Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
BY AND BETWEEN
TIDEL TECHNOLOGIES, INC.
AND
LAURUS MASTER FUND, LTD.
NOVEMBER 26, 2004
TABLE OF CONTENTS
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PAGE
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1. A greement to Sell and Purchase............................................2
2. Fees and Warrant...........................................................2
2.1. On the Closing Date, the Company shall:..............................2
3. Closing, Delivery and Payment..............................................3
3.1. Closing..............................................................3
3.2. Closing Deliveries...................................................3
4. Representations and Warranties of the Company..............................3
4.1. Organization, Good Standing and Qualification........................3
4.2. Subsidiaries.........................................................4
4.3. Capitalization; Voting Rights........................................4
4.4. Authorization; Binding Obligations...................................5
4.5. Liabilities..........................................................5
4.6. Agreements; Action...................................................5
4.7. Obligations to Related Parties.......................................6
4.8. Changes..............................................................7
4.9. Title to Properties and Assets; Liens, Etc...........................8
4.10. Intellectual Property................................................8
4.11. Compliance with Other Instruments....................................8
4.12. Litigation...........................................................9
4.13. Tax Returns and Payments.............................................9
4.14. Labor Matters........................................................9
4.15. Registration Rights and Voting Rights...............................10
4.16. Compliance with Laws; Permits.......................................10
4.17. Environmental and Safety Laws.......................................10
4.18. Valid Offering......................................................10
4.19. Full Disclosure.....................................................11
4.20. Insurance...........................................................11
4.21. Listing.............................................................11
4.22. No Integrated Offering..............................................11
4.23. Stop Transfer.......................................................11
4.24. Dilution............................................................11
5. Representations and Warranties of the Purchaser...........................12
5.1. No Shorting.........................................................12
5.2. Requisite Power and Authority.......................................12
5.3. Investment Representations..........................................12
5.4. Purchaser Bears Economic Risk.......................................13
5.5. Acquisition for Own Account.........................................13
5.6. Purchaser Can Protect Its Interest..................................13
5.7. Accredited Investor.................................................13
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5.8. No Governmental Review..............................................13
5.9. Legends.............................................................13
6. Covenants of the Company..................................................15
6.1. Stop-Orders.........................................................15
6.2. Listing.............................................................15
6.3. Market Regulations..................................................16
6.4. Reporting Requirements..............................................16
6.5. Use of Funds........................................................16
6.6. Access to Facilities................................................16
6.7. Taxes...............................................................16
6.8. Insurance...........................................................17
6.9. Intellectual Property...............................................17
6.10. Properties..........................................................17
6.11. Confidentiality.....................................................17
6.12. Required Approvals..................................................17
6.13. Reissuance of Securities............................................18
6.14. Opinion.............................................................18
6.15. Financial Statements................................................18
6.16. [Intentionally Deleted].............................................19
6.17. Restrictions........................................................19
6.18. Restricted Cash Disclosure..........................................19
6.19. Engagement of Investment Banking Firm...............................19
7. Covenants of the Purchaser................................................20
7.1. Confidentiality.....................................................20
7.2. Non-Public Information..............................................20
8. Covenants of the Company and the Purchaser Regarding Indemnification......20
8.1. Indemnification.....................................................20
8.2. Procedures..........................................................20
9. Conversion of Convertible Note............................................21
10. Registration Rights.......................................................22
10.1. Registration Rights Granted.........................................22
10.2. Offering Restrictions...............................................22
11. [Intentionally Omitted]...................................................22
12. Miscellaneous.............................................................22
12.1. (a) The Company and the Purchaser hereby agree that, on
the date hereof, the following amounts are outstanding
under the 2003 Note: $6,667,987.50 (collectively,
the "Outstanding Amounts")..........................................22
12.2 Governing Law.......................................................23
12.3 Survival............................................................23
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12.4 Successors..........................................................23
12.5 Entire Agreement....................................................24
12.6 Severability........................................................24
12.7 Amendment and Waiver................................................24
12.8 Delays or Omissions.................................................24
12.9 Notices.............................................................24
12.10 Attorneys' Fees.....................................................25
12.11 Titles and Subtitles................................................25
12.12 Facsimile Signatures; Counterparts..................................25
12.13 Broker's Fees.......................................................25
12.14 Construction........................................................25
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "AGREEMENT") is effective as of
November 26, 2004, by and between TIDEL TECHNOLOGIES, INC., a Delaware
corporation (the "COMPANY"), and LAURUS MASTER FUND, LTD., a Cayman Islands
company (the "PURCHASER").
RECITALS
WHEREAS, the Company has authorized the sale to the Purchaser of a
Convertible Term Note in the original principal amount of six hundred thousand
dollars ($600,000), substantially in the form of EXHIBIT A hereto (the
"CONVERTIBLE NOTE"), which Convertible Note is convertible into shares of the
Company's common stock, $.01 par value per share (the "COMMON STOCK") at a fixed
conversion price of $0.30 per share of Common Stock, subject to adjustment in
accordance with the terms of the Convertible Note;
WHEREAS, the Company has authorized the sale to the Purchaser of a
Convertible Term Note in the original principal amount of one million five
hundred thousand dollars ($1,500,000), substantially in the form of EXHIBIT B
hereto (the "TERM NOTE"), which Convertible Term Note is convertible into shares
of Common Stock at a fixed conversation price of $3.00 per share of Common
Stock; the Convertible Note and the Term Note are referred to hereinafter as the
"PURCHASER NOTES," and the shares of Common Stock into which the Convertible
Note, the Term Note and that certain revised Purchase Order Note issued by Tidel
Engineering L.P. ("ENGINEERING") to the Purchaser, dated as of the date hereof
(the "PO NOTE") may be converted are referred to hereinafter as the "NOTE
SHARES";
WHEREAS, the Company also has authorized the issuance of a warrant (the
"WARRANT") to the Purchaser to purchase up to 500,000 shares of the Common Stock
(the "WARRANT SHARES" and, together with the Purchaser Notes, the PO Note, the
Warrant, the Note Shares and the 2003 Fee Shares (as hereinafter defined in
Section 1, the "SECURITIES"), substantially in the form of EXHIBIT C hereto, in
connection with the Purchaser's purchase of the Purchaser Notes;
WHEREAS, the Purchaser desires to purchase the Purchaser Notes and the
Warrant on the terms and conditions set forth herein;
WHEREAS, the Company desires to issue and sell the Purchaser Notes and the
Warrant to the Purchaser on the terms and conditions set forth herein;
WHEREAS, the Company is presently indebted to the Purchaser for $375,300 in
fees incurred prior to the date hereof, which amount does not include default
interest on the 2003 Note (as defined below) (the "2003 FEES") pursuant to and
in connection with that certain Convertible Term Note in the original principal
amount of six million four hundred fifty thousand dollars ($6,450,000), dated as
of November 25, 2003 (the "2003 NOTE"), and the 2003 Transaction Documents (as
hereinafter defined); and
WHEREAS, the Company desires to issue and sell shares of Common Stock to
the Purchaser and the Purchaser desires to purchase such shares of Common Stock
in full satisfaction of the 2003 Fees at a price of $0.30 per share and on the
terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises, representations, warranties and covenants hereinafter set forth and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE. Pursuant to the terms and conditions set
forth in this Agreement, on the Closing Date (as defined herein), the Company
agrees to sell to the Purchaser, and the Purchaser hereby agrees to purchase
from the Company, (a) the Convertible Note in the principal amount of $600,000
convertible in accordance with the terms thereof into Common Stock in accordance
with the terms of the Convertible Note and this Agreement, with a Maturity Date
(as defined in the Convertible Note) one (1) year from the date of issuance
thereof; (b) the Term Note in the principal amount of $1,500,000 convertible in
accordance with the terms thereof into Common Stock, with a Maturity Date (as
defined in the Term Note) thirty six (36) months from the date of issuance
thereof; and (c) 1,251,000 shares of Common Stock (the "2003 FEE SHARES"), which
represent an issuance of Common Stock in full satisfaction of the 2003 Fees at a
price of $0.30 per share (upon receipt of the 2003 Fee Shares, the Purchaser
irrevocably and unconditionally releases the Company from any further payment
obligations with respect to the 2003 Fees, but such release shall not pertain to
fees incurred in connection with the 2003 Note or any 2003 Transaction Document
on or after the date hereof).
2. FEES AND WARRANT.
2.1. ON THE CLOSING DATE, THE COMPANY SHALL:
2.1.1 issue and deliver to the Purchaser the Warrant in connection
with the sale and purchase of the Purchaser Notes pursuant to Section I hereof.
