AGREEMENT
EXHIBIT
10.11
AGREEMENT
THIS
AGREEMENT
(this
“Agreement”) dated April 13, 2007, is entered into between CORNELL
CAPITAL PARTNERS, L.P.
(the
“Purchaser”) and ETOTALSOURCE,
INC.
(the
“Company”).
1. Purchase
and Sale.
Subject
to the terms and conditions set forth in this Agreement, the Buyer shall
purchase from the Company and the Company shall issue to the Buyer a Secured
Convertible Debenture in the form attached hereto as Exhibit A (the
“Debenture”)
in the
face amount of $72,000 for a purchase price of $72,000.
2. Closing.
The
closing of the issuance of the Debenture shall occur within 1 business day
of
the satisfaction of all conditions precedent set forth in Section 6 hereof
at
the offices of the Buyer (the “Closing”).
3. Closing
Procedure.
At the
Closing, the Company shall execute and deliver the Debenture and the Buyer
shall
pay the Purchase Price in accordance with the disbursement instructions set
forth on Schedule I attached hereto.
4. Representations
and Warranties of the Company. The
Company makes the following representations, warranties and agreements and
confirms the following understandings:
(a) Organization
and Qualification.
The
Company and its subsidiaries are corporations duly organized and validly
existing in good standing under the laws of the jurisdiction in which they
are
incorporated, and have the requisite corporate power to own their properties
and
to carry on their business as now being conducted. Each of the Company and
its
subsidiaries is duly qualified as a foreign corporation to do business and
is in
good standing in every jurisdiction in which the nature of the business
conducted by it makes such qualification necessary, except to the extent that
the failure to be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries taken as a
whole.
(b) SEC
Documents: Financial Statements.
Since
January 1, 2005, except as disclosed on the Disclosure Schedule attached hereto,
the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC under the Securities Exchange
Act of 1934, as amended (the “Exchange
Act”)
(all
of the foregoing filed prior to the date hereof or amended after the date hereof
and all exhibits included therein and financial statements and schedules thereto
and documents incorporated by reference therein, being hereinafter referred
to
as the “SEC
Documents”).
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 Subscribers which is not included in the SEC
Documents, including, without limitation, information referred to in this
Agreement, contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
(c) 10(b)-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.
(d) Legal
and Other Proceedings. Except
as
set forth in the SEC Documents or the April 12, 2007 draft of the Company’s
December 31, 2006 10-KSB, neither the Company, nor any of its affiliates or
its
executive officers or directors (in their capacity as executive officers or
directors), is a party to any pending or, to the best knowledge of the Company,
threatened, or unasserted but considered by it to be probable of assertion,
claim, action, suit, investigation, arbitration or proceeding, or is subject
to
any order, judgment or decree that is reasonably expected by management of
the
Company to have, either individually or in the aggregate, a material adverse
effect on the condition (financial or otherwise), earnings or results of
operations of the Company. The Company is not, as of the date hereof, a party
to
or subject to any enforcement action instituted by, or any agreement or
memorandum of understanding with, any federal or state regulatory authority
restricting its operations or requiring that actions be taken, and no such
regulatory authority has threatened any such action, memorandum or order against
the Company and the Company has not received any report of examination from
any
federal or state regulatory agency which requires that the Company address
any
problem or take any action which has not already been addressed or taken in
a
manner satisfactory to the regulatory agency.
(e) Authorization;
Conflict; Valid and Binding Obligation. When
issued in accordance herewith, the Debenture will be duly and validly authorized
by all requisite corporate action of the Company. The Company has full right,
power and capacity to execute, deliver and perform its obligations under the
Debenture. No governmental license, permit or authorization and no registration
or filings with any court, governmental authority or regulatory agency is
required in connection with the Company's execution, delivery and/or performance
of the Debenture, other than any filings required by applicable federal and
state securities laws. The execution, delivery and performance of the Debenture,
the consummation of the transactions herein contemplated and the compliance
with
the terms of the Debenture by the Company will not violate or conflict with
any
provision of the Articles of Incorporation, as amended or By-laws of the
Company, or any agreement, instrument, law or regulation to which the
Company
is a party or by which the Company may be bound. The Debenture, upon execution
and delivery by the Company, will represent the valid and binding obligation
of
the Company enforceable in accordance with its terms.
