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REMOTEMDX, INC.
COMMON STOCK PURCHASE AGREEMENT
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This Common Stock Purchase Agreement, dated as of August 4, 2006 is
entered into by and among RemoteMDx, Inc., a Utah corporation (the "Company")
and the individuals and entities listed on Exhibit A hereto under the heading
"Purchasers" (the "Purchasers"), who become parties to this Agreement by
executing and delivering a financing signature page in the form of Exhibit B
hereto or such other form as may be acceptable to the Company (the "Financing
Signature Page"). In consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:
1. Authorization; Sale of Shares.
1.1 Authorization. The Company has, or before the Closing (as
defined in Section 2) will have, duly authorized the sale and issuance in this
offering, pursuant to the terms of this Agreement, a maximum of 5,300,000 shares
of the Company's Common Stock (the "Shares").
1.2 Sale of Shares. Subject to the terms and conditions of this
Agreement, at the Closings (as defined in Section 2.2), the Company will sell
and issue to each of the Purchasers, and each of the Purchasers will purchase,
the number of Shares for the purchase price of $1.30 per share (the "Purchase
Price"). The Company's agreement with each Purchaser is a separate agreement,
and the sale of Shares to each Purchaser is a separate sale.
1.3 Use of Proceeds. The Company will use the proceeds from the
sale of the Shares for product development and other general corporate purposes.
2. Closing.
2.1 The Closing. Subject to the terms and conditions of this
Agreement, the closing (the "Closing") of the sale and purchase of Shares under
this Agreement shall take place on the date of this Agreement (the " Closing
Date"). At the Closing:
(a) The Company shall deliver to the Purchasers the
Disclosure Schedule (as defined in Section 3);
(b) the Company shall deliver to the Purchasers a
certificate, as of the most recent practicable dates, as to the corporate good
standing of the Company issued by the Secretary of State of the State of Utah;
(c) the Company shall deliver to the Purchasers a copy
of the Articles of Incorporation of the Company, as amended and in effect as of
the Closing Date (including the Designation of Rights), certified by the
Secretary of State of the State of Utah;
(d) the Company shall deliver to the Purchasers a
Certificate of the Secretary of the Company attesting as to (i) the By-laws of
the Company; (ii) the signatures and titles of the officers of the Company
executing this Agreement or any of the other agreements to be executed and
delivered by the Company at the Closing; and (iii) resolutions of the Board of
Directors of the Company, authorizing and approving all matters in connection
with this Agreement and the transactions contemplated hereby;
(e) the Company shall deliver to each of the Purchasers
a certificate for the number of Shares set forth opposite such Initial
Purchaser's name on Exhibit A, registered in the name of such Purchaser; and
(f) each Purchaser shall pay to the Company, by wire
transfer of immediately available funds, the Purchase Price for the Shares being
purchased. The Closing shall not be deemed to occur, and all such payments by
any Purchaser shall be deemed to be held in escrow, until all Purchasers listed
on Exhibit A have tendered to the Company the payments indicated thereon.
3. Representations of the Company. Except as disclosed by the Company
in a written Disclosure Schedule provided by the Company to the Purchasers dated
the date hereof (the "Disclosure Schedule"), the Company hereby represents and
warrants to each Purchaser that the statements contained in this Section 3 are
complete and accurate as of the date of this Agreement. The Disclosure Schedule
shall be arranged in sections corresponding to the numbered and lettered
sections and subsections contained in this Section 3, and the disclosures in any
section or subsection of the Disclosure Schedule shall qualify only the
corresponding section or subsection of this Section 3, unless otherwise
specified.
3.1 Organization and Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Utah and has full corporate power and authority to conduct its business
as presently conducted and as proposed to be conducted by it and to enter into
and perform this Agreement and all other agreements required to be executed by
the Company at or prior to the Closing pursuant to Section 2 (the "Ancillary
Agreements") and to carry out the transactions contemplated by this Agreement
and the Ancillary Agreements. The Company is duly qualified to do business as a
foreign corporation and is in good standing in every other jurisdiction in which
the failure so to qualify would have a material adverse effect on the business,
prospects, assets or condition (financial or otherwise) of the Company (a
"Company Material Adverse Effect"). The Company has furnished to the Purchasers
complete and accurate copies of its Articles of Incorporation and By-laws, each
as amended to date and presently in effect. The Company has at all times
complied with all provisions of its Articles of Incorporation and By-laws and is
not in default under, or in violation of, any such provisions.
3.2 Subsidiaries, Etc. The Company has no subsidiaries and does
not own or control, directly or indirectly, any shares of capital stock of any
other corporation or any interest in any partnership, limited liability company,
joint venture or other non-corporate business enterprise.
3.3 Capitalization.
(a) The authorized capital stock of the Company
(immediately prior to the Closing) consists of (i) 175,000,000 shares of Common
Stock, $.0001 par value per share, of which, as of August 4, 2006, 71,878,237
shares are issued and outstanding and no shares are held in the treasury of the
Company, and (ii) 20,000,000 shares of Preferred Xxxxx, x.0000 par value per
share, of which 40,000 shares have been designated as Series A Preferred and, as
of August 4, 2006, 17,659 of which are issued or outstanding; 2,000,000 which
have been designated as Series B Preferred and, as of August 4, 2006, 268,332 of
which are outstanding; and 7,383,929 shares have been designated as Series C
Preferred, 5,357,143 of which are issued or outstanding.
(b) Except as set forth in this Section 3.3 or the
Disclosure Schedule, (i) no subscription, warrant, option, convertible security
or other right (contingent or otherwise) to purchase or acquire any shares of
capital stock of the Company is authorized or outstanding, and there are no
statutory or contractual stockholders' preemptive rights or rights of refusal
with respect to the issuance of the Shares, (ii) the Company has no obligation
(contingent or otherwise) to issue any subscription, warrant, option,
convertible security or other such right, or to issue or distribute to holders
of any shares of its capital stock any evidences of indebtedness or assets of
the Company, (iii) the Company has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any shares of its capital stock or any
interest therein or to pay any dividend or to make any other distribution in
respect thereof, and (iv) there are no outstanding or authorized stock
appreciation, phantom stock or similar rights with respect to the Company.
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(c) At no time shall the Company reprice any of its
employee or director stock options outstanding from time to time, except (i) as
required by law or judicial process or (ii) in accordance with the terms and
provisions thereof pursuant to antidilution rights or otherwise.
3.4 Issuance of Shares. The issuance, sale and delivery of the
Shares in accordance with this Agreement, and the issuance and delivery of the
shares of Common Stock issuable upon conversion of the Shares, have been, or
will be on or prior to the Closing, duly authorized by all necessary corporate
action on the part of the Company, and all such shares have been reserved for
issuance by the Board of Directors. The Shares when so issued, sold and
delivered against payment therefor in accordance with the provisions of this
Agreement, and the shares of Common Stock issuable upon conversion of the
Shares, when issued upon such conversion, will be duly and validly issued, fully
paid and nonassessable, and free of restrictions on transfer other than
restrictions imposed or created under this Agreement or the Ancillary
Agreements, restrictions required as necessary to qualify this offering as
exempt from the registration requirements of the Securities Act of 1933 or any
other applicable law, or by the Purchaser.
