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SECURITIES PURCHASE AGREEMENT

Purchase and Sale Agreement

SECURITIES PURCHASE AGREEMENT | Document Parties: XA, INC. | Chris  G.  Andersen,Ltd. You are currently viewing:
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XA, INC. | Chris G. Andersen,Ltd.

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Title: SECURITIES PURCHASE AGREEMENT
Governing Law: New York     Date: 11/1/2006

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Exhibit 10.1


















                                    XA, INC.



                          SECURITIES PURCHASE AGREEMENT







        Dated October 26, 2006, to be effective as of September 26, 2006




















<PAGE>

     THIS   SECURITIES   PURCHASE AGREEMENT, dated as of this 26th day of October,
2006,   to   be effective as of September 26, 2006 (this "AGREEMENT"), between XA,
                                                        ---------
INC.,    a   Nevada    corporation    (the   "COMPANY"),    and   Chris   G.   Andersen,
                                  -------
Ltd.   (the   "PURCHASER")   is meant to replace and supersede the prior Securities
             ---------
Purchaser   Agreement entered into between the parties, which was dated September
26,   2006.

                              W I T N E S S E T H:

     WHEREAS,   the   Company   has   previously   entered into a Securities Purchase
Agreement   on   August   8,   2006   (the   "PRIOR   CLOSING"   and the "PRIOR PURCHASE
                                         --------------             --------------
AGREEMENT"),   whereby   it   sold an aggregate of $1,250,000 in 11% Senior Secured
---------
Convertible   Promissory   Notes   (the   "PRIOR   NOTES")   and   175,000   warrants to
                                        -------------
purchase shares of its common stock at an exercise price of $1.10 per share (the
"PRIOR   WARRANTS"),   to five entities (the "PRIOR PURCHASERS") which Prior Notes
  ---------------                             ----------------
were   secured   by   a   Security   Agreement   (the "PRIOR SECURITY AGREEMENT"). The
                                                 ------------------------
shares   of   common   stock   which   the   Prior Notes were convertible into and the
shares   of   common   stock   which the Prior Warrants were convertible into and an
aggregate   of   1,000,000   additional   warrants   previously issued exercisable at
$0.30   per   share,(collectively   the   "PRIOR   UNDERLYING   SHARES"), were granted
                                        -------------------------
registration   rights   pursuant   to   a   Registration Rights Agreement (the "PRIOR
                                                                           -----
REGISTRATION   AGREEMENT");
-----------------------

     WHEREAS,   the   Company desires to issue to the Purchaser, and the Purchaser
desires   to   purchase   from the Company, the Securities (as such term is defined
below)   as   set   forth   below   (the   "OFFERING");   and
                                      --------

      WHEREAS,   certain   capitalized   terms used in this Agreement are defined in
Section   9.1   hereof;
------------

     NOW,   THEREFORE,   in consideration of the promises and mutual covenants and
agreements   hereinafter   contained,   and for good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the parties hereto hereby
agree   as   follows:

          1.    SALE AND   PURCHASE   OF   SECURITIES.

               1.1   Sale   and   Purchase   of Securities. Subject to the terms and
                     ----------------------------------
          conditions   of   this   Agreement,   on   the   Closing Date (as defined in
          Section   3.1 hereof), the Company shall issue, sell and deliver to the
          ------------
          Purchaser,   and   the Purchaser shall purchase from the Company for the
          Purchase   Price   (as   defined   in   Section   2.1 hereof) (i) 11% Senior
                                             ------------
          Subordinated   Secured   Convertible   Promissory   Notes in the aggregate
          principal   amount   of   $100,000   (the   "NOTES")   and   (ii) warrants (a
                                                  -----
          "WARRANT"   and   collectively   the   "WARRANTS")   to   purchase   fifteen
           -------                             --------
          thousand (15,000) shares (subject to adjustment as described therein),
          of   the   Company's   common   stock,   par   value   $0.001 per share at an
          exercise   price   of $1.10 (the "COMMON STOCK"). The Notes and Warrants
                                          ------------
          shall   hereinafter   sometimes   be   collectively   referred   to   as   the
          "SECURITIES."   The   names,   addresses   and   principal   amount of Notes
            ----------
          purchased and Warrants received by the Purchaser shall be set forth on
          Schedule   1.1   hereto.
          -------------

