<PAGE>
EXHIBIT 10.1
BRIDGE LOAN AGREEMENT
THIS BRIDGE LOAN AGREEMENT, dated as of December 15, 2005, is
entered
into by and between AMEDIA NETWORKS, INC.,
a Delaware corporation with
headquarters located at 101 Crawfords
Corner Road, Holmdel, New Jersey 07733
(the "Company"), and each individual or
entity named on an executed counterpart
of the signature page hereto (each such
signatory is referred to as a "Buyer")
(each agreement with a Buyer being deemed a
separate and independent agreement
between the Company and such Buyer, except
that each Buyer acknowledges and
consents to the rights granted to each
other Buyer [each, an "Other Buyer"]
under such agreement and the Transaction
Agreements, as defined below, referred
to therein).
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing and delivering
this
Agreement in accordance with and in
reliance upon the exemption from securities
registration for offers and sales to
accredited investors afforded, INTER ALIA,
by Rule 506 under Regulation D ("Regulation
D") as promulgated by the United
States Securities and Exchange Commission
(the "SEC") under the Securities Act
of 1933, as amended (the "1933 Act"),
and/or Section 4(2) of the 1933 Act; and
WHEREAS, each Buyer wishes to lend funds in the amount of the
Purchase
Price (as defined below) to the Company,
subject to and upon the terms and
conditions of this Agreement and acceptance
of this Agreement by the Company,
the repayment of which will be represented
by a Secured Promissory Note of the
Company (the "Note"), on the terms and
conditions referred to herein; and
WHEREAS, in connection with the loan to be made by the Buyer,
the
Company has agreed to issue the Note and
the Warrant (as defined below) to the
Buyer;
NOW THEREFORE, in consideration of the premises and the mutual
covenants
contained herein and other good and
valuable consideration, the receipt and
sufficiency of which are hereby
acknowledged, the parties agree as follows:
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1. AGREEMENT
TO PURCHASE; PURCHASE PRICE.
A.
PURCHASE.
(i)
Subject to the terms and conditions of this Agreement and the
other Transaction Agreements (as defined
below), the Buyer hereby agrees to loan
to the Company the principal amount
specified on the Buyer's signature page of
this Agreement (the "Purchase Price"), out
of the aggregate amount being loaned
by all Buyers of US $1,000,000 (the
"Aggregate Purchase Price"). The Buyers and
the Other Buyers have agreed that the
Company may enter into one or more
Permitted New Transactions (as defined
below), in which event the term
"Aggregate Purchase Price" shall be deemed
to refer to the sum of (x) the
aggregate amount loaned by all Buyers under
this Agreement and (y) the aggregate
amount loaned by all parties identified as
Buyers under such Permitted New
Transactions; provided, however, that in no
event will the Aggregate Purchase
Price be more than $1,500,000 (the "Maximum
Aggregate Purchase Price")
(ii) The
obligation to repay the loan of the relevant Purchase Price
from the Buyer shall be evidenced by the
Company's issuance of one or more Notes
to the Buyer in the principal amount of one
hundred eight percent (108%) of the
Purchase Price paid by the Buyer on or in
connection with the Closing Date. Each
Note shall be payable on the date (the
"Stated Maturity Date") which is one
hundred twenty days after the Closing Date
or the date on which the New
Transaction Threshold (as defined below)
occurs. Each Note, which shall be shall
be in the form of ANNEX I annexed hereto.
Repayment of the Note shall be secured
under the terms of a Security Interest
Agreement between the Company, as debtor,
and the Buyer, as secured party (the
"Security Interest Agreement"),
substantially in the form annexed hereto as
ANNEX V.
(iii) In
consideration of the loan to be made by the Buyer, the
Company will issue to such Buyer the
Warrant to purchase the number of shares of
the Company's Common Stock as provided in
Section 4 hereof.
(iv) The
loan to be made by the Buyer and the issuance of the Note
and the Warrant to the Buyer and the other
transactions contemplated hereby are
sometimes referred to herein and in the
other Transaction Agreements as the
purchase and sale of the Securities (as
defined below), and are referred to
collectively as the "Transactions."
