INVISA, Inc. Shares of Series B Convertible Preferred Stock and Common Stock Warrants SUBSCRIPTION AGREEMENT
Exhibit 10.52
INVISA,
Inc.
Shares
of Series B Convertible Preferred Stock and Common Stock
Warrants
August
31, 2005
M.A.G.
Capital, LLC
Mercator
Momentum Fund III, LP
Monarch
Pointe Fund, Ltd.
Asset
Managers International, Ltd.
000
Xxxxx
Xxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Ladies
and Gentlemen:
Invisa,
Inc. a Nevada corporation (the
“Company”), hereby confirms its agreement with the
entities set forth on the signature page hereto (collectively, the
“Purchasers”) and M.A.G. CAPITAL, LLC
(“MAG”), as set forth below.
1. The Securities. Subject to the terms and conditions herein contained, the Company proposes to issue and sell to the Purchasers an aggregate of: (a) Ten Thousand (10,000) shares of its Series B Convertible Preferred Stock (the “Series B Stock”), which shall be convertible into shares (the “Conversion Shares”) of the Company’s Common Stock (the “Common Stock”) in accordance with the formula set forth in the Certificate of Designations further described below and (b) Two Million Five Hundred Thousand (2,500,000) warrants, substantially in the form attached hereto at Exhibit A (the “Warrants”), to acquire up to Two Million Five Hundred Thousand (2,500,000) shares of Common Stock (the “Warrant Shares”). The rights, preferences and privileges of the Series B Stock are as set forth in the Certificate of Designations of Series B Preferred Stock as filed with the Secretary of State of the State of Nevada (the “Certificate of Designations”) in the form attached hereto as Exhibit B. The number of Conversion Shares and Warrant Shares that any Purchaser may acquire at any time are subject to limitation in the Certificate of Designations and in the Warrants, respectively, so that the aggregate number of shares of Common Stock of which such Purchaser and all persons affiliated with such Purchaser have beneficial ownership (calculated pursuant to Rule 13d-3 of the Securities Exchange Act of 1934, as amended) does not at any time exceed 9.99% of the Company’s then outstanding Common Stock.
The
Series B Stock and the Warrants are sometimes herein collectively referred
to as
the “Securities.” This Agreement, the Certificate of
Designations, Registration Rights Agreement and the Warrant Agreements are
sometimes herein collectively referred to as the “Transaction
Documents.”
1
The
Securities will be offered and sold to the Purchasers without such offers
and
sales being registered under the Securities Act of 1933, as amended (together
with the rules and regulations of the Securities and Exchange Commission
(the
“SEC”) promulgated thereunder, the
“Securities Act”), in reliance on
exemptions
therefrom.
In
connection with the sale of the Securities, the Company has made available
(including electronically via the SEC’s XXXXX system) to Purchasers its periodic
and current reports, forms, schedules, proxy statements and other documents
(including exhibits and all other information incorporated by reference)
filed
with the SEC under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). These reports, forms, schedules,
statements, documents, filings and amendments, are collectively referred
to as
the “Disclosure Documents.” All references in this
Agreement to financial statements and schedules and other information which
is
“contained,”“included” or “stated” in the Disclosure Documents (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules, documents, exhibits and other information
which is incorporated by reference in the Disclosure Documents.
2. Representations
and Warranties of the Company. Except as set forth on the Disclosure
Schedule (the “Disclosure Schedule”) delivered by the
Company to Purchasers on the Closing Date (as defined in Section 3 below),
or in
the Disclosure Documents the Company represents and warrants to and agrees
with
Purchasers and MAG as follows:
(a) The
Disclosure Documents as of their respective dates did not, and will not (after
giving effect to any updated disclosures therein) as of the Closing Date,
contain any untrue statement of a material fact or omit to state a material
fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Disclosure Documents and
the
documents incorporated or deemed to be incorporated by reference therein,
at the
time they were filed or hereafter are filed with the SEC, complied and will
comply, at the time of filing, in all material respects with the requirements
of
the Securities Act and/or the Exchange Act, as the case may be, as
applicable.
(b) Schedule
A attached hereto sets forth a complete list of the subsidiaries of the
Company (the “Subsidiaries”). Each of the Company and
its Subsidiaries has been duly incorporated and each of the Company and the
Subsidiaries is validly existing in good standing as a corporation under
the
laws of its jurisdiction of incorporation, with the requisite corporate power
and authority to own its properties and conduct its business as now conducted
as
described in the Disclosure Documents and is duly qualified to do business
as a
foreign corporation in good standing in all other jurisdictions where the
ownership or leasing of its properties or the conduct of its business requires
such qualification, except where the failure to be so qualified would not,
individually or in the aggregate, have a material adverse effect on the
business, condition (financial or other), properties, prospects or results
of
operations of the Company and the Subsidiaries, taken as a whole (any such
event, a “Material Adverse Effect”); as of the Closing
Date, the Company will have the authorized, issued and outstanding
capitalization set forth in on Schedule B attached hereto (the
“Company Capitalization”); except as set forth in the
Disclosure Documents or on Schedule A, the Company does not have any
subsidiaries or own directly or indirectly any of the capital stock or other
equity or long-term debt securities of or have any equity interest in any
other
person; all of the outstanding
shares of capital stock of the Company and the Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable and were
not
issued in violation of any preemptive or similar rights and are owned free
and
clear of all liens, encumbrances, equities, and restrictions on transferability
(other than those imposed by the Securities Act and the state securities
or
“Blue Sky” laws) or voting; except as set forth in the Disclosure Documents, all
of the outstanding shares of capital stock of the Subsidiaries are owned,
directly or indirectly, by the Company; except as set forth in the Disclosure
Documents, no options, warrants or other rights to purchase from the Company
or
any Subsidiary, agreements or other obligations of the Company or any Subsidiary
to issue or other rights to convert any obligation into, or exchange any
securities except for the $150,000 line of credit for, shares of capital
stock
of or ownership interests in the Company or any Subsidiary are outstanding;
and
except as set forth in the Disclosure Documents or on Schedule C, there
is no agreement, understanding or arrangement among the Company or any
Subsidiary and each of their respective stockholders or any other person
relating to the ownership, registration other than piggy back rights or
disposition of any capital stock of the Company or any Subsidiary or the
election of directors of the Company or any Subsidiary or the governance
of the
Company’s or any Subsidiary’s affairs, and, if any, such agreements,
understandings and arrangements will not be breached or violated as a result
of
the execution and delivery of, or the consummation of the transactions
contemplated by, the Transaction Documents.
