STANDBY EQUITY DISTRIBUTION AGREEMENT
THIS
AGREEMENT
dated as
of the 14th day of November 2005 (the “Agreement”)
between CORNELL
CAPITAL PARTNERS, LP,
a
Delaware limited partnership (the “Investor”),
and
UNICORP
INCORPORATED,
a
corporation organized and existing under the laws of the State of Nevada (the
“Company”).
WHEREAS,
the
parties desire that, upon the terms and subject to the conditions contained
herein, the Company shall issue and sell to the Investor, from time to time
as
provided herein, and the Investor shall purchase from the Company up to Ten
Million Dollars ($10,000,000) of the Company’s common stock, par value
$0.001 per share (the “Common
Stock”);
and
WHEREAS,
such
investments will be made in reliance upon the provisions of Regulation D
(“Regulation
D”)
of the
Securities Act of 1933, as amended, and the regulations promulgated thereunder
(the “Securities
Act”),
and
or upon such other exemption from the registration requirements of the
Securities Act as may be available with respect to any or all of the investments
to be made hereunder.
WHEREAS,
the
Company has engaged Monitor Capital, Inc. (the “Placement
Agent”),
to
act as the Company’s exclusive placement agent in connection with the sale of
the Company’s Common Stock to the Investor hereunder pursuant to the Placement
Agent Agreement dated the date hereof by and among the Company, the Placement
Agent and the Investor (the “Placement
Agent Agreement”).
NOW,
THEREFORE,
the
parties hereto agree as follows:
ARTICLE
I.
Certain
Definitions
Section
1.1. “Advance”
shall
mean the portion of the Commitment Amount requested by the Company in the
Advance Notice.
Section
1.2. “Advance
Date”
shall
mean the first (1st)
Trading
Day after expiration of the applicable Pricing Period for each
Advance.
Section
1.3. “Advance
Notice”
shall
mean a written notice to the Investor setting forth the Advance amount that
the
Company requests from the Investor and the Advance Date.
Section
1.4. “Advance
Notice Date”
shall
mean each date the Company delivers to the Investor an Advance Notice requiring
the Investor to advance funds to the Company, subject to the terms of this
Agreement. No Advance Notice Date shall be less than five (5) Trading Days
after
the prior Advance Notice Date.
Section
1.5. “Bid
Price”
shall
mean, on any date, the closing bid price (as reported by Bloomberg L.P.) of
the
Common Stock on the Principal Market or if the Common Stock is not traded on
a
Principal Market, the highest reported bid price for the Common Stock, as
furnished by the National Association of Securities Dealers, Inc.
Section
1.6. “Closing”
shall
mean one of the closings of a purchase and sale of Common Stock pursuant to
Section 2.3.
Section
1.7. “Commitment
Amount”
shall
mean the aggregate amount of up to Ten Million Dollars ($10,000,000) which
the
Investor has agreed to provide to the Company in order to purchase the Company’s
Common Stock pursuant to the terms and conditions of this
Agreement.
Section
1.8. “Commitment
Period”
shall
mean the period commencing on the earlier to occur of (i) the Effective Date,
or
(ii) such earlier date as the Company and the Investor may mutually agree in
writing, and expiring on the earliest to occur of (x) the date on which the
Investor shall have made payment of Advances pursuant to this Agreement in
the
aggregate amount of Ten Million Dollars ($10,000,000), (y) the date this
Agreement is terminated pursuant to Section 2.4, or (z) the date occurring
twenty-four (24) months after the Effective Date.
Section
1.9. “Common
Stock”
shall
mean the Company’s common stock, par value $0.001 per share.
Section
1.10. “Condition
Satisfaction Date”
shall
have the meaning set forth in Section 7.2.
Section
1.11. “Damages”
shall
mean any loss, claim, damage, liability, costs and expenses (including, without
limitation, reasonable attorney’s fees and disbursements and costs and expenses
of expert witnesses and investigation).
Section
1.12. “Effective
Date”
shall
mean the date on which the SEC first declares effective a Registration Statement
registering the resale of the Registrable Securities as set forth in Section
7.2(a).
Section
1.13. “Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
Section
1.14. “Material
Adverse Effect”
shall
mean any condition, circumstance, or situation that would prohibit or otherwise
materially interfere with the ability of the Company to enter into and perform
any of its obligations under this Agreement or the Registration Rights Agreement
in any material respect.
Section
1.15. “Market
Price”
shall
mean the lowest closing Bid Price of the Common Stock during the Pricing
Period.
Section
1.16. “Maximum
Advance Amount”
shall
be Two Million Dollars ($2,000,000) per Advance Notice.
Section
1.17. “NASD”
shall
mean the National Association of Securities Dealers, Inc.
Section
1.18. “Person”
shall
mean an individual, a corporation, a partnership, an association, a trust or
other entity or organization, including a government or political subdivision
or
an agency or instrumentality thereof.
Section
1.19. “Placement
Agent”
shall
mean Monitor Capital, Inc., a registered broker-dealer.
Section
1.20. “Pricing
Period”
shall
mean the five (5) consecutive Trading Days after the Advance Notice
Date.
Section
1.21. “Principal
Market”
shall
mean the Nasdaq National Market, the Nasdaq SmallCap Market, the American Stock
Exchange, the OTC Bulletin Board or the New York Stock Exchange, whichever
is at
the time the principal trading exchange or market for the Common
Stock.
Section
1.22. “Purchase
Price”
shall
be set at ninety six percent (96%) of the Market Price during the Pricing
Period.
Section
1.23. “Registrable
Securities”
shall
mean the shares of Common Stock to be issued hereunder (i)
in
respect of which the Registration Statement has not been declared effective
by
the SEC, (ii) which have not been sold under circumstances meeting all of the
applicable conditions of Rule 144 (or any similar provision then in force)
under
the Securities Act (“Rule
144”)
or
(iii) which have not been otherwise transferred to a holder who may trade such
shares without restriction under the Securities Act, and the Company has
delivered a new certificate or other evidence of ownership for such securities
not bearing a restrictive legend.
Section
1.24. “Registration
Rights Agreement”
shall
mean the Registration Rights Agreement dated the date hereof, regarding the
filing of the Registration Statement for the resale of the Registrable
Securities, entered into between the Company and the Investor.
Section
1.25. “Registration
Statement”
shall
mean a registration statement on Form S-1 or SB-2 (if use of such form is then
available to the Company pursuant to the rules of the SEC and, if not, on such
other form promulgated by the SEC for which the Company then qualifies and
which
counsel for the Company shall deem appropriate, and which form shall be
available for the resale of the Registrable Securities to be registered
thereunder in accordance with the provisions of this Agreement and the
Registration Rights Agreement, and in accordance with the intended method of
distribution of such securities), for the registration of the resale by the
Investor of the Registrable Securities under the Securities Act.
Section
1.26. “Regulation
D”
shall
have the meaning set forth in the recitals of this Agreement.
Section
1.27. “SEC”
shall
mean the Securities and Exchange Commission.
