SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of August 20,
2004, by and among Dendo Global Corp., a Nevada corporation, with headquarters
located at 0000 X. Xxxxxxxxx Xxx., Xxxxx X, Xxxxxxxxx Xxxxxxx, XX. 00000 (to be
renamed TechAlt, Inc.) (the "COMPANY"), and the investors listed on the Schedule
of Buyers attached hereto (individually, a "BUYER" and collectively, the
"BUYERS").
WHEREAS:
A. The Company has authorized a new series of convertible preferred shares
of the Company, the terms of which are set forth in the Company's Certificate of
Designation (the "CERTIFICATE") in the form attached hereto as EXHIBIT A
(together with any convertible preferred shares issued in replacement thereof in
accordance with the terms thereof, the "PREFERRED SHARES"), which Preferred
Shares shall be convertible into shares of the Company's Common Stock, par value
$.001 per share (the "COMMON STOCK") in accordance with the terms of the
Certificate.
B. Each Buyer wishes to purchase, and the Company wishes to sell, upon the
terms and conditions stated in this Agreement, (i) that aggregate number of
Preferred Shares set forth opposite such Buyer's name in column (3) on the
Schedule of Buyers (which aggregate number for all Buyers shall be 500,000
Preferred Shares) which are convertible into Common Stock in accordance with the
Certificate (as converted, collectively, the "INITIAL CONVERSION SHARES"), (ii)
warrants, in substantially the form attached hereto as EXHIBIT B (the "INITIAL
Warrants"), to acquire that number of shares of Common Stock set forth opposite
such Buyer's name in column (4) on the Schedule of Buyers (as exercised,
collectively, the "INITIAL WARRANT SHARES"), (iii) a right in substantially the
form attached hereto as EXHIBIT C (the "ADDITIONAL INVESTMENT RIGHTS") to
acquire all the Preferred Shares (as exercised, collectively, the "ADDITIONAL
INVESTMENT RIGHT SHARES") set forth opposite such Buyer's name in column (5)
(which aggregate number for all Buyers shall be 3,500,000 Preferred Shares),
which shall be convertible into shares of Common Stock (as converted, the
"ADDITIONAL CONVERSION SHARES," and together with the Initial Conversion Shares,
the CONVERSION SHARES"), and (iv) that number of additional warrants in
substantially the form attached hereto as EXHIBIT D, (the "ADDITIONAL WARRANTS"
and together with the Initial Warrants, the "WARRANTS") to acquire that number
of shares of Common Stock set forth opposite such Buyer's name in column (6)
(the "ADDITIONAL WARRANT SHARES" and together with the Initial Warrant Shares,
the "WARRANT SHARES").
C. The Company and each Buyer is executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the "1933 ACT"), and Rule 506 of
Regulation D ("REGULATION D") as promulgated by the United States Securities and
Exchange Commission (the "SEC") under the 1933 Act to the extent necessary to
issue the Preferred Shares, the Conversion Shares, the Warrants and the Warrant
Shares.
D. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement,
substantially in the form attached hereto as EXHIBIT E (the "REGISTRATION RIGHTS
AGREEMENT"), pursuant to which the Company has agreed to provide certain
registration rights with respect to the Registrable Securities (as defined in
the Registration Rights Agreement) under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities laws.
E. The Preferred Shares, the Additional Investment Rights, the Additional
Investment Right Shares, the Conversion Shares, the Warrants and the Warrant
Shares collectively are referred to herein as the "SECURITIES".
NOW, THEREFORE, the Company and each Buyer hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES, WARRANTS AND ADDITIONAL
INVESTMENT RIGHTS.
(a) PURCHASE OF PREFERRED SHARES, WARRANTS AND ADDITIONAL INVESTMENT
RIGHTS.
(i) PREFERRED SHARES, WARRANTS AND ADDITIONAL INVESTMENT
RIGHTS. Subject to the satisfaction (or waiver) of the conditions set forth in
Sections 6 and 7 below, the Company shall issue and sell to each Buyer, and each
Buyer severally, but not jointly, agrees to purchase from the Company on the
Closing Date (as defined below), the number of Preferred Shares as is set forth
opposite such Buyer's name in column (3) on the Schedule of Buyers, along with
Initial Warrants to acquire that number of Initial Warrant Shares set forth
opposite such Buyer's name in column (4) on the Schedule of Buyers, along with
the Additional Investment Rights to acquire up to that number of Additional
Investment Right Shares set forth opposite such Buyer's name in column (5) on
the Schedule of Buyers and Additional Warrants to acquire that number of
Additional Warrant Shares in Column (6) on the Schedule of Buyers (the
"CLOSING").
(ii) CLOSING. The Closing shall occur on the Closing Date at
the offices of Xxxxxxx Xxxx & Xxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000.
(iii) PURCHASE PRICE. The purchase price for each Buyer (the
"PURCHASE PRICE") of the Preferred Shares, the Warrants and Additional
Investment Rights to be purchased by each such Buyer at the Closing shall be
equal to $1.00 for each Preferred Share and related Warrants, and Additional
Investment Right being purchased by such Buyer at the Closing.
(b) CLOSING DATE. The date and time of the Closing (the "CLOSING
DATE") shall be 10:00 a.m., New York City Time, on the date of this Agreement
after notification of satisfaction (or waiver) of the conditions to the Closing
set forth in Sections 6 and 7 below (or such later date as is mutually agreed to
by the Company and each Buyer).
(c) FORM OF PAYMENT. On the Closing Date, (i) each Buyer shall pay
its Purchase Price to the Company for the Preferred Shares, the Warrants and the
Additional Investment Rights to be issued and sold to such Buyer at the Closing,
by wire transfer of immediately available funds in accordance with the Company's
written wire instructions, and (ii) the Company shall deliver to each Buyer the
Preferred Shares (in the denominations as such Buyer shall request) which such
Buyer is then purchasing hereunder along with the corresponding amount of
Warrants and Additional Investment Rights such Buyer is purchasing, duly
executed on behalf of the Company and registered in the name of such Buyer or
its designee.
2. BUYER'S REPRESENTATIONS AND WARRANTIES. Each Buyer represents and
warrants with respect to only itself that:
(a) NO PUBLIC SALE OR DISTRIBUTION. Such Buyer is (i) acquiring the
Preferred Shares, the Warrants and the Additional Investment Rights; (ii) upon
conversion of the Preferred Shares and exercise of the Warrants (other than
pursuant to Cashless Exercise (as defined in the Warrants)) and the Additional
Investment Rights and upon payment of any Dividend Shares (as defined in the
Certificate), will acquire the Conversion Shares issuable upon conversion of the
Preferred Shares, any such Dividend Shares, the Warrant Shares issuable upon
exercise of the Warrants and the Additional Investment Right Shares issuable
upon exercise of the Additional Investment Rights; and (iii) upon conversion of
the Additional Investment Right Shares will acquire the Additional Conversion
Shares issuable upon conversion of the Additional Investment Right Shares for
its own account 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 1933 Act; PROVIDED, HOWEVER, that by making the
representations herein, such Buyer does not agree to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the 1933 Act. Such Buyer is acquiring the
Securities hereunder in the ordinary course of its business. Such Buyer
presently does not have any agreement or understanding, directly or indirectly,
with any Person (as defined in Section 3(r)) to distribute any of the
Securities.
(b) ACCREDITED INVESTOR STATUS. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D.
(c) RELIANCE ON EXEMPTIONS. Such Buyer understands that the
Securities 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, and
such Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire the Securities.
(d) INFORMATION. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been requested by such Buyer. Such Buyer and its advisors, if any,
have been afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other due diligence investigations conducted by such Buyer or
its advisors, if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's representations and warranties contained
herein.
(e) NO GOVERNMENTAL REVIEW. Such Buyer understands that no
Governmental Authority (as defined in Section 3(v)) has passed on or made any
recommendation or endorsement of the Securities or the fairness or suitability
of the investment in the Securities nor have such authorities passed upon or
endorsed the merits of the offering of the Securities.
(f) TRANSFER OR RESALE. Such Buyer understands that except as
provided in the Registration Rights Agreement: (i) the Securities have not been
and are not being registered under the 1933 Act or any state securities laws,
and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) such Buyer shall have delivered to the
Company an opinion of counsel, in a form reasonably satisfactory to the Company,
to the effect that such Securities to be sold, assigned or transferred may be
sold, assigned or transferred pursuant to an exemption from such registration,
or (C) such Buyer shall have satisfied the requirements of Rule 144(k)
promulgated under the 1933 Act, as amended (or a successor rule thereto); (ii)
any sale of the Securities made in reliance on Rule 144 or Rule 144A promulgated
under the 1933 Act, as amended (or a successor rule thereto) (collectively,
"RULE 144"), may be made only in accordance with the terms of Rule 144 and
further, if Rule 144 is not applicable, any resale of the Securities under
circumstances in which the seller (or the Person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the 0000 Xxx) may
require compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
Person is under any obligation to register the Securities under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder. The Securities may be pledged in connection with a bona
fide margin account or other loan secured by the Securities and such pledge of
Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and no Buyer effecting a pledge of Securities shall be
required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction
Document, including, without limitation, this Section 2(f); PROVIDED, that in
order to make any sale, transfer or assignment of Securities, such Buyer and its
pledgee makes such disposition in accordance with or pursuant to a registration
statement or an exemption under the 1933 Act.
