EQUITY DISTRIBUTION AGREEMENT
Exhibit
10.12
THIS
AGREEMENT dated as of the ___ day of November 2007 (the “Agreement”) between IFG
Opportunity Fund, LLC., (the “Investor”), and EXOBOX TECHNOLOGIES CORP., a
corporation organized and existing under the laws of the State of Nevada
(the
“Company”).
WHEREAS,
the parties desire that, upon the terms and subject to the conditions contained
herein, the Company shall issue and sell to the Investor, from time to time
as
provided herein, and the Investor shall purchase from the Company up to Ten
Million Dollars ($10,000,000) of the Company’s common stock, par value $0.001
per share (the “Common Stock”); and
WHEREAS,
such investments will be made in reliance upon the provisions of Regulation
D
(“Regulation D”) of the Securities Act of 1933, as amended, and the regulations
promulgated thereunder (the “Securities Act”), and or upon such other exemption
from the registration requirements of the Securities Act as may be available
with respect to any or all of the investments to be made hereunder.
NOW,
THEREFORE, the parties hereto agree as follows:
ARTICLE
I.
Certain
Definitions
Section
1.1. “Advance” shall mean the portion
of the Commitment Amount requested by the Company in the Advance
Notice.
Section
1.2. “Advance Date” shall mean the
first (1st) Trading Day after expiration of the applicable Pricing Period
for
each Advance.
Section
1.3. “Advance Notice” shall mean a
written notice in the form of Exhibit A attached hereto to the Investor executed
by an officer of the Company and setting forth the Advance amount that the
Company requests from the Investor.
Section
1.4. “Advance Notice Date” shall mean
each date the Company delivers (in accordance with Section 2.2(b) of this
Agreement) to the Investor an Advance Notice requiring the Investor to advance
funds to the Company, subject to the terms of this Agreement. No
Advance Notice Date shall be less than five (5) Trading Days after the prior
Advance Notice Date.
Section
1.5. “Closing” shall mean one of the
closings of a purchase and sale of Common Stock pursuant to Section
2.3.
Section
1.6. “Commitment Amount” shall mean the
aggregate amount of up to Ten Million Dollars ($10,000,000) which the Investor
has agreed to provide to the Company in order to purchase the Company’s Common
Stock pursuant to the terms and conditions of this Agreement.
Section
1.7. “Commitment Period” shall mean the
period commencing on the earlier to occur of (i) the Effective Date, or (ii)
such earlier date as the Company and the Investor may mutually agree in writing,
and expiring on the earliest to occur of (x) the date on which the Investor
shall have made payment of Advances pursuant to this Agreement in the aggregate
amount of the Commitment Amount, (y) the date this Agreement is terminated
pursuant to Section 10.2 or (z) the date occurring thirty (30) months after
the
Effective Date.
Section
1.8. “Common Stock” shall mean the
Company’s common stock, par value $0.001 per share.
Section
1.9. “Condition Satisfaction Date”
shall have the meaning set forth in Section 7.2.
Section
1.10. “Damages” shall mean any loss, claim, damage,
liability, costs and expenses (including, without limitation, reasonable
attorney’s fees and disbursements and costs and expenses of expert witnesses and
investigation).
Section
1.11. “Effective Date” shall mean the date on which
the SEC first declares effective a Registration Statement registering the
resale
of the Registrable Securities as set forth in Section 7.2(a).
Section
1.12. “Exchange Act” shall mean the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
Section
1.13. “Material Adverse Effect” shall mean any
condition, circumstance, or situation that would prohibit or otherwise
materially interfere with the ability of the Company to enter into and perform
any of its obligations under this Agreement or the Registration Rights Agreement
in any material respect.
Section
1.14. “Market Price” shall mean the VWAP of the
Common Stock during the Pricing Period as defined by Bloomberg.
Section
1.15. “Maximum Advance Amount” shall be One Million
Dollars
($1,000,000)
per Advance Notice, but in no case more than Four Million Dollars ($4,000,000)
in any thirty-day (30) calendar period.
Section
1.16. “NASD” shall mean the National Association of
Securities Dealers, Inc.
Section
1.17. “Person” shall mean an individual, a
corporation, a partnership, an association, a trust or other entity or
organization, including a government or political subdivision or an agency
or
instrumentality thereof.
Section
1.18. “Pricing Period” shall mean the five (5)
consecutive Trading Days after the Advance Notice Date subject to any reduction
pursuant to Section 2.2(c).
Section
1.19. “Principal Market” shall mean the Nasdaq
National Market, the Nasdaq Capital Market, the American Stock Exchange,
the OTC
Bulletin Board or the New York Stock Exchange, whichever is at the time the
principal trading exchange or market for the Common Stock.
Section
1.20. “Purchase Price” shall be set at ninety-eight
percent (98%) of the Market Price during the Pricing Period.
Section
1.21. “Registrable Securities” shall mean the
shares of Common Stock to be issued hereunder (i) in respect of which the
Registration Statement has not been declared effective by the SEC, (ii) which
have not been sold under circumstances meeting all of the applicable conditions
of Rule 144 (or any similar provision then in force) under the Securities
Act
(“Rule 144”) or (iii) which have not been otherwise transferred to a holder who
may trade such shares without restriction under the Securities Act, and the
Company has delivered a new certificate or other evidence of ownership for
such
securities not bearing a restrictive legend.
Section
1.22. “Registration Rights Agreement” shall mean
the Registration Rights Agreement dated the date hereof, regarding the filing
of
the Registration Statement for the resale of the Registrable Securities,
entered
into between the Company and the Investor.
Section
1.23. “Registration Statement” shall mean a
registration statement on Form S-1 or SB-2 (if use of such form is then
available to the Company pursuant to the rules of the SEC and, if not, on
such
other form promulgated by the SEC for which the Company then qualifies and
which
counsel for the Company shall deem appropriate, and which form shall be
available for the resale of the Registrable Securities to be registered
thereunder in accordance with the provisions of this Agreement and the
Registration Rights Agreement, and in accordance with the intended method
of
distribution of such securities), for the registration of the resale by the
Investor of the Registrable Securities under the Securities Act.
Section
1.24. “Regulation D” shall have the meaning set
forth in the recitals of this Agreement.
Section
1.25. “SEC” shall mean the United States Securities
and Exchange Commission.
