WHEREAS, the Company and the Buyer are executing and delivering this Agreement in reliance
upon an exemption from securities registration pursuant to Section 4(2) of the Securities Act of
1933, as amended (the Securities Act) and/or Rule 506 of Regulation D (Regulation
D) as promulgated by the U.S. Securities and Exchange Commission (the SEC or the
Commission) under the Securities Act; and
WHEREAS, the parties desire that, upon the terms and subject to the conditions contained
herein, the Company shall issue and sell to the Buyer, as provided herein, and the Buyer shall
purchase the number of shares of the Companys common stock, par value $0.001 (the Common
Stock) set forth on Schedule I for a total purchase price of $1.00 per share (the
Purchase Price) (the Subscription Amount).
NOW, THEREFORE, in consideration of the mutual covenants and other agreements contained in
this Agreement the Company and the Buyer hereby agree as follows:
1. PURCHASE AND SALE OF COMMON STOCK.
(a) Purchase of Shares. Subject to the satisfaction (or waiver) of the terms and
conditions of this Agreement, the Buyer agrees to purchase at Closing (as defined herein below) and
the Company agrees to sell and issue to the Buyer at Closing, Common Stock in the amount
corresponding with the Subscription Amount set forth opposite the Buyers name on Schedule I hereto
(the Shares). Upon execution hereof by the Buyer, the Buyer shall wire transfer the Subscription
Amount set forth opposite his name on Schedule I in same-day funds to the trust account of the
Companys legal counsel as provided on Exhibit A attached hereto.
(b) Closing Date.
The Closing of the purchase and sale of the Shares shall take place
at 10:00 a.m. Eastern Daylight Time on or before the tenth (10th
) business day following
the date hereof, unless all conditions precedent to the Closing have been satisfied by the Parties
prior to such date (the Closing Date). The Closing shall occur on the Closing Date at the
offices of Gallagher, Briody & Butler in Princeton, New Jersey
(or such other place as is mutually
agreed to by the Company and the Buyer).
(c) Form of Payment. Upon execution hereof by the Buyer, the aggregate proceeds of
the sale of the Shares to Buyer pursuant hereto shall be deposited via wire transfer to the trust
account of the Companys legal counsel described on Exhibit A attached hereto. In the
event that the Closing does not occur as provided herein, the aggregate proceeds shall be
returned to the Buyer via wire transfer to an account designated by the Buyer.
2. BUYERS REPRESENTATIONS AND WARRANTIES.
The Buyer represents and warrants, severally and not jointly, that:
(a) Investment Purpose. The Buyer is acquiring the Shares, for its own account for
investment only and not with a view towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales registered or exempted under the Securities Act.
(b) Accredited Investor Status. The Buyer is an Accredited Investor as that
term is defined in Rule 501(a) of Regulation D.
(c) Reliance on Exemptions. The Buyer understands that the Shares are being offered
and sold to it in reliance on specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying in part upon the truth and
accuracy of the representations and warranties of the Buyer set forth herein in order to determine
the availability of such exemptions and the eligibility of the Buyer to acquire such securities.
(d) Information. The Buyer and its advisors (and its counsel), if any, have been
furnished with all materials relating to the business, finances and operations of the Company and
information it has deemed material to making an informed investment decision regarding its purchase
of the Shares, which have been requested by the Buyer. The Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company and its management. Neither such
inquiries nor any other due diligence investigations conducted by the Buyer or its advisors, if
any, or its representatives shall modify, amend or affect the Buyers right to rely on the
Companys representations and warranties contained in Section 3 below. The Buyer understands that
its investment in the Shares involves a high degree of risk and the Buyer has the financial
wherewithal to lose its entire investment and understands that it could lose its entire investment.
The Buyer has sought such accounting, legal and tax advice, as it has considered necessary to make
an informed investment decision with respect to its acquisition of the Shares.
(e) No Governmental Review. The Buyer understands that no United States federal or
state agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Shares, or the fairness or suitability of the investment in
the Shares, nor have such authorities passed upon or endorsed the merits of the offering of the
Shares. The Buyer understands and acknowledges that the Company has undertaken and will undertake
no efforts to comply with any laws of any jurisdiction outside the United States relating to the
issuance and sale of its securities except as may be provided herein.