3.5 Authority for Agreement; No Conflict. The execution,
delivery and performance by the Company of this Agreement and the Ancillary
Agreements, and the consummation by the Company of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary corporate action.
This Agreement has been, and the Ancillary Agreements when executed at the
Closing will be, duly executed and delivered by the Company and constitute valid
and binding obligations of the Company enforceable in accordance with their
respective terms. The execution and delivery of this Agreement and the Ancillary
Agreements, the consummation of the transactions contemplated hereby and thereby
and the compliance with their respective provisions by the Company will not (a)
conflict with or violate any provision of the Articles of Incorporation or
By-laws of the Company, (b) conflict with, result in a breach of, constitute
(with or without due notice or lapse of time or both) a default under, result in
the acceleration of obligations under, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice, consent or
waiver under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest (as defined below) or other arrangement to which
the Company is a party or by which the Company is bound or to which its assets
are subject, (c) result in the imposition of any Security Interest upon any
assets of the Company or (d) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company or any of its properties
or assets. For purposes of this Agreement, "Security Interest" means any
mortgage, pledge, security interest, encumbrance, charge or other lien (whether
arising by contract or by operation of law).
3.6 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any court, arbitrational tribunal, administrative agency or
commission or other governmental or regulatory authority or agency (each of the
foregoing is hereafter referred to as a "Governmental Entity") is required on
the part of the Company in connection with the offer, issuance, sale and
delivery of the Shares, the issuance and delivery of the shares of Common Stock
issuable upon conversion of the Shares or the other transactions to be
consummated at the Closing, as contemplated by this Agreement and the Ancillary
Agreements, except such filings as shall have been made prior to and shall be
effective on and as of the Closing and such filings required to be made after
the Closing under applicable federal and state securities laws, all of which
filings are specified in the Disclosure Schedule. Based on the representations
made by each of the Purchasers in Section 5 of this Agreement, the offer and
sale of the Shares to each of the Purchasers will be in compliance with
applicable federal and state securities laws.
3.7 Litigation. There is no action, suit or proceeding, or
governmental inquiry or investigation, pending, or, to the best of the Company's
knowledge, any basis therefor or threat thereof, against the Company, which
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questions the validity of this Agreement, the Ancillary Agreements or the right
of the Company to enter into any such agreements, or which might result, either
individually or in the aggregate, in a Company Material Adverse Effect. The
Company is not subject to any outstanding judgement, order or decree.
3.8 Financial Statements. The Company has made available to
each of the Purchasers a complete and accurate copy of (a) the audited balance
sheet of the Company at September 30, 2005 and the related audited statements of
operations and cash flows for the fiscal year then ended, and (b) the unaudited
balance sheet of the Company (the "Balance Sheet") at March 31, 2006 (the
"Balance Sheet Date") and the related statements of operations and cash flows
for the three (3) months then ended (collectively, the "Financial Statements").
The Financial Statements are in accordance with the books and records of the
Company, present fairly the financial condition and results of operations of the
Company, at the dates and for the periods indicated, and have been prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied, except that the unaudited Financial Statements may not be in accordance
with GAAP because of the absence of footnotes normally contained therein and are
subject to normal year-end audit adjustments which in the aggregate will not be
material.
3.9 Absence of Undisclosed Liabilities. The Company does not
have any liability (whether known or unknown and whether absolute or
contingent), except for (a) liabilities shown on the Balance Sheet, (b)
liabilities not in excess of $5,000 in the aggregate, which have arisen since
the Balance Sheet Date in the ordinary course of business and (c) contractual
liabilities incurred in the ordinary course of business which are not required
by GAAP to be reflected on a balance sheet and which would not, either
individually or in the aggregate, have or result in a Company Material Adverse
Effect.
3.10 Absence of Changes. Since the Balance Sheet Date, there has
been no event or development that, individually or in the aggregate, has had a
Company Material Adverse Effect.
3.11 Taxes.
(a) For purposes of this Agreement: (i) "Tax" or "Taxes"
means all taxes, charges, fees, levies or other similar assessments or
liabilities, including without limitation income, gross receipts, ad valorem,
premium, value-added, excise, real property, personal property, sales, use,
transfer, withholding, employment, unemployment insurance, social security,
business license, business organization, environmental, workers compensation,
payroll, profits, license, lease, service, service use, severance, stamp,
occupation, windfall profits, customs, duties, franchise and other taxes imposed
by the United States of America or any state, local or foreign government, or
any other Governmental Entity, and any interest, fines, penalties, assessments
or additions to tax resulting from, attributable to or incurred in connection
with any tax or any contest or dispute thereof; and (ii) "Tax Returns" means all
reports, returns, declarations, statements or other information required to be
supplied to a taxing authority in connection with Taxes and any amendment
thereof.
(b) The amount shown on the Balance Sheet as provision
for Taxes is sufficient in all material respects for the payment of all unpaid
Taxes for all periods ending on or before the date thereof. The Company has
timely filed or obtained presently effective extensions with respect to all Tax
Returns that are or were required to be filed by it, such Tax Returns are
complete and accurate in all material respects and all Taxes shown thereon to be
due have been timely paid. All Taxes that the Company is or was required by law
to have withheld or collected have been duly withheld or collected and, to the
extent required, have been timely paid to the proper Governmental Entity. The
Tax Returns of the Company have not been audited by any Governmental Entity, and
no controversy with respect to Taxes is pending or, to the best of the Company's
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knowledge, threatened. Neither the Company nor, to the knowledge of the Company
any of its stockholders, has ever filed an election pursuant to Section 1362 of
the Internal Revenue Code of 1986, as amended (the "Code"), that the Company be
taxed as an S corporation.
(c) The Company is not now and has never been a "United
States real property holding corporation" as defined in Section 897(c)(2) of the
Code and the Treasury Regulations thereunder.
3.12 Property and Assets. The Company has good title to, or a
valid leasehold interest in, all of its material properties and assets,
including all properties and assets reflected in the Balance Sheet, except those
disposed of since the date thereof in the ordinary course of business, and none
of such properties or assets is subject to any Security Interest other than
those the material terms of which are described in the Balance Sheet or in the
Disclosure Schedule.
3.13 Intellectual Property.
(a) The Disclosure Schedule lists (i) each patent,
patent application, copyright registration or application therefor, mask work
registration or application therefor, and trademark, service xxxx and domain
name registration or application therefor of the Company and (ii) each Customer
Deliverable (as defined below) of the Company.