All the representations, covenants, warranties, undertakings, and
indemnifications, and other rights made or granted to or for the benefit of the
Purchaser by the Company pursuant to this Agreement are hereby also made and
granted in respect of the Warrant as of the date hereof and in respect of the
Warrant Shares issuable upon exercise of the Warrant as of the date of exercise
thereof;
2.1.2 pay to Laurus Capital Management, LLC, manager of the
Purchaser, a closing payment in an amount equal to $73,500, representing three
and one half percent (3.50%) of the aggregate original principal amount of the
Purchaser Notes (the "CLOSING PAYMENT");
2.1.3 reimburse the Purchaser for its reasonable expenses arising
from the Purchaser's due diligence review of the Company, preparation of the
documentation and other related matters (the "EXPENSES" and, together with the
Closing Payment, the "FEES"); PROVIDED, HOWEVER, that under no circumstance
shall the Fees exceed $20,000. The Fees will be paid at the Closing, less any
amounts paid to the Purchaser prior to Closing; and
2.1.4 pay the Fees (net of deposits previously paid by the Company)
at Closing out of funds held pursuant to a Funds Escrow Agreement of even date
herewith among the Company, the Purchaser, and an escrow agent in the form of
EXHIBIT D hereto (the "FUNDS ESCROW AGREEMENT") and a disbursement letter dated
of even date herewith in the form of EXHIBIT E hereto (the "DISBURSEMENT
LETTER").
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3. CLOSING, DELIVERY AND PAYMENT.
3.1. CLOSING. Subject to the terms and conditions herein, the closing of
the transactions contemplated hereby (the "CLOSING"), shall take place at such
time or place as the Company and the Purchaser may mutually agree (such date is
hereinafter referred to as the "CLOSING DATE").
3.2. CLOSING DELIVERIES. The Closing shall be conditioned upon the
following deliveries being made by the parties hereto:
3.2.1 the Company will deliver to the Purchaser, among other
things:
(a) the Convertible Note;
(b) the Term Note;
(c) the Warrant;
(d) the Fees;
(e) an opinion of Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx and
Wolosky LLP, counsel to the Company, substantially in the form of EXHIBIT F
hereto (the "OPINION");
(f) that certain Agreement of Amendment and Reaffirmation by
and among the Purchaser, the Company and the Subsidiaries (as hereinafter
defined, dated as of the date hereof, the "REAFFIRMATION AGREEMENT");
(g) an agreement regarding asset sales by the Company, by and
between the Purchaser and the Company, dated as of the date hereof (the "ASSET
SALE AGREEMENT"); and
(h) that certain Purchase Order Finance and Security
Agreement by and between Engineering, any other Credit Party (as defined
therein) signatory thereto and the Purchaser, dated as of the date hereof; and
(i) the other documents, instruments and agreements required
by the Purchaser to be delivered to the Purchaser prior to the Closing.
3.2.2 The Purchaser will deliver to the Company the amounts set
forth in the Disbursement Letter, which amounts shall include $1,250,000 of
Advances (as such term is defined in the Purchase Order Agreement).
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Purchaser, as of the
date of this Agreement:
4.1. ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has the corporate power and authority to
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own and operate its properties and assets, to execute, deliver, enter into and
perform its obligations under this Agreement, the Convertible Note, the Term
Note, the Warrant, the Reaffirmation Agreement, the Funds Escrow Agreement, the
Purchase Order Agreement and the Asset Sale Agreement (the Term Note, the
Convertible Note, the Warrant, the Funds Escrow Agreement, the Disbursement
Letter, the Reaffirmation Agreement, the Purchase Order Agreement, the Asset
Sale Agreement, and all other agreements related to this Agreement, the Term
Note the Convertible Note and the Purchase Order Agreement shall be collectively
referred to herein as the "RELATED AGREEMENTS") and all other agreements
referred to herein or therein, to issue and sell the Term Note, the Convertible
Note and the Note Shares, to issue and sell the Warrant and the Warrant Shares,
and to carry out the provisions of this Agreement, the Related Agreements and
all other agreements referred to herein or therein and to perform all
obligations of the Company hereunder and thereunder at the Closing, and to carry
on its business as presently conducted. The Company is duly qualified and is
authorized to do business and is in good standing as a foreign corporation in
all jurisdictions in which the nature of its activities and of its properties
(both owned and leased) makes such qualification necessary, except for those
jurisdictions in which failure to do so would not have a material adverse effect
on the Company or its business.
4.2. SUBSIDIARIES. The Company owns all of the issued and outstanding
capital stock of (i) Tidel Cash Systems, Inc., a Delaware corporation ("TIDEL
CASH"); (ii) Anycard International, Inc., a Delaware corporation ("ANYCARD");
(iii) Tidel Services, Inc., a Delaware corporation ("SERVICES"); and (iv)
Engineering together with Tidel Cash, Anycard and Services, the "SUBSIDIARIES").
Except as set forth on SCHEDULE 4.2 hereof, the Company does not own or control
any equity security or other interest of any other corporation, limited
partnership or other business entity other than the Subsidiaries.
4.3. CAPITALIZATION; VOTING RIGHTS.
4.3.1 The authorized capital stock of the Company, as of the date
hereof consists of 100,000,000 shares of Common Stock, par value $.01 per share,
19,426,210 shares of which are issued and outstanding.
4.3.2 Except as disclosed on SCHEDULE 4.3, other than (i) the
shares reserved for issuance under the Company's stock option plans; and (ii)
shares which may be granted pursuant to this Agreement and the Related
Agreements, there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal), proxy or
stockholder agreements, or arrangements or agreements of any kind for the
purchase or acquisition from the Company of any of its securities. Except as
disclosed on SCHEDULE 4.3, neither the offer, issuance or sale of either of the
Purchaser Notes or the Warrant, or the issuance of any of the Note Shares,
Warrant Shares or 2003 Fee Shares, nor the consummation of any transaction
contemplated hereby will result in a change in the price or number of any
securities of the Company outstanding, under anti-dilution or other similar
provisions contained in or affecting any such securities.
4.3.3 All issued and outstanding shares of the Company's Common
Stock (i) have been duly authorized and validly issued and are fully paid and
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nonassessable and (ii) were issued in compliance with all applicable state and
federal laws concerning the issuance of securities.
4.3.4 The rights, preferences, privileges and restrictions of the
shares of the Common Stock are as stated in the Company's Certificate of
Incorporation, as amended through the date hereof (the "CHARTER"). Based on the
Fixed Conversion Price (as defined in the Convertible Note) as of the date
hereof, the Note Shares and Warrant Shares issuable pursuant to the Purchaser
Notes, the PO Note and the Warrant, respectively, have been duly and validly
reserved for issuance. When issued in compliance with the provisions of this
Agreement and the Charter, the Securities will be validly issued, fully paid and
nonassessable, and will be free of any liens or encumbrances; provided, however,
that the Securities may be subject to restrictions on transfer under state
and/or federal securities laws as set forth herein or as otherwise required by
such laws at the time a transfer is proposed.
4.4. AUTHORIZATION; BINDING OBLIGATIONS. The execution and delivery of
this Agreement and the Related Agreements, the performance of all obligations of
the Company hereunder and thereunder at the Closing and the authorization, sale,
issuance and delivery of the Purchaser Notes and the Warrant by the Company and
the consummation by it of the transactions described herein and therein, have
been duly authorized by the Company's Board of Directors (the "BOARD") and no
further consent or authorization is required by the Company, the Board or the
Company's stockholders under the Delaware General Corporation Law, the Charter
or otherwise. This Agreement and the Related Agreements have been duly and
validly authorized, executed and delivered on behalf of the Company. The
Agreement and the Related Agreements, when executed and delivered and to the
extent it is a party thereto, will be valid and binding obligations of the
Company, enforceable in accordance with their terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights, and (b) as
limited by general principles of equity that restrict the availability of
equitable or legal remedies. The sale of the Purchaser Notes and the PO Note and
the subsequent conversion of the Purchaser Notes and the PO Note into Note
Shares are not and will not be subject to any preemptive rights or rights of
first refusal that have not been properly waived or complied with. The issuance
of the Warrant and the subsequent exercise of the Warrant for Warrant Shares are
not and will not be subject to any preemptive rights or rights of first refusal
that have not been properly waived or complied with.
4.5. LIABILITIES. Except as disclosed in SCHEDULE 4.5, to the Company's
knowledge, the Company has no material contingent liabilities, except current
liabilities incurred in the ordinary course of business and liabilities
disclosed in any of the Company's filings (the "SEC REPORTS") as of the date
hereof under the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT").