Section
1.26. “Securities Act” shall have the meaning set
forth in the recitals of this Agreement.
Section
1.27. “SEC Documents” shall mean Annual Reports on
Form 10-KSB, Quarterly Reports on Form 10-QSB, Current Reports on Form 8-K
and
Proxy Statements of the Company as supplemented to the date hereof, filed
by the
Company for a period of at least twelve (12) months immediately preceding
the
date hereof or the Advance Date, as the case may be, until such time as the
Company no longer has an obligation to maintain the effectiveness of a
Registration Statement as set forth in the Registration Rights
Agreement.
Section
1.28. “Trading Day” shall mean any day during which
the New York Stock Exchange shall be open for business.
Section
1.29. “VWAP” shall mean the volume weighted average
price of the Company’s Common Stock as quoted by Bloomberg, LP.
ARTICLE
II.
Advances
Section
2.1. Advances.
Subject
to the terms and conditions of this Agreement (including, without limitation,
the provisions of Article VII hereof), the Company, at its sole and exclusive
option, may issue and sell to the Investor, and the Investor shall purchase
from
the Company, shares of the Company’s Common Stock by the delivery, in the
Company’s sole discretion, of Advance Notices. The number of shares
of Common Stock that the Investor shall purchase pursuant to each Advance
shall
be determined by dividing the amount of the Advance by the Purchase Price.
No
fractional shares shall be issued. Fractional shares shall be rounded to
the
next higher whole number of shares. The aggregate maximum amount of
all Advances that the Investor shall be obligated to make under this Agreement
shall not exceed the Commitment Amount.
Section
2.2. Mechanics.
(a) Advance
Notice. At any time during the Commitment Period, the Company may
require the Investor to purchase shares of Common Stock by delivering an
Advance
Notice to the Investor, subject to the conditions set forth in Section 7.2;
provided, however, the amount for each Advance as designated by the Company
in
the applicable Advance Notice shall not be more than the Maximum Advance
Amount
and the aggregate amount of the Advances pursuant to this Agreement shall
not
exceed the Commitment Amount. The Company acknowledges that the
Investor may sell shares of the Company’s Common Stock corresponding with a
particular Advance Notice after the Advance Notice is received by the
Investor. There shall be a minimum of five (5) Trading Days between
each Advance Notice Date.
(b) Date
of Delivery of Advance Notice. An Advance Notice shall be deemed
delivered on (i) the Trading Day it is received by facsimile or otherwise
by the
Investor if such notice is received prior to 5:00 pm Eastern Time, or (ii)
the
immediately succeeding Trading Day if it is received by facsimile or otherwise
after 5:00 pm Eastern Time on a Trading Day or at any time on a day which
is not
a Trading Day. No Advance Notice may be deemed delivered on a day
that is not a Trading Day.
(c) Minimum
Acceptable Price. The lowest closing Bid Price of the Common Stock
during the Pricing Period (before taking into account any discount used to
calculate the Purchase Price) for any particular Advance shall, in connection
with each Advance Notice delivered by the Company, be equal to seventy five
percent (75%) of the closing Bid Price on the Trading Day immediately preceding
the Advance Notice Date for such Advance Notice (the “Minimum Acceptable
Price”). Subject to the next sentence, upon the issuance by the
Company of an Advance Notice with a Minimum Acceptable Price, if any of the
closing Bid Prices during the Pricing Period are below the Minimum Acceptable
Price (i) the Company shall automatically reduce the amount of the Advance
set
forth in such Advance Notice by twenty percent (20%) for each Trading Day
during
the Pricing Period that the closing Bid Price of the Common Stock is below
the
Minimum Acceptable Price (each such day, an “Excluded Day”), and (ii) each
Excluded Day shall be excluded from the Pricing Period for purposes of
determining the Market Price. The number of shares of Common Stock to
be delivered to the Investor at the Closing (in accordance with Section 2.3
of
this Agreement) shall correspond with the Advance Notice amount as reduced
pursuant to clause (i) above. The Company, and only the Company, may
waive the Minimum Acceptable Price with respect to any particular Advance
Notice
by providing the Investor with written notice of waiver on or prior to the
Advance Date.
(d) Floor
Price. The Company at its option may select a Floor Price for any
Put, which the Company will not put shares to Investor under that Floor
Price.
Section
2.3. Closings. Within two
(2) Trading Days of each Advance Date (i) the Company shall deliver
to the Investor such number of shares of the Common Stock registered in the
name
of the Investor as shall equal (x) the amount of the Advance specified in
such
Advance Notice pursuant to Section 2.1 herein, divided by (y) the Purchase
Price
and (ii) upon receipt of such shares, the Investor shall deliver to the Company
the amount of the Advance specified in the Advance Notice by wire transfer
of
immediately available funds. In addition, on or prior to the Advance
Date, each of the Company and the Investor shall deliver to the other all
documents, instruments and writings required to be delivered by either of
them
pursuant to this Agreement in order to implement and effect the transactions
contemplated herein. To the extent the Company has not paid the fees,
expenses, and disbursements of the Investor in accordance with Section 12.4,
the
amount of such fees, expenses, and disbursements may be deducted by the Investor
(and shall be paid to the relevant party) directly out of the proceeds of
the
Advance with no reduction in the amount of shares of the Company’s Common Stock
to be delivered on such Advance Date.
(a) Company’s
Obligations Upon Closing.
(i) The
Company shall deliver to the Investor the shares of Common Stock applicable
to
the Advance in accordance with Section 2.3. The certificates
evidencing such shares shall be free of restrictive legends.
(ii) the
Company’s Registration Statement with respect to the resale of the shares of
Common Stock delivered in connection with the Advance shall have been declared
effective by the SEC;
(iii) the
Company shall have obtained all material permits and qualifications required
by
any applicable state for the offer and sale of the Registrable Securities,
or
shall have the availability of exemptions therefrom. The sale and
issuance of the Registrable Securities shall be legally permitted by all
laws
and regulations to which the Company is subject;
(iv) the
Company shall have filed with the SEC in a timely manner all reports, notices
and other documents required of a “reporting company” under the Exchange Act and
applicable Commission regulations;
(v) the
fees as set forth in Section 12.4 below shall have been paid or can be withheld
as provided in Section 2.3; and
(vi) the
Company’s transfer agent shall be DWAC eligible.
