Exhibit 4.1.1
LMIC, INC.
SHARES OF COMMON STOCK AND COMMON STOCK WARRANTS
SUBSCRIPTION AGREEMENT
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November 9, 2004
Allegiant Capital Group, LLC
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Gentlemen:
LMIC, Inc., a Delaware corporation (the "COMPANY"), hereby confirms its
agreement with you (the "PURCHASER"), as set forth below.
1. The Securities. Subject to the terms and conditions herein contained, the
Company proposes to issue and sell to the Purchaser an aggregate of: (a) 333,333
shares (the "SHARES") of the Company's Common Stock, $0.001 par value per share
(the "COMMON STOCK"), and (b) warrants, substantially in the form attached
hereto as EXHIBIT A (the "WARRANTS"), to acquire up to 350,000 additional shares
of Common Stock (the "WARRANT SHARES"). The Shares and the Warrants are
sometimes herein collectively referred to as the "SECURITIES." This Agreement
and the Warrants are sometimes herein collectively referred to as the
"TRANSACTION DOCUMENTS."
The Securities will be offered and sold to the Purchaser without such offers and
sales being registered under the Securities Act of 1933, as amended (together
with the rules and regulations of the Securities and Exchange Commission (the
"SEC") promulgated thereunder, the "SECURITIES ACT"), in reliance on exemptions
therefrom.
In connection with the sale of the Securities, the Company has made available
(including electronically via the Commission's ▇▇▇▇▇ system) to Purchaser its
periodic and current reports, forms, schedules, proxy statements and other
documents (including exhibits and all other information incorporated by
reference) filed with the SEC under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT") since January 1, 2003. These reports, forms,
schedules, statements, documents, filings and amendments, including, without
limitation, the Company's registration statement and prospectus dated October
28, 2004 (the "CURRENT PROSPECTUS") are collectively referred to as the
"DISCLOSURE DOCUMENTS." All references in this Agreement to financial statements
and schedules and other information which is "contained," "included" or "stated"
in the Disclosure Documents (or other references of like import) shall be deemed
to mean and include all such financial statements and schedules, documents,
exhibits and other information which is incorporated by reference in the
Disclosure Documents.
2. Representations and Warranties of the Company. The Company represents and
warrants to and agrees with Purchaser as follows:
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(a) The Disclosure Documents as of their respective dates did not, and
will not (after giving effect to any updated disclosures therein) as of the
Closing Date as defined in Section 3 below, contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The Disclosure Documents and the documents incorporated or deemed to
be incorporated by reference therein, at the time they were filed or hereafter
are filed with the Commission, complied and will comply, at the time of filing,
in all material respects with the requirements of the Securities Act and/or the
Exchange Act, as the case may be, as applicable.
(b) Schedule A attached hereto sets forth a complete list of the
subsidiaries of the Company (the "SUBSIDIARIES"). Each of the Company and its
Subsidiaries has been duly incorporated and each of the Company and the
Subsidiaries is validly existing in good standing as a corporation under the
laws of its jurisdiction of incorporation, with the requisite corporate power
and authority to own its properties and conduct its business as now conducted as
described in the Disclosure Documents and is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions where the
ownership or leasing of its properties or the conduct of its business requires
such qualification, except where the failure to be so qualified would not,
individually or in the aggregate, have a material adverse effect on the
business, condition (financial or other), properties, prospects or results of
operations of the Company and the Subsidiaries, taken as a whole (any such
event, a "MATERIAL ADVERSE EFFECT"); as of the Closing Date, the Company will
have the authorized, issued and outstanding capitalization set forth in on
Schedule B attached hereto (the "COMPANY CAPITALIZATION"); except as set forth
in the Disclosure Documents, the Company does not have any subsidiaries or own
directly or indirectly any of the capital stock or other equity or long-term
debt securities of or have any equity interest in any other person; all of the
outstanding shares of capital stock of the Company and the Subsidiaries have
been duly authorized and validly issued, are fully paid and nonassessable and
were not issued in violation of any preemptive or similar rights and are owned
free and clear of all liens, encumbrances, equities, and restrictions on
transferability (other than those imposed by the Securities Act and the state
securities or "Blue Sky" laws) or voting; except as set forth in the Disclosure
Documents, all of the outstanding shares of capital stock of the Subsidiaries
are owned, directly or indirectly, by the Company; except as set forth in the
Disclosure Documents, no options, warrants or other rights to purchase from the
Company or any Subsidiary, agreements or other obligations of the Company or any
Subsidiary to issue or other rights to convert any obligation into, or exchange
any securities for, shares of capital stock of or ownership interests in the
Company or any Subsidiary are outstanding; and except as set forth in the
Disclosure Documents or on Schedule C, there is no agreement, understanding or
arrangement among the Company or any Subsidiary and each of their respective
stockholders or any other person relating to the ownership or disposition of any
capital stock of the Company or any Subsidiary or the election of directors of
the Company or any Subsidiary or the governance of the Company's or any
Subsidiary's affairs, and, if any, such agreements, understandings and
arrangements will not be breached or violated as a result of the execution and
delivery of, or the consummation of the transactions contemplated by, the
Transaction Documents.
