SECURITIES PURCHASE AGREEMENT
EXHIBIT
10.1
THIS SECURITIES PURCHASE AGREEMENT
(this “Agreement”), dated as
of December 31, 2007, by and among C-Xxxx International, Inc., a
South Carolina corporation, with headquarters located at 0000 X. Xxx Xxxxx,
Xxxxx 000, Xxxxxxx, XX 00000 (the “Company”), and the
Buyers listed on Schedule I attached hereto (individually, a “Buyer” or
collectively “Buyers”).
WHEREAS, the Company and the
Buyer(s) are executing and delivering this Agreement in reliance upon an
exemption from securities registration pursuant to Section 4(2) and/or
Rule 506 of Regulation D (“Regulation D”) as
promulgated by the U.S. Securities and Exchange Commission (the “SEC”) under the
Securities Act of 1933, as amended (the “1933
Act”);
WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
shall issue and sell to the Buyer(s), as provided herein, and the Buyer(s) shall
purchase Three Million Five Hundred Thousand Dollars ($3,500,000) of secured
convertible debentures (the “Convertible
Debentures”), which shall be convertible into shares of the Company’s
common stock, par value $.0001 (the “Common Stock”) (as
converted, the “Conversion Shares”),
for a total purchase price Three Million Five Hundred Thousand Dollars
($3,500,000), (the “Purchase Price”) in
the respective amounts set forth opposite each Buyer(s) name on Schedule I (the
“Subscription
Amount”); and
Prior to
the date of this Agreement, the Buyer(s) have purchased certain other
convertible debentures from the Company, and the outstanding amount owed to
Buyer(s) on such previously issued convertible debentures equals Two Million
Five Hundred Twenty Five Thousand Dollars ($2,525,000) (the “Prior Convertible
Debentures”); and
In
connection with this Agreement, at the Closing (as defined herein) the Prior
Convertible Debentures shall be cancelled and simultaneous with the cancellation
of such Prior Convertible Debentures the Purchase Price shall be credited by the
Two Million Five Hundred Twenty Five Thousand Dollars ($2,525,000) outstanding
under the Prior Convertible Debentures and the Buyer(s) shall purchase an
additional Nine Hundred Seventy-Five Thousand Dollars ($975,000) (the
“Commitment Amount”) of Convertible Debentures.
WHEREAS, contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement substantially in the
form attached hereto as Exhibit A (the “Investor Registration Rights
Agreement”) pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
there under, and applicable state securities laws; and
WHEREAS, the aggregate
proceeds of the sale of the Convertible Debentures contemplated hereby shall be
held in escrow pursuant to the terms of an escrow agreement substantially in the
form of the Escrow Agreement attached hereto as Exhibit B;
and
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10.1 - continued
WHEREAS, the parties hereto
previously executed and delivered Irrevocable Transfer Agent Instructions
substantially in the form attached hereto as Exhibit C (the “Irrevocable Transfer Agent
Instructions”); and
WHEREAS, contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Security Agreement substantially in the form attached
hereto as Exhibit
D (the “Security Agreement”)
pursuant to which the Company has agreed to provide the Buyer a security
interest in Pledged Collateral (as this term is defined in the Security
Agreement dated the date hereof) to secure Company’s obligations under this
Agreement, the Convertible Debenture, the Investor Registration Rights
Agreement, the Irrevocable Transfer Agent Instructions, the Security Agreement
or any other obligations of the Company to the Buyer; and
WHEREAS, contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering Irrevocable Transfer Agent Instructions (the “Irrevocable Transfer Agent
Instructions”)
NOW, THEREFORE, in
consideration of the mutual covenants and other agreements contained in this
Agreement the Company and the Buyer(s) hereby agree as follows:
(a)
Purchase of
Convertible Debentures. Subject to the satisfaction (or
waiver) of the terms and conditions of this Agreement, each Buyer agrees,
severally and not jointly, to purchase at Closing (as defined herein below) and
the Company agrees to sell and issue to each Buyer, severally and not jointly,
at Closing, Convertible Debentures in amounts corresponding with the
Subscription Amount set forth opposite each Buyer’s name on Schedule I
hereto. Upon execution hereof by a Buyer, the Buyer shall wire
transfer the Subscription Amount set forth opposite his name on Schedule I in
same-day funds or a check payable to: “Xxxxx X. Xxxxxxx XX, P.A. as Escrow Agent
for C-Xxxx International, Inc./Trafalgar Capital Investment Fund”, which
Subscription Amount shall be held in escrow pursuant to the terms of the Escrow
Agreement (as hereinafter defined) and disbursed in accordance
therewith. Notwithstanding the foregoing, a Buyer may withdraw his
Subscription Amount and terminate this Agreement as to such Buyer at any time
after the execution hereof and prior to Closing (as hereinafter
defined).
(b)
Closing
Date. The Closing of the purchase and sale of the Convertible
Debentures shall take place at 10:00 a.m. Eastern Standard Time on the date
hereof, subject to notification of satisfaction of the conditions to the Closing
set forth herein and in Sections 6 and 7 below (or such later date as is
mutually agreed to by the Company and the Buyer(s)) (the “Closing Date”),
The Closing shall occur on their respective Closing Dates at the
offices of Xxxxx X. Xxxxxxx XX, P.A., 0000 Xxxxxxxx Xxx, Xxxx Xxxxx,
XX 00000 (or such other place as is mutually agreed to by the Company
and the Buyer(s)).