(b) The Company owns or has the right to use all
Intellectual Property (as defined below) necessary (i) to use, manufacture,
market and distribute the Customer Deliverables and (ii) to operate the Internal
Systems (as defined below). The Company has taken all reasonable measures to
protect the proprietary nature of each item of Company Intellectual Property (as
defined below), and to maintain in confidence all trade secrets and confidential
information, that it owns or uses. No other person or entity has any rights to
any of the Company Intellectual Property owned by the Company (except pursuant
to agreements or licenses specified in the Disclosure Schedule), and, to the
best of the Company's knowledge, no other person or entity is infringing,
violating or misappropriating any of the Company Intellectual Property.
(c) None of the Customer Deliverables, or the marketing,
distribution, provision or use thereof, infringes or violates, or constitutes a
misappropriation of, any Intellectual Property rights of any person or entity,
and neither the marketing, distribution, provision or use of any Customer
Deliverables currently under development by the Company will, when such Customer
Deliverables are commercially released by the Company, infringe or violate, or
constitute a misappropriation of, any Intellectual Property rights of any person
or entity that exist today. To the best of the Company's knowledge, none of the
Internal Systems, or the use thereof, infringes or violates, or constitutes a
misappropriation of, any Intellectual Property rights of any person or entity.
The Disclosure Schedule lists any complaint, claim or notice, or written threat
thereof, received by the Company alleging any such infringement, violation or
misappropriation; and the Company has provided to the Purchasers complete and
accurate copies of all written documentation in the possession of the Company
relating to any such complaint, claim, notice or threat. The Company has
provided to the Purchasers complete and accurate copies of all written
documentation in the Company's possession relating to claims or disputes known
to the Company concerning any Company Intellectual Property.
(d) The Disclosure Schedule identifies each license or
other agreement pursuant to which the Company has licensed, distributed or
otherwise granted any rights to any third party with respect to, any Company
Intellectual Property. Except as described in the Disclosure Schedule, the
Company has not agreed to indemnify any person or entity against any
infringement, violation or misappropriation of any Intellectual Property rights
with respect to any Company Intellectual Property.
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(e) The Disclosure Schedule identifies each item of
Company Intellectual Property that is owned by a party other than the Company,
and the license or agreement pursuant to which the Company uses it (excluding
off-the-shelf software programs licensed by the Company pursuant to "shrink
wrap" or "click through" licenses).
(f) The Company has not disclosed the source code for
any software developed by it, or other confidential information constituting,
embodied in or pertaining to such software, to any person or entity, except
pursuant to the agreements listed in the Disclosure Schedule, and the Company
has taken reasonable measures to prevent disclosure of such source code.
(g) All of the copyrightable materials incorporated in
or bundled with the Customer Deliverables have been created by employees of the
Company within the scope of their employment by the Company or by independent
contractors of the Company who have executed agreements expressly assigning all
right, title and interest in such copyrightable materials to the Company. No
portion of such copyrightable materials was jointly developed with any third
party.
(h) The Disclosure Schedule lists all Open Source
Materials (as defined below) that the Company has used in any way and describes
the manner in which such Open Source Materials have been used by the Company,
including, without limitation, whether and how the Open Source Materials have
been modified and/or distributed by the Company. Except as set forth in the
Disclosure Schedule, the Company has not (i) incorporated any Open Source
Materials into, or combined Open Source Materials with, any Customer
Deliverables, (ii) distributed Open Source Materials in connection with any
Customer Deliverables, or (iii) used Open Source Materials that (with respect to
either clause (i), (ii) or (iii) above) (A) create, or purport to create,
obligations for the Company with respect to software developed or distributed by
the Company or (B) grant, or purport to grant, to any third party any rights or
immunities under intellectual property rights. Without limiting the generality
of the foregoing, the Company has not used any Open Source Materials that
require, as a condition of use, modification and/or distribution of such Open
Source Materials, that other software incorporated into, derived from or
distributed with such Open Source Materials be (1) disclosed or distributed in
source code form, (2) licensed for the purpose of making derivative works, or
(3) redistributable at no charge.
(i) To the best of the Company's knowledge, the Customer
Deliverables and the Internal Systems are free from significant defects or
programming errors and conform in all material respects to the written
documentation and specifications therefor.
(j) For purposes of this Agreement, the following terms
shall have the following meanings:
(i) "Customer Deliverables" shall mean (A) the
products that the Company (1) currently manufactures, markets, sells or licenses
or (2) currently plans to manufacture, market, sell or license in the future and
(B) the services that the Company (1) currently provides or (2) currently plans
to provide in the future.
(ii) "Internal Systems" shall mean the internal
systems of the Company that are used in its business or operations, including,
computer hardware systems, software applications and embedded systems.
(iii) "Intellectual Property" shall mean all: (A)
patents, patent applications, patent disclosures and all related continuation,
continuation-in-part, divisional, reissue, reexamination, utility model,
certificate of invention and design patents, patent applications, registrations
and applications for registrations; (B) trademarks, service marks, trade dress,
Internet domain names, logos, trade names and corporate names and registrations
and applications for registration thereof; (C) copyrights and registrations and
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applications for registration thereof; (D) mask works and registrations and
applications for registration thereof; (E) computer software, data and
documentation; (F) inventions, trade secrets and confidential business
information, whether patentable or nonpatentable and whether or not reduced to
practice, know-how, manufacturing and product processes and techniques, research
and development information, copyrightable works, financial, marketing and
business data, pricing and cost information, business and marketing plans and
customer and supplier lists and information; (G) other proprietary rights
relating to any of the foregoing (including remedies against infringements
thereof and rights of protection of interest therein under the laws of all
jurisdictions); and (H) copies and tangible embodiments thereof.
(iv) "Company Intellectual Property" shall mean
the Intellectual Property owned by or licensed to the Company and incorporated
in, underlying or used in connection with the Customer Deliverables or the
Internal Systems.
(v) "Open Source Materials" shall mean all
software or other material that is distributed as "free software", "open source
software" or under a similar licensing or distribution model, including without
limitation the GNU General Public License (GPL), GNU Lesser General Public
License (LGPL), Mozilla Public License (MPL), BSD Licenses, the Artistic
License, the Netscape Public License, the Sun Community Source License (SCSL)
the Sun Industry Standards License (SISL) and the Apache License.
3.14 Insurance. The Company maintains valid policies of workers'
compensation insurance and of insurance with respect to its properties and
business of the kinds and in the amounts not less than are customarily obtained
by corporations of established reputation engaged in the same or similar
business and similarly situated, including, without limitation, insurance
against loss, damage, fire, theft, public liability and other risks.