(f) Rule 144. The Buyer understands that the Shares must be held indefinitely unless
such Shares are registered under the Securities Act or an exemption from registration is available.
The Buyer acknowledges that such Buyer is familiar with Rule 144, promulgated pursuant to the
Securities Act (Rule 144), and that until the Shares are registered
under the Securities Act in accordance with Section 7 below, Rule 144 permits resales of the
Shares only under certain circumstances. The Buyer understands that to the extent that Rule 144 is
not available, the Buyer will be unable to sell any Shares without either registration under the
Securities Act or the existence of another exemption from such registration requirement.
(g) Legends. The Buyer understands that until the Shares are registered under the
Securities Act in accordance with Section 7 below, the certificates or other instruments
representing the Shares shall bear a restrictive legend in substantially the following form (and a
stop transfer order may be placed against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED
SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS.
The legend set forth above shall be removed from the Shares and the Company shall within two
(2) business days issue a certificate without such legend to the holder of the Shares upon which it
is stamped, if, unless otherwise required by state securities laws, (i) in connection with a sale
transaction, provided the Shares are registered under the Securities Act or (ii) in connection with
a sale transaction, after such holder provides the Company with an opinion of counsel, which
opinion shall be in form, substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale, assignment or transfer of the Shares may be made
without registration under the Securities Act. The legend set forth above shall be removed from
the Shares and the Company shall issue a certificate without such legend to the holder of the
Shares immediately upon the registration of the Shares under the Securities Act in accordance with
Section 7 below.
(h) Authorization, Enforcement. The Buyer has full power and authority to enter into
this Agreement. This Agreement has been duly and validly authorized, executed and delivered on
behalf of the Buyer and is a valid and legally binding agreement of such Buyer enforceable in
accordance with its terms, except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable creditors rights
and remedies. All necessary corporate action has been taken with respect to the Buyer to authorize
and approve this Agreement, and Buyer is under no obligation to obtain any approval, consent, or
other action from any third party in order for Buyer to consummate the transaction contemplated
(i) Receipt of Documents. The Buyer and/or its counsel has received and read in their
entirety: (i) this Agreement and each representation, warranty and covenant set forth herein; (ii)
all due diligence and other information provided by the Company to the Buyer or made available to
the Buyer at the SEC Website (defined below); (iii) the Companys Prospectus filed with the SEC
pursuant to Rule 424(b)(3) on September 20, 2005; and (iv) written answers to all questions the
Buyer submitted to the Company regarding an investment in the Company; and the Buyer has relied on
the information contained therein and has not been furnished any other documents, literature,
memorandum or prospectus. Buyer acknowledges and agrees that the Companys representations and
warranties are limited to exclusively those expressly stated in this Agreement and exclude any and
all statements made in any other business plan, prospectus, projections, memorandum or other
document or in any oral communication.
(j) Due Formation of Corporate and Other Buyers. If the Buyer is a corporation,
trust, partnership or other entity that is not an individual person, it has been formed and validly
exists and has not been organized for the specific purpose of purchasing the Shares and is not
prohibited from doing so.
(k) No Legal Advice From the Company. The Buyer acknowledges, that it had the
opportunity to review this Agreement and the transactions contemplated by this Agreement with his
or its own legal counsel and investment and tax advisors. The Buyer is relying solely on such
counsel and advisors and not on any statements or representations of the Company or any of its
representatives or agents for legal, tax or investment advice with respect to this investment, the
transactions contemplated by this Agreement or the securities laws of any jurisdiction.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Buyer that, except as set forth in the SEC
Documents (as defined herein):
(a) Organization and Qualification. The Company is a corporation duly organized and
validly existing in good standing under the laws of the jurisdiction in which it is incorporated,
and has the requisite corporate power and authority to own its properties and to carry on its
business as presently conducted. The Company is duly qualified to do business and is in good
standing in every jurisdiction in which the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company taken as a whole.