(c)
Escrow Arrangements;
Form of Payment. Upon execution hereof by Buyer(s) and pending
the Closing, the aggregate proceeds of the sale of the Convertible Debentures to
Buyer(s) pursuant hereto shall be deposited in a non-interest bearing
escrowaccount
with Xxxxx X. Xxxxxxx XX, P.A., as escrow agent (the “Escrow Agent”),
pursuant to the terms of an escrow agreement between the Company, the Buyer(s)
and the Escrow Agent in the form attached hereto as Exhibit B (the “Escrow
Agreement”). Subject to the satisfaction of the terms and
conditions of this Agreement, on the Closing Dates, (i) the Escrow Agent shall
deliver to the Company in accordance with the terms of the Escrow Agreement such
aggregate proceeds for the Convertible Debentures to be issued and sold to such
Buyer(s), minus the fees and expenses as set forth herein which shall be paid
directly from the gross proceeds held in escrow at each Closing by wire transfer
of immediately available funds and (ii) the Company shall deliver to each
Buyer, Convertible Debentures which such Buyer(s) is purchasing in amounts
indicated opposite such Buyer’s name on Schedule I, duly executed on behalf of
the Company.
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(d)
“Closing Date Exchange Rate” means the Euro to US dollar spot exchange rate as
quoted in the London edition of the Financial Times on the Closing
Date.
(e)
“Repayment
Exchange Rate” means in relation to
each date of a Conversion Notice or date of a Redemption Notice, the Euro to US dollar spot
exchange rate as quoted by in the London edition of the Financial Times on such
date.
(f)
If on the date of any Conversion Notice or Redemption Notice, the Repayment
Exchange Rate is less than the Closing Date Exchange Rate then the number of
Shares to be issued shall be increased by the same percentage as results from
dividing the Closing Date Exchange Rate by the relevant Repayment Exchange Rate.
By way of example, if the number of Shares to be issued in respect of a
particular Conversion Notice or Redemption Notice would, but for this Clause
1(f), be 1,000 and if the Closing Date Exchange Rate is 1.80 and the relevant
Repayment Exchange Rate is 1.75, then 1,029 Shares will be issued in relation to
that Conversion Notice or Redemption Notice, as the case may be.
(g)
If on the Repayment Date or any Interest Repayment Date, the Cash Payment Date
Exchange Rate, as defined below is less than the Closing Date Exchange Rate then
the amount of cash required to satisfy the amounts due at such time shall be
increased by the same percentage as results from dividing the Closing Date
Exchange Rate by the relevant Cash Payment Date Exchange Rate. “Cash Payment
Date Exchange Rate” means in relation to each
Repayment Date or Interest Repayment Date the Euro to US dollar spot
exchange rate as quoted in the London edition of the Financial Times on such
date. By way of example, if the amount of cash required to repay all
amounts due on such date would, but for this Clause 1(g), be $1,000 and if the
Closing Date Exchange Rate is 1.80 and the relevant Repayment Date Exchange Rate
is 1.75 then the amount of cash from the Cash Payment required to repay all
amounts due on such date will be $1,028.57.
Each
Buyer represents and warrants, severally and not jointly, that:
(a)
Investment
Purpose. Each Buyer is acquiring the Convertible Debentures
and, upon conversion of Convertible Debentures, the Buyer will acquire
theConversion
Shares then issuable, for its own account for investment only and not with a
view towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under the 1933 Act;
provided, however, that by making the representations herein, such Buyer
reserves the right to dispose of the Conversion Shares at any time in accordance
with or pursuant to an effective registration statement covering such Conversion
Shares or an available exemption under the 1933 Act.
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(b)
Accredited Investor
Status. Each Buyer is an “Accredited Investor”
as that term is defined in Rule 501(a)(3) of Regulation D.
(c)
Reliance on
Exemptions. Each Buyer understands that the Convertible
Debentures are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy of, and
such Buyer’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire such securities.
(d)
Information. Each
Buyer and its advisors (and his or, its counsel), if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and information he deemed material to making an informed investment
decision regarding his purchase of the Convertible Debentures and the Conversion
Shares, which have been requested by such Buyer. Each Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company and its management. Neither such inquiries nor any other due
diligence investigations conducted by such Buyer or its advisors, if any, or its
representatives shall modify, amend or affect such Buyer’s right to rely on the
Company’s representations and warranties contained in Section 3
below. Each Buyer understands that its investment in the Convertible
Debentures and the Conversion Shares involves a high degree of
risk. Each Buyer is in a position regarding the Company, which, based
upon employment, family relationship or economic bargaining power, enabled and
enables such Buyer to obtain information from the Company in order to evaluate
the merits and risks of this investment. Each Buyer has sought such
accounting, legal and tax advice, as it has considered necessary to make an
informed investment decision with respect to its acquisition of the Convertible
Debentures and the Conversion Shares.
(e)
No Governmental
Review. Each Buyer understands that no United States federal
or state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Convertible Debentures or the
Conversion Shares, or the fairness or suitability of the investment in the
Convertible Debentures or the Conversion Shares, nor have such authorities
passed upon or endorsed the merits of the offering of the Convertible Debentures
or the Conversion Shares.
(f)
Transfer
or Resale. Each Buyer understands that except as provided in
the Investor Registration Rights Agreement: (i) the Convertible Debentures have
not been and are not being registered under the 1933 Act or any state securities
laws, and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, or (B) such Buyer shall have delivered to
the Company an opinion of counsel, in a generally acceptable form, to the
effect that such securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration
requirements; (ii) any sale of such securities made in reliance on Rule 144
under the 1933 Act (or a successor rule thereto) (“Rule 144”)
may be made only in accordance with the terms of Rule 144 and further, if Rule
144 is not applicable, any resale of such securities under circumstances in
which the seller (or the person through whom the sale is made) may be
deemed to be an underwriter (as that term is 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. The Company reserves the right to place stop
transfer instructions against the shares and certificates for the Conversion
Shares.
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(g)
Legends. Each
Buyer understands that the certificates or other instruments representing the
Convertible Debentures and or the Conversion Shares shall bear a restrictive
legend in substantially the following form (and a stop transfer order may
be placed against transfer of such stock certificates):
| THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS. |
The
legend set forth above shall be removed and the Company within two (2) business
days shall issue a certificate without such legend to the holder of the
Conversion Shares upon which it is stamped, if, unless otherwise required by
state securities laws, (i) in connection with a sale transaction, provided the
Conversion Shares are registered under the 1933 Act or (ii) in connection with a
sale transaction, after such holder provides the Company with an opinion of
counsel, which opinion shall be in form, substance and scope customary for
opinions of counsel in comparable transactions, to the effect that a public
sale, assignment or transfer of the Conversion Shares may be made without
registration under the 1933 Act.