4.6. AGREEMENTS; ACTION. Except as set forth on SCHEDULE 4.6 or as
disclosed in any SEC Reports:
4.6.1 There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or, to the Company's knowledge, by which it is bound that
may involve (i) obligations (contingent or otherwise) of, or payments to, the
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Company in excess of $50,000 (other than obligations of, or payments to, the
Company arising from purchase or sale agreements entered into in the ordinary
course of business), (ii) the transfer or license of any Intellectual Property
(as defined herein) to or from the Company (other than licenses arising from the
purchase of "off the shelf" or other standard products), (iii) provisions
restricting the development, manufacture or distribution of the Company's
products or services, or (iv) indemnification by the Company with respect to
infringements of proprietary rights.
4.6.2 Since June 30, 2002, the Company has not (i) declared or paid
any dividends, or authorized or made any distribution upon or with respect to
any class or series of its capital stock, (ii) incurred any indebtedness for
money borrowed or any other liabilities (other than ordinary course obligations)
individually in excess of $50,000 or, in the case of indebtedness and/or
liabilities individually less than $50,000, in excess of $100,000 in the
aggregate, (iii) made any loans or advances to any person not in excess,
individually or in the aggregate, of $100,000, other than ordinary advances for
travel expenses, or (iv) sold, exchanged or otherwise disposed of any of its
assets or rights, other than the sale of its inventory in the ordinary course of
business.
4.6.3 For the purposes of subsections 4.6.1 and 4.6.2 above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
4.7. OBLIGATIONS TO RELATED PARTIES. Except as set forth on SCHEDULE
4.7, there are no obligations of the Company to officers, directors,
stockholders or employees of the Company other than (a) 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, (b) for payment of salary for services rendered and for bonus
payments, (c) reimbursement for reasonable expenses incurred on behalf of the
Company, (d) for other standard employee benefits made generally available to
all employees (including stock option agreements outstanding under any stock
option plan approved by the Board) and (e) obligations listed in the Company's
financial statements or disclosed in any of its SEC Reports. Except as described
above or set forth on SCHEDULE 4.7 or as disclosed in any of the Company's SEC
Reports, none of the officers, directors or, to the Company's knowledge, key
employees or stockholders of the Company or any members of their immediate
families, are indebted to the Company, individually or in the aggregate, in
excess of $50,000 or have any direct or indirect ownership interest in any firm
or corporation with which the Company is affiliated or with which the Company
has a business relationship, or any firm or corporation which competes with the
Company, other than passive investments in publicly traded companies
(representing less than 5% of such company) which may compete with the Company.
Except as set forth on SCHEDULE 4.7, no officer, director or stockholder, or any
member of their immediate families, is, directly or indirectly, interested in
any material contract with the Company and no agreements, understandings or
proposed transactions are contemplated between the Company and any such person.
Except as set forth on SCHEDULE 4.7, the Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation.
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4.8. CHANGES. Since June 30, 2002, except as disclosed in any SEC Report
or in SCHEDULE 4.8 or any other schedule to this Agreement or to any of the
Related Agreements, there has not been:
4.8.1 Any change in the assets, liabilities, financial condition,
prospects or operations of the Company, other than changes in the ordinary
course of business, none of which individually or in the aggregate has had or is
reasonably expected to have a material adverse effect on such assets,
liabilities, financial condition, prospects or operations of the Company;
4.8.2 Any resignation or termination of any officer, key employee
or group of employees of the Company;
4.8.3 Any material change, except in the ordinary course of
business, in the contingent obligations of the Company by way of guaranty,
endorsement, indemnity, warranty or otherwise;
4.8.4 Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, business or
prospects or financial condition of the Company;
4.8.5 Any waiver by the Company of a material right or of a
material debt owed to it;
4.8.6 Any material direct or indirect loans made by the Company to
any stockholder, employee, officer or director of the Company, other than
advances made in the ordinary course of business;
4.8.7 Any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder;
4.8.8 Any declaration or payment of any dividend or other
distribution of the assets of the Company;
4.8.9 Any labor organization activity related to the Company;
4.8.10 Any material debt, obligation or liability incurred, assumed
or guaranteed by the Company, and for current liabilities incurred in the
ordinary course of business;
4.8.11 Any sale, assignment or transfer of any Intellectual
Property (as defined herein);
4.8.12 Any change in any material agreement to which the Company is
a party or by which it is bound which may materially and adversely affect the
business, assets, liabilities, financial condition, operations or prospects of
the Company;
4.8.13 Any other event or condition of any character that, either
individually or cumulatively, has or may materially and adversely affect the
business, assets, liabilities, financial condition, prospects or operations of
the Company; or
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4.8.14 Any arrangement or commitment by the Company to do any of
the acts described in subsection 4.8.1 through 4.8.13 above.
4.9. TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. Except for Intellectual
Property which is the subject of SECTION 4.10 hereof, and except as set forth on
SCHEDULE 4.9, the Company has good and marketable title to its properties and
assets, and good title to its leasehold estates, in each case subject to no
mortgage, pledge, lien, lease, encumbrance or charge, other than (a) those
resulting from taxes which have not yet become delinquent, (b) Permitted Liens
(as defined in the Security Agreement), and (c) those that have otherwise arisen
in the ordinary course of business. All facilities, machinery, equipment,
fixtures, vehicles and other properties owned, leased or used by the Company are
in good operating condition and repair and are reasonably fit and usable for the
purposes for which they are being used or for which they are intended to be
used. Except as set forth on SCHEDULE 4.9, the Company is in compliance with all
material terms of each lease to which it is a party or is otherwise bound.
4.10. INTELLECTUAL PROPERTY.
4.10.1 The Company owns or possesses sufficient legal rights to use
all patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information and other proprietary rights and processes ("INTELLECTUAL
PROPERTY") necessary for its business as now conducted, and, to the Company's
knowledge, as presently proposed to be conducted without, to the Company's
knowledge, any infringement of the rights of others. There are no outstanding
options, licenses or agreements of any kind relating to the Company's
Intellectual Property, nor is the Company bound by or a party to any options,
licenses or agreements of any kind with respect to the Intellectual Property of
any other person or entity other than such licenses or agreements arising from
the purchase of "off the shelf" or standard products.
4.10.2 Except as set forth in SCHEDULE 4.12, the Company has not
received any communications alleging that the Company has violated any of the
Intellectual Property of any other person or entity, nor is the Company aware of
any basis therefore.
4.10.3 To the Company's knowledge, it is not, nor will it be,
necessary to utilize any inventions, trade secrets or proprietary information of
any of its employees made prior to their employment by the Company, except for
inventions, trade secrets or proprietary information that have been rightfully
assigned to the Company.
4.11. COMPLIANCE WITH OTHER INSTRUMENTS. Except as set forth on SCHEDULE
4.11, the Company is not in violation or default of any term of its Charter or
Bylaws, or in material violation of any provision of any mortgage, indenture,
contract, agreement, instrument or contract to which it is party or by which it
is bound or of any judgment, decree, order or writ. The execution, delivery and
performance of and compliance with this Agreement and the Related Agreements to
which it is a party, and the issuance and sale of the Purchaser Notes by the
Company and the other Securities by the Company pursuant hereto, will not, with
or without the passage of time or giving of notice, result in any such material
violation, or be in conflict with or constitute a default under any such term or
provision, or result in the creation of any mortgage, pledge, lien, encumbrance
or charge upon any of the properties or assets of the Company or the suspension,
revocation, impairment, forfeiture or nonrenewal of any permit, license,
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authorization or approval applicable to the Company, its business or operations
or any of its assets or properties.
4.12. LITIGATION. Except as set forth on SCHEDULE 4.12 hereto or as
disclosed in the SEC Reports, there is no action, suit, proceeding or
investigation pending or, to the Company's knowledge, currently threatened
against the Company, wherein an unfavorable decision, ruling or finding,
individually or in the aggregate, could be expected to prevent the Company from
entering into this Agreement or the Related Agreements, or to consummate the
transactions contemplated hereby or thereby, or which might result, either
individually or in the aggregate, in any material adverse change in the assets,
condition, affairs or prospects of the Company, financially or otherwise, or any
change in the current equity ownership of the Company. The Company is not a
party or subject to the provisions of any order, writ, injunction, judgment or
decree of any court, government agency or instrumentality. There is no action,
suit, proceeding or investigation by the Company currently pending or which the
Company intends to initiate as of the date hereof.