Section
1.28. “Securities
Act”
shall
have the meaning set forth in the recitals of this Agreement.
Section
1.29. “SEC
Documents”
shall
mean Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB, Current
Reports on Form 8-K and Proxy Statements of the Company as supplemented to
the
date hereof, filed by the Company for a period of at least twelve (12) months
immediately preceding the date hereof or the Advance Date, as the case may
be,
until such time as the Company no longer has an obligation to maintain the
effectiveness of a Registration Statement as set forth in the Registration
Rights Agreement.
Section
1.30. “Trading
Day”
shall
mean any day during which the New York Stock Exchange shall be open for
business.
ARTICLE
II.
Advances
Section
2.1. Investments.
Advances.
Upon
the
terms and conditions set forth herein (including, without limitation, the
provisions of Article VII hereof), the Company may request an Advance by the
Investor by the delivery of an Advance Notice. The number of shares of Common
Stock that the Investor shall purchase pursuant to each Advance shall be
determined by dividing the amount of the Advance by the Purchase Price. No
fractional shares shall be issued. Fractional shares shall be rounded to the
next higher whole number of shares. The aggregate maximum amount of all Advances
that the Investor shall be obligated to make under this Agreement shall not
exceed the Commitment Amount.
Section
2.2. Mechanics.
(a) Advance
Notice.
At any
time during the Commitment Period, the Company may deliver an Advance Notice
to
the Investor, subject to the conditions set forth in Section 7.2; provided,
however, the amount for each Advance as designated by the Company in the
applicable Advance Notice, shall not be more than the Maximum Advance Amount.
The aggregate amount of the Advances pursuant to this Agreement shall not exceed
the Commitment Amount. The Company acknowledges that the Investor may sell
shares of the Company’s Common Stock corresponding with a particular Advance
Notice after the Advance Notice is received by the Investor. There shall be
a
minimum of five (5) Trading Days between each Advance Notice Date.
(b) Date
of Delivery of Advance Notice.
An
Advance Notice shall be deemed delivered on (i) the Trading Day it is received
by facsimile or otherwise by the Investor if such notice is received prior
to
12:00 noon Eastern Time, or (ii) the immediately succeeding Trading Day if
it is
received by facsimile or otherwise after 12:00 noon Eastern Time on a Trading
Day or at any time on a day which is not a Trading Day. No Advance Notice may
be
deemed delivered on a day that is not a Trading Day.
Section
2.3. Closings.
On each
Advance Date (i) the Company shall deliver to the Investor shares of the
Company’s Common Stock, representing the amount of the Advance specified in such
Advance Notice pursuant to Section 2.1 herein, registered in the name of the
Investor and (ii) upon receipt of such shares, the Investor shall deliver to
the
Company the amount of the Advance specified in the Advance Notice by wire
transfer of immediately available funds. In addition, on or prior to the Advance
Date, each of the Company and the Investor shall deliver to the other all
documents, instruments and writings required to be delivered by either of them
pursuant to this Agreement in order to implement and effect the transactions
contemplated herein. The extent the Company has not paid the fees, expenses,
and
disbursements of the Investor or the Company’s counsel in accordance with
Section 12.4, the amount of such fees, expenses, and disbursements may be
deducted by the Investor (and shall be paid to the relevant party) directly
out
of the proceeds of the Advance with no reduction in the amount of shares of
the
Company’s Common Stock to be delivered on such Advance Date. Section
2.3. Termination
of Investment.
The
obligation of the Investor to make an Advance to the Company pursuant to this
Agreement shall terminate permanently (including with respect to an Advance
Date
that has not yet occurred) in the event that (i) there shall occur any stop
order or suspension of the effectiveness of the Registration Statement for
an
aggregate of fifty (50) Trading Days, other than due to the acts of the
Investor, during the Commitment Period, or (ii) the Company shall at any time
fail materially to comply with the requirements of Article VI and such failure
is not cured within thirty (30) days after receipt of written notice from the
Investor, provided,
however,
that
this termination provision shall not apply to any period commencing upon the
filing of a post-effective amendment to such Registration Statement and ending
upon the date on which such post effective amendment is declared effective
by
the SEC.
Section
2.4. Agreement
to Advance Funds.
The
Investor agrees to advance the amount specified in the Advance Notice to the
Company after the completion of each of the following conditions and the other
conditions set forth in this Agreement:
(a) the
execution and delivery by the Company, and the Investor, of this Agreement
and
the Exhibits hereto;
(b) The
Investor shall have received the shares of Common Stock applicable to the
Advance in accordance with Section 2.3. Such shares shall be free of restrictive
legends.
(c) the
Company’s Registration Statement with respect to the resale of the Registrable
Securities in accordance with the terms of the Registration Rights Agreement
shall have been declared effective by the SEC;
(d) the
Company shall have obtained all material permits and qualifications required
by
any applicable state for the offer and sale of the Registrable Securities,
or
shall have the availability of exemptions therefrom. The sale and issuance
of
the Registrable Securities shall be legally permitted by all laws and
regulations to which the Company is subject;
(e) the
Company shall have filed with the Commission in a timely manner all reports,
notices and other documents required of a “reporting company” under the Exchange
Act and applicable Commission regulations;
(f) the
fees
as set forth in Section 12.4 below shall have been paid or can be withheld
as
provided in Section 2.3; and
(g) the
conditions set forth in Section 7.2 shall have been satisfied.
(h) the
Company shall have provided to the Investor an acknowledgement, from the
Company’s independent certified public accountants as to its ability to provide
all consents required in order to file a registration statement in connection
with this transaction;
(i) The
Company’s transfer agent shall be DWAC eligible.
Section
2.6. Lock
Up Period.
On the
date hereof, the Company shall obtain from each officer and director a lock-up
agreement, as defined below, in the form annexed hereto as Schedule 2.6
agreeing to only sell in compliance with the volume limitation of Rule
144.
Section
2.7. Hardship.
In the
event the Investor sells shares of the Company’s Common Stock after receipt of
an Advance Notice and the Company fails to perform its obligations as mandated
in Section 2.3, and specifically the Company fails to deliver to the Investor
on
the Advance Date the shares of Common Stock corresponding to the applicable
Advance, the Company acknowledges that the Investor shall suffer financial
hardship and therefore shall be liable for any and all losses, commissions,
fees, or financial hardship caused to the Investor.
ARTICLE
III.
Representations
and Warranties of Investor
Investor
hereby represents and warrants to, and agrees with, the Company that the
following are true and correct as of the date hereof and as of each Advance
Date:
Section
3.1. Organization
and Authorization.
The
Investor is duly incorporated or organized and validly existing in the
jurisdiction of its incorporation or organization and has all requisite power
and authority to purchase and hold the securities issuable hereunder. The
decision to invest and the execution and delivery of this Agreement by such
Investor, the performance by such Investor of its obligations hereunder and
the
consummation by such Investor of the transactions contemplated hereby have
been
duly authorized and requires no other proceedings on the part of the Investor.
