EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "AGREEMENT") is dated as of
March 28, 2005, among Roaming Messenger, Inc., a Nevada corporation (the
"Company"), and Wings Fund, Inc. a Nevada corporation (the "INVESTOR").
WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act (as defined below),
and Rule 506 promulgated thereunder, the Company desires to issue and sell to
the Investor, and the Investor desires to purchase from the Company Five Million
(5,000,000) shares of Common Stock (as defined below) on the Closing Date (as
defined below).
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Investor agree as
follows:
ARTICLE I.
DEFINITIONS
1.1 DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:
"ACTION" shall have the meaning ascribed to such term in Section
3.1(j).
"AFFILIATE" means any Person that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with a Person as such terms are used in and construed under Rule 144. With
respect to Investor, any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as Investor will be deemed to
be an Affiliate of Investor.
"CLOSING" means the closing of the purchase and sale of the Common
Stock pursuant to Section 2.1.
"CLOSING DATE" means the Trading Day when all of the Transaction
Documents have been executed and delivered by the applicable parties thereto,
and all conditions precedent to (a) the Investors' obligations to pay the
Subscription Amount and (b) the Company's obligations to deliver the Shares have
been satisfied or waived.
"COMMISSION" means the United States Securities and Exchange
Commission.
"COMMON STOCK" means the common stock of the Company, $0.001 par value
per share, and any securities into which such common stock may hereafter be
reclassified.
"COMMON STOCK EQUIVALENTS" means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
shares of Common Stock, including without limitation, any debt, preferred stock,
rights, options, warrants or other instrument that is at any time convertible
into or exchangeable for, or otherwise entitles the holder thereof to receive,
shares of Common Stock.
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"COMPANY COUNSEL" means Sichenzia Ross Friedman Ference LLP, with
offices at 1065 Avenue of the Americas, New York, New York 10018, Tel: (212)
930-9700, Fax: (212) 930-9725.
"DISCLOSURE SCHEDULES" means the Disclosure Schedules of the Company
attached hereto and incorporated herein.
"EFFECTIVE DATE" means the date that a Registration Statement is first
declared effective by the Commission.
"ESCROW AGENT" means Company Counsel.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"INTELLECTUAL PROPERTY RIGHTS" shall have the meaning ascribed to such
term in Section 3.1(o).
"LIENS" means a lien, charge, security interest, encumbrance, right of
first refusal, preemptive right or other similar restriction.
"MATERIAL ADVERSE EFFECT" shall have the meaning ascribed to such term
in Section 3.1(b).
"MATERIAL PERMITS" shall have the meaning ascribed to such term in
Section 3.1(m).
"OTCBB" means the Over-The-Counter Bulletin Board.
"PER SHARE PURCHASE PRICE" equals $0.10.
"PERSON" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other legal entity of any kind.
"PROCEEDING" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition).
"REGISTRATION STATEMENT" means a registration statement meeting the
requirements set forth in the Registration Rights Agreement and covering the
resale by the Investors of the Shares or a portion thereof (as provided for in
the Registration Rights Agreement).
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date of this Agreement, by and among the Company and
each Investor, in the form of Exhibit A hereto.
"REQUIRED APPROVALS" shall have the meaning ascribed to such term in
Section 3.1(e).
"RULE 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
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"SEC REPORTS" shall have the meaning ascribed to such term in Section
3.1(h).
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means the shares of Common Stock issued or issuable to each
Investor pursuant to this Agreement.
"SUBSCRIPTION AMOUNT" means, as to Investor, $500,000, in United States
dollars and in immediately available funds.
"SUBSIDIARY" shall mean the subsidiaries of the Company, if any, set
forth on Schedule 3.1(a).
"TRADING DAY" means a day on which the Common Stock is traded on a
Trading Market.
"TRADING MARKET" means each of the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the date in question:
OTCBB, the American Stock Exchange, the New York Stock Exchange, the Nasdaq
National Market or the Nasdaq SmallCap Market.
"TRANSACTION DOCUMENTS" means this Agreement and the Registration
Rights Agreement and any other documents or agreements executed in connection
with the transactions contemplated hereunder.
ARTICLE II.
PURCHASE AND SALE
2.1 CLOSING. On the Closing Date, Investor shall purchase from the
Company, and the Company shall issue and sell to Investor, Five Million
(5,000,000) Shares at the Per Share Purchase Price for aggregate consideration
of $500,000. Upon satisfaction or waiver of the conditions set forth in Sections
2.2(a), (b), (c) and (d), the Closing shall occur at the offices of Company
Counsel or such other location as the parties shall mutually agree.