3.15 Material Contracts and Obligations. The Disclosure Schedule
sets forth a list of all material agreements or commitments of any nature
(whether written or oral) to which the Company is a party or by which it is
bound, including without limitation (a) any agreement which requires future
expenditures by the Company in excess of $15,000 or which might result in
payments to the Company in excess of $15,000, (b) any employment or consulting
agreement, employee benefit, bonus, pension, profit-sharing, stock option, stock
purchase or similar plan or arrangement, (c) any distributor, sales
representative or similar agreement, (d) any agreement with any current or
former stockholder, officer or director of the Company, or any "affiliate" or
"associate" of such persons (as such terms are defined in the rules and
regulations promulgated under the Securities Act), including without limitation
any agreement or other arrangement providing for the furnishing of services by,
rental of real or personal property from, or otherwise requiring payments to,
any such person or entity, (e) any agreement under which the Company is
restricted from carrying on any business anywhere in the world, (f) any
agreement relating to indebtedness for borrowed money, (g) any agreement for the
disposition of a material portion of the Company's assets (other than for the
sale of inventory in the ordinary course of business), (h) any agreement for the
acquisition of the business or securities or other ownership interests of
another party or (i) any other agreement that is material to the operations,
business or finances of the Company. All of such agreements and contracts are
valid, binding and in full force and effect. Neither the Company, nor, to the
best of the Company's knowledge, any other party thereto, is in default of any
of its obligations under any of the agreements or contracts listed in the
Disclosure Schedule.
3.16 Compliance. The Company has complied with all laws,
regulations and orders applicable to its present and proposed business and has
all material permits and licenses required thereby, except to the extent such a
violation would not be reasonably likely to result in or have a Company Material
Adverse Effect. There is no term or provision of any mortgage, indenture,
contract, agreement or instrument to which the Company is a party or by which it
is bound, or, to the best of the Company's knowledge, of any provision of any
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state or federal judgment, decree, order, statute, rule or regulation applicable
to or binding upon the Company, which materially adversely affects or, so far as
the Company may now foresee, in the future is reasonably likely to result in or
have a Company Material Adverse Effect. To the best of the Company's knowledge,
none of the employees of the Company is in violation of any term of any contract
or covenant (either with the Company or with another entity) relating to
employment, patents, assignment of inventions, proprietary information
disclosure, non-competition or non-solicitation.
3.17 Employees.
(a) All current and former employees of the Company who
have or have had access to confidential or proprietary information of the
Company have executed and delivered non-disclosure and assignment of inventions
agreements and all of such agreements are in full force and effect. All current
and former consultants of the Company that have performed development work or
provided technical services to the Company or have otherwise had access to
confidential or proprietary information of the Company have executed and
delivered non-disclosure and assignment of inventions agreements, and all of
such agreements are in full force and effect.
(b) The Company is not aware that any employee of the
Company has plans to terminate his or her employment relationship with the
Company. All employees of the Company are engaged by the Company on a full time
basis. The Company has complied in all material respects with all applicable
laws relating to wages, hours, equal opportunity, collective bargaining,
workers' compensation insurance and the payment of social security and other
Taxes. None of the employees of the Company is represented by any labor union,
and there is no labor strike or other labor trouble pending with respect to the
Company (including, without limitation, any organizational drive) or, to the
best of the Company's knowledge, threatened.
3.18 ERISA. The Company does not have or otherwise contribute to
or participate in any employee benefit plan subject to the Employee Retirement
Income Security Act of 1974, as amended, other than a medical benefit plan with
respect to which the Company has made all required contributions and has
complied with all applicable laws.
3.19 Books and Records. The minute books of the Company contain
complete and accurate records of all meetings and other corporate actions of its
stockholders and its Board of Directors and committees thereof. The stock ledger
of the Company is complete and accurate and reflects all issuances, transfers,
repurchases and cancellations of shares of capital stock of the Company.
3.20 Permits. The Disclosure Schedule sets forth a list of all
material permits, licenses, registrations, certificates, orders or approvals
from any Governmental Entity ("Permits") issued to or held by the Company. Such
listed Permits are the only Permits that are required for the Company to conduct
its business as presently or proposed to be conducted, except for those the
absence of which would not have a Company Material Adverse Effect. Each such
Permit is in full force and effect and, to the best of the Company's knowledge,
no suspension or cancellation of such Permit is threatened and there is no basis
for believing that such Permit will not be renewable upon expiration.
3.21 Environmental Matters.
(a) To the best knowledge of the Company, the Company
has complied with all applicable Environmental Laws (as defined below). There is
no pending or, to the best of the Company's knowledge, threatened civil or
criminal litigation, written notice of violation, formal administrative
proceeding, or investigation, inquiry or information request by any Governmental
Entity, relating to any Environmental Law involving the Company. For purposes of
this Agreement, "Environmental Law" shall mean any federal, state or local law,
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statute, rule or regulation or the common law relating to the environment or
occupational health and safety, including any statute, regulation,
administrative decision or order pertaining to (i) treatment, storage, disposal,
generation and transportation of industrial, toxic or hazardous materials or
substances or solid or hazardous waste; (ii) air, water and noise pollution;
(iii) groundwater and soil contamination; (iv) the release or threatened release
into the environment of industrial, toxic or hazardous materials or substances,
or solid or hazardous waste, including emissions, discharges, injections,
spills, escapes or dumping of pollutants, contaminants or chemicals; (v) the
protection of wildlife, marine life and wetlands, including all endangered and
threatened species; (vi) storage tanks, vessels, containers, abandoned or
discarded barrels and other closed receptacles; (vii) health and safety of
employees and other persons; and (viii) manufacturing, processing, using,
distributing, treating, storing, disposing, transporting or handling of
materials regulated under any law as pollutants, contaminants, toxic or
hazardous materials or substances or oil or petroleum products or solid or
hazardous waste. As used above, the terms "release" and "environment" shall have
the meaning set forth in the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA").
(b) The Company has no liabilities or obligations
arising from the release of any Materials of Environmental Concern (as defined
below) into the environment. For purposes of this Agreement, "Materials of
Environmental Concern" shall mean any chemicals, pollutants or contaminants,
hazardous substances (as such term is defined under CERCLA), solid wastes and
hazardous wastes (as such terms are defined under the Resource Conservation and
Recovery Act), toxic materials, oil or petroleum and petroleum products or any
other material subject to regulation under any Environmental Law.
(c) The Company is not a party to or bound by any court
order, administrative order, consent order or other agreement between the
Company and any Governmental Entity entered into in connection with any legal
obligation or liability arising under any Environmental Law.
(d) The Company is not aware of any material
environmental liability of any solid or hazardous waste transporter or
treatment, storage or disposal facility that has been used by the Company.
(e) Set forth in the Disclosure Schedule is a list of
all documents (whether in hard copy or electronic form) that contain any
environmental reports, investigations and audits relating to premises currently
or previously owned or operated by the Company (whether conducted by or on
behalf of the Company or a third party, and whether done at the initiative of
the Company or directed by a Governmental Entity or other third party) which
were issued or conducted during the past five years and which the Company has
possession of or access to. A complete and accurate copy of each such document
has been provided to the Purchasers.