2
(c) The
Company
has the requisite corporate power and authority to execute, deliver and perform
its obligations under the Transaction Documents. Each of the Transaction
Documents has been duly and validly authorized by the Company and, when executed
and delivered by the Company, will constitute a valid and legally binding
agreement of the Company, enforceable against the Company in accordance with
its
terms except as the enforcement thereof may be limited by (A) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to or affecting creditors’ rights
generally or (B) general principles of equity and the discretion of
the
court before which any proceeding therefore may be brought (regardless of
whether such enforcement is considered in a proceeding at law or in equity)
(collectively, the “Enforceability
Exceptions”).
(d) The
Series B
Stock and the Warrants have been duly authorized and, when issued upon payment
thereof in accordance with this Agreement, will have been validly issued,
fully
paid and non-assessable. The Conversion Shares issuable have been duly
authorized and validly reserved for issuance, and when issued upon conversion
of
the Series B Stock in accordance with the terms of the Certificate of
Designations, will have been validly issued, fully paid and non-assessable.
The
Warrant Shares have been duly authorized and validly reserved for issuance,
and
when issued upon exercise of the Warrants in accordance with the terms thereof,
will have been validly issued, fully paid and non-assessable. The Common
Stock
of the Company conforms to the description thereof contained in the Disclosure
Documents. The stockholders of the Company have no preemptive or similar
rights
with respect to the Common Stock.
(e) No
consent,
approval, authorization, license, qualification, exemption or order of any
court
or governmental agency or body or third party is required for the performance
of
the Transaction Documents by the Company or for the consummation by the Company
of any of the transactions contemplated thereby, or the application of the
proceeds of the issuance of the Securities as described in this Agreement,
except for such consents, approvals, authorizations, licenses, qualifications,
exemptions or orders (i) as have been obtained on or prior to the
Closing
Date, (ii) as are not required to be obtained on or prior to the Closing
Date that will be obtained when required, or (iii) the failure to
obtain
which would not, individually or in the aggregate, have a Material Adverse
Effect.
(f) Except
as set
forth on Schedule D, none of the Company or the Subsidiaries is (i) in
material violation of its articles of incorporation or bylaws (or similar
organizational document), (ii) in breach or violation of any statute, judgment,
decree, order, rule or regulation applicable to it or any of its properties
or
assets, which breach or violation would, individually or in the aggregate,
have
a Material Adverse Effect, or (iii) except as described in the Disclosure
Documents, in default (nor has any event occurred which with notice or passage
of time, or both, would constitute a default) in the performance or observance
of any obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan agreement, note, lease, license,
franchise agreement, permit, certificate or agreement or instrument to which
it
is a party or to which it is subject, which default would, individually or
in
the aggregate, have a Material Adverse Effect.
3
(g) The
execution, delivery and performance by the Company of the Transaction Documents
and the consummation by the Company of the transactions contemplated thereby
and
the fulfillment of the terms thereof will not (a) violate, conflict
with or
constitute or result in a breach of or a default under (or an event that,
with
notice or lapse of time, or both, would constitute a breach of or a default
under) any of (i) the terms or provisions of any contract, indenture,
mortgage, deed of trust, loan agreement, note, lease, license, franchise
agreement, permit, certificate or agreement or instrument to which any of
the
Company or the Subsidiaries is a party or to which any of their respective
properties or assets are subject, (ii) the Certificate of Incorporation
or
bylaws of any of the Company or the Subsidiaries (or similar organizational
document) or (iii) any statute, judgment, decree, order, rule or regulation
of any court or governmental agency or other body applicable to the Company
or
the Subsidiaries or any of their respective properties or assets or
(b) result in the imposition of any lien upon or with respect to any
of the
properties or assets now owned or hereafter acquired by the Company or any
of
the Subsidiaries; which violation, conflict, breach, default or lien would,
individually or in the aggregate, have a Material Adverse Effect.
(h) The
audited
consolidated financial statements included in the Disclosure Documents present
fairly the consolidated financial position, results of operations, cash flows
and changes in shareholders’ equity of the entities, at the dates and for the
periods to which they relate and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis; the interim
un-audited consolidated financial statements included in the Disclosure
Documents present fairly the consolidated financial position, results of
operations and cash flows of the entities, at the dates and for the periods
to
which they relate subject to year-end audit adjustments and have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis with the audited consolidated financial statements included
therein; the selected financial and statistical data included in the Disclosure
Documents present fairly the information shown therein and have been prepared
and compiled on a basis consistent with the audited financial statements
included therein, except as otherwise stated therein; and each of the auditors
previously engaged by the Company or to be engaged in the future by the Company
is an independent certified public accountant as required by the Securities
Act
for an offering registered thereunder.
(i) Except
as
described in the Disclosure Documents, there is not pending or, to the knowledge
of the Company, threatened any action, suit, proceeding, inquiry or
investigation, governmental or otherwise, to which any of the Company or
the
Subsidiaries is a party, or to which their respective properties or assets
are
subject, before or brought by any court, arbitrator or governmental agency
or
body, that, if determined adversely to the Company or any such Subsidiary,
would, individually or in the aggregate, have a Material Adverse Effect or
that
seeks to restrain, enjoin, prevent the consummation of or otherwise challenge
the issuance or sale of the Securities to be sold hereunder or the application
of the proceeds therefrom or the other transactions described in the Disclosure
Documents.
(j) The
Company
and the Subsidiaries own or possess adequate licenses or other rights to
use all
patents, trademarks, service marks, trade names, copyrights and know-how
that
are necessary to conduct their businesses as described in the Disclosure
Documents. None of the Company or the Subsidiaries has received any written
notice of infringement of (or knows of any such infringement of) asserted
rights
of others with respect to any patents, trademarks, service marks, trade names,
copyrights or know-how that, if such assertion of infringement or conflict
were
sustained, would, individually or in the aggregate, have a Material Adverse
Effect.
4
(k) Each
of the
Company and the Subsidiaries possesses all licenses, permits, certificates,
consents, orders, approvals and other authorizations from, and has made all
declarations and filings with, all federal, state, local and other governmental
authorities, all self-regulatory organizations and all courts and other
tribunals presently required or necessary to own or lease, as the case may
be,
and to operate its respective properties and to carry on its respective
businesses as now or proposed to be conducted as set forth in the Disclosure
Documents (“Permits”), except where the failure to
obtain such Permits would not, individually or in the aggregate, have a Material
Adverse Effect and none of the Company or the Subsidiaries has received any
notice of any proceeding relating to revocation or modification of any such
Permit, except as described in the Disclosure Documents and except where
such
revocation or modification would not, individually or in the aggregate, have
a
Material Adverse Effect.
