BUSINESS ADVISORY AGREEMENT
Exhibit 10.2
This Agreement is made and entered into as of this 26th day of May 2009 (the “Effective Date”)
between iGambit, Inc. a Delaware corporation with its principal offices at 00 Xxxx Xxxxx Xxxxxxx,
XX 00000 (the “Company”) and Newbridge Securities Corporation, a Virginia corporation with its
principal offices at 0000 Xxxx Xxxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxx Xxxxxxxxxx, XX 00000 (the
“Advisor”).
WHEREAS, the Company is seeking certain services and advice regarding the Company’s business
and financing activities; and
WHEREAS, the Advisor is willing to furnish certain business and financial related advice and
services to the Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual terms and covenants contained herein, and for
other good and valuable consideration, the receipt of which is hereby acknowledged, the parties
agree as follows:
1. Purpose. The Company hereby engages the Advisor on a non-exclusive basis for the
term specified in this agreement to render financial and business advisory consulting advice to the
Company as a financial advisor relating to financial and similar matters upon the terms and
conditions set forth herein.
2. Representations of the Advisor. The Advisor represents and warrants to the Company
that it is a member in good standing of the Financial Industry Regulatory Authority (“FINRA”) and
that it is engaged in the securities brokerage business; (b) in addition to its securities
brokerage business, the Advisor provides consulting advisory services; and (c) it is free to enter
into this Agreement and the services to be provided pursuant to this Agreement are not in conflict
with any other contractual or other obligation to which the Advisor is bound. The Company
acknowledges that the Advisor is in the securities business and may provide financial and business
consulting services and advice of the type contemplated by this Agreement to others, and that
nothing contained herein shall be construed to limit or restrict the Advisor in providing such
services or advice to others.
3. Duties of the Advisor. During the term of this Agreement, the Advisor will provide
the Company with consulting advice as specified below at the request of the Company, provided that
the Advisor shall not be required to undertake duties not reasonably within the scope of the
consulting advisory service in which the Advisor is engaged generally. In the performance of these
duties, the Advisor shall provide the Company with the benefits of its best judgment and efforts,
and the Advisor cannot and does not guarantee or promise that its efforts will have any impact on
the business of the Company or that any subsequent improvement will result from the efforts of the
Advisor. It is understood and acknowledged by the parties that the value of the Advisor’s advice
is not measurable in any quantitative manner, and that the amount of time spent rendering such
consulting advice shall be determined according to the Advisor’s discretion. The Advisor’s duties
may include, but will not necessarily be limited to, rendering the following services to the
Company:
(a) Study and review the business, operations, historical financial performance of the Company
(based upon information provided to the Advisor by management) so as to enable the Advisor to
provide advice to the Company;
(b) Assist the Company in attempting to formulate the optimum strategy to meet the Company’s
working capital and capital resource needs during the term of this Agreement;
(c) Assist the Company in seeking to identify and evaluate potential merger and acquisition
candidates for the Company and, in appropriate instances, negotiate on the Company’s behalf;
(d) Assist in the introduction of the Company to institutional or other capital financing
sources;
(e) Assist in the formulation of the terms and structure of any reasonable proposed equity or
debt financing or business transaction involving the Company;
(f) Newbridge, upon request, will seek out and recommend financial events (such as
conferences, seminars, etc...) in order for the Company to maximize its awareness to the financial
community and
(g) Newbridge, upon request, will assist the Company in appropriately positioning itself with
the financial community as to its sector and advantages to its peers.
4. Term. Subject to the termination provisions set forth in paragraph 16 hereof, the
term of this Agreement shall be for one (1) year commencing from the date of this Agreement (the
“Term”); provided, however, that this Agreement may be renewed or extended upon such terms and
conditions as may be mutually agreed upon by the parties hereto. This Agreement shall terminate,
however, in the event that the Advisor is no longer a member in good standing of FINRA.
5. Advisory Fee.
(a) As compensation for the services to be rendered by Advisor hereunder, Company
agrees to pay to Advisor a $5000 non-refundable retainer due upon the Effective Date and
$5000 per month, the first such payment to be due no later than thirty (30) days from the
Commencement Date and thereafter, on the same date for each month in which such a payment
is due, provider however that this agreement is not cancelled as per Sections 4, and 16.
(b) As additional compensation for the services to be rendered by Advisor hereunder, the
Company agrees to issue 500,000 shares of the Company’s restricted common stock (the “Shares”) to
Advisor at a purchase price of $.50 per share;
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(c) As additional compensation for the services to be rendered by Advisor hereunder the
Company also agrees to issue one or more warrants (each, a “Warrant”),
substantially in the form attached hereto as Exhibit A (the “Warrant Agreement”), to acquire
up to 1,500,000 shares of common stock (the “Warrant Shares”) in three (3) equal tranches of
500,000 shares with exercise prices of $.,65 $.80, and $1.15, respectively. Each Warrant will be
exercisable for a period of 7 years following the date of issuance of such Warrant;
(d) The Shares and Warrants and rights provided under Section 5(e) shall be deemed earned as
follows: 1/3rd, 12 months from the Effective Date, 1/3rd, 24 months from the
Effective Date and 1/3rd, 36 months from the Effective Date.
6. Financing Fee and Right of First Refusal.
(a) In the event the Advisor effects, underwrites or introduces a financing by offering or
selling any of the securities of the Company, in a private or public debt and/or equity
transaction, pursuant to which the Company obtains financing or other consideration, the Advisor
shall receive a Financing Fee in addition to the Advisory Fee and any other fee to be received
pursuant to this Agreement, which shall be mutually determined between the Company and the Advisor
at the time of any such Financing.
(b) For the Term of this Agreement and 18 months thereafter, the Company shall provide the
Advisor a right of first refusal to provide all public and/or private financings to the Company as
set forth in paragraph 10(d)
7. Transaction Finder’s Fee.
(a) In connection with any transaction (“Transaction”) consummated by the Company during the
period ending two years from the termination of this Agreement in which the Advisor during the term
of this Agreement introduced the other party (except for any party identified by the Company on a
schedule to be provided contemporaneously with the execution of this Agreement) to the Company, the
Company will pay to the Advisor a Transaction Fee (“Transaction Fee”) based on the aggregate
consideration received or to be paid by the Company in connection with such Transaction, and
computed as follows: (i) 6% of the first million dollars or part thereof; 5% of the next million
dollars or part thereof; 4% of the next million dollars or part thereof; 3% of the next million
dollars of part thereof and 2% of the balance of the value of the transaction, or (ii) as otherwise
mutually agreed to in writing by the parties (the formula can be increased). The Transaction Fee
will be payable in the same forms and proportions as the aggregate consideration disbursed or
received by the Company, unless otherwise mutually agreed to in writing by the parties.
(b) As used herein, the term “aggregate consideration” shall be deemed to be the total amount
disbursed or received by the Company (which shall be deemed to include amounts paid into escrow) in
connection with a Transaction.
(c) A Transaction Fee is payable in the event of and upon the closing of a Transaction;
provided, however, that if the aggregate consideration consists of or may be increased by future
payments or contingent payments related to future earnings or operations, the Company, in its
discretion, shall have the choice to either (i) pay that portion of the Transaction Fee at closing
based on the present value of any future and/or contingent payments calculated as at closing or
(ii) pay that portion of the Transaction Fee calculated and paid when and as such
future and/or contingent payments are made to the Company; provided further, however, that
even if the Company exercises its discretion under clause (ii) above, the entire Transaction Fee
due to the Advisor will be paid within twenty-four (24) months of the date this Agreement is
terminated, regardless of whether the Company has then received all payments that are to be made to
the Company in connection with the Transaction.
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8. Use of Name and Advice. The Company agrees that any reference to Advisor in any
release, communication or other material is subject to Advisor’s prior written approval, which may
be given or withheld in its sole discretion and which will expire immediately upon Advisor’s
resignation or the termination of this Agreement. No statements made or advice rendered by Advisor
in connection with the services performed by Advisor pursuant to this Agreement will be quoted by,
nor will any such statements or advice be referred to, in any communication, whether written or
oral, prepared, issued or transmitted, directly or indirectly, by the Company without the prior
written authorization of Advisor, which may be given or withheld in its sole discretion, except to
the extent required by law (in which case the appropriate party shall so advise Advisor in writing
prior to such use and shall consult with Advisor with respect to the form and timing of
disclosure).
9. Representations and Warranties of the Company. Set forth on Exhibit C are the
representations and warranties of the Company.
10. Covenants of the Company. The Company covenants and agrees with Advisor that:
(a) During the Term of this Agreement, the Company will deliver to the Advisor:
(i) as soon as they are available, copies of all reports (financial or other) mailed to
shareholders;
(ii) as soon as they are available, copies of all reports and financial statements furnished
to or filed with the Commission, FINRA or any securities exchange;
(iii) every press release and every material news item or article of interest to the financial
community in respect of the Company or its affairs which was prepared and released by or on behalf
of the Company; and
(iv) any additional information of a public nature concerning the Company (and any future
subsidiaries) or its businesses which the Advisor may reasonably request.
(b) During the Term of this Agreement, the Company will provide to a designated representative
of Advisor’s investment banking team, a quarterly current client list and shareholder list, which
will be treated at all times as “Confidential Information” as defined in that certain
Confidentiality Agreement between the Company and the Advisor.
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(c) During the Term of this Agreement, the Company will allow the Advisor to nominate an
observer to the Board of Directors of the Company. The choice of such person
shall be subject to the approval of the Company, which approval shall not unreasonably be
withheld. All out-of-pocket expenses incurred by that person shall be reimbursed by the Company
who will not receive compensation different from the other non-officer directors; provided,
however, that any single expense item in excess of $1,000 shall be pre-approved by the Company.
(d) During the Term of this Agreement and for a period of 18 months thereafter, the Company
will give the Advisor a right of first refusal to provide all future public and/or private
financings to the Company, provided that any such financings are made on terms and conditions at
least as favorable to the Company as is otherwise available to the Company from other sources.
11. Costs and Expenses. In addition to the fees payable hereunder, the Company shall
reimburse the Advisor, within five (5) business days of its request, for any and all reasonable
out-of-pocket expenses incurred in connection with the services performed by the Advisor under this
Agreement; provided, however, that any single expense item in excess of $1,000 shall be
pre-approved by the Company.
12. Company Information. The Company recognizes and confirms that, in advising the
Company and in fulfilling its engagement hereunder, the Advisor will use and rely on data, material
and other information furnished to the Advisor by the Company (the “Company Information”). The
Company acknowledges and agrees that in performing its services under this engagement, the Advisor
may rely upon the Company Information without independently verifying the accuracy, completeness or
veracity of same. The parties further acknowledge that the Advisor shall have no responsibility
for the accuracy of any statements to be made by Company management contained in press releases or
other communications, including, but not limited to, filings with the SEC and FINRA. In addition,
in the performance of its services, the Advisor may look to such others for factual information,
economic advice and/or research upon which to base its advice to the Company hereunder as the
Advisor shall in good xxxxx xxxx appropriate.
13. Indemnification.
(a) The Company agrees to indemnify and hold harmless the Advisor, each person who controls
the Advisor within the meaning of Section 15 of the Act or Section 20 of the Securities Exchange
Act of 1934, as amended, and the Advisor’s officers, directors, employees, accountants, attorneys
and agents (the “Advisor’s Indemnitees”) against any and all losses, claims, expenses, damages or
liabilities, joint or several, to which they or any of them may become subject (including the costs
of any investigation and all reasonable attorneys’ fees and costs) or incurred by them, to the
fullest extent lawful, in connection with any pending or threatened litigation, legal claim or
proceeding, whether or not resulting in any liability, arising out of or in connection with the
services rendered by the Advisor or any transactions in connection with this Agreement; provided,
however, that the Indemnitee agreement contained in this Section 12(a) shall not apply to any such
losses, claims, related expenses, damages or liabilities arising out of gross negligence, willful
misconduct or fraud of the Advisor, or a material breach of the Advisor’s representations and
warranties hereunder.
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(b) The Advisor agrees to indemnify and hold harmless the Company and its officers, directors,
employees, accountants, attorneys and agents (the “Company’s Indemnitees”) against any and all
losses, claims, expenses, damages or liabilities, joint or several, to which they or any of them
may become subject (including the costs of any investigation and all reasonable attorneys’ fees and
costs) or incurred by them, to the fullest extent lawful, in connection with any pending or
threatened litigation, legal claim or proceeding, whether or not resulting in any liability,
arising out of gross negligence, willful misconduct or fraud of the Advisor; provided, however,
that the Indemnitee agreement contained in this Section 12(b) shall not apply to any such losses,
claims, related expenses, damages or liabilities arising out of the gross negligence, willful
misconduct or fraud of the Company, or a material breach of the Company’s representations and
warranties hereunder. In addition, Advisor and Advisor’s Indemnitees shall not have any liability
to the Company or Company Indemnitees in connection with the services rendered pursuant to the
Agreement except for any liability for claims, liabilities, losses or damages finally judicially
determined to have resulted solely as a result of the gross negligence or willful misconduct of
Advisor or Advisor’s Indemnitees. In no event shall Advisor or Advisor’s Indemnitees be
responsible for any special, indirect, punitive or consequential damages.
(c) Each Advisor’s Indemnitee or Company’s Indemnitee, as the case may be (an “Indemnified
Person”), shall give prompt written notice to the Company or the Advisor, as appropriate (the
“Indemnifying Party”), after the receipt by such Indemnified Person of any written notice of the
commencement of any action, suit or proceeding for which such Indemnified Person will claim
indemnification or contribution pursuant to this Agreement. The Indemnifying Party shall have the
right, exercisable by giving written notice to an Indemnified Person within twenty (20) business
days after the receipt of written notice from such Indemnified Person of such commencement, to
assume, at its expense, the defense of any such action, suit or proceeding; provided, however, that
an Indemnified Person shall have the right to employ counsel in any such action, suit or
proceeding, and to participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless: (i) the Indemnifying Party fails to
assume the defense of such action, suit or proceeding or fails to employ separate counsel
reasonably satisfactory to such Indemnified Person in any such action, suit or proceeding; or (ii)
the Indemnifying Party and such Indemnified Person shall have been advised by counsel that there
may be one or more defenses available to such Indemnified Person which are in conflict with,
different from or additional to those available to the Indemnifying Party, or another Indemnified
Person, as the case may be (in which case, if such Indemnified Person notifies the Indemnifying
Party in writing that it elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the defense of such action, suit
or proceeding on behalf of such Indemnified Person); it being understood, however, that the
Indemnifying Party shall not, in connection with any one such action or proceeding of separate but
substantially similar or related actions or proceedings arising out of the same general allegations
or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time acting for each Indemnified Person in any one
jurisdiction. The Indemnifying Party shall not settle or compromise or consent to the entry of any
judgment in or otherwise seek to terminate any pending or threatened action, claim, suit or
proceeding in which any Indemnified Person is a party and as to which indemnification or
contribution has been sought by such Indemnified Person hereunder, unless such Indemnified Person
has given its prior written consent or the
settlement, compromise, consent or termination includes an express unconditional release of
such Indemnified Person, satisfactory in form and substance to such Indemnified Person, from all
losses, claims, damages or liabilities arising out of such action, claim, suit or proceeding.
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(d) If for any reason the Indemnitee provided for in this Section 12 is unavailable to an
Indemnified Person or insufficient to hold an Indemnified Person harmless, then the Indemnifying
Party, to the fullest extent permitted by law, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such claims, liabilities, losses, damages or expenses in
such proportion as its appropriate to reflect (i) the relative benefits received by the Company on
one hand and by the Advisor on the other, from the transaction or proposed transaction under this
Agreement and (ii) the relative fault of the Company and the Advisor, as well as any relevant
equitable considerations. The relative fault of the Company on the one hand and the Advisor on the
other shall be determined by reference to, among other things, whether any untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a material fact relates
to information supplied by the Company or by the Advisor. The Indemnitee, contribution and expense
reimbursement obligations set forth herein (i) shall be in addition to any liability an
Indemnifying Party may have to any Indemnified Person at common law of otherwise, (ii) shall
survive the termination of this Agreement, (iii) shall apply to any modification of this Agreement
and shall remain in full force and effect following the completion or termination of the Agreement,
(iv) shall remain operative and in full force and effect regardless of any investigation made by or
on behalf of the Advisor or any other Indemnified Person, and (v) shall be binding on any successor
or assign of the Company or the Advisor and the respective successors or assigns to all or
substantially all of the Company’s or the Advisor’s business and assets.
(e) In the performance of its services, the Advisor shall be obligated to act only in good
faith, and shall not be liable to the Company for errors in judgment that are not the result of
gross negligence or willful misconduct.
14. Use of Advice by the Company. The Company acknowledges that all opinions and
advice (written or oral) given by the Advisor to the Company in connection with the engagement of
the Advisor are intended solely for the benefit and use of the Company in considering the matters
to which they relate, and the Company agrees that no person or entity other than the Company and
its Board of Directors shall be entitled to make, use or rely upon the advice of the Advisor to be
given hereunder, and no such opinion or advice shall be used for any other purpose, or reproduced,
disseminated, quoted or referred to at any time, in any manner or for any purpose, not may the
Company make any public references to the Advisor, or use the Advisor’s name in any reports or
releases of the Company without the Advisor’s prior written consent.
The Company acknowledges that the Advisor makes no representations or commitment whatsoever as
to making a market in the Company’s securities or recommending or advising its clients, or any
other persons, to purchase the Company’s securities. Research reports or corporate business
reports that may be prepared by the Advisor will, when and if prepared, be done solely on the
merits and the judgment and analysis of the Advisor or any of its senior personnel.
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15. The Advisor as an Independent Contractor. The Advisor shall perform its services
hereunder as an independent contractor and not as an employee of the Company or an affiliate
thereof. It is expressly understood and agreed to by the parties hereto that the Advisor shall
have no authority to act for, represent or bind the Company or any affiliate thereof, in any
manner, except as may be agreed to expressly by the Company in writing from time to time.
16. Termination. This Agreement may be terminated by either party upon thirty (30)
days written notice; provided, however, that all compensation (including any amounts to become due
on account of a Financing Fee or Transaction Fee) due or to become due after the effective date of
such termination shall be unaffected by such termination. Unless otherwise specifically provided,
termination of this Agreement shall not affect the Advisor’s rights under the Warrant Agreement (as
set forth in paragraph 5 hereof).
17. Representations, Warranties and Agreements to Survive. The respective
indemnities, agreements, representations, warranties and other statements of the Company and the
Advisor set forth in or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of the Advisor, the Company, or any of their
respective officers or directors.
18. Notices. All communications hereunder will be in writing and, except as otherwise
expressly provided herein, sent by overnight mail, to the Company at: IGambit, Inc. 00 Xxxx Xxxxx
Xxxxxxx, XX 00000 Attn: Xxxx Xxxxxxx and to the Advisor at: Newbridge Securities Corporation, 0000
Xxxx Xxxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxx Xxxxxxxxxx, XX 00000, Attn: Xxxxxxx X. Xxxxxxxxx
19. Parties in Interest. This Agreement is made solely for the benefit of the Advisor
and the Company, and their respective controlling persons, directors and officers, and their
respective successors, assigns, executors and administrators. No other person shall acquire or
have any right under or by virtue of this Agreement.
20. Headings. The section headings in this Agreement have been inserted as a matter
of convenience of reference and are not a part of this Agreement.
21. Applicable Law; Venue and Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, without giving effect to conflict of
law principles. Any action arising out of this agreement shall be brought exclusively in a court
of competent jurisdiction located in Broward County, Florida, and the parties hereby irrevocably
submit to the personal jurisdiction of such courts, and waive any objection they now or hereafter
may have to the laying of venue in such courts.
22. Integration. This Agreement constitutes the entire agreement and understanding of
the parties hereto, and supersedes any and all previous agreements and understandings, whether oral
or written, between the parties with respect to the matters set forth herein. No provision of this
Agreement may be amended, modified or waived, except in a writing signed by all of the parties
hereto.
23. Counterparts. This Agreement may be executed in any number of counterparts, each
of which together shall constitute one and the same instrument.
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24. Authority. This Agreement has been duly authorized, executed and delivered by and
on behalf of the Company and the Advisor.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of
the day and year first above written.
| THE COMPANY iGambit, Inc. |
||||
| By: | /s/ Xxxx Xxxxxxx | |||
| Xxxx Xxxxxxx | ||||
| Chairman, CEO | ||||
| THE ADVISOR Newbridge Securities Corporation |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxxxx | |||
| Xxxxxxx X. Xxxxxxxxx | ||||
| Director of Investment Banking | ||||
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DISCLOSURE SCHEDULE
EXHIBIT C
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Advisor as follows:
(a) The Company has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the state of its incorporation, with full corporate power and authority
to own its properties and conduct its business and is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which the nature of its business or the
character or location of its properties requires such qualification, except where the failure to so
qualify would not have a material adverse effect on the business, properties or operations of the
Company and its subsidiaries as a whole.
(b) The Company has full legal right, power and authority to enter into this Agreement, and to
consummate the transactions provided for herein, and this Agreement, when executed by the Company,
will constitute a valid and binding agreement, enforceable in accordance with its terms (except as
the enforceability thereof may be limited by bankruptcy or other similar laws affecting the rights
of creditors generally or by general equitable principles and except as the enforcement of
indemnification provisions may be limited by federal or state securities laws).
(c) Except as disclosed in the Company’s public filings or on the Disclosure Schedule attached
hereto (“Disclosure Schedule”), the Company is not in violation of its articles of incorporation or
bylaws or in default in the performance or observance of any material obligation, agreement,
covenant or condition contained in any material bond, debenture, note or other evidence of
indebtedness or in any material contract, indenture, mortgage, loan agreement, lease, joint
venture, partnership or other agreement or instrument to which the Company is a party or by which
it may be bound or is not in material violation of any law, order, rule, regulation, writ,
injunction or decree of any governmental instrumentality or court, domestic or foreign; and the
execution and delivery of this Agreement and the consummation of the transactions contemplated
therein and will not conflict with, or result in a material breach of any of the terms, conditions
or provisions of, or constitute a material default under, or result in the imposition of any
material lien, charge or encumbrance upon any of the property or assets of the Company pursuant to,
any material bond, debenture, note or other evidence of indebtedness or any material contract,
indenture, mortgage, loan agreement, lease, joint venture, partnership or other agreement or
instrument to which the Company is a party nor will such action result in the material violation by
the Company of any of the provisions of its articles of incorporation or bylaws or any law, order,
rule, regulation, writ, injunction, decree of any government, governmental instrumentality or
court, domestic or foreign, except where such violation will not have a material adverse effect on
the financial condition of the Company.
(d) The authorized, issued and outstanding capital stock of the Company is as disclosed in
writing to the Advisor and all of the shares of issued and outstanding capital stock of the Company
set forth therein have been duly authorized, validly issued and are fully paid and nonassessable;
the holders thereof do not have any rights of rescission with respect therefor and are not subject
to personal liability for any obligations of the Company by reason of being
stockholders under the laws of the State in which the Company is incorporated; and none of
such outstanding capital stock is subject to or was issued in violation of any preemptive or
similar rights of any stockholder of the Company.
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(e) Except as disclosed in the Company’s public filings or on the Disclosure Schedule, the
Company is not a party to or bound by any instrument, agreement or other arrangement providing for
it to issue any capital stock, rights, warrants, options or other securities, except for this
Agreement and as disclosed in writing to the Advisor. Upon the issuance and delivery pursuant to
the terms hereof of any securities to the Advisor, the Advisor will acquire good and marketable
title to such securities free and clear of any lien, charge, claim, encumbrance, pledge, security
interest, defect or other restriction of any kind whatsoever other than restrictions as may be
imposed under the securities laws.
(f) Except as disclosed in the Company’s public filings or on the Disclosure Schedule, the
Company has good and marketable title to all of its properties and assets as owned by it, free and
clear of all liens, charges, encumbrances or restrictions, except as disclosed in writing to the
Advisor or which are not materially significant or important in relation to its business or which
have been incurred in the ordinary course of business.
(g) The financial information contained in the Company’s public filings fairly presents the
financial position and results of operations of the Company at the respective dates and for the
respective periods to which they apply. Said information has been prepared in accordance with
generally accepted accounting principles applied on a basis which is consistent in all material
respects during the periods involved, except in the case of unaudited financial statements’ normal
recurring adjustments.
(h) There has been no material adverse change or material development involving a prospective
adverse change in the condition, financial or otherwise, or in the prospects, value, operation,
properties, business or results of operations of the Company whether or not arising in the ordinary
course of business.
(i) To the knowledge of the Company, except as disclosed in the Company’s public filings or on
the Disclosure Schedule, there is no pending or threatened, action, suit or proceeding to which the
Company is a party before or by any court or governmental agency or body, which might result in any
material adverse change in the financial condition or business of the Company as a whole or might
materially and adversely affect the properties or assets of the Company as a whole nor are there
any actions, suits or proceedings against the Company related to environmental matters or related
to discrimination on the basis of age, sex, religion or race which might be expected to materially
and adversely affect the conduct of the business, property, operations, financial condition or
earnings of the Company as a whole; and no labor disturbance by the employees of the Company exists
or is, to the knowledge of the Company, imminent which might be expected to materially and
adversely affect the conduct of the business, property, operations, financial condition or earnings
of the Company as a whole.
(j) Except as disclosed in the Company’s public filings or on the Disclosure Schedule, the
Company has properly prepared and filed all necessary federal, state, local and foreign income and
franchise tax returns, has paid all taxes shown as due thereon, has established
adequate reserves for such taxes which are not yet due and payable, and does not have any tax
deficiency or claims outstanding, proposed or assessed against it.
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(k) The Company has sufficient licenses, permits, right to use trade or service marks and
other governmental authorizations currently required for the conduct of its business as now being
conducted and the Company is in all material respects complying therewith. To its knowledge, none
of the activities or businesses of the Company are in material violation of, or cause the Company
to materially violate any law, rule, regulations, or order of the United States, any state, county
or locality, or of any agency or body of the United States or of any state, county or locality.
(l) The Company knows of no outstanding claims for services either in the nature of a finder’s
fee, brokerage fee or otherwise with respect to this Agreement for which the Company or the Advisor
may be responsible.
(m) The Company has its property adequately insured against loss or damage.
(n) To the best of the Company’s knowledge it has generally enjoyed a satisfactory
employer-employee relationship with its employees and, to the best of its knowledge, is in
substantial compliance in all material respects with all federal, state, local, and foreign laws
and regulations respecting employment and employment practices, terms and conditions of employment
and wages and hours.
(o) Except as disclosed in the Company’s public filings or on the Disclosure Schedule, no
officer or director of the Company, holder of 5% or more of securities of the Company or any
affiliate of any of the foregoing persons or entities has or has had, either directly or
indirectly, (i) an interest in any person or entity which (A) furnishes or sells services or
products which are furnished or sold or are proposed to be furnished or sold by the Company, or (B)
purchases from or sells or furnishes to the Company any goods or services, or (ii) a beneficiary
interest in any contract or agreement to which the Company is a party or by which it may be bound
or affected.
(p) The minute books of the Company have been made available to the Advisor and contain a
complete summary of all meetings and actions of the directors and stockholders of the Company,
since the time of its incorporation and reflect all transactions referred to in such minutes
accurately in all respects.
(q) Except as disclosed in the Company’s public filings or on the Disclosure Schedule, no
holders of any securities of the Company or of any options, warrants or other convertible or
exchangeable securities of the Company have the right to include any securities issued by the
Company in any registration statement to be filed by the Company or to require the Company to file
a registration statement under the Act and no person or entity holds any anti-dilution rights with
respect to any securities of the Company.
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