(b) Authorization, Enforcement, Compliance with Other Instruments. (i) The Company
has the requisite corporate power and authority to enter into and perform this Agreement, and any
related agreements, and to issue the Shares in accordance with the terms hereof and thereof, (ii)
the execution and delivery of this Agreement and any related agreements by the Company and the
consummation by it of the transactions contemplated hereby and thereby, including, without
limitation, the issuance of the Shares have been duly authorized by the Companys Board of
Directors and no further consent or authorization is required by the Company, its Board of
Directors or its stockholders, (iii) this Agreement and any related
agreements have been duly executed and delivered by the Company, (iv) this Agreement and any
related agreements constitute the valid and legally binding obligations of the Company enforceable
against the Company in accordance with their terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement of creditors
rights and remedies.
(c) Capitalization. The authorized capital stock of the Company consists of
95,000,000 shares of Common Stock, par value $0.001 per share and 5,000,000 shares of Preferred
Stock. As of the date hereof and as of the Closing Date, the Company has 24,545,723 shares of
Common Stock and 316,000 shares of Preferred Stock issued and outstanding, subject to any issuances
which may occur prior to the Closing Date as described in the Disclosure Schedule attached hereto.
All of such outstanding shares of Common Stock and Preferred Stock have been duly authorized and
are validly issued, fully paid and nonassessable. Except as disclosed in the SEC Documents (as
defined in Section 3(f)) or the Disclosure Schedule attached hereto as Exhibit B, no shares of
Common Stock are subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company. Except as disclosed in the SEC Documents or the
Disclosure Schedule, as of the date of this Agreement, (i) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating
to, or securities or rights convertible into, any shares of capital stock of the Company, or
contracts, commitments, understandings or arrangements by which the Company is or may become bound
to issue additional shares of capital stock of the Company or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company, (ii) there are no outstanding debt
securities and (iii) there are no agreements or arrangements under which the Company is obligated
to register the sale of its securities under the Securities Act (other than as provided herein) and
(iv) there are no outstanding registration statements and there are no outstanding comment letters
from the SEC or any other regulatory agency. Except as set forth on the Disclosure Schedule, there
are no securities or instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Shares as described in this Agreement. The Company has furnished
to the Buyer or made available through the SECs website at
http://www.sec.gov (the SEC
Website) true and correct copies of the Companys Certificate of Incorporation, as amended and
as in effect on the date hereof and as of the Closing Date (the Certificate of
Incorporation), and the Companys By-laws, as in effect on the date hereof and as of the
Closing Date (the By-laws), and the terms of all securities convertible into or
exercisable for Common Stock and the material rights of the holders thereof in respect thereto
other than stock options issued to employees and consultants.
(d) Issuance of Securities. The Shares to be issued at the Closing have been duly
authorized by all necessary corporate action and the Shares, when paid for and issued in accordance
with the terms hereof, shall be validly issued and outstanding, fully paid and nonassessable. The
Shares will be issued in compliance with all applicable federal and state securities laws and in
accordance with U.S. Department of Transportation foreign ownership regulations.
(e) No Conflicts. Except as disclosed in the SEC Documents, the execution, delivery
and performance of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby will not (i) result in a violation of the Certificate of
Incorporation, any certificate of designations of any outstanding series of preferred stock of the
Company or the By-laws or (ii) conflict with or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to
which the Company is a party, or result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations and the rules and
regulations of The National Association of Securities Dealers Inc.s OTC Bulletin Board on which
the Common Stock is to be quoted) applicable to the Company or by which any property or asset of
the Company is bound or affected. Except as disclosed in the SEC Documents, the Company is not in
violation of any term of or in default under its Certificate of Incorporation or By-laws or their
organizational charter or by-laws, respectively, or any material contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any statute, rule or regulation
applicable to the Company. The business of the Company is not being conducted, and shall not be
conducted in material violation of any material law, ordinance, or regulation of any governmental
entity. Except as specifically contemplated by this Agreement and as required under the Securities
Act and any applicable state securities laws, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or governmental
agency in order for it to execute, deliver or perform any of its obligations under or contemplated
by this Agreement in accordance with the terms hereof or thereof. Except as disclosed in the SEC
Documents, all consents, authorizations, orders, filings and registrations which the Company is
required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to
the date hereof. The Company is unaware of any facts or circumstance, which might give rise to any
of the foregoing.