2.2 DELIVERIES; CLOSING CONDITIONS.
(a) On the Closing Date, the Company shall deliver or cause to be
delivered to Investor the following:
(i) this Agreement duly executed by the Company;
(ii) a copy of duly executed irrevocable instructions, which
shall be satisfactory in form and substance to the Investor,
to the Company's transfer agent instructing the transfer agent
to deliver, on an expedited basis, a certificate evidencing a
number of Shares equal to Investor's Subscription Amount
divided by the Per Share Purchase Price, registered in the
name of such Investor;
(iii) the Registration Rights Agreement duly executed by the
Company;
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(iv) the Escrow Agreement duly executed by the Company; and
(b) On the Closing Date, Investor shall deliver or cause to be
delivered to the Company the following:
(i) this Agreement duly executed by Investor;
(ii) Investor's Subscription Amount by wire transfer to the
Escrow Agent;
(iii) the Escrow Agreement duly executed by Investor; and
(iv) the Registration Rights Agreement duly executed by
Investor.
(c) All representations and warranties of the other party contained
herein shall remain true and correct in all material respects as of the Closing
Date and all covenants of the other party shall have been performed if due prior
to such date.
(d) From the date hereof to the Closing Date, trading in the Common
Stock shall not have been suspended by the Commission (except for any suspension
of trading of limited duration agreed to by the Company, which suspension shall
be terminated prior to the Closing), and, at any time prior to the Closing Date,
trading in securities generally shall not have been suspended or limited on any
Trading Market, nor shall a general commercial banking moratorium have been
declared either by the United States or New York State authorities, nor shall
there have occurred any material outbreak or escalation of hostilities or other
national or international calamity of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each case, in the
reasonable judgment of Investors representing a majority of the Subscription
Amounts made by all Investors, makes it impracticable or inadvisable to purchase
the Shares at the Closing.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as otherwise
set forth under the corresponding section of the Disclosure Schedules attached
hereto, which Disclosure Schedules shall be deemed a part hereof, the Company
hereby represents and warrants as of the date hereof and as of the Closing Date
to each Investor as follows:
(a) SUBSIDIARIES. All of the direct and indirect Subsidiaries of the
Company are set forth on Schedule 3.1(a). The Company owns, directly or
indirectly, all of the capital stock or other equity interests of each
Subsidiary free and clear of any Liens, and all the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to subscribe for
or purchase such securities. If the Company has no subsidiaries, then references
in the Transaction Documents to the Subsidiaries will be disregarded.
(b) ORGANIZATION AND QUALIFICATION. Each of the Company and the
Subsidiaries is an entity duly incorporated or otherwise organized, validly
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existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted except where failure to be so qualified, organized or
have such power and authority would not reasonably be expected to have a
Material Adverse Effect (as defined below). Neither the Company nor any
Subsidiary is in violation or default of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries is duly qualified to
conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, would not
have or reasonably be expected to result in (i) a material adverse effect on the
legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business or
financial condition of the Company and the Subsidiaries, taken as a whole, or
(iii) a material adverse effect on the Company's ability to perform in any
material respect on a timely basis its obligations under any Transaction
Document (any of (i), (ii) or (iii), a "Material Adverse Effect"), and to the
knowledge of the Company, no Proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.
(c) AUTHORIZATION; ENFORCEMENT. The Company has the requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated by each of the Transaction Documents to which it is a
party and otherwise to carry out its obligations thereunder. The execution,
delivery and performance by the Company of each of the Transaction Documents to
which it is a party and the consummation by it of the transactions contemplated
thereby have been duly authorized by all necessary action on the part of the
Company and no further action is required by the Company in connection therewith
other than in connection with the Required Approvals. Each Transaction Document
to which it is a party has been (or upon delivery will have been) duly executed
by the Company and, when delivered in accordance with the terms hereof, will
constitute the valid and legally binding obligation of the Company enforceable
against the Company in accordance with its terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) as the rights to
indemnification or contribution hereunder and thereunder may be limited by
applicable law.
(d) NO CONFLICTS. The execution, delivery and performance by the
Company of the Transaction Documents to which it is a party, the issuance and
sale of the Shares and the consummation by the Company of the other transactions
contemplated thereby do not and will not (i) conflict with or violate any
provision of the Company's or any Subsidiary's certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, result in the creation of any Lien
upon any of the properties or assets of the Company or any Subsidiary, or give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument evidencing a Company or Subsidiary debt or
otherwise or other understanding to which the Company or any Subsidiary is a
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party or by which any property or material asset of the Company or any
Subsidiary is bound, or (iii) subject to the Required Approvals, conflict with
or result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound, or (iv) violate the terms of any agreement by
which the Company or any Subsidiary is bound or to which any property or asset
of the Company or any Subsidiary is bound; except in the case of each of clauses
(ii), (iii) and (iv), such as would not have or reasonably be expected to result
in a Material Adverse Effect.