(b) Investor’s
Obligations Upon Closing. Upon receipt of the shares referenced in
Section 2.3(a)(i) above and provided the Company is in compliance with its
obligations in Section 2.3, the Investor shall deliver to the Company the
amount
of the Advance specified in the Advance Notice by wire transfer of immediately
available funds.
ARTICLE
III.
Representations
and Warranties of Investor
Investor
hereby represents and warrants to, and agrees with, the Company that the
following are true and correct as of the date hereof and as of each Advance
Date:
Section
3.1. Organization and
Authorization. The Investor is duly incorporated or organized and
validly existing in the jurisdiction of its incorporation or organization
and
has all requisite power and authority to purchase and hold the securities
issuable hereunder. The decision to invest and the execution and
delivery of this Agreement by such Investor, the performance by such Investor
of
its obligations hereunder and the consummation by such Investor of the
transactions contemplated hereby have been duly authorized and requires no
other
proceedings on the part of the Investor. The undersigned has the
right, power and authority to execute and deliver this Agreement and all
other
instruments (including, without limitations, the Registration Rights Agreement),
on behalf of the Investor. This Agreement has been duly executed and
delivered by the Investor and, assuming the execution and delivery hereof
and
acceptance thereof by the Company, will constitute the legal, valid and binding
obligations of the Investor, enforceable against the Investor in accordance
with
its terms.
Section
3.2. Evaluation of
Risks. The Investor has such knowledge and experience in financial,
tax and business matters as to be capable of evaluating the merits and risks
of,
and bearing the economic risks entailed by, an investment in the Company
and of
protecting its interests in connection with this transaction. It
recognizes that its investment in the Company involves a high degree of
risk.
Section
3.3. No Legal Advice From the
Company. The Investor acknowledges that it had the opportunity to
review this Agreement and the transactions contemplated by this Agreement
with
his or its own legal counsel and investment and tax advisors. The
Investor is relying solely on such counsel and advisors and not on any
statements or representations of the Company or any of its representatives
or
agents for legal, tax or investment advice with respect to this investment,
the
transactions contemplated by this Agreement or the securities laws of any
jurisdiction.
Section
3.4. Investment Purpose. The securities
are being purchased by the Investor for its own account, and for investment
purposes. The Investor agrees not to assign or in any way transfer
the Investor’s rights to the securities or any interest therein and acknowledges
that the Company will not recognize any purported assignment or transfer
except
in accordance with applicable Federal and state securities laws. No
other person has or will have a direct or indirect beneficial interest in
the
securities. The Investor agrees not to sell, hypothecate or otherwise
transfer the Investor’s securities unless the securities are registered under
Federal and applicable state securities laws or unless, in the opinion of
counsel satisfactory to the Company, an exemption from such laws is
available.
Section
3.5. Accredited
Investor. The Investor is an “Accredited Investor” as that term is
defined in Rule 501(a)(3) of Regulation D of the Securities Act.
Section
3.6. Information. The
Investor and its advisors (and its counsel), if any, have been furnished
with
all materials relating to the business, finances and operations of the Company
and information it deemed material to making an informed investment
decision. The Investor and its advisors, if any, have been afforded
the opportunity to ask questions of the Company and its
management. Neither such inquiries nor any other due diligence
investigations conducted by such Investor or its advisors, if any, or its
representatives shall modify, amend or affect the Investor’s right to rely on
the Company’s representations and warranties contained in this
Agreement. The Investor understands that its investment involves a
high degree of risk. The Investor is in a position regarding the
Company, which, based upon employment, family relationship or economic
bargaining power, enabled and enables such Investor to obtain information
from
the Company in order to evaluate the merits and risks of this
investment. The Investor has sought such accounting, legal and tax
advice, as it has considered necessary to make an informed investment decision
with respect to this transaction.
Section
3.7. Receipt of Documents. The Investor
and its counsel have received and read in their entirety: (i) this
Agreement and the Exhibits annexed hereto; (ii) all due diligence and other
information necessary to verify the accuracy and completeness of such
representations, warranties and covenants; (iii) the Company’s Form 10-KSB for
the year ended August 31, 2006 and Form 10-QSB for the period ended
November 30, 2006; and (iv) answers to all questions the Investor submitted
to
the Company regarding an investment in the Company; and the Investor has
relied
on the information contained therein and has not been furnished any other
documents, literature, memorandum or prospectus.
Section
3.8. Registration Rights
Agreement. The parties have entered into the Registration Rights
Agreement dated the date hereof.
Section
3.9. No General
Solicitation. Neither the Company, nor any of its affiliates, nor any
person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the shares of
Common
Stock offered hereby.
Section
3.10. Not an Affiliate. The Investor is
not an officer, director or a person that directly, or indirectly through
one or
more intermediaries, controls or is controlled by, or is under common control
with the Company or any “Affiliate” of the Company (as that term is defined in
Rule 405 of the Securities Act).
Section
3.11. Trading Activities. The Investor’s
trading activities with respect to the Company’s Common Stock shall be in
compliance with all applicable federal and state securities laws, rules and
regulations and the rules and regulations of the Principal Market on which
the
Company’s Common Stock is listed or traded. Neither the Investor nor its
affiliates has an open short position in the Common Stock of the Company,
the
Investor agrees that it shall not, and that it will cause its affiliates
not to,
engage in any short sales of or hedging transactions with respect to the
Common
Stock.
ARTICLE
IV.
Representations
and Warranties of the Company
Except
as
stated below, on the disclosure schedules attached hereto or in the SEC
Documents (as defined herein), the Company hereby represents and warrants
to,
and covenants with, the Investor that the following are true and correct
as of
the date hereof:
Section
4.1. Organization and
Qualification. The Company is duly incorporated or organized and
validly existing in the jurisdiction of its incorporation or organization
and
has all requisite corporate power to own its properties and to carry on its
business as now being conducted. Each of the Company and its
subsidiaries is duly qualified as a foreign corporation to do business and
is in
good standing in every jurisdiction in which the nature of the business
conducted by it makes such qualification necessary, except to the extent
that
the failure to be so qualified or be in good standing would not have a Material
Adverse Effect on the Company and its subsidiaries taken as a
whole.