<PAGE>

          2.    PURCHASE   PRICE.

               2.1   Purchase   Price.   The   aggregate   purchase   price   of   the
                    ---------------
          Securities   to be purchased pursuant to Section 1.1 shall be $100,000,
          (the   "PURCHASE   PRICE").
                 ---------------

               2.2   Payment of the Purchase Price. At the Closing (as defined in
                    -----------------------------
          Section   3.1   hereof),   the   Purchaser shall pay the Purchase Price by
          ------------
          wire   transfer   of immediately available funds or by such other method
          as   may   be reasonably acceptable to the Company and the Purchaser, to
          such   account   of the Company as shall have been designated in advance
          to   the   Purchaser   by the Company. The Company at its sole discretion
           may   pay   qualified   Broker Dealers a selling concession of 10% and an
          unaccountable   expense   allowance   of 3% of gross proceeds received in
          connection   with   this   Offering.

          3.   CLOSING.

               3.1   Closing   Date.   The   closing of the sale and purchase of the
                    -------------
          Securities (the "CLOSING") has previously taken place on September 30,
                           -------
          2006.   The   date   on   which the Closing is held is referred to in this
          Agreement   as the "CLOSING DATE." At the Closing (i) the Company shall
                             ------------
          deliver,   or   cause   to   be   delivered,   the   Notes and Warrants, each
          executed   by the Company and (ii) the documents referred to in Section
          8   hereof.

          4.   REPRESENTATIONS   AND WARRANTIES OF THE COMPANY. The Company hereby
     represents,   covenants   and   warrants   as   of the date hereof and as of the
     Closing   Date to the Purchaser, acknowledging that the Purchaser is relying
     upon   the   accuracy   and completeness of the representations and warranties
     set   forth   herein   to,   among other things, ensure that registration under
     Section 5 of the Securities Act is not required in connection with the sale
     of   the   Securities   hereby,   as   follows:

               4.1   Organization   and   Good   Standing;   Capitalization.
                    --------------------------------------------------

                     (a)   The   Company   (and   each Subsidiary) is duly organized,
               validly existing and in good standing under the laws of the state
               of Nevada and has the corporate power and authority to own, lease
               and   operate   its   properties   and   assets   and   to   carry on its
               business   as now conducted and as it is proposed to be conducted.
               The   Company   is   in   good   standing   under   the   laws   of   each
               jurisdiction   in   which   the   conduct   of   its   business   or   the
               ownership of its properties or assets requires such qualification
               or   authorization.

                    (b)   All   the   outstanding   shares   of   capital stock of the
               Company   have been duly authorized, and are validly issued, fully
               paid   and   non-assessable. Except as disclosed on Schedule 4.1(b)
                                                                 --------------
               (i) there is no option, warrant, call, right, commitment or other
               agreement   of any character to which the Company is a party, (ii)
               there   are   no   securities   of the Company outstanding which upon
               conversion or exchange, and (iii) there are no share appreciation
               rights,   or   other   similar   rights   based   on   securities of the
               Company   which,   in   the case of clause (i), (ii) or (iii), would
               require   the   issuance, sale or transfer of any additional shares
               of   capital   stock   or   other equity securities of the Company or
               other securities convertible into, exchangeable for or evidencing
               the   right   to   subscribe   for or purchase share capital or other
               equity   securities   of the Company. Other than as contemplated by
               this   Agreement   or   Transaction Documents (as defined in Section
                                                                         -------
                4.2),   the   Company   is   not   a party to, nor is it aware of, any
               ---

<PAGE>

               voting   trust   or other voting, stockholders or similar agreement
               with   respect   to   any of the securities of the Company or of any
               agreement relating to the issuance, sale, redemption, transfer or
               other   disposition   of   the   shares   of   capital   stock   on other
               securities   of   the   Company.