The undersigned has the right, power and authority to execute and deliver this
Agreement and all other instruments (including, without limitations, the
Registration Rights Agreement), on behalf of the Investor. This Agreement has
been duly executed and delivered by the Investor and, assuming the execution
and
delivery hereof and acceptance thereof by the Company, will constitute the
legal, valid and binding obligations of the Investor, enforceable against the
Investor in accordance with its terms.
Section
3.2. Evaluation
of Risks.
The
Investor has such knowledge and experience in financial, tax and business
matters as to be capable of evaluating the merits and risks of, and bearing
the
economic risks entailed by, an investment in the Company and of protecting
its
interests in connection with this transaction. It recognizes that its investment
in the Company involves a high degree of risk.
Section
3.3. No
Legal Advice From the Company.
The
Investor acknowledges that it had the opportunity to review this Agreement
and
the transactions contemplated by this Agreement with his or its own legal
counsel and investment and tax advisors. The Investor is relying solely on
such
counsel and advisors and not on any statements or representations of the Company
or any of its representatives or agents for legal, tax or investment advice
with
respect to this investment, the transactions contemplated by this Agreement
or
the securities laws of any jurisdiction.
Section
3.4. Investment
Purpose.
The
securities are being purchased by the Investor for its own account, and for
investment purposes. The Investor agrees not to assign or in any way transfer
the Investor’s rights to the securities or any interest therein and acknowledges
that the Company will not recognize any purported assignment or transfer except
in accordance with applicable Federal and state securities laws. No other person
has or will have a direct or indirect beneficial interest in the securities.
The
Investor agrees not to sell, hypothecate or otherwise transfer the Investor’s
securities unless the securities are registered under Federal and applicable
state securities laws or unless, in the opinion of counsel satisfactory to
the
Company, an exemption from such laws is available.
Section
3.5. Accredited
Investor.
The
Investor is an “Accredited
Investor”
as
that
term is defined in Rule 501(a)(3) of Regulation D of the Securities
Act.
Section
3.6. Information.
The
Investor and its advisors (and its counsel), if any, have been furnished with
all materials relating to the business, finances and operations of the Company
and information it deemed material to making an informed investment decision.
The Investor and its advisors, if any, have been afforded the opportunity to
ask
questions of the Company and its management. Neither such inquiries nor any
other due diligence investigations conducted by such Investor or its advisors,
if any, or its representatives shall modify, amend or affect the Investor’s
right to rely on the Company’s representations and warranties contained in this
Agreement. The Investor understands that its investment involves a high degree
of risk. The Investor is in a position regarding the Company, which, based
upon
employment, family relationship or economic bargaining power, enabled and
enables such Investor to obtain information from the Company in order to
evaluate the merits and risks of this investment. The Investor has sought such
accounting, legal and tax advice, as it has considered necessary to make an
informed investment decision with respect to this transaction.
Section
3.7. Receipt
of Documents.
The
Investor and its counsel have received and read in their entirety: (i) this
Agreement and the Exhibits annexed hereto; (ii) all due diligence and other
information necessary to verify the accuracy and completeness of such
representations, warranties and covenants; (iii) the Company’s Form 10-KSB for
the fiscal year ended December 31, 2004, and Form 10-QSB for the period
ended March 31,2005; and (iv) answers to all questions the Investor
submitted to the Company regarding an investment in the Company; and the
Investor has relied on the information contained therein and has not been
furnished any other documents, literature, memorandum or
prospectus.
Section
3.8. Registration
Rights Agreement.
The
parties have entered into the Registration Rights Agreement dated the date
hereof.
Section
3.9. No
General Solicitation.
Neither
the Company, nor any of its affiliates, nor any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the Securities Act) in connection
with
the offer or sale of the shares of Common Stock offered hereby.
Section
3.10. Not
an
Affiliate.
The
Investor is not an officer, director or a person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with the Company or any “Affiliate”
of
the
Company (as that term is defined in Rule 405 of the Securities Act).
Section
3.11. Trading
Activities.
The
Investor’s trading activities with respect to the Company’s Common Stock shall
be in compliance with all applicable federal and state securities laws, rules
and regulations and the rules and regulations of the Principal Market on which
the Company’s Common Stock is listed or traded. Neither
the Investor nor its affiliates has an open short position in the Common Stock
of the Company, the Investor agrees that it shall not, and that it will cause
its affiliates not to, engage in any short sales of or hedging transactions
with
respect to the Common Stock, provided
that the
Company acknowledges and agrees that upon receipt of an Advance Notice the
Investor has the right to sell the shares to be issued to the Investor pursuant
to the Advance Notice
during
the applicable Pricing Period.
ARTICLE
IV.
Representations
and Warranties of the Company
Except
as
stated below, on the disclosure schedules attached hereto or in the SEC
Documents (as defined herein), the Company hereby represents and warrants to,
and covenants with, the Investor that the following are true and correct as
of
the date hereof:
Section
4.1. Organization
and Qualification.
The
Company is duly incorporated or organized and validly existing in the
jurisdiction of its incorporation or organization and has all requisite
corporate power to own its properties and to carry on its business as now being
conducted. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing would not have a Material Adverse Effect on the Company and its
subsidiaries taken as a whole.
Section
4.2. Authorization,
Enforcement, Compliance with Other Instruments.
(i) The
Company has the requisite corporate power and authority to enter into and
perform this Agreement, the Registration Rights Agreement, the Placement Agent
Agreement and any related agreements, in accordance with the terms hereof and
thereof, (ii) the execution and delivery of this Agreement, the Registration
Rights Agreement, the Placement Agent Agreement and any related agreements
by
the Company and the consummation by it of the transactions contemplated hereby
and thereby, have been duly authorized by the Company’s Board of Directors and
no further consent or authorization is required by the Company, its Board of
Directors or its stockholders, (iii) this Agreement, the Registration
Rights Agreement, the Placement Agent Agreement and any related agreements
have
been duly executed and delivered by the Company, (iv) this Agreement, the
Registration Rights Agreement, the Placement Agent Agreement and assuming the
execution and delivery thereof and acceptance by the Investor and any related
agreements constitute the valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws
relating to, or affecting generally, the enforcement of creditors’ rights and
remedies.
Section
4.3. Capitalization.
As of
the date hereof, the authorized capital stock of the Company consists of
1,500,000,000 shares of Common Stock, par value $0.001 per share and 25,000,000
shares of Preferred Stock, $0.001 par value per share (“Preferred
Stock”),
of
which 82,156,609 shares of Common Stock and 0 shares of Preferred Stock were
issued and outstanding. All of such outstanding shares have been validly issued
and are fully paid and nonassessable. Except as disclosed in the SEC Documents,
no shares of Common Stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company. Except
as disclosed in the SEC Documents, as of the date hereof, (i) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries, or contracts, commitments, understandings or arrangements by
which
the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries
or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into,
any
shares of capital stock of the Company or any of its subsidiaries, (ii) there
are no outstanding debt securities (iii) there
are no outstanding registration statements other than on Form S-8 and (iv)
there
are no agreements or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of their securities under
the Securities Act (except pursuant to the Registration Rights Agreement).