4.13. TAX RETURNS AND PAYMENTS. The Company has timely filed all tax
returns (federal, state and local) required to be filed by it. All taxes shown
to be due and payable on such returns, any assessments imposed, and, to the
Company's knowledge, all other taxes due and payable by the Company on or before
the Closing Date, have been paid or will be paid prior to the time they become
delinquent. Except as set forth on SCHEDULE 4.13, the Company has not been
advised (a) that any of its returns, federal, state or other, have been or are
being audited as of the date hereof, or (b) of any deficiency in assessment or
proposed judgment to its federal, state or other taxes. To the Company's
knowledge, there is no liability for any tax to be imposed upon its properties
or assets as of the date of this Agreement that is not adequately provided for.
4.14. LABOR MATTERS. Except as set forth on SCHEDULE 4.14, the Company
has no collective bargaining agreements with any of its employees. There is no
labor union organizing activity pending or, to the Company's knowledge,
threatened with respect to the Company. Except as disclosed in the SEC Reports
or on SCHEDULE 4.14, the Company is not a party to or bound by any currently
effective employment contract, deferred compensation arrangement, bonus plan,
incentive plan, profit sharing plan, retirement agreement or other employee
compensation plan or agreement. To the Company's knowledge, no employee of the
Company, nor any consultant with whom the Company has contracted, is in
violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be employed by, or to contract with, the Company because of the nature of the
business to be conducted by the Company; and to the Company's knowledge the
continued employment by the Company of its present employees, and the
performance of the Company's contracts with its independent contractors, will
not result in any such violation. To the Company's knowledge, none of its
employees is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
his or her duties to the Company. The Company has not received any notice
alleging that any such violation has occurred. Except for employees who have a
current effective employment agreement with the Company, no employee of the
Company has been granted the right to continued employment by the Company or to
any material compensation following termination of employment with the Company.
Except as set forth on SCHEDULE 4.14, the Company is not aware that any officer,
9
key employee or group of employees intends to terminate his, her or their
employment with the Company, nor does the Company have a present intention to
terminate the employment of any officer, key employee or group of employees.
4.15. REGISTRATION RIGHTS AND VOTING RIGHTS. Except as set forth on
SCHEDULE 4.15 and except as disclosed in the SEC Reports, the Company is
presently not under any obligation, and has not granted any rights, to register
any of the Company's presently outstanding securities or any of its securities
that may hereafter be issued. Except as set forth on SCHEDULE 4.15 and except as
disclosed in the SEC Reports, to the Company's knowledge, no stockholder of the
Company has entered into any agreement with respect to the voting of equity
securities of the Company.
4.16. COMPLIANCE WITH LAWS; PERMITS. Except as set forth on SCHEDULE
4.16, to the Company's knowledge, the Company is not in violation in any
material respect of any applicable statute, rule, regulation, order or
restriction of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or the ownership of its
properties which violation would materially and adversely affect the business,
assets, liabilities, financial condition, operations or prospects of the
Company. No governmental orders, permissions, consents, approvals or
authorizations are required to be obtained and no registrations or declarations
are required to be filed in connection with the execution and delivery of this
Agreement and the issuance of any of the Securities, except such as has been
duly and validly obtained or filed by the Closing Date, or with respect to any
filings that must be made after the Closing Date, as will be filed in a timely
manner. The Company has all material franchises, permits, licenses and any
similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which would materially and adversely affect the
business, properties, prospects or financial condition of the Company.
4.17. ENVIRONMENTAL AND SAFETY LAWS. The Company is not in material
violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and to the Company's knowledge,
no material expenditures are or will be required in order to comply with any
such existing statute, law or regulation. Except as set forth on SCHEDULE 4.17,
no Hazardous Materials (as defined below) are used or have been used, stored, or
disposed of by the Company in violation of any applicable statue, law or
regulation relating to the environment or, to the Company's knowledge, by any
other person or entity on any property owned, leased or used by the Company
except for such use, storage or disposal which would not have a material adverse
effect. For the purposes of the preceding sentence, "HAZARDOUS MATERIALS" shall
mean (a) materials which are listed or otherwise defined as "HAZARDOUS" or
"TOXIC" under any applicable local, state, federal and/or foreign laws and
regulations that govern the existence and/or remedy of contamination on
property, the protection of the environment from contamination, the control of
hazardous wastes, or other activities involving hazardous substances, including
building materials, or (b) any petroleum products or nuclear materials.
4.18. VALID OFFERING. Assuming the accuracy of the representations and
warranties of the Purchaser contained in this Agreement, the offer, sale and
issuance of the Securities will be exempt from the registration requirements of
the Securities Act of 1933, as amended (the "SECURITIES ACT"), and will have
10
been registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state securities laws.
4.19. FULL DISCLOSURE. The Company has provided the Purchaser with all
information requested by the Purchaser in connection with its decision to
purchase the Purchaser Notes and Warrant, including all information the Company
believes is reasonably necessary to make such investment decision. Neither this
Agreement, the exhibits and schedules hereto, the Related Agreements nor any
other document delivered by the Company to the Purchaser or its attorneys or
agents in connection herewith or therewith or with the transactions contemplated
hereby or thereby, contain any untrue statement of a material fact nor omit to
state a material fact necessary in order to make the statements contained herein
or therein, in light of the circumstances in which they are made, not
misleading. Any financial projections and other estimates provided to the
Purchaser by the Company were based on the Company's experience in the industry
and on assumptions of fact and opinion as to future events which the Company, at
the date of the issuance of such projections or estimates, believed to be
reasonable.
4.20. INSURANCE. The Company has general commercial, product liability,
fire and casualty insurance policies with coverages which, to the Company's
knowledge, are customary for companies similarly situated to the Company in the
same or similar business.
4.21. LISTING. The Common Stock is listed for trading on the National
Quotation Bureau's Pink Sheets. The Company has not received any notice that its
Common Stock will be delisted from the National Quotation Bureau's Pink Sheets
or that its Common Stock does not meet all requirements for listing.
4.22. NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates (as such term is defined in Rule 501(b) under the Securities Act)
has, directly or through any authorized agent, during the six month period
ending on the date of this Agreement, made any offers or sales of any security
or solicited any offers to buy any security in a manner that would cause the
offering of the Securities pursuant to this Agreement to fail to be entitled to
the exemption afforded by Rule 506 under, or section 4(2) of, the Securities
Act. Neither the Company nor any of its affiliates (as such term is defined in
Rule 501(b) under the Securities Act) shall take any intentional action or steps
that would cause the offering of the Securities to fail to be entitled to the
exemption afforded by Rule 506 under, or under Section 4(2) of, the Securities
Act.
4.23. STOP TRANSFER. The Securities are restricted securities as of the
date of this Agreement. The Company will not issue any stop transfer order or
other order impeding the sale and delivery of any of the Securities at such time
as the Securities are registered for public sale or an exemption from
registration is available, except as required by state and federal securities
laws or as provided by Section 7(d) of the Registration Rights Agreement.
4.24. DILUTION. The Company specifically acknowledges that its obligation
to issue the Note Shares upon conversion of the Purchaser Notes and the PO Note
and the Warrant Shares upon exercise of the Warrant is binding upon the Company
and enforceable regardless of the dilution such issuance may have on the
ownership interests of other shareholders of the Company.
11
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby represents, warrants and covenants to the
Company, as of the date of this Agreement:
5.1. NO SHORTING. Neither the Purchaser nor any of its affiliates and
investment partners will or will cause any person or entity, to directly engage
in "short sales" of the Company's Common Stock while any principal portion of
either Purchaser Note or the PO Note is outstanding.
5.2. REQUISITE POWER AND AUTHORITY. The Purchaser is a limited
partnership duly organized, validly existing and in good standing under the laws
of the Cayman Islands. The Purchaser has the corporate power and authority under
all applicable provisions of law to execute, deliver, enter into and perform the
obligations under this Agreement and the Related Agreements and all other
agreements referred to herein or therein, to carry out their provisions, and to
perform all obligations of the Purchaser hereunder and thereunder at the
Closing. The execution and delivery of this Agreement and the Related
Agreements, the performance of all obligations of the Purchaser hereunder and
thereunder at the Closing and the consummation by the Purchaser of the
transactions described herein and therein have been duly and validly authorized
on behalf of the Purchaser. This Agreement and the Related Agreements have been
duly and validly executed and delivered on behalf of the Purchaser. This
Agreement and the Related Agreements, when executed and delivered and to the
extent it is a party thereto, will be valid and binding obligations of the
Purchaser, enforceable in accordance with their terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights, and (b) as
limited by general principles of equity that restrict the availability of
equitable and legal remedies.
