST Document GTC as incorporated
herein pursuant to the preceding Section), and each initially capitalized
term used but not defined in any other Transaction Document, shall have
the meaning ascribed thereto in the PipeFund Services Organization
Standard Transaction Document labeled 1-10 DEF (Definitions) available and
accessible at xxx.xxxxxxxx.xxx.
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(c)
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PipeFund Transaction
Code. This Securities Purchase Agreement shall be known
as “Securities Purchase Agreement
#CEXI-10-A”.
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2. Securities. The
Company agrees to issue and sell, and each Purchaser agrees to purchase,
severally and not jointly, in consideration for payment by such Purchaser of its
Subscription Amount indicated on such Purchaser’s signature page hereto, upon
the terms and conditions contained in this Securities Purchase Agreement, 10%
Senior Convertible Notes of the Company, in the form attached hereto as Exhibit A (“Notes”), with an aggregate
original principal amount equal to such Purchaser’s Subscription Amount, which
Notes shall (i) bear interest at 10% per annum, (ii) be convertible into shares
of Common Stock as set forth in the Notes, and (iii) have a maturity date of
February 15, 2012, subject to acceleration of such date as set forth
therein. On or prior to the Offering Termination Date, the Company
may issue to any Creditor Notes with an original principal amount equal to the
amount of indebtedness under Creditor Claims which is being cancelled in
exchange for such Notes.
3. Closing. Notwithstanding
anything to the contrary contained in Section 2.3(b) of PST Document
GTC:
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(a)
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Gemini
Exchange. Gemini shall pay for the Note being purchased
hereunder at Closing solely by exchanging and surrendering to the Company
its Gemini Note for a new Note with an original principal amount equal to
the outstanding balance (including principal and accrued interest thereon)
of the Gemini Note as of the Closing Date, and no other value or
consideration shall be paid or payable by Gemini for the purchase of such
new Note.
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(b)
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Philips
Exchange. Philips shall pay for the Note being purchased
hereunder at Closing solely by exchanging and surrendering to the Company
all of the Philips Notes for a new Note with an original principal amount
equal to the aggregate outstanding balance (including principal and
accrued interest thereon) of the Philips Notes as of the Closing Date, and
no other value or consideration shall be paid or payable by Philips for
the purchase of such new Note.
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(c)
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Purchasers. Each
of Gemini and Philips and each other Creditor purchasing Notes hereunder
shall constitute a “Purchaser” under the Transaction Documents
notwithstanding the foregoing payment for Notes by exchange of
securities.
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2
4. Specific
Terms.
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(a)
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The
Minimum Aggregate Investment Amount shall be $400,000 of new cash
investments into the Company, $200,000 of which shall be from Philips or
an Affiliate of Philips. The Maximum Aggregate Investment
Amount (and for clarification the maximum principal amount of Notes which
may be issued to Purchasers and Creditors) shall be
$4,000,000.
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(b)
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The
Bulletin Board shall be an Eligible
Market.
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(c)
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Requisite
Purchasers means 67%-in-Interest of the
Purchasers.
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(d)
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The
Offering Termination Date shall be April 1,
2010.
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5. Escrow. Xxxxxxx
XxXxxxxx (“Escrow
Agent”) shall act as funds escrow agent for the Closing of the
Transactions pursuant to those certain Funds Disbursements Agreements entered or
to be entered into by the Escrow Agent with the Company to serve in such
capacity for the Closing. There shall be no Documents Escrow Agent
for the Closing. The Company represents that the Escrow Agent is
holding $450,000 in cash in escrow pending Closing of the
Transactions.
6. Expenses. At the
Closing or promptly thereafter, the Company shall pay or reimburse to Gemini’s
counsel (“Expense
Payee”) a non-refundable, non-accountable sum equal to $20,000 for
documentation of the Transactions, which amount shall be deducted and paid from
Closing proceeds.
7. Company
Address for Notices:
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Company:
0000
Xxxxx Xxxx Xxxxx Xxxx
Xxxxx
000
Xxxxxx,
XX 00000
Facsimile:
000-000-0000
Email:
xxxxxxxxx@xxxx-xxx.xxx
Contact
person: Xxxxxxx XxXxxxxx, CFO
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With
a copy to:
Xxxx
Xxxxxx O'Hara
Madama
Xxxxxxxxx X'Xxxx LLP
000
Xxxx Xxxxxx Xxxxx, Xxxxxx Xxxxx
Xxx
Xxxx, XX 00000
Facsimile:
(000) 000-0000
Email:
xxxxxx@xxxxxx-xxx.xxx
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8. Modifications
and Additional Terms.