B. CERTAIN
DEFINITIONS. As used herein, each of the following terms
has the meaning set forth below, unless the
context otherwise requires:
"Affiliate" means, with respect to a specific Person referred
to
in the relevant provision, another Person
who or which controls or is controlled
by or is under common control with such
specified Person.
"Buyer Control Person" means each director, executive officer,
promoter, and such other Persons as may be
deemed in control of the Buyer
pursuant to Rule 405 under the 1933 Act or
Section 20 of the 1934 Act.
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"Buyer's Allocable Share" means the fraction, of which the
numerator is the Buyer's Purchase Price and
the denominator is the Aggregate
Purchase Price.
"Certificates" means the ink-signed Note and the Warrant, each
duly executed by the Company and issued on
the Closing Date in the name of the
Buyer.
"Closing Date" means the date of the closing of the
Transactions, as provided herein. "Company
Control Person" means each director,
executive officer, promoter, and such other
Persons as may be deemed in control
of the Company pursuant to Rule 405 under
the 1933 Act or Section 20 of the 1934
Act (as defined below).
"Disclosure Letter" means a letter and any modifications
thereof, the latest of which is dated at
least one Trading Day prior to the
Closing Date, from the Company to the
Buyer; provided, however, that the
Disclosure Letter shall be arranged in
sections corresponding to the identified
Sections of this Agreement, but the
disclosure in any such section of the
Disclosure Letter shall qualify other
provisions in this Agreement to the extent
that it would be readily apparent to an
informed reader from a reading of such
section of the Disclosure Letter that it is
also relevant to other provisions of
this Agreement.
"Escrow Agent" means Krieger & Prager LLP, the escrow agent
identified in the Joint Escrow Instructions
attached hereto as ANNEX II (the
"Joint Escrow Instructions").
"Escrow Funds" means the Purchase Price delivered to the Escrow
Agent as contemplated by Sections 1(c) and
(d) hereof.
"Escrow Property" means the Escrow Funds and the Certificates
delivered to the Escrow Agent as
contemplated by Section 1(c) hereof.
"Holder" means the Person holding the relevant Securities at
the
relevant time.
"Last Audited Date" means December 31, 2004.
"Material Adverse Effect" means an event or combination of
events, which individually or in the
aggregate, would reasonably be expected to
(x) adversely affect the legality, validity
or enforceability of the Purchased
Securities or any of the Transaction
Agreements, (y) have or result in a
material adverse effect on the results of
operations, assets, or financial
condition of the Company and its
subsidiaries, taken as a whole, or (z)
adversely impair the Company's ability to
perform fully on a timely basis its
material obligations under any of the
Transaction Agreements or the transactions
contemplated thereby.
"New Common Stock" means shares of Common Stock and/or
securities convertible into, and/or other
rights exercisable for, Common Stock,
which are offered or sold in a New
Transaction.
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"New Investor" means the third party investor, purchaser or
lender (howsoever denominated) in a New
Transaction.
"New Transaction" means
(i) the offer or sale of New Common Stock by or on behalf of the
Company
to a New Investor and/or
(ii) the grant of a security interest in or pledge of (x) any or
all of
the Company's assets by the Company and/or (y) shares of the
Company's
Common Stock or securities convertible into or exercisable for
the
Company's Common Stock by any other party
in a transaction offered or consummated
after the date hereof; provided,
however, that it is specifically understood
that the term "New Transaction" (1)
includes, but is not limited to, a sale of
Common Stock or of a security
convertible into Common Stock or an equity
or credit line transaction, but (2)
does not include (a) the issuance of Common
Stock upon the exercise or
conversion of options, warrants or
convertible securities outstanding on the
date hereof, or in respect of any other
financing agreements as in effect on the
date hereof and identified in the
Disclosure Letter (provided the same is not
amended after the date of the Disclosure
Letter) or the Company SEC Documents
(provided the same is not amended after the
date hereof), (b) the issuance of
Common Stock pursuant to an Employee Stock
Option Plan (an "ESOP") of the
Company, such ESOP having been properly
approved by the shareholders of the
Company, (c) the issuance of Common Stock
pursuant to a non-employee director or
consultants' stock option plan of the
Company, (d) the issuance of Common Stock
upon the exercise of any options or
warrants referred to in the preceding
clauses of this paragraph (provided the
same is not amended after the date
hereof), (e) the issuance of shares to a
Strategic Partner, (f) the issuance of
any securities or the grant of a security
interest pursuant to a Permitted New
Transaction.
