SECURITIES PURCHASE AGREEMENT
EXHIBIT 10.6
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This SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of January 16,
2010, by and among ALL FUELS & ENERGY COMPANY, a Delaware corporation, with
headquarters located at 0000 X.X. 00xx Xxxxxx, Xxxxxxxx, Xxxx 00000 (the "Company"), and
XXXXX ENTERPRISES, INC., a Delaware corporation, with its address at 0 Xxxxxx Xxxxx, Xxxxx
000, Xxxxx Xxxx, XX 00000 (the "Buyer").
WHEREAS:
A. The Company and the Buyer is executing and delivering this Agreement in reliance upon the
exemption from securities registration afforded by the rules and regulations as promulgated by
the United States Securities and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended (the "1933 Act");
B. Buyer desires to purchase and the Company desires to issue and sell, upon the terms and
conditions set forth in this Agreement an 8% secured convertible note of the Company, in the
form attached hereto as Exhibit A, in the aggregate principal amount of Sixty Five Thousand
Dollars ($65,000.00)(together with any note(s) issued in replacement thereof or as a dividend
thereon or otherwise with respect thereto in accordance with the terms thereof, the "Note"),
convertible into shares of common stock, $0.01 par value per share, of the Company (the
"Common Stock"), upon the terms and subject to the limitations and conditions set forth in such
Note.
C. The Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, such
principal amount of Note as is set forth immediately below its name on the signature pages
hereto; and
NOW THEREFORE, the Company and the Buyer severally (and not jointly) hereby agree as
follows:
1. Purchase and Sale of Note.
a. Purchase of Note. On the Closing Date (as defined below), the Company shall issue and sell to
the Buyer and the Buyer agrees to purchase from the Company such principal amount of Note as
is set forth immediately below the Buyer's name on the signature pages hereto.
b. Form of Payment. On the Closing Date (as defined below), the Buyer shall pay the purchase
price for the Note to be issued and sold to it at the Closing (as defined below) (the "Purchase
Price") by wire transfer of immediately available funds to the Company, in accordance with the
Company's written wiring instructions, against delivery of the Note in the principal amount equal
to the Purchase Price as is set forth immediately below the Buyer's name on the signature pages
hereto, and the Company shall deliver such duly executed on behalf of the Company, to the
Buyer, against delivery of such Purchase Price.
c. Closing Date. Subject to the satisfaction (or written waiver) of the conditions thereto set forth
in Section 6 and Section 7 below, the date and time of the issuance and sale of the Note pursuant
to this Agreement (the "Closing Date") shall be 12:00 noon, Eastern Standard Time on January
26, 2010, or such other mutually agreed upon time. The closing of the transactions contemplated
by this Agreement (the "Closing") shall occur on the Closing Date at such location as may be
agreed to by the parties.
2. Buyer's Representations and Warranties. The Buyer represents and warrants to the Company
that:
a. Investment Purpose. As of the date hereof, the Buyer is purchasing the Note and the shares of
Common Stock issuable upon conversion of or otherwise pursuant to the Note (including,
without limitation, such additional shares of Common Stock, if any, as are issuable on account
of interest on the Note, as a result of the events described in Sections 1.3 and 1.4(g) of the Note
or in payment of the Standard Liquidated Damages Amount (as defined in Section 2(f) below)
pursuant to this Agreement, such shares of Common Stock being collectively referred to herein
as the "Conversion Shares" and, collectively with the Note, the "Securities") for its own account
and not with a present view towards the public sale or distribution thereof, except pursuant to
sales registered or exempted from registration under the 1933 Act; provided, however, that by
making the representations herein, the Buyer does not agree to hold any of the Securities for any
minimum or other specific term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption under the 1933 Act.
b. Accredited Investor Status. The Buyer is an "accredited investor" as that term is defined in
Rule 501(a) of Regulation D (an "Accredited Investor").
c. Reliance on Exemptions. The Buyer understands that the Securities are being offered and sold
to it in reliance upon specific exemptions from the registration requirements of United States
federal and state securities laws and that the Company is relying upon the truth and accuracy of,
and the Buyer's compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the Securities.
d. Information. The Buyer and its advisors, if any, have been, and for so long as the Note remain
outstanding will continue to be, furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the Securities which
have been requested by the Buyer or its advisors. The Buyer and its advisors, if any, have been,
and for so long as the Note remain outstanding will continue to be, afforded the opportunity to
ask questions of the Company. Notwithstanding the foregoing, the Company has not disclosed to
the Buyer any material nonpublic information and will not disclose such information unless such
information is disclosed to the public prior to or promptly following such disclosure to the Buyer.
Neither such inquiries nor any other due diligence investigation conducted by Buyer or any of its
advisors or representatives shall modify, amend or affect Buyer's right to rely on the Company's
representations and warranties contained in Section 3 below. The Buyer understands that its
investment in the Securities involves a significant degree of risk. The Buyer is not aware of any
facts that may constitute a breach of any of the Company's representations and warranties made
herein.
e. Governmental Review. The Buyer understands that no United States federal or state agency or
any other government or governmental agency has passed upon or made any recommendation or
endorsement of the Securities.