3.22 SEC Documents. The Company has filed with the Securities
and Exchange Commission (the "Commission") all forms, reports, schedules,
statements and other documents required to be filed by it since its initial
public offering under the Securities Exchange Act of 1934, as amended (together
with the rules and regulations thereunder, the "Exchange Act") or the Securities
Act of 1933, as amended (together with the rules and regulations thereunder, the
"Securities Act") (such documents, as supplemented and amended since the time of
filing, collectively, the "Company SEC Documents"). The Company has timely filed
with the Commission all Company SEC Documents within the five-year period
preceding the date hereof. To the best of the Company's knowledge, the Company
SEC Documents, including, without limitation, any financial statements or
schedules included or incorporated by reference therein, at the time filed (and,
in the case of registration statements and proxy statements, on the dates of
effectiveness and the dates of mailing, respectively) (a) did not contain any
-9-
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein (and, in
the case of any prospectus, in light of the circumstances under which they were
made), not misleading, and (b) complied in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be. To the best knowledge of the Company, the financial statements of the
Company included in the Company SEC Documents at the time filed (and, in the
case of registration statements and proxy statements, on the dates of
effectiveness and the dates of mailing, respectively) complied as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the Commission with respect thereto, were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto or, in the case of unaudited statements, as permitted by Form 10-Q of
the Commission), and fairly presented (subject, in the case of the unaudited
interim financial statements, to normal, recurring year-end audit adjustments
consistent with past practice), in all material respects, the consolidated
financial position of the Company and its consolidated subsidiaries as at the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended. No subsidiary of the Company is subject to the
periodic reporting requirements of the Exchange Act or required to file any
form, report or other document with the Commission, the Nasdaq Stock Market,
Inc., any stock exchange or any other comparable governmental authority.
3.23 Disclosures. Neither this Agreement nor any Exhibit hereto,
nor any Ancillary Agreement nor any report, certificate or instrument furnished
by the Company to any of the Purchasers or their counsel in connection with the
transactions contemplated by this Agreement, when read together, contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements contained herein
or therein, in light of the circumstances under which they were made, not
misleading. Each projection furnished was prepared in good faith based on
reasonable assumptions and represents the Company's best estimate of future
results based on information available as of the date of such projections.
4. Representations of the Purchasers. Each of the Purchasers
severally represents and warrants to the Company as follows:
4.1 Investment. Such Purchaser is acquiring the Shares for his,
her or its own account for investment and not with a view to, or for sale in
connection with, any distribution thereof, nor with any present intention of
distributing or selling the same; and, except as contemplated by this Agreement,
and the Exhibits hereto, such Purchaser has no present or contemplated
agreement, undertaking, arrangement, obligation, indebtedness or commitment
providing for the disposition thereof.
4.2 Accredited Investor. Such Purchaser is an "accredited
investor" as defined in Rule 501(a) under the Securities Act.
4.3 Authority. Such Purchaser has full power and authority to
enter into and to perform this Agreement and the Ancillary Agreements in
accordance with their terms. Any Purchaser which is a corporation, limited
liability company, partnership or trust represents that it has not been
organized, reorganized or recapitalized specifically for the purpose of
investing in the Company.
4.4 Disclosure and Experience. Such Purchaser has carefully
read and reviewed the information, representations, and risks concerning the
Company contained in this Agreement, any Ancillary Agreement, and any exhibits
or schedules thereto or documents incorporated by reference therein. The
officers of the Company have made available to such Purchaser any and all
written information which he, she or it has requested and have answered to such
Purchaser's satisfaction all inquiries made by such Purchaser; and such
Purchaser has sufficient knowledge and experience in finance and business that
-10-
he, she or it is capable of evaluating the risks and merits of his, her or its
investment in the Company and such Purchaser is able financially to bear the
risks thereof.
4.5 Exculpation Among Purchasers. Each Purchaser acknowledges
that it is not relying upon statements or representations by any person, firm or
corporation, other than the Company, in making its decision to invest in the
Company.
4.6 Risk Factors. Each Purchaser agrees and acknowledges that
he or she has been informed about and fully understands that there are risks
associated with an investment in the Company. Such risks may include, but not
necessarily be limited to, the risk that investment in the shares may be
illiquid (as there can be no guarantee that the registration statement to be
filed will be declared effective by the SEC), and that the Company may use the
proceeds from the offering in a way with which the investors may not agree, as
well as the risk factors set forth in the Company's public periodic filings,
including filings on Forms 10-KSB and 10-QSB. By signing below, the Purchaser
acknowledges that he or she has read or reviewed such public periodic filings,
and recognizes and acknowledges that an investment in the Company includes
certain risks, not limited to those listed herein and in the Company's public
periodic filings.
4.7 Sole Party in Interest. Each Purchaser represents and
warrants that it is the sole and true party in interest with respect to the
Shares being issued to it.
4.8 Investment Purpose. Each Purchaser represents and warrants
that it is acquiring the Shares for its own account, for investment purposes,
and not for the account or benefit of any other person or entity or for or with
a view to resale or distribution thereof, and it has no present intention to
effect any distribution of the Shares, provided that the disposition of the
Shares owned by such Purchaser shall at all times be and remain within its
control, subject to the provisions of this Agreement.
4.9 Knowledge and Experience. Each purchaser represents and
warrants that it is experienced in evaluating and making speculative
investments, and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of its investment
in the Company. Each Purchaser further represents and warrants that it
understands that an investment in the Company is speculative and has concluded
that its proposed investment is appropriate in light of its overall investment
objectives and financial situation.
4.10 Disclosure; Access to Information. Each purchaser
represents and warrants that it has received, read and understands this
Agreement; that all documents, records, books and other information pertaining
to its investment in the Company requested by it have been made available for
inspection and copying and there are no additional materials or documents that
have been requested by it that have not been made available by or on behalf of
the Company; and that it further acknowledges that the Company is subject to the
periodic reporting requirements of the Exchange Act, and it has reviewed or
received copies of any such reports that have been requested by it. Without
limiting the generality of the foregoing, each Purchaser acknowledges that it
has received and reviewed copies of the following documents and materials, all
of which are incorporated herein by reference: (a) Annual Report on Form 10-KSB
for the fiscal year ended September 30, 2005 (the "2005 10-KSB"); (b) Quarterly
Reports on Form 10-QSB for the quarters ended December 31, 2005, and March 31,
2006 (the "10-QSBs"); and (c) the Company's Proxy Statement, dated June 6, 2006,
for the Company's 2006 Annual Meeting of Shareholders held on July 10, 2006 (the
"2006 Proxy Statement").
4.11 Accuracy of Representations and Information. Each Purchaser
represents and warrants that all representations made by it in this Agreement,
and all information provided by it to the Company concerning it, are correct and
complete in all material respects as of the date hereof, and further that if
-11-
there is any material change in such information before the Closing Date and the
issuance of the Shares, it promptly will provide such information to the
Company.
4.12 Tax Matters. Each Purchaser represents and warrants that it
has reviewed and understands the U.S. federal and any applicable state income
tax aspects of its purchase of the Shares, and has received such advice in this
regard as it deems necessary from qualified sources such as attorneys, tax
advisors or accountants, and is not relying on any representative or employee of
the Company for such advice.
4.13 Manner of Sale. Each Purchaser represents and warrants that
at no time was such Purchaser presented with or solicited by or through any
leaflet, public promotional meeting, television advertisement or any other form
of general solicitation or advertising.