"Person" means any living person or any entity, such as, but
not
necessarily limited to, a corporation,
partnership or trust.
"Principal Trading Market" means the Over the Counter Bulletin
Board or such other market on which the
Common Stock is principally traded at
the relevant time, but shall not included
the "pink sheets."
"Purchased Securities" means the Note and the Warrant.
"Registrable Securities" means the Warrant Shares, unless such
shares can then be sold by the Holder
without volume or other restrictions or
limit.
"Registration Rights Provisions" means the piggy-back
registration rights contemplated by the
terms of this Agreement, including, but
not necessarily limited to, Section 4(h)
hereof, and of the other Transaction
Agreements.
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"Registration Statement" means an effective registration
statement covering the Registrable
Securities.
"Securities" means the Note, the Warrant and the Shares.
"Shares" means the shares of Common Stock representing any of
the Warrant Shares.
"State of Incorporation" means Delaware.
"Strategic Partner" means a third party, whether or not
currently affiliated with the Company,
hereof, which party (i) is engaged in a
business which is the business in which the
Company is engaged or a similar or
related business, and (ii) either (a)
subsequently purchases equity securities
of the Company (or securities convertible
into equity securities of the
Company), or (b) enters into an agreement
for one or more of the following: the
licensing by the Company of all or any
portion of its technology to such third
party, the licensing by such third party of
all or any portion of its technology
to the Company, or any other coordination
of all or a portion of their
respective business activities or
operations by the Company and such third
party.
"Trading Day" means any day during which the Principal Trading
Market shall be open for business.
"Transfer Agent" means, at any time, the transfer agent for the
Company's Common Stock.
"Transaction Agreements" means this Bridge Loan Agreement, the
Note, the Security Interest Agreement, the
Joint Escrow Instructions, and the
Warrant, and includes all ancillary
documents referred to in those agreements.
"Warrant" means the warrant issued to the Buyer as contemplated
by Section 4 of this Agreement.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrant.
C. FORM OF
PAYMENT; DELIVERY OF CERTIFICATES.
(i)
The Buyer shall pay the Purchase Price by delivering
immediately
available good funds in United States
Dollars to the Escrow Agent no later than
the date prior to the Closing Date.
(ii) No
later than the Closing Date, but in any event promptly
following payment by the Buyer to the
Escrow Agent of the Purchase Price, the
Company shall deliver the
<PAGE>
Certificates, each duly executed on behalf
of the Company and issued in the name
of the Buyer, to the Escrow Agent.
(iii) By signing
this Agreement, each of the Buyer and the Company,
subject to acceptance by the Escrow Agent,
agrees to all of the terms and
conditions of, and becomes a party to, the
Joint Escrow Instructions, all of the
provisions of which are incorporated herein
by this reference as if set forth in
full.
D. METHOD OF
PAYMENT. Payment into escrow of the Purchase Price
shall be made by wire transfer of funds
to:
Bank of New York
350 Fifth Avenue
New York, New York 10001
ABA# 021000018
For credit to the account of Krieger & Prager LLP
Account No.: [To be provided to the Buyer by Krieger &
Prager LLP]
Re:
Amedia 12/05 Bridge Transaction
For: [Name
of Buyer]
2. LENDER
REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.
The Buyer represents and warrants to, and covenants and agrees
with, the
Company as follows:
A. Without
limiting Buyer's right to sell the Securities pursuant
to an effective registration statement or
otherwise in compliance with the 1933
Act, the Buyer is purchasing the Securities
for its own account for investment
only and not with a view towards the public
sale or distribution thereof and not
with a view to or for sale in connection
with any distribution thereof.