5.3. INVESTMENT REPRESENTATIONS. The Purchaser understands that the
Securities are being offered and sold to it in reliance upon certain exemptions
from the registration requirements of the United States federal and state
securities laws, and that the Company is relying in part upon the truth and
accuracy of, and the Purchaser's compliance with, the Purchaser's
representations contained in this Agreement, including, without limitation, that
the Purchaser is an "accredited investor" within the meaning of Regulation D
under the Securities Act in order to determine the availability of such
exemptions and the eligibility of the Purchaser to acquire the Securities. The
Purchaser confirms that it and/or its advisors have received or have had full
access to all the information that either of them considers necessary or
appropriate to make an informed investment decision with respect to the
Purchaser Notes, the PO Note and the Warrant to be purchased by it under this
Agreement and the Note Shares and the Warrant Shares acquired by it upon the
conversion of the Purchaser Notes, the PO Note and the exercise of the Warrant,
respectively. The Purchaser and/or its advisors further confirm that they have
had an opportunity to ask questions and receive answers from the Company
regarding the Company's business, management and financial affairs and the terms
and conditions of the sale and issuance of the Purchaser Notes, the PO Note and
the issuance of the Warrant, the Note Shares, and the Warrant Shares and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to the Purchaser or to which the
Purchaser had access.
12
5.4. PURCHASER BEARS ECONOMIC RISK. The Purchaser has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. The Purchaser must bear the economic risk
of this investment until the Securities are sold pursuant to (i) an effective
registration statement under the Securities Act, or (ii) an exemption from
registration is available with respect to such sale.
5.5. ACQUISITION FOR OWN ACCOUNT. The Purchaser is (i) acquiring the
Purchaser Notes, the PO Note and Warrant, and (ii) upon exercise of the
Purchaser Notes and the PO Note, will acquire the Note Shares then issuable, and
upon exercise of the Warrant, will acquire the Warrant Shares then issuable, for
the Purchaser's own account for investment only, and not as a nominee or agent
and not with a view towards or for resale in connection with the public sale or
distribution thereof.
5.6. PURCHASER CAN PROTECT ITS INTEREST. The Purchaser represents that
by reason of its, or of its management's, business and financial experience, the
Purchaser has the capacity to evaluate the merits and risks of its investment in
the Securities and to protect its own interests in connection with the
transactions contemplated in this Agreement and the Related Agreements. Further,
the Purchaser is aware of no publication of any advertisement in connection with
the transactions contemplated in the Agreement or the Related Agreements.
5.7. ACCREDITED INVESTOR. The Purchaser represents that it is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D
under the Securities Act.
5.8. NO GOVERNMENTAL REVIEW. The Purchaser 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 Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon the endorsed the merits of the offering of the
Securities.
5.9. LEGENDS.
5.9.1 The Convertible Note, the Term Note and the PO Note shall
each bear substantially the following legend:
"THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION
OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAWS. THIS NOTE AND THE COMMON STOCK
ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD,
OFFERED FOR SALE, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE OR SUCH SHARES UNDER THE ACT
AND STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
13
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT
AND SUCH LAWS BASED ON AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO TIDEL TECHNOLOGIES, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED."
5.9.2 The Note Shares and the Warrant Shares, if not issued by DWAC
system (as defined in the Note), shall bear a legend which shall be in
substantially the following form until such shares are covered by an effective
registration statement filed with the SEC:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY STATE SECURITIES LAWS. THESE SHARES
MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, ASSIGNED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THESE SHARES UNDER THE ACT
AND STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT
AND SUCH LAWS BASED ON AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO TIDEL TECHNOLOGIES, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED."
5.9.3 The Warrant shall bear substantially the following legend:
"THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON
EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
ANY STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON
SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE
SOLD, OFFERED FOR SALE, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS WARRANT OR THE UNDERLYING SHARES OF
COMMON STOCK UNDER THE ACT AND STATE SECURITIES LAWS OR
PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND SUCH LAWS BASED ON AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO TIDEL
TECHNOLOGIES, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED."
14
6. COVENANTS OF THE COMPANY.
The Company covenants and agrees with the Purchaser as follows:
6.1. STOP-ORDERS. The Company will advise the Purchaser, promptly after
it receives notice of issuance by the Securities and Exchange Commission (the
"SEC"), any state securities commission or any other regulatory authority of any
stop order or of any order preventing or suspending any offering of any
securities of the Company, or of the suspension of the qualification of the
Common Stock for offering or sale in any jurisdiction, or the initiation of any
proceeding for any such purpose.
6.2. LISTING.
6.2.1 (i) On or before January 31, 2005, the Company will deliver
to the Purchaser evidence satisfactory to the Purchaser of the Company's filing
of its Annual Report on Form 10-K for its fiscal year ended September 30, 2002
and (ii) on or before July 31, 2005, the Company will deliver to the Purchaser
evidence satisfactory to the Purchaser that the Company has filed the following:
(A) the Company's Quarterly Reports on Form 10-Q for the quarters ended December
31, 2002, March 31, 2003, June 30, 2003, December 31, 2003, March 31, 2004 and
June 30, 2004 and (B) the Company's Annual Reports on Form 10-K for the fiscal
year ended September 30, 2003 and September 30, 2004 (collectively, the "FILING
REQUIREMENTS"). Upon satisfaction of the Filing Requirements, the Company shall
be current in the filing of its required SEC Reports. Each SEC Report, at the
time of its filing, shall be in substantial compliance with the requirements of
the Exchange Act and the regulations promulgated thereunder and none of the SEC
Reports, as of their respective filing dates, will contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Purchaser and the
Company hereby agree that this Section 6.2.1 shall supercede and replace Section
6.2.1 of the 2003 Purchase Agreement (as defined below).
6.2.2 Fourteen (14) days following satisfaction of the Filing
Requirements in accordance with the terms of the immediately preceding clause
6.2.1, the Company will deliver to the Purchaser evidence of the Company's
listing of the Common Stock on the Nasdaq Over the Counter Bulletin Board (the
"PRINCIPAL MARKET"), and shall comply with any and all requirements to become
listed on the Principal Market. As soon as the Company receives notice that the
Common Stock is listed on the Principal Market, the Company will deliver
evidence to the Purchaser of the listing of the Common Stock on the Principal
Market (the "LISTING REQUIREMENT"). As soon as practicable following
satisfaction of the Listing Requirement, the Company shall secure the listing of
the shares of Common Stock issuable upon conversion of the Convertible Note and
upon the exercise of the Warrant on the Principal Market (subject to official
notice of issuance) and shall maintain such listing for the lesser of (a) five
(5) years or (b) so long as any other shares of Common Stock shall be so listed.
The Company shall for a period of not less than five (5) years comply in all
material respects with the Company's reporting, filing and other obligations
under the bylaws or rules of the National Association of Securities Dealers
("NASD") or such alternate exchange, as applicable.
15
6.3. MARKET REGULATIONS. If required by the SEC, NASD and/or any
applicable state authorities, in accordance with such requirements, the Company
shall notify each of the SEC, NASD and such state authorities of the
transactions contemplated by this Agreement, and shall take all other necessary
action and proceedings as may be required and permitted by applicable law, rule
and regulation, for the legal and valid issuance of the Securities to the
Purchaser and promptly provide copies thereof to the Purchaser.
6.4. REPORTING REQUIREMENTS. So long as any amounts remain outstanding
under the Purchaser Notes or the 2003 Note and/or any other amounts remain
payable under any and all other documents, instruments and agreements entered
into in connection therewith (the "PURCHASER DEBT"), the Company will timely
file with the SEC all reports required to be filed pursuant to the Exchange Act
and refrain from terminating its status as an issuer required by the Exchange
Act to file reports thereunder even if the Exchange Act or the rules or
regulations thereunder would permit such termination.
6.5. USE OF FUNDS. The Company agrees that it will use (i) on the
Closing Date, $258,920.37 of the proceeds of the sale of the Convertible Note to
pay the outstanding interest owed to the Purchaser in connection with the 2003
Note, (ii) the remainder of the proceeds of the Convertible Note not utilized in
accordance with the preceding clause (i) to pay a portion of the Fees and for
working capital purposes, (iii) on the Closing Date, $417,833.33 of the proceeds
of the Term Note (which will initially be held in a segregated account of the
Purchaser at North Fork Bank) to pay interest, fees and other amounts
outstanding now or in the future in connection with the 2003 Note, the Term
Note, the PO Note and/or the Convertible Note, and (iv) the remainder of the
proceeds of the sale of the Term Note to pay a portion of the Fees and as
described in the Disbursement Letter, and the remainder to be used for working
capital purposes.