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(c) The Company has the requisite corporate power and authority to
execute, deliver and perform its obligations under the Transaction Documents.
Each of the Transaction Documents has been duly and validly authorized by the
Company and, when executed and delivered by the Company, will constitute a valid
and legally binding agreement of the Company, enforceable against the Company in
accordance with its terms except as the enforcement thereof may be limited by
(A) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally or (B) general principles of equity and the
discretion of the court before which any proceeding therefore may be brought
(regardless of whether such enforcement is considered in a proceeding at law or
in equity) (collectively, the "ENFORCEABILITY EXCEPTIONS").
(d) The Shares and the Warrants have been duly authorized and, when issued
upon payment thereof in accordance with this Agreement, will have been validly
issued, fully paid and nonassessable. The Shares issuable have been duly
authorized and validly reserved for issuance, and when issued upon conversion of
the Shares in accordance with the terms of the Certificate of Determination,
will have been validly issued, fully paid and nonassessable. The Warrant Shares
have been duly authorized and validly reserved for issuance, and when issued
upon exercise of the Warrants in accordance with the terms thereof, will have
been validly issued, fully paid and nonassessable. The Common Stock of the
Company conforms to the description thereof contained in the Disclosure
Documents. The stockholders of the Company have no preemptive or similar rights
with respect to the Common Stock.
(e) No consent, approval, authorization, license, qualification, exemption
or order of any court or governmental agency or body or third party is required
for the performance of the Transaction Documents by the Company or for the
consummation by the Company of any of the transactions contemplated thereby, or
the application of the proceeds of the issuance of the Securities as described
in this Agreement, except for such consents, approvals, authorizations,
licenses, qualifications, exemptions or orders (i) as have been obtained on or
prior to the Closing Date, (ii) as are not required to be obtained on or prior
to the Closing Date that will be obtained when required, or (iii) the failure to
obtain which would not, individually or in the aggregate, have a Material
Adverse Effect.
(f) None of the Company or the Subsidiaries is (i) in material violation
of its articles of incorporation or bylaws (or similar organizational document),
(ii) in breach or violation of any statute, judgment, decree, order, rule or
regulation applicable to it or any of its properties or assets, which breach or
violation would, individually or in the aggregate, have a Material Adverse
Effect, or (iii) except as described in the Disclosure Documents, in default
(nor has any event occurred which with notice or passage of time, or both, would
constitute a default) in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan agreement, note, lease, license, franchise agreement,
permit, certificate or agreement or instrument to which it is a party or to
which it is subject, which default would, individually or in the aggregate, have
a Material Adverse Effect.
(g) The execution, delivery and performance by the Company of the
Transaction Documents and the consummation by the Company of the transactions
contemplated thereby and the fulfillment of the terms thereof will not (a)
violate, conflict with or constitute or result in a breach of or a default under
(or an event that, with notice or lapse of time, or both, would constitute a
breach of or a default under) any of (i) the terms or provisions of any
contract, indenture, mortgage, deed of trust, loan agreement, note, lease,
license, franchise agreement, permit, certificate or agreement or instrument to
which any of the Company or the Subsidiaries is a party or to which any of their
respective properties or assets are subject, (ii) the articles of incorporation
or bylaws of any of the Company or the Subsidiaries (or similar organizational
document) or (iii) any statute, judgment, decree, order, rule or regulation of
any court or governmental agency or other body applicable to the Company or the
Subsidiaries or any of their respective properties or assets or (b) result in
the imposition of any lien upon or with respect to any of the properties or
assets now owned or hereafter acquired by the Company or any of the
Subsidiaries; which violation, conflict, breach, default or lien would,
individually or in the aggregate, have a Material Adverse Effect.