There
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by this Agreement or any related agreement or the
consummation of the transactions described herein or therein. The Company has
furnished to the Investor true and correct copies of the Company’s Certificate
of Incorporation, as amended and as in effect on the date hereof (the
“Certificate
of Incorporation”),
and
the Company’s By-laws, as in effect on the date hereof (the “By-laws”),
and
the terms of all securities convertible into or exercisable for Common Stock
and
the material rights of the holders thereof in respect thereto.
Section
4.4. No
Conflict.
The
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby will not
(i)
result in a violation of the Certificate of Incorporation, any certificate
of
designations of any outstanding series of preferred stock of the Company or
By-laws or (ii) conflict with or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, or result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations and the rules and regulations of the Principal Market on which
the
Common Stock is quoted) applicable to the Company or any of its subsidiaries
or
by which any material property or asset of the Company or any of its
subsidiaries is bound or affected and which would cause a Material Adverse
Effect. Except as disclosed in the SEC Documents, neither the Company nor its
subsidiaries is in violation of any term of or in default under its Articles
of
Incorporation or By-laws or their organizational charter or by-laws,
respectively, or any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries. The business of the
Company and its subsidiaries is not being conducted in violation of any material
law, ordinance, regulation of any governmental entity. Except as specifically
contemplated by this Agreement and as required under the Securities Act and
any
applicable state securities laws, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with,
any
court or governmental agency in order for it to execute, deliver or perform
any
of its obligations under or contemplated by this Agreement or the Registration
Rights Agreement in accordance with the terms hereof or thereof. All consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected
on
or prior to the date hereof. The Company and its subsidiaries are unaware of
any
fact or circumstance which might give rise to any of the foregoing.
Section
4.5. SEC
Documents; Financial Statements.
Since
July 2004, the Company has filed all reports, schedules, forms, statements
and
other documents required to be filed by it with the SEC under the Exchange
Act.
The Company has delivered to the Investor or its representatives, or made
available through the SEC’s website at xxxx://xxx.xxx.xxx, true and complete
copies of the SEC Documents. As of their respective dates, the financial
statements of the Company disclosed in the SEC Documents (the “Financial
Statements”)
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and, fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case
of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Investor which is
not
included in the SEC Documents contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
Section
4.6. 10b-5.
The SEC
Documents do not include any untrue statements of material fact, nor do they
omit to state any material fact required to be stated therein necessary to
make
the statements made, in light of the circumstances under which they were made,
not misleading.
Section
4.7. No
Default.
Except
as disclosed in the SEC Documents, the Company is not in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust or other material
instrument or agreement to which it is a party or by which it is or its property
is bound and neither the execution, nor the delivery by the Company, nor the
performance by the Company of its obligations under this Agreement or any of
the
exhibits or attachments hereto will conflict with or result in the breach or
violation of any of the terms or provisions of, or constitute a default or
result in the creation or imposition of any lien or charge on any assets or
properties of the Company under its Certificate of Incorporation, By-Laws,
any
material indenture, mortgage, deed of trust or other material agreement
applicable to the Company or instrument to which the Company is a party or
by
which it is bound, or any statute, or any decree, judgment, order, rules or
regulation of any court or governmental agency or body having jurisdiction
over
the Company or its properties, in each case which default, lien or charge is
likely to cause a Material Adverse Effect on the Company’s business or financial
condition.
Section
4.8. Absence
of Events of Default.
Except
for matters described in the SEC Documents and/or this Agreement, no Event
of
Default, as defined in the respective agreement to which the Company is a party,
and no event which, with the giving of notice or the passage of time or both,
would become an Event of Default (as so defined), has occurred and is
continuing, which would have a Material Adverse Effect on the Company’s
business, properties, prospects, financial condition or results of
operations.
Section
4.9. Intellectual
Property Rights.
The
Company and its subsidiaries own or possess adequate rights or licenses to
use
all material trademarks, trade names, service marks, service xxxx registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and rights necessary
to
conduct their respective businesses as now conducted. The Company and its
subsidiaries do not have any knowledge of any infringement by the Company or
its
subsidiaries of trademark, trade name rights, patents, patent rights,
copyrights, inventions, licenses, service names, service marks, service xxxx
registrations, trade secret or other similar rights of others, and, to the
knowledge of the Company, there is no claim, action or proceeding being made
or
brought against, or to the Company’s knowledge, being threatened against, the
Company or its subsidiaries regarding trademark, trade name, patents, patent
rights, invention, copyright, license, service names, service marks, service
xxxx registrations, trade secret or other infringement; and the Company and
its
subsidiaries are unaware of any facts or circumstances which might give rise
to
any of the foregoing.
Section
4.10. Employee
Relations.
Neither
the Company nor any of its subsidiaries is involved in any labor dispute nor,
to
the knowledge of the Company or any of its subsidiaries, is any such dispute
threatened. None of the Company’s or its subsidiaries’ employees is a member of
a union and the Company and its subsidiaries believe that their relations with
their employees are good.
Section
4.11. Environmental
Laws.
The
Company and its subsidiaries are (i) in compliance with any and all applicable
material foreign, federal, state and local laws and regulations relating to
the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (“Environmental
Laws”),
(ii)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit, license
or
approval.
Section
4.12. Title.
Except
as set forth in the SEC Documents, the Company has good and marketable title
to
its properties and material assets owned by it, free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest other than
such as are not material to the business of the Company. Any real property
and
facilities held under lease by the Company and its subsidiaries are held by
them
under valid, subsisting and enforceable leases with such exceptions as are
not
material and do not interfere with the use made and proposed to be made of
such
property and buildings by the Company and its subsidiaries.
Section
4.13. Insurance.
The
Company and each of its subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its subsidiaries are engaged. Neither the Company
nor
any such subsidiary has been refused any insurance coverage sought or applied
for and neither the Company nor any such subsidiary has any 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 condition, financial or otherwise, or the earnings,
business or operations of the Company and its subsidiaries, taken as a
whole.
Section
4.14. Regulatory
Permits.
The
Company and its subsidiaries possess all material certificates, authorizations
and permits issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct their respective businesses, and neither the
Company nor any such subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization or
permit.
Section
4.15. Internal
Accounting Controls.
The
Company and each of its subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance 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 conformity 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.
Section
4.16. No
Material Adverse Breaches, etc.
Except
as set forth in the SEC Documents, neither the Company nor any of its
subsidiaries is subject to any charter, corporate or other legal restriction,
or
any judgment, decree, order, rule or regulation which in the judgment of the
Company’s officers has or is expected in the future to have a Material Adverse
Effect on the business, properties, operations, financial condition, results
of
operations or prospects of the Company or its subsidiaries. Except as set forth
in the SEC Documents, neither the Company nor any of its subsidiaries is in
breach of any contract or agreement which breach, in the judgment of the
Company’s officers, has or is expected to have a Material Adverse Effect on the
business, properties, operations, financial condition, results of operations
or
prospects of the Company or its subsidiaries.
