NOTE PURCHASE AGREEMENT
This NOTE PURCHASE AGREEMENT (this "Agreement"), dated as of July 27,
2004, is entered into by and among PETCARE TELEVISION NETWORK, INC., a Florida
corporation (the "Company"), and the purchaser listed on Exhibit A attached
hereto (the "Purchaser"), for the issuance and sale to the Purchaser of the Note
(as defined below) of the Company, in the manner, and upon the terms, provisions
and conditions set forth in this Agreement.
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Purchaser
and the Purchaser shall purchase the Note;
WHEREAS, such issuance and sale will be made in reliance upon the
provisions of Section 4(2) and/or Rule 506 of Regulation D ("Regulation D") of
the United States Securities Act of 1933, as amended, and regulations
promulgated thereunder (the "Securities Act"), or upon such other exemption from
the registration requirements of the Securities Act as may be available with
respect to the purchase of the Note to be made hereunder.
NOW, THEREFORE, in consideration of the representations, warranties and
agreements contained herein and other good and valuable consideration, the
receipt and legal adequacy of which is hereby acknowledged by the parties, the
Company and the Purchaser hereby agree as follows:
1. PURCHASE AND SALE OF NOTE.
(a) Upon the following terms and subject to the conditions contained
herein, the Company shall issue and sell to the Purchaser, and the Purchaser
shall purchase from the Company, a subordinated convertible promissory note in
the aggregate principal amount of $1,000,000 (the "Purchase Price"), in
substantially the form attached hereto as Exhibit B (the "Note"). The
outstanding principal amount of the Note plus any accrued but unpaid interest
thereon shall be due and payable in cash on the Maturity Date (as defined in the
Note); provided, however, the Purchaser shall have the sole option to convert on
the Maturity Date the outstanding principal amount of the Note plus any accrued
but unpaid interest into such number of shares of common stock of the Company,
par value $.0005 per share (the "Common Stock"), at a conversion price of $.40
per share.
(b) In consideration of and in express reliance upon the
representations, warranties, covenants, terms and conditions of this Agreement,
the Company agrees to issue and sell to the Purchaser and the Purchaser agrees
to purchase the Note. The closing under this Agreement (the "Closing") shall
take place at the offices of Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP, The Chrysler
Building, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 upon the satisfaction
of each of the conditions set forth in Sections 4 and 5 hereof (the "Closing
Date").
(c) The Company has authorized and reserved and covenants to
continue to reserve, free of preemptive rights and other similar contractual
rights of stockholders, a number of authorized but unissued shares of Common
Stock to effect the conversion of the Note. Any shares of Common Stock issuable
by the Company upon conversion of the Note are herein referred to as the
"Conversion Shares". The Note and the Conversion Shares are sometimes
collectively referred to herein as the "Securities".
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER. The
Purchaser hereby makes the following representations and warranties to the
Company, and covenants for the benefit of the Company:
(a) If the Purchaser is an entity, the Purchaser is a corporation,
limited liability company or partnership duly incorporated or organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization.
(b) This Agreement has been duly authorized, validly executed and
delivered by the Purchaser and is a valid and binding agreement and obligation
of the Purchaser enforceable against the Purchaser in accordance with its terms,
subject to limitations on enforcement by general principles of equity and by
bankruptcy or other laws affecting the enforcement of creditors' rights
generally, and the Purchaser has full power and authority to execute and deliver
this Agreement and the other agreements and documents contemplated hereby and to
perform its obligations hereunder and thereunder.
(c) The Purchaser understands that no Federal, state, local or
foreign governmental body or regulatory authority has made any finding or
determination relating to the fairness of an investment in any of the Securities
and that no Federal, state, local or foreign governmental body or regulatory
authority has recommended or endorsed, or will recommend or endorse, any
investment in any of the Securities. The Purchaser, in making the decision to
purchase the Securities, has relied upon independent investigation made by it
and has not relied on any information or representations made by third parties.