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(h) The audited consolidated financial statements included in the
Disclosure Documents present fairly the consolidated financial position, results
of operations, cash flows and changes in shareholders' equity of the entities,
at the dates and for the periods to which they relate and have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis; the interim unaudited consolidated financial statements included in the
Disclosure Documents present fairly the consolidated financial position, results
of operations and cash flows of the entities, at the dates and for the periods
to which they relate subject to year-end audit adjustments and have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis with the audited consolidated financial statements included
therein; the selected financial and statistical data included in the Disclosure
Documents present fairly the information shown therein and have been prepared
and compiled on a basis consistent with the audited financial statements
included therein, except as otherwise stated therein; and each of the auditors
previously engaged by the Company or to be engaged in the future by the Company
is an independent certified public accountant as required by the Securities Act
for an offering registered thereunder.
(i) Except as described in the Disclosure Documents, there is not pending
or, to the knowledge of the Company, threatened any action, suit, proceeding,
inquiry or investigation, governmental or otherwise, to which any of the Company
or the Subsidiaries is a party, or to which their respective properties or
assets are subject, before or brought by any court, arbitrator or governmental
agency or body, that, if determined adversely to the Company or any such
Subsidiary, would, individually or in the aggregate, have a Material Adverse
Effect or that seeks to restrain, enjoin, prevent the consummation of or
otherwise challenge the issuance or sale of the Securities to be sold hereunder
or the application of the proceeds therefrom or the other transactions described
in the Disclosure Documents.
(j) The Company and the Subsidiaries own or possess adequate licenses or
other rights to use all patents, trademarks, service marks, trade names,
copyrights and know-how that are necessary to conduct their businesses as
described in the Disclosure Documents. None of the Company or the Subsidiaries
has received any written notice of infringement of (or knows of any such
infringement of) asserted rights of others with respect to any patents,
trademarks, service marks, trade names, copyrights or know-how that, if such
assertion of infringement or conflict were sustained, would, individually or in
the aggregate, have a Material Adverse Effect.
(k) Each of the Company and the Subsidiaries possesses all licenses,
permits, certificates, consents, orders, approvals and other authorizations
from, and has made all declarations and filings with, all federal, state, local
and other governmental authorities, all self-regulatory organizations and all
courts and other tribunals presently required or necessary to own or lease, as
the case may be, and to operate its respective properties and to carry on its
respective businesses as now or proposed to be conducted as set forth in the
Disclosure Documents ("PERMITS"), except where the failure to obtain such
Permits would not, individually or in the aggregate, have a Material Adverse
Effect and none of the Company or the Subsidiaries has received any notice of
any proceeding relating to revocation or modification of any such Permit, except
as described in the Disclosure Documents and except where such revocation or
modification would not, individually or in the aggregate, have a Material
Adverse Effect.
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(l) Subsequent to the respective dates as of which information is given in
the Disclosure Documents and except as described therein, (i) the Company and
the Subsidiaries have not incurred any material liabilities or obligations,
direct or contingent, or entered into any material transactions not in the
ordinary course of business or (ii) the Company and the Subsidiaries have not
purchased any of their respective outstanding capital stock, or declared, paid
or otherwise made any dividend or distribution of any kind on any of their
respective capital stock or otherwise (other than, with respect to any of such
Subsidiaries, the purchase of capital stock by the Company), (iii) there has not
been any material increase in the long-term indebtedness of the Company or any
of the Subsidiaries, (iv) there has not occurred any event or condition,
individually or in the aggregate, that has a Material Adverse Effect, and (v)
the Company and the Subsidiaries have not sustained any material loss or
interference with respect to their respective businesses or properties from
fire, flood, hurricane, earthquake, accident or other calamity, whether or not
covered by insurance, or from any labor dispute or any legal or governmental
proceeding.
(m) There are no material legal or governmental proceedings nor are there
any material contracts or other documents required by the Securities Act to be
described in a prospectus that are not described in the Disclosure Documents.
Except as described in the Disclosure Documents, none of the Company or the
Subsidiaries is in default under any of the contracts described in the
Disclosure Documents, has received a notice or claim of any such default or has
knowledge of any breach of such contracts by the other party or parties thereto,
except for such defaults or breaches as would not, individually or in the
aggregate, have a Material Adverse Effect.