(l) Subsequent
to
the respective dates as of which information is given in the Disclosure
Documents and except as described therein, (i) the Company and the
Subsidiaries have not incurred any material liabilities or obligations, direct
or contingent, or entered into any material transactions not in the ordinary
course of business or (ii) the Company and the Subsidiaries have not
purchased any of their respective outstanding capital stock, or declared,
paid
or otherwise made any dividend or distribution of any kind on any of their
respective capital stock or otherwise (other than, with respect to any of
such
Subsidiaries, the purchase of capital stock by the Company), (iii) there
has not been any material increase in the long-term indebtedness of the Company
or any of the Subsidiaries, (iv) there has not occurred any event
or
condition, individually or in the aggregate, that has a Material Adverse
Effect,
and (v) the Company and the Subsidiaries have not sustained any material
loss or interference with respect to their respective businesses or properties
from fire, flood, hurricane, earthquake, accident or other calamity, whether
or
not covered by insurance, or from any labor dispute or any legal or governmental
proceeding.
(m) There
are no
material legal or governmental proceedings nor are there any material contracts
or other documents required by the Securities Act to be described in a
prospectus that are not described in the Disclosure Documents. Except as
described in the Disclosure Documents, none of the Company or the Subsidiaries
is in default under any of the contracts described in the Disclosure Documents,
has received a notice or claim of any such default or has knowledge of any
breach of such contracts by the other party or parties thereto, except for
such
defaults or breaches as would not, individually or in the aggregate, have
a
Material Adverse Effect.
(n) Each
of the
Company and the Subsidiaries has good and marketable title to all real property
described in the Disclosure Documents as being owned by it and good and
marketable title to the leasehold estate in the real property described therein
as being leased by it, free and clear of all liens, charges, encumbrances
or
restrictions, except, in each case, as described in the Disclosure Documents
or
such as would not, individually or in the aggregate, have a Material Adverse
Effect. All material leases, contracts and agreements to which the Company
or
any of the Subsidiaries is a party or by which any of them is bound are valid
and enforceable against the Company or any such Subsidiary, are, to the
knowledge of the Company, valid and enforceable against the other party or
parties thereto and are in full force and effect.
5
(o) Each
of the
Company and the Subsidiaries has filed all necessary federal, state and foreign
income and franchise tax returns, except where the failure to so file such
returns would not, individually or in the aggregate, have a Material Adverse
Effect, and has paid all taxes shown as due thereon; and other than tax
deficiencies which the Company or any Subsidiary is contesting in good faith
and
for which adequate reserves have been provided in accordance with generally
accepted accounting principles, there is no tax deficiency that has been
asserted against the Company or any Subsidiary that would, individually or
in
the aggregate, have a Material Adverse Effect.
(p) None
of the
Company or the Subsidiaries is, or immediately after the Closing Date will
be,
required to register as an “investment company” or a company “controlled by” an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended (the “Investment Company
Act”).
(q) None
of the
Company or the Subsidiaries or, to the knowledge of any of such entities’
directors, officers, employees, agents or controlling persons, has taken,
directly or indirectly, any action designed, or that might reasonably be
expected, to cause or result in the stabilization or manipulation of the
price
of the Common Stock.
(r) None
of the
Company, the Subsidiaries or any of their respective Affiliates (as defined
in
Rule 501(b) of Regulation D under the Securities Act) directly,
or
through any agent, engaged in any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities
Act) in connection with the offering of the Securities or engaged in any
other
conduct that would cause such offering to be constitute a public offering
within
the meaning of Section 4(2) of the Securities Act. Assuming the accuracy
of
the representations and warranties of the Purchasers in Section 6
hereof,
it is not necessary in connection with the offer, sale and delivery of the
Securities to the Purchasers in the manner contemplated by this Agreement
to
register any of the Securities under the Securities Act.
(s) There
is no
strike, labor dispute, slowdown or work stoppage with the employees of the
Company or any of the Subsidiaries which is pending or, to the knowledge
of the
Company or any of the Subsidiaries, threatened.
(t) Each
of the
Company and the Subsidiaries carries general liability insurance coverage
comparable to other companies of its size and similar business.
(u) Each
of the
Company and the Subsidiaries maintains internal accounting controls which
provide reasonable assurance that (A) transactions are executed in
accordance with management’s authorization, (B) transactions are recorded
as necessary to permit preparation of its financial statements and to maintain
accountability for its assets, and (C) access to its material assets
is
permitted only in accordance with management’s authorization and (D) the
values and amounts reported for its material assets are compared with its
existing assets at reasonable intervals.
6
(v) Except
for a
fee payable to MAG, the Company does not know of any claims for services,
either
in the nature of a finder’s fee or financial advisory fee, with respect to the
offering of the Securities and the transactions contemplated by the Transaction
Documents for which MAG is the payor or payee.
(w) The
Common
Stock is traded on the Over the Counter Bulletin Board_ (the “OTC:BB”). Except
as described in the Disclosure Documents, the Company currently is not in
violation of, and the consummation of the transactions contemplated by the
Transaction Documents will not violate, any rule of the National Association
of
Securities Dealers.
(x) The
Company
is eligible to use SB-2 for the resale of the Conversion Shares and the Warrant
Shares by Purchasers or their transferees and the Warrant Shares by Purchasers,
MAG or their transferees. The Company has no reason to believe that it is
not
capable of satisfying the registration or qualification requirements (or
an
exemption therefrom) necessary to permit the resale of the Conversion Shares
and
the Warrant Shares under the securities or “blue sky” laws of any jurisdiction
within the United States.
(y) Set
forth on Schedule E is the Company’s intended use of the proceeds from
this transaction.
(z) Except
as set
forth on Schedule F, none of the officers or directors of the Company (i)
has
been convicted of any crime (other than traffic
violations or misdemeanors not involving
fraud) or is currently under investigation or indictment for any
such crime, (ii) has been found by a court or governmental agency
to have
violated any securities or commodities law or to have committed fraud
or is
currently a party to any legal proceeding in which either is alleged, (iii)
has been the subject of a proceeding under the bankruptcy laws
or any
similar state laws, or (iv) has been an officer, director, general
partner,
or managing member of an entity which has been the subject of such
a
proceeding.