(e) FILINGS, CONSENTS AND APPROVALS. The Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents,
other than (i) filings required pursuant to Section 4.4 of this Agreement, (ii)
the filing with the Commission of the Registration Statement, (iii)
application(s) to each applicable Trading Market for the listing of the Shares
for trading thereon in the time and manner required thereby, (iv) the filing of
Form D with the Commission and such filings as are required to be made under
applicable state securities laws, (v) any other filings required to be made
pursuant to the terms of the Registration Rights Agreement, and (vi) the notices
set forth on Schedule 3.1(e) (collectively, the "Required Approvals").
(f) ISSUANCE OF THE SHARES. The Shares have been duly authorized and,
when issued and paid for in accordance with the terms of the Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens imposed by the Company other than restrictions on
transfer provided for in the Transaction Documents and under applicable federal
and state securities laws. The Company has reserved from its duly authorized
capital stock the maximum number of shares of Common Stock issuable pursuant to
this Agreement.
(g) CAPITALIZATION. Since March 21, 2005, the Company has not issued
any capital stock other than pursuant to the exercise of employee stock options
under the Company's stock option plans, the issuance of shares of Common Stock
to employees pursuant to the Company's employee stock purchase plan and pursuant
to the conversion or exercise of outstanding Common Stock Equivalents
outstanding. No Person has any right of first refusal, preemptive right, right
of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as a result of the purchase
and sale of the Shares, and except for warrants and shares issuable to certain
advisors listed on Schedule 3.1(g), there are no outstanding options, warrants,
script rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. The issue and sale of the Shares will
not obligate the Company to issue shares of Common Stock or other securities to
any Person (other than the Investors) and will not result in a right of any
holder of Company securities to adjust the exercise, conversion, exchange or
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reset price under such securities. All of the outstanding shares of capital
stock of the Company are validly issued, fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws, and none of
such outstanding shares were issued in violation of any preemptive rights or
similar rights to subscribe for or purchase securities. No further approval or
authorization of any shareholder, the Board of Directors of the Company or
others is required for the issuance and sale of the Shares. Except as disclosed
in the SEC Reports, there are no shareholders agreements, voting agreements or
other similar agreements with respect to the Company's capital stock to which
the Company is a party or, to the knowledge of the Company, between or among any
of the Company's shareholders.
(h) SEC REPORTS; FINANCIAL STATEMENTS. The Company has filed all
reports required to be filed by it under the Exchange Act, including without
limitation, those filed pursuant to Section 13(a) or 15(d) thereof, for the two
years preceding the date hereof the foregoing materials, including the exhibits
thereto, being collectively referred to herein as the "SEC Reports") on a timely
basis or has received a valid extension of such time of filing and has filed any
such SEC Reports prior to the expiration of any such extension. As of their
respective dates, the SEC Reports complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder, and none of the SEC Reports, when filed, 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
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Reports comply as to
form in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance with
United States generally accepted accounting principles applied on a consistent
basis during the periods involved ("GAAP"), except as may be otherwise specified
in such financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by GAAP, and fairly
present in all material respects the financial position of the Company and its
consolidated subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments.
(i) MATERIAL CHANGES. Since December 31, 2004, except as specifically
disclosed in the SEC Reports, (i) there has been no event, occurrence or
development that has had or that would reasonably be expected to result in a
Material Adverse Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (A) liabilities incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company's financial statements pursuant to GAAP
or required to be disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting, (iv) the Company has not
declared or made any dividend or distribution of cash or other property to its
shareholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock and (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except pursuant to existing
Company stock option plans. The Company does not have pending before the
Commission any request for confidential treatment of information.
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(j) LITIGATION. There is no action, suit, inquiry, notice of violation
or proceeding pending or, to the knowledge of the Company, threatened, nor, to
the knowledge of the Company, is any investigation pending or threatened,
against the Company, any Subsidiary or any of their respective properties before
or by any court, arbitrator, governmental or administrative agency or regulatory
authority (federal, state, county, local or foreign) (collectively, an "Action")
which (i) challenges the legality, validity or enforceability of any of the
Transaction Documents or the Shares or (ii) would, if there were an unfavorable
decision, have or reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any Subsidiary, nor to the knowledge of the Company, any
director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws or a
claim of breach of fiduciary duty. There has not been, and to the knowledge of
the Company, there is not pending, any investigation by the Commission involving
the Company or any current or former director or officer of the Company. The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.
(k) LABOR RELATIONS. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company or any Subsidiary which would reasonably be expected to result in a
Material Adverse Effect.
(l) COMPLIANCE. Neither the Company nor any Subsidiary (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received written notice of a claim that it is in default under, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not such
default or violation has been waived), (ii) is in violation of any order of any
court, arbitrator or governmental body, or (iii) is in violation of any statute,
rule or regulation of any governmental authority, including without limitation
all foreign, federal, state and local laws applicable to its business, except in
each case as would not have a Material Adverse Effect.