(n) Each of the Company and the Subsidiaries has good and marketable title
to all real property described in the Disclosure Documents as being owned by it
and good and marketable title to the leasehold estate in the real property
described therein as being leased by it, free and clear of all liens, charges,
encumbrances or restrictions, except, in each case, as described in the
Disclosure Documents or such as would not, individually or in the aggregate,
have a Material Adverse Effect. All material leases, contracts and agreements to
which the Company or any of the Subsidiaries is a party or by which any of them
is bound are valid and enforceable against the Company or any such Subsidiary,
are, to the knowledge of the Company, valid and enforceable against the other
party or parties thereto and are in full force and effect.
(o) Each of the Company and the Subsidiaries has filed all necessary
federal, state and foreign income and franchise tax returns, except where the
failure to so file such returns would not, individually or in the aggregate,
have a Material Adverse Effect, and has paid all taxes shown as due thereon; and
other than tax deficiencies which the Company or any Subsidiary is contesting in
good faith and for which adequate reserves have been provided in accordance with
generally accepted accounting principles, there is no tax deficiency that has
been asserted against the Company or any Subsidiary that would, individually or
in the aggregate, have a Material Adverse Effect.
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(p) None of the Company or the Subsidiaries is, or immediately after the
Closing Date will be, required to register as an "investment company" or a
company "controlled by" an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY ACT").
(q) None of the Company or the Subsidiaries or, to the knowledge of any of
such entities' directors, officers, employees, agents or controlling persons,
has taken, directly or indirectly, any action designed, or that might reasonably
be expected, to cause or result in the stabilization or manipulation of the
price of the Common Stock.
(r) None of the Company, the Subsidiaries or any of their respective
Affiliates (as defined in Rule 501(b) of Regulation D under the Securities Act)
directly, or through any agent, engaged in any form of general solicitation or
general advertising (as those terms are used in Regulation D under the
Securities Act) in connection with the offering of the Securities or engaged in
any other conduct that would cause such offering to be constitute a public
offering within the meaning of Section 4(2) of the Securities Act. Assuming the
accuracy of the representations and warranties of the Purchaser in Section 6
hereof, it is not necessary in connection with the offer, sale and delivery of
the Securities to the Purchaser in the manner contemplated by this Agreement to
register any of the Securities under the Securities Act.
(s) Except as set forth in the Disclosure Documents, there is no strike,
labor dispute, slowdown or work stoppage with the employees of the Company or
any of the Subsidiaries which is pending or, to the knowledge of the Company or
any of the Subsidiaries, threatened.
(t) Each of the Company and the Subsidiaries carries general liability
insurance coverage comparable to other companies of its size and similar
business.
(u) Each of the Company and the Subsidiaries maintains internal accounting
controls which provide reasonable assurance that (A) transactions are executed
in accordance with management's authorization, (B) transactions are recorded as
necessary to permit preparation of its financial statements and to maintain
accountability for its assets, (C) access to its material assets is permitted
only in accordance with management's authorization and (D) the values and
amounts reported for its material assets are compared with its existing assets
at reasonable intervals.
(v) The Company does not know of any claims for services, either in the
nature of a finder's fee or financial advisory fee, with respect to the offering
of the Shares and the transactions contemplated by the Transaction Documents.
(w) The Common Stock is listed on the National Association of Securities
Dealers, Inc. OTC Bulletin Board (the "NASD OTC-BB"). Except as described in the
Disclosure Documents, the Company currently is not in violation of, and the
consummation of the transactions contemplated by the Transaction Documents will
not violate, any rule of the National Association of Securities Dealers.
(x) The Company is eligible to use Form S-1 or SB-2 for the resale of the
Shares and the Warrant Shares by Purchaser or their transferees. The Company has
no reason to believe that it is not capable of satisfying the registration or
qualification requirements (or an exemption therefrom) necessary to permit the
resale of the Shares and the Warrant Shares under the securities or "blue sky"
laws of any jurisdiction within the United States that is the residence or
domicile of any Purchaser.
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3. Purchase, Sale and Delivery of the Shares. On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Purchaser, and Purchaser agrees to purchase from the
Company, 333,333 Shares of Common Stock at $1.50 per Share for a total of
$500,000. In connection with the purchase and sale of Shares, for no additional
consideration, the Purchaser will receive Warrants to purchase up to an
aggregate of 350,000 shares of Common Stock, subject to adjustment as set forth
in the Warrants.
