LOAN AGREEMENT
Exhibit
10.1
THIS
LOAN AGREEMENT,
dated
as of November 30, 2007, is entered into by and between MILLENNIUM
BIOTECHNOLOGIES GROUP, INC.,
a
Delaware corporation with headquarters located at 000 Xxxxxxxxxxxx Xxxx, Xxxxx
000, Xxxxxxx Xxxxx, XX 00000 (the “Company”), and HARBORVIEW
MASTER FUND L.P., c/o Beacon Capital Management, Harbor House, Roadtown,
Tortola, BVI (the
“Buyer”).
W
I T N E S S E T H:
WHEREAS,
the
Company and the Buyer are executing and delivering this Agreement in accordance
with and in reliance upon the exemption from securities registration for offers
and sales to accredited investors afforded, inter alia,
by Rule
506 under Regulation D (“Regulation D”) as promulgated by the United States
Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933,
as amended (the “1933 Act”); and
WHEREAS,
the
Buyer wishes to lend funds to the Company, subject to and upon the terms and
conditions of this Agreement and acceptance of this Agreement by the Company,
the repayment of which will be represented by a 6% Secured Convertible Note
of
the Company (the “Note”), on the terms and conditions referred to herein;
and
WHEREAS,
in
connection with the loan to be made by the Buyer, the Company has agreed to
issue an aggregate of 2,750,000 shares of its Common Stock (the “Shares”) to the
Buyer;
NOW
THEREFORE,
in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the parties agree as follows:
1. AGREEMENT
TO PURCHASE; PURCHASE PRICE.
a. Purchase.
(i) Subject
to the terms and conditions of this Agreement and the other Transaction
Agreements, the Buyer hereby agrees to loan to the Company an aggregate of
Five
Hundred Fifty Thousand Dollars ($550,000) (the “Loan Amount”).
(ii) The
obligation to repay the loan from the Buyer shall be evidenced by the Company’s
issuance of the Note, which shall be in the form of Annex
I annexed
hereto.
(iii) In
consideration of the loan to be made by the Buyer, the Company agrees to issue
to the Buyer the Shares on the Closing Date. Additional provisions relating
to
the Shares are provided below.
(iv) The
loan
to be made by the Buyer and the issuance of the Note and the Shares to the
Buyer
are sometimes referred to herein as the purchase and sale of the Securities
(as
defined below), and are referred to collectively as the
“Transactions.”
b. Certain
Definitions. As
used
herein, each of the following terms has the meaning set forth below, unless
the
context otherwise requires
“Affiliate”
means, with respect to a specific Person referred to in the relevant provision,
another Person who or which controls or is controlled by or is under common
control with such specified Person.
“Buyer
Control Person” means each director, executive officer, promoter, and such other
Persons as may be deemed in control of the Buyer pursuant to Rule 405 under
the
1933 Act or Section 20 of the 1934 Act.
“Certificates”
means the original ink-signed Note and the Share Certificate, each duly executed
by the Company and issued on the Closing Date in the name of the
Buyer.
“Closing
Date” means the date of the closing of the Transactions, as provided
herein.
“Escrow
Agent” means Xxxxxxx & Xxxxxx LLP, the escrow agent identified in the Joint
Escrow Instructions attached hereto as Annex
II
(the
“Joint Escrow Instructions”).
“Escrow
Funds” means the Loan Amount delivered to the Escrow Agent as contemplated by
Sections 1(c) and (d) hereof.
“Escrow
Property” means the Escrow Funds and the Certificates delivered to the Escrow
Agent as contemplated by Section 1(c) hereof.
“Holder”
means the Person holding the relevant Securities at the relevant
time.
“Material
Adverse Effect” means an event or combination of events, which individually or
in the aggregate, would reasonably be expected to (w) adversely affect the
legality, validity or enforceability of the Securities or any of the Transaction
Agreements, (x) have or result in a material adverse effect on the results
of
operations, assets, prospects, or condition (financial or otherwise) of the
Company and its subsidiaries, taken as a whole, (y) adversely impair the
Company's ability to perform fully on a timely basis its obligations under
any
of the Transaction Agreements or the transactions contemplated thereby, or
(z)
materially and adversely affect the value of the rights granted to the Buyer
in
the Transaction Agreements.
“Person”
means any living person or any entity, such as, but not necessarily limited
to,
a corporation, partnership or trust.
“Principal
Trading Market” means the Over the Counter Bulletin Board or such other market
on which the Common Stock is principally traded at the relevant time, but shall
not included the “pink sheets.”
“Securities”
means the Note and the Shares.
“Share
Certificate” means the stock certificate issued by the Company in the name of
the Buyer representing the Shares.
“State
of
Incorporation” means Delaware.
“Subsidiary”
means any subsidiary of the Company (whether included in the Company’s SEC
Documents, as defined below, or otherwise, now existing or hereafter acquired
or
created).