f. Transfer or Re-sale. The Buyer understands that the sale or re-sale of the Securities has not
been and is not being registered under the 1933 Act or any applicable state securities laws, and
the Securities may not be transferred unless the Securities are sold pursuant to an effective
registration statement under the 1933 Act, the Buyer shall have delivered to the Company, at the
cost of the Company, an opinion of counsel that shall be in form, substance and scope customary
for opinions of counsel in comparable transactions to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such registration, which
opinion shall be accepted by the Company, the Securities are sold or transferred to an "affiliate"
(as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) ("Rule 144")) of
the Buyer who agrees to sell or otherwise transfer the Securities only in accordance with this
Section 2(f) and who is an Accredited Investor, the Securities are sold pursuant to Rule 144, or
the Securities are sold pursuant to Regulation S under the 1933 Act (or a successor rule)
("Regulation S"), and the Buyer shall have delivered to the Company, at the cost of the
Company, an opinion of counsel that shall be in form, substance and scope customary for
opinions of counsel in corporate transactions, which opinion shall be accepted by the Company;
(ii) any sale of such Securities made in reliance on Rule 144 may be made only in accordance
with the terms of said Rule and further, if said Rule is not applicable, any re-sale of such
Securities under circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the 0000 Xxx) may require
compliance with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person is under any obligation to
register such Securities under the 1933 Act or any state securities laws or to comply with the
terms and conditions of any exemption thereunder (in each case). Notwithstanding the foregoing
or anything else contained herein to the contrary, the Securities may be pledged as collateral in
connection with a bona fide margin account or other lending arrangement. In the event that the
Company does not accept the opinion of counsel provided by the Buyer with respect to the
transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation
S, within three (3) business days of delivery of the opinion to the Company, the Company shall
pay to the Buyer liquidated damages of five percent (5%) of the outstanding amount of the Note
per day plus accrued and unpaid interest on the Note, prorated for partial months, in cash or
shares at the option of the Buyer ("Standard Liquidated Damages Amount"). If the Buyer elects
to be pay the Standard Liquidated Damages Amount in shares of Common Stock, such shares
shall be issued at the Conversion Price (as defined in the Note) at the time of payment.
g. Legends. The Buyer understands that the Note and, until such time as the Conversion Shares
have been registered under the 1933 Act may be sold pursuant to Rule 144 or Regulation S
without any restriction as to the number of securities as of a particular date that can then be
immediately sold, the Conversion Shares may bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of the certificates for
such Securities):
"NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE
OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL
(WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
(II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES."
The legend set forth above shall be removed and the Company shall issue a certificate without
such legend to the holder of any Security upon which it is stamped, if, unless otherwise required
by applicable state securities laws, (a) such Security is registered for sale under an effective
registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or
Regulation S without any restriction as to the number of securities as of a particular date that can
then be immediately sold, or (b) such holder provides the Company with an opinion of counsel,
in form, substance and scope customary for opinions of counsel in comparable transactions, to
the effect that a public sale or transfer of such Security may be made without registration under
the 1933 Act, which opinion shall be accepted by the Company so that the sale or transfer is
effected or (c) such holder provides the Company with reasonable assurances that such Security
can be sold pursuant to Rule 144 or Regulation S. The Buyer agrees to sell all Securities,
including those represented by a certificate(s) from which the legend has been removed, in
compliance with applicable prospectus delivery requirements, if any.
h. Authorization; Enforcement. This Agreement has been duly and validly authorized. This
Agreement has been duly executed and delivered on behalf of the Buyer, and this Agreement
constitutes a valid and binding agreement of the Buyer enforceable in accordance with its terms.
i. Residency. The Buyer is a resident of the jurisdiction set forth immediately below the Buyer's
name on the signature pages hereto.
3. Representations and Warranties of the Company. The Company represents and warrants to the
Buyer that:
a. Organization and Qualification. The Company and each of its Subsidiaries (as defined below),
if any, is a corporation duly organized, validly existing and in good standing under the laws of
the jurisdiction in which it is incorporated, with full power and authority (corporate and other) to
own, lease, use and operate its properties and to carry on its business as and where now owned,
leased, used, operated and conducted. Schedule 3(a) sets forth a list of all of the Subsidiaries of
the Company and the jurisdiction in which each is incorporated. The Company and each of its
Subsidiaries is duly qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which its ownership or use of property or the nature of the business
conducted by it makes such qualification necessary except where the failure to be so qualified or
in good standing would not have a Material Adverse Effect. "Material Adverse Effect" means
any material adverse effect on the business, operations, assets, financial condition or prospects of
the Company or its Subsidiaries, if any, taken as a whole, or on the transactions contemplated
hereby or by the agreements or instruments to be entered into in connection herewith.
"Subsidiaries" means any corporation or other organization, whether incorporated or
unincorporated, in which the Company owns, directly or indirectly, any equity or other
ownership interest.