Section
4.17. Absence
of Litigation.
Except
as set forth in the SEC Documents, there is no action, suit, proceeding, inquiry
or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending against or affecting the Company,
the Common Stock or any of the Company’s subsidiaries, wherein an unfavorable
decision, ruling or finding would (i) have a Material Adverse Effect on the
transactions contemplated hereby (ii) adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of the documents contemplated herein,
or (iii) except as expressly disclosed in the SEC Documents, have a Material
Adverse Effect on the business, operations, properties, financial condition
or
results of operation of the Company and its subsidiaries taken as a
whole.
Section
4.18. Subsidiaries.
Except
as disclosed in the SEC Documents, the Company does not presently own or
control, directly or indirectly, any interest in any other corporation,
partnership, association or other business entity.
Section
4.19. Tax
Status.
Except
as disclosed in the SEC Documents, the Company and each of its subsidiaries
has
made or filed all federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject and (unless
and only to the extent that the Company and each of its subsidiaries has set
aside on its books provisions reasonably adequate for the payment of all unpaid
and unreported taxes) has paid all taxes and other governmental assessments
and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment
of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of
the
Company know of no basis for any such claim.
Section
4.20. Certain
Transactions.
Except
as set forth in the SEC Documents none of the officers, directors, or employees
of the Company is presently a party to any transaction with the Company (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to
or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to
the
knowledge of the Company, any corporation, partnership, trust or other entity
in
which any officer, director, or any such employee has a substantial interest
or
is an officer, director, trustee or partner.
Section
4.21. Fees
and Rights of First Refusal.
The
Company is not obligated to offer the securities offered hereunder on a right
of
first refusal basis or otherwise to any third parties including, but not limited
to, current or former shareholders of the Company, underwriters, brokers, agents
or other third parties.
Section
4.22. Use
of
Proceeds.
The
Company shall use the net proceeds from this offering for general corporate
purposes, including, without limitation, the payment of loans incurred by the
Company. However, in no event shall the Company use the net proceeds from this
offering for the payment (or loan to any such person for the payment) of any
judgment, or other liability, incurred by any executive officer, officer,
director or employee of the Company, except for any liability owed to such
person for services rendered, or if any judgment or other liability is incurred
by such person originating from services rendered to the Company, or the Company
has indemnified such person from liability.
Section
4.23. Further
Representation and Warranties of the Company.
For so
long as any securities issuable hereunder held by the Investor remain
outstanding, the Company acknowledges, represents, warrants and agrees that
it
will maintain the listing of its Common Stock on the Principal
Market.
Section
4.24. Opinion
of Counsel.
Investor shall receive an opinion letter from counsel to the Company on the
date
hereof.
Section
4.25. Opinion
of Counsel.
The
Company will obtain for the Investor, at the Company’s expense, any and all
opinions of counsel which may be reasonably required in order to sell the
securities issuable hereunder without restriction.
Section
4.26. Dilution.
The
Company is aware and acknowledges that issuance of shares of the Company’s
Common Stock could cause dilution to existing shareholders and could
significantly increase the outstanding number of shares of Common Stock.
ARTICLE
V.
Indemnification
The
Investor and the Company represent to the other the following with respect
to
itself:
Section
5.1. Indemnification.
(a) In
consideration of the Investor’s execution and delivery of this Agreement, and in
addition to all of the Company’s other obligations under this Agreement, the
Company shall defend, protect, indemnify and hold harmless the Investor, and
all
of its officers, directors, partners, employees and agents (including, without
limitation, those retained in connection with the transactions contemplated
by
this Agreement) (collectively, the “Investor
Indemnitees”)
from
and against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Investor Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and disbursements (the “Indemnified
Liabilities”),
incurred by the Investor Indemnitees or any of them as a result of, or arising
out of, or relating to (a) any misrepresentation or breach of any representation
or warranty made by the Company in this Agreement or the Registration Rights
Agreement or any other certificate, instrument or document contemplated hereby
or thereby, (b) any breach of any covenant, agreement or obligation of the
Company contained in this Agreement or the Registration Rights Agreement or
any
other certificate, instrument or document contemplated hereby or thereby, or
(c)
any cause of action, suit or claim brought or made against such Investor
Indemnitee not arising out of any action or inaction of an Investor Indemnitee,
and arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Investor Indemnitees. To the extent
that
the foregoing undertaking by the Company may be unenforceable for any reason,
the Company shall make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities, which is permissible under applicable
law.
(b) In
consideration of the Company’s execution and delivery of this Agreement, and in
addition to all of the Investor’s other obligations under this Agreement, the
Investor shall defend, protect, indemnify and hold harmless the Company and
all
of its officers, directors, shareholders, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the “Company
Indemnitees”)
from
and against any and all Indemnified Liabilities incurred by the Company
Indemnitees or any of them as a result of, or arising out of, or relating to
(a)
any misrepresentation or breach of any representation or warranty made by the
Investor in this Agreement, the Registration Rights Agreement, or any instrument
or document contemplated hereby or thereby executed by the Investor, (b) any
breach of any covenant, agreement or obligation of the Investor(s) contained
in
this Agreement, the Registration Rights Agreement or any other certificate,
instrument or document contemplated hereby or thereby executed by the Investor,
or (c) any cause of action, suit or claim brought or made against such Company
Indemnitee based on misrepresentations or due to a breach by the Investor and
arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Company Indemnitees. To the extent that
the foregoing undertaking by the Investor may be unenforceable for any reason,
the Investor shall make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities, which is permissible under applicable
law.
(c) The
obligations of the parties to indemnify or make contribution under this Section
5.1 shall survive termination.
ARTICLE
VI.
Covenants
of the Company
Section
6.1. Registration
Rights.
The
Company shall cause the Registration Rights Agreement to remain in full force
and effect and the Company shall comply in all material respects with the terms
thereof.
Section
6.2. Listing
of Common Stock.
The
Company is currently trading on the Pink Sheets and will use its best efforts
to
obtain authorization for quotation on the National Association of Securities
Dealers Inc.’s Over the Counter Bulletin Board.
Section
6.3. Exchange
Act Registration.
The
Company will cause its Common Stock to continue to be registered under Section
12(g) of the Exchange Act, will file in a timely manner all reports and other
documents required of it as a reporting company under the Exchange Act and
will
not take any action or file any document (whether or not permitted by Exchange
Act or the rules thereunder) to terminate or suspend such registration or to
terminate or suspend its reporting and filing obligations under said Exchange
Act.
Section
6.4. Transfer
Agent Instructions.
Upon
effectiveness of the Registration Statement the Company shall deliver
instructions to its transfer agent to issue shares of Common Stock to the
Investor free of restrictive legends on or before each Advance Date
Section
6.5. Corporate
Existence.
The
Company will take all steps necessary to preserve and continue the corporate
existence of the Company.