“Trading
Day” means any day during which the Principal Trading Market shall be open for
business.
“Transfer
Agent” means, at any time, the transfer agent for the Company’s Common
Stock.
“Transaction
Agreements” means this Loan Agreement and the Note.
c. Form
of Payment; Delivery of Certificates.
(i) The
Buyer
shall pay the Loan Amount by delivering immediately available good funds in
United States Dollars to the Escrow Agent no later than the date prior to the
Closing Date.
(ii) No
later
than the Closing Date, but in any event promptly following payment by the Buyer
to the Escrow Agent of the Loan Amount, the Company shall deliver the
Certificates, each duly executed on behalf of the Company and issued in the
name
of the Buyer, to the Escrow Agent.
(iii) By
signing this Agreement, each of the Buyer and the Company, subject to acceptance
by the Escrow Agent, agrees to all of the terms and conditions of, and becomes
a
party to, the Joint Escrow Instructions, all of the provisions of which are
incorporated herein by this reference as if set forth in full.
d. Method
of Payment.
Payment
into escrow of the Loan Amount shall be made by wire transfer of funds
to:
Bank
of
New York
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
ABA#
000000000
For
credit to the account of Xxxxxxx & Prager LLP
Account
No.: [To
be
provided to the Buyer by Xxxxxxx & Xxxxxx LLP]
Re: MILLENNIUM
BIOTECHNOLOGIES GROUP Nov 07
Transaction.
2.
BUYER REPRESENTATIONS, WARRANTIES, ETC.
The
Buyer
represents and warrants to, and covenants and agrees with, the Company as
follows:
a. Without
limiting Buyer's right to sell the Securities pursuant to an effective
registration statement or otherwise in compliance with the 1933 Act, the Buyer
is purchasing the Securities for its own account for investment only and not
with a view towards the public sale or distribution thereof and not with a
view
to or for sale in connection with any distribution thereof.
b. The
Buyer
is (i) an “accredited investor” as that term is defined in Rule 501 of the
General Rules and Regulations under the 1933 Act by reason of Rule 501(a)(3),
(ii) experienced in making investments of the kind described in this Agreement
and the related documents, (iii) able, by reason of the business and financial
experience of its officers (if an entity) and professional advisors (who are
not
affiliated with or compensated in any way by the Company or any of its
Affiliates or selling agents), to protect its own interests in connection with
the transactions described in this Agreement, and the related documents, and
to
evaluate the merits and risks of an investment in the Securities, and (iv)
able
to afford the entire loss of its investment in the Securities.
c. All
subsequent offers and sales of the Securities by the Buyer shall be made
pursuant to registration of the relevant Securities under the 1933 Act or
pursuant to an exemption from registration.
d. The
Buyer
understands that the Securities are being offered and sold to it in reliance
on
specific exemptions from the registration requirements of the 1933 Act and
state
securities laws and that the Company is relying upon the truth and accuracy
of,
and the Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Securities.
e. The
Buyer
and its advisors, if any, have been furnished with or have been given access
to
all materials relating to the business, finances and operations of the Company
and materials
relating to the offer and sale of the Securities which have been requested
by
the Buyer. The Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and its management and have received
complete and satisfactory answers to any such inquiries. Without limiting the
generality of the foregoing, the Buyer has also had the opportunity to obtain
and to review the Company's filings on XXXXX (collectively,
the “Company's SEC Documents”).
f. The
Buyer
understands that its investment in the Securities involves a high degree of
risk.
g. The
Buyer
hereby represents that, in connection with its purchase of the Securities,
it
has not relied on any statement or representation by the Company or any of
its
officers, directors and employees or any of their respective attorneys or
agents, except as specifically set forth herein.
h. The
Buyer
understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation
or
endorsement of the Securities.
i. This
Agreement and the other Transaction Agreements to which the Buyer is a party,
and the transactions contemplated thereby, have been duly and validly
authorized, executed and delivered on behalf of the Buyer and are valid and
binding agreements of the Buyer enforceable in accordance with their respective
terms, subject as to enforceability to general principles of equity and to
bankruptcy, insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally.
3. COMPANY
REPRESENTATIONS, ETC. The
Company represents and warrants to the Buyer as of the date hereof and as of
the
Closing Date that, except as otherwise provided in the Company’s SEC
Documents:
a. Corporate
Status.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Incorporation and has the requisite corporate
power to own its properties and to carry on its business as now being conducted.
The Company is duly qualified as a foreign corporation to do business and is
in
good standing in each jurisdiction where the nature of the business conducted
or
property owned by it makes such qualification necessary, other than those
jurisdictions in which the failure to so qualify would not have or result in
a
Material Adverse Effect. The Company has registered its stock and is obligated
to file reports pursuant to Section 12 or Section 15(d) of the Securities and
Exchange Act of 1934, as amended (the “1934 Act”).
b. The
Shares.
(i) The
Company has sufficient authorized and unissued shares of Common Stock as may
be
necessary to effect the issuance of the Shares on the Closing Date.
(ii) As
of the
Closing Date, the Shares shall have been duly authorized by all necessary
corporate action on the part of the Company, and, when issued on the Closing
Date or pursuant to other relevant provisions of the Transaction Agreements,
in
each case in accordance with their respective terms, will be duly and validly
issued, fully paid and non-assessable and will not subject the Holder thereof
to
personal liability by reason of being such Holder.
c. Transaction
Agreements.
This
Agreement and the other Transaction Agreement, and the transactions contemplated
thereby, have been duly and validly authorized by the Company, this Agreement
has been duly executed and delivered by the Company and this Agreement is,
and
the Note, when executed and delivered by the Company, will be, valid and binding
agreements of the Company enforceable in accordance with their respective terms,
subject as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium, and other similar laws affecting the enforcement of
creditors' rights generally.
d. Filings.
None of
the Company’s SEC Documents contained, at the time they were filed, any untrue
statement of a material fact or omitted to state any material fact required
to
be stated therein or necessary to make the statements made therein in light
of
the circumstances under which they were made, not misleading. Since November
1,
2006, the Company has timely filed all requisite forms, reports and exhibits
thereto required to be filed by the Company with the SEC.
e. No
Integrated Offering.
Neither
the Company nor any of its Affiliates nor any Person acting on its or their
behalf has, directly or indirectly, at any time since May 1, 2007, made any
offer or sales of any security or solicited any offers to buy any security
under
circumstances that would eliminate the availability of the exemption from
registration under Regulation D in connection with the offer and sale of the
Securities as contemplated hereby.
f. Dilution.
The
Shares may have a dilutive effect on the ownership interests of the other
shareholders (and Persons having the right to become shareholders) of the
Company. The Company's executive officers and directors have studied and fully
understand the nature of the Securities being sold hereby and recognize that
they have such a potential dilutive effect. The board of directors of the
Company has concluded, in its good faith business judgment, that such issuance
is in the best interests of the Company.
g. Fees
to Brokers, Finders and Others.
The
Company has taken no action which would give rise to any claim by any Person
for
brokerage commission, finder's fees or similar payments by Buyer relating to
this Agreement or the transactions contemplated hereby. Notwithstanding the
foregoing, the Company acknowledges that it has agreed to pay Due Diligence
Fees
(as defined in the Joint Escrow Instructions) for due diligence conducted in
connection with the transactions contemplated hereby. Buyer shall have no
obligation with respect to such fees or with respect to any claims made by
or on
behalf of other Persons for fees of a type contemplated in this paragraph that
may be due in connection with the transactions contemplated hereby. The Company
shall indemnify and hold harmless the Buyer, its employees,
officers, directors, agents, and partners, and their respective Affiliates,
from
and against all claims, losses, damages, costs (including the costs of
preparation and attorney's fees) and expenses suffered in respect of any such
claimed or existing fees, as and when incurred.
4. CERTAIN
COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer
Restrictions.
The
Buyer acknowledges that (1) the Securities have not been and are not being
registered under the provisions of the 1933 Act and, the Shares have not been
and are not being registered under the 1933 Act, and may not be transferred
unless (A) subsequently registered thereunder or (B) the Buyer shall have
delivered to the Company an opinion of counsel, reasonably satisfactory in
form,
scope and substance to the Company, to the effect that the Securities to be
sold
or transferred may be sold or transferred pursuant to an exemption from such
registration; (2) any sale of the Securities made in reliance on Rule 144
promulgated under the 1933 Act (“Rule 144") may be made only in accordance with
the terms of said Rule and further, if said Rule is not applicable, any resale
of such Securities under circumstances in which the seller, or the Person
through whom the sale is made, may be deemed to be an underwriter, as that
term
is used in the 1933 Act, may require compliance with some other exemption under
the 1933 Act or the rules and regulations of the SEC thereunder; and (3) neither
the Company nor any other Person is under any obligation to register the
Securities under the 1933 Act or to comply with the terms and conditions of
any
exemption thereunder.
b. Restrictive
Legend.
The
Buyer acknowledges and agrees that, unless and until such time as the relevant
Shares have been registered under the 1933 Act and sold in accordance with
an
effective registration statement, the certificates and other instruments
representing any of the Securities shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of any such Securities):
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED
FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
OR
AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
c. Filings.
The
Company undertakes and agrees to make all necessary filings in connection with
the sale of the Securities to the Buyer under any United States laws and
regulations applicable to the Company, or by any domestic securities exchange
or
trading market, and to provide a copy thereof to the Buyer promptly after such
filing.
d. Reporting
Status.
So long
as the Buyer beneficially owns any of the Shares, the Company shall file all
reports required to be filed with the SEC pursuant to Section 13 or 15(d) of
the
1934 Act, shall take all reasonable action under its control to ensure that
adequate current public information with respect to the Company, as required
in
accordance with Rule 144(c)(2) of the 1933 Act, is publicly available, and
shall
not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would permit such termination.
e. Use
of Proceeds.
The
Company will use the proceeds received hereunder (excluding amounts paid by
the
Company for legal, due diligence and escrow fees in connection with the sale
of
the Securities) for general corporate purposes.
f. Shares.
The
Company agrees to issue the Shares to the Buyer on the Closing Date.
g. Publicity,
Filings, Releases, Etc.
Each of
the parties agrees that it will not disseminate any information relating to
the
Transaction Agreements or the transactions contemplated thereby, including
issuing any press releases, holding any press conferences or other forums,
or
filing any reports (collectively, “Publicity”), without giving the other party
reasonable advance notice and an opportunity to comment on the contents thereof.
Neither party will include in any such Publicity any statement or statements
or
other material to which the other party reasonably objects, unless in the
reasonable opinion of counsel to the party proposing such statement, such
statement is legally required to be included. In furtherance of the foregoing,
the Company will provide to the Buyer drafts of the applicable text of the
first
filing of a Current Report on Form 8-K or a Quarterly or Annual Report on Form
10-Q or 10-K intended to be made with the SEC which refers to the Transaction
Agreements or the transactions contemplated thereby as soon as practicable
and
will not include in such filing any statement or statements or other material
to
which the other party reasonably objects, unless in the reasonable opinion
of
counsel to the party proposing such statement, such statement is legally
required to be included. Notwithstanding the foregoing, each of the parties
hereby consents to the inclusion of the text of the Transaction Agreements
in
filings made with the SEC as well as any descriptive text accompanying or part
of such filing which is accurate and reasonably determined by the Company’s
counsel to be legally required.
5. TRANSFER
AGENT INSTRUCTIONS.
a. The
Company warrants that, with respect to the Securities, other than the stop
transfer instructions to give effect to Section 4(b) hereof, it will give its
transfer agent no instructions inconsistent with instructions to issue Common
Stock to the Holder as contemplated in the Transaction Agreements. Except as
so
provided, the Shares shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement. Nothing
in this Section shall affect in any way the Buyer's obligations and agreement
to
comply with all applicable securities laws upon resale of the Securities. If
the
Buyer provides the Company with documentation reasonably satisfactory to the
Company that registration of a resale by the Buyer of any of the Securities
in
accordance with clause (1)(B) of Section 4(a) of this Agreement is not required
under the 1933 Act, the Company shall, at its expense (except as provided in
clause (2) of Section 4(a) of this Agreement) cause its counsel to issue and
opinion to permit the transfer or reissue of the Shares represented by one
or
more certificates for Common Stock without legend (or where applicable, by
electronic registration) in such name and in such denominations as specified
by
the Buyer. If the Company does not promptly provide an opinion from Company
counsel, the Company agrees to accept an opinion of Xxxxxxx & Xxxxxx LLP or
such other counsel chosen by the Buyer reasonably acceptable to the Company,
which opinion will be at the Company’s expense.
b. The
Company will authorize the Transfer Agent to give information relating to the
Company directly to the Holder or the Holder’s representatives upon the request
of the Holder or any such representative, to the extent such information relates
to (i) the status of shares of Common Stock issued or claimed to be issued
to
the Holder in connection with a Notice of Exercise to the Holder, or (ii) the
aggregate number of outstanding shares of Common Stock of all shareholders
(as a
group, and not individually) as of a current or other specified date. At the
request of the Holder, the Company will provide the Holder with a copy of the
authorization so given to the Transfer Agent.
6. CLOSING
DATE.
a.
The
Closing Date shall occur on the date which is the first Trading Day after each
of the conditions contemplated by Sections 7 and 8 hereof shall have either
been
satisfied or been waived by the party in whose favor such conditions
run.
b. The
closing of the Transactions shall occur on the Closing Date at the offices
of
the Escrow Agent and shall take place no later than 3:00 P.M., New York time,
on
such day or such other time as is mutually agreed upon by the Company and the
Buyer.
c. Notwithstanding
anything to the contrary contained herein, the Escrow Agent will be authorized
to release the Escrow Funds to the Company and to others and to release the
other Escrow Property on the Closing Date upon satisfaction of the conditions
set forth in Sections 7 and 8 hereof and as provided in the Joint Escrow
Instructions.
7. CONDITIONS
TO THE COMPANY'S OBLIGATION TO SELL.
The
Buyer
understands that the Company's obligation to sell the Notes and the Shares
to
the Buyer pursuant to this Agreement on the Closing Date is conditioned
upon:
a. The
execution and delivery of this Agreement by the Buyer;
b. Delivery
by the Buyer to the Escrow Agent of good funds as payment in full of an amount
equal to the Loan Amount in accordance with this Agreement;
c. The
accuracy on such Closing Date of the representations and warranties of the
Buyer
contained in this Agreement, each as if made on such date, and the performance
by the Buyer on or before such date of all covenants and agreements of the
Buyer
required to be performed on or before such date; and
d. There
shall not be in effect any law, rule or regulation prohibiting or restricting
the transactions contemplated hereby, or requiring any consent or approval
which
shall not have been obtained.
8. CONDITIONS
TO THE BUYER'S OBLIGATION TO PURCHASE.
The
Company understands that the Buyer's obligation to purchase the Notes and the
Shares on the Closing Date is conditioned upon:
a. The
execution and delivery of this Agreement and the other Transaction Agreements
by
the Company;
b. Delivery
by the Company to the Escrow Agent of the Certificates in accordance with this
Agreement;
c. An
opinion of counsel for the Company, dated the Closing Date, in form, scope
and
substance reasonably satisfactory to the Buyer;
d. The
accuracy in all material respects on the Closing Date of the representations
and
warranties of the Company contained in this Agreement, each as if made on such
date, and the performance by the Company on or before such date of all covenants
and agreements of the Company required to be performed on or before such date;
and
e. There
shall not be in effect any law, rule or regulation prohibiting or restricting
the transactions contemplated hereby, or requiring any consent or approval
which
shall not have been obtained.
9. INDEMNIFICATION
AND REIMBURSEMENT.
a.
(i)
The
Company agrees to indemnify and hold harmless the Buyer and its officers,
directors, employees, and agents, and each Buyer Control Person from and against
any losses, claims, damages, liabilities or expenses incurred (collectively,
“Damages”), joint or several, and any action in respect thereof to which the
Buyer, its partners, Affiliates, officers, directors, employees, and duly
authorized agents, and any such Buyer Control Person becomes subject to,
resulting from, arising out of or relating to any misrepresentation, breach
of
warranty or nonfulfillment of or failure to perform any covenant or agreement
on
the part of Company contained in this Agreement, as such Damages are incurred,
except to the extent such Damages result primarily from Buyer's failure to
perform any covenant or agreement contained in this Agreement or the Buyer's
or
its officer’s, director’s, employee’s, agent’s or Buyer Control Person’s gross
negligence, recklessness or bad faith in performing its obligations under this
Agreement.
(ii) The
Company hereby agrees that, if the Buyer, other than by reason of its gross
negligence, illegal or willful misconduct (in each case, as determined by a
non-appealable judgment to such effect), (x) becomes involved in any capacity
in
any action, proceeding or investigation brought by any shareholder of the
Company, in connection with or as a result of the consummation of the
transactions contemplated by this Agreement or the other Transaction Agreements,
or if the Buyer is impleaded in any such action, proceeding or investigation
by
any Person, or (y) becomes involved in any capacity in any action, proceeding
or
investigation brought by the SEC, any self-regulatory organization or other
body
having jurisdiction, against or involving the Company or in connection with
or
as a result of the consummation of the transactions contemplated by this
Agreement or the other Transaction Agreements, or (z) is impleaded in any such
action, proceeding or investigation by any Person, then in any such case, the
Company shall indemnify, defend and hold harmless the Buyer from and against
and
in respect of all losses, claims, liabilities, damages or expenses resulting
from, imposed upon or incurred by the Buyer, directly or indirectly, and
reimburse such Buyer for its reasonable legal and other expenses (including
the
cost of any investigation and preparation) incurred in connection therewith,
as
such expenses are incurred. The indemnification and reimbursement obligations
of
the Company under this paragraph shall be in addition to any liability which
the
Company may otherwise have, shall extend upon the same terms and conditions
to
any Affiliates of the Buyer who are actually named in such action, proceeding
or
investigation, and partners, directors, agents, employees and Buyer Control
Persons (if any), as the case may be, of the Buyer and any such Affiliate,
and
shall be binding upon and inure to the benefit of any successors, assigns,
heirs
and personal representatives of the Company, the Buyer, any such Affiliate
and
any such Person. The Company also agrees that neither the Buyer nor any such
Affiliate, partner, director, agent, employee or Buyer Control Person shall
have
any liability to the Company or any Person asserting claims on behalf of or
in
right of the Company in connection with or as a result of the consummation
of
this Agreement or the other Transaction Agreements,
except as may be expressly and specifically provided in or contemplated by
this
Agreement.
b. All
claims for indemnification by any Indemnified Party (as defined below) under
this Section shall be asserted and resolved as follows:
(i)
In the
event any claim or demand in respect of which any Person claiming
indemnification under any provision of this Section (an "Indemnified Party")
might seek indemnity under paragraph (a) of this Section is asserted against
or
sought to be collected from such Indemnified Party by a Person other than a
party hereto or an Affiliate thereof (a "Third Party Claim"), the Indemnified
Party shall deliver a written notification, enclosing a copy of all papers
served, if any, and specifying the nature of and basis for such Third Party
Claim and for the Indemnified Party's claim for indemnification that is being
asserted under any provision of this Section against any Person (the
"Indemnifying Party"), together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith, of such Third
Party Claim (a "Claim Notice") with reasonable promptness to the Indemnifying
Party. If the Indemnified Party fails to provide the Claim Notice with
reasonable promptness after the Indemnified Party receives notice of such Third
Party Claim, the Indemnifying Party shall not be obligated to indemnify the
Indemnified Party with respect to such Third Party Claim to the extent that
the
Indemnifying Party's ability to defend has been prejudiced by such failure
of
the Indemnified Party. The Indemnifying Party shall notify the Indemnified
Party
as soon as practicable within the period ending thirty (30) calendar days
following receipt by the Indemnifying Party of either a Claim Notice or an
Indemnity Notice (as defined below) (the "Dispute Period") whether the
Indemnifying Party disputes its liability or the amount of its liability to
the
Indemnified Party under this Section and whether the Indemnifying Party desires,
at its sole cost and expense, to defend the Indemnified Party against such
Third
Party Claim. The following provisions shall also apply.
(x)
If
the Indemnifying Party notifies the Indemnified Party within the Dispute Period
that the Indemnifying Party desires to defend the Indemnified Party with respect
to the Third Party Claim pursuant to this paragraph (b) of this Section, then
the Indemnifying Party shall have the right to defend, with counsel reasonably
satisfactory to the Indemnified Party, at the sole cost and expense of the
Indemnifying Party, such Third Party Claim by all appropriate proceedings,
which
proceedings shall be vigorously and diligently prosecuted by the Indemnifying
Party to a final conclusion or will be settled at the discretion of the
Indemnifying Party (but only with the consent of the Indemnified Party in the
case of any settlement that provides for any relief other than the payment
of
monetary damages or that provides for the payment of monetary damages as to
which the Indemnified Party shall not be indemnified in full pursuant to
paragraph (a) of this Section). The Indemnifying Party shall have full control
of such defense and proceedings, including any compromise or settlement thereof;
provided, however, that the Indemnified Party may, at the sole cost and expense
of the Indemnified Party, at any time prior to the Indemnifying Party's delivery
of the notice referred to in the first sentence of this subparagraph (x), file
any motion, answer or other pleadings or take any other action that the
Indemnified Party reasonably believes to be necessary or appropriate protect
its
interests; and provided further, that if requested by the Indemnifying Party,
the Indemnified Party will, at the sole cost and expense of the Indemnifying
Party, provide reasonable cooperation to the Indemnifying Party in contesting
any Third Party Claim that the Indemnifying Party elects to contest. The
Indemnified Party may participate in, but not control, any defense or settlement
of any Third Party Claim controlled by the Indemnifying Party pursuant to this
subparagraph (x), and except as provided in the preceding sentence, the
Indemnified Party shall bear its own costs and expenses with respect to such
participation. Notwithstanding the foregoing, the Indemnified Party may take
over the control of the defense or settlement of a Third Party Claim at any
time
if it irrevocably waives its right to indemnity under paragraph (a) of this
Section with respect to such Third Party Claim.
(y)
If
the Indemnifying Party fails to notify the Indemnified Party within the Dispute
Period that the Indemnifying Party desires to defend the Third Party Claim
pursuant to paragraph (b) of this Section, or if the Indemnifying Party gives
such notice but fails to prosecute vigorously and diligently or settle the
Third
Party Claim, or if the Indemnifying Party fails to give any notice whatsoever
within the Dispute Period, then the Indemnified Party shall have the right
to
defend, at the sole cost and expense of the Indemnifying Party, the Third Party
Claim by all appropriate proceedings, which proceedings shall be prosecuted
by
the Indemnified Party in a reasonable manner and in good faith or will be
settled at the discretion of the Indemnified Party (with the consent of the
Indemnifying Party, which consent will not be unreasonably withheld). The
Indemnified Party will have full control of such defense and proceedings,
including any compromise or settlement thereof; provided, however, that if
requested by the Indemnified Party, the Indemnifying Party will, at the sole
cost and expense of the Indemnifying Party, provide reasonable cooperation
to
the Indemnified Party and its counsel in contesting any Third Party Claim which
the Indemnified Party is contesting. Notwithstanding the foregoing provisions
of
this subparagraph (y), if the Indemnifying Party has notified the Indemnified
Party within the Dispute Period that the Indemnifying Party disputes its
liability or the amount of its liability hereunder to the Indemnified Party
with
respect to such Third Party Claim and if such dispute is resolved in favor
of
the Indemnifying Party in the manner provided in subparagraph(z) below, the
Indemnifying Party will not be required to bear the costs and expenses of the
Indemnified Party's defense pursuant to this subparagraph (y) or of the
Indemnifying Party's participation therein at the Indemnified Party's request,
and the Indemnified Party shall reimburse the Indemnifying Party in full for
all
reasonable costs and expenses incurred by the Indemnifying Party in connection
with such litigation. The Indemnifying Party may participate in, but not
control, any defense or settlement controlled by the Indemnified Party pursuant
to this subparagraph (y), and the Indemnifying Party shall bear its own costs
and expenses with respect to such participation.
(z)
If
the Indemnifying Party notifies the Indemnified Party that it does not dispute
its liability or the amount of its liability to the Indemnified Party with
respect to the Third Party
Claim under paragraph (a) of this Section or fails to notify the Indemnified
Party within the Dispute Period whether the Indemnifying Party disputes its
liability or the amount of its liability to the Indemnified Party with respect
to such Third Party Claim, the amount of Damages specified in the Claim Notice
shall be conclusively deemed a liability of the Indemnifying Party under
paragraph (a) of this Section and the Indemnifying Party shall pay the amount
of
such Damages to the Indemnified Party on demand. If the Indemnifying Party
has
timely disputed its liability or the amount of its liability with respect to
such claim, the Indemnifying Party and the Indemnified Party shall proceed
in
good faith to negotiate a resolution of such dispute; provided, however, that
if
the dispute is not resolved within thirty (30) days after the Claim Notice,
the
Indemnifying Party shall be entitled to institute such legal action as it deems
appropriate.
(ii) In
the
event any Indemnified Party should have a claim under paragraph (a) of this
Section against the Indemnifying Party that does not involve a Third Party
Claim, the Indemnified Party shall deliver a written notification of a claim
for
indemnity under paragraph (a) of this Section specifying the nature of and
basis
for such claim, together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith, of such claim
(an
"Indemnity Notice") with reasonable promptness to the Indemnifying Party. The
failure by any Indemnified Party to give the Indemnity Notice shall not impair
such party's rights hereunder except to the extent that the Indemnifying Party
demonstrates that it has been irreparably prejudiced thereby. If the
Indemnifying Party notifies the Indemnified Party that it does not dispute
the
claim or the amount of the claim described in such Indemnity Notice or fails
to
notify the Indemnified Party within the Dispute Period whether the Indemnifying
Party disputes the claim or the amount of the claim described in such Indemnity
Notice, the amount of Damages specified in the Indemnity Notice will be
conclusively deemed a liability of the Indemnifying Party under paragraph (a)
of
this Section and the Indemnifying Party shall pay the amount of such Damages
to
the Indemnified Party on demand. If the Indemnifying Party has timely disputed
its liability or the amount of its liability with respect to such claim, the
Indemnifying Party and the Indemnified Party shall proceed in good faith to
negotiate a resolution of such dispute; provided, however, that it the dispute
is not resolved within thirty (30) days after the Claim Notice, the Indemnifying
Party shall be entitled to institute such legal action as it deems
appropriate.
c. The
indemnity agreements contained herein shall be in addition to (i) any cause
of
action or similar rights of the indemnified party against the indemnifying
party
or others, and (ii) any liabilities the indemnifying party may be subject
to.
10. JURY
TRIAL WAIVER. The
Company and the Buyer hereby waive a trial by jury in any action, proceeding
or
counterclaim brought by either of the Parties hereto against the other in
respect of any matter arising out or in connection with the Transaction
Agreements.
11. GOVERNING
LAW: MISCELLANEOUS.
a. (i)
This
Agreement shall be governed by and interpreted in accordance with the laws
of
the State of New York for contracts to be wholly performed in such state and
without giving effect to the principles thereof regarding the conflict of laws.
Each of the parties consents to the exclusive jurisdiction of the federal courts
whose districts encompass any part of the County of New York or the state courts
of the State of New York sitting in the County of New York in connection with
any dispute arising under this Agreement or any of the other Transaction
Agreements and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on
forum non conveniens,
to the
bringing of any such proceeding in such jurisdictions or to any claim that
such
venue of the suit, action or proceeding is improper. To the extent determined
by
such court, the Company shall reimburse the Buyer for any reasonable legal
fees
and disbursements incurred by the Buyer in enforcement of or protection of
any
of its rights under any of the Transaction Agreements. Nothing in this Section
shall affect or limit any right to serve process in any other manner permitted
by law.
(ii)
The
Company and the Buyer acknowledge and agree that irreparable damage would occur
in the event that any of the provisions of this Agreement or the other
Transaction Agreements were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent or cure breaches
of
the provisions of this Agreement and the other Transaction Agreements and to
enforce specifically the terms and provisions hereof and thereof, this being
in
addition to any other remedy to which any of them may be entitled by law or
equity.
b. Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as
a
waiver thereof.
c. This
Agreement shall inure to the benefit of and be binding upon the successors
and
assigns of each of the parties hereto.
d. All
pronouns and any variations thereof refer to the masculine, feminine or neuter,
singular or plural, as the context may require.
e. A
facsimile transmission of this signed Agreement shall be legal and binding
on
all parties hereto.
f. This
Agreement may be signed in one or more counterparts, each of which shall be
deemed an original.
g. The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
h. If
any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.
i. This
Agreement may be amended only by an instrument in writing signed by the party
to
be charged with enforcement thereof.
j. This
Agreement supersedes all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof.
12. NOTICES.
Any
notice required or permitted hereunder shall be given in writing (unless
otherwise specified herein) and shall be deemed effectively given on the
earliest of
(a)
the
date delivered, if delivered by personal delivery as against written receipt
therefor or by confirmed facsimile transmission,
(b)
the
fifth Trading Day after deposit, postage prepaid, in the United States Postal
Service by registered or certified mail, or
(c)
the
third Trading Day after mailing by domestic or international express courier,
with delivery costs and fees prepaid,
in
each
case, addressed to each of the other parties thereunto entitled at the following
addresses (or at such other addresses as such party may designate by ten (10)
days’ advance written notice similarly given to each of the other parties
hereto):
|
COMPANY:
|
At
the address set forth at the head of this Agreement.
|
|
Attn:
President
|
|
|
Telephone
No.: (000) 000-0000
|
|
|
Telecopier
No.: (000) 000-0000
|
|
with
a copy to:
|
|
|
Xxxxxxxxx
Xxxxx Xxxx & Xxxxx PLLC
|
|
|
000
Xxxx Xxxxxx Xxxxx, Xxxxx 0000
|
|
|
Xxx
Xxxx, XX 00000
|
|
|
Attn:
Xxxxx Xxxxxxxxx, Esq.
|
|
|
Telephone
No.: (000) 000-0000
|
|
|
Telecopier
No.: (000) 000-0000
|
|
|
BUYER:
|
At
the address set forth on the signature page of this
Agreement.
|
|
with
a copy to:
|
|
|
Xxxxxxx
& Xxxxxx LLP,
Esqs.
|
|
|
00
Xxxxxxxx
|
|
|
Xxxxx
000
|
|
|
Xxx
Xxxx, XX 00000
|
|
|
Attn:
Xxxxxx X. Xxxxxxx, Esq.
|
|
|
Telephone
No.: (000) 000-0000
|
|
|
Telecopier
No. (000) 000-0000
|
|
|
ESCROW
AGENT:
|
Xxxxxxx
& Xxxxxx LLP,
Esqs.
|
|
00
Xxxxxxxx
|
|
|
Xxxxx
000
|
|
|
Xxx
Xxxx, XX 00000
|
|
|
Attn:
Xxxxxx Xxxxxxx, Esq.
|
|
|
Telephone
No.: (000) 000-0000
|
|
|
Telecopier
No. (000) 000-0000
|
13. SURVIVAL
OF REPRESENTATIONS AND WARRANTIES.
The
Company’s and the Buyer’s representations and warranties herein shall survive
the execution and delivery of this Agreement and the delivery of the
Certificates and the payment of the Loan Amount, and shall inure to the benefit
of the Buyer and the Company and their respective successors and
assigns.
[Balance
of page intentionally left blank]
IN
WITNESS WHEREOF,
with
respect to the Loan Amount specified below, this Agreement has been duly
executed by the Buyer and the Company as of the date set first above
written.
|
LOAN
AMOUNT:
|
$550,000.00
|
|||||
|
|
|
|||||
|
|
Buyer:
|
|||||
|
|
|
|||||
|
Xxxxxxx
Xxxxx, 0x Xxxxx
|
|
|||||
|
Xxxx
Xxxx, Xxxxxxx
|
XXXXXXXXXX
MASTER FUND LP
|
|||||
|
British
Virgin Islands
|
Printed
Name of Buyer
|
|||||
|
|
|
|||||
|
Telephone
No.
|
|
By:
|
s/
|
|
||
|
Telecopier
No.
|
|
(Signature
of Authorized Person)
|
||||
|
|
|
|||||
|
|
Navigator
Management Ltd.
|
|||||
|
|
Authorized Signatory
|
|
||||
|
BVI
|
|
Printed
Name and Title
|
||||
Jurisdiction
of Incorporation
or
Organization
COMPANY
MILLENNIUM
BIOTECHNOLOGIES GROUP, INC.
By:
/s/
Xxxxx Xxxxxxx
(Signature
of Authorized Person)
Xxxxx
Xxxxxxx, CFO
Printed
Name and Title