(g) LEGENDS. Such Buyer understands that the certificates or other
instruments representing the Preferred Shares, Warrants, Additional Investment
Rights and the Additional Investment Right Shares and, until such time as the
resale of Registrable Securities have been registered under the 1933 Act as
contemplated by the Registration Rights Agreement, the stock certificates
representing the Registrable Securities, except as set forth below, shall bear
any legend as required by the "blue sky" laws of any state and a restrictive
legend in substantially the following form (and a stop-transfer order may be
placed against transfer of such stock certificates):
[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
[CONVERTIBLE] [EXERCISABLE] HAVE BEEN] [THE SHARES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. NO SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL IN A FORM REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for resale under the 1933 Act, (ii) in connection with
a sale, assignment or other transfer, such holder provides the Company with an
opinion of counsel, in a form reasonably acceptable to the Company, to the
effect that such sale, assignment or transfer of the Securities may be made
without registration under the 1933 Act, or (iii) such holder provides the
Company with reasonable assurance that the Securities can be sold, assigned or
transferred pursuant to Rule 144.
(h) ORGANIZATION; AUTHORIZATION; VALIDITY; ENFORCEMENT. Such Buyer
is validly existing and in good standing under the laws of the jurisdiction of
its organization, and has the requisite power and authorization to execute and
deliver this Agreement and the Registration Rights Agreement and to consummate
the transaction contemplated hereby and thereby. This Agreement and the
Registration Rights Agreement have been duly and validly authorized, executed
and delivered on behalf of such Buyer and constitute the legal, valid and
binding obligations of such Buyer enforceable against such Buyer in accordance
with their respective terms, except as such enforceability may be limited by
general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights and
remedies.
(i) RESIDENCY. Such Buyer is a resident of that country or state
specified below its address on the Schedule of Buyers.
(j) Acknowledgment Regarding Buyer's Purchase of Securities. Such
Buyer is acting solely in the capacity of arm's length purchaser with respect to
the Transaction Documents and the transactions contemplated hereby and thereby,
and such Buyer is not an officer or director of the Company. Further, such Buyer
is not acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby. Such Buyer acknowledges and agrees that the
Company has not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Section 3.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to each of the Buyers that:
(a) ORGANIZATION AND QUALIFICATION. The Company and its
"SUBSIDIARIES" (which for purposes of this Agreement means any entity in which
the Company, directly or indirectly, owns capital stock or holds a comparable
equity or similar interest) are entities duly organized and validly existing in
good standing (to the extent applicable) under the laws of the jurisdiction in
which they are organized, and have the requisite corporate or other power and
authorization to own their properties and to carry on their business as now
being conducted. Each of the Company and its Subsidiaries is duly qualified as a
foreign entity to do business and is in good standing (to the extent applicable)
in every jurisdiction in which its ownership of property or 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 could not
reasonably be expected to have a Material Adverse Effect. As used in this
Agreement, "MATERIAL ADVERSE EFFECT" means any material adverse effect on the
business, properties, assets, operations, results of operations, condition
(financial or otherwise) or prospects of the Company and its Subsidiaries, taken
as a whole, or on the transactions contemplated hereby and the other Transaction
Documents (as defined below) or by the agreements and instruments to be entered
into in connection herewith or therewith, including the Intellectual Property
License Agreement (as herein defined) or on the authority or ability of the
Company to perform its obligations under the Transaction Documents or under the
Intellectual Property License Agreement. The Company has no Subsidiaries except
as set forth on SCHEDULE 3(A).
(b) AUTHORIZATION; ENFORCEMENT; VALIDITY. The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Certificate, the Registration Rights
Agreement, the Irrevocable Transfer Agent Instructions (as defined in Section
5(b)), the Warrants, the Additional Investment Rights and each of the other
agreements and documents entered into by the parties hereto in connection with
the transactions contemplated by this Agreement (collectively, the "TRANSACTION
DOCUMENTS") and to issue the Securities in accordance with the terms hereof and
thereof. The execution and delivery of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby, including, without limitation, the issuance of the Preferred Shares,
the Warrants, and the Additional Investment Rights and the reservation for
issuance and the issuance of the Conversion Shares, the Warrant Shares, and
Additional Investment Right Shares issuable upon conversion or exercise thereof,
the reservation for issuance and the issuance of the Dividend Shares issuable
thereon, as the case may be, have been duly authorized by the Company's Board of
Directors and no further consent or authorization is required by the Company,
its Board of Directors or its stockholders. This Agreement and the other
Transaction Documents have been duly executed and delivered by the Company, and
constitute the legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their respective 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 applicable creditors'
rights and remedies. As of the Closing, the Certificate of Designations in the
form attached as EXHIBIT A shall have been filed on or prior to the Closing Date
with the Secretary of State of the State of Nevada and shall be in full force
and effect, enforceable against the Company in with its terms and shall not have
been amended.
(c) ISSUANCE OF SECURITIES. The Preferred Shares, the Warrants and
Additional Investment Rights are duly authorized and, upon issuance in
accordance with the terms hereof, shall be validly issued, free from all taxes,
liens and charges with respect to the issue thereof, and the Preferred Shares
shall be entitled to the rights and preferences as set forth in the Certificate.
As of the Closing, a number of shares of Common Stock shall have been duly
authorized and reserved for issuance which equals 130% of the maximum number of
shares of Common Stock issuable upon conversion of the Preferred Shares and
Additional Investment Right Shares, as the case may be, and 130% of the maximum
number of shares of Common Stock issuable upon exercise of the Warrants to be
issued at the Closing and 100% of the maximum number of Preferred Shares
issuable upon, the exercise of the Additional Investment Rights. Upon conversion
or exercise in accordance with the Preferred Shares, the Warrants or the
Additional Investment Rights, as the case may be, and upon issuance of the
Dividend Shares as dividends on the Preferred Shares and Additional Investment
Right Shares, the Conversion Shares, the Warrant Shares and the Dividend Shares,
respectively, will be validly issued, fully paid and nonassessable and free from
all taxes, liens and charges with respect to the issue thereof, with the holders
being entitled to all rights accorded to a holder of Common Stock. Assuming the
accuracy of each of the representations and warranties of Buyer contained in
Section 2, the issuance by the Company of the Securities is exempt from
registration under the 1933 Act.
(d) NO CONFLICTS. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Preferred Shares, Warrants, and Additional Investment Rights and
reservation for issuance and issuance of the Conversion Shares, the Dividend
Shares and the Warrant Shares and the Additional Investment Right Shares) will
not (i) result in a violation of the articles of incorporation, any certificate
of designations, preferences and rights of any outstanding series of preferred
stock or bylaws of the Company or any Subsidiary, (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 material agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party, or (iii)
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 OTC Bulletin Board or an Eligible Market) applicable to the
Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected. For purposes of this
Agreement, "ELIGIBLE MARKET" means any of the American Stock Exchange, The New
York Stock Exchange, the Nasdaq National Market or The Nasdaq SmallCap Market.
(e) CONSENTS. All consents, authorizations, orders, filings and
registrations which the Company is required as of the Closing Date to obtain to
execute, deliver or perform any of its obligations under or contemplated by the
Transaction Documents in accordance with their terms will have been obtained or
effected on or prior to the Closing Date. The Company and its Subsidiaries are
unaware of any facts or circumstances which might reasonably be expected to
prevent the Company from obtaining or effecting any of the foregoing.
(f) ACKNOWLEDGMENT REGARDING BUYER'S PURCHASE OF SECURITIES. The
Company acknowledges and agrees that each Buyer is acting solely in the capacity
of arm's length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby, and that no Buyer is an officer or
director of the Company. The Company further acknowledges that no Buyer is
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby, and any advice given by a Buyer or any of its
representatives or agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to such
Buyer's purchase of the Securities. The Company further represents to each Buyer
that the Company's decision to enter into the Transaction Documents has been
based solely on the independent evaluation by the Company and its
representatives.
(g) NO GENERAL SOLICITATION; PLACEMENT AGENT'S FEES. 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) in connection with the offer or sale of the
Securities. The Company shall be responsible for the payment of any placement
agent's fees, financial advisory fees, or brokers' commissions (other than for
persons engaged by any Buyer or its investment advisor) relating to or arising
out of the transactions contemplated hereby. The Company shall pay, and hold
each Buyer harmless against, any liability, loss or expense (including, without
limitation, attorney's fees and out-of-pocket expenses) arising in connection
with any such claim. The Company acknowledges that it has engaged Sunrise
Securities Corporation as placement agent (the "AGENT") in connection with the
sale of the Preferred Shares, Warrants and Additional Investment Rights. Other
than the Agent, the Company has not engaged any placement agent or other agent
in connection with the sale of the Preferred Shares, Warrants and Additional
Investment Rights.