Section
6.6. Notice
of Certain Events Affecting Registration; Suspension of Right to Make an
Advance.
The
Company will immediately notify the Investor upon its becoming aware of the
occurrence of any of the following events in respect of a registration statement
or related prospectus relating to an offering of Registrable Securities: (i)
receipt of any request for additional information by the SEC or any other
Federal or state governmental authority during the period of effectiveness
of
the Registration Statement for amendments or supplements to the registration
statement or related prospectus; (ii) the issuance by the SEC 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; (iii) receipt of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the happening of any event
that makes any statement made in the Registration Statement or related
prospectus of any document incorporated or deemed to be incorporated therein
by
reference untrue in any material respect or that requires the making of any
changes in the Registration Statement, related prospectus or documents so that,
in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to
be
stated therein or necessary to make the statements therein not misleading,
and
that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to
be
stated therein or necessary to make the statements therein, in the light of
the
circumstances under which they were made, not misleading; and (v) the Company’s
reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate; and the Company will promptly make available
to
the Investor any such supplement or amendment to the related prospectus. The
Company shall not deliver to the Investor any Advance Notice during the
continuation of any of the foregoing events.
Section
6.7. Restriction
on Sale of Capital Stock. During
the Commitment Period, the Company shall not, without written notice to the
Investor given five business days prior to undertaking such action, i) issue
or
sell any Common Stock or Preferred Stock without consideration or for a
consideration per share less than the Bid Price of the Common Stock determined
immediately prior to its issuance, (ii) issue or sell any Preferred Stock
warrant, option, right, contract, call, or other security or instrument granting
the holder thereof the right to acquire Common Stock without consideration
or
for a consideration per share less than such Common Stock’s Bid Price determined
immediately prior to its issuance, or (iii) file any registration statement
on
Form S-8.
Section
6.8. Consolidation;
Merger.
The
Company shall not, at any time after the date hereof, effect any merger or
consolidation of the Company with or into, or a transfer of all or substantially
all the assets of the Company to another entity (a “Consolidation
Event”)
unless
the resulting successor or acquiring entity (if not the Company) assumes by
written instrument the obligation to deliver to the Investor such shares of
stock and/or securities as the Investor is entitled to receive pursuant to
this
Agreement.
Section
6.9. Issuance
of the Company’s Common Stock.
The sale
of the shares of Common Stock shall be made in accordance with the provisions
and requirements of Regulation D and any applicable state securities
law.
ARTICLE
VII.
Conditions
for Advance and Conditions to Closing
Section
7.1. Conditions
Precedent to the Obligations of the Company.
The
obligation hereunder of the Company to issue and sell the shares of Common
Stock
to the Investor incident to each Closing is subject to the satisfaction, or
waiver by the Company, at or before each such Closing, of each of the conditions
set forth below.
(a) Accuracy
of the Investor’s Representations and Warranties.
The
representations and warranties of the Investor shall be true and correct in
all
material respects.
(b) Performance
by the Investor.
The
Investor shall have performed, satisfied and complied in all respects with
all
covenants, agreements and conditions required by this Agreement and the
Registration Rights Agreement to be performed, satisfied or complied with by
the
Investor at or prior to such Closing.
Section
7.2. Conditions
Precedent to the Right of the Company to Deliver an Advance Notice and the
Obligation of the Investor to Purchase Shares of Common Stock.
The
right of the Company to deliver an Advance Notice and the obligation of the
Investor hereunder to acquire and pay for shares of the Company’s Common Stock
incident to a Closing is subject to the fulfillment by the Company, on (i)
the
date of delivery of such Advance Notice and (ii) the applicable Advance
Date (each a “Condition
Satisfaction Date”),
of
each of the following conditions:
(a) Registration
of the Common Stock with the SEC.
The
Company shall have filed with the SEC a Registration Statement with respect
to
the resale of the Registrable Securities in accordance with the terms of the
Registration Rights Agreement. As set forth in the Registration Rights
Agreement, the Registration Statement shall have previously become effective
and
shall remain effective on each Condition Satisfaction Date and (i) neither
the
Company nor the Investor shall have received notice that the SEC has issued
or
intends to issue a stop order with respect to the Registration Statement or
that
the SEC otherwise has suspended or withdrawn the effectiveness of the
Registration Statement, either temporarily or permanently, or intends or has
threatened to do so (unless the SEC’s concerns have been addressed and the
Investor is reasonably satisfied that the SEC no longer is considering or
intends to take such action), and (ii) no other suspension of the use or
withdrawal of the effectiveness of the Registration Statement or related
prospectus shall exist. The Registration Statement must have been declared
effective by the SEC prior to the first Advance Notice Date.
(b) Authority.
The
Company shall have obtained all permits and qualifications required by any
applicable state in accordance with the Registration Rights Agreement for the
offer and sale of the shares of Common Stock, or shall have the availability
of
exemptions therefrom. The sale and issuance of the shares of Common Stock shall
be legally permitted by all laws and regulations to which the Company is
subject.
(c) Fundamental
Changes.
There
shall not exist any fundamental changes to the information set forth in the
Registration Statement which would require the Company to file a post-effective
amendment to the Registration Statement.
(d) Performance
by the Company.
The
Company shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by this Agreement
(including, without limitation, the conditions specified in Section 2.5
hereof) and the Registration Rights Agreement to be performed, satisfied or
complied with by the Company at or prior to each Condition Satisfaction
Date.
(e) No
Injunction.
No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits or directly and adversely
affects any of the transactions contemplated by this Agreement, and no
proceeding shall have been commenced that may have the effect of prohibiting
or
adversely affecting any of the transactions contemplated by this
Agreement.
(f) No
Suspension of Trading in or Delisting of Common Stock.
The
trading of the Common Stock is not suspended by the SEC or the Principal Market
(if the Common Stock is traded on a Principal Market). The issuance of shares
of
Common Stock with respect to the applicable Closing, if any, shall not violate
the shareholder approval requirements of the Principal Market (if the Common
Stock is traded on a Principal Market). The Company shall not have received
any
notice threatening the continued listing of the Common Stock on the Principal
Market (if the Common Stock is traded on a Principal Market).
(g) Maximum
Advance Amount.
The
amount of an Advance requested by the Company shall not exceed the Maximum
Advance Amount. In addition, in no event shall the number of shares issuable
to
the Investor pursuant to an Advance cause the aggregate number of shares of
Common Stock beneficially owned by the Investor and its affiliates to exceed
nine and 9/10 percent (9.9%) of the then outstanding Common Stock of the
Company. For the purposes of this section beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act.
(h) No
Knowledge.
The
Company has no knowledge of any event which would be more likely than not to
have the effect of causing such Registration Statement to be suspended or
otherwise ineffective.
(i) Principal
Market Listing.
The
Company shall have obtained the listing of its Common Stock on the Principal
Market.
(j) Other.
On each
Condition Satisfaction Date, the Investor shall have received the certificate
executed by an officer of the Company in the form of Exhibit
A
attached
hereto.
