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BRIDGE LOAN AGREEMENT BY AND BETWEEN V2K INTERNATIONAL, INC. AND AMERIVON INVESTMENTS LLC

Bridge Loan Agreement

BRIDGE LOAN AGREEMENT BY AND BETWEEN
V2K INTERNATIONAL, INC. AND AMERIVON INVESTMENTS LLC | Document Parties: V2K INTERNATIONAL INC | AMERIVON INVESTMENTS LLC You are currently viewing:
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V2K INTERNATIONAL INC | AMERIVON INVESTMENTS LLC

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Title: BRIDGE LOAN AGREEMENT BY AND BETWEEN V2K INTERNATIONAL, INC. AND AMERIVON INVESTMENTS LLC
Governing Law: Nevada     Date: 6/12/2008

BRIDGE LOAN AGREEMENT BY AND BETWEEN
V2K INTERNATIONAL, INC. AND AMERIVON INVESTMENTS LLC, Parties: v2k international inc , amerivon investments llc
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EXHIBIT 10.1
 
BRIDGE LOAN AGREEMENT BY AND BETWEEN
V2K INTERNATIONAL, INC. AND AMERIVON INVESTMENTS LLC
DATED AS OF JUNE 6, 2008

 
 
 

 















BRIDGE LOAN AGREEMENT
 
by and between
 
V2K International, Inc.
 
and
 
Amerivon Investments LLC
 

 








Dated as of June 6, 2008
 

 
 
 

 

TABLE OF CONTENTS
 
Page
 
 
1.
DEFINITIONS                                                                                                             1
 
 
1.1
Agreement                                                                                                     1
 
 
1.2
Amerivon                                                                                                      1
 
 
1.3
Balance Sheet                                                                                               1
 
 
1.4
Certificate of Designation                                                                          1
 
 
1.5
Closing                                                                                                         1
 
 
1.6
Closing Date                                                                                                1
 
 
1.7
Collateral                                                                                                     1
 
 
1.8
Common Stock                                                                                           1
 
 
1.9
Common Stock Equivalents                                                                      1
 
 
1.10       Company                                                                                                      2
 
1.11       Company Intellectual Property                                                                  2
 
1.12       Consulting Agreement                                                                               2
 
1.13       Disclosure Schedule                                                                                 2
 
1.14       Employee Benefit Programs                                                                   2
 
1.15       ERISA                                                                                                        2
 
1.16       Event of Default                                                                                        2
 
1.17       Hazardous Material                                                                                  2
 
1.18       Indemnified Party                                                                                    2
 
1.19       Indemnifying Party                                                                                  2  
 
1.20       Liens                                                                                                         2
 
1.21       Loan Documents                                                                                      2
 
1.22       Note                                                                                                          2
 
1.23       Registration Rights Agreement                                                             3
 
1.24       Securities                                                                                                 3
 
1.25       Securities Act                                                                                          3
 
1.26       Securities Laws                                                                                       3
 
1.27       Security Agreement                                                                                3
 
1.28       Series A Preferred Stock                                                                       3
 
1.29       Series B Preferred Stock                                                                       3
 
1.30       Series B Preferred Stock Financing                                                     3
 
1.31       Services Agreement                                                                               3
 
1.32       Shares                                                                                                      3
 
1.33       Short Sales                                                                                             3
 
1.34       Subsidiaries                                                                                            3
 
1.35       Voidable Transfer                                                                                  3
 
2.
BRIDGE LOAN                                                                                                     4
 
 
2.1
Bridge Loan                                                                                            4
 
 
2.2
Delivery by the Company                                                                      4
 
 
(a)
Note                                                                                         4
 
 
-i-
 

 
(b)
Security Agreement                                                                4
 
 
(c)
Shares                                                                                       4
 
 
(d)
Registration Rights Agreement                                              4
 
 
(e)
Consulting Agreement                                                             4
 
 
(f)
Services Agreement                                                                 4
 
 
(g)
Certified Articles                                                                     4
 
 
(h)
Good Standing Certificates                                                     4
 
 
(i)
Officers’ Certificate                                                                5
 
 
(j)
Secretaries’ Certificate                                                           5
 
 
(k)
FIRPTA                                                                                     5
 
 
(l)
Legal Opinion                                                                           5
 
                             (m)
Fees and Expenses                                                                    5
 
(n)
Other Documents                                                                      5
 
 
2.3
Fees and Expenses                                                                                   5
 
 
(a)
Fees                                                                                           5
 
 
(b)
Expenses                                                                                   5
 
 
2.4
Closing                                                                                                    6
 
 
2.5
Revival                                                                                                     6
 
 
2.6
Participation                                                                                           6
 
 
3.
SERIES B PREFERRED STOCK FINANCING.                                                6
 
 
3.1
Option to Purchase Series B Preferred Stock                                      6
 
 
3.2
Purchase of the Series B Preferred Stock                                            6
 
 
3.3
Rights of the Series B Preferred Stock                                                6
 
 
3.4
Extension of Note Maturity                                                                  7
 
 
4.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY                 7
 
 
4.1
Organization and Good Standing                                                           7
 
 
(a)
The Company                                                                           7
 
 
(b)
The Subsidiaries                                                                      7
 
 
4.2
Authorization                                                                                         7
 
 
4.3
No Violation                                                                                          8
 
 
4.4
No Governmental Consent                                                                   8
 
 
4.5
Capitalization                                                                                         8
 
 
4.6
Subsidiaries                                                                                            8
 
 
4.7
Financial Statements                                                                             9
 
 
(a)
Annual Financial Statements                                                 9
 
 
(b)
Interim Financial Statements                                                9
 
 
4.8
Financial Projections                                                                           9
 
 
4.9
Tax Returns                                                                                           9
 
 
4.10       Absence of Undisclosed Liabilities                                                 10
 
4.11       Absence of Certain Changes                                                            10
 
(a)
Material Adverse Change                                                  10
 
 
(b)
No Liens                                                                             10
 
 
(c)
Purchase or Sale of Assets                                                10
 
 
(d)
Damage to Property                                                           10
 