One or more certificates in definitive form for the Shares that the Purchaser
have agreed to purchase, as well as the Warrants, shall be delivered by or on
behalf of the Company, against payment by or on behalf of the Purchaser, of the
purchase price therefor by wire transfer of immediately available funds to the
account of the Company previously designated by it in writing. Such delivery of
and payment for the Shares and the Warrants shall be made at the offices of each
of the Purchaser, at not later than 12:00 noon (New York time) on November 9,
2004 (the "CLOSING"), or at such date as the Purchaser and the Company may agree
upon, such time and date of delivery against payment being herein referred to as
the "CLOSING DATE."
4. Certain Covenants of the Company. The Company covenants and agrees with
Purchaser as follows:
(a) All proceeds from the sale of the Shares shall be used by the Company
for working capital and general corporate purposes.
(b) None of the Company or any of its Affiliates will sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any "security" (as
defined in the Securities Act) which could be integrated with the sale of the
Securities in a manner which would require the registration under the Securities
Act of the Securities.
(c) The Company will not become, at any time prior to the expiration of
three years after the Closing Date, an open-end investment company, unit
investment trust, closed-end investment company or face-amount certificate
company that is or is required to be registered under the Investment Company
Act.
(d) None of the proceeds of the Securities will be used to reduce or
retire any insider note or convertible debt held by an officer or director of
the Company.
(e) Subject to Section 10 of this Agreement, the Shares and the Warrant
Shares will be listed on the NASD OTC-BB, or such market on which the Company's
shares are subsequently listed or traded, immediately following their issuance.
(f) The Company will use its best efforts to do and perform all things
required to be done and performed by it under this Agreement and the other
Transaction Documents and to satisfy all conditions precedent on its part to the
obligations of the Purchaser to purchase and accept delivery of the Securities.
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5. Conditions of the Purchaser Obligations. The obligation of Purchaser to
purchase and pay for the Securities is subject to the following conditions
unless waived in writing by the Purchaser:
(a) The representations and warranties of the Company contained in this
Agreement shall be true and correct in all material respects (other than
representations and warranties with a Material Adverse Effect qualifier, which
shall be true and correct as written) on and as of the Closing Date; the Company
shall have complied in all material respects with all agreements and satisfied
all conditions on its part to be performed or satisfied hereunder at or prior to
the Closing Date.
(b) None of the issuance and sale of the Securities pursuant to this
Agreement or any of the transactions contemplated by any of the other
Transaction Documents shall be enjoined (temporarily or permanently) and no
restraining order or other injunctive order shall have been issued in respect
thereof; and there shall not have been any legal action, order, decree or other
administrative proceeding instituted or, to the Company's knowledge, threatened
against the Company or against any Purchaser relating to the issuance of the
Securities or any Purchaser' activities in connection therewith or any other
transactions contemplated by this Agreement, the other Transaction Documents or
the Disclosure Documents.
(c) The Purchaser shall have received certificates, dated the Closing Date
and signed by the Chief Executive Officer and the Chief Financial Officer of the
Company, to the effect of paragraphs 5(a) and (b).
(d) The Common Stock Purchase Agreement between the Purchaser, Linsang
Partners, LLC and Linsang International L.P. (collectively, the "LINSANG GROUP")
shall have been executed and performed by all parties thereto, and all the
conditions to the obligations of the Linsang Group to sell to the Purchaser
those shares referenced in such Common Stock Purchase Agreement shall have been
satisfied.
6. Representations and Warranties of the Purchaser.
(a) Purchaser represents and warrants to the Company that the Securities
to be acquired by it hereunder (including the Shares and the Warrant Shares that
it may acquire upon conversion or exercise thereof, as the case may be) are
being acquired for its own account for investment and with no intention of
distributing or reselling such Securities (including the Shares and the Warrant
Shares that it may acquire upon conversion or exercise thereof, as the case may
be) or any part thereof or interest therein in any transaction which would be in
violation of the securities laws of the United States of America or any State.
Nothing in this Agreement, however, shall prejudice or otherwise limit a
Purchaser's right to sell or otherwise dispose of all or any part of such Shares
or Warrant Shares under an effective registration statement under the Securities
Act and in compliance with applicable state securities laws or under an
exemption from such registration. By executing this Agreement, Purchaser further
represents that such Purchaser does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to any Person with respect to any of the Securities.