(h) NO INTEGRATED OFFERING. None of the Company, its Subsidiaries,
any of their affiliates, and any Person acting on 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 any of
the Securities under the 1933 Act or cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of the 1933 Act or
any applicable stockholder approval provisions, including, without limitation,
under the rules and regulations of any exchange or automated quotation system on
which any of the securities of the Company are listed or designated. None of the
Company, its Subsidiaries, their affiliates and any Person acting on their
behalf will take any action or steps referred to in the preceding sentence that
would require registration of any of the Securities under the 1933 Act or cause
the offering of the Securities to be integrated with other offerings.
(i) DILUTIVE EFFECT. The Company further acknowledges that, subject
to the terms and conditions of the Transaction Documents, its obligation to
issue Conversion Shares upon conversion of the Preferred Shares in accordance
with this Agreement and the Preferred Shares, its obligation to issue the
Warrant Shares upon exercise of the Warrants in accordance with this Agreement
and the Warrants, its obligation to issue the Additional Investment Right Shares
upon exercise of the Additional Investment Rights in accordance with this
Agreement and the Additional Investment Rights is, in each case, absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interests of other stockholders of the Company.
(j) APPLICATION OF TAKEOVER PROTECTIONS; RIGHTS AGREEMENT. The
Company and its board of directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Articles of Incorporation (as
defined in Section 3(q)) or the laws of the state of its incorporation which is
or could become applicable to any Buyer as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company's
issuance of the Securities and any Buyer's ownership of the Securities. The
Company has not adopted a stockholder rights plan or similar arrangement
relating to accumulations of beneficial ownership of Common Stock or a change in
control of the Company.
(k) 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 pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "1934 ACT") (all of the foregoing filed
prior to the date hereof, or in connection with the Closing subsequent to the
date hereof, filed prior to the date of the Closing, 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 Buyers or their respective
representatives true, correct and complete copies of the SEC Documents not
available on the XXXXX system. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the 1934 Act and the
rules and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. As of their respective dates, the financial statements of
the Company included in the SEC Documents 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 Buyers which is not included in the SEC Documents 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 circumstance under
which they are or were made and, taken together with the information set forth
in the SEC Documents, not misleading.
(l) ABSENCE OF CERTAIN CHANGES. Except as disclosed in SCHEDULE
3(L), since December 31, 2003, there has been no material adverse change and no
material adverse development in the business, properties, operations, condition
(financial or otherwise), results of operations or prospects of the Company or
its Subsidiaries. Since December 31, 2003, the Company has not (i) declared or
paid any dividends, (ii) sold any assets, individually or in the aggregate, in
excess of $100,000 outside of the ordinary course of business or (iii) had
capital expenditures, individually or in the aggregate, in excess of $100,000.
The Company has not taken any steps to seek protection pursuant to any
bankruptcy law nor does the Company have any knowledge or reason to believe that
its creditors intend to initiate involuntary bankruptcy proceedings or any
actual knowledge of any fact which would reasonably lead a creditor to do so.
The Company is not as of the date hereof, and after giving effect to the
transactions contemplated hereby to occur at the Closing, will not be Insolvent
(as defined below). For purposes of this Section 3(l), "INSOLVENT" means (i) the
present fair saleable value of the Company's assets is less than the amount
required to pay the Company's total indebtedness, contingent or otherwise, (ii)
the Company is unable to pay its debts and liabilities, subordinated, contingent
or otherwise, as such debts and liabilities become absolute and matured, (iii)
the Company intends to incur or believes that it will incur debts that would be
beyond its ability to pay as such debts mature or (iv) the Company has
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted.
(m) NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR
CIRCUMSTANCES. No event, liability, development or circumstance has occurred or
exists, or is contemplated to occur, with respect to the Company or its
Subsidiaries or their respective business, properties, prospects, operations or
financial condition, that would be required to be disclosed by the Company under
applicable securities laws on a registration statement on Form S-1 filed with
the SEC relating to an issuance and sale by the Company of its Common Stock and
which has not been publicly announced.
(n) CONDUCT OF BUSINESS; REGULATORY PERMITS. Neither the Company nor
its Subsidiaries is in violation of any term of or in default under its Articles
of Incorporation, any Certificate, Preferences and Rights of any outstanding
series of preferred stock of the Company or Bylaws or their organizational
charter or bylaws, respectively (except, with respect to the Subsidiaries, for
violations that could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect). Neither the Company nor any of its
Subsidiaries is in violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to the Company or its Subsidiaries, and
neither the Company nor any of its Subsidiaries will conduct its business in
violation of any of the foregoing, except for possible violations which could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Without limiting the generality of the foregoing, the Company is
not in violation of any of the listing requirements of the OTC Bulletin Board or
an Eligible Market and has no knowledge of any facts or circumstances which
would reasonably lead to delisting or suspension of the Common Stock by the OTC
Bulletin Board or an Eligible Market, as applicable, in the foreseeable future.
The Common Stock has been designated for quotation or listed on the OTC Bulletin
Board or an Eligible Market, (ii) trading in the Common Stock has not been
suspended by the SEC, the OTC Bulletin Board or such Eligible Market and (iii)
the Company has received no communication, written or oral, from the SEC, the
OTC Bulletin Board or an Eligible Market regarding the suspension or delisting
of the Common Stock from the OTC Bulletin Board or such Eligible Market, as
applicable. The Company and its Subsidiaries possess all Governmental Approvals
issued by the appropriate Governmental Authorities (as defined in Section 3(v))
necessary to conduct their respective businesses, except where the failure to
possess such Governmental Approvals could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, and neither the
Company nor any such Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such Governmental Approval.
(o) FOREIGN CORRUPT PRACTICES. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other Person acting
on behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.
(p) TRANSACTIONS WITH AFFILIATES. None of the officers, directors or
employees of the Company is presently a party to any transaction with the
Company or any of its Subsidiaries (other than for ordinary course services as
employees, officers or 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 such officer, director or employee or, to the knowledge of the
Company, any corporation, partnership, trust or other entity in which any such
officer, director, or employee has a substantial interest or is an officer,
director, trustee or partner.
(q) EQUITY CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Company consists of (x) 50,000,000 shares of Common Stock,
of which as of the date hereof, 12,000,000 are issued and outstanding (none of
which are treasury shares), 5,000,000 shares of common stock are reserved for
issuance pursuant to the Company's 2004 Stock Option Plan (the "2004 Stock
Option Plan") and no shares are reserved for issuance pursuant to securities
(other than the aforementioned options, the Preferred Shares discussed below and
the Warrants) exercisable or exchangeable for, or convertible into, shares of
Common Stock, and (y) 5,000,000 shares of preferred stock par value $.001 per
share, of which none are issued and outstanding. As used herein, the "Company
2004 Stock Option Plan" shall mean the Company's 2004 Stock Option Plan.
SCHEDULE 3(Q) contains a complete and accurate list of the record and beneficial
owners of all of the Company's outstanding securities and options to purchase
securities and the names and amounts of any securities to be issued prior to the
nine-month anniversary of the date hereof pursuant to the 2004 Stock Option
Plan. All of such outstanding shares have been, or upon issuance will be,
validly issued and are fully paid and nonassessable. Except as set forth on
SCHEDULE 3(Q) there are no outstanding convertible or non-convertible debt
securities, notes, credit agreements, credit facilities or other agreements,
documents or instruments evidencing Indebtedness (as defined in Section 3(r)) of
the Company or any of its Subsidiaries or by which the Company or any of its
Subsidiaries is or may become bound. Except as set forth on Schedule 3(q): (i)
no shares of the Company's capital stock are subject to preemptive rights or any
other similar rights or any liens or encumbrances suffered or permitted by the
Company; (ii) 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, or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its Subsidiaries; (iii) there
are no financing statements securing obligations in any material amounts, either
singly or in the aggregate, filed in connection with the Company; (iv) there are
no agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of their securities under the 1933 Act
(except the Registration Rights Agreement); (v) there are no outstanding
securities or instruments of the Company or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries; (vi) there are no securities or instruments containing
anti-dilution, pre-emptive or similar provisions that will be triggered by the
issuance of the Securities; (vii) the Company does not have any stock
appreciation rights or "phantom stock" plans or agreements or any similar plan
or agreement; and (viii) the Company and its Subsidiaries have no liabilities or
obligations required to be disclosed in the SEC Documents (as defined herein)
but not so disclosed in the SEC Documents, other than those incurred in the
ordinary course of the Company's or its Subsidiaries' respective businesses and
which, individually or in the aggregate, do not or could not reasonably be
expected to have a Material Adverse Effect. The Company has made available to
the Buyer true, correct and complete copies of the Company's Articles of
Incorporation, as amended and as in effect on the date hereof (together with any
certificate of designations of any outstanding series of preferred stock of the
Company, the "ARTICLES OF INCORPORATION"), and the Company's Bylaws, as amended
and as in effect on the date hereof (the "BYLAWS"), and the terms of all
securities convertible into, or exercisable or exchangeable for, Common Stock
and the material rights of the holders thereof in respect thereto.