6.6. ACCESS TO FACILITIES. So long as any Purchaser Debt remains
outstanding, the Company will permit any representatives designated by the
Purchaser (or any successor of the Purchaser), upon reasonable notice and during
normal business hours, at such person's expense and accompanied by a
representative of the Company, to (a) visit and inspect any of the properties of
the Company, (b) examine the corporate and financial records of the Company
(unless such examination is not permitted by federal, state or local law or by
contract) and make copies thereof or extracts therefrom and (c) discuss the
affairs, finances and accounts of the Company with the directors, officers and
independent accountants of the Company. Notwithstanding the foregoing, the
Company shall not be required by this Section 6.6 to provide any material,
non-public information to the Purchaser unless the Purchaser signs a
confidentiality agreement and otherwise complies with Regulation FD under the
Exchange Act.
6.7. TAXES. So long as any Purchaser Debt remains outstanding, the
Company will promptly pay and discharge, or cause to be paid and discharged when
due and payable, all lawful taxes, assessments and governmental charges or
levies imposed upon the income, profits, property or business of the Company;
provided, however, that any such tax, assessment, charge or levy need not be
paid if the validity thereof shall currently be contested in good faith by
appropriate proceedings and if the Company shall have set aside on its books
adequate reserves with respect thereto, and provided, further, that the Company
will pay all such taxes, assessments, charges or levies forthwith upon the
commencement of proceedings to foreclose any lien which may have attached as
security therefore.
16
6.8. INSURANCE. So long as any Purchaser Debt remains outstanding, the
Company will keep its assets which are of an insurable character insured by
insurers that the Company reasonably deems financially sound and reputable,
against loss or damage by fire, explosion and other risks customarily insured
against by companies in similar business similarly situated as the Company; and
the Company will maintain, with such financially sound and reputable insurers,
insurance against other hazards and risks and liability to persons and property
to the extent and in the manner which the Company reasonably believes is
customary for companies in similar business similarly situated as the Company
and to the extent available on commercially reasonable terms.
6.9. INTELLECTUAL PROPERTY. So long as any Purchaser Debt remains
outstanding, the Company shall maintain in full force and effect its corporate
existence, rights and franchises and all licenses and other rights to use
material Intellectual Property owned or possessed by it and reasonably deemed to
be necessary to the conduct of its business.
6.10. PROPERTIES. So long as any Purchaser Debt remains outstanding, the
Company will keep its properties in good repair, working order and condition,
reasonable wear and tear excepted, and from time to time make all needful and
proper repairs, renewals, replacements, additions and improvements thereto; and
the Company will at all times comply with each provision of all leases to which
it is a party or under which it occupies property if the breach of such
provision could reasonably be expected to have a material adverse effect.
6.11. CONFIDENTIALITY. The Company agrees that it will not, without prior
written consent of the Purchaser, disclose, or include in any public
announcement, the name of the Purchaser, unless and until such disclosure is
required by law or applicable regulation, and then only to the extent of such
requirement. The Purchaser acknowledges that the Company is required to disclose
the Purchaser's name and this transaction under federal securities laws.
6.12. REQUIRED APPROVALS. For so long as any principal amount of any of
the Convertible Note, the Term Note or the 2003 Convertible Term Note is
outstanding, or for so long as any Advances are outstanding under the Purchase
Order Agreement, neither the Company nor any of its Subsidiaries, without the
prior written consent of the Purchaser, shall take any of the actions listed on
SCHEDULE 6.12.
6.13. REISSUANCE OF SECURITIES. The Company agrees to reissue
certificates representing the shares of Common Stock issuable upon conversion of
the Purchaser Notes and the PO Note and upon exercise of the Warrant without the
legends set forth in Section 5.9 above at such time as (a) the holder thereof is
permitted to dispose of such Securities pursuant to Rule 144(k) under the
Securities Act, or (b) upon resale subject to an effective registration
statement after such Securities are registered under the Securities Act. The
Company agrees to cooperate with the Purchaser in connection with all resales
pursuant to Rule 144(d) and Rule 144(k) and provide legal opinions necessary to
allow such resales provided the Company and its counsel receive reasonably
requested representations from the selling Purchaser and broker, if any.
6.14. OPINION. In addition to the Opinion (as defined herein), the
Company will provide, at the Company's expense, such other legal opinions in the
17
future as are reasonably necessary for the conversion of the Purchaser Notes and
the PO Note and the exercise of the Warrant.
6.15. FINANCIAL STATEMENTS. (a) Commencing with the Company's fiscal year
ending September 30, 2004, as soon as available, and in any event within one
hundred and five (105) days after the end of each fiscal year of the Company,
the Company shall deliver to the Purchaser the Company's audited financial
statements with a report of independent certified public accountants of
recognized standing selected by the Company and reasonably acceptable to the
Purchaser (the "ACCOUNTANTS"), which annual financial statements shall include
the Company's balance sheet as at the end of such fiscal year and the related
statements of the Company's income, retained earnings and cash flows for the
fiscal year then ended, prepared, on a consolidating and consolidated basis to
include all subsidiaries, all in reasonable detail and prepared in accordance
with generally accepted accounting principles practices and procedures in effect
from time to time in the United States of America ("GAAP"), together with (i)
copies of any management letters prepared by such Accountants; (ii) a report
signed by the Accountants stating that, in making the investigations necessary
for said opinion, they obtained no knowledge, except as specifically stated, of
any "EVENT OF DEFAULT" (as defined in the Convertible Note); and (iii) a
certificate of the Company's President, Chief Executive Officer or Chief
Financial Officer stating that such financial statements have been prepared in
accordance with GAAP and stating whether or not such officer has knowledge of
the occurrence of any Event of Default hereunder and, if so, stating in
reasonable detail the facts with respect thereto;
6.15.1 Commencing with the Company's fiscal quarter ended December
31, 2004, as soon as available and in any event within (i) fifty (50) days after
the end of each quarter and (ii) thirty (30) days after the end of each month,
the Company shall deliver to the Purchaser an unaudited/internal balance sheet
and statements of income, retained earnings and cash flows of the Company as at
the end of and for such quarter or month, as the case may be, and for the year
to date period then ended, on a consolidating and consolidated basis to include
all subsidiaries, in reasonable detail and stating in comparative form the
figures for the corresponding date and periods in the previous year, all
prepared in accordance with GAAP, subject to year-end adjustments and
accompanied by a certificate of the Company's President, Chief Executive Officer
or Chief Financial Officer, stating (i) that such financial statements have been
prepared in accordance with GAAP, subject to year-end audit adjustments, and
(ii) whether or not such officer has knowledge of the occurrence of any Event of
Default hereunder not theretofore reported and remedied and, if so, stating in
reasonable detail the facts with respect thereto;
6.15.2 Within thirty (30) days after the end of each month, the
Company shall deliver to the Purchaser any and all amended budgets for the
Company and its Subsidiaries.
6.16. [INTENTIONALLY DELETED].
6.17. RESTRICTIONS. So long as any Purchaser Debt remains outstanding,
without prior written consent of the Purchaser, the Company shall not, except as
set forth on Schedule 6.17, (i) create, assume or suffer to exist any
indebtedness (exclusive of trade debt) senior to or pari passu with the
Purchaser Debt, and in any event unless and until each holder of such
indebtedness shall have entered into an intercreditor agreement with and on
18
terms reasonably acceptable to the Purchaser and/or (ii) declare, pay or make
any cash dividend or distribution on any shares of its capital stock or apply
any of its funds, property or assets to the purchase, redemption or other
retirement of any of its capital stock or of any options to purchase or acquire
any such shares of capital stock, or make any cash distribution in respect of
principal owing to any debt or equity holder of the Company to the extent that
the repayment of such principal is junior in right of payment to the Purchaser
Debt. In the event of any such payment to a holder of any indebtedness of the
Company which by its terms is pari passu with the Purchaser Debt, the Purchaser
Debt and such other debt shall be paid on a pro rata basis.
6.18. RESTRICTED CASH DISCLOSURE. The Company agrees that, in connection
with its filing of its 8-K Report with the SEC concerning the transactions
contemplated by this Agreement and the Related Agreements (such report, the
"LAURUS TRANSACTION 8-K") in a timely manner after the date hereof, it will
disclose in such Laurus Transaction 8-K the amount of the proceeds of the Term
Note and/or the Convertible Note issued to the Purchaser that has been placed in
escrow pursuant in a bank account controlled by the Purchaser and is subject to
the terms and conditions of this Agreement and the Related Agreements.