               4.2   Authorization   of Agreement; Enforceability. The Company has
                    -------------------------------------------
          all   requisite   corporate   power   and authority to execute and deliver
          this   Agreement   and   each   other   agreement, document, instrument and
          certificate,   including,   but   not   limited to, Waiver Agreements, the
          Bank   Consent,   the Notes, Warrants, Registration Rights Agreement and
          Security   Agreement,   to be executed by the Company in connection with
          the   consummation   of   the transactions contemplated by this Agreement
          (collectively,   the "TRANSACTION DOCUMENTS"), and to perform fully its
                               ---------------------
          obligations   hereunder   and   thereunder.   The   execution, delivery and
          performance   by   the   Company   of   this   Agreement and the Transaction
          Documents   have been duly authorized by all necessary corporate action
          on   the   part   of the Company and its stockholders. This Agreement and
          each   of the Transaction Documents have been duly and validly executed
          and   delivered   by   the   Company   and, assuming the due authorization,
          execution   and   delivery   thereof by the Purchaser, this Agreement and
          each   of   the   Transaction   Documents constitutes the legal, valid and
          binding obligations of the Company, enforceable against the Company in
          accordance   with   its   respective   terms,   subject   to   applicable
           bankruptcy,   insolvency,   reorganization,   moratorium and similar laws
          affecting   creditors' rights and remedies generally and subject, as to
          enforceability, to general principles of equity (regardless of whether
          enforcement   is   sought   in   a   proceeding   at   law   or   in   equity).

               4.3   No Conflicts. The execution, delivery and performance of the
                    ------------
          Transaction   Documents   by   the   Company   and   the consummation by the
          Company   of the transactions contemplated thereby, do not and will not
          (i) conflict with or violate any provision of the Company's and/or any
          Subsidiary's   Articles   of   Incorporation   or   by-laws and any and all
           amendments   thereto   (collectively,   the   "INTERNAL   DOCUMENTS"), (ii)
                                                     -------------------
          conflict   with,   or constitute a default (or an event that 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   (with   or without notice, lapse of time or both) of, any
          agreement,   credit   facility,   debt   or other instrument (evidencing a
          Company   or   Subsidiary   debt or otherwise), or other understanding to
          which   the   Company   or   any   Subsidiary   is   a   party or by which any
          property   or   asset   of   the   Company   or   any   Subsidiary is bound or
          affected, or (iii) result in a violation of any law, rule, regulation,
          order,   judgment, injunction, decree or other restriction of any court
          or   governmental   authority   to   which   the Company or a Subsidiary is
          subject (including federal and state securities laws and regulations),
          or   by   which   any property or asset of the Company or a Subsidiary is
          bound   or   affected.

               4.4   Subsidiaries,   Joint   Ventures,   Partnerships,   Etc.
                    ---------------------------------------------------

                    (a)   As   of   the   Closing (i) The Experiential Agency, Inc.,
               (ii)   XA Scenes, Inc., (iii) XA Interactive, Inc., and (iv) Fiori
               XA,   Inc.   (collectively   the   "SUBSIDIARIES")   are   the   only
                                               ------------
               subsidiaries   of   the Company. Each Subsidiary is wholly owned by
               the   Company,   is   duly   organized,   validly existing and in good
               standing   under the laws of the jurisdiction of its incorporation
               with   corporate   power and corporate authority under such laws to
               own, lease and operate its properties and conduct its business as
               currently   conducted;   and is in good standing (if applicable) in
               each   other jurisdiction in which it owns or leases property of a

<PAGE>

               nature,   or   transacts   business   of a type, that would make such
               qualification   necessary other than such qualifications which the
               failure   to   have   would   not   reasonably   be   expected to have a
               Material   Adverse   Effect.

                    (b)   Neither   the Company nor its Subsidiaries is a party to
               any   joint   venture,   partnership   or   similar   arrangement   or
               agreement.

