Contract
SECURITIES
PURCHASE AGREEMENT,
dated as
of September
19, 2005 (this “Agreement”),
between
TRESTLE
HOLDINGS INC., a
Delaware corporation with principal executive offices at 000 Xxxxxxxxxx Xx,
Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000 (the
“Company”),
and
BRISTOL
INVESTMENT FUND, Ltd.,
a Cayman
Islands entity with its principal offices at Caledonian House, Xxxxxxx Street,
Xxxxxx Town, Grand Cayman, Cayman Islands (the “Purchaser”).
INTRODUCTION
Subject
to the terms and conditions of this Agreement, the Company may issue and sell
to
the Purchaser and the Purchaser shall purchase from the Company the following:
(i) up to 1,687,500 shares of the Common Stock (the “Shares”),
par
value $0.001 per share (the “Common
Stock”);
(ii)
warrants (the “$0.70
Warrants”)
exercisable for an aggregate of 168,750 shares of Common Stock at the exercise
price of $0.70 per share, in the form attached hereto as Exhibit A hereto;
and
(iii) warrants (the “$0.85
Warrants”),
exercisable for an aggregate of 168,750 shares of Common Stock at the exercise
price of $0.85 per share, in the form of Exhibit B hereto, and (iii) warrants
(the “$0.95
Warrants”,
and,
together with the $0.70 Warrants and the $0.85 Warrants, the “Warrants”)
exercisable for an aggregate of 168,750 shares of Common Stock at the exercise
price of $0.95 per share, in the form attached hereto as Exhibit C hereto.
This
Agreement, together with the Warrants, are hereinafter referred to as the
“Transaction
Agreements”.
NOW
THEREFORE,
in
consideration of the mutual covenants contained in this Agreement, the Company
and the Purchaser hereby agree as follows:
ARTICLE
I
ACQUISITION
OF SECURITIES
Section
1.01 Purchase
and Sale.
(a) Schedule
1.01(a) attached hereto defines nine
tranches
of Shares that the Purchaser has agreed to purchase from the Company (each,
a
“Tranche”)
and,
with respect to each Tranche, sets forth the number of Shares constituting
such
Tranche (the “Tranche
Shares”)
and
the purchase price per share for the Tranche Shares in such Tranche (the
“Tranche
Purchase Price”).
The
number of shares in each Tranche, and the purchase price for each share, shall
be adjusted for any stock split, stock dividend or reverse stock split occurring
after the date hereof and prior to the closing of a Tranche.
(b) The
Company may, in its sole discretion, elect to sell the Tranche Shares of any
Tranche to the Purchaser at any time commencing on the date (the “Effective
Date”)
on
which the Registration Statement (as defined in Section 3.01(a)) of the Company
covering the resale of the Shares is declared effective under the Securities
Act
of 1933, as amended (the “Securities
Act”),
and
terminating reasonably promptly thereafter, provided, however, (i) the Company
must elect to sell all of the Tranche Shares included in a Tranche if it elects
to sell any of the Tranche Shares in such Tranche; (ii) the Company must elect
to sell the Tranche Shares in the order that the Tranches are listed on Schedule
1.01(a); and (iii) the total beneficial ownership of the Purchaser of shares
of
Common Stock shall not exceed 9.8% of the Common Stock, giving effect to the
acquisition of the Tranche or Tranches in question. For purposes of this Section
1.01(b), each Tranche shall include each corresponding “Tranche” as defined in
the Other Purchaser Agreement (as hereinafter defined); accordingly, (A) any
election or requirement of the Company to sell any Tranche hereunder shall
automatically, and without any further action by any party, be deemed to be
the
requirement or election of the Company to sell the corresponding Tranche under
the Other Purchaser Agreement, and (B) any election or requirement of the
Company to sell any Tranche under the Other Purchaser Agreement shall
automatically be deemed to be the requirement or election of the Company to
sell
the corresponding Tranche under this Agreement and the Other Purchaser
Agreement. Subject to the immediately preceding sentence, the Company may elect
to sell Tranche Shares included in more than one Tranche at the same time.
To
effect its election to sell Shares, the Company must give written notice thereof
(an “Election
Notice”)
to the
Purchaser. The Election Notice shall specify the Tranche or Tranches with
respect to which the election is being made and the date on which the closing
of
the sale and purchase of the Tranche Shares shall occur; provided, such date
shall be a Business Day (as hereinafter defined) and shall not be earlier than
five Business Days after the date such Election Notice is given to the
Purchaser. An Election Notice shall be irrevocable except as provided in Section
1.02(c). For purposes hereof, the term “Business
Day”
shall
mean any day which is not (i) a Saturday or a Sunday or (ii) a day on which
banking institutions are generally authorized or obligated to close in the
City
of Los Angeles, California. Subject to the foregoing and provided that the
representations and warranties of the Company set forth herein are true and
correct in all material respects as of the date of an Election Notice and that
all conditions to the respective obligations of the parties hereto set forth
herein have either been satisfied or waived, in
the
event that the Company gives an Election Notice, the Purchaser shall be
obligated to purchase the Tranche Shares, covered by such notice.
For
purposes hereof, “Other Purchaser Agreement” shall mean the following agreement:
Securities Purchase Agreement, dated as of the date hereof, between the Company
and SBI Brightline XII LLC.
(c) (i) Upon
the
execution and delivery hereof, the Company shall deliver to the Purchaser $0.70
Warrants exercisable for an aggregate of 25,000 shares of Common Stock, $0.85
Warrants exercisable for an aggregate of 25,000 shares of Common Stock, and
$0.95 Warrants exercisable for an aggregate of 25,000 shares of Common Stock.
(ii) Subject
to the immediately preceding clause (i), simultaneous with the purchase
of the Tranche Shares,
the
Company shall deliver to the Purchaser the Warrants
applicable to such Xxxxxxx.xx
set
forth in Schedule 1.01 hereof.
Section
1.02 Closing
Procedures; The
Closings.
(a) Subject
to the satisfaction or waiver of the conditions precedent set forth in Article
IV hereof, the closing of a purchase of Tranche Shares by the Purchaser pursuant
to this Agreement (each, a “Closing”)
shall
occur at 10:00 a.m. on the date specified in the Election Notice delivered
by
the Company with respect to such Tranche Shares unless the Company and the
Purchaser have mutually agreed on a different time or date with respect to
such
Closing (the time and date of the Closing of a particular Tranche is referred
to
herein as the “Tranche
Closing Date”).
Unless otherwise agreed by the Company and the Purchaser, each Closing shall
occur at the offices of Bristol Capital Advisors, LLC, 00000 Xxxxxxxx Xxxxxxxxx,
Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, investment advisor to the
Purchaser.
(b) At
each
Closing, (i) each of the Company and the Purchaser shall deliver to the other,
as applicable, any documents required to be delivered by Sections 4.01 and
4.02
hereof which have not been delivered prior to such Closing, (ii) the Purchaser
shall deliver to the Company an acknowledgement of the applicable Tranche
Purchase Price for the Tranche Shares being purchased at the Closing and state
the date, not to exceed ten Business Days following the Tranche Closing Date,
on
or prior to which the Tranche Purchase Price shall be delivered by the Purchaser
to the Company by wire transfer of immediately available funds to an account
designated in writing by the Company at or prior to the Closing, and (iii)
the
Company shall deliver to the Purchaser one or more stock certificates,
determined in accordance with the instructions of the Purchaser, representing
the Tranche Shares being purchased or shall cause the Tranche Shares being
purchased to be electronically transferred to the Purchaser. The payment of
the
Tranche Purchase Price referenced in clause (ii) shall be deemed to have been
delivered at the Closing for the purposes hereof.
(c) If
a
Closing does not occur on a proposed Tranche Closing Date because the conditions
specified in Section 1.02(b) to be fulfilled by the Purchaser and/or Article
IV
were not satisfied at the time of the applicable proposed Tranche Closing Date,
the Election Notice with respect to the Tranche or Tranches proposed to be
sold
on such proposed Tranche Closing Date shall automatically be revoked; provided,
however, such revocation shall not impair the right of the Company to give
another Election Notice with respect to the Tranche or Tranches covered by
the
revoked Election Notice or to compel the Purchaser to purchase any Tranche
Shares included in such Tranche or Tranches on a subsequent Tranche Closing
Date
on which the conditions specified in such sections and Article hereof are
satisfied.
(d) If
a
Closing does not occur on a proposed Tranche Closing Date because the conditions
specified in Section 1.02(b) to be fulfilled by the Company and/or Section
4.01
were not satisfied at the time of the applicable proposed Tranche Closing Date,
the Election Notice with respect to any Tranche or Tranches proposed to be
sold
on such proposed Tranche Closing Date shall, at the option of the Purchaser,
be
revoked and the Purchaser’s obligations under this Article I (for such Tranche
and subsequent Tranches) shall terminate.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES
Section
2.01 Representations
and Warranties of the Company.
The
Company hereby represents and warrants to the Purchaser as follows:
(a) (i)The
Common Stock has been registered under Section 12(g) of the Securities Exchange
Act of 1934, as amended (the “Exchange
Act”),
and
the Company is subject to the periodic reporting requirements of Section 13
of
the Exchange Act. The Company has heretofore provided to the Purchaser true,
complete, and correct copies of all forms, reports, schedules, statements,
and
other documents required to be filed by it under the Exchange Act since at
least
December 31, 2003, as such documents have been amended since the time of the
filing thereof (collectively, including all forms, reports, schedules,
statements, and other documents filed by the Company therewith, the
“SEC
Documents”).