B. The Buyer
is (i) an "accredited investor" as that term is
defined in Rule 501 of the General Rules
and Regulations under the 1933 Act by
reason of Rule 501(a)(3), (ii) experienced
in making investments of the kind
described in this Agreement and the related
documents, (iii) able, by reason of
the business and financial experience of
its officers (if an entity) and
professional advisors (who are not
affiliated with or compensated in any way by
the Company or any of its Affiliates or
selling agents), to protect its own
interests in connection with the
transactions described in this Agreement, and
the related documents, and to evaluate the
merits and risks of an investment in
the Securities, and (iv) able to afford the
entire loss of its investment in the
Securities.
<PAGE>
C. All
subsequent offers and sales of the Securities by the Buyer
shall be made pursuant to registration of
the relevant Securities under the 1933
Act or pursuant to an exemption from
registration.
D. The Buyer
understands that the Securities are being offered and
sold to it in reliance on specific
exemptions from the registration requirements
of the 1933 Act and state securities laws
and that the Company is relying upon
the truth and accuracy of, and the Buyer's
compliance with, the representations,
warranties, agreements, acknowledgments and
understandings of the Buyer set
forth herein in order to determine the
availability of such exemptions and the
eligibility of the Buyer to acquire the
Securities.
E. The Buyer
and its advisors, if any, have been furnished with or
have been given access to all materials
relating to the business, finances and
operations of the Company and materials
relating to the offer and sale of the
Securities which have been requested by the
Buyer, including those set forth on
in any annex attached hereto. The Buyer and
its advisors, if any, have been
afforded the opportunity to ask questions
of the Company and its management and
have received complete and satisfactory
answers to any such inquiries. Without
limiting the generality of the foregoing,
the Buyer has also had the opportunity
to obtain and to review the Company's
filings on EDGAR listed on ANNEX VI hereto
(the documents listed on such Annex VI, to
the extent available on EDGAR or
otherwise provided to the Buyer as
indicated on said Annex VI, collectively, the
"Company's SEC Documents").
F. The Buyer
understands that its investment in the Securities
involves a high degree of risk.
G. The Buyer
hereby represents that, in connection with its
purchase of the Securities, it has not
relied on any statement or representation
by the Company or any of its officers,
directors and employees or any of its
attorneys or agents, except as specifically
set forth herein.
H. The Buyer
understands that no United States federal or state
agency or any other government or
governmental agency has passed on or made any
recommendation or endorsement of the
Securities.
I. This
Agreement and the other Transaction Agreements to which the
Buyer is a party, and the transactions
contemplated thereby, have been duly and
validly authorized, executed and delivered
on behalf of the Buyer and are valid
and binding agreements of the Buyer
enforceable in accordance with their
respective terms, subject as to
enforceability to general principles of equity
and to bankruptcy, insolvency, moratorium
and other similar laws affecting the
enforcement of creditors' rights
generally.
3. COMPANY
REPRESENTATIONS, ETC. The Company represents and
warrants to the Buyer as of the date hereof
and as of the Closing Date that,
except as otherwise provided in the
Disclosure Letter or in the Company's SEC
Documents:
<PAGE>
A. RIGHTS OF
OTHERS AFFECTING THE TRANSACTIONS. There are no
preemptive rights of any shareholder of the
Company, as such, to acquire the
Note, the Warrant or the Shares. No party
has a currently exercisable right of
first refusal which would be applicable to
any or all of the transactions
contemplated by the Transaction
Agreements.
B. STATUS.
The Company is a corporation duly organized, validly
existing and in good standing under the
laws of the State of Incorporation and
has the requisite corporate power to own
its properties and to carry on its
business as now being conducted. The
Company is duly qualified as a foreign
corporation to do business and is in good
standing in each jurisdiction where
the nature of the business conducted or
property owned by it makes such
qualification necessary, other than those
jurisdictions in which the failure to
so qualify would not have or result in a
Material Adverse Effect. The Company
has registered its stock and is obligated
to file reports pursuant to Section 12
or Section 15(d) of the Securities and
Exchange Act of 1934, as amended (the
"1934 Act"). The Common Stock is quoted on
the Principal Trading Market. The
Company has received no notice, either oral
or written, with respect to the
continued eligibility of the Common Stock
for such quotation on the Principal
Trading Market, and the Company has
maintained all requirements on its part for
the continuation of such quotation.