(f) SEC Documents; Financial Statements. The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by it with the SEC under of
the Securities Exchange Act of 1934, as amended (the Exchange Act) and has filed a
registration statement on Form SB-2 on April 22, 2005, as amended on June 27, 2005, July 21, 2005,
August 17, 2005, August 31, 2005 and on September 2, 2005, as well as a 424(b)(3) prospectus on
September 20, 2005 (all of the foregoing filed prior to the date hereof or amended after the date
hereof and all exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein, being hereinafter referred to as the SEC
Documents). The Company has delivered to the Buyer or their representatives, or made
available through the SEC Website, true and complete copies of the SEC Documents. As of their
respective dates, the financial statements of the Company disclosed in the SEC Documents (the
Financial Statements) complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with respect thereto.
Such financial statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may be otherwise
indicated in such Financial Statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed or summary
statements) and, fairly present in all material respects the financial position of the Company as
of the dates thereof and the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the Company to the Buyer which is
not included in the SEC Documents, including, without limitation, information referred to in this
Agreement, contains any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(g) Financial Statements. The Company has supplied the Buyer with, or made available
to the Buyer through the SEC Website the Companys balance sheet as of December 31, 2004, and the
related statements of operations, stockholders equity (deficit), and cash flows for the year ended
December 31, 2004 and the period from inception (March 4, 2003) to December 31, 2003.
(h) 10(b)-5. None of the representations and warranties in this Agreement, any
certificate to be furnished to the Buyer at Closing or the SEC Documents included (or will include
in the case of the Closing Certificate) any untrue statements of material fact, or omits (or will
omit in the case of the Closing Certificate) to state any material fact required to be stated
therein necessary to make the statements made, in light of the circumstances under which they were
made, not misleading.
(i) Absence of Litigation. Except as disclosed in the SEC Documents, there is no
claim, action, suit, proceeding, arbitration, complaint, charge, inquiry or investigation before or
by any court, public board, government agency, self-regulatory organization or body pending or to
the Companys knowledge threatened against or affecting the Company or the Common Stock, wherein an
unfavorable decision, ruling or finding would (i) have a material adverse effect on the
transactions contemplated hereby (ii) adversely affect the validity or enforceability of, or the
authority or ability of the Company to perform its obligations under, this Agreement or any of the
documents contemplated herein, or (iii) except as expressly disclosed in the SEC Documents, have a
material adverse effect on the business, operations, properties, financial condition or prospects
or results of operations of the Company taken as a whole.
(j) Acknowledgments Regarding Buyers Purchase of the Shares. The Company
acknowledges and agrees that the Buyer is acting solely in the capacity of an arms length
purchaser with respect to this Agreement and the transactions contemplated hereby. The Company
further acknowledges that the Buyer is not acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by the Buyer or any of their respective representatives or
agents in connection with this Agreement and the transactions contemplated hereby is merely
incidental to such Buyers purchase of the Shares.
(k) No General Solicitation. Neither the Company, nor any of its affiliates, nor any
person acting on its or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act) in connection with the
offer or sale of the Shares.
(l) No Integrated Offering. Neither the Company, nor any of its affiliates, nor any
person acting on its or their behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that would require
registration of the Shares under the Securities Act or cause this offering of the Shares to be
integrated with prior offerings by the Company for purposes of the Securities Act.
(m) Employee Relations. The Company is not involved in any labor dispute nor, to the
knowledge of the Company, is any such dispute threatened. None of the Companys employees is a
member of a union and the Company believes that its relations with their employees are good.
(n) Intellectual Property Rights. The Company owns or possesses or is currently
seeking to develop adequate rights or licenses to use all trademarks, trade names, service marks,
service mark registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and rights necessary to conduct its
business as now conducted. The Company does not have any knowledge of any infringement by the
Company of trademark, trade name rights, patents, patent rights, copyrights, inventions, licenses,
service names, service marks, service mark registrations, trade secret or other similar rights of
others, and, to the knowledge of the Company there is no claim, action or proceeding being made or
brought against, or to the Companys knowledge, being threatened against, the Company regarding
trademark, trade name, patents, patent rights, invention, copyright, license, service names,
service marks, service mark registrations, trade secret or other infringement; and the Company is
unaware of any facts or circumstances which might give rise to any of the foregoing.