b. Authorization; Enforcement. (i) The Company has all requisite corporate power and authority
to enter into and perform this Agreement, the Note and to consummate the transactions
contemplated hereby and thereby and to issue the Securities, in accordance with the terms hereof
and thereof, (ii) the execution and delivery of this Agreement, the Note by the Company and the
consummation by it of the transactions contemplated hereby and thereby (including without
limitation, the issuance of the Note and the issuance and reservation for issuance of the
Conversion Shares issuable upon conversion or exercise thereof) have been duly authorized by
the Company's Board of Directors and no further consent or authorization of the Company, its
Board of Directors, or its shareholders is required, (iii) this Agreement has been duly executed
and delivered by the Company by its authorized representative, and such authorized
representative is the true and official representative with authority to sign this Agreement and the
other documents executed in connection herewith and bind the Company accordingly, and (iv)
this Agreement constitutes, and upon execution and delivery by the Company of the Note, each
of such instruments will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
c. Capitalization. As of the date hereof, the authorized capital stock of the Company consists of
80,000,000 shares of Common Stock, $0.01 par value per share, of which 51,692,703 shares are
issued and outstanding, of which no shares are issued and outstanding, no shares are reserved for
issuance pursuant to the Company's stock option plans; no shares are reserved for issuance
pursuant to securities (other than the Note) exercisable for, or convertible into or exchangeable
for shares of Common Stock and 11,206,897 shares are reserved for issuance upon conversion of
the Note (subject to adjustment pursuant to the Company's covenant set forth in Section 4(g)
below). All of such outstanding shares of capital stock are, or upon issuance will be, duly
authorized, validly issued, fully paid and non-assessable. No shares of capital stock of the
Company are subject to preemptive rights or any other similar rights of the shareholders of the
Company or any liens or encumbrances imposed through the actions or failure to act of the
Company. Except as disclosed in Schedule 3(c), as of the effective date of this Agreement, (i)
there are no outstanding options, warrants, scrip, rights to subscribe for, puts, calls, rights of first
refusal, agreements, understandings, claims or other commitments or rights of any character
whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of
capital stock of the Company or any of its Subsidiaries, 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, (ii) there are no agreements or arrangements under which
the Company or any of its Subsidiaries is obligated to register the sale of any of its or their
securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions
contained in any security issued by the Company (or in any agreement providing rights to
security holders) that will be triggered by the issuance of the Note or the Conversion Shares. The
Company has furnished to the Buyer true and correct copies of the Company's Certificate of
Incorporation as in effect on the date hereof ("Certificate of Incorporation"), 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 of the Company and the material rights of the
holders thereof in respect thereto. The Company shall provide the Buyer with a written update of
this representation signed by the Company's Chief Executive on behalf of the Company as of the
Closing Date.
d. Issuance of Shares. The Conversion Shares are duly authorized and reserved for issuance and,
upon conversion of the Note in accordance with its respective terms, will be validly issued, fully
paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to
the issue thereof and shall not be subject to preemptive rights or other similar rights of
shareholders of the Company and will not impose personal liability upon the holder thereof.
e. Acknowledgment of Dilution. The Company understands and acknowledges the potentially
dilutive effect to the Common Stock upon the issuance of the Conversion Shares upon
conversion of the Note. The Company further acknowledges that its obligation to issue
Conversion Shares upon conversion of the Note in accordance with this Agreement, the Note is
absolute and unconditional regardless of the dilutive effect that such issuance may have on the
ownership interests of other shareholders of the Company.
f. No Conflicts. The execution, delivery and performance of this Agreement, the Note by the
Company and the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the issuance and reservation for issuance of the
Conversion Shares) will not (i) conflict with or result in a violation of any provision of the
Certificate of Incorporation or By-laws or (ii) violate or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which with notice or lapse of time or both could
become a default) under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture, patent, patent license or instrument to which the
Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities laws and regulations
and regulations of any self-regulatory organizations to which the Company or its securities are
subject) applicable to the Company or any of its Subsidiaries or by which any property or asset of
the Company or any of its Subsidiaries is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would not, individually
or in the aggregate, have a Material Adverse Effect). Neither the Company nor any of its
Subsidiaries is in violation of its Certificate of Incorporation, By-laws or other organizational
documents and neither the Company nor any of its Subsidiaries is in default (and no event has
occurred which with notice or lapse of time or both could put the Company or any of its
Subsidiaries in default) under, and neither the Company nor any of its Subsidiaries has taken any
action or failed to take any action that would 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 by which any property or assets of the Company
or any of its Subsidiaries is bound or affected, except for possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect. The businesses of the Company
and its Subsidiaries, if any, are not being conducted, and shall not be conducted so long as a
Buyer owns any of the Securities, in violation of any law, ordinance or regulation of any
governmental entity. Except as specifically contemplated by this Agreement and as required
under the 1933 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,
governmental agency, regulatory agency, self regulatory organization or stock market or any third
party in order for it to execute, deliver or perform any of its obligations under this Agreement, the
Note in accordance with the terms hereof or thereof or to issue and sell the Note in accordance
with the terms hereof and to issue the Conversion Shares upon conversion of the Note. 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 is not in violation of the listing requirements of the Over-the-Counter
Bulletin Board (the "OTCBB") and does not reasonably anticipate that the Common Stock will
be delisted by the OTCBB in the foreseeable future. The Company and its Subsidiaries are
unaware of any facts or circumstances which might give rise to any of the foregoing.
g. SEC Documents; Financial Statements. The Company has timely filed all reports, schedules,
forms, statements and other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act") (all
of the foregoing filed prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents (other than exhibits to such documents)
incorporated by reference therein, being hereinafter referred to herein as the "SEC Documents").
The Company has delivered to the Buyer true and complete copies of the SEC Documents,
except for such exhibits and incorporated documents. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the 1934 Act and the rules
and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none
of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement
of a material fact or omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which they were made,
not misleading. None of the statements made in any such SEC Documents is, or has been,
required to be amended or updated under applicable law (except for such statements as have been
amended or updated in subsequent filings prior the date hereof). As of their respective dates, the
financial statements of the Company included in the SEC Documents 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 United States generally accepted accounting principles, consistently applied,
during the periods involved and fairly present in all material respects the consolidated financial
position of the Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments). Except as set forth in the
financial statements of the Company included in the SEC Documents, the Company has no
liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of
business subsequent to September 30, 2009, and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required under generally
accepted accounting principles to be reflected in such financial statements, which, individually or
in the aggregate, are not material to the financial condition or operating results of the Company.