(d) The Purchaser understands that the Securities are being offered
and sold to it in reliance on specific provisions of Federal and state
securities laws and that the Company is relying upon the truth and accuracy of
the representations, warranties, agreements, acknowledgments and understandings
of the Purchaser set forth herein for purposes of qualifying for exemptions from
registration under the Securities Act, and applicable state securities laws.
(e) The Purchaser is an "accredited investor" as defined under Rule
501 of Regulation D promulgated under the Securities Act.
(f) The Purchaser is and will be acquiring the Securities for its
own account, and not with a view to any resale or distribution of the Note in
whole or in part, in violation of the Securities Act or any applicable
securities laws.
(g) The offer and sale of the Securities is intended to be exempt
from registration under the Securities Act, by virtue of Section 4(2) and/or
Rule 506 of Regulation D promulgated under the Securities Act. The Purchaser
understands that the Securities purchased hereunder have not been, and may never
be, registered under the Securities Act and that none of the Securities can be
sold or transferred unless they are first registered under the Securities Act
and such state and other securities laws as may be applicable or in the opinion
of counsel for the Company an exemption from registration under the Securities
Act is available (and then the Securities may be sold or transferred only in
compliance with such exemption and all applicable state and other securities
laws).
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3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The Company
represents and warrants to the Purchaser, and covenants for the benefit of the
Purchaser, as follows:
(a) The Company has been duly incorporated and is validly existing
and in good standing under the laws of the State of Florida, with full corporate
power and authority to own, lease and operate its properties and to conduct its
business as currently conducted, and is duly registered and qualified to conduct
its business and is in good standing in each jurisdiction or place where the
nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure to register or qualify
would not have a Material Adverse Effect. For purposes of this Agreement,
"Material Adverse Effect" shall mean any effect on the business, results of
operations, prospects, assets or financial condition of the Company that is
material and adverse to the Company and its subsidiaries and affiliates and/or
any condition, circumstance, or situation that would prohibit or otherwise
materially interfere with the ability of the Company from entering into and
performing any of its obligations under this Agreement or the Note in any
material respect.
(b) The Note has been duly authorized by all necessary corporate
action and, when paid for or issued in accordance with the terms hereof, the
Note shall be validly issued and outstanding, free and clear of all liens,
encumbrances and rights of refusal of any kind. When the Conversion Shares are
issued and paid for in accordance with the terms of this Agreement and as set
forth in the Note, such shares will be duly authorized by all necessary
corporate action and validly issued and outstanding, fully paid and
nonassessable, free and clear of all liens, encumbrances and rights of refusal
of any kind and the holders shall be entitled to all rights accorded to a holder
of Common Stock.
(c) The Note and this Agreement (the "Transaction Documents") have
been duly authorized, validly executed and delivered on behalf of the Company
and is a valid and binding agreement and obligation of the Company enforceable
against the Company in accordance with its terms, subject to limitations on
enforcement by general principles of equity and by bankruptcy or other laws
affecting the enforcement of creditors' rights generally, and the Company has
full power and authority to execute and deliver the Transaction Documents and
the other agreements and documents contemplated hereby and to perform its
obligations hereunder and thereunder.
(d) The execution and delivery of the Transaction Documents and the
consummation of the transactions contemplated by this Agreement by the Company,
will not (i) conflict with or result in a breach of or a default under any of
the terms or provisions of, (A) the Company's certificate of incorporation or
by-laws, or (B) of any material provision of any indenture, mortgage, deed of
trust or other material agreement or instrument to which the Company is a party
or by which it or any of its material properties or assets is bound, (ii) result
in a violation of any material provision of any law, statute, rule, regulation,
or any existing applicable decree, judgment or order by any court, Federal or
state regulatory body, administrative agency, or other governmental body having
jurisdiction over the Company, or any of its material properties or assets or
(iii) result in the creation or imposition of any material lien, charge or
encumbrance upon any material property or assets of the Company or any of its
subsidiaries pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which any of their
property or any of them is subject except in the case of clauses (i)(B) or (iii)
for any such conflicts, breaches, or defaults or any liens, charges, or
encumbrances which would not have a Material Adverse Effect.