C. AUTHORIZED
SHARES.
(i)
The authorized capital stock of the Company consists of (x)
75,000,000 shares of Common Stock, $.001
par value per share, of which
approximately 21,359,814 are outstanding as
of the date hereof, and (y)
5,000,000 shares of Preferred Stock, $.001
par value, of which (1) 52,500 shares
of the Series A 7% Convertible Preferred
Stock, par value $.001 per share and
having a Stated Value of $100 per share,
are authorized and approximately 21,403
shares are outstanding as of the date
hereof; and (2) 85,000 shares of the
Series B 8% Convertible Preferred Stock,
par value $.001 per share and having a
Stated Value of $100 per share, are
authorized and approximately 76,650 shares
are outstanding as of the date hereof.
(ii) Other
than the convertible preferred shares referred to in the
immediately preceding subparagraph (i),
there are no outstanding securities
which are convertible into shares of Common
Stock, whether such conversion is
currently exercisable or exercisable only
upon some future date or the
occurrence of some event in the future. If
any such securities are listed on the
Disclosure Letter, the number or amount of
each such outstanding convertible
security and the conversion terms are set
forth in said Disclosure Letter.
(iii) All issued
and outstanding shares of Common Stock have been duly
authorized and validly issued and are fully
paid and non-assessable. The Company
has sufficient authorized and unissued
shares of Common Stock as would be
necessary to effect the issuance of the
Shares on the Closing Date, were the
Warrant fully exercised on that date.
(iv) As of
the Closing Date, the Shares shall have been duly
authorized by all necessary corporate
action on the part of the Company, and,
when issued upon exercise of the
<PAGE>
Warrant, in accordance with its terms, will
have been duly and validly issued,
fully paid and non-assessable and will not
subject the Holder thereof to
personal liability by reason of being such
Holder.
D.
TRANSACTION AGREEMENTS AND STOCK. This Agreement and each of
the
other Transaction Agreements, and the
transactions contemplated thereby, have
been duly and validly authorized by the
Company, this Agreement has been duly
executed and delivered by the Company and
this Agreement is, and the Note, the
Warrant and each of the other Transaction
Agreements, when executed and
delivered by the Company, will be, valid
and binding agreements of the Company
enforceable in accordance with their
respective terms, subject as to
enforceability to general principles of
equity and to bankruptcy, insolvency,
moratorium, and other similar laws
affecting the enforcement of creditors'
rights generally.
E.
NON-CONTRAVENTION. The execution and delivery of this Agreement
and each of the other Transaction
Agreements by the Company, the issuance of the
Securities, and the consummation by the
Company of the other transactions
contemplated by this Agreement, the Note,
the Warrant and the other Transaction
Agreements do not and will not conflict
with or result in a breach by the
Company of any of the terms or provisions
of, or constitute a default under (i)
the certificate of incorporation or by-laws
of the Company, each as currently in
effect, (ii) any indenture, mortgage, deed
of trust, or other material agreement
or instrument to which the Company is a
party or by which it or any of its
properties or assets are bound, including
any listing agreement for the Common
Stock except as herein set forth, or (iii)
to its knowledge, any existing
applicable law, rule, or regulation or any
applicable decree, judgment, or order
of any court, United States federal or
state regulatory body, administrative
agency, or other governmental body having
jurisdiction over the Company or any
of its properties or assets, except such
conflict, breach or default which would
not have or result in a Material Adverse
Effect.
F. APPROVALS.
No authorization, approval or consent of any court,
governmental body, regulatory agency,
self-regulatory organization, or stock
exchange or market or the shareholders of
the Company is required to be obtained
by the Company for the issuance and sale of
the Securities to the Buyer as
contemplated by this Agreement, except such
authorizations, approvals and
consents that have been obtained.