4.14 Liquidity. Each Purchaser represents and warrants that it
presently has sufficient liquid assets to pay the Purchase Price for all Shares
to be purchased by it hereunder; that it has adequate means of providing for its
current needs and contingencies and has no need for liquidity in its investment
in the Company or for a source of income from the Company; and that it is
capable of bearing the economic risk and the burden of the investment
contemplated by this Agreement including, but not limited to, the possibility of
the complete loss of the value of the Shares and the limited transferability of
the Shares, which may make the liquidation of the Shares impossible in the near
future.
4.15 Absence of Conflicts. Each Purchaser represents and
warrants that neither the execution and delivery of this Agreement or any other
agreement or instrument to be executed in connection therewith, nor the
consummation of the transactions contemplated thereby and compliance with the
requirements thereof, will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on it, or the provision of any
indenture, instrument or agreement to which it is a party or is subject, or by
which it or any of its properties is bound, or conflict with or constitute a
material default thereunder, or result in the creation or imposition of any lien
pursuant to the terms of any such indenture, instrument or agreement, or
constitute a breach of any fiduciary duty owed by or to it to any third party,
or require the approval of any third party pursuant to any material contract,
agreement, instrument, relationship or legal obligation to which it is subject
or to which any of its properties, operations or management may be subject. If
Purchaser is, or is purchasing Shares on behalf of, a mutual fund, venture
capital fund, investment partnership, or other entity formed for the purpose of
group investing on behalf of fund equity owners (an "Investment Fund"),
Purchaser has made its own determination of the suitability of an investment in
Shares for the Investment Fund and an investment in Shares satisfies all
diversification, liquidity and other requirements applicable to an investment by
such Investment Fund.
5. Transfer of Shares.
5.1 Restricted Shares. "Restricted Shares" means (a) the
Shares, and (b) any other shares of capital stock of the Company issued in
respect of such shares (as a result of stock splits, stock dividends,
reclassifications, recapitalizations or similar events); provided, however, that
shares of Common Stock which are Restricted Shares shall cease to be Restricted
Shares (x) upon any sale pursuant to a registration statement under the
Securities Act, Section 4(1) of the Securities Act or Rule 144 under the
Securities Act or (y) at such time as they become eligible for sale under Rule
144(k) under the Securities Act.
5.2 Requirements for Transfer.
(a) Restricted Shares shall not be sold or transferred
unless either (i) they first shall have been registered under the Securities
Act, or (ii) the Company first shall have been furnished with an opinion of
-12-
legal counsel, reasonably satisfactory to the Company, to the effect that such
sale or transfer is exempt from the registration requirements of the Securities
Act.
(b) Notwithstanding the foregoing, no registration or
opinion of counsel shall be required for (i) a transfer by a Purchaser to an
Affiliated Party (as such term is defined below) of such Purchaser, (ii) a
transfer by a Purchaser which is a partnership to a partner of such partnership
or a retired partner of such partnership who retires after the date hereof, or
to the estate of any such partner or retired partner, or (iii) a transfer by a
Purchaser which is a limited liability company to a member of such limited
liability company or a retired member who resigns after the date hereof or to
the estate of any such member or retired member; provided that the transferee in
each case agrees in writing to be subject to the terms of this Section 6 to the
same extent as if it were the original Purchaser hereunder, or (iv) a transfer
made in accordance with Rule 144 under the Securities Act. For purposes of this
Agreement "Affiliated Party" shall mean, with respect to any Purchaser, any
person or entity which, directly or indirectly, controls, is controlled by or is
under common control with such Purchaser, including, without limitation, any
general partner, officer or director of such Purchaser and any venture capital
fund now or hereafter existing which is controlled by one or more general
partners of, or shares the same management company as, such Purchaser.
5.3 Legend. Each certificate representing Restricted Shares
shall bear a legend substantially in the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL SUCH SHARES ARE REGISTERED UNDER
SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS
OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED."
The foregoing legend shall be removed from the certificates representing
any Restricted Shares, at the request of the holder thereof, at such time as
they become eligible for resale pursuant to Rule 144(k) under the Securities
Act.
5.4 Rule 144 Information. The Company agrees to use its
commercially reasonable efforts to (a) make and keep current public information
regarding the Company available, as those terms are understood and defined in
Rule 144 under the Securities Act, at all times from and after the date hereof;
(b) file with the United States Securities and Exchange Commission (the "SEC")
in a timely manner all reports and other documents required of the Company under
the Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), at all times from and after the date hereof; and (c) furnish to
each Purchaser upon request a copy of the most recent annual or quarterly report
of the Company, and such other reports and documents so filed as such Purchaser
may reasonably request in availing itself of any rule or regulation of the SEC
allowing such Purchaser to sell any such securities without registration.
5.5 Rule 144A Information. The Company shall, at all times
during which it is neither subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act, nor exempt from reporting pursuant to Rule
12g3-2(b) under the Exchange Act, upon the written request of any Purchaser,
provide in writing to such Purchaser and to any prospective transferee of any
Restricted Shares of such Purchaser the information concerning the Company
described in Rule 144A(d)(4) under the Securities Act ("Rule 144A Information").
The Company also shall, upon the written request of any Purchaser, cooperate
with and assist such Purchaser or any member of the National Association of
-13-
Securities Dealers, Inc. PORTAL system in applying to designate and thereafter
maintain the eligibility of the Restricted Shares for trading through PORTAL.
The Company's obligations under this Section shall at all times be contingent
upon receipt from the prospective transferee of Restricted Shares of a written
agreement to take all reasonable precautions to safeguard the Rule 144A
Information from disclosure to anyone other than persons who will assist such
transferee in evaluating the purchase of any Restricted Shares.
6. Indemnification.
6.1 The Company hereby agrees to indemnify, defend and hold
harmless each Purchaser and its respective affiliates, directors, officers,
trustees, employees and representatives (any of the foregoing, a "Purchaser
Indemnified Party"), from and against any loss, liability, claim, obligation,
damage, deficiency, costs and expenses, fines or penalties, including interest,
reasonable attorneys' fees and all reasonable amounts paid in investigation,
defense or settlement of any of the foregoing ("Losses") suffered, sustained,
incurred or required to be paid by any such Purchaser Indemnified Party due to,
based upon or arising out of any (i) material inaccuracy in, or any material
breach by the Company of, a representation, warranty or covenant of the Company
contained in this Agreement or in the Transaction Documents; (ii) untrue
statement or alleged untrue statement of any material fact contained in a
Registration Statement (defined below) or any other registration statement
contemplated by this Agreement, or any amendment or supplement thereof, or out
of or based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading (provided, however, that the Company will not be liable in any
such case if and to the extent that any such Losses arise out of or are based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by such Purchaser
Indemnified Party, its directors, officers, employees or agents in writing
specifically for use in the Registration Statement or such other registration
statement, as applicable); and (iii) violation by the Company of any rule or
regulation promulgated under the Securities Act or Exchange Act applicable to
the Company in connection with any registration, qualification, or compliance of
the Shares under Section 7 of this Agreement. The Company shall pay each
Purchaser Indemnified Party, in cash, for all Losses.
6.2 Each Purchaser hereby agrees to indemnify, defend and hold
harmless the Company and its affiliates, directors, officers, trustees,
managers, employees and representatives (any of the foregoing, a "Company
Indemnified Party"), from and against any Losses suffered, sustained, incurred
or required to be paid by any such Company Indemnified Party due to, based upon
or arising out of any material inaccuracy in, or any material breach of, a
representation or warranty of such Purchaser contained in this Agreement.
7. Registration Rights
7.1 The Company agrees that, as soon as practicable after the
Closing, but in any event within sixty (60) days of the Closing, the Company
shall file, on Form SB-2 or such other form as is available to the Company, a
registration statement (the "Registration Statement") with respect to all of the
Shares, to register the resale by each Purchaser of the Shares allocated to such
Purchaser as set forth on Exhibit A hereto. The Company shall use its
commercially reasonable efforts to cause the Registration Statement to become
effective no later than one hundred twenty (120) days after the date of the
initial filing of the Registration Statement. The Company will use its
commercially reasonable efforts to cause the Registration Statement to be
continuously effective under the Securities Act until the earliest of: (i) when
all such Shares are sold by the Purchasers; and (ii) when all of the Shares
become eligible for resale under Rule 144(k) (or any successor provision then in
force) under the Securities Act (the "Effectiveness Period"). The Registration
Statement, when declared effective (including the documents incorporated therein
by reference), will comply as to form with all applicable requirements of the
-14-
Securities Act and the Exchange Act and will not contain an 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 not misleading.
7.2 The Parties hereby agree that in the event that the Company
does not file the Registration Statement within sixty (60) days of the Closing,
or the Registration Statement is not declared effective within one hundred
twenty (120) days of the filing of the Registration Statement, the Company shall
issue to each Purchaser, as liquidated damages and not as a penalty, an
additional number of shares equal to five percent (5%) of the aggregate number
of Shares purchased by such Purchaser hereunder. The Parties further agree that
(i) for the thirty- (30-) day period which begins on the sixty-first (61st) day
following the Closing, and for each successive thirty- (30-) day period, during
which the Company has not filed the Registration Statement, the Company shall
issue to each Purchaser, as liquidated damages and not as a penalty, an
additional number of shares equal to five percent (5%) of the aggregate number
of Shares purchased by such Purchaser hereunder; and (ii) for the thirty- (30-)
day period which begins on the one hundred twenty-first (121st) day following
the filing of the Registration Statement, and for each successive thirty- (30-)
day period during which the Registration Statement is not effective, the Company
shall pay to each Purchaser, in immediately available funds, as liquidated
damages and not as a penalty, an amount equal to five percent (5%) of the
aggregate Purchase Price paid by the such Purchaser in accordance with Section
1.2 hereof.
7.3 If the Registration Statement is filed and declared
effective but, during the Effectiveness Period, shall thereafter cease to be
effective or fail to be usable for its intended purpose, and such suspension
shall not be lifted or failure shall not be remedied within sixty (60) business
days, by the filing of a post-effective amendment to the Registration Statement
or otherwise, then, on the sixty-first (61st) day thereafter and for each
successive thirty- (30-) day period thereafter until such suspension is lifted
or such failure is remedied, the Company shall pay to each Purchaser, in
immediately available funds, as liquidated damages and not as a penalty, an
amount equal to five percent (5%) of the amount of the Purchase Price paid by
such Purchaser corresponding to the number of shares held by such purchaser at
the time that the Registration Statement ceases to be effective or fails to be
usable for its intended purpose. For example, assume that a hypothetical
purchaser pays an aggregate purchase price of $130,000, and purchases 100,000
shares, and then sells 50,000 of those shares. If the Registration Statement
then ceases to be effective as set forth above, the amount of liquidated damages
will be five percent (5%) of $65,000 (the purchase price relating to the
remaining 50,000 shares held by the purchaser), or $3,250 (65,000 x 0.05 =
3,250).
7.4 If at any time the Company proposes to file (i) a
prospectus supplement to an effective shelf registration statement, including
the Registration Statement, or (ii) any other registration statement in an
underwritten offering for its own account, then, as soon as practicable, the
Company shall give notice of such proposed offering or filing to each Purchaser
and such notice shall offer each such Purchaser the opportunity to include in
such underwritten offering or other registration statement such number of Shares
as each such Purchaser may request in writing.
7.5 The Company will pay all costs, fees and expenses incurred
in connection with the Company's compliance under this Section 7 to effect the
registration of the Shares, including, without limitation, in connection with
the preparation, filing and maintenance of the Registration Statement.
8. Miscellaneous.
8.1 Successors and Assigns. This Agreement, and the rights and
obligations of each Purchaser hereunder, may be assigned by such Purchaser to
(a) any person or entity to which Shares are transferred by such Purchaser, or
(b) to any affiliate, partner, member, stockholder or subsidiary of such
Purchaser, and, in each case, such transferee shall be deemed a "Purchaser" for
purposes of this Agreement; provided that each such assignment of rights shall
-15-
be contingent upon the transferee providing a written instrument to the Company
notifying the Company of such transfer and assignment and agreeing in writing to
be bound by the terms of this Agreement. The Company may not assign its rights
under this Agreement.
8.2 Survival of Representations and Warranties. All
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the closings of the transactions contemplated
hereby.
8.3 Brokers. The Company and each Purchaser (a) represents and
warrants to the other parties hereto that he, she or it has not retained a
finder or broker in connection with the transactions contemplated by this
Agreement, and (b) will indemnify and save the other parties harmless from and
against any and all claims, liabilities or obligations with respect to brokerage
or finders' fees or commissions, or consulting fees in connection with the
transactions contemplated by this Agreement asserted by any person on the basis
of any statement or representation alleged to have been made by such
indemnifying party.
8.4 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
8.5 Specific Performance. In addition to any and all other
remedies that may be available at law in the event of any breach of this
Agreement, each Purchaser shall be entitled to specific performance of the
agreements and obligations of the Company hereunder and to such other injunctive
or other equitable relief as may be granted by a court of competent
jurisdiction.
8.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Utah (without
reference to the conflicts of law provisions thereof), as to all other matters.
8.7 Notices. All notices, requests, consents and other
communications under this Agreement shall be in writing and shall be deemed
delivered (a) three business days after being sent by registered or certified
mail, return receipt requested, postage prepaid or (b) one business day after
being sent via a reputable nationwide overnight courier service guaranteeing
next business day delivery, in each case to the intended recipient as set forth
below:
If to the Company, at
RemoteMDx, Inc.
000 Xxxx Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxx, Xxxx 00000
Attn: Xxxxxxx X. Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy (which shall not constitute notice), to
Durham Xxxxx & Xxxxxxx, P.C.
000 Xxxx Xxxxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Xxxxx X. Xxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
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If to a Purchaser, at its address set forth on Exhibit A, or at such
other address as may have been furnished in writing by such Purchaser to the
other parties hereto.