(r) INDEBTEDNESS AND OTHER CONTRACTS. Neither the Company nor any of
its Subsidiaries (i) has any outstanding Indebtedness (as defined below), (ii)
is a party to any contract, agreement or instrument, the violation of which, or
default under which, by the other party(ies) to such contract, agreement or
instrument could reasonably be expected to result in a Material Adverse Effect,
(iii) is in violation of any term of or in default under any contract, agreement
or instrument relating to any Indebtedness, except where such violations and
defaults could not reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect, or (iv) is a party to any contract,
agreement or instrument relating to any Indebtedness, the performance of which,
in the judgment of the Company's officers, has or is expected to have a Material
Adverse Effect. For purposes of this Agreement: (x) "INDEBTEDNESS" of any Person
means, without duplication (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services (other than trade payables entered into in the ordinary
course of business), (C) all reimbursement or payment obligations with respect
to letters of credit, surety bonds and other similar instruments, (D) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses, (E) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property), (F) all monetary obligations under any
leasing or similar arrangement which, in connection with generally accepted
accounting principles, consistently applied for the periods covered thereby, is
classified as a capital lease, (G) all indebtedness referred to in clauses (A)
through (F) above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any mortgage,
lien, pledge, charge, security interest or other encumbrance (each, a "LIEN")
upon or in any property or assets (including accounts and contract rights) owned
by any Person, even though the Person which owns such assets or property has not
assumed or become liable for the payment of such indebtedness, and (H) all
Contingent Obligations in respect of indebtedness or obligations of others of
the kinds referred to in clauses (A) through (G) above; (y) "CONTINGENT
OBLIGATION" means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any indebtedness, lease,
dividend or other obligation of another Person if the primary purpose or intent
of the Person incurring such liability, or the primary effect thereof, is to
provide assurance to the obligee of such liability that such liability will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such liability will be protected (in whole or in
part) against loss with respect thereto; and (z) "PERSON" means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any department or
agency thereof.
(s) ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation, whether criminal, civil or otherwise, before or by the
Nasdaq Stock Market, the OTC Bulletin Board or an Eligible Market, any court,
public board, Governmental Authority, self-regulatory organization or body
pending or, to the knowledge of the Company, threatened against or affecting the
Company, the Common Stock or any of the Company's Subsidiaries or any of the
Company's or the Company's Subsidiaries' officers or directors in their
capacities as such, except (i) as disclosed in Item 3 of the Company's Annual
Report on Form 10-KSB for the year ended December 31, 2003 or (ii) such as are
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. To the knowledge of the Company, none of the directors or
officers of the Company have been a party to any securities related litigation
during the past five years, other than as disclosed in the SEC Documents.
(t) INSURANCE. The Company and each of its Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such
Subsidiary 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 could not have a Material Adverse Effect.
(u) EMPLOYEE RELATIONS. Neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or employs any
member of a union. The Company and its Subsidiaries believe that their relations
with their employees are good. No executive officer of the Company (as defined
in Rule 501(f) of the 0000 Xxx) has notified the Company that such officer
intends to leave the Company or otherwise terminate such officer's employment
with the Company. No executive officer of the Company, to the knowledge of the
Company, is, or is now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or any other contract or agreement or any
restrictive covenant, and, to the knowledge of the Company, the continued
employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any material liability with respect to any of the foregoing
matters. The Company and its Subsidiaries are in compliance with all federal,
state, local and foreign laws and regulations respecting employment and
employment practices, terms and conditions of employment and wages and hours,
except where failure to be in compliance could not, either individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.
(v) TITLE. The Company and its Subsidiaries have good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except (i) immaterial liens for taxes not yet
delinquent, (ii) immaterial mechanics' and materialmen's liens (and other
similar liens), and immaterial liens under operating and similar agreements, to
the extent the same relate to expenses incurred in the ordinary course of
business and that are not yet due, (iii) that are routine Governmental
Approvals, or (iv) such as do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such property
by the Company and any of its Subsidiaries. Upon execution of the Intellectual
Property License Agreement by the parties thereto, the Company will have a
license to use all intellectual property which is material to the conduct of the
business of Technology Alternatives, Inc., as currently conducted, in each case
free and clear of all liens, encumbrances and defects except (i) immaterial
liens for taxes not yet delinquent, (ii) immaterial mechanics' and materialmen's
liens (and other similar liens), and immaterial liens under operating and
similar agreements, to the extent the same relate to expenses incurred in the
ordinary course of business and that are not yet due, (iii) that are routine
Governmental Approvals, or (iv) such as do not materially affect the value of
such property or the Intellectual Property License Agreement and do not
interfere with the use made and proposed to be made of such property or the
Intellectual Property License Agreement by the Company and any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries owns any real
property. Any real property and facilities held under lease by the Company and
any of its Subsidiaries are held by them 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
and its Subsidiaries. For purposes of this Agreement: (a) "GOVERNMENTAL
APPROVAL" means any authorization, approval, consent, franchise, license,
covenant, order, ruling, permit, certification, exemption, notice, declaration
or similar right, undertaking or other action of, to or by, or any filing,
qualification or registration with, any Governmental Authority; and (b)
"GOVERNMENTAL AUTHORITY" means any nation or government, any state, province,
city, municipal entity or other political subdivision thereof, and any
governmental, executive, legislative, judicial, administrative or regulatory
agency, department, authority, instrumentality, commission, board or similar
body, whether federal, state, provincial, territorial, local or foreign.
(w) INTELLECTUAL PROPERTY RIGHTS. Upon execution of the Intellectual
Property License Agreement by the parties thereto, the Company and its
Subsidiaries will own or possess adequate rights or licenses to use all
trademarks, trade names, service marks, service xxxx registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
Governmental Approvals, trade secrets and other intellectual property rights
("INTELLECTUAL PROPERTY RIGHTS") necessary to conduct their respective
businesses and the business of Technology Alternatives, Inc. as now conducted.
None of the Company's Intellectual Property Rights have expired or terminated,
or are expected to expire or terminate within two years from the date of this
Agreement, except for those which could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. The Company does
not have any knowledge of any infringement by the Company or its Subsidiaries of
Intellectual Property Rights of others. There is no claim, action or proceeding
being made or brought, or to the knowledge of the Company, being threatened,
against the Company or its Subsidiaries regarding its Intellectual Property
Rights. The Company does not have any knowledge of any facts or circumstances
which might give rise to any of the foregoing infringements or claims, actions
or proceedings. The Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
intellectual properties.
(x) ENVIRONMENTAL LAWS. The Company and its Subsidiaries (i) are in
compliance with any and all Environmental Laws (as hereinafter defined), (ii)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit, license or
approval where, in each of the foregoing clauses (i), (ii) and (iii), the
failure to so comply could be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect. The term "ENVIRONMENTAL LAWS" means
all federal, state, local or foreign laws relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, "HAZARDOUS MATERIALS") into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved thereunder.
(y) SUBSIDIARY RIGHTS. The Company or one of its Subsidiaries has
the unrestricted right to vote, and (subject to limitations imposed by
applicable law) to receive dividends and distributions on, all capital
securities of its material Subsidiaries as owned by the Company or such
Subsidiary.
(z) TAX STATUS. The Company and each of its Subsidiaries (i) has
made or filed all federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject, (ii) 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 (iii) 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 claim.
(aa) INTERNAL ACCOUNTING CONTROLS. The Company and each of its
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's 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
and liability accountability, (iii) access to assets or incurrence of
liabilities is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any difference. The
Company maintains disclosure controls and procedures (as such term is defined in
Rule 13a-14 under the 0000 Xxx) that are effective in ensuring that information
required to be disclosed by the Company in the reports that it files or submits
under the 1934 Act is recorded, processed, summarized and reported, within the
time periods specified in the rules and forms of the SEC, including, without
limitation, controls and procedures designed in to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the 1934 Act is accumulated and communicated to the Company's management,
including its principal executive officer or officers and its principal
financial officer or officers, as appropriate, to allow timely decisions
regarding required disclosure.
(bb) XXXXXXXX-XXXXX ACT. The Company is in compliance with any and
all applicable requirements of the Xxxxxxxx-Xxxxx Act of 2002 that are effective
as of the date hereof, and any and all applicable rules and regulations
promulgated by the SEC thereunder that are effective as of the date hereof,
except where such noncompliance could not have a Material Adverse Effect.
(cc) INVESTMENT COMPANY STATUS. The Company is not, and upon
consummation of the sale of the Securities will not be, an "investment company,"
a company controlled by an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.
(dd) FORM SB-2 ELIGIBILITY. The Company is eligible to register the
Securities for resale by the Buyers using Form SB-2 promulgated under the
Securities Act of 1933, as amended.
(ee) DISCLOSURE. The Company confirms that neither it nor any other
Person acting on its behalf has provided any of the Buyers or their agents or
counsel with any information that constitutes or might constitute material,
nonpublic information. The Company understands and confirms that each of the
Buyers will rely on the foregoing representations in effecting transactions in
securities of the Company. All disclosure provided to the Buyers regarding the
Company, its business and the transactions contemplated hereby, including the
Schedules to this Agreement, furnished by or on behalf of the Company taken as a
whole is true and correct and do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. No event or circumstance has occurred or information
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, prospects, operations or financial conditions, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed. The Company acknowledges and agrees that no Buyer makes or has made
any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 2.
4. COVENANTS.
(a) BEST EFFORTS. Each party shall use its best efforts timely to
satisfy each of the conditions to be satisfied by it as provided in Sections 6
and 7 of this Agreement.