G. FILINGS.
None of the Company's SEC Documents contained, at the
time they were filed, any untrue statement
of a material fact or omitted to
state any material fact required to be
stated therein or necessary to make the
statements made therein in light of the
circumstances under which they were
made, not misleading. Since November 1,
2004, the Company has timely filed all
requisite forms, reports and exhibits
thereto required to be filed by the
Company with the SEC.
H. ABSENCE OF
CERTAIN CHANGES. Since the Last Audited Date, there
has been no material adverse change and no
Material Adverse Effect, except as
disclosed in the Company's SEC Documents.
Since the Last Audited Date, except as
provided in the Company's
<PAGE>
SEC Documents, the Company has not (i)
incurred or become subject to any
material liabilities (absolute or
contingent) except liabilities incurred in the
ordinary course of business consistent with
past practices; (ii) discharged or
satisfied any material lien or encumbrance
or paid any material obligation or
liability (absolute or contingent), other
than current liabilities paid in the
ordinary course of business consistent with
past practices; (iii) declared or
made any payment or distribution of cash or
other property to shareholders with
respect to its capital stock, or purchased
or redeemed, or made any agreements
to purchase or redeem, any shares of its
capital stock; (iv) sold, assigned or
transferred any other tangible assets, or
canceled any debts owed to the Company
by any third party or claims of the Company
against any third party, except in
the ordinary course of business consistent
with past practices; (v) waived any
rights of material value, whether or not in
the ordinary course of business, or
suffered the loss of any material amount of
existing business; (vi) made any
increases in employee compensation, except
in the ordinary course of business
consistent with past practices; or (vii)
experienced any material problems with
labor or management in connection with the
terms and conditions of their
employment.
I. FULL
DISCLOSURE. To the best of the Company's knowledge, there
is no fact known to the Company (other than
general economic conditions known to
the public generally or as disclosed in the
Company's SEC Documents) that has
not been disclosed in writing to the Buyer
that would reasonably be expected to
have or result in a Material Adverse
Effect.
J. ABSENCE OF
LITIGATION. There is no action, suit, proceeding,
inquiry or investigation before or by any
court, public board or body pending
or, to the knowledge of the Company,
threatened against or affecting the Company
before or by any governmental authority or
nongovernmental department,
commission, board, bureau, agency or
instrumentality or any other person,
wherein an unfavorable decision, ruling or
finding would have a Material Adverse
Effect or which would adversely affect the
validity or enforceability of, or the
authority or ability of the Company to
perform its obligations under, any of the
Transaction Agreements. The Company is not
aware of any valid basis for any such
claim that (either individually or in the
aggregate with all other such events
and circumstances) could reasonably be
expected to have a Material Adverse
Effect. There are no outstanding or
unsatisfied judgments, orders, decrees,
writs, injunctions or stipulations to which
the Company is a party or by which
it or any of its properties is bound, that
involve the transaction contemplated
herein or that, alone or in the aggregate,
could reasonably be expect to have a
Material Adverse Effect.
K. ABSENCE OF
EVENTS OF DEFAULT. Except as set forth in Section
3(e) hereof, (i) neither the Company nor
any of its subsidiaries is in default
in the performance or observance of any
material obligation, agreement, covenant
or condition contained in any material
indenture, mortgage, deed of trust or
other material agreement to which it is a
party or by which its property is
bound, and (ii) no Event of Default (or its
equivalent term), as defined in the
respective agreement to which the Company
or its subsidiary is a party, and no
event which, with the giving of notice or
the passage of time or both, would
become an Event of Default (or its
equivalent
<PAGE>
term) (as so defined in such agreement),
has occurred and is continuing, which
would have a Material Adverse Effect.