(o) Environmental Laws. The Company is, to the best of managements knowledge, (i) in
material compliance with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants (Environmental Laws), (ii) has
received all material permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and (iii) is in material compliance with all terms and
conditions of any such permit, license or approval.
(p) Title. Any real property and facilities held under lease by the Company are held
by the Company under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such property and
buildings by the Company.
(q) Insurance. The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as management of the Company
believes to be reasonably prudent and customary in the business in which the Company is engaged.
The Company has neither been refused any insurance coverage sought or applied for nor has any
reason to believe that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company, taken as a whole.
(r) Regulatory Permits. The Company possesses or is in the process of applying for
all material certificates, authorizations and permits issued or to be issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct its business, and the Company
has not received any notice of proceedings relating to the revocation, modification or denial of
any such certificate, authorization or permit.
(s) Internal Accounting Controls. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i) transactions are executed
in accordance with managements general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, and (iii) the recorded amounts for
assets is compared with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(t) No Material Adverse Breaches, etc. Except as set forth in the Disclosure
Schedule, the Company is not subject to any charter, corporate or other legal restriction, or any
judgment, decree, order, rule or regulation which in the judgment of the Companys officers has or
is expected in the future to have a material adverse effect on the business, properties,
operations, financial condition, results of operations or prospects of the Company. Except as set
forth in the Disclosure Schedule, the Company is not in breach of any contract or agreement which
breach, in the judgment of the Companys officers, has or is expected to have a material adverse
effect on the business, properties, operations, financial condition, results of operations or
prospects of the Company.
(u) Tax Status. Except as set forth in the Disclosure Schedule, the Company has made
and filed all federal and state income and all other tax returns, reports and declarations required
by any jurisdiction to which it is subject and (unless and only to the extent that the Company has
set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported
taxes) has paid all taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations, except those being
contested in good faith and has set aside on its books provision reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such
(v) Certain Transactions. Except as set forth in the SEC Documents, and except for
arms length transactions pursuant to which the Company makes payments in the ordinary course of
business upon terms no less favorable than the Company could obtain from third parties and other
than the grant of stock options disclosed in the Disclosure Schedule, none of the officers,
directors, or employees of the Company is presently a party to any transaction with the Company
(other than for services as employees, officers and directors), including any contract, agreement
or other arrangement providing for the furnishing of services to or by, providing for rental of
real or personal property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation, partnership, trust
or other entity in which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
(w) Fees and Rights of First Refusal. The Company is not obligated to offer the
securities offered hereunder on a right of first refusal basis or otherwise to any third parties
including, but not limited to, current or former shareholders of the Company, underwriters,
brokers, agents or other third parties.
(x) The Company acknowledges that the Buyer is relying on the representations and warranties
made by the Company hereunder and that such representations and warranties are a material
inducement to the Buyer purchasing the Shares. The Company further acknowledges that without such
representations and warranties of the Company made hereunder, the Buyer would not enter into this
(a) Best Efforts. Each party shall use its commercially reasonable best efforts
timely to satisfy each of the conditions to be satisfied by it as provided in Sections 5 and 6 of
(b) Form D. The Company shall notify the SEC in accordance with their rules and
regulations, of the transactions contemplated herein, including filing a Form D with respect to the
Shares as required under Regulation D, 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 Shares to the Buyer or subsequent holders.
(c) Reporting Status. Until the date as of which the Buyer may sell all of the Shares
without restriction pursuant to Rule 144(k) promulgated under the Securities Act (or successor
thereto) (the Registration Period), the Company shall file in a timely manner all reports
required to be filed with the SEC pursuant to the Exchange Act and the regulations of the SEC
thereunder, and the Company shall not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would
otherwise permit such termination.