(b) FORM D AND BLUE SKY. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof to each Buyer promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for or to qualify the
Securities for sale to the Buyers at the Closing pursuant to this Agreement
under applicable securities or "Blue Sky" laws of the states of the United
States (or to obtain an exemption from such qualification), and shall provide
evidence of any such action so taken to the Buyers on or prior to the Closing
Date. The Company shall make all filings and reports relating to the offer and
sale of the Securities required under applicable securities or "Blue Sky" laws
of the states of the United States following the Closing Date.
(c) REPORTING STATUS. Until the date on which the Investors (as
defined in the Registration Rights Agreement) shall have sold all the Conversion
Shares and Warrant Shares and none of the Preferred Shares, Warrants or
Additional Investment Rights is outstanding, (the "REPORTING PERIOD"), the
Company shall file all reports required to be filed with the SEC pursuant to the
1934 Act, and the Company shall not terminate its status as an issuer required
to file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.
(d) USE OF PROCEEDS. The Company will use the proceeds from the sale
of the Securities for working capital purposes and not for the repayment of any
outstanding Indebtedness of the Company or any of its Subsidiaries or redemption
or repurchase of any of its equity securities.
(e) FINANCIAL INFORMATION. The Company agrees to send the following
to each Investor during the Reporting Period (i) unless the following are filed
with the SEC through XXXXX and are available to the public through the XXXXX
system, within one (1) Business Day after the filing thereof with the SEC, a
copy of its Annual Reports on Form 10-K or 10-KSB, as applicable, its Quarterly
Reports on Form 10-Q or 10-QSB, as applicable, any Current Reports on Form 8-K
and any registration statements or amendments filed pursuant to the 1933 Act,
(ii) on the same day as the release thereof, facsimile copies of all press
releases issued by the Company or any of its Subsidiaries, and (iii) copies of
any notices and other information made available or given to the stockholders of
the Company generally, contemporaneously with the making available or giving
thereof to the stockholders. As used herein, "BUSINESS DAY" means any day other
than Saturday, Sunday or other day on which commercial banks in The City of New
York are authorized or required by law to remain closed.
(f) LISTING. The Company shall promptly secure the listing of all of
the Registrable Securities (as defined in the Registration Rights Agreement)
upon each national securities exchange and automated quotation system, if any,
upon which shares of Common Stock are then listed (subject to official notice of
issuance) and shall maintain, so long as any other shares of Common Stock shall
be so listed, such listing of all Registrable Securities from time to time
issuable under the terms of the Transaction Documents. The Company shall
maintain the Common Stock's authorization for quotation on the OTC Bulletin
Board or an Eligible Market. Neither the Company nor any of its Subsidiaries
shall take any action which could be reasonably expected to result in the
delisting or suspension of the Common Stock on the OTC Bulletin Board or such
Eligible Market. The Company shall pay all fees and expenses in connection with
satisfying its obligations under this Section 4(f).
(g) FEES. At the Closing, the Company shall pay a maximum expense
allowance of $39,500 for legal fees to Smithfield Fiduciary LLC (a Buyer)
("SMITHFIELD") or its designee(s), which amount shall be withheld by such Buyer
from its Purchase Price at the Closing. The Company shall be responsible for the
payment of any placement agent's fees, financial advisory fees, or broker's
commissions relating to or arising out of the transactions contemplated hereby,
including, without limitation, any fees or commissions payable to the Agent. The
Company shall pay, and hold each Buyer harmless against, any liability, loss or
expense (including, without limitation, reasonable attorney's fees and
out-of-pocket expenses) arising in connection with claim relating to any such
payment. Except as otherwise set forth in this Agreement or in the Registration
Rights Agreement, each party to this Agreement shall bear its own expenses in
connection with the sale of the Securities to the Buyers. Upon the additional
closing of the Additional Investment Right, the Company shall pay a maximum
expense allowance of $10,000 for the legal fees to Smithfield or its
designee(s), which amount shall be withheld by such Buyer from its Purchase
Price at the additional closing of the Additional Investment Right.
(h) PLEDGE OF SECURITIES. The Company acknowledges and agrees that
the Securities may be pledged by an Investor (as defined in the Registration
Rights Agreement) in connection with a bona fide margin agreement or other loan
or financing arrangement that is secured by such Securities. The pledge of the
Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and no Investor effecting a pledge of Securities shall be
required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction
Document, including, without limitation, Section 2(f) of this Agreement;
provided that an Investor and its pledgee shall be required to comply with the
provisions of Section 2(f) hereof in order to effect a sale, transfer or
assignment of Securities to such pledgee. The Company hereby agrees to execute
and deliver such documentation as a pledgee of Securities may reasonably request
in connection with a pledge of such Securities to such pledgee by an Investor.
If any of the Securities are pledged, such Buyer and its pledgee shall make such
disposition in accordance with or pursuant to a registration statement or an
exemption under the 1933 Act.
(i) DISCLOSURE OF TRANSACTIONS AND OTHER MATERIAL INFORMATION. On or
before 8:30 a.m., New York City Time, on the second Business Day following
execution of this Agreement, the Company shall file a Current Report on Form 8-K
describing the terms of the transactions contemplated by the Transaction
Documents in the form required by the 1934 Act, and attaching the material
Transaction Documents (including, without limitation, this Agreement, the
Registration Rights Agreement, the Certificate and the form of Warrant) as
exhibits to such filing (including all attachments, the "8-K FILING"). From and
after the filing of the 8-K Filing with the SEC, no Buyer shall be in possession
of any material, nonpublic information in regards to the Company, any of its
Subsidiaries or any of its respective officers, directors, employees or agents,
that is not disclosed in the 8-K Filing. The Company shall not, and shall cause
each of its Subsidiaries and its and each of their respective officers,
directors, employees and agents, not to, provide any Buyer with any material
nonpublic information regarding the Company or any of its Subsidiaries from and
after the filing of the 8-K Filing with the SEC without the express written
consent of such Buyer. In the event of a breach of the foregoing covenant by the
Company, any of its Subsidiaries, any of its or their respective officers,
directors, employees and agents, or any of the Buyers, in addition to any other
remedy provided herein or in the Transaction Documents, a Buyer shall have the
right to make a public disclosure, in the form of a press release, public
advertisement or otherwise, of such material nonpublic information; provided,
however, that such Buyer shall give the Company notice of the information it
plans to disclose prior to any disclosure thereof. No Buyer shall have any
liability to the Company, its Subsidiaries, or any of its or their respective
officers, directors, employees, stockholders or agents for any such disclosure.
Subject to the foregoing, neither the Company nor any Buyer shall issue any
press releases or any other public statements with respect to the transactions
contemplated hereby; PROVIDED, HOWEVER, that the Company shall be entitled,
without the prior approval of any Buyer, to make any press release or other
public disclosure with respect to such transactions (i) in substantial
conformity with the 8-K Filing and contemporaneously therewith and (ii) as is
required by applicable law and regulations, including the applicable rules and
regulations of an Eligible Market (provided that in the case of clause (i) each
Buyer shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release).
(j) ADDITIONAL REGISTRATION STATEMENTS. With the exception of the
registering of the Company's 2004 Stock Option Plan (pursuant to which options
shall be issued only to employees who work forty (40) hours or more per week and
who enter into lock-up agreements pursuant to which they agree not to exercise
such options until six (6) months after the Effective Date (as defined in the
Registration Rights Agreement) of the Registration Statement (as defined in the
Registration Rights Agreement)) on Form S-8 pursuant to the 1933 Act until such
time as the Registration Statement is declared effective by the SEC, the Company
will not file a registration statement under the 1933 Act relating to securities
that are not the Securities.
(k) VARIABLE SECURITIES. With the exception of options granted
pursuant to the Company's 2004 Stock Option Plan, so long as any Preferred
Shares or Warrants are outstanding, the Company shall not, in any manner, issue
or sell any rights, warrants or options to subscribe for or purchase Common
Stock or directly or indirectly convertible into or exchangeable or exercisable
for Common Stock at a price which varies or may vary with the market price of
the Common Stock, including by way of one or more reset(s) to any fixed price
unless the conversion, exchange or exercise price of any such security cannot be
less than the then applicable Conversion Price (as defined in the Certificate)
and the then applicable Exercise Price (as defined in the Warrants).
(l) CORPORATE EXISTENCE. So long as any Buyer beneficially owns any
Securities, the Company shall not be party to any Fundamental Transaction (as
defined in the Certificate) unless the Company is in compliance with the
applicable provisions governing Fundamental Transactions set forth in the
Certificate and the Warrants.
(m) RESERVATION OF SHARES. The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than the sum of (1) 130% of the number of shares of Common
Stock issuable upon conversion of the outstanding Preferred Shares and the
Additional Investment Right Shares, (2) 130% of the number of shares of Common
Stock issuable upon exercise of the outstanding Warrants, and (3) 100% of the
number of Preferred Shares issuable upon exercise of the Additional Investment
Rights.
(n) CONDUCT OF BUSINESS. The business of the Company and its
Subsidiaries shall not be conducted in violation of any law, ordinance or
regulation of any Governmental Authority, except where such violations could not
result, either individually or in the aggregate, in a Material Adverse Effect.