The Company is subject to the reporting requirements of the 1934 Act.
h. Absence of Certain Changes. Since September 30, 2009, there has been no material adverse
change and no material adverse development in the assets, liabilities, business, properties,
operations, financial condition, results of operations, prospects or 1934 Act reporting status of
the Company or any of its Subsidiaries.
i. Absence of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation
before or by any court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against or
affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as
such, that could have a Material Adverse Effect. Schedule 3(i) contains a complete list and
summary description of any pending or, to the knowledge of the Company, threatened
proceeding against or affecting the Company or any of its Subsidiaries, without regard to whether
it would have a Material Adverse Effect. The Company and its Subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing.
j. Patents, Copyrights, etc. The Company and each of its Subsidiaries owns or possesses the
requisite licenses or rights to use all patents, patent applications, patent rights, inventions,
know-how, trade secrets, trademarks, trademark applications, service marks, service names, trade
names and copyrights ("Intellectual Property") necessary to enable it to conduct its business as
now operated (and, as presently contemplated to be operated in the future); there is no claim or
action by any person pertaining to, or proceeding pending, or to the Company's knowledge
threatened, which challenges the right of the Company or of a Subsidiary with respect to any
Intellectual Property necessary to enable it to conduct its business as now operated (and, as
presently contemplated to be operated in the future); to the best of the Company's knowledge, the
Company's or its Subsidiaries' current and intended products, services and processes do not
infringe on any Intellectual Property or other rights held by any person; and the Company is
unaware of any facts or circumstances which might give rise to any of the foregoing. The
Company and each of its Subsidiaries have taken reasonable security measures to protect the
secrecy, confidentiality and value of their Intellectual Property.
k. No Materially Adverse Contracts, Etc. 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. Neither the Company nor any of its Subsidiaries is a party to any
contract or agreement which in the judgment of the Company's officers has or is expected to have
a Material Adverse Effect.
l. Tax Status. The Company and each of its Subsidiaries has made or filed all federal, state and
foreign income and all other tax returns, reports and declarations required by any jurisdiction to
which it is subject (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) and 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 provisions 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. The Company has not executed a waiver with respect to the statute of
limitations relating to the assessment or collection of any foreign, federal, state or local tax.
None of the Company's tax returns is presently being audited by any taxing authority.
m. Certain Transactions. Except for arm's length transactions pursuant to which the Company or
any of its Subsidiaries makes payments in the ordinary course of business upon terms no less
favorable than the Company or any of its Subsidiaries could obtain from third parties and other
than the grant of stock options disclosed on Schedule 3(c), none of the officers, directors, or
employees of the Company is presently a party to any transaction with the Company or any of its
Subsidiaries (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.
n. Disclosure. All information relating to or concerning the Company or any of its Subsidiaries
set forth in this Agreement and provided to the Buyer pursuant to Section 2(d) hereof and
otherwise in connection with the transactions contemplated hereby is true and correct in all
material respects and the Company has not omitted to state any material fact necessary in order to
make the statements made herein or therein, in light of the circumstances under which they were
made, not misleading. No event or circumstance has occurred or exists with respect to the
Company or any of its Subsidiaries or its or their business, properties, prospects, operations or
financial conditions, which, under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or disclosed
(assuming for this purpose that the Company's reports filed under the 1934 Act are being
incorporated into an effective registration statement filed by the Company under the 1933 Act).
o. Acknowledgment Regarding Buyer' Purchase of Securities. The Company acknowledges and
agrees that the Buyer is acting solely in the capacity of arm's length purchasers with respect to
this Agreement and the transactions contemplated hereby. The Company further acknowledges
that no Buyer is acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated hereby and any
statement made by any Buyer or any of their respective representatives or agents in connection
with this Agreement and the transactions contemplated hereby is not advice or a recommendation
and is merely incidental to the Buyer' purchase of the Securities. The Company further
represents to the Buyer that the Company's decision to enter into this Agreement has been based
solely on the independent evaluation of the Company and its representatives.
p. No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting
on its or their behalf, has directly or indirectly made any offers or sales in any security or
solicited any offers to buy any security under circumstances that would require registration under
the 1933 Act of the issuance of the Securities to the Buyer. The issuance of the Securities to the
Buyer will not be integrated with any other issuance of the Company's securities (past, current or
future) for purposes of any shareholder approval provisions applicable to the Company or its
securities.
q. No Brokers. The Company has taken no action which would give rise to any claim by any
person for brokerage commissions, transaction fees or similar payments relating to this
Agreement or the transactions contemplated hereby.
r. Permits; Compliance. The Company and each of its Subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances, exemptions, consents,
certificates, approvals and orders necessary to own, lease and operate its properties and to carry
on its business as it is now being conducted (collectively, the "Company Permits"), and there is
no action pending or, to the knowledge of the Company, threatened regarding suspension or
cancellation of any of the Company Permits. Neither the Company nor any of its Subsidiaries is
in conflict with, or in default or violation of, any of the Company Permits, except for any such
conflicts, defaults or violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. Since September 30, 2009, neither the Company nor
any of its Subsidiaries has received any notification with respect to possible conflicts, defaults or
violations of applicable laws, except for notices relating to possible conflicts, defaults or
violations, which conflicts, defaults or violations would not have a Material Adverse Effect.
s. Environmental Matters.
(i) There are, to the Company's knowledge, with respect to the Company or any of its
Subsidiaries or any predecessor of the Company, no past or present violations of Environmental
Laws (as defined below), releases of any material into the environment, actions, activities,
circumstances, conditions, events, incidents, or contractual obligations which may give rise to
any common law environmental liability or any liability under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 or similar federal, state, local or foreign laws
and neither the Company nor any of its Subsidiaries has received any notice with respect to any
of the foregoing, nor is any action pending or, to the Company's knowledge, threatened in
connection with any of the foregoing. The term "Environmental Laws" means all federal, state,
local or foreign laws relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata), including, without limitation, laws relating to emissions, discharges, releases
or threatened releases of chemicals, pollutants contaminants, or toxic or hazardous substances or
wastes (collectively, "Hazardous Materials") into the environment, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations
issued, entered, promulgated or approved thereunder.