ARTICLE
VIII.
Due
Diligence Review; Non-Disclosure of Non-Public Information
Section
8.1. Due
Diligence Review.
Prior
to the filing of the Registration Statement the Company shall make available
for
inspection and review by the Investor, its advisors and representatives, and
any
underwriter participating in any disposition of the Registrable Securities
on
behalf of the Investor pursuant to the Registration Statement, any such
registration statement or amendment or supplement thereto or any blue sky,
NASD
or other filing, all financial and other records, all SEC Documents and other
filings with the SEC, and all other corporate documents and properties of the
Company as may be reasonably necessary for the purpose of such review, and
cause
the Company’s officers, directors and employees to supply all such information
reasonably requested by the Investor or any such representative, advisor or
underwriter in connection with such Registration Statement (including, without
limitation, in response to all questions and other inquiries reasonably made
or
submitted by any of them), prior to and from time to time after the filing
and
effectiveness of the Registration Statement for the sole purpose of enabling
the
Investor and such representatives, advisors and underwriters and their
respective accountants and attorneys to conduct initial and ongoing due
diligence with respect to the Company and the accuracy of the Registration
Statement.
Section
8.2. Non-Disclosure
of Non-Public Information.
(a) The
Company shall not disclose non-public information to the Investor, its advisors,
or its representatives, unless prior to disclosure of such information the
Company identifies such information as being non-public information and provides
the Investor, such advisors and representatives with the opportunity to accept
or refuse to accept such non-public information for review. The Company may,
as
a condition to disclosing any non-public information hereunder, require the
Investor’s advisors and representatives to enter into a confidentiality
agreement in form reasonably satisfactory to the Company and the
Investor.
(b) Nothing
herein shall require the Company to disclose non-public information to the
Investor or its advisors or representatives, and the Company represents that
it
does not disseminate non-public information to any investors who purchase stock
in the Company in a public offering, to money managers or to securities
analysts, provided, however, that notwithstanding anything herein to the
contrary, the Company will, as hereinabove provided, immediately notify the
advisors and representatives of the Investor and, if any, underwriters, of
any
event or the existence of any circumstance (without any obligation to disclose
the specific event or circumstance) of which it becomes aware, constituting
non-public information (whether or not requested of the Company specifically
or
generally during the course of due diligence by such persons or entities),
which, if not disclosed in the prospectus included in the Registration Statement
would cause such prospectus to include a material misstatement or to omit a
material fact required to be stated therein in order to make the statements,
therein, in light of the circumstances in which they were made, not misleading.
Nothing contained in this Section 8.2 shall be construed to mean that such
persons or entities other than the Investor (without the written consent of
the
Investor prior to disclosure of such information) may not obtain non-public
information in the course of conducting due diligence in accordance with the
terms of this Agreement and nothing herein shall prevent any such persons or
entities from notifying the Company of their opinion that based on such due
diligence by such persons or entities, that the Registration Statement contains
an untrue statement of material fact or omits a material fact required to be
stated in the Registration Statement or necessary to make the statements
contained therein, in light of the circumstances in which they were made, not
misleading.
ARTICLE
IX.
Choice
of Law/Jurisdiction
Section
9.1. Governing
Law.
This
Agreement shall be governed by and interpreted in accordance with the laws
of
the State of New Jersey without regard to the principles of conflict of laws.
The parties further agree that any action between them shall be heard in Xxxxxx
County, New Jersey, and expressly consent to the jurisdiction and venue of
the
Superior Court of New Jersey, sitting in Xxxxxx County, New Jersey and the
United States District Court of New Jersey, sitting in Newark, New Jersey,
for
the adjudication of any civil action asserted pursuant to this
paragraph.
ARTICLE
X.
Assignment;
Termination
Section
10.1. Assignment.
Neither
this Agreement nor any rights of the Company hereunder may be assigned to any
other Person.
Section
10.2. Termination.
The
obligations of the Investor to make Advances under Article II hereof shall
terminate twenty-four (24) months after the Effective Date.
ARTICLE
XI.
Notices
Section
11.1. Notices.
Any
notices, consents, waivers, or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile, provided a copy is mailed by U.S. certified
mail, return receipt requested; (iii) three (3) days after being sent by U.S.
certified mail, return receipt requested, or (iv) one (1) day after deposit
with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
|
If
to the Company, to:
|
Unicorp
Incorporated
|
|
0000
Xxxxxxxx Xxxxxx, Xxxxx 000
|
|
|
Xxxxxxx,
XX 00000
|
|
|
Attention: Xxxxx
Xxxxx
|
|
|
Telephone: (000)
000-0000
|
|
|
Facsimile: (000)
000-0000
|
|
|
With
a copy to:
|
Xxxxxxxxxxx
& Xxxxxxxx Xxxxxxxxx Xxxxxx LLP
|
|
000
Xxxxx Xxxxxxxx Xxxxxxxxx - Xxxxx 0000
|
|
|
Xxxxx,
XX 00000-0000
|
|
|
Attention: Xxxxxxx
X. Xxxxxx, Esq.
|
|
|
Telephone: (000)
000-0000
|
|
|
Facsimile: (000)
000-0000
|
|
|
If
to the Investor(s):
|
Cornell
Capital Partners, LP
|
|
000
Xxxxxx Xxxxxx -Xxxxx 0000
|
|
|
Xxxxxx
Xxxx, XX 00000
|
|
|
Attention: Xxxx
Xxxxxx
|
|
|
Portfolio
Manager
|
|
|
Telephone: (000)
000-0000
|
|
|
Facsimile: (000)
000-0000
|
|
|
With
a Copy to:
|
Xxxxx
Xxxxxxxx, Esq.
|
|
000
Xxxxxx Xxxxxx - Xxxxx 0000
|
|
|
Xxxxxx
Xxxx, XX 00000
|
|
|
Telephone: (000)
000-0000
|
|
|
Facsimile: (000)
000-0000
|
|
Each
party shall provide five (5) days’ prior written notice to the other party of
any change in address or facsimile number.
ARTICLE
XII.
Miscellaneous
Section
12.1. Counterparts.
This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party.
In
the event any signature page is delivered by facsimile transmission, the party
using such means of delivery shall cause four (4) additional original executed
signature pages to be physically delivered to the other party within five (5)
days of the execution and delivery hereof, though failure to deliver such copies
shall not affect the validity of this Agreement.
Section
12.2. Entire
Agreement; Amendments.
This
Agreement supersedes all other prior oral or written agreements between the
Investor, the Company, their affiliates and persons acting on their behalf
with
respect to the matters discussed herein, and this Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor the Investor makes any
representation, warranty, covenant or undertaking with respect to such matters.
No provision of this Agreement may be waived or amended other than by an
instrument in writing signed by the party to be charged with
enforcement.
Section
12.3. Reporting
Entity for the Common Stock.
The
reporting entity relied upon for the determination of the trading price or
trading volume of the Common Stock on any given Trading Day for the purposes
of
this Agreement shall be Bloomberg, L.P. or any successor thereto. The written
mutual consent of the Investor and the Company shall be required to employ
any
other reporting entity.
