AURIGA LABORATORIES, INC. STOCK PURCHASE AGREEMENT September 13, 2007
September
13, 2007
TABLE
OF CONTENTS
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Page
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1.
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AGREEMENT
TO SELL AND PURCHASE
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1
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1.1
Authorization
of Shares.
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1
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1.2
Sale
and Purchase.
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1
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2.
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CLOSING,
DELIVERY AND PAYMENT
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2
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2.1
Closing.
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2
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2.2
Delivery.
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2
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3.
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REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
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2
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3.1
Organization,
Good Standing and Qualification.
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2
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3.2
Capitalization;
Voting Rights.
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2
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3.3
Authorization;
Binding Obligations.
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3
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3.4
Liabilities.
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3
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3.5
Agreements;
Action.
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3
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3.6
Obligations
to Related Parties.
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3
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3.7
Changes.
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3
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3.8
Title
to Properties and Assets; Liens, etc.
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5
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3.9
Patents
and Trademarks.
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5
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3.10
Litigation.
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5
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3.11
Taxes.
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6
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3.12
Employees.
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6
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3.13
Compliance
with Laws; Permits.
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6
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3.14
Offering
Valid.
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6
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3.15
Full
Disclosure.
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7
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4.
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REPRESENTATIONS
AND WARRANTIES OF PURCHASER
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7
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4.1
Requisite
Power and Authority.
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7
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4.2
Investment
Representations.
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7
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5.
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CONDITIONS
TO CLOSING9
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5.1
Conditions
to Purchaser’s Obligations at the Closing.
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9
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5.2
Conditions
to Obligations of the Company.
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9
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6.
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OTHER
AGREEMENTS
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10
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6.1
Indemnification.
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10
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6.2
Registration
of the Shares.
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10
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7.
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MISCELLANEOUS
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11
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7.1
Governing
Law.
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11
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7.2
Survival.
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11
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7.3
Successors
and Assigns.
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12
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7.4
Entire
Agreement.
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12
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7.5
Severability.
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12
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7.6
Amendment;
Waiver.
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12
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7.7
Delays
or Omissions.
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12
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i
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7.8
Notices.
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13
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7.9
Expenses.
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14
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7.10
Attorneys’
Fees.
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14
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7.11
Titles
and Subtitles.
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14
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7.12
Counterparts.
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14
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7.13
Broker’s
Fees.
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14
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7.14
Confidentiality.
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14
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7.15
Pronouns.
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15
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7.16
California
Corporate Securities Law.
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15
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ii
THIS
STOCK PURCHASE AGREEMENT (the “Agreement”)
is
entered into as of September 13, 2007, by and among Auriga Laboratories, Inc.,
a
Delaware corporation (the “Company”)
and
the persons and/or entities whose names are set forth on the signature page
hereto (collectively referred to hereinafter as “Purchaser”).
Recitals
WHEREAS,
the
Company wishes to sell and issue an aggregate of up to 6,000,000 shares of
its
common stock, par value $0.001 per share (the “Common
Shares”);
WHEREAS,
as
additional consideration for the purchase of the Common Shares, the Company
shall issue to Purchaser a warrant to purchase an additional number of shares
of
its common stock, par value $0.001 per share, equal to twenty percent (20%)
of
the aggregate number of Common Shares purchased by Purchaser hereunder (the
“Warrant
Shares”
and,
together with the Common Shares, the “Shares”);
WHEREAS,
Purchaser desires to purchase the Shares on the terms and conditions set forth
herein; and
WHEREAS,
the
Company desires to issue and sell the Shares to Purchaser on the terms and
conditions set forth herein.
Agreement
NOW,
THEREFORE,
in
consideration of the foregoing recitals and the mutual promises hereinafter
set
forth, the parties hereto agree as follows:
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1.
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AGREEMENT
TO SELL AND PURCHASE
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1.1
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Authorization
of Shares.
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On
or
prior to the Closing (as defined in Section 2.1 hereof), the Company shall
have authorized: (a) the sale and issuance to Purchaser of the Common
Shares; and (b) the issuance of such shares of common stock, par value
$0.001 per share, to be issued upon conversion of the Warrant Shares (the
“Conversion
Shares”).
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1.2
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Sale
and Purchase.