(ii) Other than those that are or were stored, used or disposed of in compliance with applicable
law, no Hazardous Materials are contained on or about any real property currently owned, leased
or used by the Company or any of its Subsidiaries, and no Hazardous Materials were released on
or about any real property previously owned, leased or used by the Company or any of its
Subsidiaries during the period the property was owned, leased or used by the Company or any of
its Subsidiaries, except in the normal course of the Company's or any of its Subsidiaries'
business.
(iii) There are no underground storage tanks on or under any real property owned, leased or used
by the Company or any of its Subsidiaries that are not in compliance with applicable law.
t. Title to Property. The Company and its Subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal property owned by them
which is material to the business of the Company and its Subsidiaries, in each case free and clear
of all liens, encumbrances and defects except such as are described in Schedule 3(t) or such as
would not have a Material Adverse Effect. 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 would not have a Material Adverse Effect.
u. 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 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 have a Material Adverse Effect. The Company has
provided to Buyer true and correct copies of all policies relating to directors' and officers' liability
coverage, errors and omissions coverage, and commercial general liability coverage.
v. Internal Accounting Controls. The Company and each of its Subsidiaries maintain a system of
internal accounting controls sufficient, in the judgment of the Company's board of directors, 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.
w. Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any director,
officer, agent, employee or other person acting on behalf of the Company or any Subsidiary has,
in the course of his actions for, or on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity;
made any direct or indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; violated or is in violation of any provision of the U.S. Foreign
Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government official or employee.
x. Solvency. The Company (after giving effect to the transactions contemplated by this
Agreement) is solvent (i.e., its assets have a fair market value in excess of the amount required to
pay its probable liabilities on its existing debts as they become absolute and matured) and
currently the Company has no information that would lead it to reasonably conclude that the
Company would not, after giving effect to the transaction contemplated by this Agreement, have
the ability to, nor does it intend to take any action that would impair its ability to, pay its debts
from time to time incurred in connection therewith as such debts mature. The Company did not
receive a qualified opinion from its auditors with respect to its most recent fiscal year end and,
after giving effect to the transactions contemplated by this Agreement, does not anticipate or
know of any basis upon which its auditors might issue a qualified opinion in respect of its current
fiscal year.
y. No Investment Company. The Company is not, and upon the issuance and sale of the
Securities as contemplated by this Agreement will not be an "investment company" required to
be registered under the Investment Company Act of 1940 (an "Investment Company"). The
Company is not controlled by an Investment Company.
z. Breach of Representations and Warranties by the Company. If the Company breaches any of
the representations or warranties set forth in this Section 3, and in addition to any other remedies
available to the Buyer pursuant to this Agreement, the Company shall pay to the Buyer the
Standard Liquidated Damages Amount in cash or in shares of Common Stock at the option of the
Company, until such breach is cured. If the Company elects to pay the Standard Liquidated
Damages Amounts in shares of Common Stock, such shares shall be issued at the Conversion
Price at the time of payment.
4. COVENANTS.
a. Best Efforts. The parties shall use their best efforts to satisfy timely each of the conditions
described in Section 6 and 7 of this Agreement.
b. Form D; Blue Sky Laws. The Company agrees to file a Form D with respect to the Securities
as required under Regulation D and to provide a copy thereof to the Buyer promptly after such
filing. The Company shall, on or before the Closing Date, take such action as the Company shall
reasonably determine is necessary to qualify the Securities for sale to the Buyer at the applicable
closing pursuant to this Agreement under applicable securities or "blue sky" laws of the states of
the United States (or to obtain an exemption from such qualification), and shall provide evidence
of any such action so taken to the Buyer on or prior to the Closing Date.
c. Use of Proceeds. The Company shall use the proceeds from the sale of the Note in the manner
set forth in Schedule 4(d) attached hereto and made a part hereof and shall not, directly or
indirectly, use such proceeds for any loan to or investment in any other corporation, partnership,
enterprise or other person (except in connection with its currently existing direct or indirect
Subsidiaries).
d. Right of First Refusal. Unless it shall have first delivered to the Buyer, at least seventy two
(72) hours prior to the closing of such Future Offering (as defined herein), written notice
describing the proposed Future Offering, including the terms and conditions thereof and
proposed definitive documentation to be entered into in connection therewith, and providing the
Buyer an option during the seventy two (72) hour period following delivery of such notice to
purchase the securities being offered in the Future Offering on the same terms as contemplated
by such Future Offering (the limitations referred to in this sentence and the preceding sentence
are collectively referred to as the "Right of First Refusal") (and subject to the exceptions
described below), the Company will not conduct any equity financing (including debt with an
equity component) ("Future Offerings") during the period beginning on the Closing Date and
ending twelve (12) months following the Closing Date. In the event the terms and conditions of
a proposed Future Offering are amended in any respect after delivery of the notice to the Buyer
concerning the proposed Future Offering, the Company shall deliver a new notice to the Buyer
describing the amended terms and conditions of the proposed Future Offering and the Buyer
thereafter shall have an option during the seventy two (72) hour period following delivery of such
new notice to purchase its pro rata share of the securities being offered on the same terms as
contemplated by such proposed Future Offering, as amended. The foregoing sentence shall apply
to successive amendments to the terms and conditions of any proposed Future Offering. The
Right of First Refusal shall not apply to any transaction involving (i) issuances of securities in a
firm commitment underwritten public offering (excluding a continuous offering pursuant to Rule
415 under the 0000 Xxx) or (ii) issuances of securities as consideration for a merger,
consolidation or purchase of assets, or in connection with any strategic partnership or joint
venture (the primary purpose of which is not to raise equity capital), or in connection with the
disposition or acquisition of a business, product or license by the Company. The Right of First
Refusal also shall not apply to the issuance of securities upon exercise or conversion of the
Company's options, warrants or other convertible securities outstanding as of the date hereof or
to the grant of additional options or warrants, or the issuance of additional securities, under any
Company stock option or restricted stock plan approved by the shareholders of the Company.