(h)
Authorization,
Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of such Buyer and is a valid and
binding agreement of such Buyer enforceable in accordance with its terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors’ rights and remedies.
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(i)
Receipt of
Documents. Each Buyer and his or its counsel has received and
read in their entirety: (i) this Agreement and each representation,
warranty and covenant set forth herein, the Security Agreement, the Investor
Registration Rights Agreement, the Escrow Agreement, and the Irrevocable
transfer Agent Instructions; (ii) all due diligence and other information
necessary to verify the accuracy and completeness of such representations,
warranties and covenants; and (iii) answers to all questions each Buyer
submitted to the Company regarding an investment in the Company; and each Buyer
has relied on the information contained therein and has not been furnished any
other documents, literature, memorandum or prospectus.
(j)
Due Formation of
Corporate and Other Buyers. If the Buyer(s) is a corporation,
trust, partnership or other entity that is not an individual person, it has been
formed and validly exists and has not been organized for the specific purpose of
purchasing the Convertible Debentures and is not prohibited from doing
so.
(k)
No Legal Advice From
the Company. Each Buyer acknowledges, that it had the
opportunity to review this Agreement and the transactions contemplated by this
Agreement with his or its own legal counsel and investment and tax
advisors. Each Buyer is relying solely on such counsel and advisors
and not on any statements or representations of the Company or any of its
representatives or agents for legal, tax or investment advice with respect to
this investment, the transactions contemplated by this Agreement or the
securities laws of any jurisdiction.
The
Company represents and warrants as of the date hereof and as of each Closing
Date to each of the Buyers that:
(a)
Organization and
Qualification. The Company and its subsidiaries are
corporations duly organized and validly existing in good standing under the laws
of the jurisdiction in which they are incorporated, and have the requisite
corporate power to own their properties and to carry on their business as now
being conducted. Each of the Company and its subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries taken as a whole.
(b)
Authorization,
Enforcement, Compliance with Other Instruments. (i) The
Company has the requisite corporate power and authority to enter into and
perform this Agreement, the Security Agreement, the Investor Registration Rights
Agreement, the Escrow Agreement, the Irrevocable Transfer Agent Instructions,
and any related agreements, and to issue the Convertible Debentures and the
Conversion Shares in accordance with the terms hereof and thereof, (ii) the
execution and delivery of this Agreement, the Security Agreement, the Investor
Registration Rights Agreement, the Escrow Agreement, the Irrevocable Transfer
AgentInstructions
(as defined herein) and any related agreements by the Company and the
consummation by it of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Convertible Debentures, the
Conversion Shares and the reservation for issuance and the 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 is required by the Company, its Board of Directors or its
stockholders, (iii) this Agreement, the Security Agreement, the Investor
Registration Rights Agreement, the Escrow Agreement, the Irrevocable Transfer
Agent Instructions and any related agreements have been duly executed and
delivered by the Company, (iv) this Agreement, the Security Agreement, the
Investor Registration Rights Agreement, the Escrow Agreement, the Irrevocable
Transfer Agent Instructions and any related agreements constitute the valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors’ rights and remedies. The authorized officer
of the Company executing this Agreement, the Security Agreement, the Investor
Registration Rights Agreement, the Escrow Agreement, the Irrevocable Transfer
Agent Instructions and any related agreements knows of no reason why the Company
cannot file the registration statement as required under the Investor
Registration Rights Agreement or perform any of the Company’s other obligations
under such documents.
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(c)
Capitalization. The
authorized capital stock of the Company consists of 500 million shares of Common
Stock, par value $.0001 per share and no shares of Preferred
Stock. As of the date hereof, the Company has 90,470,000 shares of
Common Stock and no shares of Preferred Stock issued and
outstanding. All of such outstanding shares have been validly issued
and are fully paid and nonassessable. No shares of Common Stock are
subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company. As of the date of
this Agreement, (i) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries, (ii) there are no outstanding debt securities and (iii) there are
no agreements or arrangements under which the Company or any of its subsidiaries
is obligated to register the sale of any of their securities under the 1933 Act
(except pursuant to the Registration Rights Agreement) and (iv) there are no
outstanding registration statements and there are no outstanding comment letters
from the SEC or any other regulatory agency. There are no securities
or instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Convertible Debentures as described in this
Agreement. The Company has furnished to the Buyer true and correct
copies of the Company’s Certificate of Incorporation, as amended and as in
effect on the date hereof (the “Certificate of
Incorporation”), and the Company’s By-laws, as in effect on the date
hereof (the “By-laws”), and the
terms of all securities convertible into or exercisable for Common Stock and the
material rights of the holders thereof in respect thereto other than stock
options issued to employees and consultants.
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(d)
Issuance of
Securities. The Convertible Debentures are duly authorized
and, upon issuance in accordance with the terms hereof, shall be duly issued,
fully paid and nonassessable, are free from all taxes, liens and charges with
respect to the issue thereof. The Conversion Shares issuable upon
conversion of the Convertible Debentures have been duly authorized and reserved
for issuance. Upon conversion or exercise in accordance with the
Convertible Debentures the Conversion Shares will be duly issued, fully paid and
nonassessable.