(o) ADDITIONAL ISSUANCES OF SECURITIES.
(i) For purposes of this Section 4(o), the following definitions
shall apply.
(A) "COMMON STOCK EQUIVALENTS" means, collectively, Options
and Convertible Securities.
(B) "CONVERTIBLE SECURITIES" means any stock or securities
(other than Options) convertible into or exercisable or exchangeable for Common
Stock.
(C) "OPTIONS" means any rights, warrants or options to
subscribe for or purchase Common Stock or Convertible Securities.
(ii) From the date hereof until ninety (90) Business Days after the
Effective Date (as defined in the Registration Rights Agreement), the Company
will not, directly or indirectly, offer, sell, grant any option to purchase, or
otherwise dispose of (or announce any offer, sale, grant or any option to
purchase or other disposition of) any of its or the Subsidiaries' equity or
equity equivalent securities, including without limitation any debt, preferred
stock or other instrument or security that is, at any time during its life and
under any circumstances, convertible into or exchangeable or exercisable for
Common Stock or Common Stock Equivalents (any such offer, sale, grant,
disposition or announcement being referred to as a "SUBSEQUENT PLACEMENT").
(iii) From the Effective Date until the second anniversary of the
Closing Date, the Company will not, directly or indirectly, effect any
Subsequent Placement unless the Company shall have first complied with this
Section 4(o)(iii).
(A) The Company shall deliver to each Buyer a written notice
(the "OFFER") of any proposed or intended issuance or sale or exchange of the
securities being offered (the "OFFERED SECURITIES") in a Subsequent Placement,
which Offer shall (w) identify and describe the Offered Securities, (x) describe
the price and other terms upon which they are to be issued, sold or exchanged,
and the number or amount of the Offered Securities to be issued, sold or
exchanged, (y) identify the persons or entities (if known) to which or with
which the Offered Securities are to be offered, issued, sold or exchanged and
(z) offer to issue and sell to or exchange with such Buyers the Offered
Securities allocated among such Buyers (a) based on such Buyer's pro rata
portion of the aggregate number of Preferred Shares purchased hereunder (the
"BASIC AMOUNT"), and (b) with respect to each Buyer that elects to purchase its
Basic Amount, any additional portion of the Offered Securities attributable to
the Basic Amounts of other Buyers as such Buyer shall indicate it will purchase
or acquire should the other Buyers subscribe for less than their Basic Amounts
(the "UNDERSUBSCRIPTION AMOUNT").
(B) To accept an Offer, in whole or in part, such Buyer must
deliver a written notice to the Company prior to the end of the TEN (10)
Business Day period after receipt of the Offer (the "OFFER PERIOD") , setting
forth the portion of the Buyer's Basic Amount that such Buyer elects to purchase
and, if such Buyer shall elect to purchase all of its Basic Amount, the
Undersubscription Amount, if any, that such Buyer elects to purchase (in either
case, the "NOTICE OF ACCEPTANCE"). If the Basic Amounts subscribed for by all
eligible Buyers are less than the total of all of the Basic Amounts, then each
Buyer who has set forth an Undersubscription Amount in its Notice of Acceptance
shall be entitled to purchase, in addition to the Basic Amounts subscribed for,
the Undersubscription Amount it has subscribed for; PROVIDED, HOWEVER, that if
the Undersubscription Amounts subscribed for exceed the difference between the
total of all the Basic Amounts and the Basic Amounts subscribed for (the
"AVAILABLE UNDERSUBSCRIPTION AMOUNT"), each Buyer who has subscribed for any
Undersubscription Amount shall be entitled to purchase only that portion of the
Available Undersubscription Amount as the Basic Amount of such Buyer bears to
the total Basic Amounts of all eligible Buyers that have subscribed for
Undersubscription Amounts, subject to rounding by the Board of Directors to the
extent its deems reasonably necessary.
(C) The Company shall have ten (10) Business Days from the
expiration of the Offer Period above to offer, issue, sell or exchange all or
any part of such Offered Securities as to which a Notice of Acceptance has not
been given by the eligible Buyers (the "REFUSED SECURITIES"), but only to the
offerees described in the Offer (if so described therein) and only upon terms
and conditions (including, without limitation, unit prices and interest rates)
that are not more favorable to the acquiring person or persons or less favorable
to the Company than those set forth in the Offer.
(D) In the event the Company shall propose to sell less than
all the Refused Securities (any such sale to be in the manner and on the terms
specified in Section 4(o)(iii)(C) above), then each Buyer may, at its sole
option and in its sole discretion, reduce the number or amount of the Offered
Securities specified in its Notice of Acceptance to an amount that shall be not
less than the number or amount of the Offered Securities that such Buyer elected
to purchase pursuant to Section 4(o)(iii)(B) above multiplied by a fraction, (i)
the numerator of which shall be the number or amount of Offered Securities the
Company actually proposes to issue, sell or exchange (including Offered
Securities to be issued or sold to Buyers pursuant to Section 4(o)(iii)(C) above
prior to such reduction) and (ii) the denominator of which shall be the original
amount of the Offered Securities. In the event that any Buyer so elects to
reduce the number or amount of Offered Securities specified in its Notice of
Acceptance, the Company may not issue, sell or exchange more than the reduced
number or amount of the Offered Securities unless and until such securities have
again been offered to the Buyers in accordance with Section 4(o)(iii)(A) above.
(E) Upon the closing of the issuance, sale or exchange of all
or less than all of the Refused Securities, the Buyers shall acquire from the
Company, and the Company shall issue to the Buyers, the number or amount of
Offered Securities specified in the Notices of Acceptance, as reduced pursuant
to Section 4(o)(iii)(C) above if the Buyers have so elected, upon the terms and
conditions specified in the Offer. The purchase by the Buyers of any Offered
Securities is subject in all cases to the preparation, execution and delivery by
the Company and the Buyers of a purchase agreement relating to such Offered
Securities reasonably satisfactory in form and substance to the Buyers and their
respective counsel.
(F) Any Offered Securities not acquired by the Buyers or other
persons in accordance with Section 4(o)(iii)(C) above may not be issued, sold or
exchanged until they are again offered to the eligible Buyers under the
procedures specified in this Agreement.
(iv) The restrictions contained in subsections (ii) and (iii) of
this Section 4(o) shall not apply to (I) any Approved Stock Plan; or (II) a bona
fide firm commitment underwritten public offering with a nationally recognized
underwriter which generates gross proceeds to the Company in excess of
$30,000,000 (other than an "at-the-market offering" as defined in Rule 415(a)(4)
under the Securities Act of 1933, as amended, and "equity lines").
5. REGISTER; TRANSFER AGENT INSTRUCTIONS.
(a) REGISTER. The Company shall maintain at its principal executive
offices (or such other office or agency of the Company as it may designate by
notice to each holder of Preferred Shares, Warrants or Additional Investment
Rights), a register for the Preferred Shares, the Warrants and Additional
Investment Rights, in which the Company shall record the name and address of the
Person in whose name the Preferred Shares, the Warrants and Additional
Investment Rights have been issued (including the name and address of each
transferee), the face amount of Preferred Shares held by such Person, the number
of Warrant Shares issuable upon exercise of the Warrants and the number of
Additional Investment Right Shares issuable upon exercise of the Additional
Investment Rights held by such Person. The Company shall keep the register open
and available at all times during business hours for inspection of any Buyer or
its legal representatives.
(b) TRANSFER AGENT INSTRUCTIONS. The Company shall issue irrevocable
instructions to its transfer agent, and any subsequent transfer agent, to issue
certificates or credit shares to the applicable balance accounts at DTC,
registered in the name of each Buyer or its respective nominee(s), for the
Conversion Shares and the Warrant Shares in such amounts as specified from time
to time by each Buyer to the Company upon conversion of the Preferred Shares and
the Additional Investment Right Shares or exercise of the Warrants and the
Additional Investment Rights in the form of EXHIBIT F attached hereto (the
"IRREVOCABLE TRANSFER AGENT INSTRUCTIONS"). The Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 5(b), and stop transfer instructions to give effect to Sections
2(f) and 2(g) hereof, will be given by the Company to its transfer agent, and
that the Securities shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement and the
other Transaction Documents. If a Buyer effects a sale, assignment or transfer
of the Securities in accordance with Section 2(f), the Company shall permit the
transfer and shall promptly instruct its transfer agent to issue one or more
certificates or credit shares to the applicable balance accounts at DTC in such
name and in such denominations as specified by such Buyer to effect such sale,
transfer or assignment. In the event that such sale, assignment or transfer
involves Conversion Shares, Warrant Shares, Additional Investment Rights or
Additional Investment Right Shares sold, assigned or transferred pursuant to an
effective registration statement or in compliance with Rule 144, the transfer
agent shall issue such Securities to the Buyer, assignee or transferee, as the
case may be, without any restrictive legend. The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to a
Buyer. Accordingly, the Company acknowledges that the remedy at law for a breach
of its obligations under this Section 5(b) will be inadequate and agrees, in the
event of a breach or threatened breach by the Company of the provisions of this
Section 5(b), that a Buyer shall be entitled, in addition to all other available
remedies, to an order and/or injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic loss
and without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of the
Company hereunder to issue and sell the Preferred Shares and the related
Warrants and Additional Investment Rights to each 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 Company's sole
benefit and may be waived by the Company at any time in its sole discretion by
providing each Buyer with prior written notice thereof:
(a) Such Buyer and each other Buyer shall have executed each of the
Transaction Documents to which it is a party and delivered the same to the
Company
(b) Such Buyer and each other Buyer shall have delivered to the
Company the Purchase Price (less, in the case of Smithfield, the amounts
withheld pursuant to Section 4(g)) for the Preferred Shares and the related
Warrants and Additional Investment Rights being purchased by such Buyer and each
other Buyer at the Closing by wire transfer of immediately available funds
pursuant to the wire instructions provided by the Company.