(d) Fees and Expenses. Except as may be set forth elsewhere in this Agreement, the
Company and the Buyer shall be solely responsible for the respective costs and expenses incurred by
such party in connection with the negotiation, investigation, preparation, execution and delivery
of this Agreement.
(e) Use of Proceeds. The Company will use the proceeds from the sale of the Shares
for general corporate and working capital purposes.
(f) Listings or Quotation. The Company shall, concurrently with the effectiveness of
the registration statement filed with the SEC pursuant to Section 7 below, use its best efforts to
secure the listing or quotation of its Common Stock (including, without limitation, the Shares)
upon a national securities exchange, automated quotation system or the Over-The-Counter Bulletin
Board (OTCBB) maintained by the National Association of Securities Dealers, Inc. The
Company shall maintain the listing or quotation of the Common Stock for so long as the Buyer is the
beneficial owner of any Shares. The Company shall use its best efforts to maintain the Common
Stocks authorization for quotation on the OTCBB.
(g) Financial and Accounting. Prior to the effectiveness of the Companys
registration statement on Form SB-2, the Company will have instituted and will be employing and
maintaining customary internal accounting controls and methods in its business operations
sufficient to provide reasonable assurance that (i) transactions are executed in accordance with
managements general or specific authorization; (ii) transactions are recorded as necessary to
permit preparation or financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability, and (iii) the recorded amounts for assets is
compared with the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
5. CONDITIONS TO THE COMPANYS OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Shares to the Buyer at the
Closing is subject to the satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Companys sole benefit and may be waived by
the Company at any time in its sole discretion:
(a) The Buyer shall have executed this Agreement and delivered the same to the Company.
(b) The Buyer shall have delivered to the Company the Purchase Price for Shares in the amount
set forth next to the Buyer as outlined on Schedule I attached hereto.
(c) The representations and warranties of the Buyer shall be true and correct in all material
respects as of the date when made and as of the Closing Date as though made at that time (except
for representations and warranties that speak as of a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied with by the Buyer at
or prior to the Closing Date.
(d) Shares will be issued in accordance with US Department of Transportation foreign
6. CONDITIONS TO THE BUYERS OBLIGATION TO PURCHASE.
The obligation of the Buyer hereunder to purchase the Shares at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following conditions:
(a) The Company shall have executed this Agreement and delivered the same to the Buyer.
(b) The representations and warranties of the Company shall be true and correct in all
material respects (except to the extent that any of such representations and warranties is already
qualified as to materiality in Section 3 above, in which case, such representations and warranties
shall be true and correct without further qualification) as of the date when made and as of the
Closing Date as though made at that time (except for representations and warranties that speak as
of a specific date) and the Company shall have performed, satisfied and complied in all material
respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Date. If requested by the Buyer, the Buyer shall have received
a certificate, executed by the President of the Company, dated as of the Closing Date, to the
foregoing effect and as to such other matters as may be reasonably requested by the Buyer
including, without limitation an update as of the Closing Date regarding the representation
contained in Section 3(c) above.
(c) The Company shall have executed and delivered to the Buyer the Shares in the amount set
forth opposite the Buyers name on Schedule I attached hereto.
(d) The Buyer shall have received from Gallagher, Briody & Butler, counsel to the Company, an
opinion, dated as of the Closing Date, in a form satisfactory to the Buyer.
(e) The Secretary of the Company shall have delivered to the Buyer at the Closing a
certificate certifying (i) the By-Laws of the Company and (ii) resolutions of the Board of
Directors of the Company approving this Agreement, the Warrant and the transactions contemplated
hereby and thereby.
(f) The Company shall have provided to the Buyer a certificate of good standing from the
Secretary of State of Delaware
7. REGISTRATION RIGHTS.
(a) Subject to the terms and conditions of this Agreement, the Company shall prepare and file,
no later than forty five (45) days from the Closing Date (the Scheduled Filing Deadline),
with the SEC a registration statement on Form S-1 or SB-2 (or, if the Company is then eligible, on
Form S-3) under the 1933 Act (the Initial Registration Statement) for the registration
for the resale by the Buyer of the Shares (together, the Registrable Securities). The
Company shall cause the Registration Statement to remain effective until the earlier of (i) the
Registrable Securities have been sold, or (ii) the date the Registrable Securities become eligible
for sale without restriction under Rule 144(k) promulgated under the Securities Act of 1933.