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Subject
to the terms and conditions hereof, at the Closing the Company hereby agrees
to
issue and sell to Purchaser and Purchaser agrees to purchase from the Company
the number of Shares set forth opposite Purchaser’s name on the signature page
hereto, at a purchase price calculated by the 20 day trailing moving average
prior to and including September 10, 2007 of the Company’s closing stock price
with a 20% discount, which is equal to Fifty Three Cents ($0.53) per share.
Purchaser shall pay the aggregate purchase price equal to the number of Shares
set forth opposite Purchaser’s name on the signature page hereto multiplied by
the price per share set forth in the preceding sentence (the “Purchase
Price”),
in
cash by wire transfer or check made payable to the order of the Company. As
additional consideration for the purchase of the Common Shares, the Company
shall issue to Purchaser a warrant to purchase a number of Warrant Shares equal
to twenty percent (20%) of the aggregate number of Common Shares purchased
by
Purchaser hereunder, which Warrant Shares shall be exercisable in accordance
with the terms of Section 2.2 hereof.
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2.
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CLOSING,
DELIVERY AND PAYMENT
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2.1
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Closing.
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The
closing of the sale and purchase of the Shares under this Agreement (the
“Closing”)
shall
take place at 10:00 p.m. on the date set forth above or at such time as the
parties shall agree at the offices of the Company, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
#▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, or at such other time or place as the Company
and
Purchaser may mutually agree (the “Closing
Date”).
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2.2
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Delivery.
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At
the
Closing, subject to the terms and conditions hereof, the Company will deliver
to
Purchaser, against payment of the Purchase Price: (a) a certificate representing
the number of Shares to be purchased at the Closing by Purchaser (or evidence
of
the transfer of the Shares to Purchaser’s account via DWAC electronic delivery);
and (b) a duly-executed warrant to purchase such number of Warrant Shares as
set
forth opposite Purchaser’s name on the signature page hereto, which warrant
shall be substantially in the form attached hereto as Exhibit
A
(the
“Warrant”).
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3.
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REPRESENTATIONS
AND WARRANTIES OF THE
COMPANY
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Except
as
set forth in the Company’s Annual Report on Form 10-KSB for the year ended
December 31, 2006, filed with the Securities and Exchange Commission
(“SEC”)
on
March 30, 2007 (“2006
Form 10-KSB”),
or
the Company’s Quarterly Report on Form 10-QSB for the quarter eneded June 30,
2007, filed with the SEC on August 8, 2007 (“2007 Form 10-QSB”), the Company
hereby represents and warrants to Purchaser as of the date of this Agreement
as
follows:
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3.1
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Organization,
Good Standing and Qualification.
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The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company has all requisite corporate
power and authority to own and operate its properties and assets, to execute
and
deliver this Agreement, to operate in accordance with the Certificate of
Incorporation and the Bylaws of the Company, to issue and sell the Shares and
the Conversion Shares, to carry out the provisions of this Agreement, and to
carry on its business as presently conducted and as presently proposed to be
conducted.
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3.2
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Capitalization;
Voting Rights.
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The
authorized capital stock of the Company, immediately prior to the Closing,
consists of 250,000,000 shares of common stock, par value $0.001 per share,
44,243,000 shares of which are issued and outstanding, and 10,000,000 shares
of
preferred stock, par value $0.001 per share, of which none are outstanding.
All
issued and outstanding shares of the Company’s common stock: (a) have been
duly authorized and validly issued; and (b) are fully paid and
nonassessable. The Conversion Shares have been duly and validly reserved for
issuance. When issued in compliance with the provisions of this Agreement,
the
Shares and the Conversion Shares will be validly issued, fully-paid and
nonassessable, and will be free of any liens or encumbrances; provided,
however,
that
the Shares and the Conversion Shares shall be subject to such restrictions
on
transfer under state and federal securities laws as may be required by such
laws
at the time a transfer is proposed.
2
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3.3
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Authorization;
Binding Obligations.
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All
corporate action on the part of the Company, its officers, directors and
stockholders necessary for the authorization of this Agreement, the performance
of all obligations of the Company hereunder at the Closing and the
authorization, sale, issuance and delivery of the Shares pursuant hereto and
the
Conversion Shares pursuant to the Warrant has been taken or will be taken prior
to the Closing. This Agreement, when executed and delivered, will contain valid
and binding obligations of the Company enforceable in accordance with their
terms, except: (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors’ rights; and (b) general principles of equity that
restrict the availability of equitable remedies. The sale of the Shares and
the
conversion of the Warrant Shares into Conversion Shares are not and will not
be
subject to any preemptive rights or rights of first refusal that have not been
properly waived or complied with.
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3.4
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Liabilities.
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The
Company has no material liabilities and, to the best of its knowledge, knows
of
no material contingent liabilities not disclosed in the financial statements
of
the Company included in the 2006 Form 10-KSB or 2007 Form 10-QSB (the
“Financial
Statements”),
except current liabilities incurred in the ordinary course of business
subsequent to the dates of the such financial statements which have not been,
either in any individual case or in the aggregate, materially
adverse.
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3.5
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Agreements;
Action.
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There
are
no agreements, understandings, instruments, contracts, proposed transactions,
judgments, orders, writs or decrees to which the Company is a party or to its
knowledge by which it is bound which may involve: (i) obligations
(contingent or otherwise) of, or payments to, the Company in excess of $250,000
(other than obligations of, or payments to, the Company arising from purchase
or
sale agreements entered into in the ordinary course of business); or
(ii) indemnification by the Company with respect to infringements of
proprietary rights (other than indemnification obligations arising from purchase
or sale or license agreements entered into in the ordinary course of
business).
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3.6
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Obligations
to Related Parties.
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Except
as
may be disclosed in the Financial Statements, there are no obligations of the
Company to officers, directors, stockholders or employees of the Company other
than: (a) for payment of salary for services rendered;
(b) reimbursement for reasonable expenses incurred on behalf of the
Company; and (c) for other standard employee benefits made generally
available to all employees (including stock option agreements outstanding under
any stock option plan approved by the board of directors of the Company). The
Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.
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3.7
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Changes.
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3
Since
the
date of the Financial Statements, and except as may be set forth in the 2006
Form 10-KSB and 2007 Form 10-QSB, there has not been to the Company’s
knowledge:
(a) Any
change in the assets, liabilities, financial condition or operations of the
Company from that reflected in the Financial Statements, other than changes
in
the ordinary course of business, none of which individually or in the aggregate
has had or is expected to have a material adverse effect on such assets,
liabilities, financial condition, operations or prospects of the
Company;
(b) Any
resignation or termination of any officer or key employee of the Company; and
the Company, to its knowledge, does not know of the impending resignation or
termination of employment of any such officer or key employee;
(c) Any
material change, except in the ordinary course of business, in the contingent
obligations of the Company by way of guaranty, endorsement, indemnity, warranty
or otherwise;
(d) Any
damage, destruction or loss, whether or not covered by insurance, materially
and
adversely affecting the properties, business or prospects or financial condition
of the Company;
(e) Any
waiver by the Company of a valuable right or of a material debt owed to
it;
(f) Any
direct or indirect loans made by the Company to any stockholder, employee,
officer or director of the Company;
(g) Any
material change in any compensation arrangement or agreement with any employee,
officer, director or stockholder;
(h) Any
declaration or payment of any dividend or other distribution of the assets
of
the Company;
(i) Any
debt,
obligation or liability incurred, assumed or guaranteed by the Company, except
those for immaterial amounts and for current liabilities incurred in the
ordinary course of business;
(j) Any
sale,
assignment or transfer of any patents, trademarks, copyrights, trade secrets
or
other intangible assets;
(k) Any
change in any material agreement to which the Company is a party or by which
it
is bound which materially and adversely affects the business, assets,
liabilities, financial condition, operations or prospects of the
Company;
(l) Any
other
event or condition of any character that, either individually or cumulatively,
has materially and adversely affected the business, assets, liabilities,
financial condition, operations or prospects of the Company; or
(m) Any
arrangement or commitment by the Company to do any of the acts described in
subsection (a) through (l) above.
4
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3.8
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Title
to Properties and Assets; Liens, etc.
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The
Company has good and marketable title to its properties and assets, and good
title to its leasehold estates, in each case subject to no mortgage, pledge,
lien, lease, encumbrance or charge, other than: (a) those resulting from
taxes which have not yet become delinquent; (b) minor liens and
encumbrances which do not materially detract from the value of the property
subject thereto or materially impair the operations of the Company; and
(c) those that have otherwise arisen in the ordinary course of business of
the Company.
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3.9
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Patents
and Trademarks.
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To
the
best of its knowledge, the Company owns or possesses adequate legal rights
(by
license or otherwise) to all patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information and other proprietary rights
and processes necessary for its business as now conducted and as presently
proposed to be conducted, without any known infringement of the rights of
others. Except as may be disclosed in the 2006 Form 10-KSB or 2007 Form 10-QSB,
there are no outstanding options, licenses or agreements of any kind relating
to
the foregoing, nor is the Company bound by or a party to any options, licenses
or agreements of any kind with respect to the patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, information and other
proprietary rights and processes of any other person or entity other than such
licenses or agreements arising from the purchase of “off the shelf” or other
standard products. The Company has not received any communications alleging
that
the Company has violated or, by conducting its business as presently proposed,
would violate any of the patents, trademarks, service marks, trade names,
copyrights or trade secrets or other proprietary rights of any other person
or
entity. The Company is not aware that any of its employees is obligated under
any contract (including licenses, covenants or commitments of any nature) or
other agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with their duties to the Company
or
that would conflict with the Company’s business as presently proposed to be
conducted. Neither the execution nor delivery of this Agreement, nor the
carrying on of the Company’s business by the employees of the Company, nor the
conduct of the Company’s business as presently proposed, will, to the Company’s
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any employee is now obligated.
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3.10
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Litigation.
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There
is
no action, suit, proceeding or investigation pending or, to the Company’s
knowledge, currently threatened against the Company that questions the validity
of this Agreement or the right of the Company to enter into this Agreement,
or
to consummate the transactions contemplated hereby, or which might result,
either individually or in the aggregate, in any material adverse change in
the
assets, condition, affairs or prospects of the Company, financially or
otherwise, or any change in the current equity ownership of the Company, nor
is
the Company aware that there is any basis for any of the foregoing. The Company
is not a party or subject to the provisions of any order, writ, injunction,
judgment or decree of any court or government agency or instrumentality. There
is no action, suit, proceeding or investigation by the Company currently pending
or which the Company intends to initiate.
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3.11
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Taxes.
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5
The
Company has duly, properly and timely filed all tax returns with federal, state
and local taxing authorities that are required to be filed as of the date of
this Agreement. The Company has no knowledge of any liability of any tax to
be
imposed upon its properties or assets as of the date of this Agreement that
is
not adequately provided for.
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3.12
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Employees.
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The
Company has no collective bargaining agreements with any of its employees.
There
is no labor union organizing activity pending or, to the Company’s knowledge,
threatened with respect to the Company. To the Company’s knowledge, no employee
of the Company, nor any consultant with whom the Company has contracted, is
in
violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual
to
be employed by, or to contract with, the Company because of the nature of the
business to be conducted by the Company; and, to the Company’s knowledge, the
continued employment by the Company of its present employees, and the
performance of the Company’s contracts with its independent contractors, will
not result in any such violation. The Company has not received any notice
alleging that any such violation has occurred. Except as may be set forth in
the
2006 Form 10-KSB or 2007 Form 10-QSB, no employee of the Company has been
granted the right to continued employment by the Company or to any material
compensation following termination of employment with the Company. The Company
is not aware that any officer or key employee, or that any group of key
employees, intends to terminate his, her or their employment with the Company,
nor does the Company have a present intention to terminate the employment of
any
officer, key employee or group of key employees.
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3.13
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Compliance
with Laws; Permits.
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To
its
knowledge, the Company is not in violation of any applicable statute, rule,
regulation, order or restriction of any domestic or foreign government or any
instrumentality or agency thereof in respect of the conduct of its business
or
the ownership of its properties which violation would materially and adversely
affect the business, assets, liabilities, financial condition, operations or
prospects of the Company. No governmental orders, permissions, consents,
approvals or authorizations are required to be obtained and no registrations
or
declarations are required to be filed in connection with the execution and
delivery of this Agreement and the issuance of the Shares or the Conversion
Shares, except such as has been duly and validly obtained or filed, or with
respect to any filings that must be made after the Closing, as will be filed
in
a timely manner. Except as may be set forth in the 2006 Form 10-KSB or 2007
Form
10-QSB, the Company has all franchises, permits, licenses and any similar
authority necessary for the conduct of its business as now being conducted
by
it, the lack of which could materially and adversely affect the business,
properties, prospects or financial condition of the Company and believes it
can
obtain, without undue burden or expense, any similar authority for the conduct
of its business as planned to be conducted.
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3.14
|
Offering
Valid.
|
Assuming
the accuracy of the representations and warranties of Purchaser contained in
Section 4.2 hereof, the offer, sale and issuance of the Shares and the
Conversion Shares will be exempt from the registration requirements of the
Securities Act of 1933, as amended (the “Securities
Act”),
and
will have been registered or qualified (or are exempt from registration and
qualification) under the registration, permit or qualification requirements
of
all applicable state securities laws. Neither the Company nor any agent on
its
behalf has solicited or will solicit any offers to sell or has offered to sell
or will offer to sell all or any part of the Shares to any person or persons
so
as to bring the sale of such Shares by the Company within the registration
provisions of the Securities Act or any state securities laws.
6
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3.15
|
Full
Disclosure.
|
The
Company has provided Purchaser with all information requested by Purchaser
in
connection with the decision to purchase the Shares, including all information
the Company believes is reasonably necessary to make such investment
decision.
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4.
|
REPRESENTATIONS
AND WARRANTIES OF
PURCHASER
|
Purchaser
hereby represents and warrants to the Company as follows (such representations
and warranties do not lessen or obviate the representations and warranties
of
the Company set forth in this Agreement):
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4.1
|
Requisite
Power and Authority.
|
Purchaser
has all necessary power and authority under all applicable provisions of law
to
execute and deliver this Agreement and to carry out their provisions. All action
on Purchaser’s part required for the lawful execution and delivery of this
Agreement have been or will be effectively taken prior to the Closing. Upon
its
execution and delivery, this Agreement will contain valid and binding
obligations of Purchaser, enforceable in accordance with their terms, except:
(a) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors’ rights; and (b) general principles of equity that restrict the
availability of equitable remedies.
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4.2
|
Investment
Representations.
|
Purchaser
understands that neither the Shares nor the Conversion Shares have been
registered under the Securities Act. Purchaser also understands that the Shares
are being offered and sold pursuant to an exemption from registration contained
in the Securities Act based in part upon Purchaser’s representations contained
in this Agreement. Purchaser hereby represents and warrants as
follows:
(a) Purchaser
Bears Economic Risk.
Purchaser has substantial experience in evaluating and investing in private
placement transactions of securities in companies similar to the Company so
that
it is capable of evaluating the merits and risks of its investment in the
Company and has the capacity to protect its own interests. Purchaser must bear
the economic risk of this investment indefinitely until such time as the Shares
are registered pursuant to the Securities Act, or an exemption from registration
is available.
(b) Acquisition
for Own Account.
Purchaser is acquiring the Shares and the Conversion Shares for Purchaser’s own
account for investment only, and not with a view towards their
distribution.
(c) Purchaser
Can Protect Its Interest.
Purchaser represents that by reason of its, or of its management’s, business or
financial experience, Purchaser has the capacity to protect its own interests
in
connection with the transactions contemplated in this Agreement. Further,
Purchaser is aware of no publication of any advertisement in connection with
the
transactions contemplated in this Agreement.
7
(d) Accredited
Investor.
Purchaser represents that it is an “accredited investor” within the meaning of
Regulation D under the Securities Act.
(e) Company
Information.
Purchaser has received and read the Financial Statements and has had an
opportunity to discuss the Company’s business, management and financial affairs
with directors, officers and management of the Company and has had the
opportunity to review the Company’s operations and facilities. Purchaser has
also had the opportunity to ask questions of and receive answers from, the
Company and its management regarding the terms and conditions of this
investment.
(f) Rule
144.
Purchaser acknowledges and agrees that the Shares must be held indefinitely,
unless they are subsequently registered under the Securities Act or an exemption
from such registration is available. Purchaser has been advised or is aware
of
the provisions of Rule 144 promulgated under the Securities Act as in
effect from time to time (“Rule
144”),
which
permits limited resale of shares purchased in a private placement subject to
the
satisfaction of certain conditions, including, among other things: (i) the
availability of certain current public information about the Company, (ii)
the
manner of the resale, (iii) the resale occurring following the required holding
period under Rule 144 and (iv) the number of shares being sold during any
three-month period not exceeding specified limitations.
(g) Legends.
Purchaser understands that the Shares, and, if issued, the Conversion Shares,
may bear one or more legends substantially as follows:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH
A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE
OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF
1933.”
(h) Residence.
If
Purchaser is an individual, then Purchaser resides in the state or province
identified in the address set forth opposite Purchaser’s name on the signature
page hereto; if Purchaser is a partnership, corporation, limited liability
company or other entity, then the office or offices of Purchaser in which its
investment decision was made is located at the address or addresses set forth
opposite Purchaser’s name on the signature page hereto.
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5.
|
CONDITIONS
TO CLOSING
|
8
|
5.1
|
Conditions
to Purchaser’s Obligations at the Closing.
|
Purchaser’s
obligations to purchase the Shares at the Closing are subject to the
satisfaction, at or prior to the Closing Date, of the following
conditions:
(a) Representations
and Warranties True; Performance of Obligations.
The
representations and warranties made by the Company in Section 3 hereof
shall be true and correct in all material respects as of the Closing Date with
the same force and effect as if they had been made as of the Closing Date,
and
the Company shall have performed all obligations and conditions herein required
to be performed or observed by it on or prior to the Closing.
(b) Legal
Investment.
On the
Closing Date, the sale and issuance of the Shares and the proposed issuance
of
the Conversion Shares shall be legally permitted by all laws and regulations
to
which Purchaser and the Company are subject (except for such as may be properly
obtained subsequent to the Closing).
(c) Consents,
Permits, and Waivers.
The
Company shall have obtained any and all consents, permits and waivers necessary
or appropriate for consummation of the transactions contemplated by this
Agreement (except for such as may be properly obtained subsequent to the
Closing).
(d) Corporate
Documents.
The
Company shall have delivered to Purchaser or Purchaser’s counsel, copies of all
corporate documents of the Company as Purchaser shall reasonably
request.
(e) Reservation
of Conversion Shares.
The
Conversion Shares issuable upon conversion of the Warrant shall have been duly
authorized and reserved for issuance upon such conversion.
(f) Warrant.
A
Warrant substantially in the form attached hereto as Exhibit A
shall
have been executed and delivered by the Company.
(g) Proceedings
and Documents.
All
corporate and other proceedings in connection with the transactions contemplated
at the Closing hereby and all documents and instruments incident to such
transactions shall be reasonably satisfactory in substance and form to
Purchaser, and Purchaser shall have received all such counterpart originals
or
certified or other copies of such documents as may be reasonably
requested.
|
5.2
|
Conditions
to Obligations of the Company.
|
The
Company’s obligation to issue and sell the Shares at the Closing is subject to
the satisfaction, on or prior to the Closing, of the following
conditions:
(a) Representations
and Warranties True.
The
representations and warranties in Section 4 made by Purchaser shall be true
and correct in all material respects at the date of the Closing, with the same
force and effect as if they had been made on and as of said date.
9
(b) Performance
of Obligations.
Purchaser shall have performed and complied with all agreements and conditions
herein required to be performed or complied with by Purchaser on or before
the
Closing.
(c) Warrant.
A
Warrant substantially in the form attached hereto as Exhibit A
shall
have been executed and delivered by Purchaser.
(d) Consents,
Permits and Waivers.
The
Company shall have obtained any and all consents, permits and waivers necessary
or appropriate for consummation of the transactions contemplated by this
Agreement (except for such as may be properly obtained subsequent to the
Closing).
|
6.
|
OTHER
AGREEMENTS
|
|
6.1
|
Indemnification.
|
(a)
The
Company will indemnify and hold Purchaser harmless for: (i) all claims, losses,
damages, costs, expenses and liabilities, including, but not limited to
reasonable attorney’s fees and court costs, arising from or in connection with
any violation by the Company of the terms of this Agreement or gross negligence
or willful misconduct by the Company in the performance of the terms of this
Agreement, and (ii) any breach of this Agreement (or the exhibits attached
hereto). (b) Purchaser will indemnify, defend and hold the Company harmless
against all claims, losses, damages, costs, expenses and liabilities, including,
but not limited to, reasonable attorneys’ fees and court costs, which result
from Purchaser making any false statement, including but not limited to those
false statements or omissions which cause the exemptions to the registration
or
qualification requirements of state and federal securities laws under which
the
Company is selling the Shares to be unavailable or which result in the violation
of any such securities laws by the Company.
|
6.2
|
Registration
of the Shares.
|
(a) Registration
Procedures.
The
Company shall:
(i) as
soon
as practicable, but in any event no later than thirty (30) days following the
Closing Date (the “Required
Filing Date”),
prepare and file with the SEC, a Registration Statement on Form SB-2
(“Registration
Statement”)
to
enable the resale of the Shares by Purchaser from time to time;
(ii) use
its
best efforts, subject to receipt of necessary information from Purchaser, to
cause the Registration Statement to become effective as soon as practicable,
such efforts to include, without limiting the generality of the foregoing,
preparing and filing with the SEC any financial statements that are required
to
be filed prior to the effectiveness of such Registration Statement (although
Purchaser hereby acknowledges that, despite any disclaimer of being an
underwriter, a determination by the SEC that Purchaser is deemed an underwriter
shall relieve the Company of its obligations hereunder);
(iii) use
its
best efforts to prepare and file with the SEC such amendments and supplements
to
the Registration Statement and the accompanying prospectus as may be necessary
to keep the Registration Statement current and effective for a period ending
on
the earlier of: (A) the second anniversary of the Closing Date, (B) the date
on
which Purchaser may sell Shares pursuant to paragraph (k) of Rule 144, or (C)
such time as all Shares purchased by Purchaser pursuant to this Agreement have
been sold pursuant to the Registration Statement or Rule 144, and to notify
Purchaser promptly upon the Registration Statement, and each post-effective
amendment thereto, being declared effective by the SEC;
10
(iv) furnish
to Purchaser such number of copies of the Registration Statement and
the
accompanying prospectus (including supplemental prospectuses) as Purchaser
may
reasonably request in order to facilitate the public sale or other disposition
of all or any of the Shares by Purchaser;
(v) bear
all
expenses (other than underwriting discounts and commissions, if any) in
connection with the procedures in paragraph (i) through (iii) of this Section
6.2 and the registration of the Shares pursuant to the Registration
Statement;
(vi) advise
Purchaser, promptly after it shall receive notice or obtain knowledge of the
issuance of any stop order by the SEC delaying or suspending the effectiveness
of the Registration Statement or of the initiation of any proceeding for that
purpose; and it will promptly use its commercially reasonable efforts to prevent
the issuance of any stop order or to obtain its withdrawal at the earliest
possible moment if such stop order should be issued; and
(vii) with
a
view to making available to Purchaser the benefits of Rule 144 and any other
rule or regulation of the SEC that may at any time permit Purchaser to sell
Shares to the public without registration, the Company covenants and agrees
to
use its best efforts to: (A) make and keep public information available, as
those terms are understood and defined in Rule 144, until the earlier of such
date as all of Purchaser’s Shares may be resold pursuant to Rule 144(k) or any
other rule of similar effect or such date as all of Purchaser’s Shares shall
have been resold; and (B) file with the SEC in a timely manner all reports
and
other documents required of the Company under the Securities Act and under
the
Securities Exchange Act of 1934, as amended.
(b) Purchaser’s
Obligation.
It
shall be a condition precedent to the obligations of the Company to take any
action pursuant to this Section 6.2 that Purchaser shall furnish to the Company
such information regarding itself, the Shares to be sold by Purchaser, and
the
intended method of disposition of such securities as shall be required to effect
the registration of the Shares.
|
7.
|
MISCELLANEOUS
|
|
7.1
|
Governing
Law.
|
This
Agreement shall be governed in all respects by the laws of the State of
California, as such laws are applied to agreements between California residents
entered into and performed entirely in California.
|
7.2
|
Survival.
|
The
representations, warranties, covenants and agreements made herein shall survive
any investigation made by Purchaser and the closing of the transactions
contemplated hereby for a period of one (1) year following the Closing. All
statements as to factual matters contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant hereto in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company hereunder solely as of the date
of
such certificate or instrument.
11
|
7.3
|
Successors
and Assigns.
|
Except
as
otherwise expressly provided herein, the provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors
and
administrators of the parties hereto and shall inure to the benefit of and
be
enforceable by each person who shall be a holder of the Shares from time to
time.
|
7.4
|
Entire
Agreement.
|
This
Agreement, the exhibits hereto and the other documents delivered pursuant hereto
constitute the full, complete, exclusive and entire understanding and agreement
between the parties with regard to the subjects hereof and no party shall be
liable or bound to any other in any manner by any representations, warranties,
covenants and agreements except as specifically set forth herein and
therein.
|
7.5
|
Severability.
|
In
case
any provision of this Agreement shall be invalid, illegal or unenforceable,
the
validity, legality and enforceability of the remaining provisions shall not
in
any way be affected or impaired thereby.
|
7.6
|
Amendment;
Waiver.
