EXHIBIT 2.1
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INVESTMENT AGREEMENT
This Agreement is dated as of the 1st day of February 2007 by and among
Semotus Solutions, Inc,, a Nevada corporation with its principal office at 000
Xxxxxxxxxx Xxx., Xxxxx 000, Xxx Xxxxx, XX 00000 (the "Company"), and Knezevic
Family Trust dated June 30, 1992 (the "Investor").
WHEREAS, the Company and the Investor have been discussing a potential
investment by the Investor in the Company, the use of proceeds of that
investment is intended for the Company's general corporate purposes, including
increasing the Company's sales and marketing efforts; and
WHEREAS, it was the mutual desire of the Company and the Investor that the
Investor's investment in the Company would take the form of a promissory note
that would be convertible into shares of the Company's common stock at any time
at the option of the holder at a rate that would be provided for in such
promissory note; and
NOW THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereto agree as follows.
1. PURCHASE OF CONVERTIBLE PROMISSORY NOTE.
Pursuant to the Convertible Promissory Note, dated the date hereof and attached
as Exhibit A, the Company has executed to the Investor the Convertible
Promissory Note. The Company hereby warrants and represents to Investor that:
(i) the Company's ability to issue the Common Shares and to pay cash dividends
for a reasonably foreseeable period into the future is not prohibited by
applicable provisions of law or the terms and provisions of any agreement of the
Company, including any agreement or instrument relating to its indebtedness or
the Company's Certificate of Incorporation or Bylaws, and the conversion as
provided for in such Convertible Promissory Note would not constitute a breach
thereof, or a default thereunder, and (ii) the making of the conversion under
such Convertible Promissory Note is not restricted or prohibited by any
applicable law, rule or regulation, except for the American Stock Exchange's
approval, which the Company will apply for as soon as possible and use its best
efforts to secure such approval.
Restrictions on Transferability. The Investor understands that the Common Shares
to be issued upon conversion will be restricted securities subject to the resale
provisions of Rule 144.
2. FURTHER INVESTMENT.
The Investor and the Company agree to discuss, from time to time, possible
future investments by the Investor in the securities of the Company in
connection with future acquisition opportunities that the Company may identify.
The Company acknowledges that no Investor has made any commitment to make any
such future investment, and that the decision to make any such future investment
is in the sole discretion of each Investor. The Investor acknowledges that the
Company has made no commitment to offer any such future investment to any
Investor, and
that the decision to make any such offer of future investment is in the sole
discretion of the Company.
3. PUBLIC STATEMENTS OR RELEASES.
Neither the Company nor any Investor shall make any public announcement with
respect to the existence or terms of this Agreement or the transactions provided
for herein without the prior approval of the other parties, which shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, nothing in this
Section 3 shall prevent any party from making any public announcement it
considers necessary in order to satisfy its obligations under the law or the
rules of any national securities exchange or market, provided such party, to the
extent practicable, provides the other parties with an opportunity to review and
comment on any proposed public announcement before it is made.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The Company hereby
represents and warrants to, and covenants with, the Purchaser as follows:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Nevada. The Company is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property makes such qualification or
leasing necessary unless the failure to so qualify has not and could not
reasonably be expected to have a material adverse effect.
4.2 AUTHORIZED CAPITAL STOCK. The authorized capital stock of the Company
consists of 150,000,000 common shares and 5,000,000 preferred shares. The number
of common shares, preferred shares and all subscriptions, warrants, options,
convertible securities, and other rights to purchase or otherwise acquire equity
securities of the Company issued and outstanding as at September 30, 2006, are
as set forth in the unaudited financial statements of the Company for the
quarter ended September 30, 2006 (the "Financial Statements"). The number of
common shares, preferred shares and all subscriptions, warrants, options,
convertible securities, and other rights to purchase or otherwise acquire equity
securities of the Company issued and outstanding as at December 31, 2006, is set
forth in EXHIBIT A attached hereto. The Company has reserved from its duly
authorized capital stock the maximum number of shares of common stock issuable
pursuant to this Agreement.