Section
4.2. Authorization, Enforcement, Compliance
with Other Instruments. (i) The Company has the requisite corporate
power and authority to enter into and perform this Agreement, the Registration
Rights Agreement and any related agreements, in accordance with the terms
hereof
and thereof, (ii) the execution and delivery of this Agreement, the Registration
Rights Agreement and any related agreements by the Company and the consummation
by it of the transactions contemplated hereby and thereby, have been duly
authorized by the Company’s Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors or its
stockholders, (iii) this Agreement, the Registration Rights Agreement and
any
related agreements have been duly executed and delivered by the Company,
(iv)
this Agreement, the Registration Rights Agreement and assuming the execution
and
delivery thereof and acceptance by the Investor and any related agreements
constitute the valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability
may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors’ rights and
remedies.
Section
4.3. Capitalization. The
authorized capital stock of the Company is described in its most recent Form
10-QSB. All of such outstanding shares have been validly issued and
are fully paid and nonassessable. Except as disclosed in the SEC
Documents, no shares of Common Stock are subject to preemptive rights or
any
other similar rights or any liens or encumbrances suffered or permitted by
the
Company. Except as disclosed in the SEC Documents, as of the date
hereof, (i) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, or contracts, commitments, understandings
or
arrangements by which the Company or any of its subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of
its
subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries, (ii) there are no outstanding debt securities (iii) there are
no
outstanding registration statements other than on Form S-8 and (iv) there
are no
agreements or arrangements under which the Company or any of its subsidiaries
is
obligated to register the sale of any of their securities under the Securities
Act (except pursuant to the Registration Rights Agreement). There are
no securities or instruments containing anti-dilution or similar provisions
that
will be triggered by this Agreement or any related agreement or the consummation
of the transactions described herein or therein. The Company has
furnished to the Investor true and correct copies of the Company’s Articles of
Incorporation, as amended and as in effect on the date hereof (the “Certificate
of Incorporation”), and the Company’s By-laws, as in effect on the date hereof
(the “By-laws”), and the terms of all securities convertible into or exercisable
for Common Stock and the material rights of the holders thereof in respect
thereto.
Section
4.4. No Conflict. The
execution, delivery and performance of this Agreement by the Company and
the
consummation by the Company of the transactions contemplated hereby will
not (i)
result in a violation of the Certificate of Incorporation, any certificate
of
designations of any outstanding series of preferred stock of the Company
or
By-laws or (ii) conflict with or constitute a default (or an event which
with
notice or lapse of time or both would become a default) under, or give to
others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, or result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations and the rules and regulations of the Principal Market on which
the
Common Stock is quoted) applicable to the Company or any of its subsidiaries
or
by which any material property or asset of the Company or any of its
subsidiaries is bound or affected and which would cause a Material Adverse
Effect. Except as disclosed in the SEC Documents, neither the Company
nor its subsidiaries is in violation of any term of or in default under its
Articles of Incorporation or By-laws or their organizational charter or by-laws,
respectively, or any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries. The
business of the Company and its subsidiaries is not being conducted in violation
of any material law, ordinance, regulation of any governmental
entity. Except as specifically contemplated by this Agreement and as
required under the Securities Act and any applicable state securities laws,
the
Company is not required to obtain any consent, authorization or order of,
or
make any filing or registration with, any court or governmental agency in
order
for it to execute, deliver or perform any of its obligations under or
contemplated by this Agreement or the Registration Rights Agreement in
accordance with the terms hereof or thereof. All consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected
on
or prior to the date hereof. The Company and its subsidiaries are
unaware of any fact or circumstance which might give rise to any of the
foregoing.
Section
4.5. SEC Documents; Financial
Statements. The Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC under
the
Exchange Act since December 31, 2006. The Company has delivered to
the Investor or its representatives, or made available through the SEC’s website
at xxxx://xxx.xxx.xxx, true and complete copies of the SEC
Documents. As of their respective dates, the financial statements of
the Company disclosed in the SEC Documents (the “Financial Statements”) complied
as to form in all material respects with applicable accounting requirements
and
the published rules and regulations of the SEC with respect
thereto. Such financial statements have been prepared in accordance
with generally accepted accounting principles, consistently applied, during
the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed
or
summary statements) and, fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case
of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Investor which
is not
included in the SEC Documents contains any untrue statement of a material
fact
or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
Section
4.6. 10b-5. The SEC Documents do
not include any untrue statements of material fact, nor do they omit to state
any material fact required to be stated therein necessary to make the statements
made, in light of the circumstances under which they were made, not
misleading.
Section
4.7. No Default. Except as
disclosed in the SEC Documents, the Company is not in default in the performance
or observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust or other material instrument
or agreement to which it is a party or by which it is or its property is
bound
and neither the execution, nor the delivery by the Company, nor the performance
by the Company of its obligations under this Agreement or any of the exhibits
or
attachments hereto will conflict with or result in the breach or violation
of
any of the terms or provisions of, or constitute a default or result in the
creation or imposition of any lien or charge on any assets or properties
of the
Company under its Certificate of Incorporation, By-Laws, any material indenture,
mortgage, deed of trust or other material agreement applicable to the Company
or
instrument to which the Company is a party or by which it is bound, or any
statute, or any decree, judgment, order, rules or regulation of any court
or
governmental agency or body having jurisdiction over the Company or its
properties, in each case which default, lien or charge is likely to cause
a
Material Adverse Effect on the Company’s business or financial
condition.
Section
4.8. Absence of Events of
Default. Except for matters described in the SEC Documents and/or
this Agreement, no Event of Default, as defined in the respective agreement
to
which the Company is a party, and no event which, with the giving of notice
or
the passage of time or both, would become an Event of Default (as so defined),
has occurred and is continuing, which would have a Material Adverse Effect
on
the Company’s business, properties, prospects, financial condition or results of
operations.
Section
4.9. Intellectual Property
Rights. The Company and its subsidiaries own or possess adequate
rights or licenses to use all material trademarks, trade names, service marks,
service xxxx registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets
and
rights necessary to conduct their respective businesses as now
conducted. The Company and its subsidiaries do not have any knowledge
of any infringement by the Company or its subsidiaries of trademark, trade
name
rights, patents, patent rights, copyrights, inventions, licenses, service
names,
service marks, service xxxx registrations, trade secret or other similar rights
of others, and, to the knowledge of the Company, there is no claim, action
or
proceeding being made or brought against, or to the Company’s knowledge, being
threatened against, the Company or its subsidiaries regarding trademark,
trade
name, patents, patent rights, invention, copyright, license, service names,
service marks, service xxxx registrations, trade secret or other infringement;
and the Company and its subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing.