e. Expenses. At the Closing, the Company shall reimburse Buyer for expenses incurred by them
in connection with the negotiation, preparation, execution, delivery and performance of this
Agreement and the other agreements to be executed in connection herewith ("Documents"),
including, without limitation, reasonable attorneys' and consultants' fees and expenses, transfer
agent fees, fees for stock quotation services, fees relating to any amendments or modifications of
the Documents or any consents or waivers of provisions in the Documents, fees for the
preparation of opinions of counsel, escrow fees, and costs of restructuring the transactions
contemplated by the Documents. When possible, the Company must pay these fees directly,
otherwise the Company must make immediate payment for reimbursement to the Buyer for all
fees and expenses immediately upon written notice by the Buyer or the submission of an invoice
by the Buyer Notwithstanding anything herein to the contrary, the Company's obligation to
reimburse Buyer' expenses shall be $2,500.
f. Financial Information. The Company agrees to send or make available the following reports to
the Buyer until the Buyer transfers, assigns, or sells all of the Securities: within ten (10) days
after the filing with the SEC, a copy of its Annual Report on Form 10-K its Quarterly Reports on
Form 10-Q and any Current Reports on Form 8-K; within one (1) day after release, copies of all
press releases issued by the Company or any of its Subsidiaries; and contemporaneously with
the making available or giving to the shareholders of the Company, copies of any notices or other
information the Company makes available or gives to such shareholders.
g. Authorization and Reservation of Shares. The Company shall at all times have authorized, and
reserved for the purpose of issuance, a sufficient number of shares of Common Stock to provide
for the full conversion or exercise of the outstanding Note and issuance of the Conversion Shares
in connection therewith (based on the Conversion Price of the Note in effect from time to time)
and as otherwise required by the Note. The Company shall not reduce the number of shares of
Common Stock reserved for issuance upon conversion of Note without the consent of the Buyer.
The Company shall at all times maintain the number of shares of Common Stock so reserved for
issuance at an amount ("Reserved Amount") equal to two times the number that is then actually
issuable upon full conversion of the Note and Additional Note (based on the Conversion Price of
the Note in effect from time to time). If at any time the number of shares of Common Stock
authorized and reserved for issuance ("Authorized and Reserved Shares") is below the Reserved
Amount, the Company will promptly take all corporate action necessary to authorize and reserve
a sufficient number of shares, including, without limitation, calling a special meeting of
shareholders to authorize additional shares to meet the Company's obligations under this Section
4(g), in the case of an insufficient number of authorized shares, obtain shareholder approval of an
increase in such authorized number of shares, and voting the management shares of the Company
in favor of an increase in the authorized shares of the Company to ensure that the number of
authorized shares is sufficient to meet the Reserved Amount. If the Company fails to obtain such
shareholder approval within thirty (30) days following the date on which the number of Reserved
Amount exceeds the Authorized and Reserved Shares, the Company shall pay to the Borrower
the Standard Liquidated Damages Amount, in cash or in shares of Common Stock at the option
of the Buyer. If the Buyer elects to be paid the Standard Liquidated Damages Amount in shares
of Common Stock, such shares shall be issued at the Conversion Price at the time of payment. In
order to ensure that the Company has authorized a sufficient amount of shares to meet the
Reserved Amount at all times, the Company must deliver to the Buyer at the end of every month
a list detailing (1) the current amount of shares authorized by the Company and reserved for the
Buyer; and (2) amount of shares issuable upon conversion of the Note and as payment of interest
accrued on the Note for one year. If the Company fails to provide such list within five (5)
business days of the end of each month, the Company shall pay the Standard Liquidated
Damages Amount, in cash or in shares of Common Stock at the option of the Buyer, until the list
is delivered. If the Buyer elects to be paid the Standard Liquidated Damages Amount in shares
of Common Stock, such shares shall be issued at the Conversion Price at the time of payment.
h. Listing. The Company shall promptly secure the listing of the Conversion Shares upon each
national securities exchange or automated quotation system, if any, upon which shares of
Common Stock are then listed (subject to official notice of issuance) and, so long as any Buyer
owns any of the Securities, shall maintain, so long as any other shares of Common Stock shall be
so listed, such listing of all Conversion Shares from time to time issuable upon conversion of the
Note. The Company will obtain and, so long as any Buyer owns any of the Securities, maintain
the listing and trading of its Common Stock on the OTCBB or any equivalent replacement
exchange, the Nasdaq National Market ("Nasdaq"), the Nasdaq SmallCap Market ("Nasdaq
SmallCap"), the New York Stock Exchange ("NYSE"), or the American Stock Exchange
("AMEX") and will comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Financial Industry Regulatory Authority ("FINRA")
and such exchanges, as applicable. The Company shall promptly provide to the Buyer copies of
any notices it receives from the OTCBB and any other exchanges or quotation systems on which
the Common Stock is then listed regarding the continued eligibility of the Common Stock for
listing on such exchanges and quotation systems.
i. Corporate Existence. So long as a Buyer beneficially owns any Note, the Company shall
maintain its corporate existence and shall not sell all or substantially all of the Company's assets,
except in the event of a merger or consolidation or sale of all or substantially all of the
Company's assets, where the surviving or successor entity in such transaction (i) assumes the
Company's obligations hereunder and under the agreements and instruments entered into in
connection herewith and (ii) is a publicly traded corporation whose Common Stock is listed for
trading on the OTCBB, Nasdaq, Nasdaq SmallCap, NYSE or AMEX.