(b) Purchaser understands that the Securities (including the Shares and
the Warrant Shares that it may acquire upon conversion or exercise thereof, as
the case may be) have not been registered under the Securities Act and may not
be offered, resold, pledged or otherwise transferred except (a) pursuant to an
exemption from registration under the Securities Act (and, if requested by the
Company, based upon an opinion of counsel acceptable to the Company) or pursuant
to an effective registration statement under the Securities Act and (b) in
accordance with all applicable securities laws of the states of the United
States and other jurisdictions.
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Purchaser agrees to the imprinting, so long as appropriate, of the
following legend on the Securities (including the Shares and the Warrant Shares
that it may acquire upon conversion or exercise thereof, as the case may be):
THE SHARES OF STOCK EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ("TRANSFERRED") IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. IN THE
ABSENCE OF SUCH REGISTRATION, SUCH SHARES MAY NOT BE TRANSFERRED UNLESS,
IF THE COMPANY REQUESTS, THE COMPANY HAS RECEIVED A WRITTEN OPINION FROM
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY STATING THAT
SUCH TRANSFER IS BEING MADE IN COMPLIANCE WITH ALL APPLICABLE FEDERAL AND
STATE SECURITIES LAWS.
The legend set forth above may be removed if and when the Shares or the
Warrant Shares, as the case may be, are disposed of pursuant to an effective
registration statement under the Securities Act or in the opinion of counsel to
the Company experienced in the area of United States Federal securities laws
such legends are no longer required under applicable requirements of the
Securities Act. The Shares, the Warrants and the Warrant Shares shall also bear
any other legends required by applicable Federal or state securities laws, which
legends may be removed when in the opinion of counsel to the Company experienced
in the applicable securities laws, the same are no longer required under the
applicable requirements of such securities laws. The Company agrees that it will
provide Purchaser, upon request, with a substitute certificate, not bearing such
legend at such time as such legend is no longer applicable. Purchaser agrees
that, in connection with any transfer of the Shares or the Warrant Shares by it
pursuant to an effective registration statement under the Securities Act, such
Purchaser will comply with all prospectus delivery requirements of the
Securities Act. The Company makes no representation, warranty or agreement as to
the availability of any exemption from registration under the Securities Act
with respect to any resale of the Shares, the Shares or the Warrant Shares.
(c) Purchaser is an "accredited investor" within the meaning of Rule
501(a) of Regulation D under the Securities Act. No Purchaser learned of the
opportunity to purchase Shares or any other security issuable by the Company
through any form of general advertising or public solicitation.
(d) Purchaser represents and warrants to the Company that it has such
knowledge, sophistication and experience in business and financial matters so as
to be capable of evaluating the merits and risks of the prospective investment
in the Securities, having been represented by counsel, and has so evaluated the
merits and risks of such investment and is able to bear the economic risk of
such investment and, at the present time, is able to afford a complete loss of
such investment.
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(e) Purchaser represents and warrants to the Company that (i) the purchase
of the Securities to be purchased by it has been duly and properly authorized
and this Agreement has been duly executed and delivered by it or on its behalf
and constitutes the valid and legally binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
generally and to general principles of equity; (ii) the purchase of the
Securities to be purchased by it does not conflict with or violate its charter,
by-laws or any law, regulation or court order applicable to it; and (iii) the
purchase of the Securities to be purchased by it does not impose any penalty or
other onerous condition on the Purchaser under or pursuant to any applicable law
or governmental regulation.
(f) Purchaser represents and warrants to the Company that neither it nor
any of its directors, officers, employees, agents, partners, members, or
controlling persons has taken, directly or indirectly, any actions designed, or
might reasonably be expected to cause or result in the stabilization or
manipulation of the price of the Common Stock.
(g) Purchaser acknowledges it or its representatives have reviewed the
Disclosure Documents and further acknowledges that it or its representatives
have been afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Securities and the
merits and risks of investing in the Securities; (ii) access to information
about the Company and the Company's financial condition, results of operations,
business, properties, management and prospects sufficient to enable it to
evaluate its investment in the Securities; and (iii) the opportunity to obtain
such additional information which the Company possesses or can acquire without
unreasonable effort or expense that is necessary to verify the accuracy and
completeness of the information contained in the Disclosure Documents.
(h) Purchaser represents and warrants to the Company that it has based its
investment decision solely upon the information contained in the Disclosure
Documents and such other information as may have been provided to it or its
representatives by the Company in response to their inquiries, and has not based
its investment decision on any research or other report regarding the Company
prepared by any third party ("THIRD PARTY REPORTS"). Purchaser understands and
acknowledges that (i) the Company does not endorse any Third Party Reports and
(ii) its actual results may differ materially from those projected in any Third
Party Report.