L. ABSENCE OF
CERTAIN COMPANY CONTROL PERSON ACTIONS OR EVENTS. To
the Company's knowledge, none of the
following has occurred during the past five
(5) years with respect to a Company Control
Person:
(1) A petition under the federal bankruptcy laws or any state
insolvency
law was filed by or against, or a receiver, fiscal agent or
similar
officer was appointed by a court for the business or property of
such
Company Control Person, or any partnership in which he was a
general
partner at or within two years before the time of such filing, or
any
corporation or business association of which he was an executive
officer
at or within two years before the time of such filing;
(2) Such Company Control Person was convicted in a criminal
proceeding
or is a named subject of a pending criminal proceeding
(excluding
traffic violations and other minor offenses);
(3) Such Company Control Person was the subject of any order,
judgment
or decree, not subsequently reversed, suspended or vacated, of any
court
of competent jurisdiction, permanently or temporarily enjoining
him
from, or otherwise limiting, the following activities:
(i) acting, as an investment advisor, underwriter, broker or
dealer in securities, or as an affiliated person, director or
employee of any investment company, bank, savings and loan
association or insurance company, as a futures commission
merchant, introducing broker, commodity trading advisor,
commodity pool operator, floor broker, any other Person
regulated by the Commodity Futures Trading Commission ("CFTC")
or engaging in or continuing any conduct or practice in
connection with such activity;
(ii) engaging in any type of business practice; or
(iii) engaging in any activity in connection with the purchase
or sale of any security or commodity or in connection with any
violation of federal or state securities laws or federal
commodities laws;
(4) Such Company Control Person was the subject of any order,
judgment
or decree, not subsequently reversed, suspended or vacated, of
any
federal or state authority barring, suspending or otherwise
limiting for
more than 60 days the right of such Company Control Person to
engage in
any activity described in paragraph (3) of this item, or to be
associated with Persons engaged in any such activity; or
<PAGE>
(5) Such Company Control Person was found by a court of
competent
jurisdiction in a civil action or by the CFTC or SEC to have
violated
any federal or state securities law, and the judgment in such
civil
action or finding by the CFTC or SEC has not been subsequently
reversed,
suspended, or vacated.
M. NO
UNDISCLOSED LIABILITIES OR EVENTS. To the best of the
Company's knowledge, the Company has no
liabilities or obligations other than
those disclosed in the Transaction
Agreements or the Company's SEC Documents or
those incurred in the ordinary course of
the Company's business since the Last
Audited Date, or which individually or in
the aggregate, do not or would not
have a Material Adverse Effect. No event or
circumstances has occurred or exists
with respect to the Company or its
properties, business, operations, condition
(financial or otherwise), or results of
operations, which, under applicable law,
rule or regulation, requires public
disclosure or announcement prior to the date
hereof by the Company but which has not
been so publicly announced or disclosed.
There are no proposals currently under
consideration or currently anticipated to
be under consideration by the Board of
Directors or the executive officers of
the Company which proposal would (x) change
the articles or certificate of
incorporation or other charter document or
by-laws of the Company, each as
currently in effect, with or without
shareholder approval, which change would
reduce or otherwise adversely affect the
rights and powers of the shareholders
of the Common Stock or (y) materially or
substantially change the business,
assets or capital of the Company, including
its interests in subsidiaries.
N. NO
INTEGRATED OFFERING. Neither the Company nor any of its
Affiliates nor any Person acting on its or
their behalf has, directly or
indirectly, at any time since June 1, 2005,
made any offer or sales of any
security or solicited any offers to buy any
security under circumstances that
would eliminate the availability of the
exemption from registration under
Regulation D in connection with the offer
and sale of the Securities as
contemplated hereby.
O. DILUTION.
The number of shares issuable upon exercise of the
Warrant may have a dilutive effect on the
ownership interests of the other
shareholders (and Persons having the right
to become shareholders) of the
Company. The Company's executive officers
and directors have studied and fully
understand the nature of the Securities
being sold hereby and recognize that
they have such a potential dilutive effect.
The board of directors of the
Company has concluded, in its good faith
business judgment, that such issuance
is in the best interests of the Company.
The Company specifically acknowledges
that its obligation to issue the Warrant
Shares upon exercise of the Warrant is
binding upon the Company and enforceable
regardless of the dilution such
issuance may have on the ownership
interests of other shareholders of the
Company, and the Company will honor such
obligations, including honoring every
Notice of Exercise (as contemplated by the
Warrant), unless the Company is
su