(aa) The
Company’s most recent SEC review commenced on approximately June 25, 2003 and
was concluded in approximately 2003.
(bb) The
Company’s CUSIP number is 000000000.
3. Purchase,
Sale and Delivery of the Securities.
(a) Issuance
of Series B Stock and Warrants. On the basis of the representations,
warranties, agreements and covenants herein contained and subject to the
terms
and conditions herein set forth, the Company agrees to issue and sell to
the
Purchasers, and Purchasers agree to purchase from the Company, 10,000 shares
of
Series B Stock at $100.00 per share in the amounts shown on the signature
page
hereto. In connection with the purchase and sale of Series B Stock, for no
additional consideration, the Purchasers will receive Warrants to purchase
up to
an aggregate of 2,500,000 shares of Common Stock, and MAG will receive Warrants
to purchase up to an aggregate of 2,500,000 shares of Common Stock, subject
to
adjustment as set forth in the Warrants.
7
(b) Closing.
The
closing of the transactions described herein (the
“Closing”) shall take place at a time and on a date
(the “Closing Date”) to be specified by the parties,
which will be no later than 5:00 p.m. (Pacific time) on August 31, 2005.
On the
Closing Date, the Company shall deliver (a) certificates in definitive form
for
the Series B Stock in the names and amounts set forth on the signature page
hereto, (b) Warrants, in the names and amounts set forth on the signature
page
hereto, (c) the Subscription Agreement, Certificate of Designation and
Registration Rights Agreement, each duly executed on behalf of the Company,
and
(d) the Opinion of Counsel in the form attached hereto as Exhibit C. On
the Closing Date, Purchasers shall deliver (i) 50% of the Purchase Price
or
$500,000 by wire transfer of immediately available funds to an escrow account
mutually acceptable to the parties, and (ii) the Subscription Agreement and
Registration Rights Agreement, each duly executed on behalf of the Purchasers
and MAG. The Closing will occur when all documents and instruments necessary
or
appropriate to effect the transactions contemplated herein are exchanged
by the
parties and all actions taken at the Closing will be deemed to be taken
simultaneously.
(c) Release
from Escrow. Upon receipt of written confirmation from MAG that all
documents and instruments have been duly executed and delivered, the escrow
holder shall release (a) to the Company, the sum of $455,000 and (b) to MAG,
the
Due Diligence Fee in the amount of $40,000, and the legal fees in the amount
of
$5,000.
(d) Conditions
to Final Funding. Provided that no Event of Default (as that term is defined
in Section 10 below) has occurred, within two trading days after Company
(i)
files the Registration Statement and (ii) delivers to MAG and Purchaser a
certificate executed on behalf of the Company by its Chief Financial Officer
certifying that all representations and warranties made by the Company herein
are true and correct as of the date of the Registration Statement, the Purchaser
covenants and agrees to deliver to the Company the balance of the Purchase
Price
or $500,000.
(e) In
the event
that on or before 40 days after the Closing Date, the conditions to funding
the
balance of the Purchase Price have not been satisfied by Company or waived
in
writing by Purchaser and MAG, then (a) the Purchaser’s obligation to fund the
balance of the Purchase Price shall terminate, and (b) the number of shares
Series B Stock issued to Purchaser in excess of the Purchaser Price actually
paid by Purchaser shall automatically cancel. The Warrants shall be remain
in
full force and effect as originally issued.
4. Certain
Covenants of the Company. The Company covenants and agrees with each
Purchaser as follows:
(a) None
of the
Company or any of its Affiliates will sell, offer for sale or solicit offers
to
buy or otherwise negotiate in respect of any “security” (as defined in the
Securities Act) which could be integrated with the sale of the Securities
in a
manner which would require the registration under the Securities Act of the
Securities.
8
(b) The
Company
will not become, at any time prior to the expiration of three years after
the
Closing Date, an open-end investment company, unit investment trust, closed-end
investment company or face-amount certificate company that is or is required
to
be registered under the Investment Company Act.
(c) None
of the
proceeds of the Series B Stock will be used to reduce or retire any insider
note
or convertible debt held by an officer or director of the Company.
(d) Subject
to
Section 10 of this Agreement, the Conversion Shares and the Warrant Shares
will
be eligible for trading on the Over-the-Counter Bulletin Board, or such market
on which the Company’s shares are subsequently listed or traded, immediately
following the effectiveness of the Registration Statement.
(e) The
Company
will use best efforts to do and perform all things required to be done and
performed by it under this Agreement and the other Transaction Documents
and to
satisfy all conditions precedent on its part to the obligations of the
Purchasers to purchase and accept delivery of the Securities.
(f) Commencing
on
the Closing Date and continuing until the Registration Statement is declared
effective, Company shall not file a registration statement with the SEC to
register any shares other than the shares of Common Stock issuable to Purchasers
and MAG upon conversion of the Series B Preferred Stock and exercise of the
Warrants, up to 500,000 shares of Common Stock for payment of Dividends on
the
Series B Preferred Stock, and the shares of Common Stock issuable to the
persons
and entities set forth on Exhibit C.
5. Conditions
of the Purchasers’ Obligations. The obligation of each Purchaser to purchase
and pay for the Securities is subject to the following conditions unless
waived
in writing by the Purchaser:
(a) The
representations and warranties of the Company contained in this Agreement
shall
be true and correct in all material respects (other than representations
and
warranties with a Material Adverse Effect qualifier, which shall be true
and
correct as written) on and as of the Closing Date; the Company shall have
complied in all material respects with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior
to the
Closing Date.
(b) None
of the issuance
and sale of the Securities pursuant to this Agreement or any of the transactions
contemplated by any of the other Transaction Documents shall be enjoined
(temporarily or permanently) and no restraining order or other injunctive
order
shall have been issued in respect thereof; and there shall not have been
any
legal action, order, decree or other administrative proceeding instituted
or, to
the Company’s knowledge, threatened against the Company or against any Purchaser
relating to the issuance of the Securities or any Purchaser’s activities in
connection therewith or any other transactions contemplated by this Agreement,
the other Transaction Documents or the Disclosure Documents
9
(c) The
Purchasers shall have received certificates, dated the Closing Date and signed
by the Chief Executive Officer and the Chief Financial Officer of the Company,
to the effect of paragraphs 5(a) and (b).