6.19. ENGAGEMENT OF INVESTMENT BANKING FIRM. (a) The Company hereby
agrees that within ten (10) days after the Closing Date, it shall engage the
investment banking services of Xxxxxx, Xxxxxxxx & Company, Inc. ("STIFEL") for
the purpose of actively pursuing the consummation of the Asset Sales.
(b) The Company further agrees that, in the event that the transaction
described on SCHEDULE 6.19 (the "Specified Transaction") is not
consummated either a result of the Company not obtaining
shareholder approval for such Specified Transaction by October 31,
2005 or the party currently interested in the Specified Transaction
terminating its interests in consummating such Specified
Transaction by February 28, 2005, the Company shall retain Stifel
for the sale of the assets that were the subject of the Specified
Transaction.
(c) Unless agreed mutually between the Company and the Purchaser,
Stifel shall be retained by the Company until the assets referred
to in Section 6.19(a) and Section 6.19(b) are sold.
7. COVENANTS OF THE PURCHASER.
The Purchaser covenants and agrees with the Company as follows:
7.1. CONFIDENTIALITY. The Purchaser agrees that it will not, without
prior written consent of the Company, disclose, or include in any public
announcement, the name of the Company, or unless and until such disclosure is
required by law or applicable regulation, and then only to the extent of such
requirement.
7.2. NON-PUBLIC INFORMATION. The Purchaser agrees not to effect any
sales in the shares of the Common Stock while in possession of material,
non-public information regarding the Company if such sales would violate
applicable securities law.
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8. COVENANTS OF THE COMPANY AND THE PURCHASER REGARDING INDEMNIFICATION.
8.1. INDEMNIFICATION. Each party hereto (the "INDEMNIFYING PARTY")
agrees to indemnify, hold harmless, reimburse and defend the other party hereto
(the "INDEMNIFIED PARTY"), each of the Indemnified Party's officers, directors,
agents, affiliates, control persons, and principal shareholders (collectively,
the "INDEMNITEES"), against any claim, cost, expense, liability, obligation,
loss or damage (including reasonable legal fees) of any nature, incurred by or
imposed upon the Indemnified Party (each, a "LOSS", and collectively, the
"LOSSES") which results, arises out of or is based upon (i) any
misrepresentation by the Indemnifying Party or breach of any representation or
warranty made by the Indemnifying Party in this Agreement or in any exhibits or
schedules attached hereto or any Related Agreement, or (ii) any breach or
default in performance by the Indemnifying Party of any covenant or undertaking
to be performed by the Indemnifying Party hereunder, or any other agreement
entered into by the Company and the Purchaser relating hereto.
8.2. PROCEDURES. (a) Any claim for recovery or indemnification pursuant
to Section 8.1 will be made within ten (10) days after discovery of the
circumstances underlying such claim in a written statement signed by the
Indemnified Party, which will specify in reasonable detail each Loss suffered by
the Indemnified Party and the estimated amount thereof, the date such item was
claimed or the facts giving rise to such claim were discovered, the basis for
any alleged liability and the nature of the breach or claim to which each such
item is related.
8.2.1 Within ten (10) days after receipt by the Indemnified Party
hereunder of notice of the commencement of any such action, such Indemnified
Party shall, if a claim in respect thereof is to be made against the
Indemnifying Party hereunder, notify the Indemnifying Party in writing thereof
requesting indemnification and specifying the basis for which indemnification is
sought and the amount of asserted Losses, to the extent then known, but the
omission so to notify the Indemnifying Party shall not relieve it from any
liability which it may have to such Indemnified Party other than under this
Section 8.2 and shall only relieve it from any liability which it may have to
such Indemnified Party under this Section 8.2 if and to the extent the
Indemnifying Party is prejudiced by such omission. In case any such action shall
be brought against any Indemnified Party by a third party (a "THIRD PARTY
CLAIM") and it shall notify the Indemnifying Party of the commencement thereof,
the Indemnifying Party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense of such Third Party Claim with
counsel satisfactory to such Indemnified Party, and, after notice from the
Indemnifying Party to such Indemnified Party of its election so to assume and
undertake the defense thereof, the Indemnifying Party shall not be liable to
such Indemnified Party under this Section 8.2 for any legal expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof; if the Indemnified Party retains its own counsel, then the Indemnified
Party shall pay all fees, costs and expenses of such counsel, provided, however,
that, if the defendants in any such action include both the Indemnified Party
and the Indemnifying Party and the Indemnified Party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the Indemnifying Party or if
the interests of the Indemnified Party reasonably may be deemed to conflict with
the interests of the Indemnifying Party, the Indemnified Party shall have the
right to select one separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the reasonable
20
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the Indemnifying Party as incurred.
9. CONVERSION OF CONVERTIBLE NOTE.
9.1.1 The Company understands that upon a Conversion (as defined in
the Convertible Note) a delay in the delivery of the Note Shares in the form
required pursuant to the Convertible Note beyond the "DELIVERY DATE" (as defined
in the Convertible Note) could result in economic loss to the Purchaser. In the
event that the Note Shares are not delivered to the Purchaser by the Delivery
Date, as compensation to the Purchaser for such loss, the Company agrees to pay
late payments to the Purchaser for late issuance of such Note Shares in the
amount equal to the greater of (i) $500 per business day after the Delivery Date
or (ii) the Purchaser's actual damages from such delayed delivery.
Notwithstanding the foregoing, the Company shall not be liable to pay the
Purchaser any late payments if the delay in the delivery of the Note Shares
beyond the Delivery Date is solely out of the control of the Company and the
Company is actively trying to cure the cause of the delay. The Company shall pay
any payments required to be paid under this Section 9.1 in immediately available
funds upon demand and, in the case of actual damages by the Purchaser, upon
receipt by the Company of reasonable documentation of the amount of such
damages, containing the number of shares of Common Stock the Purchaser is forced
to purchase (in an open market transaction) that the Purchaser anticipated
receiving upon such Conversion. Such damages owed by the Purchaser to the
Company shall be calculated as the amount by which (A) the Purchaser's total
purchase price (including customary brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (B) the aggregate principal and/or
interest amount of the Convertible Note, for which such Conversion Notice was
not timely honored.
9.1.2 Nothing contained herein or in any document referred to
herein or delivered in connection herewith shall be deemed to establish or
require the payment of a rate of interest or other charges in excess of the
maximum permitted by applicable law. In the event that the rate of interest or
dividends required to be paid or other charges hereunder exceed the maximum
amount permitted by such law, any payments in excess of such maximum shall be
credited against amounts owed by the Company to the Purchaser and any remainder
refunded to the Company.
10. REGISTRATION RIGHTS.
10.1. REGISTRATION RIGHTS GRANTED. The Purchaser shall retain
registration rights pursuant to the terms of the Registration Rights Agreement.
10.2. OFFERING RESTRICTIONS. Except as previously disclosed in the SEC
Reports or stock or stock options granted to employees or directors of the
Company, or shares of preferred stock issued to pay dividends in respect of the
Company's preferred stock, or equity or debt issued in connection with an
acquisition of a business or assets by the Company, or the issuance by the
Company of stock in connection with the establishment of a joint venture
partnership or licensing arrangement, the Company will not issue any securities
with a continuously variable/floating conversion feature which are or could be
(by conversion or registration) free-trading securities (i.e. common stock
21
subject to a registration statement) prior to the full repayment or conversion
of the Purchaser Debt.
11. [INTENTIONALLY OMITTED]
12. MISCELLANEOUS.
12.1. (a) The Company and the Purchaser hereby agree that, on the date
hereof, the following amounts are outstanding under the 2003 Note: $6,667,987.50
(collectively, the "OUTSTANDING AMOUNTS"). The Company and the Purchaser hereby
agree that the Outstanding Amounts shall be paid by the Company to the Purchaser
in the following manner: No payments of Principal Amount shall be due under the
2003 Note until February 1, 2005. From February 1, 2005 until November 30, 2005,
on the first of every month, payments of Monthly Amounts (as such term is
defined in the 2003 Note) in an amount equal to $75,000 shall be due and payable
to Holder (as such term is defined in the 2003 Note), together with any accrued
and unpaid interest to date on such portion of the Monthly Amount. From December
1, 2005 until the day prior to the Maturity Date (as such term is defined in the
2003 Note), on the first of every month, payments of Monthly Amounts in an
amount equal to $225,000 shall be due and payable to Holder, together with any
accrued and unpaid interest to date on such portion of the Monthly Amount. On
the Maturity Date, all remaining amounts of principal and interest due under the
2003 Note shall be due and payable to Holder. No Event of Default (as such term
is defined in the 2003 Note) as a result of the non-payment of principal of the
2003 Note by the Company shall be deemed to have occurred unless and until
payments of Monthly Amounts or any other portion of the Principal Amount (as
such term is defined in the 2003 Note) are not made pursuant to this paragraph
and after the expiration of any applicable grace periods under the 2003 Note.