 
(e)
Capital Stock                                                                      10
 
-ii-

 
 
(f)
Employee Matters                                                             10
 
 
(g)
Officers and Key Personnel                                             11
 
 
(h)
Payment of Material Lien or Liability                             11
 
 
(i)
Guarantee                                                                            11
 
 
(j)
Insider Loans                                                                      11 
 
 
(k)
Accounting and Other Practices                                       11
 
 
(l)
Loss of Customer or Supplier                                          11
 
 
(m)        Termination of Material Contract                                     11
 
(n)
Royalty Agreements                                                          11
 
 
(o)
Fixed Price or Volume Agreements                                11
 
 
(p)
Material Transactions                                                        11
 
 
(q)
Amendment of Articles or Bylaws                                   12
 
 
(r)
Agreements                                                                         12
 
 
4.12       Accounts Receivable                                                                         12
 
4.13       Accounts Payable                                                                               12
 
4.14       Inventory                                                                                             12
 
4.15       Transactions with Affiliates                                                             12
 
4.16       Properties                                                                                          13
 
4.17       Certain Contracts and Arrangements                                               13
 
4.18       Intellectual Property                                                                         14
 
(a)
The Company Intellectual Property                                  14
 
 
(b)
Ownership of Company Intellectual Property                  15
 
 
(c)
Registration of Company Intellectual Property                15
 
 
(d)
No Infringement Action                                                      15
 
 
(e)
No Infringement                                                                   15
 
 
(f)
No Notice of Infringement                                                  15
 
 
(g)
No Employee Ownership                                                     15
 
 
(h)
No Infringement by Others                                                  15
 
 
(i)
Trade Secrets                                                                        15
 
 
(j)
Confidential Information                                                     15
 
 
4.19       Litigation                                                                                             16
 
4.20       Labor Matters                                                                                     16
 
4.21       Permits; Compliance with Laws                                                       16
 
4.22       Employee Benefit Programs                                                             16
 
(a)
Employee Benefit Programs                                              16
 
 
(b)
Qualified Employee Benefit Programs                             17
 
 
4.23       Insurance Coverage                                                                           17
 
4.24       No Broker                                                                                         18
 
4.25       Environmental Matters                                                                     18
 
4.26       Customers, Distributors, and Partners                                           18
 
4.27       Suppliers                                                                                           18
 
4.28       Warranty and Related Matters                                                        18
 
4.29       Illegal Payments                                                                              19
 
4.30       Solvency                                                                                          19
 
4.31       Government Contracts                                                                   19
 
4.32       Directors and Officers                                                                  19
-iii-

 
 
4.33       Private Sale of Securities                                                                20
 
4.34       Disclosure                                                                                         20
 
5.
REPRESENTATIONS AND WARRANTIES OF AMERIVON                    20
 
 
5.1
Organization and Good Standing                                                      20
 
 
5.2
Authorization                                                                                     20
 
 
5.3
No Violation                                                                                      20
 
 
5.4
Securities Laws                                                                                 20
 
 
5.5
Short Sales and Confidentiality Prior to the Date Hereof            21
 
 
6.
PRE-CLOSING COVENANTS                                                                       21
 
 
6.1
Business in the Ordinary Course                                                     21
 
 
6.2
Conditions Precedent                                                                       21
 
 
7.
CLOSING CONDITIONS                                                                                21
 
 
7.1
Closing Conditions of Amerivon                                                     21
 
 
(a)
Representations and Warranties True                               21
 
 
(b)
Covenants Performed                                                         21
 
 
(c)
No Material Adverse Changes                                            21
 
 
(d)
No Default                                                                           22
 
 
(e)
No Litigation                                                                      22
 
 
(f)
Broker Agreement                                                             22
 
 
(g)
Financing                                                                            22
 
 
(h)
Certificate of Designation                                               22
 
 
(i)
Delivery                                                                             22
 
 
7.2
Closing Conditions of the Company                                              22
 
 
(a)
Representations and Warranties True                             22
 
 
(b)
Purchase Price                                                                  22
 
 
7.3
Termination                                                                                      22
 
 
8.
POST-CLOSING COVENANTS OF THE COMPANY                              23
 
 
8.1
Preservation of Existence                                                              23
 
 
8.2
Transfer of Assets                                                                           23
 
 
8.3
No Cash Payments or Other Transfers To Shareholders             23
 
 
8.4
Additional Indebtedness                                                                  23
 
 
8.5
Loans                                                                                                23
 
 
8.6
Liens and Encumbrances                                                                 24
 
 
8.7
Access to Books and Inspection                                                    24
 
 
8.8
Accountant-Generated Information                                               24
 
 
8.9
Insurance                                                                                          24
 
 
8.10       Change in Nature of Business                                                        24
 
8.11       Notices                                                                                            24
 
8.12       Reporting Covenants                                                                     24
 
(a)
Annual Financial Statements                                        24
 
 
(b)
Monthly Financial Statements                                     25
 
 
(c)
No Event of Default                                                      25
 
 
(d)
Annual Budget                                                               25
 
-iv-

 
 
(e)
Notice of and Event of Default                                    25
 
 
(f)
Other Financial Information                                         25
 
 
8.13       Maintenance of Company Intellectual Property                         25
 
8.14       Performance of Loan Documents                                                25
 
8.15       After-Acquired Real Property                                                      25
 
8.16       Consulting and Services Agreements                                           26
 
9.
POST-CLOSING COVENANTS OF AMERIVON                                    26
 
9.1
Short Sales and Confidentiality After the Closing Date            26
 
 
9.2
Lock-Up                                                                                         26
 
 
10.
INDEMNIFICATION                                                                                   26
 
 
10.1       Survival of Representations and Warranties                                26
 
10.2       Indemnification by the Company                                                  27
 
10.3       Indemnification by Amerivon                                                       27
 
10.4       Notice                                                                                             27
 
10.5       Claim Not Involving a Third Party                                               28
 
10.6       Claim Involving a Third Party                                                       28
 
11.
EVENTS OF DEFAULT                                                                              28
 
 
11.1       Events of Default                                                                          28
 
(a)
Failure to Pay                                                                 28
 
 
(b)
Breach of Covenant                                                       28 
 
 
(c)
Uncured Breach                                                             28
 
 
(d)
Representation Untrue                                                  28
 
 
(e)
Voluntary Bankruptcy                                                    29
 
 
(f)
Involuntary Bankruptcy                                                 29
 
 
(g)
Dissolution                                                                    29
 
 
(h)
Suspension of Business                                                29
 
 
(i)
Material Adverse Change                                             29 
 
 
(j)
Material Impairment                                                     29
 
 
(k)
Destruction or Damage to the Collateral                   29
 
(l)
Attachment                                                                    29
 
                             (m)
Judgment                                                                       29
 
(n)
Default of Material Agreement                                  29 
 
 
(o)
Material Misrepresentation                                        30
 
 
(p)
Loan Documents                                                          30
 
 
12.
GENERAL PROVISIONS                                                                        30
 
 
12.1       Amendment                                                                                30
 
12.2       Waiver                                                                                        30
 
12.3       Notices                                                                                       30
 
12.4       Successors and Assigns                                                            31
 
12.5       Law Governing                                                                          31
 
12.6      Attorneys’ Fees                                                                          31
 
12.7      Counterparts                                                                               31
 
12.8      Severability of Provisions                                                         31
-v-

 
 
 
12.9       Integration                                            31
               12.10
Expenses                                               32
 
               12.11
No Third Party Beneficiaries                             32
 
               12.12
Further Assurances                                                                    32
 
               12.13
Relationship Between the Company and Amerivon               32
 
               12.14
Arbitration                                                                                 32
 
               12.15
Construction                                                                              33
 

SIGNATURE PAGE                                                                                               34
 
SCHEDULES AND EXHIBITS                                                                             35
 
SCHEDULE 3.2                                                                                                      36
 
 
 
 
 
 
 
 
 
 
 
 
 
-vi-

 
 
 

 

BRIDGE LOAN AGREEMENT
 
This Bridge Loan Agreement (the “Agreement”) is made and entered into as of the 6th day of June, 2008, by and between V2K International, Inc., a Colorado corporation (the “Company”), and Amerivon Investments LLC, a Nevada limited liability company (“Amerivon”).
 
RECITALS
 
Amerivon desires to make a $1.6 million bridge loan to the Company and the Company desires to borrow such amount from Amerivon, and the Company desires to give Amerivon the option to purchase up to $5 million in preferred stock from the Company, all on the terms and condi­tions set forth herein.
 
NOW, THEREFORE, in consideration of the foregoing, the mutual promises and covenants set forth herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereby agree as follows:
 
AGREEMENT
 
1.   DEFINITIONS .  The following terms when used with initial capital letters shall have the following defined meanings, unless expressly indicated otherwise:
 
1.1   Agreement .  This Bridge Loan Agreement, including all exhibits and schedules hereto.
 
1.2   Amerivon .  Amerivon Investments LLC, a Nevada limited liability company.
 
1.3   Balance Sheet .  The audited, year-end consolidated balance sheets of the Company as at September 30, 2007.
 
1.4   Certificate of Designation .  The Certificate of Designation of the Rights, Preferences, and Privileges of the Series A Preferred Stock and the Series B Preferred Stock in sub­stantially the form as set forth in Exhibit G attached hereto and incorporated herein by this reference.
 
1.5   Closing .  The consummation of the purchase and sale of the Securities.
 
1.6   Closing Date .  The date of the Closing.
 
1.7   Collateral .  The collateral pledged pursuant to the Security Agreement.
 
1.8   Common Stock .  The Company’s common stock, par value $0.001 per share.
 
1.9   Common Stock Equivalents .  Shares of Common Stock, any securities of the Company that are substantially similar to the Common Stock, any securities convertible into or exer­cisable or exchangeable for Common Stock, and any shares of Common Stock that may be deemed
 
-1-

 
to be beneficially owned by Amerivon in accordance with the rules and regulations of the Securities and Exchange Commission.
 
1.10   Company .  V2K International, Inc., a Colorado corporation.
 
1.11   Company Intellectual Property .  All of the items described in Section 4.18(a) , whether or not listed in Schedule 4.18 of the Disclosure Schedule.
 
1.12   Consulting Agreement .  That certain Consulting Agreement, dated as of the date hereof, by and between Amerivon and the Company in substantially the form as set forth in Exhibit D attached hereto and incorporated herein by this reference.
 
1.13   Disclosure Schedule .  The schedule attached hereto pursuant to Section 4 that identifies the exceptions and limitations to the representations and warranties of the Company.
 
1.14   Employee Benefit Programs .  All employee benefit plans within the meaning of Section 3(3) of ERISA, fringe benefit, stock option, equity-based compensation, phantom stock, bonus, or incentive plans, severance pay policies or agreements, retirement, pension, profit sharing, or deferred compensation plans or agreements, and all similar plans, agreements, and arrangements providing monetary and non-monetary compensation or rights to employees or non-employee directors.
 
1.15   ERISA .  The Employee Retirement Income Security Act of 1974, as amended.
 
1.16   Event of Default .  As set forth in Section 11.1 .
 
1.17   Hazardous Material .  Any oil, petroleum, petroleum product, asbestos, toxic substance, pollutant, contaminant, hazardous waste, hazardous substance, or hazardous material as defined or set forth in any federal or applicable state environmental or hazardous material law, rule, or regulation.
 
1.18   Indemnified Party .  The party or persons being indemnified pursuant to Sec­tion 10 .
 
1.19   Indemnifying Party .  The party providing indemnification pursuant to Section 10 .
 
1.20   Liens .  All security interests, encumbrances, mortgages, deeds of trust, hypoth­ecations, and other liens, including but not limited to liens of attachment, judgment, and execution.
 
1.21   Loan Documents.   This Agreement and all of the agreements and documents to be delivered by the Company pursuant to Section 2.2 other than agreements, documents, and instruments to which the Company or one or more of its officers is not a party, signatory, or issuer.
 
1.22   Note .  That certain Secured Bridge Note, dated as of the Closing Date,  issued by the Company and each Subsidiary to Amerivon in the original principal amount of One Million Six Hundred Thousand Dollars ($1,600,000) in substantially the form as set forth in Exhibit A attached hereto and incorpo­rated herein by this reference.
 
-2-

1.23   Registration Rights Agreement .  That certain Registration Rights Agreement, dated as of the Closing Date, by and between Amerivon and the Company in substantially the form as set forth in Exhibit C attached hereto and incorporated herein by this reference.
 
1.24   Securities .  The Note and the Shares, and any shares of Common Stock issued on conversion thereof.
 
1.25   Securities Act .  The Securities Act of 1933, as amended.
 
1.26   Securities Laws .  The Securities Act and the rules and regulations promulgated thereunder, and all applicable state securities laws and the rules and regulations promulgated there­under.
 
1.27   Security Agreement .  That certain Security Agreement, dated as of the Closing Date, by and among Amerivon, the Company, and each Subsidiary in substantially the form as set forth in Exhibit B attached hereto and incorporated herein by this reference.
 
1.28   Series A Preferred Stock .  The Company’s Series A Convertible Preferred Stock, par value $0.001 per share.
 
1.29   Series B Preferred Stock .  The Company’s Series B Convertible Preferred Stock, par value $0.001 per share.
 
1.30   Series B Preferred Stock Financing .  The purchase of shares of Series B Preferred Stock as set forth in Section 3 .
 
1.31   Services Agreement .  That certain Services Agreement, dated as of the date hereof, by and between Amerivon and the Company in substantially the form as set forth in Exhibit E attached hereto and incorporated herein by this reference.
 
1.32   Shares .  The one million six hundred thousand  (1,600,000) shares of Series A Preferred Stock to be issued to Amerivon pursuant to Section 2.3 .
 
1.33   Short Sales .  The same definition as set forth in Rule 200 of Regulation SHO, promulgated under the Securities Exchange Act of 1934.
 
1.34   Subsidiaries .  Marketing Source International LLC, a Colorado limited liability company, V2K Manufacturing, Inc., a Colorado corporation, V2K Technology, Inc., a Colorado corporation, and V2K Window Fashions, Inc., a Colorado corporation, each of which is a “Subsidiary.”
 
1.35   Voidable Transfer .  Any incurrence of debt, payment of money, or transfer of property made to Amerivon by or on behalf of the Company that is declared to be “voidable” or “avoidable” within the meaning of any federal or state law relating to creditor’s rights, including, without limitation, a fraudulent conveyance, preference, or otherwise voidable or recoverable payment of money or transfer of property, in whole or in part, for any reason under the Bankruptcy Code or any other federal or state law.
 
-3-

2.   BRIDGE LOAN .
 
2.1   Bridge Loan .  Subject to the terms and conditions of this Agreement, subject to compliance with federal and all applicable state securities laws, and in reliance upon the Company’s representations, warranties, and covenants set forth herein, at the Closing Amerivon shall purchase the Note from the Company and the Subsidiaries, and the Company and the Subsidiaries shall issue and sell the Note to Amerivon.  The purchase price for the Note shall be One Million Six Hundred Thousand Dollars ($1,600,000).  Amerivon shall pay the purchase price, less applicable fees and expenses as set forth in Section 2.3 , by wire transfer or other form of payment acceptable to the parties.
 
2.2   Delivery by the Company .  At or prior to the Closing, the Company shall deliver the following to Amerivon:
 
(a)   Note .  The Note duly executed by the Company and each Subsidiary;
 
(b)   Security Agreement .  The Security Agreement duly executed by the Company and each Subsidiary;
 
(c)   Shares .  The certificate for the Shares duly executed by the Company;
 
(d)   Registration Rights Agreement .  The Registration Rights Agreement duly executed by the Company.
 
(e)   Consulting Agreement .  The Consulting Agreement duly executed by the Company.
 
(f)   Services Agreement .  The Services Agreement duly executed by the Company;
 
(g)   Certified Articles .  A copy of the Company’s Articles of Incorporation, as amended, including but not limited to the Articles of Amendment containing the Certificate of Designation, certified by the Colorado Secretary of State, and a copy of the Articles of Incorporation, Articles of Organization, or similar organizational document for each Subsidiary, certified by the Secretary of State of the jurisdiction in which such Subsidiary is incorporated or organized;
 
(h)   Good Standing Certificates .  The following certificates: (i) a certificate issued by the Colorado Secretary of State as to the legal existence and good standing of the Company in Colorado, (ii) a certificate issued by the Secretary of State (or similar authority) of each jurisdiction in which the Company has qualified to do business as a foreign corporation (or is required to be so qualified) as to such foreign qualification and good standing, (iii) a certificate issued by the Secretary of State of each jurisdiction in which a Subsidiary is incorporated or organized as to the legal exist­ence and good standing of such Subsidiary in such state, and (iv) a certificate issued by the Secretary of State (or similar authority) of each jurisdiction in which a Subsidiary has qualified to do business as a foreign corporation or entity (or is required to be so qualified) as to such foreign qualification and good standing;
 
-4-

(i)   Officers’ Certificate .  A certificate, dated as of the Closing Date, exe­cuted by the Company’s Chief Executive Officer and Chief Financial Officer, satisfactory in form and substance to Amerivon and its legal counsel, certifying that (i) all of the representations and warranties of the Company set forth in Section 4 are true and correct as of the Closing Date, (ii) all covenants of the Company set forth in Section 6 have been performed, and (iii) all conditions to the obligations of Amerivon contained in Section 7.1 have been fulfilled.
 