(i) Purchaser understands and acknowledges that (i) any forward-looking
information included in the Disclosure Documents supplied to Purchaser by the
Company or its management is subject to risks and uncertainties, including those
risks and uncertainties set forth in the Disclosure Documents; and (ii) the
Company's actual results may differ materially from those projected by the
Company or its management in such forward-looking information.
(j) Purchaser understands and acknowledges that (i) the Securities are
offered and sold without registration under the Securities Act in a private
placement that is exempt from the registration provisions of the Securities Act
and (ii) the availability of such exemption depends in part on, and that the
Company and its counsel will rely upon, the accuracy and truthfulness of the
foregoing representations and Purchaser hereby consents to such reliance.
7. Covenants of Purchaser Not to Short Stock. Purchaser and its affiliates and
assigns agree: (i) not to short the Company Common Stock as long as shares of
the Series D Stock are outstanding; and (ii) to limit its sales of the Company's
Common Stock in the open market to approximately 10-15% of the Company's average
dollar trading volume or less.
-10-
8. Termination.
(a) This Agreement may be terminated in the sole discretion of the Company
by notice to Purchaser if at the Closing Date:
(i) the representations and warranties made by any Purchaser in
Section 6 are not true and correct in all material respects; or
(ii) as to the Company, the sale of the Securities hereunder (i) is
prohibited or enjoined by any applicable law or governmental regulation or (ii)
subjects the Company to any penalty, or in its reasonable judgment, other
onerous condition under or pursuant to any applicable law or government
regulation that would materially reduce the benefits to the Company of the sale
of the Securities to such Purchaser, so long as such regulation, law or onerous
condition was not in effect in such form at the date of this Agreement.
(b) This Agreement may be terminated in the sole discretion of either
Purchaser by notice to the Company given in the event that the Company shall
have failed, refused or been unable to satisfy all conditions on its part to be
performed or satisfied hereunder on or prior to the Closing Date, or if after
the execution and delivery of this Agreement and immediately prior to the
Closing Date, trading in securities of the Company or in securities generally on
the New York Stock Exchange, the American Stock Exchange, the Nasdaq National or
Small Cap Market or the OTC Bulletin Board shall have been suspended or minimum
or maximum prices shall have been established on any such exchange.
(c) This Agreement may be terminated by mutual written consent of all
parties.
9. Registration. Within 45 days from the Closing Date, the Company shall prepare
and file with the SEC a Registration Statement covering the resale of the
maximum number of Shares issuable upon conversion of the Shares and the Warrant
Shares as well as the shares purchased from the ▇▇▇▇▇▇-Vector Investment Trust
(collectively, the "REGISTRABLE SECURITIES") as set forth in the Registration
Rights Agreement attached hereto as Exhibit C.
10. Event of Default. If an Event of Default (as defined below) occurs and
remains uncured for a period of five (5) days, from and including the day
following the date on which an Event of Default occurs, until the date on which
the Company has cured all such situations as have arisen, the Company shall pay
liquidated damages to Holder equal to two percent (2.00%) of the $500,000
purchase price for the Securities for each complete month or partial month
during which such situation exists. Any amounts to be paid as liquidated damages
shall be paid in cash monthly in arrears on or before the 10th day following the
end of the month or partial month to which they relate.
-11-
An "EVENT OF DEFAULT" shall mean any of the following:
(a) the commencement by or against the Company of a voluntary or
involuntary case or proceeding under the bankruptcy laws, and the Company's
failure to discharge or stay such bankruptcy proceeding within 60 days of such
action being taken against the Company,
(b) the Company's failure to file the Registration Statement with the SEC
within 45 days after the Closing Date,
(c) the Company's failure to cause the Registration Statement to be
declared effective by the SEC within 120 days after the Closing Date, other than
due to a delay caused by the review process of the SEC and not by the Company,
or
(d) the de-listing of the Company's Common Stock from the NASD OTC-BB
except for any periods when the stock is listed on the NASDAQ Small Stock
Market, the NASDAQ National Stock Market, the AMEX or the NYSE.
11. Notices. All communications hereunder shall be in writing and shall be hand
delivered, mailed by first-class mail, couriered by next-day air courier or by
facsimile and confirmed in writing (i) if to the Company, at the addresses set
forth below, or (ii) if to a Purchaser, to the address set forth for such party
in this Agreement.