Any party may give any notice, request, consent or other communication
under this Agreement using any other means (including, without limitation,
personal delivery, messenger service, telecopy, first class mail or electronic
mail), but no such notice, request, consent or other communication shall be
deemed to have been duly given unless and until it is actually received by the
party for whom it is intended. Any party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in this
Section.
8.8 Complete Agreement. This Agreement (including its Exhibits)
constitutes the entire agreement and understanding of the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter.
8.9 Amendments and Waivers. This Agreement may be amended or
terminated and the observance of any term of this Agreement may be waived with
respect to all parties to this Agreement (either generally or in a particular
instance and either retroactively or prospectively), with the written consent of
the Company and the holders of at least 66.6% of the Shares then held by all
Purchasers; provided that any such amendment, termination or waiver that occurs
before the Closing shall require the written consent of the Company and the
Purchasers obligated to purchase at least 66.6% of the Shares to be issued to
all Purchasers at the Closing. Notwithstanding the foregoing, this Agreement may
not be amended or terminated and the observance of any term hereunder may not be
waived with respect to any Purchaser without the written consent of such
Purchaser unless such amendment, termination or waiver applies to all Purchasers
in the same fashion. The Company shall give prompt written notice of any
amendment or termination hereof or waiver hereunder to any party hereto that did
not consent in writing to such amendment, termination or waiver. Any amendment,
termination or waiver effected in accordance with this Section shall be binding
on all parties hereto, even if they do not execute such consent. No waivers of
or exceptions to any term, condition or provision of this Agreement, in any one
or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such term, condition or provision.
8.10 Press Release. The Parties hereby agree that they will work
together to prepare and issue a joint press release announcing the investment in
the Company by the Purchasers, and that the Parties anticipate that such
announcement shall be made on Tuesday, August 8, 2006.
8.11 Pronouns. Whenever the context may require, any pronouns
used in this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural, and vice versa.
8.12 Counterparts; Facsimile Signatures. This Agreement may be
executed in any number of counterparts (including, in the case of the
Purchasers, Financing Signature Pages), each of which shall be deemed to be an
original, and all of which shall constitute one and the same document. This
Agreement (including the Financing Signature Pages) may be executed by facsimile
signatures.
8.13 Section Headings and References. The section headings are
for the convenience of the parties and in no way alter, modify, amend, limit or
restrict the contractual obligations of the parties. Any reference in this
agreement to a particular section or subsection shall refer to a section or
subsection of this Agreement, unless specified otherwise.
-Remainder of Page Intentionally Left Blank-
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Executed as of the date first written above.
COMPANY:
REMOTEMDX, INC.
-------------------------------
By:
---------------------------
PURCHASERS:
Purchaser counterpart signature pages attached
EXHIBIT A
List of Purchasers and Shares Purchased
--------- ---------------------------- --------- ----------- ---------------
Name Investing Entity # Shares $$$ Contact
--------- ---------------------------- --------- ----------- ---------------
EGI Fund (05-07) 2,300,000 $2,990,000
Investors, LLC
Two X. Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
(formed in Delaware)
--------- ---------------------------- --------- ----------- ---------------
Xxxxxx X. Xxxxx Living 625,000 $812,000
Trust Dtd. February 8,
1991
000 Xxxxxx Xxxx Xxx.
Xxx Xxxxxxxxx, XX 00000
Xxxxxx X. Xxxxx Trustee
(Revocable Trust under
California Law)
--------- ---------------------------- --------- ----------- ---------------
Xxxxx Investment 600,000 $780,000
Partners, LP*
0000 Xxxxxxx Xxx.
Xxxxxxx, XX 00000
(a California Limited
Partnership)
--------- ---------------------------- --------- ----------- ---------------
Gimmel Partners, LP 400,000 $520,000
000 Xxxxx Xxxxxx, 00xx
Xxxxx
XX,XX 00000
(Registered in
Delaware, County of
Kent)
--------- ---------------------------- --------- ----------- ---------------
--------- ---------------------------- --------- ----------- ---------------
Ninth Street Partners, Ltd. 350,000 $455,000
Xxx 000000
Xxxxxx Xxxxxx, XX 00000
(a Florida Limited
Partnership)
--------- ---------------------------- --------- ----------- ---------------
Xxxxxxx Xxxxx Trust U/A 350,000 $455,000
DTD 3-8-88
Xxxxxxx Xxxxx Trustee
0 Xxxxx Xxxxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
(a Trust under California
law)
--------- ---------------------------- --------- ----------- ---------------
Will X. Xxxxxxxxx 225,000 $292,500
Revocable Trust UTA dtd
2/27/90
Xxx Xxxxx Xxxxxxxx,
Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
(a Revocable Trust under
California law)
--------- ---------------------------- --------- ----------- ---------------
HHS Partnership 200,000 $260,000
X.X. Xxx 0000
Xxxxxx Xxxx, XX 00000
(A Florida General
Partnership)
--------- ---------------------------- --------- ----------- ---------------
Xxxx Xxxxx Revocable 150,000 $195,000
Living Trust U/A dtd
12/27/1999
0000 XX 00xx Xxxxxx
Xxxxx, XX 00000-0000
(a Revocable Trust under
Florida law)
--------- ---------------------------- --------- ----------- ---------------
2
--------- ---------------------------- --------- ----------- ---------------
2005 Blickman Family Trust 100,000 $130,000
000 Xxxxxxx xx xxx Xxxxxx
Xxxxxxxx, XX 00000
(a California Revocable
Trust)
--------- ---------------------------- --------- ----------- ---------------
TOTALS 5,300,000 $6,890,000
--------- ---------------------------- --------- ----------- ---------------
3
EXHIBIT B
---------
Financing Signature Page
------------------------
By execution and delivery of this signature page, the undersigned
hereby agrees to become a Purchaser, as defined in that certain Common Stock
Purchase Agreement (the "Purchase Agreement") by and among RemoteMDx, Inc., a
Utah corporation (the "Company"), and the Purchasers (as defined in the Purchase
Agreement), dated as of the Closing Date (as defined in the Purchase Agreement),
acknowledges having read the representations in the Purchase Agreement section
entitled "Representations of the Purchasers," and hereby represents that the
statements contained therein are complete and accurate with respect to the
undersigned as a Purchaser. The undersigned further hereby agrees to be bound by
the terms and conditions of the Purchase Agreement as a "Purchaser" thereunder,
and authorizes this signature page to be attached to the Purchase Agreement.
Executed, in counterpart, as of the date set forth below.
PURCHASER:
By:_____________________________________
Name of Purchaser
By:_____________________________________
Title:__________________________________
Date:___________________________________
Number of Shares Purchased:_____________
Contact Person:_________________________
Telephone No.:__________________________
Telecopy No.:___________________________
Email Address:__________________________
Address of Principal Place of Business:
________________________________________
________________________________________
________________________________________
SS or Tax ID #: ________________________
4
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