(c) The representations and warranties of such Buyer shall be true
and correct 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 such Buyer shall have performed, satisfied and complied in
all material respects (except for covenants, agreements and conditions that are
qualified by materiality, which shall be complied with in all respects) with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by such Buyer at or prior to the Closing Date.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE. The obligation of
each Buyer hereunder to purchase the Preferred Shares and the related Warrants
and Additional Investment Rights 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 each Buyer's sole benefit and may be waived by
such Buyer at any time in its sole discretion by providing the Company with
prior written notice thereof:
(a) The Company shall have executed and delivered to such Buyer (i)
each of the Transaction Documents and (ii) certificates representing the
Preferred Shares (in such denominations as such Buyer shall request) and the
related Warrants and Additional Investment Rights (in such amounts as such Buyer
shall request) being purchased by such Buyer at the Closing pursuant to this
Agreement.
(b) Such Buyer shall have received the opinion of The Xxxx Law
Group, PLLC, the Company's counsel, dated as of the Closing Date, in
substantially the form of EXHIBIT G attached hereto.
(c) The Company shall have delivered to such Buyer a copy of the
Irrevocable Transfer Agent Instructions, in the form of EXHIBIT F attached
hereto, which instructions shall have been delivered to and acknowledged in
writing by the Company's transfer agent.
(d) The Company shall have delivered to such Buyer a certificate
evidencing the incorporation and good standing of the Company in such
corporation's state of incorporation issued by the Secretary of State of such
state of incorporation as of a date within 10 days of the Closing Date.
(e) The Company shall have delivered to such Buyer a certificate
evidencing the Company's qualification as a foreign corporation and good
standing issued by the Secretary of State of each State in which the Company is
required to qualify to do business as a foreign corporation.
(f) The Company shall have delivered to such Buyer a certified copy
of the Articles of Incorporation as certified by the Secretary of State of the
State of Nevada within 10 days of the Closing Date.
(g) The Company shall have delivered to such Buyer a certificate in
the form attached hereto as EXHIBIT H, executed by an executive officer of the
Company and dated as of the Closing Date, as to (i) the resolutions consistent
with Section 3(b) as adopted by the Company's Board of Directors in a form
reasonably acceptable to such Buyer, (ii) the Articles of Incorporation and
(iii) the Bylaws, each as in effect at the Closing.
(h) The representations and warranties of the Company shall be true
and correct 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 (except for covenants, agreements and conditions that are
qualified by materiality, which shall be complied with in all respects) with the
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. Such Buyer shall have received a certificate, executed by the Chief
Executive Officer 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 such Buyer
in the form attached hereto as EXHIBIT I.
(i) The Company shall have delivered to such Buyer a letter from the
Company's transfer agent certifying the number of shares of Common Stock
outstanding as of a date within five days of the Closing Date.
(j) The Company shall have consummated (x) the Intellectual Property
License Agreement with Technology Alternatives, Inc., an Illinois corporation in
accordance with the terms and conditions of the Intellectual Property License
Agreement in the form of EXHIBIT J attached hereto.
(k) The Common Stock (I) shall be designated for quotation or listed
on the OTC Bulletin Board or an Eligible Market and (II) shall not have been
suspended by the SEC, the Nasdaq Stock Market, the OTC Bulletin Board or such
Eligible Market from trading on the OTC Bulletin Board or such Eligible Market,
as applicable nor shall suspension by the SEC, the Nasdaq Stock Market, the OTC
Bulletin Board or such Eligible Market have been threatened either (A) in
writing by the SEC, the Nasdaq Stock Market, the OTC Bulletin Board or such
Eligible Market or (B) by falling below the minimum listing maintenance
requirements of the OTC Bulletin Board or such Eligible Market.
(l) The Company shall have obtained all Governmental Approvals and
third party consents and approvals, if any, necessary for the sale of the
Preferred Shares, the Warrants, and the Additional Investment Rights.
(m) The Company shall have caused Xxxxx X. Xxxxxxx to have delivered
to such Buyer a lock-up agreement in the form attached hereto as EXHIBIT K.
(n) The Company shall have delivered to such Buyer the Escrow
Agreements, each dated August _, 2004, among the Company, the Escrow Agent,
Xxxxx X. Xxxxxxx, Technology Alternatives, Inc. and Sunrise Securities Corp.
(each an "ESCROW AGREEMENT") in the forms attached hereto as EXHIBIT L and
EXHIBIT M, respectively, and each such Buyer shall have received written
confirmation from the Escrow Agent that the Escrow Shares (as defined in the
relevant Escrow Agreement) and the Dispute Reserve Shares (as defined in the
relevant Escrow Agreement) have been received and duly endorsed in blank.
(o) The Company shall have delivered to such Buyer such other
documents relating to the transactions contemplated by this Agreement as such
Buyer or its counsel may reasonably request.
8. TERMINATION. In the event that the Closing shall not have occurred with
respect to a Buyer on or before ten (10) days from the date hereof due to the
Company's or such Buyer's failure to satisfy the conditions set forth in
Sections 6 and 7 above (and the nonbreaching party's failure to waive such
unsatisfied condition(s)), the nonbreaching party shall have the option to
terminate this Agreement with respect to such breaching party at the close of
business on such date without liability of any party to any other party;
provided, however, that if this Agreement is terminated pursuant to this Section
8, the Company shall remain obligated to reimburse the non-breaching Buyers for
the expenses described in Section 4(g) above.
9. MISCELLANEOUS.
(a) GOVERNING LAW; JURISDICTION; JURY TRIAL. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York. Each party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in The City of New York, Borough of Manhattan,
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(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; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
(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 Buyers, 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 any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and the holders of at least a majority of the Preferred Shares or, if
prior to the Closing Date, the Company and the Buyers listed on the Schedule of
Buyers as being obligated to purchase at least a majority of the Preferred
Shares. No provision hereof may be waived other than by an instrument in writing
signed by the party against whom enforcement is sought. No such amendment shall
be effective to the extent that it applies to less than all of the holders of
the Preferred Shares then outstanding. No consideration shall be offered or paid
to any Person to amend or consent to a waiver or modification of any provision
of any of the Transaction Documents unless the same consideration also is
offered to all of the parties to the Transaction Documents, holders of Preferred
Shares, holders of the Warrants, holders of Additional Investment Rights, or
Additional Investment Right Shares as the case may be. The Company has not,
directly or indirectly, made any agreements with any Buyers relating to the
terms or conditions of the transactions contemplated by the Transaction
Documents except as set forth in the Transaction Documents.
(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 receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after deposit with
an overnight courier 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:
Dendo Global Corp.
0000 X. Xxxxxxxxx Xxx., Xxxxx X
Xxxxxxxxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
with a copy (which shall not constitute notice) to:
The Xxxx Law Group
000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxx, Esq.
If to the Transfer Agent:
Interwest Transfer Co., Inc.
000 X 0000 X #0
Xxxx Xxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers, with copies to such Buyer's representatives as set forth on the Schedule
of Buyers,
with a copy (for informational purposes) to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxx, Esq.
or to such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (i), (ii) or (iii) above, respectively.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including any purchasers of the Preferred Shares, the Warrants, the Additional
Investment Rights or Additional Investment Right Shares. The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the holders of at least a majority of the Preferred Shares
then outstanding. A Buyer may assign some or all of its rights hereunder without
the consent of the Company, in which event such assignee shall be deemed to be a
Buyer hereunder with respect to such assigned rights.
(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. Unless this Agreement is terminated under Section 8,
the representations and warranties of the Company and the Buyers contained in
Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and 9
shall survive the Closing. Each 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.
(k) INDEMNIFICATION. In consideration of each Buyer's execution and
delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company's other obligations under the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless each
Buyer and each other holder of the Securities and all of their stockholders,
partners, members, officers, directors, employees and direct or indirect
investors and any of the foregoing Persons' agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "INDEMNITEES")
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by
any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents, (b) any breach of any covenant, agreement
or obligation of the Company contained in the Transaction Documents, or (c) any
cause of action, suit or claim brought or made against such Indemnitee by a
third party (including for these purposes a derivative action brought on behalf
of the Company) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Transaction Documents, (ii) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, (iii) any
disclosure made by such Buyer pursuant to Section 4(i), or (iv) the status of
such Buyer or holder of the Securities as an investor in the Company (other than
in connection with any action such Buyer may have taken). To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities which is permissible under applicable law.