(e)
No
Conflicts. The execution, delivery and performance of this
Agreement, the Security Agreement, the Investors Registration Rights Agreement,
the Escrow Agreement and the Irrevocable Transfer Agent Instructions by the
Company and the consummation by the Company of the transactions contemplated
hereby will not (i) result in a violation of the Certificate of Incorporation,
any certificate of designations of any outstanding series of preferred stock of
the Company or the By-laws or (ii) conflict with or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations and, once the Company’s common stock is quoted on the OTC
Bulletin Board, the rules and regulations of The National Association of
Securities Dealers Inc.’s OTC Bulletin Board) 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. Neither the Company nor its
subsidiaries is in violation of any term of or in default under its Certificate
of Incorporation or By-laws or their organizational charter or by-laws,
respectively, or any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries. The
business of the Company and its subsidiaries is not being conducted, and shall
not be conducted in violation of any material 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 or governmental agency in
order for it to execute, deliver or perform any of its obligations under or
contemplated by this Agreement or the Registration Rights Agreement in
accordance with the terms hereof or thereof. All consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof. The Company and its subsidiaries are
unaware of any facts or circumstance, which might give rise to any of the
foregoing.
(f)
[reserved]
(g)
None of the Company’s public statements and none of the information provided to
the Buyers include any untrue statements of material fact, nor do they omit to
state any material fact required to be stated therein necessary to make the
statements made, in light of the circumstances under which they were made, not
misleading.
(h)
Absence
of Litigation. There is no action, suit, proceeding, inquiry
or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending against or affecting the
Company, the Common Stock or any of the Company’s subsidiaries, wherein an
unfavorable decision, ruling or finding would (i) have a material adverse effect
on the transactions contemplated hereby (ii) adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of the documents contemplated herein,
or (iii) except as expressly disclosed in the SEC Documents, have a material
adverse effect on the business, operations, properties, financial condition or
results of operations of the Company and its subsidiaries taken as a
whole.
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(i)
Acknowledgment
Regarding Buyer’s Purchase of the Convertible Debentures. The
Company acknowledges and agrees that the Buyer(s) is acting solely in the
capacity of an arm’s length purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges
that the Buyer(s) is not 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 advice given by the Buyer(s) or any of
their respective representatives or agents in connection with this Agreement and
the transactions contemplated hereby is merely incidental to such Buyer’s
purchase of the Convertible Debentures or the Conversion Shares. 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 by the
Company and its representatives.
(j)
No General
Solicitation. Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the 0000 Xxx) in connection with the offer or sale of the Convertible Debentures
or the Conversion Shares.
(k)
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 of any security or solicited any offers to buy any security,
under circumstances that would require registration of the Convertible
Debentures or the Conversion Shares under the 1933 Act or cause this offering of
the Convertible Debentures or the Conversion Shares to be integrated with prior
offerings by the Company for purposes of the 1933 Act.
(l)
Employee
Relations. Neither the Company nor any of its subsidiaries is
involved in any labor dispute nor, to the knowledge of the Company or any of its
subsidiaries, is any such dispute threatened. None of the Company’s
or its subsidiaries’ employees is a member of a union and the Company and its
subsidiaries believe that their relations with their employees are
good.
(m)
Intellectual
Property Rights. The Company and its subsidiaries own or
possess adequate rights or licenses to use all trademarks, trade names, service
marks, service xxxx registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, governmental authorizations, trade
secrets and rights necessary to conduct their respective businesses as now
conducted. The Company and its subsidiaries do not have any knowledge
of any infringement by the Company or its subsidiaries of trademark, trade name
rights, patents, patent rights, copyrights, inventions, licenses, service names,
service marks, service xxxx registrations, trade secret or other similar rights
of others, and, to the knowledge of the Company there is no claim, action
or proceeding being made or brought against, or to the Company’s knowledge,
being threatened against, the Company or its subsidiaries regarding trademark,
trade name, patents, patent rights, invention, copyright, license, service
names, service marks, service xxxx registrations, trade secret or other
infringement; and the Company and its subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.
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(n)
Environmental
Laws. The Company and its subsidiaries are (i) in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”),
(ii) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval.
(o)
Title. Any
real property and facilities held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
subsidiaries.
(p)
Insurance. The
Company and each of its subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its subsidiaries are engaged. Neither the
Company nor any such subsidiary has been refused any insurance coverage sought
or applied for and neither the Company nor any such subsidiary has any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not materially
and adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and its subsidiaries, taken as a
whole.
(q)
Regulatory
Permits. The Company and its subsidiaries possess all material
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
(r)
Internal Accounting
Controls. The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, and (iii)
the recorded amounts for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(s)
No
Material Adverse Breaches, 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 on the business, properties, operations, financial
condition, results of operations or prospects of the Company or its
subsidiaries. Neither the Company nor any of its subsidiaries is in
breach of any contract or agreement which breach, in the judgment of the
Company’s officers, has or is expected to have a material adverse effect on the
business, properties, operations, financial condition, results of operations or
prospects of the Company or its subsidiaries.
10
EXHIBIT
10.1 - continued
(t)
Tax
Status. The Company and each of its subsidiaries has made and
filed all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject and (unless and
only to the extent that the Company and each of its subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know of no basis for any such claim.
(u)
Certain
Transactions. Except for arm’s length transactions pursuant to
which the Company makes payments in the ordinary course of business upon terms
no less favorable than the Company could obtain from third parties and other
than the grant of stock options disclosed in the SEC Documents, none of the
officers, directors, or employees of the Company is presently a party to any
transaction with the Company (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
(v)
Fees and Rights of
First Refusal. The Company is not obligated to offer the
securities offered hereunder on a right of first refusal basis or otherwise to
any third parties including, but not limited to, current or former shareholders
of the Company, underwriters, brokers, agents or other third
parties.
(w)
Borrowing Base
Compliance Formula. The Borrowing Base Compliance Formula as
set forth below shall at all times be a minimum of Two Hundred Fifty Percent
(250%). The Borrowing Base Compliance Formula shall equal the sum of
the backlog, receivables and current projects divided by the sum of the trade
payables (which for purposes of this formula shall include the principal balance
due under the Convertible Debentures) and cost of goods to complete the current
projects and cost of goods to complete the backlog. In the event the
Company is not in compliance with the Borrowing Base Compliance Formula, it
shall be obligated to reduce the principal balance due under the Convertible
Debentures to an amount that will bring it into compliance.