The
SEC Documents, including, without limitation, any financial statements and
schedules included therein, at the time filed or, if subsequently amended,
as so
amended, (i) did not contain any untrue statement of a material fact required
to
be stated therein or necessary in order to make the statements therein not
misleading and (ii) complied in all material respects with the applicable
requirements of the Exchange Act and the applicable rules and regulations
thereunder.
(ii) The
Company maintains disclosure controls and procedures required by Rule 13a-15
or
15d-15 under the Exchange Act; such controls and procedures are effective to
ensure that all material information concerning the Company and its subsidiaries
is made known on a timely basis to the individuals responsible for the
preparation of the Company’s filings with the SEC and other public disclosure
documents. The Company has delivered or made available to the Purchaser
copies of, all written descriptions of, and all policies, manuals and other
documents promulgating, such disclosure controls and procedures. To
the
Company’s knowledge, except as set forth in the SEC documents, each director and
executive officer thereof has filed with the SEC on a timely basis all
statements required by Section 16(a) of the Exchange Act and the rules and
regulations thereunder since at
least
December 31, 2004. As used in this Section 2.01(a),
the term “file” shall be broadly construed to include any manner in which a
document or information is furnished, supplied or otherwise made available
to
the SEC.
(iii) The
Chief
Executive Officer and the Chief Financial Officer of the Company have signed,
and the Company has furnished to the SEC, all certifications required by
Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act of 2002; such certifications
contain no qualifications or exceptions to the matters certified therein and
have not been modified or withdrawn; and neither the Company nor any of its
officers has received notice from any governmental entity questioning or
challenging the accuracy, completeness, form or manner of filing or submission
of such certifications.
(iv) The
Company has heretofore has provided to the Purchaser complete and correct copies
of all certifications filed with the SEC pursuant to Sections 302 and 906 of
Xxxxxxxx-Xxxxx Act of 2002 and hereby reaffirms, represents and warrants to
the
Purchaser the matters and statements made in such certificates as of the
respective dates thereof as well as as of the date hereof.
| (b) |
At
the date hereof and at each Tranche Closing
Date:
|
(i)
the
Common Stock is and shall be traded and quoted in the over-the-counter Bulletin
Board market or the Nasdaq Stock Market (collectively, “Nasdaq”);
(ii)
the
Company has and shall have performed or satisfied all of its undertakings to,
and of its obligations and requirements with, the Commission; and
(iii)
the
Company has not, and shall not have taken any action that would preclude, or
otherwise jeopardize, the inclusion of the Common Stock for quotation on the
over-the-counter Bulletin Board .
(c) Trestle
Acquisition Corp.,
a
Delaware corporation, Sunland Entertainment, Inc, a New York corporation (in
the
process of being dissolved), and Xxxxx/Xxxxx Entertainment Group, Inc., a
California corporation (in the process of being dissolved), are the sole
investment of the Company (“Investments”). Other than the Investments or any
entity in which the Company owns more than 50% of the voting control (a
“Subsidiary”), the Company has no subsidiaries or affiliated corporation or owns
any interest in any other enterprise (whether or not such enterprise is a
corporation). Each of the
Company and
Subsidiary has
been
duly organized and is validly existing as a corporation in good standing under
the laws of the respective
jurisdiction
of its incorporation with full power and authority (corporate and other) to
own,
lease and operate its respective
properties
and conduct its respective
business
as described in the SEC Documents; each
of
the
Company and
Subsidiary is
duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the ownership or leasing of its respective
properties
or the conduct of its respective
business
requires such qualification, except where the failure to be so qualified or
be
in good standing would not have a material adverse effect on the business,
prospects, condition
(financial or otherwise), and results of operations of the Company and
Subsidiary taken
as
a whole; no proceeding has been instituted in any such jurisdiction, revoking,
limiting or curtailing, or seeking to revoke, limit or curtail, such power
and
authority or qualification; each
of
the
Company and
Subsidiary is
in
possession of,
and
operating in compliance with,
all
authorizations, licenses, certificates, consents, orders and permits from state,
federal,
foreign
and
other regulatory authorities that are material to the conduct of its business,
all of which are valid and in full force and effect; neither
the
Company nor
Subsidiary is
in
violation of its charter or bylaws or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in
any
material bond, debenture, note or other evidence of indebtedness, or in any
material lease, contract, indenture, mortgage, deed of trust, loan agreement,
joint venture or other agreement or instrument to which it is a party or by
which it or its respective
properties
or assets may be bound,
which
violation or default would have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company and
Subsidiary taken as a whole;
and
neither
the
Company nor
Subsidiary is
in
violation of any law, order, rule, regulation, writ, injunction, judgment or
decree of any court, government or governmental agency or body, domestic or
foreign, having jurisdiction over the Company or
Subsidiary or
over
its respective
properties
or assets,
which
violation would have a material adverse effect on the business, prospects,
financial condition or results of operations of the Company and Subsidiary
taken
as a whole.
The SEC
Documents accurately describe any corporation, association or other entity
owned
or controlled, directly or indirectly, by the Company
or
Subsidiary.
(d) The
Company has full legal right, power and authority to enter into each of the
Transaction Agreements and to perform the transactions contemplated hereby
and
thereby. Each of the Transaction Agreements
has been
duly authorized, executed and delivered by the Company and,
assuming the due authorization, execution, and delivery thereof by the other
parties thereto,
is a
valid and binding agreement on the part of the Company, enforceable in
accordance with its respective
terms;
the performance of each of the
Transaction Agreements
and the
consummation of the transactions herein or therein contemplated will not result
in a breach or violation of any of the terms and provisions of, or constitute
a
default under, (i) any bond, debenture, note or other evidence of indebtedness,
or under any lease, contract, indenture, mortgage, deed of trust, loan
agreement, joint venture or other agreement or instrument to which the Company
or
Subsidiary is
a
party or by which its respective
properties
or assets may be bound, (ii) the charter or bylaws of the Company
or
Subsidiary,
or
(iii) any law, order, rule, regulation, writ, injunction, judgment or decree
of
any court, government or governmental agency or body, domestic or foreign,
having jurisdiction over the Company or
Subsidiary or
over
its respective
properties
or assets,
which
violation or default would have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company and
Subsidiary taken as a whole.
No
consent, approval, authorization or order of,
or
qualification with,
any
court, government or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or
Subsidiary or
over
its respective
properties
or assets is required for the execution and delivery of any Transaction
Agreement and the consummation by the Company of the transactions herein and
therein contemplated, except such as may be required under the Securities
Act,
the
Exchange Act,
or under
state or other securities or blue
sky
laws,
all of which requirements have been,
or in
accordance therewith will be,
satisfied in all material respects.
(e) There
is
not any pending or, to the best of the Company's knowledge, threatened, action,
suit, claim or proceeding against the Company
or
Subsidiary,
or any
of its respective
officers
or any of its properties, assets or rights, before any court, government or
governmental agency or body, domestic or foreign, having jurisdiction over
the
Company or
Subsidiary or
over
its officers or properties or otherwise that (i) is reasonably likely to result
in any material adverse change in the business,
prospects, financial condition
or results of operations of the Company and
Subsidiary taken as a whole or
might
materially and adversely affect their properties, assets or rights taken
as
a whole, (ii)
might prevent consummation of the transactions contemplated by the Transaction
Agreements, (iii) will be required to be disclosed in the Registration
Statement,
except
to the extent heretofore disclosed in the SEC Documents, or (iv) alleging
violation of any Federal or state securities laws.
(f) The
authorized capital stock of the Company consists of 40,000,000 shares of Common
Stock, of which 8,257,214 shares
of
Common Stock are outstanding. Each of such outstanding shares of Common Stock
and each outstanding share of capital stock of Subsidiary, is duly and validly
authorized, validly issued, fully paid, and nonassessable, has not been issued
and is not owned or held in violation of any preemptive or similar right of
stockholders. Except as disclosed in the SEC Documents, (i) there is no
commitment, plan, or arrangement to issue, and no outstanding option, warrant,
or other right calling for the issuance of, any share of capital stock of,
or
any security or other instrument convertible into, exercisable for, or
exchangeable for capital stock of, the Company or Subsidiary, except
for an aggregate of 5,980,713 options and/or warrants currently
outstanding
to
acquire shares of Common Stock,
and
(ii) except as described in the SEC Documents, there is outstanding no security
or other instrument convertible into or exchangeable for capital stock of the
Company or Subsidiary. The
Shares
and the shares
of
Common Stock issuable upon the exercise of the Warrants (the “Warrant
Shares”)
have
been duly authorized for issuance and sale to the Purchaser pursuant
hereto
and
the Warrants, respectively, and, when issued and delivered by the Company in
accordance with the terms of this Agreement against
payment therefor and
the
relevant Warrant or Warrants, respectively,
will be
duly and validly issued and fully paid and nonassessable, and will be sold
free
and clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest
of any
kind established by the Company;
and no
preemptive or
similar right,
co-sale right, registration right, right of first refusal or other similar
right
of stockholders exists with respect to any of the Shares or Warrant Shares
or
the issuance and sale thereof other than those that have been expressly waived
prior to the date hereof and those that will automatically expire upon the
execution hereof. Subject
to the Company’s issuance of an Election Notice for particular Tranche Shares,
no
further
approval or authorization of any stockholder, the Board of Directors of the
Company or others is required for the issuance and sale or transfer of the
Shares, the
Warrants, or the Warrant Shares, except
as
may be required under the Securities Act, the rules
and
regulations
promulgated
thereunder or
under
state or other securities or blue
sky
laws.