j. No Integration. The Company shall not make any offers or sales of any security (other than the
Securities) under circumstances that would require registration of the Securities being offered or
sold hereunder under the 1933 Act or cause the offering of the Securities to be integrated with
any other offering of securities by the Company for the purpose of any stockholder approval
provision applicable to the Company or its securities.
k. Breach of Covenants. If the Company breaches any of the covenants set forth in this Section
4, and in addition to any other remedies available to the Buyer pursuant to this Agreement, the
Company shall pay to the Buyer the Standard Liquidated Damages Amount, in cash or in shares
of Common Stock at the option of Buyer, until such breach is cured. If the Buyer elects to pay
the Standard Liquidated Damages Amount in shares, such shares shall be issued at the
Conversion Price at the time of payment.
l. Failure to Comply with the 1934 Act. So long as the Buyer beneficially owns the Note, the
Company shall comply with the reporting requirements of the 1934 Act; and the Company shall
continue to be subject to the reporting requirements of the 1934 Act.
m. Trading Activities. Neither the Buyer nor their affiliates has an open short position in the
common stock of the Company and the Buyer agree that they shall not, and that they will cause
their affiliates not to, engage in any short sales of or hedging transactions with respect to the
common stock of the Company.
5. Transfer Agent Instructions. The Company shall issue irrevocable instructions to its transfer
agent to issue certificates, registered in the name of the Buyer or its nominee, for the Conversion
Shares in such amounts as specified from time to time by the Buyer to the Company upon
conversion of the Note in accordance with the terms thereof (the "Irrevocable Transfer Agent
Instructions"). Prior to registration of the Conversion Shares under the 1933 Act or the date on
which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the
number of Securities as of a particular date that can then be immediately sold, all such
certificates shall bear the restrictive legend specified in Section 2(g) of this Agreement. The
Company warrants that no instruction other than the Irrevocable Transfer Agent Instructions
referred to in this Section 5, and stop transfer instructions to give effect to Section 2(f) hereof (in
the case of the Conversion Shares, prior to registration of the Conversion Shares under the 1933
Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any
restriction as to the number of Securities as of a particular date that can then be immediately
sold), will be given by the Company to its transfer agent and that the Securities shall otherwise be
freely transferable on the books and records of the Company as and to the extent provided in this
Agreement. Nothing in this Section shall affect in any way the Buyer's obligations and
agreement set forth in Section 2(g) hereof to comply with all applicable prospectus delivery
requirements, if any, upon re-sale of the Securities. If a Buyer provides the Company, at the cost
of the Company, with (i) an opinion of counsel in form, substance and scope customary for
opinions in comparable transactions, to the effect that a public sale or transfer of such Securities
may be made without registration under the 1933 Act and such sale or transfer is effected or (ii)
the Buyer provides reasonable assurances that the Securities can be sold pursuant to Rule 144,
the Company shall permit the transfer, and, in the case of the Conversion Shares, promptly
instruct its transfer agent to issue one or more certificates, free from restrictive legend, in such
name and in such denominations as specified by the Buyer. The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the Buyer, by vitiating the
intent and purpose of the transactions contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this Section 5 may be
inadequate and agrees, in the event of a breach or threatened breach by the Company of the
provisions of this Section, that the Buyer shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach and requiring immediate transfer, without the
necessity of showing economic loss and without any bond or other security being required.
6. Conditions to the Company's Obligation to Sell. The obligation of the Company hereunder to
issue and sell the Note to a Buyer at the Closing is subject to the satisfaction, at or before the
Closing Date of each of the following conditions thereto, provided that these conditions are for
the Company's sole benefit and may be waived by the Company at any time in its sole discretion:
a. The Buyer shall have executed this Agreement and delivered the same to the Company.
b. The Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.
c. The representations and warranties of the applicable Buyer shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though made at that
time (except for representations and warranties that speak as of a specific date), and the
applicable Buyer shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed, satisfied or
complied with by the applicable Buyer at or prior to the Closing Date.
d. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have
been enacted, entered, promulgated or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.
7. Conditions to The Buyer's Obligation to Purchase. The obligation of the Buyer hereunder to
purchase the Note at the Closing is subject to the satisfaction, at or before the Closing Date of
each of the following conditions, provided that these conditions are for the Buyer's sole benefit
and may be waived by the Buyer at any time in its sole discretion:
a. The Company shall have executed this Agreement and delivered the same to the Buyer.
b. The Company shall have delivered to the Buyer duly executed Note (in such denominations as
the Buyer shall request) in accordance with Section 1(b) above.
c. The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to a
majority-in-interest of the Buyer, shall have been delivered to and acknowledged in writing by
the Company's Transfer Agent.
d. The representations and warranties of the Company shall be true and correct in all material
respects as of the date when made and as of the Closing Date as though made at such time
(except for representations and warranties that speak as of a specific date) and the Company shall
have performed, satisfied and complied in all material respects with the covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Date. The Buyer shall have received a certificate or
certificates, executed by the chief executive officer of the Company, dated as of the Closing
Date, to the foregoing effect and as to such other matters as may be reasonably requested by the
Buyer including, but not limited to certificates with respect to the Company's Certificate of
Incorporation, By-laws and Board of Directors' resolutions relating to the transactions
contemplated hereby.
e. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have
been enacted, entered, promulgated or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.
f. No event shall have occurred which could reasonably be expected to have a Material Adverse
Effect on the Company including but not limited to a change in the 1934 Act reporting status of
the Company or the failure of the Company to be timely in its 1934 Act reporting obligations.
g. The Conversion Shares shall have been authorized for quotation on the OTCBB and trading in
the Common Stock on the OTCBB shall not have been suspended by the SEC or the OTCBB.
h. The Buyer shall have received an officer's certificate described in Section 3(c) above, dated as
of the Closing Date.