If to the Company:
LMIC, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇, Chairman & CEO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Gertsten Savage Kaplowitz ▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
All such notices and communications shall be deemed to have been duly given: (i)
when delivered by hand, if personally delivered; (ii) five business days after
being deposited in the mail, postage prepaid, if mailed certified mail, return
receipt requested; (iii) one business day after being timely delivered to a
next-day air courier guaranteeing overnight delivery; (iv) the date of
transmission if sent via facsimile to the facsimile number as set forth in this
Section or the signature page hereof prior to 6:00 p.m. on a business day, or
(v) the business day following the date of transmission if sent via facsimile at
a facsimile number set forth in this Section or on the signature page hereof
after 6:00 p.m. or on a date that is not a business day. Change of a party's
address or facsimile number may be designated hereunder by giving notice to all
of the other parties hereto in accordance with this Section.
-12-
12. Survival Clause. The respective representations, warranties, agreements and
covenants of the Company and the Purchaser set forth in this Agreement shall
survive until the first anniversary of the Closing.
13. Successors. This Agreement shall inure to the benefit of and be binding upon
Purchaser and the Company and their respective successors and legal
representatives, and nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of this Agreement, or any provisions
herein contained; this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person. Neither the Company nor the Purchaser may
assign this Agreement or any rights or obligation hereunder without the prior
written consent of the other party.
14. No Waiver; Modifications in Writing. No failure or delay on the part of the
Company or any Purchaser in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to the Company or any Purchaser at law or in equity or otherwise. No
waiver of or consent to any departure by the Company or any Purchaser from any
provision of this Agreement shall be effective unless signed in writing by the
party entitled to the benefit thereof, provided that notice of any such waiver
shall be given to each party hereto as set forth below. Except as otherwise
provided herein, no amendment, modification or termination of any provision of
this Agreement shall be effective unless signed in writing by or on behalf of
each of the Company and the Purchaser. Any amendment, supplement or modification
of or to any provision of this Agreement, any waiver of any provision of this
Agreement, and any consent to any departure by the Company or any Purchaser from
the terms of any provision of this Agreement shall be effective only in the
specific instance and for the specific purpose for which made or given. Except
where notice is specifically required by this Agreement, no notice to or demand
on the Company in any case shall entitle the Company to any other or further
notice or demand in similar or other circumstances.
15. Entire Agreement. This Agreement, together with Transaction Documents,
constitutes the entire agreement among the parties hereto and supersedes all
prior agreements, understandings and arrangements, oral or written, among the
parties hereto with respect to the subject matter hereof and thereof.
16. Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Agreement shall not in any way be affected or
impaired thereby.
-13-
17. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE
TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO
PROVISIONS RELATING TO CONFLICTS OF LAW TO THE EXTENT THE APPLICATION OF THE
LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE PARTIES HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREE THAT ACTIONS, SUITS OR PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS AGREEMENT MAY BE BROUGHT ONLY IN STATE OR FEDERAL
COURTS LOCATED IN THE CITY OF NEW YORK, NEW YORK AND HEREBY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF SUCH COURTS FOR SUCH PURPOSE.
18. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
[the balance of this page intentionally left blank]
-14-
If the foregoing correctly sets forth our understanding, please indicate your
acceptance thereof in the space provided below for that purpose, whereupon this
Agreement shall constitute a binding agreement among the Company and the
Purchaser.
Very truly yours,
LMIC, INC.
By: ___________________________
Name: ▇▇▇▇ ▇▇
Title: Chief Executive Officer
By: ___________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial Officer
ACCEPTED AND AGREED:
ALLEGIANT CAPITAL GROUP, LLC
By: __________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Managing Member
Number of Shares Purchased at
Closing: 333,333
Purchase Price: $500,000
-15-
Schedule A
----------
Direct and Indirect Subsidiaries of LMIC, Inc.
LMIC Manufacturing, Inc.
Schedule A
Exhibit A
Warrant
(attached hereto)
Exhibit A
Exhibit B
Capitalization of LMIC, Inc.
----------------------------
As at July 30, 2004
-------------------
Authorized common stock: 100,000,000 shares
Outstanding common stock at July 30, 2004: 17,951,264 shares
Shares issuable upon exercise and/or
Conversion of outstanding convertible
Notes, or upon exercise of outstanding
Warrants and options: 12,274,015 shares
-3-