The description of the Company's stock option, stock bonus and other stock
plans
or arrangements, and the options or other rights granted and exercised
thereunder, set forth in the SEC Documents accurately and fairly presents the
information required to be shown with respect to such plans, arrangements,
options and rights under the Securities Act,
the
Exchange Act,
and the
rules
and
regulations
promulgated thereunder.
The
Company agrees to immediately reserve, free of preemptive rights and other
similar contractual rights of stockholders, a sufficient number of its
authorized, but unissued, shares of its Common Stock to cover the Shares and
the
Warrant Shares.
(g) Singer
Lewak Xxxxxxxxx & Xxxxxxxxx LLP (the “Auditor”),
which
have examined the consolidated
financial
statements of the Company, together with the related schedules and notes,
for
the
quarter ended June 30, 2005
and for
the six month period ended June 30, 2005,
respectively, filed with the Commission as a part of the SEC Documents,
and
which,
pursuant to the rules and regulations of the Commission
are
to
be
included
in the Registration Statement, are independent accountants within the meaning
of
the Securities Act,
the
Exchange Act,
and the
rules
and
regulations
promulgated thereunder;
the
audited consolidated
financial
statements of the Company, together with the related schedules and notes, and
the unaudited financial information, forming part of the SEC Documents, fairly
present and
will
fairly present the
financial position and the results of operations of the Company at the
respective dates and for the respective periods to which they apply; and all
audited consolidated
financial
statements of the Company, together with the related schedules and notes, and
the unaudited consolidated
financial
information, filed with the Commission as part of the SEC Documents,
complied
and will comply as to form in all material respects with applicable accounting
requirements and with the rules and regulations of the Commission with respect
hereto when filed, have
been
and
will
be prepared
in accordance with generally accepted accounting principles consistently applied
throughout the periods involved except as may be otherwise stated
therein
(except
as may be indicated in the notes thereto or as permitted by the rules and
regulations of the Commission) and fairly present and will fairly present,
subject in the case of the unaudited consolidated financial statements, to
customary year end audit adjustments, the financial position of the Company
as
at the dates thereof and the results of its operations and cash
flows. The
procedures pursuant to which the aforementioned consolidated financial
statements have been audited are compliant with generally accepted auditing
standards. The
selected and summary consolidated
financial
and statistical data included in the SEC Documents present and
will
present fairly
the information shown therein and have been compiled on a basis consistent
with
the audited consolidated
financial
statements presented therein. No other financial statements or schedules are
required to be included in the SEC Documents.
The
financial statements referred to in this Section 2.01(g) contain all
certifications and statements required the SEC’s Order, dated June 27, 2002,
pursuant to Section 21(a)(1) of the Exchange Act (File No. 4-460), Rule 13a-14
or 15d-14 under the Exchange Act, or 18 U.S.C. Section 1350 (Sections 302 and
906 of the Xxxxxxxx-Xxxxx Act of 2002) with respect to the report relating
thereto. Since June 30, 2005 except as set forth or contemplated in the SEC
Documents,
(i) There
has
at no time been a material adverse change in the financial condition, results
of
operations, businesses, properties, assets, liabilities, or future prospects
of
the Company and Subsidiary taken as a whole;
(ii)
The
Company has not authorized, declared, paid, or effected any dividend or
liquidating or other distribution in respect of its capital stock or any direct
or indirect redemption, purchase, or other acquisition of any stock of the
Company or Subsidiary.
(iii)
Except
as
set forth or contemplated in the SEC Documents, the operations and businesses
of
the Company have been conducted in all material respects only in the ordinary
course.
Except
as
set forth or contemplated in the SEC Documents, there is no fact known to the
Company which materially adversely affects or in the future (as far as the
Company can reasonably foresee) may materially adversely affect the financial
condition, results of operations, businesses, properties, assets, liabilities,
or future prospects of the Company; provided, however, that the Company
expresses no opinion as to political or economic matters of general
applicability. The Company has made known, or caused to be made known, to the
accountants or auditors who have prepared, reviewed, or audited the
aforementioned consolidated financial statements all material facts and
circumstances which could affect the preparation, presentation, accuracy, or
completeness thereof.
(h) Subsequent
to,
June
30, 2005,
there
has not been (i) any material adverse change in the business,
prospects, financial condition
or results of operations of the Company
and
Subsidiary taken as a whole,
(ii)
any transaction
committed to or consummated
that is
material to the Company
and
Subsidiary taken as a whole,
(iii)
any obligation, direct or contingent, that is material to the
Company
and
Subsidiary taken as a whole
incurred
by the Company
or
Subsidiary,
except
such
obligations
as
have
been incurred
in the ordinary course of business, (iv) any change in the capital stock or
outstanding indebtedness of the Company or
Subsidiary that
is
material to the Company
and
Subsidiary taken as whole,
(v) any
dividend or distribution of any kind declared, paid,
or made
on the capital stock of the Company, or (vi) any loss or damage (whether or
not
insured) to the property of the Company or
Subsidiary which
has
a material adverse effect on the business,
prospects, condition
(financial or otherwise), or results of operations of the Company
and
Subsidiary taken as a whole.
(i) Except
as
set forth in the SEC Documents, (i) each
of
the
Company and
Subsidiary has
good
and marketable title to all properties and assets described in the SEC Documents
as owned by it, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest, other than such as would not have
a
material adverse effect on the business,
prospects, financial condition
or
results of operations
of the Company
and
Subsidiary taken as a whole,
(ii)
the agreements to which the Company and
Subsidiary is
a
party described in the SEC Documents are legal,
valid
and
binding agreements,
enforceable by the Company or
Subsidiary, as applicable, in
accordance with their terms, and, to the best of the Company's knowledge, the
other contracting party or parties thereto are not in breach or default under
any of such agreements, and (iii) each
of
the
Company and
Subsidiary has
valid
and enforceable leases for all properties described in the SEC Documents
as
leased
by it.
Except
as
set forth in the SEC Documents, each
of
the
Company and
Subsidiary owns
or
leases all such properties as are necessary to its respective
operations
as now conducted and as described in the SEC Documents.
(j) Each
of
the
Company and
Subsidiary has
timely filed all respective
federal,
state, local and foreign tax returns required to be filed by it (or
has
received extensions with respect to such filings) and
has
paid all taxes shown thereon as due, and there is no tax deficiency that has
been or, to the best of the Company's knowledge, is likely to be asserted
against the Company
or
Subsidiary if audited,
which
might have a material adverse effect on the business,
prospects, financial condition
or results of operations of the Company
and
Subsidiary taken as a whole,
and all
tax liabilities are adequately provided for on the books of the
Company
and
Subsidiary.
(k) Each
of
the
Company and
Subsidiary maintains
insurance with insurers of recognized financial responsibility of the types
and
in the amounts generally deemed adequate for its business including, but not
limited to, insurance covering real and personal property owned or leased by
the
Company or
Subsidiary, as applicable, against
theft, damage, destruction, acts of vandalism,
and all
other risks customarily insured against, all of which insurance is in full
force
and effect; neither
the
Company nor
Subsidiary has
been
refused any insurance coverage sought or applied for; and neither
the
Company not Subsidiary
has
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 business,
prospects, condition,
or results of
operations
of the Company
and
Subsidiary taken as a whole.
(l) No
labor
disturbance by the employees of the Company or
Subsidiary exists
or, to the best of the Company’s knowledge, is imminent. The Company is not
aware of any existing or imminent labor disturbance by the employees of any
principal suppliers or customers of
the
Company or Subsidiary that
might be expected to result in any material adverse change in the business,
prospects, financial condition,
or results of operations of the Company
and
Subsidiary taken as a whole.
No
collective bargaining agreement exists with any of the Company’s
or
Subsidiary’s employees
and, to the best of the Company's knowledge, no such agreement is
imminent.
(m) Each
of
the Company
and
Subsidiary owns
or
possesses adequate rights to use all patents, patent rights, inventions, trade
secrets, know-how, trademarks, service marks, trade names,
logos,
and
copyrights described or referred to in the SEC Documents as owned by or used
by
it or that are necessary to conduct its respective
businesses
as described in the SEC Documents; neither
the
Company nor
Subsidiary has
received any notice of, or has knowledge of, any infringement of or conflict
with asserted rights of the Company or
Subsidiary by
others
with respect to any patents, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names,
logos,
or
copyrights described or referred to in the SEC Documents as owned by or used
by
it; and neither
the
Company nor
Subsidiary has
received any notice of, or has knowledge of, any infringement of,
or
conflict with,
asserted
rights of others with respect to any patents, patent rights, inventions, trade
secrets, know-how, trademarks, service marks, trade names,
logos,
or
copyrights described or referred to in the SEC Documents as owned by or used
by
it or which, individually or in the aggregate, in the event of an unfavorable
decision, ruling or finding, would have a material adverse effect on the
business,
prospects, financial condition
or results of operations of the Company
and
Subsidiary taken as a whole.
(n) The
Company has been advised concerning the Investment Company Act of 1940, as
amended (the “Investment
Company Act”),
and
the rules and regulations thereunder, and has in the past conducted, and intends
in the future,
to
conduct its affairs in such a manner as to ensure that it is not and will not
become an “investment
company”
or a
company “controlled”
by an “investment company”
within
the meaning of the Investment Company Act and such rules and regulations.
(o) Neither
the
Company nor
Subsidiary has,
and no
person or entity acting on behalf or at the request of the Company or Subsidiary
has,
at any
time during the last five years (i) made any unlawful contribution to any
candidate for foreign office or failed to disclose fully any contribution in
violation of law, or (ii) made any payment to any federal or state governmental
officer or official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United
States or any other applicable jurisdiction.
(p) Neither
the
Company nor
Subsidiary, nor any person acting on behalf thereof, has
taken
or will take, directly or indirectly, any action designed to,
or that
might reasonably be expected to cause or result in,
stabilization in violation of law,
or
manipulation,
of the
price of the Common Stock to facilitate the sale or resale of the
Shares
or the
Warrant Shares.
(q) [INTENTIONALLY
OMITTED]
(r) Except
as
set forth in the SEC Documents, (i) each
of
the
Company and
Subsidiary is
in
compliance in
all
material respects with
all
rules, laws and regulations relating to the use, treatment, storage and disposal
of toxic substances and protection of health or the environment (“Environmental
Laws”)
that
are applicable to its business, (ii) neither
the
Company nor
Subsidiary has
received notice from any governmental authority or third party of an asserted
claim under Environmental Laws, which claim is required to be disclosed in
the
SEC Documents, (iii) to the best knowledge
of the
Company,
neither
the
Company nor
Subsidiary is
likely
to be required to make future material capital expenditures to comply with
Environmental Laws (iv) no property which is owned, leased or occupied by the
Company or
Subsidiary has
been
designated as a Superfund site pursuant to the Comprehensive Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. §
9601,
et seq.),
or
otherwise designated as a contaminated site under applicable state or local
law,
and (v) neither
the
Company nor
Subsidiary is
in
violation of any federal or state law or regulation relating to occupational
safety or health.
(s) The
books, records and accounts of each of the Company and Subsidiary accurately
and
fairly reflect, in reasonable detail, the transactions in, and dispositions
of,
the assets of, and the results of operations of, the Company and Subsidairy,
as
applicable, all to the extent required by generally accepted accounting
principles. Each of the Company and Subsidiary maintains a system of internal
accounting controls sufficient to provide reasonable assurances 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 accordance 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.
(t) There
are
no outstanding loans, advances (except normal advances for business expenses
in
the ordinary course of business) or guarantees of indebtedness by the Company
or
Subsidiary to,
or for
the benefit of,
any of
the officers, directors,
or
director-nominees of the Company or
Subsidiary or
any of
the members of the families of any of them, except as disclosed in the SEC
Documents.
(u) [Intentionally
left blank]
(v) Except
as
set forth in the SEC Documents, no stockholder of the Company has any right
(which has not been waived or has not expired by reason of lapse of time
following notification of the Company’s intent to file the Registration
Statement) to request or require the Company to register the sale of any shares
owned by such stockholder under the Securities Act on the Registration
Statement.
(w) Neither
the Company or Subsidiary, nor, to the best knowledge of the Company, any
director, officer, agent, employee, or other person associated with, or acting
on behalf of, the Company or any Subsidiary, has, directly or indirectly: used
any corporate funds for unlawful contributions, gifts, entertainment, or other
unlawful expenses relating to political activity; made any unlawful payment
to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds; violated any provision
of
the Foreign Corrupt Practices Act of 1977, as amended; or made any bribe,
rebate, payoff, influence payment, kickback, or other unlawful payment. The
Company's internal accounting controls and procedures are sufficient to cause
the Company and Subsidiary to comply in all respects with the Foreign Corrupt
Practices Act of 1977, as amended.
(x) Except
as
disclosed in the SEC Documents, to the Company’s knowledge, no
director, officer, or employee of the Company or Subsidiary has any interest,
whether as an employee, officer, director, shareholder, agent, independent
contractor, security holder, creditor, consultant, or otherwise (other than
as
less than 1% shareholder of a publicly traded company), either directly or
indirectly, in any person (whether a corporation, partnership, limited
partnership, limited liability company, limited liability partnership, business
trust, sole proprietorship, or otherwise) that presently (i) provides any
services or designs, produces and/or sells any products or product lines, or
engages in any activity which is the same, similar to or competitive with any
activity or business in which the Company or Subsidiary is now engaged; (ii)
is
a supplier of, customer of, creditor of, or has an existing contractual
relationship with the Company or Subsidiary; or (iii) has any direct or indirect
interest in any asset or property used by the Company or Subsidiary or any
property, real or personal, tangible or intangible, that is necessary or
desirable for the conduct of the business of the Company or the Subsidiary.
Except
as
disclosed in the SEC Documents, no
current
or former stockholder, director, officer or employee of any member of the
Company or Subsidiary or any affiliate thereof, is at present, or since the
inception of the Company has been, directly or indirectly through his
affiliation with any other person, a party to any transaction (other than as
an
employee) with the Company or Subsidiary providing for the furnishing of
services by, or rental of real or personal property from, or otherwise requiring
cash payments to any such person.
(y) (i) The
Company is in compliance with, and is not in violation of, applicable federal,
state, local or foreign statutes, laws and regulations (including without
limitation, any applicable building, zoning or other law, ordinance or
regulation) materially affecting its properties or the operation of its
business. The Company is not subject to any material order, decree, judgment
or
other sanction of any court, administrative agency or other
tribunal.
(ii) Each
of
the Company, its directors and its senior financial officers has consulted
with
the Company’s independent auditors and with the Company’s outside counsel with
respect to, and (to the extent applicable to the Company) is familiar in all
material respects with all of the requirements of, Xxxxxxxx-Xxxxx Act of
2002. The Company is in compliance with the provisions of such act
applicable to it as of the date hereof and has implemented such programs and
has
taken reasonable steps, upon the advice of the Company’s independent auditors
and outside counsel, respectively, to ensure the Company’s future compliance
(not later than the relevant statutory and regulatory deadlines therefore)
with
all provisions of such act which shall become applicable thereto after the
date
hereof.
(z) Except
for the representations and warranties contained in this Section 2.01, the
Company makes no representation or warranty to the Company, express or implied,
in connection with the transactions contemplated by this Agreement.
Section
2.02 Representations,
Warranties and Covenants of the Purchaser.
The
Purchaser represents and warrants to the Company as follows:
(a) The
Purchaser is a limited liability company duly organized, validly existing and
in
good standing under the laws of its jurisdiction of formation.
(b) The
Purchaser has full legal right, power and authority to enter into this Agreement
and to perform the transactions contemplated hereby. This Agreement has been
duly authorized, executed and delivered by the Purchaser. The execution,
delivery and performance of this Agreement by the Purchaser and the consummation
of the transactions herein contemplated will not violate any provision of the
organizational documents of the Purchaser and will not result in the creation
of
any lien, charge, security interest or encumbrance upon any assets or property
of the Purchaser pursuant to the terms or provisions of, or will not 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 agreement,
mortgage, deed of trust, lease, franchise, license, indenture, permit or other
instrument to which the Purchaser is a party or by which the Purchaser or any
of
its assets or properties may be bound or affected 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 Purchaser or any of its properties. No consent, approval, authorization
or
other order of any court, regulatory body, administrative agency or other
governmental body is required for the execution, delivery and performance by
the
Purchaser of this Agreement or the consummation by the Purchaser of the
transactions contemplated hereby. Assuming the valid execution hereof by the
Company, this Agreement will constitute the legal, 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’ 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) and except as the indemnification agreements of the Purchaser
in Section 3.03 hereof may be legally unenforceable.
(c) There
are
no legal or governmental actions, suits or proceedings pending or, to the
Purchaser’s knowledge, threatened to which the Purchaser is or may be a party
which seeks to prevent or restrain the transactions contemplated by this
Agreement or to recover damages as a result of the consummation of such
transactions. To the knowledge of the Purchaser, the Purchaser has not been
and
is not currently the subject of an investigation or inquiry by the Commission,
National Association of Securities Dealers, Inc., NASD Regulation, Inc., or
any
state securities commission.
(d) The
Purchaser is knowledgeable, sophisticated and experienced in making, and is
qualified to make, decisions with respect to investments in shares representing
an investment decision like that involved in the purchase of the Shares, the
Warrants, and the Warrant Shares, including investments in securities issued
by
the Company. The Purchaser is an “accredited
investor”
within
the meaning of Rule 501(a) of Regulation D promulgated under the Securities
Act.
The Purchaser is not a “dealer” within the meaning of the Securities Act or a
“broker” or “dealer” within the meaning of the Exchange Act. The Purchaser is
able to bear the economic risk of loss of the Purchaser’s entire investment in
the Shares, the Warrants, and the Warrant Shares.
(e) The
Purchaser has requested, received, reviewed and considered all information
it
deems relevant in making an informed decision to purchase the Shares and the
Warrants. The Purchaser understands that the Company is still in the development
stage and does not have operating revenues.
(f) The
Purchaser is acquiring the Shares and the Warrants in the ordinary course of
its
business and for its own account for investment only and with no present
intention of distributing any of such Shares in violation of the Securities
Act
or entering into any arrangement or understanding with any other person
regarding the distribution of such Shares in violation of the Securities Act
(it
being understood that the foregoing does not limit the Purchaser’s right to sell
Shares pursuant to the Registration Statement).
(g) Except
for the representations and warranties contained in this Section 2.02, the
Purchaser makes no representation or warranty to the Company, express or
implied, in connection with the transactions contemplated by this
Agreement.
Section
2.03 Survival
of Representations, 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 the certificates delivered pursuant hereto shall survive the
execution of this Agreement, the
termination
of Purchaser’s obligations to purchase the Shares, and the
delivery to the Purchaser of the Shares and the Warrants being purchased and
the
payment therefor.
ARTICLE
III
COVENANTS
Section
3.01 Covenants
of the Company.
(a) (i) As
soon
as practicable, but in any event no later than 60 days following the date of
this Agreement, the Company shall prepare and file with the Commission a
registration statement on Form SB-2 or other applicable form as determined
by
the Company (the “Registration
Statement”)
for
the purpose of registering the sale of the Shares by the Purchaser from time
to
time on the facilities of any securities exchange or trading system on which
the
Common Stock is then traded or in privately-negotiated transactions, which
Registration Statement shall contain all material non-public information
disclosed to the Purchasers by the Company in connection with the issuance
and
sale of the Shares. For purposes of this Section 3.01(a), the term “Shares”
shall
include any other securities of the Company issued in exchange for the Shares,
as a dividend on the Shares or in connection with a stock split or other
reorganization transaction affecting the Shares. The Company shall use its
commercially reasonable efforts to cause the Registration Statement to become
effective as soon as practicable, and in any event within 120 days following
the
date of this Agreement.
(ii) The
Company shall prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus forming a part
thereof as may be necessary to keep the Registration Statement effective until
the earliest date, after the date on which all of the Shares have been purchased
pursuant to this Agreement or the obligation of the Purchaser to purchase the
Shares pursuant to this Agreement has been terminated, on which (i) all the
Shares have been disposed of pursuant to the Registration Statement, (ii) all
of
the Shares then held by the Purchaser may be sold under the provisions of Rule
144 without limitation as to volume, whether pursuant to Rule 144(k) or
otherwise, or (iii) the Company has determined that all Shares then held by
the
Purchaser may be sold without restriction under the Securities Act and has
removed any stop transfer instructions relating to such Shares and offered
to
cause to be removed any restrictive legends on the certificates, if any
representing such Shares (the period between the Effective Date and the earliest
of such dates is referred to herein as the “Registration
Period”).
At
any time after the end of the Registration Period, the Company may withdraw
the
Registration Statement and its obligations under this Section 3.01(a) shall
automatically terminate.
(iii) The
Company shall not be obligated to prepare and to file
a
post-effective amendment or supplement to the Registration Statement or the
prospectus constituting a part thereof during the continuance of a Blackout
Event;
provided, however, that no Blackout Event may be deemed to exist for more than
60 days,
and
there can be no more that one Blackout Events during any period of 365
days.
A
“Blackout
Event”
means
any of the following: (a) the possession by the Company of material information
that is not ripe for disclosure in a registration statement or prospectus,
as
determined reasonably
and in
good
faith by the Chief Executive Officer or the Board of Directors of the Company
or
that disclosure of such information in the Registration Statement or the
prospectus constituting a part thereof would be materially detrimental to the
business and affairs of the Company; or (b) any material engagement or activity
by the Company which would, in the reasonable
and good
faith determination of the Chief Executive Officer or the Board of Directors
of
the Company, be materially adversely affected by disclosure in a registration
statement or prospectus at such time.
Without
the express written consent of the Purchaser, if required to permit the
continued sale of Shares by the Purchaser, a post-effective amendment or
supplement to Registration Statement or the prospectus constituting a part
thereof must be filed no later than the 61st
day
following commencement of a Blackout Event. In
the
event that the filing of the Registration Statement or such effectiveness shall
not take place within the time period heretofore set forth, the Company shall
issue to the holders of the securities described above and/or issuable upon
the
exercise thereof (the “Underlying
Shares”)
additional shares of Common Stock and warrants in such number as shall equal
2.0% of the number of shares of Common Stock, warrants, and/or Underlying Shares
issued to such holder under and pursuant to this Agreement per each 30 days,
or
part thereof, after the aforementioned time periods until the such filing and/or
effectiveness, as applicable, shall take place. The Company shall cause the
Registration Statement to remain effective until the earlier of (i) the sale
by
the Investor of all of the aforementioned securities and (ii) the date upon
which the Investor may dispose of all of such securities without regard to
the
limitations set forth in paragraph (e) of Rule 144 under the Securities
Act.
(iv) At
least
five (5) Business Days prior to the filing with the Commission of the
Registration Statement (or any amendment thereto) or the prospectus forming
a
part thereof (or any supplement thereto), the Company shall provide draft copies
thereof to the Purchaser and shall consider incorporating into such documents
such comments as the Purchaser (and its counsel) may propose to be incorporated
therein. Notwithstanding the foregoing, no prospectus supplement, the form
of
which has previously been provided to the Purchaser, need be delivered in draft
form to the Purchaser.
(v) The
Company shall promptly notify the Purchaser upon the occurrence of any of the
following events in respect of the Registration Statement or the prospectus
forming a part thereof: (i) receipt of any request for additional information
from the Commission or any other federal or state governmental authority during
the Registration Period, the response to which would require any amendments
or
supplements to the Registration Statement or related prospectus; (ii) the
issuance by the Commission 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; or (iii) receipt of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Shares for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.
(vi) The
Company shall furnish to the Purchaser with respect to the Shares registered
under the Registration Statement such number of copies of prospectuses and
such
other documents as the Purchaser may reasonably request, in order to facilitate
the public sale or other disposition of all or any of the Shares by the
Purchaser pursuant to the Registration Statement.
(vii) The
Company shall file or cause to be filed such documents as are required to be
filed by the Company for normal state securities law or “blue sky” clearance in
states specified in writing by the Purchaser; provided,
however,
that
the Company shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so qualified
or
has not so consented.
(viii) With
a
view to making available to the Purchaser the benefits of Rule 144, the Company
agrees, from the date hereof and throughout the Registration Period and so
long
as the Purchaser owns Shares purchased pursuant to this Agreement,
to:
(A) comply
with the provisions of paragraph (c)(1) of Rule 144; and
(B) file
with
the Commission in a timely manner all reports and other documents required
to be
filed by the Company pursuant to Section 13, 14 or 15(d) under the Exchange
Act;
and, if at any time it is not required to file such reports but in the past
had
been required to or did file such reports, it will, upon the request of the
Purchaser, make available other information as required by, and so long as
necessary to permit sales of its Shares pursuant to, Rule 144.
(ix) The
Company shall bear all expenses incurred by it in connection with the procedures
in this Section 3.01(a) and the registration of the Shares pursuant to the
Registration Statement and
qualification of the shares under applicable state securities laws.
The
Company shall not be responsible for any expenses incurred by the Purchaser
in
connection with its sale of the Shares or its participation in the procedures
in
paragraphs (i) through (ix) of this Section 3.01(a), including, without
limitation, any fees and expenses of counsel or other advisers to the Purchaser
and any underwriting discounts, brokerage fees and commissions incurred by
the
Purchaser.
(b) (i) The
Company may refuse to register (or permit its transfer agent to register) any
transfer of any Shares not made in compliance with the Securities Act and for
such purpose may place stop order instructions with its transfer agent with
respect to the Shares.
(c) So
long
as the Registration Statement is effective covering the resale of Shares then
still owned by the Purchaser, the Company shall furnish to the Purchaser:
(i) as
soon
as practicable after available, one copy of (A) its Annual Report to
Stockholders (which Annual Report shall contain financial statements audited
in
accordance with generally accepted accounting principles by a firm of certified
public accountants), (B) upon written request, its Annual Report on Form 10-KSB
or 10-K, (C) upon written request, its Quarterly Reports on Form 10-QSB or
10-Q,
(D) upon written request, its Current Reports on Form 8-K, and (E) a full copy
of the Registration Statement (the foregoing, in each case, excluding exhibits);
and
(ii) upon
the
written request of the Purchaser, all exhibits excluded by the parenthetical
to
subparagraph (i)(E) of this Section 3.01(c).
(d) The
Company will maintain a transfer agent and, if necessary under the jurisdiction
of incorporation of the Company, a registrar (which may be the same entity
as
the transfer agent) for its Common Stock,
which
transfer agent and registration shall be reasonably satisfactory to the
Purchaser.
(e) If
at any
time prior
to
the termination of the Registration Period,
any
rumor, publication or event relating to or affecting the Company shall occur
as
a result of which,
in the
reasonable opinion of
the
Purchaser, the
market price of the Common Stock has been or is likely to be materially affected
(regardless of whether such rumor, publication or event necessitates a
supplement to,
or
amendment of,
the
Prospectus), the Company will, if reasonably requested by the Purchaser,
forthwith prepare, and, if permitted by law, disseminate a press release or
other public statement, reasonably satisfactory to the Purchaser, responding
to
or commenting on such rumor, publication or event.
(f) The
Company shall comply with the Xxxxxxxx-Xxxxx Act of 2002 and the regulations
promulgated pursuant thereto if it is not in compliance at the date
hereof.
(g) [INTENTIONALLY
OMITTED]
(h) Until
the
earlier of the termination of this Agreement and the Closing of the purchase
of
the final Tranche Shares hereunder (the earlier of such events, the
“Release
Time”),
no
amendment will be made in the certificate of incorporation or by-laws (or,
in
each case, the comparable charter documents, if any, under applicable law)
of
the Company.
(i) Until
the
Release Time, except as permitted by Section 5.01(e) no share of capital stock
of the Company, option or warrant for any such share, right to subscribe to
or
purchase any such share, or security convertible into, or exchangeable or
exercisable for, any such share, shall be issued or sold by the Company
otherwise than as contemplated by, or in connection with, this Agreement or
with
an effective purchase price of no les than $0.95 per share of Common Stock
other
than new employee options.
(j) Until
the
Release Time, no dividend or liquidating or other distribution or stock split
shall be authorized, declared, paid, or effected by the Company in respect
of
the outstanding shares of capital stock of the Company. Until the Release Time,
no direct or indirect redemption, purchase, or other acquisition shall be made
by the Company or any affiliate thereof of shares of capital stock of the
Company.
(k) Until
the
Release Time, the Company will afford the officers, directors, employees,
counsel, agents, investment bankers, accountants, and other representatives
of
the Purchaser free and full access to the plants, properties, books, and records
of the Company, will permit them to make extracts from and copies of such books
and records, and will from time to time furnish the Purchaser with such
additional financial and operating data and other information as to the
business, prospects, financial condition, and results of operations of the
Company as the Purchaser from time to time may request. Until the Release Time,
the Company will cause the independent certified public accountants thereof
to
make available to the Purchaser and its independent certified public accountants
the work papers relating to the audits of the Company referenced in this
Agreement.
(l) Until
the
Release Time, the Company will conduct its affairs so that at each Closing,
no
representation or warranty of the Company will be inaccurate in any material
respect, no covenant or agreement of the Company will be breached, and no
condition in this Agreement will remain unfulfilled by reason of the actions
or
omissions of the Company. Except as otherwise consented to by the Purchaser
in
writing, until the Release Time, the Company will use its best efforts to
preserve the business operations of the Company intact, to keep available the
services of its present personnel, to preserve in full force and effect the
contracts, agreements, instruments, leases, licenses, arrangements, and
understandings of the Company, and to preserve the good will of its suppliers,
customers, and others having business relations with any of them. Until the
Release Time, the Company will conduct its affairs in all respects only in
the
ordinary course, other than in connection with the matters referenced herein
or
as set forth or contemplated in the SEC Documents.
(m) Until
the
Release Time, the Company will immediately advise the Purchaser in a detailed
written notice of any material fact or occurrence or any pending or threatened
material occurrence of which it obtains knowledge and which (if existing and
known at the date of the execution of this Agreement) would have been required
to be set forth or disclosed in or pursuant to this Agreement, which (if
existing and known at any time prior to or at the relevant Tranche Closing)
would make the performance by any party of a covenant contained in this
Agreement impossible or make such performance materially more difficult than
in
the absence of such fact or occurrence, or which (if existing and known at
the
time of the applicable Tranche Closing) would cause a condition to any party’s
obligations under this Agreement not to be fully satisfied.
(n) Before
the Company releases any information concerning this Agreement or any of the
transactions contemplated by this Agreement which is intended for, or may result
in, public dissemination thereof, the Company shall cooperate with the
Purchaser, shall furnish drafts of all documents or proposed oral statements
to
the Purchaser for comment, and shall not release any such information without
the written consent of Purchaser, which consent shall not be unreasonably
withheld. Nothing contained herein shall prevent the Company from releasing
any
information if required to do so by law.
(o) The
Company shall timely prepare and file any declaration or filing necessary to
comply with any transfer tax statutes that require any such filing before the
relevant Tranche Closing.
(p) The
Company shall obtain make such state securities law or “blue sky” filings and
obtain such state securities law or “blue sky” filings as shall be reasonably
requested by the Purchaser, provided, however, that the Company shall not be
required to qualify to do business or to become subject to general service
of
process in any such jurisdiction.
Section
3.02 Covenants
of the Purchaser.
(a) The
Purchaser agrees to comply in all material respects with all federal and state
securities laws and the rules and regulations promulgated thereunder in
connection with any sale by it of the Shares, the Warrants and the Warrant
Shares, whether or not such sale is pursuant to the Registration Statement.
In
connection with the sale of any Shares pursuant to the Registration Statement,
but without limiting the generality of the foregoing sentence, the Purchaser
shall (i) comply with the provisions of Regulation M promulgated under the
Exchange Act, and (ii) deliver to the purchaser of Shares the prospectus forming
a part of the Registration Statement and all relevant supplements thereto which
have been provided by the Company to the Purchaser on or prior to the applicable
delivery date.
(b) The
Purchaser will cooperate with the Company in all material respects in connection
with the performance by the Company of its obligations under Section 3.01(a),
including timely supplying all information reasonably requested by the Company
(which shall include all information regarding the Purchaser, and any person
who
beneficially owns Shares held by the Purchaser within the meaning of Rule 13d-3
promulgated under the Exchange Act, and the proposed manner of sale of the
Shares required to be disclosed in the Registration Statement) and executing
and
returning all documents reasonably requested in connection with the registration
and sale of the Shares. The Purchaser hereby consents to be named as an
underwriter in the Registration Statement, if applicable, in accordance with
current Commission policy and, if necessary, to join in the request of the
Company for the acceleration of the effectiveness of the Registration
Statement.
(c) In
connection with the sale of any Shares pursuant to the Registration Statement,
the Purchaser shall deliver to the purchaser thereof the prospectus forming
a
part of the Registration Statement and all relevant supplements thereto which
have been provided by the Company to the Purchaser on or prior to the applicable
delivery date, all in accordance with the requirements of the Securities Act
and
the rules and regulations promulgated thereunder and any applicable blue sky
laws. Unless such untrue statement or omission relates to a Blackout Event,
the
Company shall file a post-effective amendment or prospectus supplement as
promptly as practicable, but in no event later than five Business Days following
the discovery of such untrue statement or omission.
(e) If
at any
time or from time to time after the Effective Date, the Company notifies the
Purchaser in writing that the Registration Statement or the prospectus forming
a
part thereof (taking into account any prior amendments or supplements thereto)
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading, or in the case of a Blackout Event,
the Purchaser shall not offer or sell any Shares or engage in any other
transaction involving or relating to the Shares (other than purchases of Shares
pursuant to this Agreement), from the time of the giving of notice with respect
to such untrue statement or omission until the Purchaser receives written notice
from the Company that such untrue statement or omission no longer exists or
has
been corrected or disclosed in an effective post-effective amendment to the
Registration Statement or a valid prospectus supplement to the prospectus
forming a part thereof.
(f) The
Purchaser acknowledges and understands that the Shares, the Warrants, and the
Warrant Shares are (or upon the issuance thereof will be) “restricted
securities” as defined in Rule 144. The Purchaser hereby agrees not to offer or
sell (as such terms are defined in the Securities Act and the rules and
regulations promulgated thereunder) any Shares, Warrants, or Warrant Shares
unless such offer or sale is made (a) pursuant to an effective registration
of
such securities under the Securities Act, or (b) pursuant to an available
exemption from the registration requirements of the Securities Act. The
Purchaser agrees that it will not engage in hedging transactions with regard
to
the Shares, the Warrants, and the Warrant Shares other than in compliance with
the Securities Act. A proposed transfer shall be deemed to comply with this
Section 3.02(f) if the Purchaser delivers to the Company a legal opinion in
form
and substance reasonably satisfactory to the Company from counsel reasonably
satisfactory to the Company to the effect that such transfer complies with
this
Section 3.02(f).
Section
3.03 Indemnification.
(a) For
the
purpose of this Section 3.03: (i)
the
term “Purchaser
Affiliate”
shall
mean any person who controls the Purchaser within the meaning of Section 15
of
the Securities Act or Section 20 of the Exchange Act; and
(ii) the
term “Registration
Statement”
shall
include any final prospectus, exhibit, supplement or amendment included in
or
relating to the Registration Statement referred to in Section 3.01(a).
(i) The
Company agrees to indemnify and hold harmless the Purchaser and each Purchaser
Affiliate, against any losses, claims, damages, liabilities or expenses, joint
or several, to which such Purchaser or such Purchaser Affiliate may become
subject, under the Securities Act, the Exchange Act, or any other federal or
state statutory law or regulation, or at common law or otherwise (including
in
settlement of any litigation, if such settlement is effected with the written
consent of the Company, which consent shall not be unreasonably withheld),
insofar as such losses, claims, damages, liabilities or expenses (or actions
in
respect thereof as contemplated below) arise out of or are based upon
(A) any untrue statement or alleged untrue statement of any material
fact
contained in the Registration Statement, as amended as of the Effective Date,
including any information deemed to be a part thereof as of the time of
effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434
promulgated under the Securities Act, or the prospectus, in the form first
filed
with the Commission pursuant to Rule 424(b) of the Regulations, or filed as
part
of the Registration Statement at the time of effectiveness if no Rule 424(b)
filing is required (the “Prospectus”),
or
any amendment or supplement thereto, (B) the omission or alleged omission to
state in the Registration Statement as of the Effective Date a material fact
required to be stated therein or necessary to make the statements in the
Registration Statement or any post-effective amendment or supplement thereto,
or
in the Prospectus or any amendment or supplement thereto, not misleading, in
each case in the light of the circumstances under which the statements contained
therein were made, or (C) any inaccuracy in the representations and warranties
of the Company contained in this Agreement, or any failure of the Company to
perform its obligations hereunder, and will reimburse the Purchaser and each
such Purchaser Affiliate for any legal and other expenses as such expenses
which
are reasonably incurred by the Purchaser or such Purchaser Affiliate in
connection with investigating, defending, settling, compromising or paying
any
such loss, claim, damage, liability, expense or action; provided,
however,
that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense arises out of or is based upon (A)
an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, the prospectus included therein, or any
amendment or supplement thereto in reliance upon, and in conformity with,
written information furnished to the Company by the Purchaser expressly for
use
therein, or (B) the failure of the Purchaser to comply with the covenants and
agreements contained in Section 3.02 hereof, or (C) the inaccuracy of
any
representations made by the Purchaser herein or (D) any statement or omission
in
any Prospectus that is corrected or disclosed in any subsequent Prospectus
that
was delivered to the Purchaser prior to the pertinent sale or sales by the
Purchaser.
(ii) The
Purchaser agrees to indemnify and hold harmless the Company, each of its
directors, each of its officers who signed the Registration Statement and each
person, if any, who controls the Company within the meaning of the Securities
Act and the Exchange Act, against any losses, claims, damages, liabilities
or
expenses to which the Company, each of its directors, each of its officers
who
signed the Registration Statement or controlling person may become subject,
under the Securities Act, the Exchange Act, or any other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Purchaser) insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof as contemplated below) arise out
of
or are based upon (A) any failure to comply with the covenants and agreements
contained in Section 3.02 hereof, (B) the inaccuracy of any representation
made by the Purchaser herein, or (C) any (I) untrue or alleged untrue statement
of any material fact contained in the Registration Statement, the Prospectus,
or
any amendment or supplement thereto, or (II) omission or alleged omission to
state in the Registration Statement, the Prospectus or any amendment or
supplement thereto a material fact required to be stated therein or necessary
to
make the statements in the Registration Statement or any amendment or supplement
thereto, in the prospectus included therein, or any amendment or supplement
thereto, not misleading, in each case in the light of the circumstances under
which they were made; provided, that the Purchaser’s indemnification obligation
under this clause (C) shall apply to the extent, and only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, such prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by the Purchaser expressly for use therein,
and will reimburse the Company, each of its directors, each of its officers
who
signed the Registration Statement or controlling person for any legal and other
expense reasonably incurred by the Company, each of its directors, each of
its
officers who signed the Registration Statement or controlling person in
connection with investigating, defending, settling, compromising or paying
any
such loss, claim, damage, liability, expense or action.
(iii) Promptly
after receipt by an indemnified party under this Section 3.03 of notice of
the
threat or commencement of any action, such indemnified party will, if a claim
in
respect thereof is to be made against an indemnifying party under this Section
3.03, promptly notify the indemnifying party in writing thereof; provided,
that
the omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party for indemnification and
contribution (except as provided in paragraph (iv)) or otherwise than under
the
indemnity agreement contained in this Section 3.03 or to the extent it is not
materially prejudiced as a result of such failure. In case any such action
is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it may wish, jointly
with all other indemnifying parties similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party. Upon
receipt of notice from the indemnifying party to such indemnified party of
its
election so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified
party under this Section 3.03 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof unless
the indemnifying party shall not have employed counsel reasonably satisfactory
to the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of action, in which case the reasonable fees
and expenses of counsel shall be at the expense of the indemnifying party or
both the Company and Purchaser, in the reasonable opinion of counsel to the
Purchaser, have defenses distinct from, or contradictory to, the defenses
available to the other.
(iv) If
the
indemnification provided for in this Section 3.03 is required by its terms
but
is for any reason held to be unavailable to or otherwise insufficient to hold
harmless an indemnified party under paragraphs (i) or (ii) of this Section
3.03
in respect to any losses, claims, damages, liabilities or expenses referred
to
herein (subject to the limitation of paragraph (iii) of this Section 3.03),
then
each applicable indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of any losses, claims, damages,
liabilities or expenses referred to herein (I) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Purchaser from the sale of the Common Stock contemplated by this Agreement
or
(II) if the allocation provided by clause (I) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (I) above but the relative fault of
the
Company and the Purchaser in connection with the statements or omissions or
inaccuracies in the representations and warranties in this Agreement that
resulted in such losses, claims, damages, liabilities or expenses, as well
as
any other relevant equitable considerations. The relative benefits received
by
the Company on the one hand and the Purchaser on the other shall be deemed
to be
in the same proportion as the amount paid by the Purchaser to the Company
pursuant to this Agreement for the Shares purchased by the Purchaser that were
sold pursuant to the Registration Statement bears to the difference (the
“Difference”)
between the amount such Purchaser paid for the Shares that were sold pursuant
to
the Registration Statement and the amount received by such Purchaser from such
sale. The relative fault of the Company on the one hand and the Purchaser on
the
other shall be determined by reference to, among other things, whether the
untrue or alleged statement of a material fact or the omission or alleged
omission to state a material fact or the inaccurate or the alleged inaccurate
representation and/or warranty relates to information supplied by the Company
or
by the Purchaser and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement, omission
or
inaccuracy. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed
to
include, subject to the limitations set forth in paragraph (iii) of this Section
3.03, any legal or other fees or expenses reasonably incurred by such party
in
connection with investigating or defending any action or claim. The provisions
set forth in paragraph (iii) of this Section 3.03 with respect to the notice
of
the threat or commencement of any threat or action shall apply if a claim for
contribution is to be made under this paragraph (iv); provided,
however,
that no
additional notice shall be required with respect to any threat or action for
which notice has been given under paragraph (iii) for purposes of
indemnification. The Company and each Purchaser agree that it would not be
just
and equitable if contribution pursuant to this Section 3.03 were determined
solely by pro rata allocation or by any other method of allocation which does
not take account of the equitable considerations referred to in this paragraph.
Notwithstanding the provisions of this Section 3.03, the Purchaser shall not
be
required to contribute any amount in excess of the amount by which the
Difference exceeds the amount of any damages that such Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
ARTICLE
IV
CONDITIONS
TO CLOSING
Section
4.01 Conditions
to the Obligations of the Purchaser.
The
obligation of the Purchaser to purchase Tranche Shares at a Closing shall be
subject to the satisfaction of the following conditions, or the waiver of such
conditions by the Purchaser, at or prior to the applicable Tranche Closing
Date:
(a) the
representations and warranties of the Company set forth in Section 2.01
of
this Agreement shall be true and correct in all material respects with the
same
force and effect as though expressly made on every date during the term of
this
Agreement, including each Tranche Closing Date, except for representations
or
warranties made as of a particular date which representations and warranties
shall be true and correct as of such date;
(b) the
Company shall have complied in all material respects with all the agreements
hereunder and satisfied all the conditions on its part to be performed or
satisfied hereunder at or prior to such Tranche Closing Date;
(c) the
Company shall have delivered to the Purchaser a certificate executed by the
Chairman of the Board or President and the chief financial or accounting officer
of the Company, dated the applicable Tranche Closing Date, to the effect that
the conditions in Section
4.01(a), (b), (h),
and
(i), have
been
satisfied;
(d) the
Registration Statement shall have been declared by the Securities and Exchange
Commission (the “Commission”)
to be
effective under the Securities
Act on or prior to December 31, 2005 and shall not have been withdrawn, no
stop
order suspending the effectiveness of the Registration Statement shall be in
effect, and no proceedings for the suspension of the effectiveness of the
Registration Statement shall have been instituted or threatened by the
Commission;
(e)
[INTENTIONALLY OMITTED]
(f) the
Company shall retain, and through the term of this Agreement shall continue
to
retain, an investor relations firm satisfactory to the Purchaser, in its sole
and absolute discretion.
(g) there
shall not have been (i) any domestic or international event, act, or occurrence,
including, without limitation, event, act, or occurrence of terrorism, that
shall have materially and adversely disrupted, or, in the opinion of the
Purchaser, will in the immediate future materially and adversely disrupt, the
securities markets; or (ii) a general suspension of, or a general limitation
on
prices for, trading in securities on the New York Stock Exchange or the American
Stock Exchange or in the over-the-counter market; or (iii) an outbreak or
increase in the level of major hostilities or other national or international
calamity; or (iv) a banking moratorium declared by any state or federal
authority; or (v) a moratorium in foreign exchange trading by major
international banks or persons declared; or (vi) a material interruption in
the
mail service or other means of communication within the United States; or (vii)
a material or substantial loss suffered by the Company by fire, flood, accident,
hurricane, earthquake, theft, sabotage, or other calamity or malicious act,
whether or not such loss shall have been insured, or from any labor dispute
or
court or government action, order, or decree, which will, in the discretion
of
the Purchaser, make it inadvisable to proceed with any portion of the
transactions contemplated hereby; or (viii) any material adverse change in
the
business, prospects, financial condition, or results of operations of the
Company; or (ix) any material governmental restrictions shall have been imposed
on trading in securities in general, which restrictions are not in effect on
the
date hereof; or (x) passed by the Congress of the United States or by any state
legislature any act or measure, or adopted by any governmental body or
authoritative accounting institute or board, or any governmental executive,
any
orders, rules, or regulations, which the Purchaser believes likely to have
a
material adverse effect on the business, financial condition, or financial
statements of the Company or any of the Subsidiary or the market for the Common
Stock; or (xi) such material and adverse change in the market for the Company's
securities or securities in general or in political, financial, or economic
conditions as in the judgment of the Purchaser makes it inadvisable to proceed
with the transactions contemplated hereby.
(h) The
Company shall have received state securities law or “blue sky” clearance for the
sale of the Shares in states reasonably specified in writing by the Purchaser,
other than states in which such clearance shall have required the Company to
qualify to do business or consent to service of process in any jurisdiction
in
which it is not now so qualified or has not so consented.
(i) A
Blackout Period shall not be in effect at either the date of the Tranche
Election Notice or the Tranche Closing Date.
Section
4.02 Conditions
to the Obligations of the Company.
The
obligation of the Company to sell Tranche Shares at any Closing shall be subject
to the satisfaction of the following conditions, or the waiver of such
conditions by the Company, at or prior to the applicable Tranche Closing
Date:
(a) the
representations and warranties of the Purchaser set forth in Section 2.02 of
this Agreement shall be true and correct in all material respects with the
same
force and effect as though expressly made on and as of such Tranche Closing
Date, except for representations or warranties made as of a particular date
which representations and warranties shall be true and correct as of such
date;
(b) the
Purchaser shall have complied in all material respects with all the agreements
hereunder and satisfied all the conditions on its part to be performed or
satisfied hereunder at or prior to such Tranche Closing Date;
(c) the
Purchaser shall have delivered to the Company a certificate executed by a duly
authorized officer of the Purchaser, dated the applicable Tranche Closing Date,
to the effect that the conditions in clauses (a) and (b) of this Section 4.02
have been satisfied; and
(d) no
stop
order suspending the effectiveness of the Registration Statement shall be in
effect, and no proceedings for the suspension of the effectiveness of the
Registration Statement shall have been instituted or threatened by the
Commission.
ARTICLE
V
TERMINATION
Section
5.01 Termination
by Purchaser.
The
Purchaser may terminate its obligations under Article I of this Agreement by
oral or written notice to the Company following the occurrence of one or more
of
the following:
(a) the
Company shall default in any material respect in the performance of any covenant
or agreement under this Agreement, which default shall continue for more than
three business days following written notice thereof from the
Purchaser;
(b) the
representations and warranties of the Company set forth in Section 2.01 of
this
Agreement shall not be true and correct in all material respects as of the
date
of this Agreement, and on each day thereafter (as if each such date was a
Tranche Closing Date), except for the representations and warranties made as
of
a particular date which representations and warranties need be true and correct
only as of such date;
(c) the
Company shall merge or consolidate with any Person, shall effect any
reorganization, or shall sell all or substantially all of its assets outside
the
ordinary course, or shall enter into any agreement contemplating the
same;
(d) the
Closing of the purchase and sale of the Tranche Shares shall not have been
completed by September
15, 2006;
(e) except
pursuant to Stock Equivalents (as hereinafter defined) outstanding on the date
of this Agreement and disclosed in the SEC Documents or new employee options,
the Company issues, or agrees to issue (other than the shares, warrants or
the
underlying shares): (i) shares of Common Stock at a purchase price less than
$0.95; (ii) shares of capital stock convertible into Common Stock; or (iii)
Stock Equivalents with an exercise or conversion price less than the highest
of
the Tranche Purchase Prices. For purposes hereof “Stock Equivalents” shall mean
options, warrants, calls, rights, commitments, convertible securities and other
securities pursuant to which the holder, directly or indirectly, has the right
to acquire (with or without additional consideration) capital stock or equity
of
the Company; or
(f) the
Company declares or pays any dividend or distribution to its shareholders,
or
purchases or redeems any Common Stock.
Section
5.02 Termination
by the Company.
The
Company may terminate the Agreement at any time in its sole discretion by notice
to the Purchaser in which case the Purchaser shall have no further obligation
under Article I of the this Agreement.
ARTICLE
VI
MISCELLANEOUS
Section
6.01 Notices.
All
notices, requests, consents and other communications hereunder shall be in
writing, shall be mailed by first-class registered or certified airmail,
confirmed facsimile or nationally recognized overnight express courier postage
prepaid, and shall be deemed given when so mailed and shall be delivered as
addressed as follows:
| (a) |
if
to the Company, to:
|
Trestle
Holdings, Inc.
000
Xxxxxxxxxx Xxxxx, #000
Xxxxxx,
XX 00000
Phone:
(000)
000-0000
Facsimile:
(000)
000-0000
Attn:
Xxxxxxxx Xxxxxxxxx
with
a
copy to:
Xxxx
Xxxxxxx, LLP
1999
Avenue of the Stars
Xxxxx
0000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxx
Xxxxx
Phone:
(000)
000-0000
Facsimile:
(000) 000-0000
or
to
such other person at such other place as the Company shall designate to the
Purchaser in writing; and
| (b) |
if
to the Purchaser, to:
|
BRISTOL
INVESTMENT FUND, Ltd.
c/o
Bristol Capital Advisors, LLC
00000
Xxxxxxxx Xxxx., Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
Attention:
Xxxx Xxxxxxx
Phone:
(000) 000-0000
Facsimile:
(000) 000-0000
E-mail:
xxxxxxxx@xxxxxxxxxxxxxxxx.xxx
with
a copy to:
Xxx
Xxxx,
Esq.
Bristol
Capital Advisors, LLC
00000
Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Phone:
(000) 000-0000
Fax:
(000) 000-0000
eFax:
(000) 000-0000
E-mail:
xxx@xxxxxxxxxxxxxxxx.xxx
Section
6.02 Assignment.
Neither
party hereto may assign or delegate any of such party’s rights or obligations
under or in connection with this Agreement, and any attempted assignment or
delegation of such rights or obligations shall be void. Except as expressly
provided in Section 3.03 with respect to Purchaser Affiliates, directors and
controlling persons of the Company and officers of the Company who signed the
Registration Statement, no person, including without limitation any person
who
purchases or otherwise acquires or receives any Shares from the Purchaser,
is an
intended third party beneficiary of this Agreement, and no party to this
Agreement shall have any obligation arising under this Agreement to any person
other than the other party hereto and, to the extent expressly provided in
Section 3.03, Purchaser Affiliates, directors and controlling persons of the
Company and officers of the Company who signed the Registration
Statement.
Section
6.03 Changes.
This
Agreement may not be modified or amended except pursuant to an instrument in
writing signed by the Company and the Purchaser.
Section
6.04 Headings.
The
headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement.
Section
6.05 Severability.
In
case
any provision contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
Section
6.06 Governing
Law; Venue.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of California, without regard to its conflicts of law principles, and
the
federal law of the United States of America. The
Company irrevocably consents to the jurisdiction of the courts of the State
of
California and of any federal court,
in each
case located in Los Angeles or Orange County, California
in
connection with any action or proceeding arising out of, or relating to, this
Agreement, any document or instrument delivered pursuant to, in connection
with,
or simultaneously with this Agreement, or a breach of this Agreement or any
such
document or instrument. In any such action or proceeding, the Company waives
personal service of any summons, complaint, or other process and agrees that
service thereof may be made in accordance with Section 6.01.
Within 30 days after such service, or such other time as may be mutually agreed
upon in writing by the attorneys for the parties to such action or proceeding,
the Company shall appear or answer such summons, complaint, or other process.
Should the Company fail to appear or answer within such 30-day period or such
extended period, as the case may be, the Company shall be deemed in default
and
judgment may be entered against the Company for the amount as demanded in any
summons, complaint, or other process so served.
Section
6.07 Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
constitute an original, but all of which, when taken together, shall constitute
but one instrument, and shall become effective when one or more counterparts
have been signed by each party hereto and delivered to the other
parties.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed by their duly
authorized representatives as of the day and year first above written.
| |
|
|
| Date: | By: | /s/ XXXXX XXXX |
|
|
||
| Title: President | ||
| BRISTOL INVESTMENT FUND, Ltd., | ||
| |
|
|
| Date: | By: | /s/ XXXX XXXXXXX |
|
|
||
| Title: Director | ||
Schedule
1.01(a)
Tranches
|
Tranche
No.
|
Number
of Tranche Shares
Included
in Tranche
|
Tranche
Purchase Price per
Tranche
Share (U.S.
Dollars)
|
Warrants
Applicable Tranche
|
Number
of Warrants Applicable Tranche
|
|
1
|
187,500
|
$0.70
|
$0.70
Warrants
|
56,250
|
|
2
|
187,500
|
$0.70
|
$0.70
Warrants
|
56,250
|
|
3
|
187,500
|
$0.70
|
$0.70
Warrants
|
31,250
|
|
4
|
187,500
|
$0.85
|
$0.85
Warrants
|
56,250
|
|
5
|
187,500
|
$0.85
|
$0.85
Warrants
|
56,250
|
|
6
|
187,500
|
$0.85
|
$0.85
Warrants
|
31,250
|
|
7
|
187,500
|
$0.95
|
$0.95
Warrants
|
56,250
|
|
8
|
187,500
|
$0.95
|
$0.95
Warrants
|
56,250
|
|
9
|
187,500
|
$0.95
|
$0.95
Warrants
|
31,250
|