(m) REGULATORY PERMITS. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits would not have or reasonably be expected to result in a
Material Adverse Effect ("Material Permits"), and neither the Company nor any
Subsidiary has received any written notice of proceedings relating to the
revocation or modification of any Material Permit.
(n) TITLE TO ASSETS. The Company and the Subsidiaries have good,
marketable and fee simple title to all real property owned by them that is
material to the business of the Company and the Subsidiaries and valid title in
all personal property owned by them that is material to the business of the
Company and the Subsidiaries, in each case free and clear of all Liens, except
for Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company and the Subsidiaries and Liens for the payment of federal, state
or other taxes, the payment of which is neither delinquent nor subject to
penalties. Any real property and facilities held under lease by the Company and
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the Subsidiaries are held by them under valid, subsisting and enforceable leases
and no landlord for any such real property or facility has notified the Company
or any such Subsidiary that any of them are in default under any such lease.
(o) PATENTS AND TRADEMARKS. The Company and the Subsidiaries have, or
have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights necessary or material for use in connection with their respective
businesses as described in the SEC Reports and which the failure to so have
would have a Material Adverse Effect (collectively, the "Intellectual Property
Rights"). Neither the Company nor any Subsidiary has received a written notice
that the Intellectual Property Rights used by the Company or any Subsidiary
violates or infringes upon the rights of any Person. To the knowledge of the
Company, all such Intellectual Property Rights are enforceable and there is no
known existing infringement by another Person of any of the Intellectual
Property Rights of others which would have a Material Adverse Effect.
(p) INSURANCE. The Company and the Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as the Company believes are prudent and customary in the businesses in
which the Company and the Subsidiaries are engaged. Neither the Company nor any
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 without a significant increase in cost.
(q) TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. Except as set forth in
the SEC Reports and in Schedule 3.1(q), none of the officers or directors of the
Company and, to the knowledge of the Company, none of the employees of the
Company is presently a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, in each case in excess of $60,000
other than (i) for payment of salary or consulting fees for services rendered,
(ii) reimbursement for expenses incurred on behalf of the Company and (iii) for
other benefits under benefit or pension plans sponsored by the Company,
including without limitation stock option agreements under any stock option plan
of the Company.
(r) SARBANES-OXLEY; INTERNAL ACCOUNTING CONTROLS. The Company is in
material compliance with all provisions of the Sarbanes-Oxley Act of 2002 which
are applicable to it as of the Closing Date. To the extent required by
applicable law, the Company and the 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 GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. To
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the extent required by applicable law, the Company has established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and designed such disclosure controls and procedures
to ensure that material information relating to the Company, including its
Subsidiaries, is made known to the certifying officers by others within those
entities. To the extent required by applicable law, the Company's certifying
officers have evaluated the effectiveness of the Company's controls and
procedures as of the end of the period covered by its most recently filed
periodic report under the Exchange Act (the date of such evaluation, the
"Evaluation Date"). To the extent required by applicable law, the Company
presented in its most recently filed periodic report under the Exchange Act the
conclusions of the certifying officers about the effectiveness of the disclosure
controls and procedures based on their evaluations as of the Evaluation Date and
since the Evaluation Date, there have been no significant changes in the
Company's internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) or, to the best of the Company's knowledge, in
other factors that could significantly affect the Company's internal controls.
(s) CERTAIN FEES. No brokerage or finder's fees or commissions are or
will be payable by the Company or any Subsidiary to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or other
Person with respect to the transactions contemplated by this Agreement. To the
knowledge of the Company, the Investors shall have no obligation with respect to
any fees or with respect to any claims made against the Company by or on behalf
of other Persons for fees of a type contemplated in this Section that may be due
in connection with the transactions contemplated by this Agreement.
(t) PRIVATE PLACEMENT. Assuming the accuracy of the Investor's
representations and warranties set forth in Section 3.2, no registration under
the Securities Act is required for the offer and sale of the Shares by the
Company to the Investors as contemplated hereby. The issuance and sale of the
Shares hereunder does not contravene the rules and regulations of the Trading
Market.
(u) INVESTMENT COMPANY. The Company is not, and is not an Affiliate of,
and immediately after receipt of payment for the Shares, will not be or be an
Affiliate of, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(v) REGISTRATION RIGHTS. No person has any right to cause the Company
to effect the registration under the Securities Act of any securities of the
Company.
(w) LISTING AND MAINTENANCE REQUIREMENT. The Company's Common Stock is
registered pursuant to Section 12(g) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act nor has the Company received any written notification that the Commission is
contemplating terminating such registration.
(x) APPLICATION OF TAKEOVER PROTECTIONS. The Company and its Board of
Directors have taken no action, to render inapplicable any laws of its state of
incorporation that is or could become applicable to the Investors as a result of
the Investors and the Company fulfilling their obligations or exercising their
rights under the Transaction Documents, including without limitation the
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Company's issuance of the Shares and the Investors' ownership of the Shares and
there is no control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar anti
takeover provision under the Company's Certificate of Incorporation (or similar
charter documents).
(y) DISCLOSURE. Except as set forth in Schedule 3.1(y) and except for
terms of the Transaction Documents and the fact that the Company is considering
consummating the transactions contemplated therein, the Company confirms that,
neither the Company nor any other Person acting on its behalf has provided any
of the Investors or their agents or counsel with any information in writing that
constitutes or might constitute material, non-public information. The Company
understands and confirms that the Investors will rely on the foregoing
representations and covenants in effecting transactions in securities of the
Company. All disclosure provided to the Investors regarding the Company, its
business and the transactions contemplated hereby, including the Schedules to
this Agreement, furnished by or on behalf of the Company with respect to the
representations and warranties made herein are true and correct with respect to
such representations and warranties 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 light of the circumstances under which they were
made, not misleading. The Company acknowledges and agrees that no Investor makes
or has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 3.2
hereof.
(z) NO INTEGRATED OFFERING. Assuming the accuracy of the Investors'
representations and warranties set forth in Section 3.2, neither the Company,
nor any of its affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would cause this
offering of the Shares to be integrated with prior offerings by the Company for
purposes of the Securities Act or any applicable shareholder approval
provisions, including, without limitation, under the rules and regulations of
the Trading Market.
(aa) SOLVENCY. Based on the financial condition of the Company as of
the Closing Date after giving effect to the receipt by the Company of the
proceeds from the sale of the Shares hereunder, (i) the Company's fair saleable
value of its assets exceeds the amount that will be required to be paid on or in
respect of the Company's existing debts and other liabilities (including known
contingent liabilities) as they mature; (ii) the Company's assets do not
constitute unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the
business conducted by the Company, and projected capital requirements and
capital availability thereof; and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash, would
be sufficient to pay all amounts on or in respect of its debt when such amounts
are required to be paid. The Company does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).
(bb) FORM SB-2 ELIGIBILITY. The Company is eligible to register the
resale of its Common Stock by the Investors under Form SB-2 promulgated under
the Securities Act.
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(cc) TAXES. Except for matters that would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and each Subsidiary has filed all necessary federal, state
and foreign income and franchise tax returns and has paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any Subsidiary.
(dd) GENERAL SOLICITATION. Neither the Company nor any person acting on
behalf of the Company has offered or sold any of the Shares by any form of
general solicitation or general advertising. The Company has offered the Shares
for sale only to the Investors and certain other "accredited investors" within
the meaning of Rule 501 under the Securities Act.
(ee) FOREIGN CORRUPT PRACTICES. Neither the Company, nor to the
knowledge of the Company, any agent or other person acting on behalf of the
Company, has (i) directly or indirectly, used any corrupt funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any person
acting on its behalf of which the Company is aware) which is in violation of
law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.
(ff) AUDITOR. The Company's auditors are set forth on Schedule 3.1(ff)
of the Disclosure Schedule. To the Company's knowledge, such auditors are
independent auditors as required by the Securities Act.
(gg) ACKNOWLEDGMENT REGARDING INVESTOR'S PURCHASE OF SHARES. The
Company further acknowledges that no Investor is acting as a financial advisor
or fiduciary of the Company (or in any similar capacity) with respect to this
Agreement and the transactions contemplated hereby.
3.2 Representations and Warranties of the Investor. Investor hereby
represents and warrants as of the date hereof and as of the Closing Date to the
Company as follows:
(a) ORGANIZATION; AUTHORITY. Investor is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with full right, corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations thereunder. The execution,
delivery and performance by Investor of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate or similar action
on the part of Investor. Each Transaction Document to which it is party has been
duly executed by Investor, and when delivered by Investor in accordance with the
terms hereof, will constitute the valid and legally binding obligation of
Investor, enforceable against it in accordance with its terms, except (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
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(b) INVESTMENT INTENT. Investor understands that the Shares are
"restricted securities" and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Shares as principal for
its own account for investment purposes only and not with a view to or for
distributing or reselling such Shares or any part thereof, has no present
intention of distributing any of such Shares and has no arrangement or
understanding with any other persons regarding the distribution of such Shares
(this representation and warranty not limiting Investor's right to sell the
Shares pursuant to the Registration Statement or otherwise in compliance with
applicable federal and state securities laws). Investor is acquiring the Shares
hereunder in the ordinary course of its business. Investor does not have any
agreement or understanding, directly or indirectly, with any Person to
distribute any of the Shares.
(c) INVESTOR STATUS. At the time Investor was offered the Shares, it
was, and at the date hereof it is an "accredited investor" under the Securities
Act.
(d) EXPERIENCE OF SUCH INVESTOR. Investor, either alone or together
with its representatives, 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 Shares, and has so evaluated the
merits and risks of such investment. Investor is able to bear the economic risk
of an investment in the Shares and, at the present time, is able to afford a
complete loss of such investment.
(e) GENERAL SOLICITATION. Investor is not purchasing the Shares as a
result of any advertisement, article, notice or other communication regarding
the Shares published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or any other general
solicitation or general advertisement.
(f) INVESTORS ACTING INDIVIDUALLY. Investor is acting severally as an
individual and is not acting together with any other Person or other Investor as
a group.
(g) OPPORTUNITY TO CONDUCT DUE DILIGENCE. Investor was granted the
opportunity to conduct due diligence prior to entering into the transactions
contemplated by this Agreement.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 TRANSFER RESTRICTIONS.
(a) The Investor hereby acknowledges that the Shares may only be
disposed of in compliance with state and federal securities laws. In connection
with any transfer of Shares other than pursuant to an effective registration
statement or Rule 144, to the Company or to an Affiliate of Investor or in
connection with a pledge as contemplated in Section 4.1(b), the Company may
require the transferor thereof to provide to the Company an opinion of counsel
selected by the transferor and reasonably acceptable to the Company, the form
and substance of such opinion shall be reasonably satisfactory to the Company,
to the effect that such transfer does not require registration of such
transferred Shares under the Securities Act. As a condition of any such
transfer, any such transferee shall agree in writing to be bound by the terms of
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this Agreement and shall have the rights of Investor under this Agreement and
the Registration Rights Agreement, as applicable.
(b) The Investor agrees to the imprinting, so long as is required by
this Section 4.1(b), of a legend on any of the Shares in the following form:
THESE SHARES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY. THESE SHARES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A
REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN
RULE 501(a) UNDER THE SECURITIES ACT.
(c) The Company acknowledges and agrees that Investor may from time to
time pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Shares to a
financial institution that is an "accredited investor" as defined in Rule 501(a)
under the Securities Act and who agrees to be bound by the provisions of this
Agreement and the Registration Rights Agreement and, if required under the terms
of such arrangement, Investor may transfer pledged or secured Shares to the
pledgees or secured parties. Such a pledge or transfer would not be subject to
approval of the Company and no legal opinion of legal counsel of the pledgee,
secured party or pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At the Investor's expense, the Company
will execute and deliver such reasonable documentation as a pledgee or secured
party of Shares may reasonably request in connection with a pledge or transfer
of the Shares, including, if the Shares are subject to registration pursuant to
the Registration Rights Agreement, the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) under the Securities Act or other
applicable provision of the Securities Act to appropriately amend the list of
Selling Stockholders thereunder.
(d) Certificates evidencing the Shares shall not contain any legend
(including the legend set forth in Section 4.1(b)), (i) while a registration
statement (including the Registration Statement) covering the resale of such
security is effective under the Securities Act, or (ii) following any sale of
such Shares pursuant to Rule 144, or (iii) if such Shares are eligible for sale
14
under Rule 144(k), or (iv) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the Staff of the Commission). The Company shall cause
its counsel to issue a legal opinion to the Company's transfer agent promptly
after the Effective Date if required by the Company's transfer agent to effect
the removal of the legend hereunder. The Company agrees that following the
Effective Date or at such time as such legend is no longer required under this
Section 4.1(d), it will, no later than seven (7) Trading Days following the
delivery by a Investor to the Company or the Company's transfer agent of a
certificate representing Shares, issued with a restrictive legend (such date,
the "Legend Removal Date"), deliver or cause to be delivered to such Investor a
certificate representing such Shares that is free from all restrictive and other
legends. The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section.
(e) Investor agrees that the removal of the restrictive legend from
certificates representing Shares as set forth in this Section 4.1 is predicated
upon the Company's reliance that the Investor will sell any Shares pursuant to
either the registration requirements of the Securities Act, including any
applicable prospectus delivery requirements, or an exemption therefrom.
(f) Until 45 days after the Effective Date, the Company shall not
undertake a reverse or forward stock split or reclassification of the Common
Stock without the prior written consent of the Investors holding a majority in
interest of the Shares.
4.2 FURNISHING OF INFORMATION. As long as Investor owns Shares, the
Company covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act. As long as Investor
owns Shares, if the Company is no longer required to file reports pursuant to
the Exchange Act (or if such filings are not otherwise generally available on
the Internet free of charge), it will prepare and furnish to Investor (upon
receipt of a written request) and make publicly available in accordance with
Rule 144(c) such information as is required for Investor to sell the Shares
under Rule 144. The Company further covenants that it will take such further
action as any holder of Shares may reasonably request, all to the extent
required from time to time to enable such Person to sell such Shares without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144.
4.3 INTEGRATION. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Shares in a manner that would require the registration under the
Securities Act of the sale of the Shares to Investor or that would be integrated
with the offer or sale of the Shares for purposes of the rules and regulations
of any Trading Market such that it would require shareholder approval prior to
the closing of such other transaction unless shareholder approval is obtained
before the closing of such subsequent transaction.
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4.4 SECURITIES LAWS DISCLOSURE; PUBLICITY.
(a) Provided that the Company has received each item required to be
delivered by Investor pursuant to Section 2.2(b), the Company shall file a
Current Report on Form 8-K disclosing the material terms of the transactions
contemplated hereby. Neither the Company nor Investor shall issue any press
release with respect to the transaction contemplated hereby or otherwise make
any such public statement without the prior consent of the Company, which
consent shall not unreasonably be withheld, except if such disclosure is
required by law, in which case the disclosing party shall promptly provide the
other party with prior notice of such public statement or communication.
(b) Investor shall make all required filings under the Securities Laws
with respect to Investor's acquisition of the Shares.
4.5 SHAREHOLDERS RIGHTS PLAN. No claim will be made or enforced by the
Company or, to the knowledge of the Company, any other Person that Investor is
an "Acquiring Person" under any shareholders rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that any Investor
could be deemed to trigger the provisions of any such plan or arrangement, by
virtue of receiving Shares under the Transaction Documents.
4.6 NON-PUBLIC INFORMATION. Except as may be required to comply with
the terms and conditions of this Agreement, the Company covenants and agrees
that neither it nor any other Person acting on its behalf will provide any
Investor or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such Investor
shall have executed a written agreement regarding the confidentiality and use of
such information. The Company understands and confirms that each Investor shall
be relying on the foregoing representations in effecting transactions in
securities of the Company.
4.7 USE OF PROCEEDS. The Company shall use the net proceeds from the
sale of the Shares hereunder for general corporate and strategic purposes,
including, but not limited to, working capital and in connection with
acquisitions, joint ventures and other similar transactions, and not for the
satisfaction of any portion of the Company's debt (other than payment of trade
payables in the ordinary course of the Company's business and prior practices),
to redeem any Company equity or equity equivalent securities or to settle any
outstanding litigation.
4.8 INDEMNIFICATION OF INVESTORS. Subject to the provisions of this
Section 4.8, the Company will indemnify and hold Investor harmless from any and
all losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including without limitation all judgments, amounts paid in
settlements, court costs and reasonable attorneys' fees and costs of
investigation that Investor may suffer or incur as a result of or relating to
(a) any breach of any of the representations, warranties, covenants or
agreements made by the Company in this Agreement or in the other Transaction
Documents or (b) any action instituted against (i) Investor, or (ii) Investor,
by any shareholder of the Company who is not an Affiliate of Investor, with
respect to any of the transactions contemplated by the Transaction Documents
(unless such action is based upon a breach of such Investor's representation,
warranties, covenants or agreements under the Transaction Documents or any
agreements or understandings Investor may have with any such shareholder or any
violations by the Investor of state or federal securities laws or any conduct by
such Investor which constitutes fraud, gross negligence, willful misconduct or
malfeasance). If any action shall be brought against Investor in respect of
16
which indemnity may be sought pursuant to this Agreement, Investor shall
promptly notify the Company in writing, and the Company shall have the right to
assume the defense thereof with counsel of its own choosing. Investor shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of Investor except to the extent that (i) the employment thereof has
been specifically authorized by the Company in writing, (ii) the Company has
failed after a reasonable period of time to assume such defense and to employ
counsel or (iii) in such action there is, in the reasonable opinion of such
separate counsel, a material conflict on any material issue between the position
of the Company and the position of Investor. The Company will not be liable to
Investor under this Agreement (i) for any settlement by Investor effected
without the Company's prior written consent, which shall not be unreasonably
withheld or delayed; or (ii) to the extent, but only to the extent that a loss,
claim, damage or liability is attributable to Investor's breach of any of the
representations, warranties, covenants or agreements made by the Investors in
this Agreement or in the other Transaction Documents.
4.9 RESERVATION OF COMMON STOCK. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue Shares pursuant to this
Agreement.
4.10 LISTING OF COMMON STOCK. The Company hereby agrees to use
commercially reasonable efforts to maintain the listing of the Common Stock on a
Trading Market, and as soon as reasonably practicable following the Closing (but
not later than the earlier of the Effective Date and the first anniversary of
the Closing Date) to list all of the Shares on such Trading Market. The Company
further agrees, if the Company applies to have the Common Stock traded on any
other Trading Market, it will include in such application all of the Shares, and
will take such other action as is necessary to cause all of the Shares to be
listed on such other Trading Market as promptly as possible. The Company will
take all action commercially reasonable and necessary to (a) continue the
listing and trading of its Common Stock on a Trading Market and (b) comply in
all respects with the Company's reporting, filing and other obligations under
the bylaws or rules of such Trading Market.
4.11 DELIVERY OF SHARES AFTER CLOSING. The Company shall deliver, or
cause to be delivered, the Shares purchased by Investor to Investor within three
(3) Trading Days of the Closing Date.
4.12 CONSOLIDATION; MERGER. The Company shall not during the period
commencing on the date hereof and ending on the Effective Date, effect any
merger or consolidation of the Company with or into, or a transfer of all or
substantially all the assets of the Company to another entity (a "Consolidation
Event") unless the resulting successor or acquiring entity (if not the Company)
assumes by written instrument the Company's obligations pursuant to this
Agreement.
17
ARTICLE V.
MISCELLANEOUS
5.1 FEES AND EXPENSES. Each party shall pay the fees and expenses of
its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement. The Company shall pay all
stamp and other taxes and duties levied in connection with the sale of the
Shares.
5.2 ENTIRE AGREEMENT. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
5.3 NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile with confirmation of
receipt at the facsimile number set forth on the signature pages attached hereto
prior to 6:30 p.m. (California time) on a Trading Day, (b) the next Trading Day
after the date of transmission, if such notice or communication is delivered via
facsimile with confirmation of receipt at the facsimile number set forth on the
signature pages attached hereto on a day that is not a Trading Day or later than
6:30 p.m. (California time) on any Trading Day, (c) the second Trading Day
following the date of mailing, if sent by a nationally recognized overnight
courier service in the United States, or (d) upon actual receipt by the party to
whom such notice is required to be given. The address for such notices and
communications shall be as set forth on the signature pages attached hereto.
5.4 AMENDMENTS; WAIVERS. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and each Investor or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right.
5.5 CONSTRUCTION. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. 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.
5.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of each Investor. Any Investor may
assign any or all of its rights under this Agreement to any Person to whom such
Investor assigns or transfers any Shares, provided such transferee agrees in
writing to be bound, with respect to the transferred Shares, by the provisions
hereof that apply to the "Investors."
18
5.7 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.8.
5.8 GOVERNING LAW. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
California, without regard to the principles of conflicts of law thereof. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the county of Santa Barbara, California, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), 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 improper or inconvenient venue for such
proceeding. 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 via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for 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. The parties hereby waive all rights to a trial by jury. If
either party shall commence an action or proceeding to enforce any provisions of
this Agreement, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its reasonable attorneys fees and expenses and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.
5.9 SURVIVAL. The representations and warranties herein shall survive
the Closing and delivery of the Shares until the third anniversary hereof.
5.10 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together 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, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
5.11 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 and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
5.12 RESCISSION AND WITHDRAWAL RIGHT. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Investor exercises a right, election, demand
or option under a Transaction Document and the Company does not timely perform
its related obligations within the periods therein provided, then such Investor
19
may rescind or withdraw, in its sole discretion from time to time upon written
notice to the Company, any relevant notice, demand or election in whole or in
part without prejudice to its future actions and rights.
5.13 REPLACEMENT OF SHARES. If any certificate or instrument evidencing
any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Shares.
5.14 REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Investors and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
5.15 PAYMENT SET ASIDE. To the extent that the Company makes a payment
or payments to any Investor pursuant to any Transaction Document or a Investor
enforces or exercises its rights 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.
5.16 LIQUIDATED DAMAGES. The Company's obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid notwithstanding the
fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.
(Signature Pages Follow)
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IN WITNESS WHEREOF, the parties hereto have caused this Shares Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
ROAMING MESSENGER, INC. Address for Notice:
------------------
By: _________________________________ 50 Castilian Drive
Name: Suite A
Title: Santa Barbara, CA 93117
With a copy to (which shall not constitute notice):
SICHENZIA ROSS FRIEDMAN FERENCE LLP
1065 Avenue of the Americas
New York, New York 10018
Tel: (212) 930-9700
Fax: (212) 930-9725
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR INVESTORS FOLLOW]
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[INVESTOR SIGNATURE PAGES TO SHARES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Shares Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
Name of Investing Entity: Wings Fund, Inc.
Signature of Authorized Signatory of Investing Entity: _________________________
Name of Authorized Signatory: James L. Bartlett III
Title of Authorized Signatory: __________________________
Address for Notice of Investing Entity:
Wings Fund, Inc.
5662 Calle Real #115
Santa Barbara, CA 93117
Address for Delivery of Shares for Investing Entity (if not same as above):
Subscription Amount: $500,000
Shares: 5,000,000
EIN Number:
[SIGNATURE PAGES CONTINUE]
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