(d) The
Purchasers shall have received an opinion of counsel selected by the Company
with respect to the authorization of the Series B Stock, the Conversion Shares,
the Warrants and the Warrant Shares and other customary matters in the form
attached hereto as Exhibit C.
6. Representations
and Warranties of the Purchasers.
(a) Each
Purchaser and MAG represents and warrants to the Company that the Securities
to
be acquired by it hereunder (including the Conversion Shares and the Warrant
Shares that it may acquire upon conversion or exercise thereof, as the case
may
be) are being acquired for its own account for investment and with no intention
of distributing or reselling such Securities (including the Conversion Shares
and the Warrant Shares that it may acquire upon conversion or exercise thereof,
as the case may be) or any part thereof or interest therein in any transaction
which would be in violation of the securities laws of the United States of
America or any State. Nothing in this Agreement, however, shall prejudice
or
otherwise limit a Purchaser’s right to sell or otherwise dispose of all or any
part of such Conversion Shares or Warrant Shares under an effective registration
statement under the Securities Act and in compliance with applicable state
securities laws or under an exemption from such registration. By executing
this
Agreement, each Purchaser further represents that such Purchaser does not
have
any contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to any Person with respect to any of the
Securities.
(b) Each
Purchaser and MAG understands that the Securities (including the Conversion
Shares and the Warrant Shares that it may acquire upon conversion or exercise
thereof, as the case may be) have not been registered under the Securities
Act
and may not be offered, resold, pledged or otherwise transferred except
(a) pursuant to an exemption from registration under the Securities
Act
(and, if requested by the Company, based upon an opinion of counsel acceptable
to the Company) or pursuant to an effective registration statement under
the
Securities Act and (b) in accordance with all applicable securities
laws of
the states of the United States and other jurisdictions.
Each
Purchaser and MAG agrees to the imprinting, so long as appropriate, of the
following legend on the Securities (including the Conversion Shares and the
Warrant Shares that it may acquire upon conversion or exercise thereof, as
the
case may be):
The
shares of stock evidenced by this certificate have not been registered under
the
U.S. Securities Act of 1933, as amended, and may not be offered, sold, pledged
or otherwise transferred (“transferred”) in the absence of such registration or
an applicable exemption therefrom. In the absence of such registration, such
shares may not be transferred unless, if the Company requests, the Company
has
received a written opinion from counsel in form and substance satisfactory
to
the Company stating that such transfer is being made in compliance with all
applicable federal and state securities laws.
10
The
legend set forth above may be removed if and when the Conversion Shares or
the
Warrant Shares, as the case may be, are disposed of pursuant to an effective
registration statement under the Securities Act or in the opinion of counsel
to
the Company experienced in the area of United States Federal securities laws
such legends are no longer required under applicable requirements of the
Securities Act. The Series B Stock, the Warrants, the Conversion Shares and
the
Warrant Shares shall also bear any other legends required by applicable Federal
or state securities laws, which legends may be removed when in the opinion
of
counsel to the Company experienced in the applicable securities laws, the
same
are no longer required under the applicable requirements of such securities
laws. The Company agrees that it will provide each Purchaser, upon request,
with
a substitute certificate, not bearing such legend at such time as such legend
is
no longer applicable. Each Purchaser agrees that, in connection with any
transfer of the Conversion Shares or the Warrant Shares by it pursuant to
an
effective registration statement under the Securities Act, such Purchaser
will
comply with all prospectus delivery requirements of the Securities Act. The
Company makes no representation, warranty or agreement as to the availability
of
any exemption from registration under the Securities Act with respect to
any
resale of the Series B Stock, the Warrants, the Conversion Shares or the
Warrant
Shares.
(c) Each
Purchaser and MAG is an “accredited investor” within the meaning of Rule 501(a)
of Regulation D under the Securities Act. Neither Purchaser nor MAG learned
of
the opportunity to acquire Securities or any other security issuable by the
Company through any form of general advertising or public
solicitation.
(d) Each
Purchaser and MAG represents and warrants to the Company that it has such
knowledge, sophistication and experience in business and financial matters
so as
to be capable of evaluating the merits and risks of the prospective investment
in the Securities, having been represented by counsel, and has so evaluated
the
merits and risks of such investment and is able to bear the economic risk
of
such investment and, at the present time, is able to afford a complete loss
of
such investment.
(e) Each
Purchaser represents and warrants to the Company that (i) the purchase of
the
Securities to be purchased by it has been duly and properly authorized and
this
Agreement has been duly executed and delivered by it or on its behalf and
constitutes the valid and legally binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
generally and to general principles of equity; (ii) the purchase of
the
Securities to be purchased by it does not conflict with or violate its charter,
by-laws or any law, regulation or court order applicable to it; and
(iii) the purchase of the Securities to be purchased by it does not
impose
any penalty or other onerous condition on the Purchaser under or pursuant
to any
applicable law or governmental regulation.
11
(f) Each
Purchaser and MAG represents and warrants to the Company that neither it
nor any
of its directors, officers, employees, agents, partners, members, controlling
persons or shareholders holding 5% or more of the Common Stock outstanding
on
the Closing Date, has taken or will take, directly or indirectly, any actions
designed, or might reasonably be expected to cause or result in the
stabilization or manipulation of the price of the Common Stock.
(g) Each
Purchaser and MAG acknowledges it or its representatives have reviewed
the
Disclosure Documents and further acknowledges that it or its representatives
have been afforded (i) the opportunity to ask such questions as it has
deemed
necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Securities and
the
merits and risks of investing in the Securities; (ii) access to information
about the Company and the Company’s financial condition, results of operations,
business, properties, management and prospects sufficient to enable it
to
evaluate its investment in the Securities; and (iii) the opportunity to
obtain
such additional information which the Company possesses or can acquire
without
unreasonable effort or expense that is necessary to verify the accuracy
and
completeness of the information contained in the Disclosure
Documents.
(h) Each
Purchaser and MAG represents and warrants to the Company that it has based
its
investment decision solely upon the information contained in the Disclosure
Documents and such other information as may have been provided to it or
its
representatives by the Company in response to their inquiries, and has
not based
its investment decision on any research or other report regarding the Company
prepared by any third party (“Third Party Reports”).
Each Purchaser understands and acknowledges that (i) the Company does not
endorse any Third Party Reports and (ii) its actual results may differ
materially from those projected in any Third Party Report.