(b) Effectiveness of the Initial Registration Statement. The Company shall use its
best efforts (i) to have the Initial Registration Statement declared effective by the SEC no later
than one hundred eighty (180) days after the filing thereof (the Scheduled Effective
Deadline) and (ii) to insure that the Initial Registration Statement and any subsequent
Registration Statement remains in effect until all of the Registrable Securities have been sold,
subject to the terms and conditions of this Agreement, but not later than the point in time that
Section 144(k) becomes available for resale of the Registrable Securities.
(c) If and whenever the Company is required by the provisions of this Section 7(a) to effect
the registration of the Shares under the Securities Act, the Company will:
(i) Furnish to the Buyers participating in such registration such reasonable number of copies
of the registration statement, preliminary prospectus, final prospectus and such other documents as
the Buyers may reasonably request in order to facilitate the sale of such shares;
(ii) Notify the Buyers participating in such registration, promptly after it shall receive
notice thereof, of the time when such registration statement has become effective or a supplement
to any prospectus forming a part of such registration statement has been filed;
(iii) Notify such Buyers promptly of any request by the Commission for the amending or
supplementing of such registration statement or prospectus or for additional information;
(iv) Prepare and promptly file with the Commission and promptly notify such Buyers of the
filing of such amendment or supplement to such registration statement or prospectus as may be
necessary to correct any statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event shall have occurred as
the result of which any such prospectus or any other prospectus as then in effect would include an
untrue statement of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which they were made, not misleading; and
(v) Advise such Buyers, promptly after it shall receive notice or obtain knowledge thereof, of
the issuance of any stop order by the Commission suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding for that purpose and promptly use its
best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop
order should be issued.
(d) With respect to a registration required pursuant to this Section 7, all fees, costs and
expenses of and incidental to such registration, shall be borne by the Company, including all
registration, filing, printing expenses, fees and disbursements of counsel and accountants for the
Company, and all legal fees and disbursements and other expenses of complying with state securities
or blue sky laws of any jurisdictions in which the Shares to be offered are to be registered and
qualified. Fees and disbursements of counsel and accountants for the participating Buyers and any
other expenses incurred by the participating Buyers shall be borne by the Company; provided
that the fees and disbursements of counsel to the participating Buyers shall not exceed $5,000 in
connection with a registration required under this Section 7.
(e) The Company will indemnify and hold harmless each Buyer whose Shares are included in a
registration statement pursuant to the provisions of Section 7 and any underwriter for such Buyer
from and against, and will reimburse such Buyer and each such underwriter with respect to, any and
all loss, damage, liability, cost and expense to which such Buyer or any such underwriter may
become subject under the Securities Act or otherwise, insofar as such losses, damages, liabilities,
costs or expenses are caused by any untrue statement or alleged untrue statement of any material
fact contained in such registration statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are 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,
in light of the circumstances in which they were made, not misleading; provided,
however, that the Company will not be liable in any such case to the extent that any such
loss, damage, liability, cost or expenses arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by such Buyer or such underwriter in writing for use in the
(f) Each Buyer whose Shares are included in a registration pursuant to the provisions of this
Section 7 hereof will indemnify and hold harmless the Company, any successor entity of the Company,
its directors and officers, any controlling person and any underwriter from and against, and will
reimburse the Company, its directors and officers, any controlling person and any underwriter with
respect to, any and all loss, damage, liability, cost or expense to which the Company or any
controlling person and/or any underwriter may become subject under the Securities Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses are caused by any untrue statement
or alleged untrue statement of any material fact contained in such registration statement, any
prospectus contained therein or any amendment or supplement thereto, or arise out of or are 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, in light of the circumstances in which they
were made, not misleading, in each case to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon and in conformity with
written information furnished by or on behalf of such Buyer for use in the preparation thereof.
The maximum aggregate liability of each Buyer pursuant to its indemnification obligations under
this Section 7 shall not exceed the portion of the Purchase Price paid by such Buyer hereunder.