               4.5 Consents of Third Parties. None of the execution and delivery
                    -------------------------
          by   the   Company   of this Agreement and the Transaction Documents, the
          consummation   of   the   transactions contemplated hereby or thereby, or
          compliance by the Company with any of the provisions hereof or thereof
          will   (a)   conflict with, or result in the breach of, any provision of
          the   Certificate   of   Incorporation   or   Bylaws of the Company (or any
          Subsidiary),   (b)   conflict   with,   violate,   result   in the breach or
          termination   of,   or constitute a default or give rise to any right of
          termination   or   acceleration   or right to increase the obligations or
          otherwise   modify the terms thereof under any Permit or Order to which
           the   Company   (or   any Subsidiary) is a party or any Contract to which
          the   Company   or   its Subsidiaries is bound or by which the Company or
          any   of   its properties or assets is bound, other than such conflicts,
          violations,   breaches,   defaults,   termination   or   accelerations that
          would   not   reasonably   be expected to have a Material Adverse Effect,
          (c)   constitute   a   violation of any Law applicable to the Company (or
          any   Subsidiary)   or   (d)   result in the creation of any Lien upon the
          properties   or   assets of the Company (or any Subsidiary). No consent,
          waiver, approval, Order, Permit or authorization of, or declaration or
          filing   with,   or   notification to, any Person or Governmental Body is
          required   on   the   part   of   the   Company   and/or   its Subsidiaries in
          connection   with   the execution and delivery of this Agreement, and/or
          the   Transaction   Documents, or the compliance by the Company with any
          of   the   provisions   hereof   or   thereof.

               4.6   Authorization   of   Securities.
                    -----------------------------

                    (a) On the Closing Date, the issuance, sale, and delivery of
               the   Securities to be purchased pursuant to Section 1.1 will have
                                                           -----------
               been duly authorized by all requisite action of the Company, and,
               when issued, sold, delivered and paid for in accordance with this
               Agreement, the Securities will be validly issued and outstanding,
               with   no   personal   liability attaching to the ownership thereof.

                    (b)   On   the   Closing Date, the issuance and delivery of the
               shares   of   Common   Stock   to be delivered upon conversion of the
               Notes (the "CONVERSION SHARES") and upon exercise of the Warrants
                           -----------------
               (the   "WARRANT   SHARES")   in   accordance   with   the terms thereof
                      ---------------
               (collectively, the Conversion Shares and the Warrants Shares, the
               "UNDERLYING   SHARES")   will   have   been   duly   authorized   by all
                ------------------
               requisite action of the Company and, when issued and delivered in
               accordance   with   the   terms   of   the   Securities, the Underlying
               Shares   will   be   validly   issued and outstanding, fully paid and
               non-assessable,   with   no   personal   liability   attaching   to the
               ownership   thereof,   and   not   subject to preemptive or any other
               similar   rights   of   the   stockholders   of the Company or others.

               4.7   Certain   Waivers.
                    ----------------

                    (a)   The Waiver of Rights Agreement (the "WAIVER AGREEMENT")
                                                              ----------------
               entered   into as of July 17, 2006, effective as of June 30, 2006,

<PAGE>

               and   extended   via email on August 3, 2006, to August 9, 2006, by
               Alpha   Capital   Aktiengesellschaft,   Stonestreet   Limited
               Partnership,   Whalehaven   Funds   Limited,   Greenwich   Growth Fund
               Limited   and   Genesis Microcap Inc. (each a "PRIOR NOTE CREDITOR"
                                                            -------------------
                and   collectively   the   "PRIOR   NOTE   CREDITORS") in favor of the
                                        ----------------------
               Company   is   a   valid   and   binding   agreement,   duly   executed,
               enforceable   against   the   Company   and   each   Note   Creditor   in
               accordance with its terms and is in full force and effect. To the
               best of the Company's knowledge, no action has been brought or is
               contemplated to be brought changing the enforcement of the Waiver
               Agreement.   The   executed   Waiver Agreement is attached hereto as
               Schedule   4.7(a).

                    (b)   The   Waiver   of   Rights   Agreement   (the "SECOND WAIVER
                                                                    -------------
               AGREEMENT")   entered   into as of September 13, 2006, by the Prior
               ---------                                                    -----
               Note   Creditors   in   favor   of the Company is a valid and binding
               ---------------
               agreement,   duly   executed,   enforceable   against the Company and
               each   Note   Creditor   in accordance with its terms and is in full
               force   and   effect.   To   the   best of the Company's knowledge, no
               action has been brought or is contemplated to be brought changing
               the   enforcement   of   the   Second   Waiver Agreement. The executed
               Second   Waiver   Agreement is attached hereto as Schedule 4.78(b).

               4.8   Capitalization. Schedule 4.8 hereto sets forth in detail all
                    -------------    ------------
          outstanding   securities   of   the   Company   (including   the   terms, the
           holders   and the amounts thereof). Other than as disclosed in Schedule
                                                                        --------
          4.8,   (i) there are no outstanding securities of the Company or any of
          ---
           its   Subsidiaries   which contain any preemptive, redemption or similar
          provisions,   nor   is   any   holder   of securities of the Company or any
          Subsidiary entitled to preemptive or similar rights arising out of any
          agreement   or   understanding   with   the   Company   or any Subsidiary by
          virtue   of   any   of   the   Transaction   Documents,   and   there   are   no
          contracts,   commitments,   understandings   or arrangements by which the
          Company   or any of its Subsidiaries is or may become bound to redeem a
          security   of   the Company or any of its Subsidiaries; (ii) the Company
          does   not   have any stock appreciation rights or "phantom stock" plans
          or agreements or any similar plan or agreement; and (iii) there are no
          outstanding options, warrants, script rights to subscribe to, calls or
          commitments   of   any   character whatsoever relating to, or securities,
          except   as   a   result   of   the   purchase   and   sale of the Transaction
          Securities,   or rights or obligations convertible into or exchangeable
          for,   or   giving any Person any right to subscribe for or acquire, any
          shares   of Common Stock, or contracts, commitments, understandings, or
          arrangements   by   which the Company or any Subsidiary is or may become
          bound   to   issue   additional shares of Common Stock, or secur-ities or
          rights   convertible   or   exchangeable   into   shares   of   Common Stock.

               4.9   SEC Reports; Financial Statements. The Company has filed all
                    ---------------------------------
          reports   required   to   be filed by it under the Securities Act and the
          Exchange   Act, including pursuant to Section 13(a) or Section 15(d) of
          the   Exchange   Act, for the one (1) year preceding the date hereof (or
          such   shorter   period   as the Company was required by law to file such
          material)   (the   foregoing   materials, including the exhibits thereto,
          being   collectively   referred   to   herein as the "SEC REPORTS"). As of
                                                            -----------
          their   respective   dates,   the   SEC   Reports   complied in all material
          respects   with the requirements of the Securities Act and the Exchange
          Act   and   the   rules   and   regulations   of   the Commission promulgated
          thereunder,   as   applicable,   and none of the SEC Reports, when filed,
           contained   any untrue statement of a material fact or omitted to state
          a material fact required to be stated therein or necessary in order to
          make the statements therein, in light of the circumstances under which
          they   were   made, not misleading. All material agreements to which the
          Company   is   a party or to which the property or assets of the Company
          are   subject   have   been   filed   as exhibits to the SEC Reports to the
          extent   required.   The financial statements of the Company included in
          the   SEC   Reports   comply   in   all   material   respects with applicable

<PAGE>

          accounting   requirements   and   the   rules   and   regulations   of   the
          Commission   with   respect   thereto as in effect at the time of filing.
          Such   financial   statements   have   been   prepared   in   accordance with
          generally accepted accounting principles applied on a consistent basis
          during   the   periods   involved   ("GAAP"),   except   as may be otherwise
                                            ----
          specified in such financial statements or the notes thereto and except
          that   unaudited   financial   statements   may   not contain all footnotes
          required   by   GAAP,   and   fairly   present in all material respects the
          financial position of the Company and its consolidated subsidiaries as
          of   and   for   the dates thereof and the results of operations and cash
          flows   for   the   periods then ended, subject, in the case of unaudited
          statements,   to   normal,   immaterial,   year-end   audit   adjustments.
          Additionally,   since   the   adoption   of the Sarbanes-Oxley Act of 2002
          (the   "NEW   ACT") and to the extent that the Company is subject to the
                 --------
          New   Act,   the   Company has complied in all material respects with the
          laws,   rules   and   regulation   under   the   New   Act.

               4.10   Material   Changes.   Since   December 31, 2005, (i) there has
                     -----------------
          been   no   event,   occurrence or development that has had or that could
          reasonably   be   expected   to result in a Material Adverse Effect, (ii)
          the   Company   has not incurred any material liabilities (contingent or
          otherwise) other than (A) trade payables and accrued expenses incurred
          in   the   ordinary course of business consistent with past practice and
          (B)   liabilities   not   required   to   be   reflected   in   the   Company's
          financial   statements   pursuant to GAAP or required to be disclosed in
          filings   made   with   the Commission, (iii) the Company has not altered
          its   method   of   accounting   or the identity of its auditors, (iv) the
          Company   has   not   declared   or   made   payment   or distribution of any
          dividend   or   distribution of cash or other property to its holders of
          Common Stock or purchased, redeemed or made any agreements to purchase
          or   redeem any shares of its capital stock and (v) the Company has not
          issued   any   equity   securities to any officer, director or Affiliate,
          except   pursuant   to   existing   Company   stock   option   plans.