(i) Each
Purchaser and MAG understands and acknowledges that (i) any forward-looking
information included in the Disclosure Documents supplied to Purchaser
by the
Company or its management is subject to risks and uncertainties, including
those
risks and uncertainties set forth in the Disclosure Documents; and (ii)
the
Company’s actual results may differ materially from those projected by the
Company or its management in such forward-looking information.
(j) Each
Purchaser and MAG understands and acknowledges that (i) the Securities
are
offered and sold without registration under the Securities Act in a private
placement that is exempt from the registration provisions of the Securities
Act
and (ii) the availability of such exemption depends in part on,
and that
the Company and its counsel will rely upon, the accuracy and truthfulness
of the
foregoing representations and Purchaser hereby consents to such
reliance.
7. Covenants
of Purchasers Not to Short Stock. Commencing on the date hereof and
continuing until such time as the Series B Stock and Warrants are no longer
outstanding Purchasers, on behalf of themselves and their affiliates, hereby
covenant and agree not to offer to “short sell”, or contract to “short sell” the
securities of the Company against the unconverted Series B Stock or the
un-exercised Warrants. In the event that the Registration Statement is
not
deemed effective within 5 months after the Closing Date or if at anytime
after
initial effectiveness the Registration Statement is ineffective, then this
covenant shall toll until such time as the Registration Statement is
effective.
12
8. Termination.
(a) This
Agreement may be terminated in the sole discretion of the Company by notice
to
each Purchaser if at the Closing Date:
(i) the
representations and warranties made by any Purchaser in Section 6 are not
true
and correct in all material respects; or
(ii) as
to the
Company, the sale of the Securities hereunder (i) is prohibited or enjoined
by
any applicable law or governmental regulation or (ii) subjects the Company
to
any penalty, or in its reasonable judgment, other onerous condition under
or
pursuant to any applicable law or government regulation that would materially
reduce the benefits to the Company of the sale of the Securities to such
Purchaser, so long as such regulation, law or onerous condition was not in
effect in such form at the date of this Agreement.
(b) This
Agreement may be terminated by any Purchaser or MAG by notice to the Company
given in the event that the Company shall have failed, refused or been unable
to
satisfy all material conditions on its part to be performed or satisfied
hereunder on or prior to the Closing Date, or if after the execution and
delivery of this Agreement and immediately prior to the Closing Date, trading
in
securities of the Company on the OTCBB shall have been suspended.
(c) This
Agreement may be terminated by mutual written consent of all
parties.
9. Registration.
Within 30 days after the Closing Date, the Company shall prepare and file
with
the SEC a Registration Statement covering the resale of the maximum number
of
Conversion Shares issuable upon conversion of the Series B Stock and the
Warrant
Shares (collectively, the “Registrable Securities”),
as set forth in the Registration Rights Agreement attached hereto as Exhibit
D.
Within 100 days after filing the Registration Statement, such Registration
Statement must be declared effective by the SEC and the final prospectus
must be
filed with the SEC pursuant to Rule 424(b) with copies provided to Purchaser
and
MAG.
10. Event
of
Default. If an Event of Default (as defined below) occurs, the Purchasers
and MAG shall have the right to exercise any or all of the rights given to
the
Purchasers and MAG relating to the Securities, as further described in the
Certificate of Designations. In addition, the price at which the shares of
Series B Stock may be converted into Common Stock shall be reduced from 80%
of
the Market Price (as defined in the Certificate of Designations) to 70% of
the
Market Price, subject to the Ceiling Price and Floor Price as those terms
are
defined in the Certificate of Designations.
13
An
“Event of Default” shall include (a) the commencement
by the Company of a voluntary case or proceeding under the bankruptcy laws,
(b)
the breach by Company of any of the covenants or representations made herein,
or
(c) the Company’s failure to: (i) discharge or stay a bankruptcy proceeding
within 60 days of such action being taken against the Company, (ii) file
the
Registration Statement with the SEC within 30 days after the Closing Date,
(iii)
have the Registration Statement deemed effective by the SEC within 100
days
after the date of filing of the Registration Statement and maintain the
effectiveness thereafter; (iv) file the final prospectus with the SEC pursuant
to Rule 424(b) within 100 days after the date of filing of the Registration
Statement and deliver copies thereof to Purchaser and MAG, (v) maintain
trading
of the Company’s Common Stock on the OTCBB except for any periods when the stock
is listed on the NASDAQ Small Stock Market, the NASDAQ National Stock Market,
the AMEX or the NYSE, (vi) pay the expenses referred to below or the Due
Diligence Fee within three (3) days after the Closing; (vii) deliver to
Purchasers, or Purchasers’ broker, as directed, Common Stock that Purchasers
have converted within five (5) business days of such conversions; (viii)
pay any
Dividend (as defined in the Certificate of Designations) when due.
IN
THE EVENT THAT (A) THE COMPANY FAILS TO FILE THE REGISTRATION STATEMENT
WITH THE
SEC WITHIN 30 DAYS AFTER THE CLOSING DATE (B) THE REGISTRATION STATEMENT
IS NOT
DEEMED EFFECTIVE BY THE SEC WITHIN 90 DAYS AFTER INITIAL FILING, (C) THE
FINAL
PROSPECTUS IS NOT FILED WITH THE SEC WITHIN 100 DAYS AFTER THE REGISTRATION
STATEMENT IS INITIALLY FILED, OR (D) THE COMPANY FAILS TO MAINTAIN THE
EFFECTIVENESS OF THE REGISTRATION STATEMENT ONCE DEEMED EFFECTIVE, AS A
REMEDY
FOR SUCH AN EVENT OF DEFAULT, COMPANY SHALL PAY TO PURCHASERS, IN CASH,
$667 FOR
EACH DAY THAT SUCH AN EVENT OF DEFAULT REMAINS UNCURED. PAYMENT PURSUANT
TO THIS
PARAGRAPH SHALL BE DUE ON THE LAST DAY OF EACH MONTH DURING WHICH SUCH
DEFAULT
OCCURS. ANY PAYMENT NOT RECEIVED ON OR BEFORE THE
3RD DAY OF THE FOLLOWING MONTH
SHALL ACCRUE INTEREST AT THE RATE OF 10% PER ANNUM. PURCHASERS AND COMPANY
ACKNOWLEDGE AND AGREE THAT THEY HAVE MUTUALLY DISCUSSED THE IMPRACTICALITY
AND
EXTREME DIFFICULTY OF FIXING THE ACTUAL DAMAGES PURCHASERS WOULD INCUR
IN THE
CASE OF SUCH AN EVENT OF DEFAULT, AND THAT AS A RESULT OF SUCH DISCUSSION
THE
PARTIES AGREE THAT $667 FOR EACH DAY THAT THE REGISTRATION STATEMENT FILING
IS
DELAYED REPRESENTS A REASONABLE ESTIMATE OF THE ACTUAL DAMAGES WHICH PURCHASERS
WOULD INCUR IN THE CASE OF SUCH AN EVENT OF DEFAULT. PURCHASERS AND COMPANY
SPECIFICALLY AND EXPRESSLY AGREE TO ABIDE BY THE TERMS AND PROVISIONS OF
THIS
PARAGRAPH CONCERNING LIQUIDATED DAMAGES.
14
11. Notices.
All
communications hereunder shall be in writing and shall be hand delivered, mailed
by first-class mail, couriered by next-day air courier or by facsimile and
confirmed in writing (i) if to the Company, at the addresses set forth below,
or
(ii) if to a Purchaser or MAG, to the address set forth for such party on the
signature page hereto.
If
to the
Company:
Invisa,
Inc.
0000
00xx Xxxxxx Xxxx
Xxxxxxxx,
Xxxxxxx 00000
Attention:
Xx Xxxx, CFO
Telephone:
000-000-0000
Facsimile:
000-000-0000
with
a
copy to:
Xxxxx
X.
Xxxxxxxx, Esq.
Ellenoff
Xxxxxxxx & Schole LLP
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
XX 00000
Business: x0
(000) 000-0000
Business
Fax: x0 (000) 000-0000
Communications
shall be deemed to be given: (i) three (3) days after it is received if sent
by
facsimile at the address and number set forth above; provided that notices
given
by facsimile shall not be effective, unless either (a) a duplicate copy of
such
facsimile notice is promptly given by depositing the same in the mail, postage
prepaid and addressed to the party as set forth below or (b) the receiving
party
delivers a written confirmation of receipt for such notice by any other method
permitted under this paragraph; and further provided that any notice given
by
facsimile received after 5:00 p.m. (recipient’s time) or on a non-business day
shall be deemed received on the next business day; (ii) five (5) business days
after deposit in the United States mail, certified, return receipt requested,
postage prepaid, and addressed to the party as set forth below; or (iii) the
next business day after deposit with an international overnight delivery
service, postage prepaid, addressed to the party as set forth below with next
business day delivery guaranteed; provided that the sending party receives
confirmation of delivery from the delivery service provider.
12. Survival
Clause. The respective representations, warranties, agreements and covenants
of the Company and the Purchasers set forth in this Agreement shall survive
until the first anniversary of the Closing.
13. Fees
and
Expenses. Within three (3) days of Closing, the Company agrees to pay
Purchasers' legal expenses incurred in connection with the preparation and
negotiation of the Transaction Documents up to $5,000.
15
14. Legal
Fees. If any action at law or in equity is necessary to enforce or interpret
the terms of this Agreement, the Warrants or the Certificate of Designations,
the prevailing party or parties shall be entitled to receive from the other
party or parties reasonable attorneys’ fees, costs and necessary disbursements
in addition to any other relief to which the prevailing party or parties may
be
entitled.
15. 8K
Filing
and Press Releases. The Company shall file a Form 8K with the SEC within 5
trading days after the Closing Date setting forth the general terms of the
transaction. Neither party shall issue any press release relating to this
transaction without the prior written consent of the other party, which consent
shall not be unreasonably withheld or delayed.
16. Successors.
This Agreement shall inure to the benefit of and be binding upon Purchasers,
MAG
and the Company and their respective successors and legal representatives,
and
nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or
claim
under or in respect of this Agreement, or any provisions herein contained;
this
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit
of
no other person. Neither the Company nor any Purchaser may assign this Agreement
or any rights or obligation hereunder without the prior written consent of
the
other party.
17. No
Waiver;
Modifications in Writing. No failure or delay on the part of the Company,
MAG or any Purchaser in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof
or
the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to the Company, MAG or any Purchaser at law or in equity or otherwise.
No waiver of or consent to any departure by the Company, MAG or any Purchaser
from any provision of this Agreement shall be effective unless signed in writing
by the party entitled to the benefit thereof, provided that notice of any such
waiver shall be given to each party hereto as set forth below. Except as
otherwise provided herein, no amendment, modification or termination of any
provision of this Agreement shall be effective unless signed in writing by
or on
behalf of each of the Company, MAG and the Purchasers. Any amendment, supplement
or modification of or to any provision of this Agreement, any waiver of any
provision of this Agreement, and any consent to any departure by the Company,
MAG or any Purchaser from the terms of any provision of this Agreement shall
be
effective only in the specific instance and for the specific purpose for which
made or given. Except where notice is specifically required by this Agreement,
no notice to or demand on the Company in any case shall entitle the Company
to
any other or further notice or demand in similar or other
circumstances.
18. Entire
Agreement. This Agreement, together with Transaction Documents, constitutes
the entire agreement among the parties hereto and supersedes all prior
agreements, understandings and arrangements, oral or written, among the parties
hereto with respect to the subject matter hereof and thereof.
16
19. Severability.
If any provision of this Agreement is held to be invalid or unenforceable in
any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired
thereby.
20. APPLICABLE
LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND
CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO PROVISIONS
RELATING TO CONFLICTS OF LAW TO THE EXTENT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE PARTIES HEREBY IRREVOCABLY
AND UNCONDITIONALLY AGREE THAT ACTIONS, SUITS OR PROCEEDINGS ARISING OUT OF
OR
RELATING TO THIS AGREEMENT MAY BE BROUGHT ONLY IN STATE OR FEDERAL COURTS
LOCATED IN THE CITY OF LOS ANGELES, CALIFORNIA AND HEREBY SUBMIT TO
THE
EXCLUSIVE JURISDICTION OF SUCH COURTS FOR SUCH PURPOSE.
21. Counterparts.
This Agreement may be executed in two or more counterparts and may be delivered
by facsimile transmission, each of which shall be deemed an original, but all
of
which together shall constitute one and the same instrument.
22. If
the
foregoing correctly sets forth our understanding, please indicate your
acceptance thereof in the space provided below for that purpose, whereupon
this
Agreement shall constitute a binding agreement among the Company, the Purchasers
and MAG.