Section
12.4. Fees
and Expenses.
The
Company hereby agrees to pay the following fees:
(a) Structuring
Fees.
Each of
the parties shall pay its own fees and expenses (including the fees of any
attorneys, accountants, appraisers or others engaged by such party) in
connection with this Agreement and the transactions contemplated hereby, except
that the Company has paid a structuring fee of Fifteen Thousand
Dollars ($15,000) to Yorkville Advisors Management, LLC, which shall be
paid on the date hereof. Subsequently on each advance date, the Company will
pay
Yorkville Advisors Management, LLC a structuring fee of Five Hundred
Dollars ($500) and any outstanding fees of Xxxxxxxxxxx & Xxxxxxxx, LLP
directly out the proceeds of any Advances hereunder.
(b) Due
Diligence Fee.
Company
has paid the Investor a non-refundable due diligence fee of Five Thousand
Dollars ($5,000) upon submission of the due diligence documents to the
Investor.
(c) Commitment
Fees.
(i) On
each
Advance Date the Company shall pay to the Investor, directly from the gross
proceeds held in escrow, an amount equal to five percent (5%) of the amount
of
each Advance. The Company hereby agrees that if such payment, as is described
above, is not made by the Company on the Advance Date, such payment will be
made
at the direction of the Investor as outlined and mandated by Section 2.3 of
this
Agreement.
(ii) The
Company has issued to the Investor shares of the Company’s Common Stock in an
amount equal to Three Hundred Thousand Dollars ($300,000) divided by the
closing Bid Price of the Company’s Common Stock, as quoted by Bloomberg, LP, on
August 8, 2005 (the “Investor’s
Shares”).
(iii) Fully
Earned.
The
Investor’s Shares shall be deemed fully earned as of the date August 8, 2005.
(iv) Registration
Rights.
The
Investor’s Shares will have “piggy-back” registration rights.
Section
12.5. Brokerage.
Each of
the parties hereto represents that it has had no dealings in connection with
this transaction with any finder or broker who will demand payment of any fee
or
commission from the other party. The Company on the one hand, and the Investor,
on the other hand, agree to indemnify the other against and hold the other
harmless from any and all liabilities to any person claiming brokerage
commissions or finder’s fees on account of services purported to have been
rendered on behalf of the indemnifying party in connection with this Agreement
or the transactions contemplated hereby.
Section
12.6. Confidentiality.
If for
any reason the transactions contemplated by this Agreement are not consummated,
each of the parties hereto shall keep confidential any information obtained
from
any other party (except information publicly available or in such party’s domain
prior to the date hereof, and except as required by court order) and shall
promptly return to the other parties all schedules, documents, instruments,
work
papers or other written information without retaining copies thereof, previously
furnished by it as a result of this Agreement or in connection
herein.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
4
IN
WITNESS WHEREOF,
the
parties hereto have caused this Standby Equity Distribution Agreement to be
executed by the undersigned, thereunto duly authorized, as of the date first
set
forth above.
|
COMPANY:
|
|
|
UNICORP
INCORPORATED
|
|
|
By:
/s/ Xxxxx Xxxxx
|
|
|
Name: Xxxxx
X. Xxxxx
|
|
|
Title: Chief
Executive Officer
|
|
|
INVESTOR:
|
|
|
CORNELL
CAPITAL PARTNERS, LP
|
|
|
By: Yorkville
Advisors, LLC
|
|
|
Its: General
Partner
|
|
|
By:
/s/ Marl Angel
|
|
|
Name: Xxxx
Xxxxxx
|
|
|
Title: Portfolio
Manager
|
|
MI-184893 v4 0950000-0102
EXHIBIT
A
ADVANCE
NOTICE/COMPLIANCE CERTIFICATE
UNICORP
INCORPORATED
The
undersigned, _______________________ hereby certifies, with respect to the
sale
of shares of Common Stock of UNICORP
INCORPORATED
(the
“Company”),
issuable in connection with this Advance Notice and Compliance Certificate
dated
___________________ (the “Notice”),
delivered pursuant to the Standby Equity Distribution Agreement (the
“Agreement”),
as
follows:
1. The
undersigned is the duly elected ______________ of the Company.
2. There
are
no fundamental changes to the information set forth in the Registration
Statement which would require the Company to file a post effective amendment
to
the Registration Statement.
3.
The
Company has performed in all material respects all covenants and agreements
to
be performed by the Company on or prior to the Advance Date related to the
Notice and has complied in all material respects with all obligations and
conditions contained in the Agreement.
4. The
undersigned hereby represents, warrants and covenants that it has made all
filings (“SEC
Filings”)
required to be made by it pursuant to applicable securities laws (including,
without limitation, all filings required under the Securities Exchange Act
of
1934, which include Forms 10-Q, 10-K, 8-K, etc. All SEC Filings and other public
disclosures made by the Company, including, without limitation, all press
releases, analysts meetings and calls, etc. (collectively, the “Public
Disclosures”),
have
been reviewed and approved for release by the Company’s attorneys and, if
containing financial information, the Company’s independent certified public
accountants. None of the Company’s Public Disclosures contain any untrue
statement of a material fact or omit to state any material fact required to
be
stated therein or necessary to make the statements therein, in the light of
the
circumstances under which they were made, not misleading.
5. The
Advance requested is _____________________.
The
undersigned has executed this Certificate this ____ day of
_________________.
UNICORP
INCORPORATED
By:
Name:
Title:
SCHEDULE
2.6
UNICORP
INCORPORATED
The
undersigned hereby agrees that for a period commencing on August 3, 2005 and
expiring on the termination of the Standby Equity Distribution Agreement dated
July ___, 2005 between the Company and the Investor (the “Lock-up
Period”),
he,
she or it will not, directly or indirectly, without the prior written consent
of
the Investor, issue, offer, agree or offer to sell, sell, grant an option for
the purchase or sale of, transfer, pledge, assign, hypothecate, distribute
or
otherwise encumber or dispose of any securities of the Company, including common
stock or options, rights, warrants or other securities underlying, convertible
into, exchangeable or exercisable for or evidencing any right to purchase or
subscribe for any common stock (whether or not beneficially owned by the
undersigned), or any beneficial interest therein (collectively, the
“Securities”)
except
in accordance with the volume limitations set forth in Rule 144(e) of the
General Rules and Regulations under the Securities Act of 1933, as
amended.
In
order
to enable the aforesaid covenants to be enforced, the undersigned hereby
consents to the placing of legends and/or stop-transfer orders with the transfer
agent of the Company’s securities with respect to any of the Securities
registered in the name of the undersigned or beneficially owned by the
undersigned, and the undersigned hereby confirms the undersigned’s investment in
the Company.
Dated:
_______________, 2005
Signature
Name:
____________________________________
Address:
City,
State, Zip Code:
Print
Social Security Number
or
Taxpayer I.D. Number