Promptly after receipt by an indemnified party pursuant to the provisions of paragraph (e) or
(f) above of notice of the commencement of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof is to be made against the
indemnifying party pursuant to the provisions of said paragraph (e) or (f), promptly notify the
indemnifying party of the commencement thereof; but the omission to so notify the indemnifying
party will not relieve it from any liability which it may have to any indemnified party otherwise
than hereunder. In case such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall have the right to
assume the defense thereof, with counsel reasonably satisfactory to such indemnified party.
8. BUYERS RIGHT TO BOARD SEAT
Within ten business days following the Closing Date, the Board of Directors of the Company
shall (a) increase the number of members of the Board of Directors by one additional member in
accordance with Section 1 of Article III of the Companys By-Laws and (b) fill such vacancy on the
Board of Directors by appointing Buyers nominee, subject to the agreement of the Company, which
shall not be unreasonably withheld (the Director Nominee), as a member of the Board of
Directors of the Company in accordance with Section 2 of Article III of the Companys By-Laws. The
Company shall provide the Director Nominee the same financial or other information as is generally
provided to the Companys other directors and officers at the same time that such other directors
and officers receive such information. The Buyer and the Company acknowledge and agree that the
Buyers director nominee shall be required to pass a standard background check as is required by
applicable Federal, State and local government agencies and departments having jurisdiction over
the Companys business and activities.
9. GOVERNING LAW: MISCELLANEOUS.
(a) Governing Law.
THIS AGREEMENT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS. THE PARTIES
HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN
, NEW YORK
WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT, THE AGREEMENTS ENTERED
INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES
IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR
PROCEEDING. BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS
MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT
OR PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTYS RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT
OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH
JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING
UNDER THIS AGREEMENT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING ATTORNEYS FEES,
INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH DISPUTE.
(b) Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the other party. In
the event any signature page is delivered by facsimile transmission, the party using such means of
delivery shall cause four (4) additional original executed signature pages to be physically
delivered to the other party within five (5) days of the execution and delivery hereof.
(c) Headings. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.
(d) Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other jurisdiction.
(e) Entire Agreement, Amendments. This Agreement supersedes all other prior oral or
written agreements between the Buyer, the Company, their affiliates and persons acting on their
behalf with respect to the matters discussed herein, and this Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or therein, neither
the Company nor the Buyer makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived or amended other than by an
instrument in writing signed by the party to be charged with enforcement.
(f) Notices. Any notices, consents, waivers, or other communications required or
permitted to be given under the terms of this Agreement must be in writing and will be deemed to
have been delivered (i) upon receipt, when delivered personally; (ii) upon confirmation of receipt,
when sent by facsimile; (iii) three (3) days after being sent by U.S. certified mail, return
receipt requested, or (iv) one (1) day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be:
If to the Company, to:
||U.S. Helicopter Corporation
||6 East River Piers, Suite 216
||Downtown Manhattan Heliport
||New York, NY 10004
||Attention: John G. Murphy
With a copy to:
||Gallagher, Briody & Butler
||Princeton Forrestal Village
||155 Village Blvd. Suite 201
||Princeton, NJ 08540
||Attention: Thomas P. Gallagher, Esq.
If to the Buyer, to its address and facsimile number on Schedule I, with copies to the Buyers
counsel as set forth on Schedule I. Each party shall provide five (5) days prior written notice
to the other party of any change in address or facsimile number.
(g) Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns. Neither the Company nor the
Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written
consent of the other party hereto.
(h) No Third Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other person.
(i) Survival. The representations and warranties of the Company and the Buyer
contained in Sections 2 and 3, the agreements and covenants set forth in Sections 4 and 5 shall
survive the Closing for a period of two (2) years following the date on which the Shares are
converted in full. The Buyer shall be responsible only for its own representations, warranties,
agreements and covenants hereunder.
(j) Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may reasonably request in
order to carry out the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
* * *
U.S. HELICOPTER CORPORATION
||/s/ John G. Murphy
||John G. Murphy
||Chief Executive Officer and President
|Name of Buyer
||Number of Buyer
Samama Global Corporation
Legal Counsel of Buyer: