Exhibit 2.5
NOTE PURCHASE AGREEMENT
This Note Purchase
Agreement (this "AGREEMENT") is made as of April
1, 2005 (the
"CLOSING
DATE") by and between
Relationserve,
Inc.,
a Delaware
corporation (the "Company"), and the persons or entities listed as
investors and
set forth on Schedule 1, annexed hereto (the "HOLDERS").
W I T N E S S E T H:
WHEREAS,
the Company desires to sell and issue to the Holders,
and
the Holders wish to purchase
from the Company
$240,000 of the
Company's
four
(4%) percent
Notes (the
"NOTES") due December 31, 2005 (the
"MATURITY
DATE")
having the rights and
privileges
set forth in the Form of Note of the
Company
substantially as set forth on Exhibit A annexed hereto; and
WHEREAS, as additional
consideration for the purchase of the Notes,
Company
has
agreed
to issue and sell to the
Holders
4,000,000
shares
(the
"INVESTOR
SHARES") of common stock, par value $0.0001 per share, of the
Company
(the
"COMMON
STOCK"),
and
issue
to
the
Holders
ten-year
warrants
(the
"WARRANTS") to purchase
6,000,000 shares (the "WARRANT SHARES") of Common Stock
at $0.50 per share as set forth on Schedule 1 annexed hereto.
Now, therefore, for good and valuable consideration, the receipt
and
sufficiency
of which are hereby
acknowledged,
the
parties to this
Agreement
hereby agree as follows:
1. THE FUNDS.
On the Closing Date, the Holders shall deliver to the
Company
$240,000 in cash (the "FUNDS") by delivery of a certified check
payable
to the Company or by wire transfer to the account of the Company.
2. THE NOTE.
On the Closing
Date,
the Company
shall
execute and
deliver to the Holders a promissory note, the form of which is
annexed hereto as
Exhibit A.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby
represents and warrants to the Holders as follows:
(a) ORGANIZATION AND STANDING.
The Company is a corporation duly
organized and validly existing under, and by virtue of, the laws of
the State of
Delaware and is in good standing
under such laws. The Company has the requisite
corporate
power to own and operate its properties
and assets,
and to carry on
its business as presently conducted and as proposed to be
conducted.
(b) NO CONFLICT.
This
Agreement does not: (i) conflict with any
provision of the
Company's
Certificate
of
Incorporation
or Bylaws,
both as
amended to date;
or (ii)
conflict
with,
or constitute a default (or an event
which with
notice or lapse of time or both would
become a default)
under,
or
give
to
others
any
rights
of
termination,
amendment,
acceleration
or
cancellation of, any agreement,
indenture, patent, patent license or instrument
to which the Company is a party;
or (iii) result in a violation of any federal,
state,
local or
foreign
law,
rule,
regulation,
order,
judgment
or decree
(including Federal and state securities laws and regulations)
applicable to the
Company or by which any property or asset of the Company is bound
or affected.
(c)
AUTHORIZATION.
The execution,
delivery and
performance of
this
Agreement
by the
Company
has
been
duly
authorized
by all
requisite
corporate
action,
and
constitutes
the valid and binding
obligations
of the
Company
enforceable in accordance with its terms,
subject as to enforcement of
remedies to applicable bankruptcy,
insolvency,
reorganization, or similar laws
relating to or affecting the enforcement of creditors' rights.
(d)
CAPITALIZATION.
The authorized capital stock of the Company
consists of 40,000,000
shares of Common Stock,
of which 1,000 shares of Common
Stock are issued and
outstanding,
and 1,000,000 shares of preferred stock, par
value $0.0001 per share.
(e) COMMON
SHARES.
The
Investor
Shares
are,
and the Warrant
Shares,
when issued,
will be, validly issued,
fully-paid and
non-assessable,
free and clear of any and all liens, claims and encumbrances. The
Warrant Shares
will be reserved for issuance, based upon a conversion price of
$0.50 per share.
(f) NO
UNDISCLOSED
LIABILITIES.
The
Company
has no
material
liabilities
or
obligations
not
disclosed
to the
Holders,
other than those
liabilities
incurred in the ordinary
course of the
Company's
business
since
March 29, 2005 its date of formation,
incurred in connection with
organization
activities and this Agreement.
(g)
BROKERS.
Neither
the Holders nor the Company has taken any
action
which
would
give
rise
to any
claim
by
any
person
for
brokerage
commissions,
finder's
fees or similar
payments
by the Company or the Holders
relating to this Agreement or the transactions contemplated hereby.
4.
REPRESENTATIONS
AND
WARRANTIES
OF THE
HOLDERS.
The
Holders
represent
and
warrant to the Company as of the
Closing
Date as follows
(the
Note, the Investor Shares and the Warrant Shares are collectively
referred to as
the "SECURITIES"):
(a) All action on the part of the Holders for the
authorization,
execution,
delivery and
performance by the Holders of this Agreement have been
taken,
and this
Agreement
constitutes
a valid and binding
obligation of the
Holders,
enforceable in accordance with its terms,
except as may be limited by
applicable bankruptcy,
insolvency,
reorganization, or similar laws relating to
or affecting the enforcement of creditors' rights.