Section
4.10. Employee Relations. Neither the
Company nor any of its subsidiaries is involved in any labor dispute nor,
to the
knowledge of the Company or any of its subsidiaries, is any such dispute
threatened. None of the Company’s or its subsidiaries’ employees is a
member of a union and the Company and its subsidiaries believe that their
relations with their employees are good.
Section
4.11. Environmental Laws. The Company
and its subsidiaries are (i) in compliance with any and all applicable material
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and
(iii)
are in compliance with all terms and conditions of any such permit, license
or
approval.
Section
4.12. Title. Except as set forth in the
SEC Documents, the Company has good and marketable title to its properties
and
material assets owned by it, free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest other than such as are
not
material to the business of the Company. Any real property and
facilities held under lease by the Company and its subsidiaries are held
by them
under valid, subsisting and enforceable leases with such exceptions as are
not
material and do not interfere with the use made and proposed to be made of
such
property and buildings by the Company and its subsidiaries.
Section
4.13. Insurance. The Company and each of
its subsidiaries are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as management of the Company
believes to be prudent and customary in the businesses in which the Company
and
its subsidiaries are engaged. Neither the Company nor any such
subsidiary has been refused any insurance coverage sought or applied for
and
neither the Company nor any such subsidiary has any reason to believe that
it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may
be
necessary to continue its business at a cost that would not materially and
adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and its subsidiaries, taken as a
whole.
Section
4.14. Regulatory Permits. The Company
and its subsidiaries possess all material certificates, authorizations and
permits issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct their respective businesses, and neither
the
Company nor any such subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization
or
permit.
Section
4.15. Internal Accounting Controls. The
Company and each of its subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions
are
executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to
maintain asset accountability, (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.
Section
4.16. No Material Adverse Breaches,
etc. Except as set forth in the SEC Documents, neither the Company
nor any of its subsidiaries is subject to any charter, corporate or other
legal
restriction, or any judgment, decree, order, rule or regulation which in
the
judgment of the Company’s officers has or is expected in the future to have a
Material Adverse Effect on the business, properties, operations, financial
condition, results of operations or prospects of the Company or its
subsidiaries. Except as set forth in the SEC Documents, neither the
Company nor any of its subsidiaries is in breach of any contract or agreement
which breach, in the judgment of the Company’s officers, has or is expected to
have a Material Adverse Effect on the business, properties, operations,
financial condition, results of operations or prospects of the Company or
its
subsidiaries.
Section
4.17. Absence of Litigation. Except as
set forth in the SEC Documents, there is no action, suit, proceeding, inquiry
or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending against or affecting the Company,
the Common Stock or any of the Company’s subsidiaries, wherein an unfavorable
decision, ruling or finding would (i) have a Material Adverse Effect on the
transactions contemplated hereby (ii) adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform
its
obligations under, this Agreement or any of the documents contemplated herein,
or (iii) except as expressly disclosed in the SEC Documents, have a Material
Adverse Effect on the business, operations, properties, financial condition
or
results of operation of the Company and its subsidiaries taken as a
whole.
Section
4.18. Subsidiaries. Except as disclosed
in the SEC Documents, the Company does not presently own or control, directly
or
indirectly, any interest in any other corporation, partnership, association
or
other business entity.
Section
4.19. Tax Status. Except as disclosed in
the SEC Documents, the Company and each of its subsidiaries has made or filed
all federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject and (unless and only
to the
extent that the Company and each of its subsidiaries has set aside on its
books
provisions reasonably adequate for the payment of all unpaid and unreported
taxes) has paid all taxes and other governmental assessments and charges
that
are material in amount, shown or determined to be due on such returns, reports
and declarations, except those being contested in good faith and has set
aside
on its books provision reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be
due by the taxing authority of any jurisdiction, and the officers of the
Company
know of no basis for any such claim.
Section
4.20. Certain Transactions. Except as
set forth in the SEC Documents none of the officers, directors, or employees
of
the Company is presently a party to any transaction with the Company (other
than
for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to
or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or,
to the
knowledge of the Company, any corporation, partnership, trust or other entity
in
which any officer, director, or any such employee has a substantial interest
or
is an officer, director, trustee or partner.
Section
4.21. Fees and Rights of First
Refusal. The Company is not obligated to offer the securities offered
hereunder on a right of first refusal basis or otherwise to any third parties
including, but not limited to, current or former shareholders of the Company,
underwriters, brokers, agents or other third parties.
Section
4.22. Use of Proceeds. The Company shall
use the net proceeds from this offering for general corporate purposes,
including, without limitation, the payment of loans incurred by the
Company. However, in no event shall the Company use the net proceeds
from this offering for the payment (or loan to any such person for the payment)
of any judgment, or other liability, incurred by any executive officer, officer,
director or employee of the Company, except for any liability owed to such
person for services rendered or as disclosed in a SEC document, or if any
judgment or other liability is incurred by such person originating from services
rendered to the Company, or the Company has indemnified such person from
liability.
Section
4.23. Further Representation and Warranties of the
Company. For so long as any securities issuable hereunder held by the
Investor remain outstanding, the Company acknowledges, represents, warrants
and
agrees that it will use its best efforts to maintain the listing of its Common
Stock on the Principal Market.
Section
4.24. Opinion of Counsel. Investor shall
receive an opinion letter from counsel to the Company on the date
hereof.
Section
4.25. Opinion of Counsel. The Company
will obtain for the Investor, at the Company’s expense, any and all opinions of
counsel which may be reasonably required in order to sell the securities
issuable hereunder without restriction.
Section
4.26. Dilution. The Company is aware and
acknowledges that issuance of shares of the Company’s Common Stock could cause
dilution to existing shareholders and could significantly increase the
outstanding number of shares of Common Stock.
ARTICLE
V.
Indemnification
The
Investor and the Company represent to the other the following with respect
to
itself:
Section
5.1. Indemnification.
(a) In
consideration of the Investor’s execution and delivery of this Agreement, and in
addition to all of the Company’s other obligations under this Agreement, the
Company shall defend, protect, indemnify and hold harmless the Investor,
and all
of its officers, directors, partners, employees and agents (including, without
limitation, those retained in connection with the transactions contemplated
by
this Agreement) (collectively, the “Investor Indemnitees”) from and against any
and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Investor Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by
the Investor Indemnitees or any of them as a result of, or arising out of,
or
relating to (a) any misrepresentation or breach of any representation or
warranty made by the Company in this Agreement or the Registration Rights
Agreement or any other certificate, instrument or document contemplated hereby
or thereby, (b) any breach of any covenant, agreement or obligation of the
Company contained in this Agreement or the Registration Rights Agreement
or any
other certificate, instrument or document contemplated hereby or
thereby, or (c) any cause of action, suit or claim brought or made against
such
Investor Indemnitee not arising out of any action or inaction of an Investor
Indemnitee, and arising out of or resulting from the execution, delivery,
performance or enforcement of this Agreement or any other instrument, document
or agreement executed pursuant hereto by any of the Investor
Indemnitees. To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities, which is permissible under applicable law.
(b) In
consideration of the Company’s execution and delivery of this Agreement, and in
addition to all of the Investor’s other obligations under this Agreement, the
Investor shall defend, protect, indemnify and hold harmless the Company and
all
of its officers, directors, shareholders, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the “Company Indemnitees”) from
and against any and all Indemnified Liabilities incurred by the Company
Indemnitees or any of them as a result of, or arising out of, or relating
to (a)
any misrepresentation or breach of any representation or warranty made by
the
Investor in this Agreement, the Registration Rights Agreement, or any instrument
or document contemplated hereby or thereby executed by the Investor, (b)
any
breach of any covenant, agreement or obligation of the Investor(s) contained
in
this Agreement, the Registration Rights Agreement or any other
certificate, instrument or document contemplated hereby or thereby executed
by
the Investor, or (c) any cause of action, suit or claim brought or made against
such Company Indemnitee based on misrepresentations or due to
a breach by the Investor and arising out of or resulting from the
execution, delivery, performance or enforcement of this Agreement or any
other
instrument, document or agreement executed pursuant hereto by any of the
Company
Indemnitees. To the extent that the foregoing undertaking by the
Investor may be unenforceable for any reason, the Investor shall make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities, which is permissible under applicable law.
(c) The
obligations of the parties to indemnify or make contribution under this Section
5.1 shall survive termination.
ARTICLE
VI.
Covenants
of the Company
Section
6.1. Registration
Rights. The Company shall cause the Registration Rights Agreement to
remain in full force and effect and the Company shall comply in all material
respects with the terms thereof.
Section
6.2. Listing of Common
Stock. The Company shall use its best efforts to maintain the Common
Stock’s authorization for quotation on the Principal Market.
Section
6.3. Exchange Act
Registration. The Company will cause its Common Stock to continue to
be registered under Section 12(g) of the Exchange Act, will file in a timely
manner all reports and other documents required of it as a reporting company
under the Exchange Act and will not take any action or file any document
(whether or not permitted by Exchange Act or the rules thereunder) to terminate
or suspend such registration or to terminate or suspend its reporting and
filing
obligations under said Exchange Act.
Section
6.4. Transfer Agent
Instructions. Upon effectiveness of the Registration Statement the
Company shall deliver instructions to its transfer agent to issue shares
of
Common Stock to the Investor free of restrictive legends on or before each
Advance Date.
Section
6.5. Corporate
Existence. The Company will take all steps necessary to preserve and
continue the corporate existence of the Company.
Section
6.6. Notice of Certain Events Affecting
Registration; Suspension of Right to Make an Advance. The Company
will immediately notify the Investor upon its becoming aware of the occurrence
of any of the following events in respect of a registration statement or
related
prospectus relating to an offering of Registrable Securities: (i) receipt
of any
request for additional information by the SEC or any other Federal or state
governmental authority during the period of effectiveness of the Registration
Statement for amendments or supplements to the registration statement or
related
prospectus; (ii) the issuance by the SEC or any other Federal or state
governmental authority of any stop order suspending the effectiveness
of the Registration Statement or the initiation of any proceedings for that
purpose; (iii) receipt of any notification with respect to the suspension
of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening
of any
proceeding for such purpose; (iv) the happening of any event that makes any
statement made in the Registration Statement or related prospectus of any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in the
Registration Statement, related prospectus or documents so that, in the case
of
the Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and that in the
case
of the related prospectus, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and (v) the Company’s reasonable
determination that a post-effective amendment to the Registration Statement
would be appropriate; and the Company will promptly make available to the
Investor any such supplement or amendment to the related
prospectus. The Company shall not deliver to the Investor any Advance
Notice during the continuation of any of the foregoing events.
Section
6.7. Issuance of the Company’s Common
Stock. The sale of the shares of Common Stock shall be made in
accordance with the provisions and requirements of Regulation D and any
applicable state securities law.
Section
6.8. Review of Public
Disclosures. All SEC filings (including, without limitation, all
filings required under the Exchange Act, which include Forms 10-Q and 10-QSB,
10-K and 10K-SB, 8-K, etc) and other public disclosures made by the Company,
including, without limitation, all press releases, investor relations materials,
and scripts of analysts meetings and calls, shall be reviewed and approved
for
release by the Company’s attorneys and, if containing financial information, the
Company’s independent certified public accountants.
Section
6.9. Market Activities. The
Company will not, directly or indirectly, take any action designed to cause
or
result in, or that constitutes or might reasonably be expected to constitute,
the stabilization or manipulation of the price of any security of the Company
to
facilitate the sale or resale of the Common Stock.
ARTICLE
VII.
Conditions
for Advance and Conditions to Closing
Section
7.1. Conditions Precedent to the
Obligations of the Company. The obligation hereunder of the Company
to issue and sell the shares of Common Stock to the Investor incident to
each
Closing is subject to the satisfaction, or waiver by the Company, at or before
each such Closing, of each of the conditions set forth below.
(a) Accuracy
of the Investor’s Representations and Warranties. The representations
and warranties of the Investor shall be true and correct in all material
respects.
(b) Performance
by the Investor. The Investor shall have performed, satisfied and
complied in all respects with all covenants, agreements and conditions required
by this Agreement and the Registration Rights Agreement to be performed,
satisfied or complied with by the Investor at or prior to such
Closing.
Section
7.2. Conditions Precedent to the Right
of the Company to Deliver an Advance Notice. The right of the Company
to deliver an Advance Notice is subject to the fulfillment by the Company,
on
such Advance Notice (a “Condition Satisfaction Date”), of each of the following
conditions:
(a) Registration
of the Common Stock with the SEC. The Company shall have filed with
the SEC a Registration Statement with respect to the resale of the Registrable
Securities in accordance with the terms of the Registration Rights
Agreement. As set forth in the Registration Rights Agreement, the
Registration Statement shall have previously become effective and shall remain
effective on each Condition Satisfaction Date and (i) neither the Company
nor
the Investor shall have received notice that the SEC has issued or intends
to
issue a stop order with respect to the Registration Statement or that the
SEC
otherwise has suspended or withdrawn the effectiveness of the Registration
Statement, either temporarily or permanently, or intends or has threatened
to do
so (unless the SEC’s concerns have been addressed and the Investor is reasonably
satisfied that the SEC no longer is considering or intends to take such action),
and (ii) no other suspension of the use or withdrawal of the effectiveness
of
the Registration Statement or related prospectus shall exist. The
Registration Statement must have been declared effective by the SEC prior
to the
first Advance Notice Date.
(b) Authority. The
Company shall have obtained all permits and qualifications required by any
applicable state in accordance with the Registration Rights Agreement for
the
offer and sale of the shares of Common Stock, or shall have the availability
of
exemptions therefrom. The sale and issuance of the shares of Common
Stock shall be legally permitted by all laws and regulations to which the
Company is subject.
(c) Fundamental
Changes. There shall not exist any fundamental changes to the information
set
forth in the Registration Statement which would require the Company to file
a
post-effective amendment to the Registration Statement.
(d) Performance
by the Company. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement and the Registration Rights Agreement to be
performed, satisfied or complied with by the Company at or prior to each
Condition Satisfaction Date.
(e) No
Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction that prohibits
or directly and adversely affects any of the transactions contemplated by
this
Agreement, and no proceeding shall have been commenced that may have the
effect
of prohibiting or adversely affecting any of the transactions contemplated
by
this Agreement.
(f) No
Suspension of Trading in or Delisting of Common Stock. The trading of
the Common Stock is not suspended by the SEC or the Principal Market (if
the
Common Stock is traded on a Principal Market). The issuance of shares
of Common Stock with respect to the applicable Closing, if any, shall not
violate the shareholder approval requirements of the Principal Market (if
the
Common Stock is traded on a Principal Market). The Company shall not
have received any notice threatening the continued listing of the Common
Stock
on the Principal Market (if the Common Stock is traded on a Principal
Market).
(g) Not
used
(h) No
Knowledge. The Company has no knowledge of any event which would be
more likely than not to have the effect of causing such Registration Statement
to be suspended or otherwise ineffective.
(i) Executed
Advance Notice. The Investor shall have received the Advance Notice
executed by an officer of the Company and the representations contained in
such
Advance Notice shall be true and correct as of each Condition Satisfaction
Date.
ARTICLE
VIII.
Due
Diligence Review; Non-Disclosure of Non-Public
Information
Section
8.1. Non-Disclosure of Non-Public
Information.
(a) The
Company covenants and agrees that it shall refrain from disclosing, and shall
cause its officers, directors, employees and agents to refrain from disclosing,
any material non-public information to the Investor without also disseminating
such information to the public, unless prior to disclosure of such information
the Company identifies such information as being material non-public information
and provides the Investor with the opportunity to accept or refuse to accept
such material non-public information for review.
(b) Nothing
herein shall require the Company to disclose non-public information to the
Investor or its advisors or representatives, and the Company represents that
it
does not disseminate non-public information to any investors who purchase
stock
in the Company in a public offering, to money managers or to securities
analysts, provided, however, that notwithstanding anything herein to the
contrary, the Company will, as hereinabove provided, immediately notify the
advisors and representatives of the Investor and, if any, underwriters, of
any
event or the existence of any circumstance (without any obligation to disclose
the specific event or circumstance) of which it becomes aware, constituting
non-public information (whether or not requested of the Company specifically
or
generally during the course of due diligence by such persons or entities),
which, if not disclosed in the prospectus included in the Registration Statement
would cause such prospectus to include a material misstatement or to omit
a
material fact required to be stated therein in order to make the statements,
therein, in light of the circumstances in which they were made, not
misleading. Nothing contained in this Section 8.2 shall be construed
to mean that such persons or entities other than the Investor (without the
written consent of the Investor prior to disclosure of such information)
may not
obtain non-public information in the course of conducting due diligence in
accordance with the terms of this Agreement and nothing herein shall prevent
any
such persons or entities from notifying the Company of their opinion that
based
on such due diligence by such persons or entities, that the Registration
Statement contains an untrue statement of material fact or omits a material
fact
required to be stated in the Registration Statement or necessary to make
the
statements contained therein, in light of the circumstances in which they
were
made, not misleading.
ARTICLE
IX.
Choice
of
Law/Jurisdiction
Section
9.1. Governing Law. This
Agreement shall be governed by and interpreted in accordance with the laws
of
the State of Texas without regard to the principles of conflict of
laws. The parties further agree that any action between them shall be
heard in Houston, Texas, and expressly consent to the jurisdiction and venue
of
the federal or state courts in Xxxxxx County, Texas, for the adjudication
of any
civil action asserted pursuant to this paragraph.
ARTICLE
X.
Assignment;
Termination
Section
10.1. Assignment. Neither this Agreement
nor any rights of the Company hereunder may be assigned to any other
Person.
Section
10.2. Termination.
(a) The
obligations of the Investor to make Advances under Article II hereof shall
terminate thirty (30) months after the Effective Date.
(b) The
obligation of the Investor to make an Advance to the Company pursuant to
this
Agreement shall terminate permanently (including with respect to an Advance
Date
that has not yet occurred) in the event that (i) there shall occur any stop
order or suspension of the effectiveness of the Registration Statement for
an
aggregate of fifty (50) Trading Days, other than due to the acts of the
Investor, during the Commitment Period, or (ii) the Company shall at any
time
fail materially to comply with the requirements of Article VI and such failure
is not cured within thirty (30) days after receipt of written notice from
the
Investor, provided, however, that this termination provision shall not apply
to
any period commencing upon the filing of a post-effective amendment to such
Registration Statement and ending upon the date on which such post effective
amendment is declared effective by the SEC.
(c) The
Company may terminate this Agreement by providing the Investor thirty (30)
days
(the “Notice Period”) advance written notice. The Investor shall not
be obligated to accept any Advance Notices during the Notice
Period. Upon termination of this Agreement the Company shall have no
further obligations to the Investor under this Agreement or the Registration
Rights Agreement, provided however the Company shall remain obligated to
Comply
with its obligations under Section 3 of the Registration Rights Agreement
and
any and all related obligations during such time as the Investor has sold
all of
the Registrable Securities, as this term is defined in the Registration Rights
Agreement.
ARTICLE
XI.
Notices
Section
11.1. Notices. Any notices, consents,
waivers, or other communications required or permitted to be given under
the
terms of this Agreement must be in writing and will be deemed to have been
delivered (i) upon receipt, when delivered personally; (ii) upon receipt,
when
sent by facsimile, provided a copy is mailed by U.S. certified mail, return
receipt requested; (iii) three (3) days after being sent by U.S. certified
mail,
return receipt requested, or (iv) one (1) day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to
the
party to receive the same. The addresses and facsimile numbers for
such communications shall be:
If
to the
Company, to:
0000
Xxxxxxxxxx Xxxx
Xxxxxx
Xxxxxxx,
Xxxxx 00000
Attention: Xxxxxx
Xxxxxx
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
If
to the
Investor(s):
IFG
Opportunity Fund, LLC
XX
Xxx 0000
Xxxxxxx,
XX 00000
Attention: Xxxxxxx
Xxxxxxx
Portfolio
Manager
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Each
party shall provide five (5) days’ prior written notice to the other party of
any change in address or facsimile number.
ARTICLE
XII.
Miscellaneous
Section
12.1. Counterparts. This Agreement may
be executed in two or more identical counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other
party. In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause four (4)
additional original executed signature pages to be physically delivered to
the
other party within five (5) days of the execution and delivery hereof, though
failure to deliver such copies shall not affect the validity of this
Agreement.
Section
12.2. Entire Agreement; Amendments. This
Agreement supersedes all other prior oral or written agreements between the
Investor, the Company, their affiliates and persons acting on their behalf
with
respect to the matters discussed herein, and this Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set
forth
herein or therein, neither the Company nor the Investor makes any
representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended
other than by an instrument in writing signed by the party to be charged
with
enforcement.
Section
12.3. RESERVED.
Section
12.3. Reporting Entity for the Common
Stock. The reporting entity relied upon for the determination of the
trading price or trading volume of the Common Stock on any given Trading
Day for
the purposes of this Agreement shall be Bloomberg, L.P. or any successor
thereto. The written mutual consent of the Investor and the Company
shall be required to employ any other reporting entity.
Section
12.4. Fees and Expenses. The Company
hereby agrees to pay the following fees:
(a) Expense
Reimbursement Fee. Each of the parties shall pay its own fees and
expenses (including the fees of any attorneys, accountants, appraisers or
others
engaged by such party) in connection with this Agreement and the transactions
contemplated hereby, except that the Company shall pay an Expense Reimbursement
Fee of Ten Thousand Dollars ($10,000) to the Investor.
(b) Company
shall issue to Investor 300,000 shares of Common Stock on the day of closing.
Common stock referenced herein shall have piggyback registration
rights.
(c) Commitment
Fees. On each Advance Date the Company shall pay to the Investor,
directly out of the gross proceeds of each Advance, an amount equal to three
percent (3%) of the amount of each Advance. The Company hereby agrees
that if such payment, as is described above, is not made by the Company on
the
Advance Date, such payment shall be made as outlined and mandated by Section
2.3
of this Agreement.
Section
12.5. Confidentiality. If for any reason
the transactions contemplated by this Agreement are not consummated, each
of the
parties hereto shall keep confidential any information obtained from any
other
party (except information publicly available or in such party’s domain prior to
the date hereof, and except as required by court order) and shall promptly
return to the other parties all schedules, documents, instruments, work papers
or other written information without retaining copies thereof, previously
furnished by it as a result of this Agreement or in connection
herein.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the parties hereto have caused this Standby Equity Distribution
Agreement to be executed by the undersigned, thereunto duly authorized, as
of
the date first set forth above.
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Name:
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Xxxxxx
Xxxxxx
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Title:
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CEO
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INVESTOR: IFG
Opportunity Fund, LLC
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By:
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Name:
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Xxxxxxx
Xxxxxxx
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Title:
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Portfolio
Manager
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EXHIBIT
A
ADVANCE
NOTICE
The
undersigned, _______________________ hereby certifies, with respect to the
sale
of shares of Common Stock of EXOBOX TECHNOLOGIES CORP. (the “Company”) issuable
in connection with this Advance Notice, delivered pursuant to the Standby
Equity
Distribution Agreement (the “Agreement”), as follows:
1. The
undersigned is the duly elected ______________ of the Company.
2. There
are no fundamental changes to the information set forth in the Registration
Statement which would require the Company to file a post effective amendment
to
the Registration Statement.
3. The
Company has performed in all material respects all covenants and agreements
to
be performed by the Company and has complied in all material respects with
all
obligations and conditions contained in the Agreement on or prior to the
Advance
Notice Date, and shall continue to perform in all material respects all
covenants and agreements to be performed by the Company through the applicable
Advance Date. All conditions to the delivery of this Advance Notice
are satisfied as of the date hereof.
4. The
undersigned hereby represents, warrants and covenants that it has made all
filings (“SEC Filings”) required to be made by it pursuant to applicable
securities laws (including, without limitation, all filings required under
the
Securities Exchange Act of 1934, which include Forms 10-Q or 10-QSB, 00-X
xx
00-XXX, 0-X, xxx.). All SEC Filings and other public disclosures made
by the Company, including, without limitation, all press releases, analysts
meetings and calls, etc. (collectively, the “Public Disclosures”), have been
reviewed and approved for release by the Company’s attorneys and, if containing
financial information, the Company’s independent certified public
accountants. None of the Company’s Public Disclosures contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the
light
of the circumstances under which they were made, not misleading.
5. The
Advance requested is _____________________.
The
undersigned has executed this Certificate this ____ day
of _________________.
By:
Name:
Title:
If
Returning This Advance Notice via Facsimile Please Send To: (___)
___-____
If
by
Mail, via Federal Express To:
______________________________________