11
EXHIBIT
10.1 - continued
(x)
Borrowing Base
Certificate. The Company shall produce a monthly report
acceptable in form and substance to the Buyer(s) within fifteen (15) days of the
end of each month. The report shall calculate the Borrowing Base
Compliance Formula and document any excess capacity.
4.
COVENANTS.
(a)
Best
Efforts. Each party shall use its best efforts timely to
satisfy each of the conditions to be satisfied by it as provided in Sections 6
and 7 of this Agreement.
(b)
Form
D. The Company agrees to file a Form D with respect to the
Conversion Shares as required under Regulation D and to provide a copy thereof
to each 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 Conversion Shares, or obtain an exemption
for the Conversion Shares for sale to the Buyers at the Closing pursuant to this
Agreement under applicable securities or “Blue Sky” laws of the states of the
United States, and shall provide evidence of any such action so taken to the
Buyers on or prior to the Closing Date.
(c)
Reporting
Status. Until the earlier of (i) the date as of which the
Buyer(s) may sell all of the Conversion Shares without restriction pursuant to
Rule 144(k) promulgated under the 1933 Act (or successor thereto), or (ii) the
date on which (A) the Buyer(s) shall have sold all the Conversion Shares and (B)
none of the Convertible Debentures are outstanding (the “Registration
Period”), the Company shall file in a timely manner all reports required
to be filed with the SEC pursuant to the 1934 Act and the regulations of the SEC
thereunder, and the Company shall not terminate its status as an issuer required
to file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.
(d)
Use of
Proceeds. The Company will use the proceeds from the sale of
the Convertible Debentures to satisfy the obligations of the outstanding
receivables and for working capital purposes.
(e)
Reservation of
Shares. The Company shall take all action reasonably necessary
to at all times have authorized, and reserved for the purpose of issuance, such
number of shares of Common Stock as shall be necessary to effect the issuance of
the Conversion Shares. If at any time the Company does not have
available such shares of Common Stock as shall from time to time be sufficient
to effect the conversion of all of the Conversion Shares of the Company, the
Company shall call and hold a special meeting of the shareholders within thirty
(30) days of such occurrence, for the sole purpose of increasing the number of
shares authorized. The Company’s management shall recommend to the
shareholders to vote in favor of increasing the number of shares of Common Stock
authorized. Management shall also vote all of its shares in favor of
increasing the number of authorized shares of Common Stock.
(f)
Listings
or Quotation. The Company shall promptly secure the listing or
quotation of the Conversion Shares upon each national securities exchange,
automated quotation system or The National Association of Securities Dealers
Inc.’s Over-The-Counter Bulletin Board (“OTCBB”)
or other market, if any, upon which shares of Common Stock are then listed or
quoted (subject to official notice of issuance) and shall use its best efforts
to 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 under the terms
of this Agreement. The Company shall maintain the Common Stock’s
authorization for quotation on the OTCBB.
12
EXHIBIT
10.1 - continued
(g)
Fees and
Expenses.
(i)
Each of the Company and the Buyer(s) shall pay all costs and expenses incurred
by such party in connection with the negotiation, investigation, preparation,
execution and delivery of this Agreement, the Escrow Agreement, the Investor
Registration Rights Agreement, the Security Agreement and the Irrevocable
Transfer Agent Instructions.
(ii)
The Company shall pay the Buyer a commitment fee of six percent (6%) of the
Commitment Amount, which shall be paid directly from the proceeds disbursed at
Closing.
(iii)
The Company has agreed to pay a structuring fee to Buyer of Fifteen Thousand
Dollars ($15,000).
(iv)
The Company shall issue to the
Buyer a warrant to purchase seven million five hundred thousand (7,500,000)
shares of the Company’s Common Stock for a period of five (5) years at an
exercise price equal to $0.001 per share (the “Warrants”). The Warrants shall be issued in full
at the Closing and shall be exercised on a cash basis provided that the Company
is not in Default and the shares underlying the Warrants are subject to an
effective registration statement.
(h)
Corporate
Existence. So long as any of the Convertible Debentures remain
outstanding, the Company shall not directly or indirectly consummate any merger,
reorganization, restructuring, reverse stock split consolidation, sale of all or
substantially all of the Company’s assets or any similar transaction or related
transactions (each such transaction, an “Organizational
Change”) unless, prior to the consummation an Organizational Change, the
Company obtains the written consent of each Buyer. In any such case,
the Company will make appropriate provision with respect to such holders’ rights
and interests to insure that the provisions of this Section 4(h) will thereafter
be applicable to the Convertible Debentures.
(i)
Transactions With
Affiliates. So long as any Convertible Debentures are
outstanding, the Company shall not, and shall cause each of its subsidiaries not
to, enter into, amend, modify or supplement, or permit any subsidiary to enter
into, amend, modify or supplement any agreement, transaction, commitment, or
arrangement with any of its or any subsidiary’s officers, directors, person who
were officers or directors at any time during the previous two (2) years,
stockholders who beneficially own five percent (5%) or more of the Common Stock,
or Affiliates (as defined below) or with any individual related by blood,
marriage, or adoption to any such individual or with any entity in which any
such entity or individual owns a five percent (5%) or more beneficial interest
(each a “Related
Party”), except for (a) customary employment arrangements and benefit
programs on reasonable terms, (b) any investment in an Affiliate of the
Company, (c) any agreement, transaction, commitment, or arrangement
on an arms-length basis on terms no less favorable than terms which would have
been obtainable from a person other than such Related Party, (d) any agreement
transaction, commitment, or arrangement which is approved by a majority of the
disinterested directors of the Company, for purposes hereof, any director who is
also an officer of the Company or any subsidiary of the Company shall not be a
disinterested director with respect to any such agreement, transaction,
commitment, or arrangement. “Affiliate” for
purposes hereof means, with respect to any person or entity, another person or
entity that, directly or indirectly, (i) has a ten percent (10%) or more equity
interest in that person or entity, (ii) has ten percent (10%) or more common
ownership with that person or entity, (iii) controls that person or entity, or
(iv) shares common control with that person or entity. “Control” or “controls” for
purposes hereof means that a person or entity has the power, direct or indirect,
to conduct or govern the policies of another person or entity.