(j)   Secretaries’ Certificate .  A certificate duly executed by the Secretary of the Company and each Subsidiary certifying (i) a true and correct copy of the Bylaws or Operating Agreement of the Company and each Subsidiary, (ii) true and correct copies of resolutions or consent actions taken by Board of Directors or managers of the Company and each Subsidiary authorizing the appropriate officers to execute and deliver the Loan Documents and all agreements, documents, and instruments executed by the Company and the Subsidiaries pursuant hereto, and to consummate the transactions contemplated herein and therein, and (iii) the names of the officers of the Company and each Subsidiary authorized to sign the Loan Documents and the other agreements, documents, and instruments executed by the Company or Subsidiary pursuant hereto, together with the true signatures of such officers;
 
(k)   FIRPTA .  A non-foreign affidavit as provided in Section 1445(b)(2) of the Internal Revenue Code for the Company and each Subsidiary;
 
(l)   Legal Opinion .  A legal opinion from the Company’s legal counsel containing the opinions as set forth in Exhibit F attached hereto and incorporated herein by this reference;
 
(m)   Fees and Expenses .  Amerivon has received the fees and the expenses as set forth in Section 2.3 ; and
 
(n)   Other Documents .  All other documents, instruments, and certificates as Amerivon may reasonably request or as may be required pursuant to this Agreement, in each case duly executed and delivered by the Company.
 
2.3   Fees and Expenses .
 
(a)   Fees .  The Company shall issue the Shares to Amerivon as a loan fee.  The Company also shall pay Amerivon Three Hundred Five Thousand Dollars ($305,000) for con­sulting fees under the Consulting Agreement, which amount Amerivon may deduct from the amount of the purchase price payable to the Company.
 
(b)   Expenses .  The Company shall reimburse Amerivon for its reasonable actual out-of-pocket fees and expenses (including legal, due diligence, accounting, and investment banking fees and expenses) incurred in connection with the purchase of the Note, in an amount not to exceed Fifty Thou­sand Dollars ($50,000).  Amerivon may deduct the actual amount of the expenses from the amount of the purchase price payable to the Company.  For any out-of-pocket fees and expenses incurred in connection with the purchase of the Note that are not reimbursed at the closing, Amerivon shall submit a written statement to the Company and the Company shall promptly reimburse Amerivon for such fees and expenses.
 
-5-

2.4   Closing .  The Closing shall occur on June 26, 2008, or on such other date as the parties may agree.
 
2.5   Revival .  In the event of any Voidable Transfer and Amerivon is required to repay or restore any Voidable Transfer or the amount or any portion thereof, or upon the advice of its counsel is advised to do so, then, as to any such amount repaid or restored (including all reasonable costs, expenses and attorneys’ fees of Amerivon related thereto), the liability of the Company and the Subsidiaries shall automatically be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made.
 
2.6   Participation .  The Company acknowledges and agrees that Amerivon intends to sell participation interests in the Securities.  The Company agrees that, on compliance with the Securities Laws, Amerivon may transfer all or any portion of the Note, the Shares, or the shares of Common Stock issuable on conversion of the Note or the Shares to the participants.
 
3.   SERIES B PREFERRED STOCK FINANCING .
 
                              3.1   Option to Purchase Series B Preferred Stock .  The Company hereby grants Amerivon the option to purchase all or any portion of five million (5,000,000) shares of Series B Preferred Stock at the exercise price of One Dollar ($1.00) per share.  Amerivon may exercise the option at any time and from time to time by giving written notice to the Company on or prior to six (6) months from the date hereof.  Amerivon may assign all or any portion of the option to affiliated companies or its co-investment entities.
 
3.2   Purchase of the Series B Preferred Stock .  Amerivon shall purchase the Series B Preferred Stock pursuant to a purchase agreement containing terms, conditions, representations, warranties, and indemnities as are customary in an investment of this type, with a registration rights agreement providing for two demand and incidental registration rights, a lock-up agreement providing that the current management of the Company will not sell any shares of the Company for a twelve (12)-month period after the date on which Amerivon purchases all or any portion of the Series B Preferred Stock, which lock-up will not be applicable to the shares of Common Stock listed in Schedule 3.2 attached hereto, and such other terms, conditions, docu­ments, and agreements as Amerivon may reasonably require. The registration rights agreement will also require the Company to pay Amerivon liquidated damages of two percent (2%) of the amount paid by Amerivon in purchasing all or any portion of the Series B Preferred Stock per each thirty (30)-day period or part thereof for any registration default, such damages being paid either in cash or, at the Company’s option, in shares of Common Stock valued at eighty-five percent (85%) of the average closing trading price for the ten (10) trading days immediately preceding the month end for which such penalty is payable, provided that such shares are fully registered for resale by Amerivon.  On satisfaction of the conditions set forth in the purchase agreement, the Company and Amerivon shall complete the purchase and sale of the Series B Preferred Stock within sixty (60) days after the Company receives the notice from Amerivon for the purchase and sale of the Series B Preferred Stock.
 
3.3   Rights of the Series B Preferred Stock .  The Series B Preferred Stock will have the rights, preferences, and privileges as set forth in the Certificate of Designation.
 
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3.4   Extension of Note Maturity .  If Amerivon does not notify the Company that it will exercise its option to purchase all five million (5,000,000) shares of Series B Preferred Stock within one hundred fifty (150) days of the Closing Date, then the maturity date of the Note shall be extended for an additional ninety (90) days.
 
4.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY .  Subject to the exceptions and limitations set forth in the Disclosure Schedule, which identifies exceptions and limi­tations by specific section reference, the Company hereby represents and warrants to Amerivon, as of the date hereof and as of the Closing Date, as follows (except where the context indicates other­wise, each reference to the Company in this Section 4 includes each of the Subsidiaries):
 
4.1   Organization and Good Standing .
 
(a)   The Company .  The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Colorado, with the corporate power to own its properties and carry on its businesses as they are now being conducted.  The Company is qualified to conduct business in every state in which it is required to be qualified to conduct busi­ness.  The Company has the requisite corporate power and authority to execute, deliver, and perform this Agreement and the Loan Documents and to consummate the transactions contemplated herein and therein.  The Company is not in violation of any term of its Articles of Incorporation or Bylaws.  The Company’s organizational number issued by the Colorado Secretary of State is 20061109378.
 