               4.11   No   Undisclosed Liabilities. Other than as disclosed in the
                     ---------------------------
          SEC   Reports,   neither   the   Company   nor   its   Subsidiaries   has   any
          liabilities   (whether   accrued, absolute, contingent or otherwise, and
          whether   due   or   to become due or asserted or unasserted), except (a)
          liabilities   provided   for   in   the   Financial   Statements (other than
          liabilities   which,   in   accordance with GAAP, need not be disclosed),
          (b)   liabilities disclosed on Schedule 4.11 hereto and (c) liabilities
                                        -------------
          incurred   in   the   ordinary course of business which do not materially
          exceed   historic   levels.

               4.12   Absence   of Certain Developments. In the ordinary course of
                     --------------------------------
          business   or   in   the context of the Transactions contemplated in this
          Agreement   and   the   Transaction   Documents:

                    (a)   there   has not been any Material Adverse Change nor has
               any   event   occurred   which   could result in any Material Adverse
               Change;

                    (b)   there   has   not   been any declaration, setting a record
               date,   setting   aside or authorizing the payment of, any dividend
               or   other   distribution in respect of any shares of capital stock

<PAGE>

               of   the Company or its Subsidiaries or any repurchase, redemption
               or   other   acquisition by the Company or its Subsidiaries, of any
               of   the   outstanding   shares of capital stock or other securities
               of,   or   other   ownership   interest   in,   the   Company   or   its
               Subsidiaries;

                    (c)   there   has   not been any transfer, issue, sale or other
               disposition   by   the   Company   of   any shares of capital stock or
               other   securities of the Company or its Subsidiaries or any grant
               of   options,   warrants,   calls   or   other   rights   to purchase or
               otherwise   acquire   shares   of   such   capital stock or such other
               securities;

                    (d) neither the Company nor its Subsidiaries has (i) awarded
               or   paid   any   bonuses   to   employees   or   representatives of the
               Company, (ii) entered into any employment, deferred compensation,
               severance or similar agreements (nor amended any such agreement),
               other   than   in   the   ordinary   course   of   business;

                    (e)   neither   the   Company nor its Subsidiaries has made any
               loans, advances (other than advances to officers and employees of
               the   Company   or   its Subsidiaries which advances are made in the
               ordinary   course   of   business),   or capital contributions to, or
               investments   in,   any   Person or paid any fees or expenses to any
               Affiliate   of   the   Company   other   than   its   Subsidiaries;

                    (f) neither the Company nor its Subsidiaries has transferred
               or   granted   any   rights under any Contracts or licenses, used by
                the   Company   in   its   business;

                    (g)   there   has   not   been   any damage, destruction or loss,
               whether or not covered by insurance, with respect to the property
               or assets of the Company or its Subsidiaries having a replacement
               cost   of more than $10,000 for any single loss or $20,000 for all
               such   losses;

                    (h)   neither the Company nor its Subsidiaries has mortgaged,
               pledged   or   subjected to any Lien any of its assets, or acquired
               any   assets   for   a   purchase   price   in excess of $10,000 in the
               aggregate   or   sold,   assigned,   transferred, conveyed, leased or
               otherwise   disposed   of   any   assets   of   the   Company   or   its
               Subsidiaries   for   a   sale   price   in   excess   of   $10,000 in the
               aggregate   except   for   assets   acquired   or   sold,   assigned,
               transferred,   conveyed,   leased   or   otherwise disposed of in the
               ordinary   course   of   business;

                    (i) neither the Company nor its Subsidiaries has canceled or
               compromised   any debt or claim, or amended, canceled, terminated,
               relinquished, waived or released any Contract or right, except in
               the ordinary course of business consistent with past practice and
               which, individually or in the aggregate, would not be material to
               the   Company   or   its   Subsidiaries;