Very
truly yours,
INVISA,
INC.
|
||
|
|
|
By: | /s/ Xxxxxxx X. Xxxxxxx | |
Xxxxxxx A. Xxxxxxx |
||
Acting President |
17
Asset
Managers International, Ltd.
a
British Virgin Islands international business company
By:
______________________________
Print
Name: _______________________
Title:
_____________________________
|
Address
for notice to Asset Managers:
00
Xxxxx Xxxxxx, Xxxxxx, X0 U 6TQ, UK,
Attention:
Xxxxx Xxxxxxx;
With
a copy to: Asset Managers Int’l Ltd., c/o
Olympia
Capital (Ireland) Limited, Harcourt
Center,
0xx Xxxxx, Xxxxx 0, Xxxxxxxx Xxxx,
Xxxxxx
0, Xxxxxxx, Facsimile: 00(000) 000-0000
|
M.A.G.
CAPITAL, LLC
By:_____________________
Name:
Xxxxx Xxxxxxxxx
Its:
Managing Member
Mercator
Momentum Fund III, LP
By: M.A.G.
Capital, LLC
Its: General
Partner
_____________________
Xxxxx
Xxxxxxxxx
Managing
Member
Monarch
Pointe Fund, Ltd.
By:_____________________
Name:
Xxxxx Xxxxxxxxx
Its:
President
|
Addresses
for Notice to MAG, Mercator
Momentum
Fund III, LP and Monarch Pointe Fund, Ltd.:
M.A.G.
CAPITAL, LLC
000
Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxx Xxxxxxxxx
Facsimile:
(000) 000-0000
with
copy to:
Xxxxx
X. Xxxxx, Esq.
Sheppard,
Mullin, Xxxxxxx & Xxxxxxx LLP
000
Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Facsimile:
(000) 000-0000
|
|
Mercator
Momentum Fund III, LP
|
Monarch
Pointe Fund, Ltd.
|
Asset
Managers International, Ltd.
|
M.A.G.
CAPITAL, LLC
|
Total
|
|||||||||||
Purchase
Price
|
$
|
100,000
|
$
|
200,000
|
$
|
700,000
|
$
|
-
|
$
|
1,000,000
|
||||||
Series
B Stock
|
1,000
|
2,000
|
7,000
|
-
|
10,000
|
|||||||||||
Warrants
@ $0.30
|
198,000
|
402,000
|
1,750,000
|
150,000
|
2,500,000
|
18
Schedule
A
Direct
and Indirect Subsidiaries of INVISA, INC.
NONE
Schedule
B
Company
Capitalization
Authorized:
Preferred-
5,000,000 shares
Common-
95,000,000 shares
Outstanding
at June 30, 2005:
Preferred
Series
A
14,500 shares
Common
23,399,272
shares
Schedule
C
Piggy
back registration rights, convertible line of credit
Name
|
Dollar
Amount
|
Shares
of Common Stock Issuable
|
Xxxxx
Xxxxxxxx
|
$50,000/$50,000
option
|
666,666
shares and 666,666 option shares
|
Friday
Harbour, LLC
|
$150,000
line of credit
|
1,999,980
conversion
shares
|
Other
Arrangements
None
Schedule
D
Violations
None
Schedule
E
Use
of
Proceeds
$325,000
Expenses related to New Products
$150,000
Expenses relating to general Research and Development
$50,000
Expenses relating to IR & PR
$175,000
Expenses relating to Transaction and registration statement
$300,000
Working Capital
Schedule
F
Criminal
Records and Bankruptcies
None
Exhibit
A
Warrant
See
Attached
Exhibit
B
Certificate
of Designations of
Series
B
Convertible Preferred Stock
of
INVISA,
INC.
Exhibit
C
Form
of
Legal Opinion
1. The
Company
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Nevada, with corporate power to own its properties
and
to conduct its business.
2. The
Company
has the corporate power to execute, deliver and perform the Transaction
Documents, including the Exhibits, thereto. The Transaction Documents have
been
duly authorized by all requisite corporate action by the Company and constitute
the valid and binding obligations of the Company, enforceable in accordance
with
their terms (subject to bankruptcy, equitable principles and other customary
exceptions).
(a) The
authorized capital stock of the Company consists of 5,000,000 shares of
Preferred Stock, and 95,000,000 shares of Common Stock.
(b) The
shares of
the Company's Series B Stock have been duly authorized and, upon issuance,
delivery, and payment therefor as described in the Subscription Agreement,
will
be validly issued, fully paid and non-assessable.
(c) The
shares of
the Company’s Common Stock initially issuable upon conversion of the shares of
Series B Stock sold have been duly authorized and reserved for issuance and,
upon issuance and delivery upon conversion of the Series B Stock as described
in
the Certificate of Designations, will be validly issued, fully paid and
non-assessable.
(d) The
shares of
the Company's Common Stock issuable upon exercise of the Warrants have been
duly
authorized and reserved for issuance, and upon issuance, delivery, and payment
therefor in accordance with the Warrants, will be validly issued, fully paid
and
non-assessable.
3. The
Company's
execution and delivery of the Transaction Documents and the issue and sale
of
the Series B Stock and the Warrants, on the terms and conditions set forth
in
the Subscription Agreement, will not violate any law of the United States or
the
State of Nevada, any rule or regulation of any governmental authority or
regulatory body of the United States or the State of Nevada or any provision
of
the Company's Articles of Incorporation or Bylaws.
4. No
consent,
approval, order or authorization of, and no notice to or filing with, any
governmental agency or body or any court is required to be obtained or made
by
the Company for the issuance and sale of the Series B Stock and the Warrants
pursuant to the Transaction Documents, except such as have been obtained or
made
and such as may be required under applicable securities laws.
5. On
the
assumption that the representations of the Purchasers and MAG in the
Subscription Agreement are correct and complete, the offer and sale of the
Series B Stock and the Warrants pursuant to the terms of the Subscription
Agreement are exempt from the registration requirements of Section 5 of the
Securities Act of 1933, as amended, and from the qualification requirements
of
California securities statutes and regulations, and, under such securities
laws
as they presently exist, the issuance of the Company's Common Stock upon
conversion of the Series B Stock and exercise of the Warrants would also be
exempt from such registration and qualification requirements.
6. We
know of no
pending or overtly threatened action, proceeding or governmental investigation
with respect to the Company’s sale of Series B Stock and Warrants pursuant to
the Transaction Documents.
Exhibit
D
Registration
Rights Agreement
See
attached