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(e) The sale and issuance of the Securities in accordance with the
terms of and in reliance on the accuracy of the Purchaser's representations and
warranties set forth in this Agreement will be exempt from the registration
requirements of the Securities Act.
(f) No consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of the Company
is required in connection with the valid execution and delivery of this
Agreement or the offer, sale or issuance of the Securities or the consummation
of any other transaction contemplated by this Agreement.
(g) There is no action, suit, claim, investigation or proceeding
pending or, to the knowledge of the Company, threatened against the Company
which questions the validity of the Transaction Documents or the transactions
contemplated thereby or any action taken or to be taken pursuant thereto. There
is no action, suit, claim, investigation or proceeding pending or, to the
knowledge of the Company, threatened, against or involving the Company or any
subsidiary, or any of their respective properties or assets which, if adversely
determined, is reasonably likely to result in a Material Adverse Effect.
(h) The Company has complied and will comply with all applicable
federal and state securities laws in connection with the offer, issuance and
sale of the Note hereunder. Neither the Company nor anyone acting on its behalf,
directly or indirectly, has or will sell, offer to sell or solicit offers to buy
the Note, or similar securities to, or solicit offers with respect thereto from,
or enter into any preliminary conversations or negotiations relating thereto
with, any person, or has taken or will take any action so as to bring the
issuance and sale of the Note under the registration provisions of the
Securities Act and any other applicable federal and state securities laws.
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 Note.
(i) To the Company's knowledge, neither this Agreement, nor the
Schedules hereto contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made herein or
therein, in the light of the circumstances under which they were made herein or
therein, not misleading.
(j) The authorized capital stock of the Company and the shares
thereof issued and outstanding as of July 27, 2004 are set forth on Schedule
3(j) attached hereto. All of the outstanding shares of the Common Stock have
been duly and validly authorized, and are fully paid and non-assessable. Except
as set forth in this Agreement or on Schedule 3(j) attached hereto, as of the
date hereof, no shares of the Common Stock are entitled to preemptive rights and
there are no registration rights or outstanding options, warrants, scrip, rights
to subscribe to, call or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company. As of the date hereof, except for as set forth on Schedule 3(j), the
Company is not a party to any agreement granting registration rights to any
person with respect to any of its equity or debt securities. The Company is not
a party to, and its executive officers have no knowledge of, any agreement
restricting the voting or transfer of any shares of the capital stock of the
Company. The offer and sale of all capital stock, convertible securities,
rights, warrants, or options of the Company issued prior to the Closing complied
with all applicable federal and state securities laws, or no stockholder has a
right of rescission or damages with respect thereto which is reasonably likely
to have a Material Adverse Effect. The Company has furnished or made available
to the Purchaser true and correct copies of the Company's Certificate of
Incorporation as in effect on the date hereof (the "Certificate"), and the
Company's Bylaws as in effect on the date hereof (the "Bylaws").
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(k) So long as the Note remains outstanding, the Company shall take
all action necessary to at all times have authorized, and reserved for the
purpose of issuance, a sufficient number of shares of Common Stock to effect the
conversion of the Note.
(l) The Company has complied and will comply with all applicable
federal and state securities laws in connection with the offer, issuance and
sale of the Note and the Conversion Shares hereunder. Neither the Company nor
anyone acting on its behalf, directly or indirectly, has or will sell, offer to
sell or solicit offers to buy any of the Securities, or similar securities to,
or solicit offers with respect thereto from, or enter into any preliminary
conversations or negotiations relating thereto with, any person, or has taken or
will take any action so as to bring the issuance and sale of any of the
Securities under the registration provisions of the Securities Act and
applicable state securities laws. 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 any of the
Securities.
(m) The Company agrees that so long as the Note is outstanding or
the Purchaser owns at least 2,000,000 shares of Common Stock on a fully diluted
basis, the Purchaser shall have the right to nominate or appoint an individual
to serve as an observer of the Company's board of directors.
4. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO SELL THE NOTE.
The obligation hereunder of the Company to issue and sell the Note to the
Purchaser is subject to the satisfaction or waiver, at or before the Closing
Date, of each of the conditions set forth below. These conditions are for the
Company's sole benefit and may be waived by the Company at any time in its sole
discretion.
(a) The Purchaser shall have executed and delivered this Agreement.
(b) The Purchaser shall have performed, satisfied and complied in
all material respects with all covenants, agreements and conditions required to
be performed, satisfied or complied with by the Purchaser at or prior to the
Closing Date.
(c) The representations and warranties of the Purchaser 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 are expressly made as of a particular date, which shall be true
and correct in all material respects as of such date.
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(d) At the Closing Date, the Purchaser shall have delivered to the
Company immediately available funds as payment in full of the Purchase Price for
the Note.
5. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO PURCHASE THE
NOTE. The obligation hereunder of the Purchaser to acquire and pay for the Note
is subject to the satisfaction or waiver, at or before the Closing Date, of each
of the conditions set forth below. These conditions are for the Purchaser's sole
benefit and may be waived by the Purchaser at any time in its sole discretion.
(a) The Company shall have executed and delivered the Note, this
Agreement and any other Transaction Document.
(b) The Company shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by the Company
at or prior to the Closing Date.
(c) Each of the representations and warranties of the Company 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 particular date), which shall be true and correct
in all material respects as of such date.
(d) No statute, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement at or
prior to the Closing Date.
(e) As of the Closing Date, no action, suit or proceeding before or
by any court or governmental agency or body, domestic or foreign, shall be
pending against or affecting the Company, or any of its properties, which
questions the validity of the Agreement, the Note, or the transactions
contemplated thereby or any action taken or to be take pursuant thereto. As of
the Closing Date, no action, suit, claim or proceeding before or by any court or
governmental agency or body, domestic or foreign, shall be pending against or
affecting the Company, or any of its properties, which, if adversely determined,
is reasonably likely to result in a Material Adverse Effect.
(f) No Material Adverse Effect shall have occurred at or before the
Closing Date.
(g) The Company shall have delivered on the Closing Date to the
Purchaser a secretary's certificate, dated as of the Closing Date, as to (i) the
resolutions of the board of directors of the Company authorizing the
transactions contemplated by this Agreement, (ii) the Certificate, (iii) the
Bylaws, each as in effect at the Closing, and (iv) the authority and incumbency
of the officers of the Company executing this Agreement and the Note.
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(h) The Purchaser shall have received a legal opinion in
substantially the form annexed hereto as Exhibit C as of the Closing Date.
6. LEGEND. Each Note and certificate representing the Conversion Shares
shall be stamped or otherwise imprinted with a legend substantially in the
following form (in addition to any legend required by applicable state
securities or "blue sky" laws): "THE SECURITIES REPRESENTED BY THIS CERTIFICATE
(THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT
AND UNDER APPLICABLE STATE SECURITIES LAWS OR PETCARE TELEVISION NETWORK, INC.
SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES
UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES
LAWS IS NOT REQUIRED." The Company agrees to reissue the Note and certificates
representing the Conversion Shares, without the legend set forth above if at
such time, prior to making any transfer of any such Securities, such holder
thereof shall give written notice to the Company describing the manner and terms
of such transfer and removal as the Company may reasonably request. Such
proposed transfer will not be effected until: (a) the Company has notified such
holder that either (i) in the opinion of its counsel, the registration of the
Note or Conversion Shares under the Securities Act is not required in connection
with such proposed transfer; or (ii) a registration statement under the
Securities Act covering such proposed disposition has been filed by the Company
with the Securities and Exchange Commission and has become effective under the
Securities Act; and (b) the Company has notified such holder that either: (i) in
the opinion of its counsel, the registration or qualification under the
securities or "blue sky" laws of any state is not required in connection with
such proposed disposition, or (ii) compliance with applicable state securities
or "blue sky" laws has been effected. The Company will use its best efforts to
respond to any such notice from a holder within five (5) days. In the case of
any proposed transfer under this Section 6, the Company will use reasonable
efforts to comply with any such applicable state securities or "blue sky" laws,
but shall in no event be required, in connection therewith, to qualify to do
business in any state where it is not then qualified or to take any action that
would subject it to tax or to the general service of process in any state where
it is not then subject. The restrictions on transfer contained in this Section 6
shall be in addition to, and not by way of limitation of, any other restrictions
on transfer contained in any other section of this Agreement.
7. FEES AND EXPENSES. Each party shall pay the fees and expenses of its
advisors, counsel, accountants and other experts, if any, and all other
expenses, incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement, provided, however, that
the Company shall pay (i) $10,000 of non-accountable fees and expenses in
connection with the due diligence, preparation, negotiation, execution and
delivery of this Agreement, the Note and the transactions contemplated
thereunder and (ii) the costs of any amendments, modifications or waivers of
this Agreement, the Note or any other Transaction Document.
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8. INDEMNIFICATION.
(a) The Company hereby agrees to indemnify and hold harmless the
Purchaser and its officers, directors, shareholders, employees, agents and
attorneys against any and all losses, claims, damages, liabilities and
reasonable expenses (collectively "Claims") incurred by each such person in
connection with defending or investigating any such Claims, whether or not
resulting in any liability to such person, to which any such indemnified party
may become subject, insofar as such Claims arise out of or are based upon any
breach of any representation or warranty or agreement made by the Company in
this Agreement.
(b) The Purchaser hereby agrees to indemnify and hold harmless the
Company and its officers, directors, shareholders, employees, agents and
attorneys against any and all losses, claims, damages, liabilities and expenses
incurred by each such person in connection with defending or investigating any
such claims or liabilities, whether or not resulting in any liability to such
person, to which any such indemnified party may become subject under the
Securities Act, or under any other statute, at common law or otherwise, insofar
as such Claims arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact made by the Purchaser, (ii) any
omission or alleged omission of a material fact with respect to the Purchaser or
(iii) any breach of any representation, warranty or agreement made by the
Purchaser in this Agreement.
9. GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed by and interpreted in accordance with the laws of the State of New York
without giving effect to the rules governing the conflicts of laws. Each of the
parties consents to the exclusive jurisdiction of the Federal courts whose
districts encompass any part of the County of New York located in the City of
New York in connection with any dispute arising under this Agreement and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on forum non conveniens, to the bringing of any such proceeding
in such jurisdictions. Each party waives its right to a trial by jury. Each
party to this Agreement irrevocably consents to the service of process in any
such proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to such party at its address set forth herein. Nothing
herein shall affect the right of any party to serve process in any other manner
permitted by law.
10. NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, express overnight
courier, registered first class mail, or telecopier (provided that any notice
sent by telecopier shall be confirmed by other means pursuant to this Section
10), initially to the address set forth below, and thereafter at such other
address, notice of which is given in accordance with the provisions of this
Section.
(a) if to the Company:
PetCARE Television Network, Inc.
0000 Xxxxxxxx Xxxx, Xxxxx X
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, President and Chief Executive
Officer
Xxx.Xx.: (000)000-0000
Fax No.: (000)000-0000
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with a copy to:
Xxxx Xxxx Xxxxxxx Xxxxxx & Xxxx, P.A.
000 X. Xxxxxxxx Xx.
Xxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
(b) if to the Purchaser:
At the address of the Purchaser set forth on Exhibit A to this
Agreement.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when receipt is
acknowledged, if telecopied; or when actually received or refused if sent by
other means.
11. ENTIRE AGREEMENT. This Agreement, the Note and any other Transaction
Document constitute the entire understanding and agreement of the parties with
respect to the subject matter hereof and supersedes all prior and/or
contemporaneous oral or written proposals or agreements relating thereto all of
which are merged herein. This Agreement may not be amended or any provision
hereof waived in whole or in part, except by a written amendment signed by both
of the parties.
12. COUNTERPARTS. This Agreement may be executed by facsimile signature
and in counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[end of page]
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IN WITNESS WHEREOF, this Agreement was duly executed on the date first
written above.
PETCARE TELEVISION NETWORK, INC.
By: s/Xxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and Chief Executive Officer
PURCHASER:
By: s/Xxxx X. Xxxxxxxx
------------------ --------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chief Operating Officer
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EXHIBIT A
PURCHASER
NAMES AND ADDRESS DOLLAR AMOUNT
OF PURCHASER OF INVESTMENT
------------ -------------
Victus Capital, LP $1,000,000
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
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EXHIBIT B
FORM OF NOTE
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EXHIBIT C
FORM OF OPINION
1. The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Florida and has the requisite
corporate power to own, lease and operate its properties and assets, and to
carry on its business as presently conducted. The Company is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the failure to so qualify would have a Material Adverse Effect.
2. The Company has the requisite corporate power and authority to enter
into and perform its obligations under the Transaction Documents and to issue
the Securities. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly and validly authorized by all necessary
corporate action and no further consent or authorization of the Company or its
Board of Directors is required. The Transaction Documents have been duly
executed and delivered, and the Note has been duly executed, issued and
delivered by the Company and each Transaction Document constitutes a legal,
valid and binding obligation of the Company enforceable against the Company in
accordance with its respective terms. The Conversion Shares are not subject to
any preemptive rights under the Certificate of Incorporation or the Bylaws.
3. The Note has been duly authorized and, when delivered against payment
in full as provided in the Purchase Agreement, will be validly issued. The
Conversion Shares have been duly authorized for issuance, and when delivered
upon conversion or against payment in full as provided in the Note, will be
validly issued, fully paid and nonassessable.
4. The execution, delivery and performance of and compliance with the
terms of the Transaction Documents and the issuance of the Securities do not (a)
violate any provision of the Certificate of Incorporation or Bylaws, (b) to our
knowledge, after due inquiry, 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 material agreement, mortgage, deed of trust, indenture,
note, bond, license, lease agreement, instrument or obligation to which the
Company is a party and which is known to us, (c) to our knowledge, after due
inquiry, create or impose a lien, charge or encumbrance on any property of the
Company under any agreement or any commitment known to us to which the Company
is a party or by which the Company is bound or by which any of its respective
properties or assets are bound, or (d) result in a violation of any Federal,
state, local or foreign statute, rule, regulation, order, judgment, injunction
or decree (including Federal and state securities laws and regulations)
applicable to the Company or by which any property or asset of the Company is
bound or affected, except, in all cases other than violations pursuant to
clauses (a) and (d) above, for such conflicts, default, terminations,
amendments, acceleration, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect.
5. No consent, approval or authorization of or designation, declaration or
filing with any governmental authority on the part of the Company is required
under Federal, state or local law, rule or regulation in connection with the
valid execution, delivery and performance of the Transaction Documents, or the
offer, sale or issuance of the Note or the Conversion Shares.
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6. To our knowledge, there is no action, suit, claim, investigation or
proceeding pending or threatened against the Company which questions the
validity of the Purchase Agreement or the transactions contemplated thereby or
any action taken or to be taken pursuant thereto. There is no action, suit,
claim, investigation or proceeding pending, or to our knowledge, threatened,
against or involving the Company or any of its properties or assets and which,
if adversely determined, is reasonably likely to result in a Material Adverse
Effect. There are no outstanding orders, judgments, injunctions, awards or
decrees of any court, arbitrator or governmental or regulatory body against the
Company or any officers or directors of the Company in their capacities as such.
7. Conditioned on the accuracy of the Purchaser's representations and
warranties contained in the Purchase Agreement, the offer, issuance and sale of
the Note and the offer, issuance and sale of the Conversion Shares pursuant to
the Purchase Agreement and the Note, as applicable, are exempt from the
registration requirements of the Securities Act of 1933, as amended.
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