                    (j)   neither   the   Company nor its Subsidiaries has made any
               binding   commitment   to   make any capital expenditures or capital
               additions   or   betterments   in   excess of $20,000 individually or
                $50,000   in   the   aggregate;

                    (k)   neither   the   Company nor its Subsidiaries has incurred
               any   debts,   obligations or liabilities, whether due or to become
               due,   except   current liabilities incurred in the ordinary course
               of   business,   none of which current liabilities (individually or
               in   the   aggregate)   could   result   in a Material Adverse Change;

<PAGE>

                    (l)   neither   the   Company   nor its Subsidiaries has entered
               into   any   transaction   other   than   in   the   ordinary   course of
               business   except for (in the case of the Company) this Agreement;

                    (m) neither the Company nor its Subsidiaries has encountered
               any   labor   difficulties   or   labor   union organizing activities;

                    (n)   neither   the   Company nor its Subsidiaries has made any
               change   in   the   accounting   principles,   methods   or   practices
                followed   by it or depreciation or amortization policies or rates
               theretofore   adopted;

                    (o)   neither   the Company nor its Subsidiaries has disclosed
               to   any   Person any material trade secrets except for disclosures
               made   to Persons subject to valid and enforceable confidentiality
               agreements;

                    (p) neither the Company nor its Subsidiaries has suffered or
               experienced   any change in the relationship or course of dealings
               between   the   Company   and/or   its   Subsidiaries and any of their
               suppliers   or   customers   which   supply   goods or services to the
               Company   or   its   Subsidiaries or purchase goods or services from
               the   Company   and   or   its   Subsidiaries;   and

                    (q)   neither   the   Company nor its Subsidiaries has made any
               payment to, or received any payment from, or made or received any
                investment   in,   or   entered   into   any   transaction or series of
               related transactions (including without limitation, the purchase,
               sale,   exchange   or lease of assets, property or services, or the
               making   of   a loan or guarantee) with any Affiliate in each case,
               in   excess   of   $10,000   or   its   equivalent   (other   than   any
               transactions   between   or among the Company and its Subsidiaries)
               (each,   an   "AFFILIATE   TRANSACTION").
                            ----------------------

               4.13   Taxes.   The Company and its Subsidiaries have filed all Tax
                     -----
          returns   (including   statements   of   estimated Taxes owed) and reports
          required   to   be   filed   within   the   applicable   periods   (subject to
          extensions)   for   such   filings and have paid all Taxes required to be
          paid,   and   has   established   adequate   reserves (net of estimated Tax
           payments already made) for the payment of all Taxes payable in respect
          of   the period subsequent to the last periods covered by such returns.
          No deficiencies for any Tax are currently assessed against the Company
          or   any   Subsidiary.   There   is   no   Tax   Lien, whether imposed by any
          federal,   state   or   local   taxing   authority, outstanding against the
          assets,   properties   or   business   of   the Company or its Subsidiaries
          other   than Liens for Taxes which are not yet due. Neither the Company
          nor   its   Subsidiaries   has   executed   any   waiver   of   the statute of
          limitations on the assessment or collection of any Tax or governmental
          charge.   The   Company   and   its   Subsidiaries   have   properly charged,
          collected   and paid all applicable stamp, sales, use and other similar
          Taxes   on   or   before   the   Closing   Date.

               4.14   Real Property. The Company currently has (i) leased certain
                      -------------
          locations for office space and all material leases, and (ii) owns real
          property,   all of which leases and real property are listed (including
          the   terms   of   such   leases)   on   Schedule   4.14.
                                              --------------

               4.15   Tangible   Personal   Property; Assets. All material items of
                     ------------------------------------
          personal   property   and   assets owned or leased by the Company and its
          Subsidiaries   are   in   good   operating condition, normal wear and tear
          excepted.