|
This
Agreement may be amended or modified only upon the written consent of the
Company and Purchaser. The obligations of the Company and Purchaser under this
Agreement may be waived only with the written consent of party against whom
such
waiver is being sought.
|
7.7
|
Delays
or Omissions.
|
It
is
agreed that no delay or omission to exercise any right, power or remedy accruing
to any party, upon any breach, default or noncompliance by another party under
this Agreement shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring. It is further agreed that any waiver, permit, consent
or
approval of any kind or character on Purchaser’s part of any breach, default or
noncompliance under this Agreement or any waiver on such party’s part of any
provisions or conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, by law or otherwise afforded to any
party, shall be cumulative and not alternative.
|
7.8
|
Notices.
|
All
notices required or permitted hereunder shall be in writing and shall be deemed
effectively given: (a) upon personal delivery to the party to be notified;
(b) when sent by confirmed facsimile if sent during normal business hours
of the recipient, if not, then on the next business day; (c) five (5) days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid; or (d) one (1) day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the Company
at the address as set forth on the signature page hereof and to Purchaser at
the
address set forth on the signature page hereof, or at such other address as
the
Company or Purchaser may designate by ten (10) days advance written notice
to
the other party hereto.
12
|
7.9
|
Expenses.
|
Each
party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement.
|
7.10
|
Attorneys’
Fees.
|
In
the
event that any suit or action is instituted to enforce any provision in this
Agreement, the prevailing party in such dispute shall be entitled to recover
from the losing party all fees, costs and expenses of enforcing any right of
such prevailing party under or with respect to this Agreement, including without
limitation, such reasonable fees and expenses of attorneys and accountants,
which shall include, without limitation, all fees, costs and expenses of
appeals.
|
7.11
|
Titles
and Subtitles.
|
The
titles of the sections and subsections of this Agreement are for convenience
of
reference only and are not to be considered in construing this
Agreement.
|
7.12
|
Counterparts.
|
This
Agreement may be executed in any number of counterparts, each of which shall
be
an original, but all of which together shall constitute one
instrument.
|
7.13
|
Broker’s
Fees.
|
Each
party hereto represents and warrants that no agent, broker, investment banker,
person or firm acting on behalf of or under the authority of such party hereto
is or will be entitled to any broker’s or finder’s fee or any other commission
directly or indirectly in connection with the transactions contemplated herein.
Each party hereto further agrees to indemnify each other party for any claims,
losses or expenses incurred by such other party as a result of the
representation in this Section 6.13 being untrue.
|
7.14
|
Confidentiality.
|
Each
party hereto agrees that, except with the prior written consent of the other
party, it shall at all times keep confidential and not divulge, furnish or
make
accessible to anyone any confidential information, knowledge or data concerning
or relating to the business or financial affairs of the other parties to which
such party has been or shall become privy by reason of this Agreement or the
Related Agreements, discussions or negotiations relating to this Agreement
or
the Related Agreements, the performance of its obligations hereunder or the
ownership of the Shares purchased hereunder. The provisions of this Section
6.15
shall be in addition to, and not in substitution for, the provisions of any
separate nondisclosure agreement executed by the parties hereto.
13
|
7.15
|
Pronouns.
|
All
pronouns contained herein, and any variations thereof, shall be deemed to refer
to the masculine, feminine or neutral, singular or plural, as to the identity
of
the parties hereto may require.
|
7.16
|
California
Corporate Securities Law.
|
THE
SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN
QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA
AND
THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION OR IN THE ABSENCE OF AN
EXEMPTION FROM SUCH QUALIFICATION IS UNLAWFUL. PRIOR TO ACCEPTANCE OF SUCH
CONSIDERATION BY THE COMPANY, THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION
FROM SUCH QUALIFICATION BEING AVAILABLE.
[Remainder
of page intentionally left blank.]
14
IN
WITNESS WHEREOF, the parties hereto have executed this Stock Purchase Agreement
as of the date set forth in the first paragraph hereof.
|
|
||
|
By:
|
||
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇
|
||
|
Chief
Executive Officer
|
||
|
Address:
▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. #▇▇▇
|
||
|
▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
|
||
|
“PURCHASER”
|
||||
|
|
||||
|
By:
|
||||
|
Name:
|
||||
|
Title:
|
||||
|
Address:
|
||||
|
Number
of Shares:
|
||||
15
EXHIBIT
A
FORM
OF WARRANT
(attached
hereto)
16