13
EXHIBIT
10.1 - continued
(j)
Transfer
Agent. The Company covenants and agrees that, in the event
that the Company’s agency relationship with the transfer agent should be
terminated for any reason prior to a date which is two (2) years after the
Closing Date, the Company shall immediately appoint a new transfer agent and
shall require that the new transfer agent execute and agree to be bound by the
terms of the Irrevocable Transfer Agent Instructions (as defined
herein).
(k)
Restriction on
Issuance of the Capital Stock. So long as any Convertible Debentures are
outstanding, the Company shall not, without the prior written consent of the
Buyer(s), (i) issue or sell shares of Common Stock or Preferred Stock without
consideration or for a consideration per share less than the bid price of the
Common Stock determined immediately prior to its issuance, (ii) issue any
preferred stock, warrant, option, right, contract, call, or other security
instrument granting the holder thereof, the right to acquire Common Stock
without consideration or for a consideration less than such Common Stock’s bid
price value determined immediately prior to it’s issuance, (iii) enter into any
security instrument granting the holder a security interest in any and all
assets of the Company, or (iv) file any registration statement on Form
S-8.
(l)
Restriction
on “Short” Position. Neither the
Buyernor any of its
affiliates have an open short position in the Common Stock of the Company, and
the Buyeragrees that it shall not, and that it
will cause its affiliates not to, engage in any short sales with respect to the
Common Stock as long as any Convertible Debentures shall remain
outstanding.
The
Company shall issue the Irrevocable Transfer Agent Instructions to its transfer
agent irrevocably appointing Xxxxx X. Xxxxxxx XX, P.A. as its agent for purpose
of having certificates issued, registered in the name of the Buyer(s) or its
respective nominee(s), for the Conversion Shares representing such amounts of
Convertible Debentures as specified from time to time by the Buyer(s) to the
Company upon conversion of the Convertible Debentures, for interest owed
pursuant to the Convertible Debenture, and for any and all Liquidated Damages
(as this term is defined in the Investor Registration Rights
Agreement). Xxxxx X. Xxxxxxx XX, P.A. shall be paid a cash fee
of One Hundred Dollars ($100) for every occasion they act pursuant to the
Irrevocable Transfer Agent Instructions. The Company shall not change
its transfer agent without the express written consent of the Buyer(s), which
may be withheld by the Buyer(s) in its sole discretion. Prior to
registration of the Conversion Shares under the 1933 Act, 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(g) hereof (in the case of the
Conversion Shares prior to registration of such shares under the 0000 Xxx) will
be given by the Company to its transfer agent and that the Conversion Shares
shall otherwise be freely transferable on the books and records of the Company
as and to the extent provided in this Agreement and the Investor Registration
Rights Agreement. Nothing in this Section 5 shall affect in any way
the Buyer’s obligations and agreement to comply with all applicable securities
laws upon resale of Conversion Shares. If the Buyer(s) provides the
Company with an opinion of counsel, in form, scope and substance customary for
opinions of counsel in comparable transactions to the effect that registration
of a resale by the Buyer(s) of any of the Conversion Shares is not required
under the 1933 Act, the Company shall within two (2) business days instruct its
transfer agent to issue one or more certificates 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 transaction contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law
for a breach of its obligations under this Section 5 will be inadequate and
agrees, in the event of a breach or threatened breach by the Company of the
provisions of this Section 5, that the Buyer(s) shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach and requiring immediate issuance and transfer, without the necessity of
showing economic loss and without any bond or other security being required.
14
EXHIBIT
10.1 - continued
The
obligation of the Company hereunder to issue and sell the Convertible Debentures
to the Buyer(s) at the Closing is subject to the satisfaction, at or before the
Closing Dates, of each of the following conditions, 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)
Each Buyer shall have executed this Agreement, the Security Agreement, the
Escrow Agreement and the Investor Registration Rights Agreement and the
Irrevocable Transfer Agent Instructions and delivered the same to the
Company.
(b)
The Buyer(s) shall have delivered to the Escrow Agent the Purchase Price for
Convertible Debentures in respective amounts as set forth next to each Buyer as
outlined on Schedule I attached hereto and the Escrow Agent shall have delivered
the net proceeds to the Company by wire transfer of immediately available U.S.
funds pursuant to the wire instructions provided by the Company.
(c)
The representations and warranties of the Buyer(s) shall be true and correct in
all material respects as of the date when made and as of the Closing Dates as
though made at that time (except for representations and warranties that speak
as of a specific date), and the Buyer(s) 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 Buyer(s) at or prior to the Closing Dates.
15
EXHIBIT
10.1 - continued
(d)
The Company shall have filed a form UCC-1 with regard to the Pledged Property
and Pledged Collateral as detailed in the Security Agreement dated the date
hereof and provided proof of such filing to the Buyer(s).
The
obligation of the Buyer(s) hereunder to purchase the Convertible Debentures at
the Closing is subject to the satisfaction, at or before the Closing Date, of
each of the following conditions:
(a)
The Company shall have executed this Agreement, the Security Agreement, the
Convertible Debenture, the Escrow Agreement, the Irrevocable Transfer
Instructions and the Investor Registration Rights Agreement, and delivered the
same to the Buyer(s).
(b)
The Common Stock shall be authorized for quotation on the OTCBB within one
hundred fifty (150) days from the date of the Closing.
(c)
The representations and warranties of the Company shall be true and correct in
all material respects (except to the extent that any of such representations and
warranties is already qualified as to materiality in Section 3 above, in which
case, such representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the Closing Dates as
though made at that 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 Dates. If requested by the Buyer, the Buyer
shall have received a certificate, executed by the President of the Company,
dated as of the Closing Dates, to the foregoing effect and as to such other
matters as may be reasonably requested by the Buyer including, without
limitation an update as of the Closing Dates regarding the representation
contained in Section 3(c) above.
(d)
The Company shall have executed and delivered to the Buyer(s) the Convertible
Debentures in the respective amounts set forth opposite each Buyer(s) name on
Schedule I attached hereto.
(e)
The Buyer(s) shall have received an opinion of counsel from counsel to the
Company in a form satisfactory to the Buyer(s).
(f)
The Company shall have provided to the Buyer(s) a certificate of good standing
from the secretary of state from the state in which the company is
incorporated.
(g)
As of the Closing Date, the Company shall have reserved out of its authorized
and unissued Common Stock, solely for the purpose of effecting the conversion of
the Convertible
Debentures, shares of Common Stock to effect the conversion of all of the
Conversion Shares then outstanding.
16
EXHIBIT
10.1 - continued
(h)
The Irrevocable Transfer Agent Instructions, in form and substance satisfactory
to the Buyer, shall have been delivered to and acknowledged in writing by the
Company’s transfer agent.
(i)
The Company shall have provided to the Buyer an acknowledgement, to the
satisfaction of the Buyer, from the Company’s independent certified
public accountants as to its ability to provide all consents required in
order to file a registration statement in connection with this
transaction.
(j)
The Company shall have filed a form UCC-1 or such other forms as may be required
to perfect the Buyer’s interest in the Pledged Property and Pledged Collateral
as detailed in the Security Agreement dated the date hereof and provided proof
of such filing to the Buyer(s).
(k)
The satisfactory completion of due diligence, including specifically the Company
providing the Buyer(s) with all materials relating to contracts awarded as well
as supply lists ofr materials and labor in connection with the
project.
8.
INDEMNIFICATION.
(a)
In consideration of the Buyer’s execution and delivery of this Agreement and
acquiring the Convertible Debentures and the Conversion Shares hereunder, and in
addition to all of the Company’s other obligations under this Agreement, the
Company shall defend, protect, indemnify and hold harmless the Buyer(s) and each
other holder of the Convertible Debentures and the Conversion Shares, and all of
their officers, directors, employees and agents (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Buyer Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Buyer Indemnitee is a party to the
action for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and disbursements (the “Indemnified
Liabilities”), incurred by the Buyer Indemnitees or any of them as a
result of, or arising out of, or relating to (a) any misrepresentation or breach
of any representation or warranty made by the Company in this Agreement, the
Convertible Debentures or the Investor Registration Rights Agreement or any
other certificate, instrument or document contemplated hereby or thereby, (b)
any breach of any covenant, agreement or obligation of the Company contained in
this Agreement, or the Investor Registration Rights Agreement or any other
certificate, instrument or document contemplated hereby or thereby, or (c) any
cause of action, suit or claim brought or made against such Indemnitee and
arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Indemnities, any transaction financed or
to be financed in whole or in part, directly or indirectly, with the proceeds of
the issuance of the Convertible Debentures or the status of the Buyer or holder
of the Convertible Debentures the Conversion Shares, as a
Buyer of Convertible Debentures in the Company. To the extent that
the foregoing undertaking by the Company may be unenforceable for any reason,
the Company shall make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities, which is permissible under applicable
law.
17
EXHIBIT
10.1 - continued
(b)
In consideration of the Company’s execution and delivery of this Agreement, and
in addition to all of the Buyer’s other obligations under this Agreement, the
Buyer shall defend, protect, indemnify and hold harmless the Company and all of
its officers, directors, employees and agents (including, without limitation,
those retained in connection with the transactions contemplated by this
Agreement) (collectively, the “Company Indemnitees”)
from and against any and all Indemnified Liabilities incurred by the Indemnitees
or any of them as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Buyer(s) in this Agreement, , instrument or document contemplated hereby or
thereby executed by the Buyer, (b) any breach of any covenant, agreement or
obligation of the Buyer(s) contained in this Agreement, the Investor
Registration Rights Agreement or any other certificate, instrument or document
contemplated hereby or thereby executed by the Buyer, or (c) any cause of
action, suit or claim brought or made against such Company Indemnitee based on
material misrepresentations or due to a material breach and arising out of or
resulting from the execution, delivery, performance or enforcement of this
Agreement, the Investor Registration Rights Agreement or any other instrument,
document or agreement executed pursuant hereto by any of the Company
Indemnities. To the extent that the foregoing undertaking by each
Buyer may be unenforceable for any reason, each Buyer shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities, which is permissible under applicable law.
(a)
Governing
Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Florida without regard to the
principles of conflict of laws. The parties further agree that any
action between them shall be heard in Broward County, Florida and expressly
consent to the jurisdiction and venue of the State Court sitting in Broward
County, Florida and the United States District Court for the Southern District
of Florida for the adjudication of any civil action asserted pursuant to this
Paragraph.
(b)
Counterparts. This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other
party. In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause four (4)
additional original executed signature pages to be physically delivered to the
other party within five (5) days of the execution and delivery
hereof.
(c)
Headings. The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
(d)
Severability. If
any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
18
EXHIBIT
10.1 - continued
(e)
Entire Agreement,
Amendments. This Agreement supersedes all other prior oral or
written agreements between the Buyer(s), the Company, their affiliates and
persons acting on their behalf with respect to the matters discussed herein, and
this Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor any 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 party to be charged with enforcement.