(b)   The Subsidiaries .  Each Subsidiary is a corporation or limited liability company duly organized, validly existing, and in good standing under the laws of the state of its incorporation or organization, with the power to own its properties and carry on its businesses as they are now being conducted.  Each Subsidiary is qualified to conduct business in every state in which it is required to be qualified to conduct business.  Each Subsidiary has the requisite power and authority to execute, deliver, and perform the Loan Documents to which it is a party and to con­summate the transactions contemplated therein.  No Subsidiary is in violation of any term of its organizational documents.  The true and correct name, state of incorporation or organization, and organizational number issued by the Secretary of State of the state of incorporation or organization of each Subsidiary is set forth below.
 
      Name                                                          State                                       Organizational Number
 
Marketing Source International LLC                     Colorado                                            20071170890
V2K Manufacturing, Inc.                                         Colorado                                           19941105773
V2K Technology, Inc.                                              Colorado                                           20061269371
V2K Window Fashions, Inc.                                    Colorado                                           19961097423

4.2   Authorization .  The execution, delivery, and performance of the Loan Docu­ments and the consummation of the transaction contemplated herein and therein have been duly and validly authorized by all necessary action on the part of the Company and each Subsidiary.  The Loan Documents have been duly and validly executed and delivered by the Company and each Sub­sidiary, and constitute the legal, valid, and binding obligations of the Company and each Subsidiary, enforceable against the Company and each Subsidiary in accordance with their respective terms,
 
 
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subject to applicable bankruptcy, insolvency, moratorium, and other laws affecting the enforcement of creditors’ rights generally.
 
4.3   No Violation .  The execution and delivery of the Loan Documents does not and the performance of the Loan Documents and the consummation of the transactions contemplated herein and therein will not conflict with, violate, or cause a breach of or default under (or an event which with notice and/or lapse of time would become a default) the provisions of the Company’s Articles of Incorporation or Bylaws, the organizational documents of any Subsidiary, or any note, indenture, agreement, or other instrument to which the Company or any Subsidiary is a party or by which its properties are bound.
 
4.4   No Governmental Consent .  The execution and delivery of the Loan Docu­ments does not and performance of the Loan Documents and the consummation of the transactions contemplated therein and therein will not conflict with or violate any federal, state, or local law or regulation, any order, judgment, or decree of any court, administrative agency, or governmental authority, or any license or permit from any federal, state, or local governmental authority applicable to the Company.  The execution and delivery of the Loan Documents does not and performance of the Loan Documents and the consummation of the transactions contemplated herein and therein will not require any approval, consent, authorization, or permit from or any filing with any federal, state, or local governmental authority.
 
4.5   Capitalization .  The Company’s authorized capital stock consists of one hundred million (100,000,000) shares of Common Stock, of which thirty-one million, four hundred sixty-seven thousand, three hundred thirty-six (31,467,336) shares are issued and outstanding, and ten million (10,000,000) shares of preferred stock, of which one million six hundred thousand (1,600,000) shares have been designated as Series A Preferred Stock and five million (5,000,000) shares have been designated as Series B Preferred Stock, and no shares of any series of preferred stock are issued or outstanding.  All of the issued and outstanding shares have been duly authorized and validly issued, and are fully paid and nonassessable.  The Company has issued options and war­rants exercisable to purchase thirty-three million, six hundred sixty-eight thousand, eight hundred sixty (33,668,860) shares of Common Stock, each of which is listed in Section 4.5 of the Disclosure Schedule, and except for such options and warrants listed in Section 4.5 of the Disclosure Schedule, there are no outstanding options, employee stock options, warrants, convertible securities, agree­ments, contracts, calls, or commitments of any character that would require the Company to issue any capital stock.  There are no preemptive rights, rights of first refusal, put or call rights or obligations, or anti-dilution rights with respect to the issuance, sale, or redemption of any capital stock by the Company.  The Shares and all shares of Common Stock to be issued on conversion of the Shares and the Note will be duly authorized, validly issued, fully paid, and nonassessable, and will not be issued in violation of any preemptive right.  The Company has duly and validly authorized and reserved sufficient shares of Common Stock for issuance on conversion of the Shares and the Note.  The Company has no obligation to purchase, redeem, or otherwise acquire any of its capital stock or any interests therein, and has not redeemed any shares of its capital stock in the past three (3) years.
 
4.6   Subsidiaries .  Other than as set forth in Section 4.1(b) , the Company does not have any other subsidiary and does not own, directly or indirectly, any voting or equity interest in any corporation, partnership, limited liability company, joint venture, company, entity, or any other business enterprise of any nature.
 
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4.7   Financial Statements .  The Company has delivered to Amerivon and included in Section 4.7 of the Disclosure Schedule copies of the following financial statements, all of which have been prepared in accordance with generally accepted accounting prin­ciples consistently applied throughout the periods indicated and are consistent with the Company’s books and records, and nothing has come to the attention of the Company since the date of any of such financial statements that would indicate that such financial statement was not true and correct in all material respects as of its applicable date:
 
(a)   Annual Financial Statements .  The consolidated balance sheets of the Company as at September 30, 2006 and 2007,  as audited by Gordon, Hughes & Bank, LLP, each of which presents fairly as of its date the financial condition and assets and liabilities of the Company, together with consolidated statements of operations, cash flows, and stockholders’ equity of the Company for the years ended September 30, 2006 and 2007, which present fairly the results of operations of the Company for the periods indicated; and
 
(b)   Interim Financial Statements .  The consolidated balance sheet of the Company as at March 31, 2008, which presents fairly as of its date the financial condition and assets and liabilities of the Company, together with consolidated interim statements of operations and cash flows of the Company for the six (6) months ended March 31, 2008, which present fairly the results of operations of the Company for the period indicated.
 
4.8   Financial Projections .  The financial projections that the Company previously provided to Amerivon represent good faith estimates of the performance of the Company for the periods stated therein based upon assumptions that were believed in good faith to be reasonable when made and continue to be reasonable on the date hereof; provided that the foregoing is not a guarantee that such projections will be achieved.
 