Except as otherwise set forth herein, the mechanics and procedures with respect
to the rights and obligations under this Section 9(k) shall be the same as those
set forth in Section 6 of the Registration Rights Agreement; provided, however,
that the Company shall not be required to indemnify such Buyer for any amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is based upon a violation which occurs in reliance upon and in
conformity with written information furnished to the Company by such Buyer
expressly for use in connection with the Transaction Documents.
(l) NO STRICT CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
(m) REMEDIES. Each Buyer and each holder of the Securities shall
have all rights and remedies set forth in the Transaction Documents and all
rights and remedies which such holders have been granted at any time under any
other agreement or contract and all of the rights which such holders have under
any law. Any Person having any rights under any provision of this Agreement
shall be entitled to enforce such rights specifically (without posting a bond or
other security), to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights granted by law. Furthermore, the
Company recognizes that in the event that it fails to perform, observe, or
discharge any or all of its obligations under this Agreement, any remedy at law
may prove to be inadequate relief to the Buyers. The Company therefore agrees
that the Buyers shall be entitled to seek temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages and
without posting a bond or other security.
(n) PAYMENT SET ASIDE. To the extent that the Company makes a
payment or payments to the Buyers hereunder or pursuant to any of the other
Transaction Documents or the Buyers enforce or exercise their rights hereunder
or thereunder, and such payment or payments or the proceeds of such enforcement
or exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other Person under any law (including, without limitation, any
bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred.
(o) INDEPENDENT NATURE OF BUYERS' OBLIGATIONS AND RIGHTS. The
obligations of each Buyer under any Transaction Document are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible
in any way for the performance of the obligations of any other Buyer under any
Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Buyer pursuant hereto or thereto, shall be
deemed to constitute the Buyers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Buyers are
in any way acting in concert or as a group with respect to such obligations or
the transactions contemplated by the Transaction Documents. Each Buyer confirms
that it has independently participated in the negotiation of the transaction
contemplated hereby with the advice of its own counsel and advisors. Each Buyer
shall be entitled to independently protect and enforce its rights, including,
without limitation, the rights arising out of this Agreement or out of any other
Transaction Documents, and it shall not be necessary for any other Buyer to be
joined as an additional party in any proceeding for such purpose.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
COMPANY:
DENDO GLOBAL CORP.
By:/s/
---------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President and CEO
[Signature Page to Securities Purchase Agreement]
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
BUYERS:
SMITHFIELD FIDUCIARY LLC
By:/s/
---------------------------------------
Name:
Title:
[Signature Page to Securities Purchase Agreement]
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
BUYERS:
CHEROKEE HOLDINGS II, LLC
By:/s/
---------------------------------------
Name:
Title:
[Signature Page to Securities Purchase Agreement]
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
BUYERS:
/s/
-----------------------------------------
XXXXX XXXXXXXX
[Signature Page to Securities Purchase Agreement]
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
BUYERS:
CRANSHIRE CAPITAL LP
By:/s/
---------------------------------------
Name:
Title:
[Signature Page to Securities Purchase Agreement]
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
BUYERS:
CRESTVIEW CAPITAL FUNDS
By:/s/
---------------------------------------
Name:
Title:
[Signature Page to Securities Purchase Agreement]
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
BUYERS:
DKR OASIS
By:/s/
---------------------------------------
Name:
Title:
[Signature Page to Securities Purchase Agreement]
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
BUYERS:
IROQUOIS CAPITAL
By:/s/
---------------------------------------
Name:
Title:
[Signature Page to Securities Purchase Agreement]
SCHEDULE OF BUYERS
(1) (2) (3) (4)
AGGREGATE NUMBER OF
AGGREGATE NUMBER OF INITIAL WARRANT
BUYER ADDRESS AND FACSIMILE NUMBER PREFERRED SHARES SHARES
----- ---------------------------- ---------------- ------
Bristol Capital 0000 Xxxxxx Xxxx. 37,500 75,000
Advisors, LLC 0xx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Xxx Xxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Residence:
Xxxxxxxx, Xxxxx 000 Xxxxxxxxx Xxx. 12,500 25,000
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxx
Facsimile:
Telephone: (000) 000-0000
Residence:
Cranshire Capital LP 000 Xxxxxx Xx. 31,250 62,500
Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxx
Facsimile:
Telephone: (000) 000-0000
Residence:
Crestview Capital Funds 95 Revere 212,500 425,000
Suite A
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Xxxx Xxxxxxx
Facsimile:
Telephone: (000) 000-0000
Residence:
(1) (5) (6) (7)
AGGREGATE NUMBER
OF ADDITIONAL AGGREGATE NUMBER
INVESTMENT RIGHT OF ADDITIONAL LEGAL REPRESENTATIVE'S
BUYER SHARES WARRANT SHARES ADDRESS AND FACSIMILE NUMBER
----- ------ -------------- ----------------------------
Bristol Capital 262,500 525,000
Advisors, LLC
Xxxxxxxx, Xxxxx 87,500 175,000 Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx,
Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Cranshire Capital LP 218,750 437,500
Crestview Capital Funds 1,487,500 2,975,000
(1) (2) (3) (4)
AGGREGATE NUMBER OF
AGGREGATE NUMBER OF INITIAL WARRANT
BUYER ADDRESS AND FACSIMILE NUMBER PREFERRED SHARES SHARES
----- ---------------------------- ---------------- ------
DKR Oasis 0000 Xxxx Xxxx Xx. 31,250 62,500
0xx Xxxxx
Xxxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxxx
Facsimile:
Telephone: (000) 000-0000
Residence:
Iroquois Capital 000 Xxxxxxxxx Xxx. 31,250 62,500
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Chill
Facsimile:
Telephone: (000) 000-0000
Residence:
Xxxxxxx, Xxx 0000 Xxxxxxxxxxxx Xxxxx 18,750 37,500
Xxxxxxxxxx, XX 00000
Attention: Xxx Xxxxxxx
Facsimile:
Telephone: (000) 000-0000
Residence:
Smithfield Fiduciary LLC c/o Highbridge Capital Management, LLC 125,000 250,000
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxx
Xxxx X. Chill
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Residence: Cayman Islands
(1) (5) (6) (7)
AGGREGATE NUMBER
OF ADDITIONAL AGGREGATE NUMBER
INVESTMENT RIGHT OF ADDITIONAL LEGAL REPRESENTATIVE'S
BUYER SHARES WARRANT SHARES ADDRESS AND FACSIMILE NUMBER
----- ------ -------------- ----------------------------
DKR Oasis 218,750 437,500
Iroquois Capital 218,750 437,500
Xxxxxxx, Xxx 131,260 262,500
Smithfield Fiduciary LLC 875,000 1,750,000 Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx,
Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
EXHIBITS
Exhibit A Form of Certificate of Designations
Exhibit B Form of Warrants
Exhibit C Form of Additional Investment Right
Exhibit D Form of Additional Warrant
Exhibit E Form of Registration Rights Agreement
Exhibit F Form of Irrevocable Transfer Agent Instructions
Exhibit G Form of Opinion
Exhibit H Form of Secretary's Certificate
Exhibit I Form of Officers Certificate
Exhibit J Intellectual Property License Agreement
Exhibit K Form of Lock-Up Agreement
Exhibit L Escrow Agreement
Exhibit M Escrow Agreement
SCHEDULES
Schedule 3(a) Subsidiaries
Schedule 3(l) Absence of Certain Changes
Schedule 3(n) Conduct of Business; Regulatory Permits
Schedule 3(p) Transactions with Affiliates
Schedule 3(q) Capitalization
SCHEDULE 3(A)
SUBSIDIARIES
None.
SCHEDULE 3(L)
ABSENCE OF CERTAIN CHANGES
None.
SCHEDULE 3(N)
CONDUCT OF BUSINESS; REGULATORY PERMITS
None.
SCHEDULE 3(P)
TRANSACTIONS WITH AFFILIATES
Persons deemed Affiliates of the Company will be paid no more than an aggregate
amount of $100,000 by the Company prior to the Closing Date in connection with
satisfying certain liabilities of the Company in order to ensure that, prior to
Closing Date, the Company shall have no liabilities..
SCHEDULE 3(Q)
CAPITALIZATION
NAME NUMBER OF SHARES
Xxxxx X. Xxxxxxx, President/CEO 1,000,000
Xxxxx Xxxxx, Proposed COO 500,000
Xxxxxxx X. Xxxxxxx, VP Business Development 100,000
Xxxxx Xxxxx, Eastern Regional VP 75,000
Xxxxx X. Xxxxxxxxxx, CFO 25,000
Xxxx Xxxxxxx, Manager Customer Service 25,000
Xxxx Prior, Product Manager 25,000
Xxxxxxx Xxxxx, Manager Network Solutions 50,000
Xxx Xxxxxxxx, Manager R&D 50,000
Xxxxxx Xxxxxxxx, Project Manager 25,000
Xxxxxxx X. Xxxxxxxxx, Regional Manager 25,000
Xxxxx Xxxxx, Regional SE Manager 25,000
Board Members (4) @ 50,000 Shares 200000
TOTAL 2,125,000
Reserved for grants to new key employees
or subsequent grants to above recipients 2,875,000
Total option shares 5,000,000