(f)
Notices. Any
notices, consents, waivers, or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered (i) upon receipt, when delivered personally; (ii) upon
confirmation of receipt, when sent by facsimile; (iii) three (3) days after
being sent by U.S. certified mail, return receipt requested, or (iv) one (1) day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
|
If
to the Company, to:
|
C-Xxxx
International, Inc.
|
|
0000
X. Xxx Xxxxx, Xxxxx 000
|
|
|
Xxxxxxx,
XX 00000
|
|
|
Attn:
Xx. Xxxxxxx Xxxxx, CEO
|
|
|
Telephone:
(000) 000-0000
|
|
|
Facsimile:
(000) 000-0000
|
|
|
With
a copy to:
|
The
X’Xxxx Law Firm, P.C.
|
|
00000
X. Xxxx Xxxx., Xxxxx 000-X
|
|
|
Xxxxxxxx
Xxxxx, XX 00000
|
|
|
Attention: Xxxxxxx
X. X’Xxxx, Esq.
|
|
|
Telephone:
(000) 000-0000
|
|
|
Facsimile:
(000) 000-0000
|
|
|
If
to the Transfer Agent, to:
|
First
American Stock Transfer
|
|
000
X. Xxxx Xxxx
|
|
|
Xxxxx
000
|
|
|
Xxxxxxx,
XX 00000
|
|
|
Attention:
Xxxxx Xxxxxxx
|
|
|
Telephone:
(000) 000-0000
|
|
|
Facsimile:
(000) 000-0000
|
|
|
With
Copy to:
|
Xxxxx
X. Xxxxxxx XX, P.A.
|
|
0000
Xxxxxxxx Xxx
|
|
|
Xxxx
Xxxxx, XX 00000
|
|
|
Attention:
Xxx Xxxxxxx, Esq.
|
|
|
Telephone:
(000) 000-0000
|
|
|
Facsimile:
(000) 000-0000
|
|
19
EXHIBIT
10.1 - continued
If to the
Buyer(s), to its address and facsimile number on Schedule I, with copies to the
Buyer’s counsel as set forth on Schedule I. Each party shall provide
five (5) days’ prior written notice to the other party of any change in address
or facsimile number.
(g)
Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective 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 party hereto.
(h)
No 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. Unless
this Agreement is terminated under Section 9(l), the representations and
warranties of the Company and the Buyer(s) contained in Sections 2 and 3, the
agreements and covenants set forth in Sections 4, 5 and 9, and the
indemnification provisions set forth in Section 8, shall survive the Closing for
a period of two (2) years following the date on which the Convertible Debentures
are converted in full. The Buyer(s) shall be responsible only for its
own representations, warranties, agreements and covenants
hereunder.
(j)
Publicity. The
Company and the Buyer(s) shall have the right to approve, before issuance any
press release or any other public statement with respect to the transactions
contemplated hereby made by any party; provided, however, that the Company shall
be entitled, without the prior approval of the Buyer(s), to issue any press
release or other public disclosure with respect to such transactions required
under applicable securities or other laws or regulations (the Company shall use
its best efforts to consult the Buyer(s) in connection with any such press
release or other public disclosure prior to its release and Buyer(s) shall be
provided with a copy thereof upon release thereof).
(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)
Termination. In
the event that the Closing shall not have occurred with respect to the Buyers on
or before five (5) business days from the date hereof due to the Company’s or
the Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7
above (and the non-breaching party’s failure to waive such unsatisfied
condition(s)), the non-breaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business on such
date without liability of any party to any other party; provided, however, that
if this Agreement is terminated by the Company pursuant to this Section 9(l),
the Company shall remain obligated to pay the Buyer(s) for the structuring fee
described in Section 4(g) above.
20
EXHIBIT
10.1 - continued
(m)
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.
[REMAINDER
PAGE INTENTIONALLY LEFT BLANK]
21
EXHIBIT
10.1 - continued
IN WITNESS WHEREOF, the Buyers and the Company
have caused this Securities Purchase Agreement to be duly executed as of the
date first written above.
|
COMPANY:
|
|
|
C-XXXX
INTERNATIONAL, INC.
|
|
|
By:
/s/ Xxxxxxx Xxxxx, Xx.
|
|
|
Name:
Xxxxxxx Xxxxx, Xx.
|
|
|
Title: President/CEO
|
|
|
BUYER:
|
|
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TRAFALGAR
CAPITAL SPECIALIZED
|
|
|
INVESTMENT
FUND, LUXEMBOURG
|
|
|
By: Trafalgar
Capital Sarl
|
|
|
Its: General
Partner
|
|
|
By:
/s/ Xxxxxx Xxxxx
|
|
|
Name:
Xxxxxx Xxxxx
|
|
|
Title:
Chairman of the Board
|
22
EXHIBIT
10.1 - continued
EXHIBIT
A
FORM OF INVESTOR
REGISTRATION RIGHTS AGREEMENT
A-1
EXHIBIT
10.1 - continued
EXHIBIT
B
FORM OF ESCROW
AGREEMENT
B-1
EXHIBIT
10.1 - continued
EXHIBIT
C
TRANSFER AGENT
INSTRUCTIONS
C-1
EXHIBIT
10.1 - continued
SCHEDULE
I
SCHEDULE OF
BUYERS
|
Name
|
Signature
|
Address/Facsimile
Number
of Buyer
|
Amount
of Subscription
|
|
|
0-00
Xxx Xxxxxxx Xxxxx
|
||||
|
Trafalgar
Capital Specialized
|
By:
Trafalgar Capital Sarl
|
BP
3023
|
$ 3,500,000
|
|
|
Investment
Fund, Luxembourg
|
Its:
General Partner
|
X-0000
Xxxxxxxxxx
|
||
|
Facsimile:
|
||||
|
011-44-207-405-0161
|
||||
|
By: /s/
Xxxxxx Xxxxx
|
and
|
|||
|
Name: Xxxxxx
Xxxxx
|
001-786-323-1651
|
|||
|
Its:
Chairman of the Board
|
||||
Buyer’s
Counsel:
Xxxxx X.
Xxxxxxx XX, P.A.
0000
Xxxxxxxx Xxx
Xxxx
Xxxxx, XX 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
SCHEDULE I-1