8. Governing Law; Miscellaneous.
a. Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without regard to principles of conflicts of laws. Any action
brought by either party against the other concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of New York or in the federal courts located
in the state and county of Nassau. The parties to this Agreement hereby irrevocably waive any
objection to jurisdiction and venue of any action instituted hereunder and shall not assert any
defense based on lack of jurisdiction or venue or based upon forum non conveniens. The
Company and Holder waive trial by jury. The prevailing party shall be entitled to recover from
the other party its reasonable attorney's fees and costs. In the event that any provision of this
Agreement or any other agreement delivered in connection herewith is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed inoperative to
the extent that it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or unenforceable under any
law shall not affect the validity or enforceability of any other provision of any agreement. Each
party hereby irrevocably waives personal service of process and consents to process being served
in any suit, action or proceeding in connection with this Agreement or any other Transaction
Document by mailing a copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process
in any other manner permitted by law.
b. Counterparts; Signatures by Facsimile. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall constitute one and
the same agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing
the signature of the party so delivering this Agreement.
c. Headings. The headings of this Agreement are for convenience of reference only and shall not
form part of, or affect the interpretation of, this Agreement.
d. Severability. In the event that any provision of this Agreement is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed inoperative to
the extent that it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any
law shall not affect the validity or enforceability of any other provision hereof.
e. Entire Agreement; Amendments. 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 Buyer
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 majority in interest of the Buyer.
f. Notices. All notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall
be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other
address as such party shall have specified most recently by written notice. Any notice or other
communication required or permitted to be given hereunder shall be deemed effective (a) upon
hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting
facsimile machine, at the address or number designated below (if delivered on a business day
during normal business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business day following the date of
mailing by express courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such communications
shall be:
If to the Company, to:
ALL FUELS & ENERGY COMPANY
0000 X.X. 00xx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attn: Xxxx X. Xxxxxxxxx, President and Chief Executive Officer
facsimile: [enter fax number]
With a copy by fax only to (which copy shall not constitute notice):
[enter name of law firm]
Attn: [attorney name]
[enter address line 1]
[enter city, state, zip]
facsimile: [enter fax number]
If to the Buyer:
XXXXX ENTERPRISES, INC.
0 Xxxxxx Xx., Xxxxx 000
Xxxxx Xxxx, XX. 00000
Attn: Xxxx Xxxxxx, President
facsimile: [enter fax number]
With a copy by fax only to (which copy shall not constitute notice):
Naidich Wurman Xxxxxxxx & Mayday LLP
00 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
facsimile: [enter fax number]
Each party shall provide notice to the other party of any change in address.
g. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the
parties and their successors and assigns. Neither the Company nor any Buyer shall assign this
Agreement or any rights or obligations hereunder without the prior written consent of the other.
Notwithstanding the foregoing, subject to Section 2(f), any Buyer may assign its rights hereunder
to any person that purchases Securities in a private transaction from a Buyer or to any of its
"affiliates," as that term is defined under the 1934 Act, without the consent of the Company.
h. Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
i. Survival. The representations and warranties of the Company and the agreements and
covenants set forth in this Agreement shall survive the closing hereunder notwithstanding any
due diligence investigation conducted by or on behalf of the Buyer. The Company agrees to
indemnify and hold harmless each of the Buyer and all their officers, directors, employees and
agents for loss or damage arising as a result of or related to any breach or alleged breach by the
Company of any of its representations, warranties and covenants set forth in this Agreement or
any of its covenants and obligations under this Agreement, including advancement of expenses as
they are incurred.
j. Publicity. The Company, and each of the Buyer shall have the right to review a reasonable
period of time before issuance of any press releases, SEC, OTCBB or FINRA filings, or any
other public statements with respect to the transactions contemplated hereby; provided, however,
that the Company shall be entitled, without the prior approval of each of the Buyer, to make any
press release or SEC, OTCBB (or other applicable trading market) or FINRA filings with respect
to such transactions as is required by applicable law and regulations (although each of the Buyer
shall be consulted by the Company in connection with any such press release prior to its release
and shall be provided with a copy thereof and be given an opportunity to comment thereon).
k. Further Assurances. Each party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the transactions
contemplated hereby.
l. No Strict Construction. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of strict construction
will be applied against any party.
m. Remedies. The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Buyer by vitiating the intent and purpose of the transaction
contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Agreement will be inadequate and agrees, in the event of a
breach or threatened breach by the Company of the provisions of this Agreement, that the Buyer
shall be entitled, in addition to all other available remedies at law or in equity, and in addition to
the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing
any breach of this Agreement and to enforce specifically the terms and provisions hereof, without
the necessity of showing economic loss and without any bond or other security being required.
IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused this
Agreement to be duly executed as of the date first above written.
ALL FUELS & ENERGY COMPANY
By: /s/
Xxxx X. Xxxxxxxxx
President and Chief Executive Officer
XXXXX ENTERPRISES, INC.
By: /s/
Name: Xxxx Xxxxxx
Title: President
0 Xxxxxx Xx., Xxxxx 000
Xxxxx Xxxx, XX. 00000
AGGREGATE SUBSCRIPTION AMOUNT:
Aggregate Principal Amount of Note: $65,000.00
Aggregate Purchase Price: $65,000.00