4.3 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS. The Company
has full legal right, corporate power and authority to enter into this
Agreement, the Convertible Promissory yNote and the Registration Rights
Agreement as referenced in such Convertible Promissory Note (all of the
preceding including this Agreement, collectively, the "Transaction Agreements")
and perform the transactions contemplated hereby. The Transaction Agreements
have been duly authorized, executed and delivered by the Company. The
consummation by the Company of the transactions contemplated in the Transaction
Agreements will not violate any provision of the organizational documents of the
Company. The execution, delivery and performance of the Transaction Agreements
by the Company and the consummation by the Company of the transactions herein
and therein contemplated will not result in the creation of
any lien, charge, security interest or encumbrance upon any assets of the
Company pursuant to the terms or provisions of, or conflict with, result in the
breach or violation of, or constitute, either by itself or upon notice or the
passage of time or both, a default under any material agreement, mortgage, deed
of trust, lease, franchise, license, indenture, permit or other instrument to
which the Company is a party or by which the Company or any of its properties
may be bound or affected and in each case which individually or in the aggregate
would have a material adverse effect on the condition (financial or otherwise),
properties, business, prospects, or results of operations of the Company and its
subsidiaries, taken as a whole (a "MATERIAL ADVERSE EFFECT"), or any statute or
any authorization, judgment, decree, order, rule or regulation of any court or
any regulatory body, administrative agency or other governmental body applicable
to the Company or any of its respective properties. Upon its execution and
delivery, and assuming the valid execution thereof by the Investor, the
Transaction Agreements will constitute a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
4.4 Except as disclosed in press releases or filings with the SEC, the
Financial Statements are true, accurate, and complete as of the date of issuance
of such financial statements.
4.5 Since December 31, 2004, Buyer has filed all forms, reports and
documents required to be filed by Buyer (the "SEC Reports") with the Securities
and Exchange Commission (the "SEC") , and as of their respective dates, the SEC
Reports (i) were prepared in accordance with and comply with the requirements of
the Securities Act of 1933, as amended and all other applicable federal law (the
"SECURITIES ACT"), and the rules and regulations of the SEC thereunder
applicable to such SEC Reports and (ii) did not at the time they were filed (or
if subsequently amended or superseded by a filing prior to the date of this
Agreement, then on the date of such subsequent filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
5.1 The Purchaser represents and warrants to, and covenants with, the
Company that:
(i) the Purchaser is knowledgeable, sophisticated and experienced in
making, and is qualified to make, decisions with respect to
investments in securities representing an investment decision
like that involved in the purchase of the Shares, including
investments in securities issued by the Company, and has
requested, received, reviewed and understood all information it
deems relevant in making an informed decision to purchase the
Shares, including, without limitation, the information contained
in the Information Documents;
(ii) it acknowledges that the offering of the Shares pursuant to this
Agreement has not been reviewed by the Commission or any state or
Canadian regulatory authority;
(iii) the Purchaser is acquiring the number of Shares set forth in the
signature page hereto, for its own account for investment only
and with no present intention of distributing any of the Shares
the distribution thereof;
(iv) the Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers
to buy, purchase or otherwise acquire or take a pledge of) any of
the Shares which form such Shares except in compliance with the
Securities Act, the Securities Act Rules and Regulations and any
applicable state securities or blue sky laws;
(v) the Purchaser has completed or caused to be completed the
American Stock Exchange Questionnaire and the Stock Certificate
Questionnaire, attached hereto as Appendix I and Appendix II, and
the answers thereto are true and correct as of the date hereof;
(vi) the Purchaser has, in connection with its decision to purchase
the number of Shares set forth on the signature page hereof, not
relied upon any representations or other information (whether
oral or written) other than as set forth in the Information
Documents and the representations and warranties of the Company
contained herein;
(vii) the Purchaser has had an opportunity to discuss this investment
with representatives of the Company and ask questions of them and
such questions have been answered to the full satisfaction of the
Purchaser; and
(viii) the Purchaser is an "accredited investor" within the meaning of
Rule 501 of Regulation D promulgated under the Securities Act
because such Purchaser meets at least one of the conditions set
forth in Appendix III hereto.
5.2 The Purchaser acknowledges that
(i) except as provided for in the Registration Rights Agreement, the
Shares have not been and are not being registered under the
provisions of the 1933 Act, and may not be transferred unless the
Purchaser shall have delivered to the Company an opinion of
counsel, reasonably satisfactory in form, scope and substance to
the Company, to the effect that the Shares to be sold or
transferred may be sold or transferred pursuant to Rule 144
promulgated under the 1933 Act;
(ii) any sale of the Shares made in reliance on Rule 144 promulgated
under the 1933 Act may be made only in accordance with the terms
of said Rule and further, if said Rule is not applicable, any
resale of such Shares under circumstances in which the seller, or
the person through whom the sale is made, may be deemed to be an
underwriter, as that term is used in the 1933 Act, may require
compliance with some other exemption under the 1933 Act or the
rules and regulations of the Securities and Exchange Commission
("Commission" or the "SEC") thereunder; and
(iii) neither the Company nor any other person is under any obligation
to register the Shares under the 1933 Act except as provided for
in the Registration Rights Agreement.
5.3 The Purchaser further represents and warrants to, and covenants with,
the Company that
(i) the Purchaser has full right, power, authority and capacity to
enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all necessary action to
authorize the execution, delivery and performance of this
Agreement,
(ii) (comment: purchaser is a revocable trust).(iii) upon the
execution and delivery of this Agreement, this Agreement shall
constitute a valid and binding obligation of the Purchaser
enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' and contracting parties' rights generally and except
as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
5.4 The Purchaser recognizes that an investment in the Shares is
speculative and involves a high degree of risk, including a risk of total loss
of the Purchaser's investment. The Investor can bear the economic risk of this
investment and can afford a complete loss thereof. The Investor has such
knowledge and prior substantial investment experience in financial and business
matters, including investment in non-listed and non-registered securities, and
has had the opportunity to read the SEC Documents and to evaluate the merits and
risks of investment in the Company and the Shares.
5.5 All of the information provided to the Company or its agents or
representatives concerning the Purchaser's suitability to invest in the Company
and the representations and warranties contained herein, are complete, true and
correct as of the date hereof. The Purchaser understands that the Company is
relying on the statements contained herein to establish an exemption from
registration under U.S. federal and state securities laws.
5.6 The address set forth in the signature page hereto is the Purchaser's
true and correct domicile.
5.7 Prior to the execution of this Purchase Agreement, the Purchaser and
any affiliates of Purchaser have not participated in any hedging transactions
involving the Company's Common Stock and have not sold short any of the
Company's Common Stock. The Investor does not have a present intention to sell
the Shares, nor a present arrangement or intention to effect any distribution of
any of the Shares to or through any person or entity for purposes of selling,
offering, distributing or otherwise disposing of any of the Shares.
5.8 The Purchaser understands and agrees that each certificate or other
document evidencing any of the Shares shall be endorsed with the legend in
substantially the form set forth below, as well as any other legends required by
applicable law, and the Purchaser covenants that the Purchaser shall not
transfer the Shares represented by any such certificate without complying with
the restrictions on transfer described in the legends endorsed on such
certificates:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES
ACT"), OR REGISTERED OR QUALIFIED UNDER ANY APPLICABLE STATE
SECURITIES LAWS OR CANADIAN SECURITIES LAWS. THESE SECURITIES MAY NOT
BE TRANSFERRED UNLESS (A) COVERED BY AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND REGISTERED OR QUALIFIED UNDER
APPLICABLE STATE LAW AND, IF APPLICABLE, CANADIAN SECURITIES LAWS OR
(B) EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION REQUIREMENTS
ARE AVAILABLE. AS A CONDITION TO PERMITTING ANY TRANSFER OF THESE
SECURITIES, THE COMPANY MAY REQUIRE THAT IT BE FURNISHED WITH AN
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY TO THE EFFECT
THAT NO REGISTRATION OR QUALIFICATIONS IS LEGALLY REQUIRED FOR SUCH
TRANSFER.
5.9 The Investor may be required to bear the economic risk of the
investment indefinitely because none of the Shares may be sold, hypothecated or
otherwise disposed of unless subsequently registered under the Securities Act
and applicable state securities laws or an exemption from registration is
available. Any resale of any of the Shares can be made only pursuant to (i) a
registration statement under the Securities Act which is effective and current
at the time of sale or (ii) a specific exemption from the registration
requirements of the Securities Act. In claiming any such exemption, the Investor
will, prior to any offer or sale or distribution of any Shares advise the
Company and, if requested, provide the Company with a reasonably acceptable
written opinion of counsel, in form and substance reasonably satisfactory to
counsel to the Company, as to the applicability of such exemption to the
proposed sale or distribution.
5.10 The Investor understands that the exemption afforded by Rule 144
promulgated by the Commission under the Securities Act ("Rule 144") will not
become available for at least one year from the date of payment for the Shares
and any sales in reliance on Rule 144, if then available, can be made only in
accordance with the terms and conditions of that rule, including, among other
things, a requirement that the Company then be subject to, and current, in its
periodic filing requirements under the Exchange Act, and, among other things, a
limitation on the amount of shares of Common Stock that may be sold in specified
time periods and the manner in which the sale can be made; that, while the
Company's Common Stock is registered under the Exchange Act and the Company is
presently subject to the periodic reporting requirements of the Exchange Act,
there can be no assurance that the Company will remain subject to such reporting
obligations or current in its filing obligations; and that, in case Rule 144 is
not applicable to a disposition of the Shares, compliance with the registration
provisions of the Securities Act or some other exemption from such registration
provisions will be required.
5.11 The Investor has taken no action which would give rise to any claim by
any person for brokerage commission, finder's fees or similar payments by
Investor relating to this Purchase Agreement or the transactions contemplated
hereby. The Company shall have no obligation with respect to such fees or with
respect to any claims made by or on behalf of other persons for fees
of a type contemplated in this Section that may be due in connection with the
transactions contemplated hereby. The Investor shall indemnify and hold harmless
the Company, its employees, officers, directors, agents, and partners, and their
respective affiliates, from and against all claims, losses, damages, costs
(including the costs of preparation and reasonable attorney's fees) and expenses
suffered in respect of any such claimed or existing fees, as and when incurred.
5.12 The execution, delivery and performance of this Purchase Agreement by
the Investor, and the consummation of the transactions contemplated hereby, will
not (i) violate any provision of the Investor's corporate organizational
documents, (ii) violate, conflict with or result in the breach of any of the
terms of, result in a material modification of the effect of, otherwise, give
any other contracting party the right to terminate, or constitute (or with
notice or lapse of time or both) a default under, any contract or other
agreement to which the Investor is a party or by or to which the Investor or any
of the Investor's assets or properties may be bound or subject, (iii) violate
any order, judgment, injunction, award or decree of any court, arbitrator or
governmental or regulatory body by which the Investor, or the assets or
properties of the Investor are bound and (iv) to the Investor's knowledge,
violate any statute, law or regulation, including but not limited to the USA
Patriot Act.
6. SURVIVAL OF REPRESENTATIVES, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchaser herein and in any certificates or documents delivered pursuant
hereto or in connection herewith shall survive following the delivery to the
Purchaser of the Convertible Promissory Note and the subsequent conversion, if
any, of such Convertible Promissory Note.
7. CAPTIONS.
The captions and paragraph headings of this Agreement are solely for the
convenience of reference and shall not affect its interpretation.
8. SEVERABILITY.
Should any part or provision of this Agreement be held unenforceable or in
conflict with the applicable laws or regulations of any jurisdiction, the
invalid or unenforceable part or provisions shall be replaced with a provision
which accomplishes, to the extent possible, the original business purpose of
such part or provision in a valid and enforceable manner, and the remainder of
this Agreement shall remain binding upon the parties hereto.
9. GOVERNING LAW.
This Agreement shall be governed by, and construed in accordance with, the laws
of the State of California, without giving effect to conflict of law principles
thereof, except with respect to matters of law concerning the internal corporate
affairs of any corporate entity which is a party to or the subject of this
Agreement, and as to those matters the law of the jurisdiction under which the
respective entity derives its powers shall govern.
10. COUNTERPARTS.
This Agreement may be signed in one or more counterparts and by facsimile, each
of which shall be an original, but all of which together shall constitute one
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal
as of the day and year first above written.
SEMOTUS SOLUTIONS, INC.
By: /s/ Xxxxxxx XxXxxx
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Name: Xxxxxxx XxXxxx
Title: CEO
INVESTOR:
Knezevic Family Trust dated June 30, 1992
/s/ Xxxx Xxxxxxxx, Co-Trustee
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Xxxx Xxxxxxxx, Co-Trustee
/s/ Xxxx X. Xxxxxxxx, Co-Trustee
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Xxxx X. Xxxxxxxx, Co-Trustee