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(a)
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Additional
Documents. In addition to the those items set forth in
Section 2.3(a)(viii) of PST Document GTC, on the Closing Date the Company
shall deliver or cause to be delivered to each Purchaser the
following:
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(i)
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a
Security Agreement, in substantially the form of Exhibit B
attached hereto, duly executed by the Company (for clarification, no
security interest is created thereunder unless and until the Company has
failed to satisfy either Milestone 1 or Milestone 2 under the Notes (as
such terms are defined in the Notes));
and
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(ii)
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irrevocable
Lock-Up Agreement, in substantially the form of Exhibit C
attached hereto, duly executed and delivered by Xxxxxxx Xxxxxxx for so
long as he is subject to the reporting requirements of Section 16 of the
Securities Act.
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(b)
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Modifications to PST Document
GTC.
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(i)
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No Registration
Rights. Sections 6.1 through 6.3 of PST Document GTC are
hereby deleted such that the Purchasers shall not have any registration
rights except for the piggyback registration rights set forth in Section
6.4 thereof.
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(ii)
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Use of
Proceeds. Notwithstanding
anything to the contrary contained in Section 4.9 of PST Document GTC, the
proceeds from the transaction will be used only for general corporate
purposes with at least $50,000 being used for investor relations to
achieve greater exposure of the Company to investors in such manner and
with such service providers as are reasonable acceptable to Gemini, at
least $25,000 of which shall be spent by June 1, 2010. Of the
first $400,000 in cash proceeds received from the sale of the Notes
(determined on a first-in, first out basis), no payments will be made to
Philips (except for no more than $35,000 in outstanding bona fide expense
reports for Company expenditures). So long as the Gemini Note
is outstanding, no payments shall be made on account of indebtedness
(including without limitation account payables, deferred compensation or
otherwise), provided that the Company may pay (A) any trade payables
incurred after the date hereof for services rendered or goods provided to
the Company in the ordinary course of business, and (B) from proceeds
received up to $450,000, up to $286,000 in the aggregate for any trade
payables (which for clarification does not include any deferred
compensation, promissory notes, indebtedness for borrowed money, or
reimbursement of Company expenses in excess of the $35,000 referenced
above) outstanding on the date hereof and Transaction
expenses. To the extent any proceeds are received in excess of
$450,000 from any financing up to $4 million, 50% of such proceeds shall
be used for payment of principal and interest outstanding on the Notes and
50% can be used for any general corporate purposes. Any amounts
payable to the Noteholders under the preceding sentence shall be shared
ratably among the Noteholders, and the portion payable to any Noteholder
which is declined in writing by such holder shall be paid to the other
Noteholders electing to be repaid pro
rata.
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(c)
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Additional Representations and
Warranties.
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(i)
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Philips Note
Balance. Each of Philips and the Company represents and
warrants to the Purchasers that the aggregate
outstanding principal balance, together with all accrued and unpaid
interest thereon, of the Philips Notes as of the date hereof is equal to
the amount set forth in the recitals hereto and shall provide evidence
thereof upon the request of any
Purchaser.
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(ii)
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Employees. The
Company represents and warrants to the Purchasers that Schedule 8(c)(ii)
attached hereto sets forth those agreements affecting employees which
entitle such employees to employment with the Company for a specified
term, which Schedule sets forth the end date of each such term and the
estimated severance expense to the Company in the event such employment is
terminated by the Company without cause prior to such end
date.
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(d)
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Additional
Covenants.
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(i)
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Stockholder
Approval.
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(A)
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Stockholder
Meeting. On or prior to September 30, 2010, the Company
shall effect an increase in the number of authorized unissued shares of
Common Stock by at least 100 million shares (or effect such other action
that has the effect of effectively increasing the number of authorized,
unissued and unreserved shares of Common Stock by at least such amount
from the number of authorized, unissued and unreserved shares of Common
Stock available on the date hereof), and prior to such date the Company
shall obtain Stockholder Approval for such increase to the extent required
by applicable state or federal laws or regulations or the regulations of
any market or self-regulatory agency or organization. On or
prior to June 30, 2010, the Company shall file with the Commission and
deliver to its stockholders a notice of meeting and proxy statement or
information circular, as required by the Commission, with respect to a
Stockholder Meeting which contains a proposal seeking such Stockholder
Approval. Such Stockholder Meeting shall occur within sixty
(60) days following the filing of such proxy statement or information
circular (75 days if the Commission gives a full review of such proxy and
the Company responds to any comments within 5 days). The Board
of Directors of the Company shall recommend to the Company’s stockholders
that such proposal be approved, which recommendation shall be contained in
such proxy statement or information circular, and the Company shall
solicit proxies from its stockholders in connection therewith in the same
manner as all other management proposals in such proxy statement (or as
typically solicited by management for management proposals), and all
management-appointed proxy holders shall vote their proxies in favor of
such Stockholder Approval. The Purchasers and their counsel
shall be entitled to review such proxy statement or information circular
prior to filing with the Commission, and such proxy statement or
information circular shall not contain any untrue statement of a material
fact or omit to state any 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. If
the Company does not obtain such Stockholder Approval at the first such
Stockholder Meeting, the Company shall call a Stockholder Meeting every
four months thereafter to seek Stockholder Approval until the date on
which Stockholder Approval is
obtained.
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(B)
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Failure to Call and
Hold Stockholder Meeting. If the Company fails to (1)
file the proxy statement or information circular referred to above or (2)
hold the Stockholder Meeting referred to above, in each case prior to the
date by which such filing or meeting is required above, then each
Purchaser shall have the right to compel the Company to redeem the Notes
held by the Purchaser which cannot be converted or exercised due to the
maximum issuance amount set forth in Section 3 above, as may be elected by
such Purchaser. The redemption price under the Notes shall be
the Mandatory Default Amount (as defined in the Notes). Such
redemption price shall be paid within ten (10) days after the exercise of
such redemption right. If the Company fails to make any cash
payments or redemption payments under this subsection in a timely manner,
such payments shall bear interest at 24% per annum until paid in full.
Without limiting the foregoing, failure to timely obtain Stockholder
Approval shall constitute an Event of Default under the
Notes.
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(C)
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Reservation of
Underlying Shares. Section 5.5 of PST Document GTC shall
not be effective until September 30, 2010, provided that the number of
shares of Common Stock currently reserved for issuance to Gemini upon
conversion of the Gemini Note and the warrant issued to Gemini on or about
June 25, 2008 for 2,717,391 shares of Common Stock (“Gemini Warrant”) shall
remain reserved for issuance to Gemini upon conversion of the new Note
purchased by Gemini hereunder and the New Warrant (as defined
below). The Company represents and warrants that such number of
shares currently reserved and to be so continued to be reserved equals at
least 10,014,313 shares, and Gemini may use shares reserved for exercise
of the New Warrant for conversion of its new Note instead or vice-versa or
as it may otherwise determine, in each case in the sole discretion of
Gemini.
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(ii)
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Rule
144. The Company acknowledges and agrees that, for
purposes of Rule 144, the holding period for the shares of Common Stock
issuable upon conversion or otherwise pursuant to the Note issued to
Gemini shall have commenced on June 25, 2008 (the date of original
issuance of the Gemini Note), notwithstanding this Agreement and the
Transactions. Without limiting the foregoing, if at any time it
is determined that such holding period does not relate back to such date,
the Company will promptly cause the registration of all such underlying
shares under the Securities Act (without regard to any beneficial
ownership or issuance limitations contained in the Note) in accordance
with Article VI of PST Document GTC. In connection with any
registration of shares of Common Stock pursuant to this Section, the
Company and Gemini shall enter into a registration rights agreement
containing customary and reasonable provisions regarding the registration
of securities under the Securities Act, consistent with Article VI of PST
Document GTC. Any and all shares of Common Stock issued upon
conversion of the Note issued to Gemini hereunder shall be issued free and
clear of any and all legends and restrictions thereon. The new
Note being issued to Gemini hereunder is in substitution for and not in
satisfaction of the Gemini Note. Such new Note shall not
constitute a novation or satisfaction and accord of the Gemini
Note. The Company hereby acknowledges and agrees that such new
Note shall amend, restate, modify, extend, renew and continue the terms
and provisions contained in the Note and shall not extinguish or release
the Company or any of its Subsidiaries under any Transaction Document or
otherwise constitute a novation of its obligations
thereunder. The Company acknowledges that, for any Creditors
(which do not currently have Other Notes) which exchange their Creditor
Claims for Notes, the Rule 144 holding period for such Notes will commence
on the date of issuance of such
Notes.
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(iii)
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Board
Seats. Within 60 days following the first Closing
hereunder and for so long as any Notes are outstanding, the Company’s
Board of Directors shall consist of up to seven members, which shall
include (1) Xxxx Xxxxxxxx, (2) Xxxxxx Xxxxxxxxx, (3) Xxx Xxxxxxxxxx, (4)
the new CEO to be appointed as described in subsection (iv) below, or in
each case for clauses (1) through (4) individuals appointed or elected to
replace such individuals upon their resignation, (5) one individual
designated by the majority of Note Holders (excluding Gemini) as
designated by Xxxxx Xxx (one of the Purchasers for cash hereunder) (so
long as at least $100,000 in principal amount of Notes are outstanding
excluding Gemini’s Notes) (“Noteholder Seat”), and
(6) one individual designated by Gemini (so long as Gemini holds at least
$100,000 in principal amount of
Notes).
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(iv)
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Management
Changes. Immediately following the first Closing, the
Company’s Board of Directors shall begin the process of seeking and
retaining a new Chief Executive Officer of the Company (“CEO”) with experience as
an executive of a medical company and of a public company. The
Company shall use every effort to conclude such search and hire a new CEO
prior to the date which is 60 days following the Closing Date, provided
that if it fails to do so by such date then the Company shall appoint an
interim CEO and use every effort to conclude such search and hiring as
soon as practicable. Any material information referenced herein
shall be publicly disclosed as soon as possible following the Closing
Date.
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(v)
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Lock-Up
Agreement. The Company shall enforce the provisions of
the Lock-Up Agreement to the extent it becomes aware of any violation
thereof. The Company agrees not to take any action inconsistent
with the Lock-Up Agreement nor amend or terminate any Lock-Up Agreement
without the consent of the
Purchasers.
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(vi)
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Subsequent Equity
Sales.
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(A)
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From
the date hereof until such time as no Purchaser holds any of the Notes,
the Company shall be prohibited from effecting or entering into an
agreement to issue shares of Common Stock, Convertible Securities or
Options involving a Variable Rate Transaction or MFN
Transaction.
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(B)
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Without
limiting the foregoing, with respect to each Purchaser, from the date
hereof until such time as such Purchaser no longer holds any of Notes, in
the event the Company issues or sells any shares of Common Stock,
Convertible Securities or Options or amends the transaction documents
relating to any sale or issuance of Common Stock, Convertible Securities
or Options, other than Exempt Issuances, if such Purchaser reasonably
believes that the terms and conditions thereunder are more favorable to
such investors than the terms and conditions granted under the Transaction
Documents, upon notice to the Company by such Purchaser the Company shall
amend the terms of this Transaction and the Transaction Documents so as to
give such Purchaser the benefit of such more favorable terms or conditions
with respect to such portion of Notes still held by such
Purchaser.
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(vii)
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Insurance. For at
least six (6) years following the final Closing, the Company shall
continue and maintain in full force and effect directors and officers
insurance in such amounts and with such coverage as is currently
maintained by the Company with a reputable, financially
sound insurance carrier, which insurance shall cover, without limitation,
claims arising with respect to actions and omissions of the Company’s
officers and directors occurring prior to the final
Closing. The Company shall promptly furnish or cause to be
furnished evidence of such insurance to each Purchaser and Board member
(including without limitation prior Board members) so requesting same, in
form and substance reasonably satisfactory to such Purchaser or Board
member.
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(viii)
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Bank
Statements. Until one of the Milestones are satisfied,
upon the written request (which may be by email) of Gemini at any time and
from time to time, the Company shall furnish to Gemini a copy of any of
the Company’s monthly bank statements requested by Gemini within five (5)
days following such request (provided that the Company shall not furnish
such statements unless so specifically requested by Gemini). The following
are approximately the debts of the company as of February 1, 2010 in a
form complaint with reporting on CDEX’s financial statements: Accounts
Payable and Accrued Expenses $384,822, Notes Payable and Accrued Interest
$1,678,227, accrued legal fees $569,911.15 (of which, $438,159 is to one
law firm), deferred compensation $589,259 and accrued payable to a
distributor $272,038.
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(ix)
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Gemini
Warrant. The Company and Gemini shall exchange the
Gemini Warrant for a new warrant (“New Warrant”) which is
identical to the Gemini Warrant in all respects except that the New
Warrant shall be exercisable for 5 million shares at an exercise price of
$0.08 per share (each subject to adjustment as set forth therein) and
shall expire on June 25, 2015.
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(x)
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No Assets Disposition;
Defeasement. Prior to Milestone 2 (as defined in the
Notes) being satisfied, other than inventory sold in the ordinary course
of business, the Company shall not sell, transfer, license, grant a
security interest in or otherwise dispose of any assets of the Company
(including without limitation any intellectual property) without the prior
written consent of each holder of Notes who holds Note(s) with an
outstanding balance in excess of $175,000 (each a “Large Noteholder”),
which consent may be withheld in his/her/its sole discretion, provided however, that
such consent shall not be required with respect to each Large Noteholder
for whom the Company (i) places an amount of cash in escrow equal to the
outstanding balance (including principal and accrued interest) of such
Large Noteholder’s Note(s) minus $175,000 as collateral against such
Note(s), and (ii) executes and delivers such escrow agreements, control
account agreements and other documents in such form and with such parties
as is acceptable to such Large Noteholder in his/her/its sole discretion
in order for such Large Noteholder to possess a perfected first priority
security interest in such cash escrow account for his/her/its sole benefit
to secure the Company’s obligations under such
Note(s).
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(e)
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Other Terms and
Provisions.
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(i)
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Full Force and
Effect. Except as otherwise expressly provided herein,
each of the transaction documents pursuant to which the Gemini Note was
issued and the other agreements and transactions contemplated thereby
(“Gemini
Documents”) shall remain in full force and effect, and this
Agreement and the transactions contemplated hereby shall not in any way
waive or prejudice any of the rights or obligations of Gemini or the
Company under the Gemini Documents, under any law, in equity or otherwise,
and shall not constitute a waiver or modification of any provision of the
Gemini Documents.
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(ii)
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Attorneys. For
reasons of administrative convenience only, the Purchasers are all
utilizing the same Transaction Documents at the Company’s
request. Xxxxx X. Xxxxxxx, P.C. does not represent any of the
Purchasers except Gemini.
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[Signature Page
Follows]
9
IN
WITNESS WHEREOF, as of the date first written above, the Parties hereto have
duly executed, or caused their authorized officers to duly execute, this
Securities Purchase Agreement #CEXI-10-A with file name SPA -- CDEX (Feb 10)
v.6.
COMPANY:
By:
Name: Xxxxxxx
XxXxxxxx
Title: CFO
PURCHASER:
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1. Signature:
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PARTNERSHIP,
CORPORATION, LIMITED
LIABILITY
COMPANY OR TRUST:
(Print
Name of Purchaser Entity)
By:
(Print name of authorized, executing entity, if any; if none, leave
blank)
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INDIVIDUAL:
(Print
Name(s))
(Signature)
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By:
(Signature of Authorized Person)
(Print Name
and Title of Authorized Person)
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(Joint-Owner
Signature, if any)
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2. Subscription Amount: $
3. Maximum
Ownership Percentage:
The
Maximum Ownership Percentage shall be 9.9% if no box is checked
below.
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□ 4.9%
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□ 9.9%
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□
Other:
%
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□
None
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PURCHASER:
(Print
Name)
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4. Address for
Notices:
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With
a copy to, if any:
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(Name
or c/o Name)
(Address)
(Contact
Name)
(Facsimile)
(Telephone)
(Email
Address)
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(Name)
(Address)
(Contact
Name)
(Facsimile)
(Telephone)
(Email
Address)
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5. Residence/Organization
and TIN:
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(State/Jurisdiction
of Primary Residence (for individuals)
or
Organization (for entities))
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(Social
Security or Employer/Tax Identification Number,
if
applicable)
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6. Special Instructions Where Securities to Be
Delivered:
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For
Common Stock:
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For
Other Securities:
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Exhibit
A
FORM OF 10% SENIOR
CONVERTIBLE NOTE
Exhibit
B
FORM OF SECURITY
AGREEMENT
Exhibit
C
FORM OF LOCK-UP
AGREEMENT