(b) Subject to the payment by the Company of the amounts set forth
in Section 12.1(a) on the dates required by Section 12.1(a), upon the execution
of this Agreement, the Purchaser hereby waives all Events of Default that have
occurred prior to the date hereof under the 2003 Note, that certain Securities
Purchase Agreement dated as of November 25, 2003 by and between Company and
Purchaser (as amended, modified or supplemented from time to time, the "2003
PURCHASE AGREEMENT"), that certain Registration Rights Agreement, dated as of
November 25, 2003, by and between Company and the Purchaser (as amended,
modified or supplemented from time to time, the "2003 REGISTRATION RIGHTS
AGREEMENT", and together with the 2003 Convertible Term Note and the 2003
Purchase Agreement and all other Related Agreements referred to in the 2003
Purchase Agreement, the "2003 TRANSACTION DOCUMENTS"), solely to the extent (i)
such Events of Default arise as a result of non-compliance or non-payment by
Company or any of its Subsidiaries with any provisions of the 2003 Transaction
Documents prior to the date hereof (including, without limitation, failure to
obtain the landlord waivers for the leased premises at 0000 XxXxxxxx Xx.,
Xxxxxxxxxx, XX and 000 Xxxx Xx., Xxx. 000, Xxxxxxxxxx, XX); (ii) have been
disclosed to the Purchaser prior to the date hereof and (iii) where such Event
of Default did not result from fraud, gross negligence or willful misconduct of
the Company and its Subsidiaries.
12.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS. ANY ACTION BROUGHT BY EITHER PARTY AGAINST THE OTHER
22
CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT SHALL BE BROUGHT ONLY
IN THE STATE COURTS OF NEW YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATE OF
NEW YORK. BOTH PARTIES AND THE INDIVIDUALS EXECUTING THIS AGREEMENT AND OTHER
AGREEMENTS ON BEHALF OF THE COMPANY AGREE TO SUBMIT TO THE JURISDICTION OF SUCH
COURTS AND WAIVE TRIAL BY JURY. IN THE EVENT THAT ANY PROVISION OF THIS
AGREEMENT OR ANY OTHER AGREEMENT DELIVERED IN CONNECTION HEREWITH IS INVALID OR
UNENFORCEABLE UNDER ANY APPLICABLE STATUTE OR RULE OF LAW, THEN SUCH PROVISION
SHALL BE DEEMED INOPERATIVE TO THE EXTENT THAT IT MAY CONFLICT THEREWITH AND
SHALL BE DEEMED MODIFIED TO CONFORM WITH SUCH STATUTE OR RULE OF LAW. ANY SUCH
PROVISION WHICH MAY PROVE INVALID OR UNENFORCEABLE UNDER ANY LAW SHALL NOT
AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF ANY AGREEMENT.
12.3 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by the Purchaser and the
closing of the transactions contemplated hereby to the extent provided therein.
All statements as to factual matters contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant hereto in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company hereunder solely as of the date of
such certificate or instrument.
12.4 SUCCESSORS. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, heirs, executors and administrators of the parties hereto and shall
inure to the benefit of and be enforceable by each person who shall be a holder
of the Securities from time to time, other than the holders of Common Stock
which has been sold by the Purchaser pursuant to Rule 144 or an effective
registration statement. The Purchaser may not assign its rights hereunder to a
competitor of the Company which determination shall be made by the Company in
the reasonable exercise of its good faith discretion.
12.5 ENTIRE AGREEMENT. This Agreement shall amend and restate in its
entirety that certain Securities Purchase Agreement by and between the Company
and the Purchaser dated as of November 26, 2004 (the "Former SPA"). This
Agreement, the exhibits and schedules hereto, the Related Agreements and the
other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and shall replace any prior agreements or understandings regarding the
subject matter hereof, including without limitation the Former SPA. No party
shall be liable or bound to any other in any manner by any representations,
warranties, covenants and agreements except as specifically set forth herein and
in the exhibits and schedules hereto, the Related Agreements and the other
documents delivered pursuant hereto.
23
12.6 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
12.7 AMENDMENT AND WAIVER.
12.7.1 This Agreement may be amended or modified only upon the
written consent of the Company and the Purchaser.
12.7.2 Except as otherwise provided herein, the obligations of the
Company and the rights of the Purchaser under this Agreement may be waived only
with the written consent of the Purchaser.
12.7.3 Except as otherwise provided herein, the obligations of the
Purchaser and the rights of the Company under this Agreement may be waived only
with the written consent of the Company.
12.8 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement or the Related
Agreements, shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring. All remedies, either under this Agreement, the Purchaser
Notes, the Warrant or the Related Agreements, by law or otherwise afforded to
any party, shall be cumulative and not alternative.
12.9 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed facsimile if sent during normal
business hours of the recipient, if not, then on the next business day, (c)
three (3) business days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent: (i) to the
Company at the address as set forth on the signature page hereof, with a copy to
Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Wolosky LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, XX
00000, Attention: Xxxx X. Xxxxxxxx, Esq., facsimile number (000) 000-0000; and
(ii) to the Purchaser at the address set forth on the signature page hereto for
such Purchaser, with a copy to Xxxx X. Xxxxxx , Esq., 000 Xxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, XX 00000, facsimile number (000) 000-0000, or (iii) at such
other address as the Company or the Purchaser may designate by written notice to
the other parties hereto given in accordance herewith.
12.10 ATTORNEYS' FEES. Except as otherwise provided herein, in the event
that any suit or action is instituted to enforce any provision in this
Agreement, the prevailing party in such dispute shall be entitled to recover
from the losing party all fees, costs and expenses of enforcing any right of
such prevailing party under or with respect to this Agreement, including,
without limitation, such reasonable fees and expenses of attorneys and
accountants, which shall include, without limitation, all fees, costs and
expenses of appeals.
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12.11 TITLES AND SUBTITLES. The titles of the sections and subsections of
the Agreement are for convenience of reference only and are not to be considered
in construing this Agreement.
12.12 FACSIMILE SIGNATURES; COUNTERPARTS. This Agreement may be executed
by facsimile signatures and in any number of counterparts, each of which shall
be an original, but all of which together shall constitute one instrument.
12.13 BROKER'S FEES. Except as set forth on SCHEDULE 12.13 hereof, each
party hereto represents and warrants that no agent, broker, investment banker,
person or firm acting on behalf of or under the authority of such party hereto
is or will be entitled to any broker's or finder's fee or any other commission
directly or indirectly in connection with the transactions contemplated herein.
Each party hereto further agrees to indemnify each other party for any claims,
losses or expenses incurred by such other party as a result of the
representation in this Section 12.13 being untrue.
12.14 CONSTRUCTION. Each party acknowledges that its legal counsel
participated in the preparation of this Agreement and the Related Agreements
and, therefore, stipulates that the rule of construction that ambiguities are to
be resolved against the drafting party shall not be applied in the
interpretation of this Agreement to favor any party against the other.
25
IN WITNESS WHEREOF, the parties hereto have executed this SECURITIES
PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.
COMPANY: PURCHASER:
TIDEL TECHNOLOGIES, INC. LAURUS MASTER FUND, LTD.
By: /s/ Xxxx X. Xxxxxxxx By: /s/ Xxxxx Grin
------------------------------- ----------------------------------
Name: Xxxx X. Xxxxxxxx Name: Xxxxx Grin
----------------------------- --------------------------------
Title: President Title: Director
---------------------------- -------------------------------
Address: 2900 Wilcrest Address: c/o M&C Corporate Services Limited,
Xxxxx 000 X.X. Xxx 000 XX, Xxxxxx House,
Houston, TX 77042 South Church Street, Xxxxxx Town,
Grand Cayman, Cayman Islands,
Fax: 000-000-0000
26
LIST OF EXHIBITS
Form of Convertible Note Exhibit A
Form of Term Note Exhibit B
Form of Warrant Exhibit C
Form of Funds Escrow Agreement Exhibit D
Form of Disbursement Letter Exhibit E
Form of Opinion Exhibit F
27