(b) The Holders are acquiring the
Securities
for investment for
their own account and not with a view to, or for resale in
connection
with, any
distribution. The Holders understand that the Securities to be
acquired have not
been
registered
under the Act of 1933, as amended (the "ACT"),
by reason of a
specific
exemption
from the
registration
provisions of the Act which depends
upon,
among
other
things,
the bona fide nature of the
investment
intent as
expressed herein.
2
(c) The Holders
represent that except as otherwise
disclosed to
the Company, in writing, prior to the Holders' execution of this
Agreement,
the
Holders
are each an
Accredited
Investor,
as defined in Rule 501
promulgated
under the Act. The Holders also
represent
the Holders have not been
organized
solely for the purpose of acquiring the Securities.
(d) The Holders are
experienced
in evaluating
and investing in
securities of companies similarly situated to the Company,
and acknowledge that
they
are
able to
fend
for
themselves,
can
bear
the
economic
risk of an
investment
in the
Securities,
and
have
such
knowledge
and
experience
in
financial or business matters that they are capable of evaluating
the merits and
risks of the investment in the Securities.
(e) The Holders
believe they have
received all the
information
they
consider
necessary or
appropriate
for deciding
whether to purchase the
Securities.
The
Holders
further
represent
that
such
Holders
have
had an
opportunity to ask questions and receive answers from the Company
regarding the
terms
and
conditions
of the
offering
of the
Securities
and the
business,
properties, prospects and financial condition of the Company.
(f) The
Holders
acknowledge
that the
Securities
must be held
indefinitely unless subsequently registered under the Act or unless
an exemption
from such registration is available.
The Holders are aware of the provisions of
Rule 144
promulgated
under the Act which permits
limited resale of securities
purchased
in a
private
placement
subject
to
the
satisfaction
of
certain
conditions, including, unless the Holders are an affiliate of the
Company, among
other things,
the availability of certain current public
information about the
Company, the resale occurring not less than one year after a party
has purchased
and paid for the
securities
to be sold,
the sale
being
through a
"broker's
transaction" or in
transactions
directly with a "market maker," and the number
of shares
being sold
during any
three-month
period not
exceeding
specified
limitations.
(g) The Holders hereby
represent that the Holders have satisfied
themselves as to the full observance of the laws of the Holders'
jurisdiction in
connection
with any
invitation to subscribe
for the
Securities or any use of
this
Agreement,
including:
(i) the legal
requirements
within
the
Holders'
jurisdiction
for the
purchase of the
Securities;
(ii) any
foreign
exchange
restrictions
applicable
to such
purchase;
(iii)
any
governmental
or other
consents
that may need to be
obtained;
and (iv) the
income tax and other tax
consequences, if any, that may be relevant to the purchase,
holding, redemption,
conversion,
sale, or transfer of the Securities.
The Holders' subscription and
payment for, and the Holders' continued
beneficial ownership of the Securities,
will
not
violate
any
applicable
securities
or other
laws of the
Holders'
jurisdiction.
The Holders
understand
and agree that it (and not the
Company)
shall be
responsible
for its own tax
liability
that may arise as a result of
this investment or the transactions contemplated by this Agreement
5. LEGENDS. All certificates
representing any shares of the capital
stock of the Company
issuable
upon
conversion of the Note shall have endorsed
thereon a legend substantially as follows:
3
"THESE
SECURITIES HAVE NOT BEEN
REGISTERED
UNDER THE
SECURITIES ACT OF 1933.
THEY MAY NOT BE SOLD,
OFFERED
FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE
REGISTRATION
STATEMENT AS TO THE SECURITIES
UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
6. FILING OF REGISTRATION STATEMENT.
A.
DEMAND.
Upon
demand
by
Holders
given
following
issuance
by the
Company of any amount in excess of
$1,000,000
of
additional
securities issued by the Company
following the date of this Agreement,
Company
shall
prepare,
and, as soon as practicable
(a) file a registration
statement
with
respect to the resale by
Holders
(or any
transferee
or
assignee
from
Holders) of the Investor Shares and the Warrant Shares and shall
include therein
such
number
of shares of Common
Stock as are held by
Holders
(and
Holder's
transferees
or assignees) at the time of such
registration
(the
"REGISTRABLE
SECURITIES") (the
"REGISTRATION
STATEMENT").
The Company agrees that it shall
file within
thirty (30) days of demand and shall use its best
efforts to cause
to be declared effective a Registration Statement for all
Registrable Securities
by the Securities and Exchange
Commission ("SEC") no later than one-hundred and
eighty
(180) days from the filing date.
In the event
either of these
periods
shall not be met,
the Company
shall pay a cash penalty of two (2%) percent per
month of the Original Note principal amount