(f) As
of the
date hereof, the Company owes its independent public auditor Xxxxxx XxXxxxx
Xxxxx & Xxxxxx, LLP, P.A. (the “Auditor”)
an
aggregate of $22,000 of which $5,000 was for services related to the Auditor’s
quarterly review for the quarter ended September 30, 2006 and the balance is
for
services rendered in connection with the Auditor’s audit of Company’s annual
report for the year ended December 31, 2006.
5. Use
of Proceeds. The
Company shall use the net proceeds of the Debenture as follows: (a) $22,000
to
pay outstanding fees owed to the Auditor, (b) up to $2,705 to pay outstanding
fees of Vintage Filing, LLC, (c) $1,530 to pay the Company’s transfer agent, (d)
$13,919 to pay fees owed to Xxxxxx, Xxxxxx & Banks the Company’s former
auditor, and (e) $25,000 to pay the retainer for special legal counsel in
connection with the 10-KSB for the year ended December 31, 2006 with any
unutilized balance of such legal retainer or other unutilized sums held in
counsel’s attorney trust account to be applied as mutually agreed by the Company
and the Purchaser. The Company authorizes the Purchaser to disburse all of
the
net proceeds directly to the attorney trust account of the Company’s special
counsel to be used in accordance with the use of proceeds set forth above with
any additional balance to be applied as mutually agreed by the Company and
the
Purchaser. The Company shall pay a structuring fee to Yorkville Advisors, LLC
in
the amount of $5,000 directly from the gross proceeds of the Closing.
6. Conditions
Precedent. The
obligations of the Buyer to purchase the Debenture shall be subject to the
satisfaction by the Company or the following conditions precedent:
|
a.
|
The
Company shall have executed and delivered to the Buyer the Convertible
Debentures.
|
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b.
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The
Company shall have provided to the Buyer a true copy of a certificate
of
good standing evidencing the formation and good standing of the Company
from the secretary of state (or comparable office) from the jurisdiction
in which the Company is incorporated, as of a date within 10 days
of the
Closing Date.
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7. Acknowledgement
Concerning Filing of the 10-KSB.
The
Company confirms that the 10-KSB for the year ended December 31, 2006 is
substantially ready to be filed with the SEC in accordance with all rules and
regulations of filing thereunder with the exception of the consent of the
Auditor. The Company acknowledges that the Buyer is relying on the Company’s
representations and warranties related to the 10-KSB in purchasing the
Debenture.
REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
IN
WITNESS WHEREOF,
the
undersigned have executed this Agreement as of the date written
above.
BUYER:
CORNELL
CAPITAL PARTNERS, L.P.
By:
Yorkville
Advisors, LLC
Its:
Investment
Advisor
By:
/s/
Xxxx Xxxxxx
Name:
Xxxx
Xxxxxx
Title:
Portfolio
Manager
COMPANY:
ETOTALSOURCE,
INC.
By:
/s/
Xxxxx
Xxxxxxx
Name:
Xxxxx
Xxxxxxx
Title:
Chief
Restructuring Officer
DISCLOSURE
SCHEDULE
EXHIBIT
A
FORM
OF DEBENTURE
SCHEDULE
I
DISBURSEMENT
INSTRUCTIONS
The
purchase price shall be disbursed in immediately available U.S. funds, payable
to the following parties:
|
Gross
Proceeds:
|
From
Cornell Capital Partners, LP
|
$
|
72,000
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||||
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Less:
Structuring Fee to Yorkville Advisors, LLC
|
($5,000
|
)
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|||||
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Disbursements:
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|||||||
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To:
Gallagher, Briody, & Xxxxxx (including a retainer of $25,000 and the
balance to be disbursed in accordance with Section 5 of the
Agreement)
|
|
($67,000
|
)
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||||
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Net
Proceeds:
|
Net
Proceeds Payable to the Company
|
$
|
0
|
REMAINDER
OF PAGE LEFT BLANK
|
ETOTALSOURCE,
INC.
|
Cornell
Capital Partners, l.p.
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|||
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By:
|
/s/
Xxxxx Xxxxxxx
|
By:
|
Yorkville
Advisors, LLC
|
|
|
Name:
|
Xxxxx
Xxxxxxx
|
Its:
|
Investment
Manager
|
|
|
Its:
|
Chief
Restructuring Officer
|
|||
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By:
|
/s/
Xxxx Xxxxxx
|
|||
|
Name:
|
Xxxx
Xxxxxx
|
|||
|
Its:
|
Portfolio
Manager
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