4.9   Tax Returns .  The Company has prepared and timely filed with the appro­priate federal, state, county, or local tax authority all income, excise, sales, real or personal property, employment, and all other tax returns required to be filed by it under all applicable laws and regula­tions, which returns were true, complete, and correct, and the Company has paid all taxes, interest, and penalties required to be paid through the date hereof, whether or not disputed.  The provisions for taxes set forth on the Balance Sheet are sufficient for the payment of all accrued and unpaid taxes of the Company (including any penalties or interest payable in respect of such taxes), whether or not disputed, for the period ended on the date hereof, and for all fiscal years prior thereto.  All such taxes and other assessments and levies that the Company was or is required to withhold or collect have been withheld and collected and have been paid over to the proper governmental authorities or will be paid when due.  The Company’s income tax returns have not been audited by the Internal Revenue Service or any taxing authority for all years open for assessment, and neither the Internal Revenue Service nor any other taxing authority has notified the Company of any audit or any tax deficiency for any prior tax year that has not been fully resolved and paid.  The Company has not executed or filed with the Internal Revenue Service or any other taxing authority an agreement ex­tending the period for the assessment or collection of any tax, or an agreement to have the provisions of former Section 341(f) of the Internal Revenue Code of 1986, as amended, applied to it.  The Company is not a party to any tax allocation or sharing arrangement.  The Company is not a party to any contract, agreement, plan, or arrangement covering any of its employees or former employees, that, individually or collectively, could give rise to the payment of any amount that would not be
 
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deductible pursuant to Sections 162 or 280G of the Internal Revenue Code (or any corresponding pro­vision of state or local tax law).  Except for consolidated income tax returns with the Subsidiaries, the Company has never been a member of an affiliated group of corporations filing a combined federal income tax return.  The Company does not have any liability for any taxes of any other person or entity except for the Subsidiaries.
 
4.10   Absence of Undisclosed Liabilities .  The Company does not have any liability or obligation of any nature, whether accrued, absolute, contingent, asserted, unasserted, known or unknown, or otherwise, except liabilities or obligations (i) stated or adequately reserved against in the Balance Sheet, (ii) arising from commitments incurred in the ordinary course of business of types and amounts consistent with past experience after the date of the Balance Sheet, or (iii) that are not material to the Company.
 
4.11   Absence of Certain Changes .  Since September 30, 2007, the Company has conducted its business only in the ordinary course and consistent with past practice, and there has not been any of the following:
 
(a)   Material Adverse Change .  Any event, action, omission, or other devel­opment that, individually or in the aggregate, has had or is reasonably expected to have a material adverse effect on the Company or its business, results of operations, assets, or financial condition;
 
(b)   No Liens .  Any Lien or other claim on any of the properties or assets of the Company, other than purchase money Liens in amounts that do not exceed Twenty Thousand Dollars ($20,000) and Liens that do not materially detract from the value or materially interfere with any present or intended use of such properties or assets;
 
(c)   Purchase or Sale of Assets .  Any purchase, sale, or other disposition, or any agreement or other arrangement for the purchase, sale, or other disposition, of any properties or assets by the Company involving the payment or receipt of more than Twenty Thousand Dollars ($20,000), other than the purchase and sale of inventory in the ordinary course of business consistent with past practice;
 
(d)   Damage to Property .  Any damage, destruction, or loss, whether or not covered by insurance, that, individually or in the aggregate, has had or is reasonably expected to have a material adverse effect on the Company or its business, results of operations, assets, or finan­cial condition;
 
(e)   Capital Stock .  Any change in the authorized, issued, or outstanding capital stock of the Company; any granting of any stock option or right to purchase shares of capital stock or any issuance of any security convertible into shares of capital stock of the Company; any purchase, redemption, retirement, or other reacquisition of any share of capital stock by the Com­pany; any agreement to do any of the foregoing; or any declaration, setting aside, or payment of any stock dividend or other distribution of the capital stock of the Company;
 
(f)   Employee Matters .  Any material labor trouble or any claim of unfair labor practices involving the Company, any change in excess of Ten Thousand Dollars ($10,000) in the compensation payable or to become payable by the Company to any of its officers or employees other than normal merit increases to employees in accordance with their respective usual practices,
 
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or any material bonus payment or arrangement made to or with any of such officers or employees or any establishment or creation of any employment, deferred compensation, severance arrangement, or employee benefit plan with respect to such persons or the material amendment of any of the foregoing;
 
(g)   Officers and Key Personnel .  Any resignation, termination, or removal of any officer or key person of the Company, any material loss of personnel of the Company, or any material change in the terms and conditions of the employment of the Company’s officers or key persons;
 
(h)   Payment of Material Lien or Liability .  Any payment or discharge of a material Lien or liability of the Company that was not shown on the Balance Sheet, other than Liens and liabilities incurred after the date of the Balance Sheet in the ordinary course of business con­sistent with past practice;
 
(i)   Guarantee .  Any contingent liability incurred by the Company as guar­antor or otherwise with respect to the obligations of other person or entity, or any cancellation of any material debt or claim owing to, or waiver of any material right of, the Company, including any write-off or compromise of any account receivable in excess of Twenty Thousand Dollars ($20,000);
 
(j)   Insider Loans .  Any obligation or liability incurred by the Company to any of its officers, directors, shareholders, or employees, or any loans or advances made by the Com­pany to any of its officers, directors, shareholders, or employees, except normal compensation and expense allowances payable to officers or employees in the ordinary course of business consistent with past practice;
 
(k)   Accounting and Other Practices .  Any change in the Company’s ac­counting principles, methods, practices, or practices, collection policies, pricing policies, or payment policies;
 
(l)   Loss of Customer or Supplier .  Any loss, or any known development that could reasonably be expected to result in a loss, of any significant supplier, customer, distribu­tor, or account of the Company;
 
(m)   Termination of Material Contract .  Any amendment or termination of any material contract or agreement to which the Company is a party or by which it is bound;
 
(n)   Royalty Agreements .  Any arrangements relating to any royalty or similar payment based on the revenues, profits, or sales volume of the Company;
 
(o)   Fixed Price or Volume Agreements .  Any transaction or agreement involving fixed price terms or fixed volume arrangements;
 
(p)   Material Transactions .  Any other material transaction entered into by the Company other than purchases and sales of inventory in the ordinary course of business con­sistent with past practice;
 
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(q)   Amendment of Articles or Bylaws .  Any amendment to the Company’s Articles of Incorporation, other than the Articles of Amendment containing the Certificate of Desig­nation, or Bylaws; or
 
(r)   Agreements .  Any agreement or understanding, whether in writing or otherwise, for the Company to take any of the actions specified in Sections 4.11(a) through (q) .
 
4.12   Accounts Receivable .  All of the accounts and notes receivable of the Com­pany are valid and enforceable claims, are subject to no set-off or counterclaim and are fully collectible in the normal course of business, after deducting the reserve for doubtful accounts stated in the Balance Sheet, which reserve is in accordance with generally accepted accounting principles.  Since the date of the Balance Sheet, the Company has collected its accounts receivable in the ordinary course of its business and in a manner that is consistent with past practice and has not accelerated any such collections.  The Company does not have any accounts receivable or notes receivable from any person or entity that is affiliated with the Company or its directors, officers, employees, or shareholders.  Since September 30, 2007, the Company has not (i) experienced returns of products previously sold or distributed to any customer or retailer, (ii) offered credits to any customer or retailer against future orders of products or services from any such customer or retailer, or (iii) provided any products or services to any customer or retailer free of charge, such that the instances of all returns, credits and other transactions described by clauses (i), (ii), and (iii) exceeded Twenty Thousand Dollars ($20,000) in the aggregate.
 
4.13   Accounts Payable.   All accounts payable and notes payable of the Company arose in bona fide arm’s length transactions in the ordinary course of business and no such account payable or note payable is delinquent in its payment.  Since the date of the Balance Sheet, the Company has paid its accounts payable in the ordinary course of its business and in a manner that is consistent with past practice.  The Company does not have any account payable to any person or entity that is affiliated with the Company or its directors, officers, employees, or shareholders.
 
4.14   Inventory .  All of the Company’s inventory items are of a quality and quantity salable in the ordinary course of its business at profit margins consistent with Company’s past practices.  The values of the inventory stated in the Balance Sheet reflect the normal inventory valua­tion policies of the Company and were determined in accordance with generally accepted accounting principles consistently applied.  Purchase commitments for raw materials and parts are not in excess of normal requirements, and none are at prices materially in excess of then current market prices.  Since the date of the Balance Sheet, no inventory items, except for sales samples, product replace­ment, and disposals, in each case, in an immaterial amount, have been sold or disposed of except through sales in the ordinary course of business at profit margins consistent with the Company’s past practices, and all sales commitments made for the Company’s products are at prices not less than inventory values plus selling expenses and said profit margins.
 
4.15   Transactions with Affiliates .  There are no loans, leases, or other agreements or transactions between the Company or any Subsidiary on the one hand and any present or former shareholder, director, officer, or employee of the Company, or any member of any such officer’s, director’s, employee’s, or shareholder’s immediate family, or any person or entity controlled by or controlling such officer, director, employee, or shareholder or his or her immediate family, on the other hand.  No present or former shareholder, director, officer, or employee of the Company or any
 
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Subsidiary, any of their respective spouses or family members, or any person or entity controlled by or controlling such officer, director, employee, or shareholder or his or her immediate family, owns directly or indirectly, on an individual or joint basis, any interest in, or serves as an officer or director or in another similar capacity of, any competitor, customer, or supplier of the Company or any organ­ization that has a material contract or arrangement with the Company.
 
4.16   Properties .  The Company has good, valid, and (if applicable) marketable title to all assets material to its business and to those assets reflected on the Balance Sheet or acquired by it after the date thereof (except for (a) properties disposed of since that date in the ordinary course of business consistent with past practice and not in violation of this Agreement, and (b) immaterial assets that have been disposed of in the ordinary course of business consistent with past practice), free and clear of all Liens and claims of any type whatsoever, except for (i) Liens not yet due and payable, (ii) purchase money Liens in amounts that do not exceed Twenty Thousand Dollars ($20,000), and (iii) Liens that do not materially detract from the value or materially interfere with any present or intended use of such properties or assets.  All equipment included in such properties that is necessary to the business of the Company is in good condition and repair (ordinary wear and tear excepted) and all leases of real or personal property to which the Company is a party are fully effec­tive and afford the Company peaceful and undisturbed possession of the property subject to the lease.  As of the date of this Agreement, the property and assets of the Company are sufficient for the con­duct of its business as conducted as of the date of this Agreement.
 
4.17   Certain Contracts and Arrangements .  Except as set forth in Section 4.17 of the Disclosure Schedule, the Company is not a party or subject to or bound by:
 
(a)           Any contract or agreement involving a potential commitment or pay­ment by the Company in excess of Twenty Thousand Dollars ($20,000), other than purchase orders or invoices for the purchase and sale of inventory (but including any contract or arrangement under­lying any of such purchase orders or invoices);
 
(b)           any material contract, lease, or agreement that is not cancelable by the Company without penalty on not less than ninety (90) days notice;
 
(c)           any contract containing covenants limiting in any respect the freedom of the Company to compete in any line of business or with any other person or entity;
 
(d)           any contract or agreement relating to the licensing, distribution, devel­opment, purchase, sale, or servicing of any of the intellectual property of the Company;
 
(e)           any indenture, mortgage, promissory note, loan agreement, guaranty. or other agreement or commitment for borrowing or any pledge or security arrangement;
 
(f)           any stock redemption or purchase agreement or other agreement affec­ting or relating to the capital stock of the Company, including, without limitation, any agreement with any shareholder of the Company or any other person or entity that includes anti-dilution rights, registration rights, voting arrangements, operating covenants, or similar provisions;
 
(g)           any pension, profit sharing, retirement, or stock option plan;
 
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(h)

 
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