<PAGE>

               4.16   Intangible   Property. The Company and its Subsidiaries own,
                     --------------------
           or   possess   adequate   rights or licenses to use all trademarks, trade
          names,   service   marks,   service   mark   registrations,   service names,
          patents,   patent   rights, copyrights, inventions, licenses, approvals,
          governmental   authorizations,   trade   secrets   and rights necessary to
          conduct   their   respective   businesses   as   now conducted, the lack of
          which   could reasonably be expected to have a Material Adverse Effect.
          The   Company   and   its   Subsidiaries   do not have any knowledge of any
          infringement   by   the Company or its Subsidiaries of trademarks, trade
          name rights, patents, patent rights, copyrights, inventions, licenses,
          service   names,   service   marks,   service   mark   registrations,   trade
          secrets   or other similar rights of others, or of any such development
          of   similar   or   identical   trade   secrets or technical information by
          others   and   no   claim,   action or proceeding has been made or brought
          against,   or   to the Company's knowledge, has been threatened against,
          the   Company   or   its   Subsidiaries   regarding   trademarks, trade name
          rights,   patents,   patent   rights,   inventions,   copyrights, licenses,
          service   names,   service   marks,   service   mark   registrations,   trade
          secrets   or other infringement, except where such infringement, claim,
          action   or   proceeding would not reasonably be expected to have either
          individually   or   in   the aggregate a Material Adverse Effect. None of
          the   Company's employees, officers, or consultants are obligated under
          any   contract   (including   licenses,   covenants, or commitments of any
          nature)   or   other   agreement,   or subject to any judgment, decree, or
          order of any court or administrative agency, that would interfere with
          the   use   of   such employee's, officer's, or consultant's commercially
          reasonable   efforts   to   promote   the interests of the Company or that
          would   conflict   with the Company's business as conducted. Neither the
          execution   nor delivery of the Transaction Documents, nor the carrying
          on   of the Company's business by the employees of the Company, nor the
          conduct   of   the Company's business, will, to the Company's knowledge,
          conflict   with   or   result   in   a   breach of the terms, conditions, or
          provisions   of, or constitute a default under, any contract, covenant,
          or   instrument   under   which   any   of   such   employees,   officers   or
          consultants   are   now   obligated.

               4.17   Material   Contracts.
                     -------------------

               Other   than as set forth on Schedule 4.17, or otherwise disclosed
                                           -------------
          in   the   Company's   Securities   and   Exchange   Commission   filings (a)
          neither   the   Company nor its Subsidiaries nor any of their respective
          properties   or   assets   is a party to or bound by any (i) Contract not
          made   in the ordinary course of business, or involving a commitment or
          payment   by   the Company or any Subsidiary in excess of $10,000 or, in
          the   Company's   belief,   otherwise   material   to   the   business of the
          Company or its Subsidiaries, (ii) Contract among members or granting a
          right   of first refusal or for a partnership or a joint venture or for
          the   acquisition,   sale or lease of any assets or share capital of the
          Company   or   any other Person or involving a sharing of profits, (iii)
          mortgage,   pledge,   conditional   sales   contract,   security agreement,
          factoring agreement or other similar Contract with respect to any real
          or tangible personal property of the Company or its Subsidiaries, (iv)
          loan   agreement,   credit   agreement,   promissory   note,   guarantee,
          subordination agreement, letter of credit or any other similar type of
          Contract, (v) Contract with any Governmental Body outside the ordinary
          course   of   business,   (vi)   Contract   with   respect to the discharge,
          storage   or removal of hazardous materials or (vii) binding commitment
          or   agreement   to   enter   into   any   of   the   foregoing.

                    (b)   (i)   Each   of   the Contracts listed on Schedule 4.17 is
                                                                -------------
               valid   and enforceable against the Company or its Subsidiaries in
               accordance   with   its   terms,   subject   to applicable bankruptcy,
               insolvency, reorganization, moratorium and similar laws affecting
                creditors'   rights   and   remedies   generally   and   subject, as to

<PAGE>

               enforceability,   to   general   principles of equity (regardless of
               whether   enforcement   is   sought   in   a   proceeding   at law or in
                equity),   and   there   is   no default under any Contract listed on
               Schedule   4.17   by   the Company or any of its Subsidiaries or, to
               --------------
               the   knowledge   of the Company, by any other party thereto, which
               is   likely   to   have   a Material Adverse Effect, and no event has
               occurred   that   with the lapse of time or the giving of notice or
               both   would   constitute a default by the Company thereunder which
                is   likely   to   have   a   Material   Adverse   Effect.

                         (ii)   No   previous or current party to any Contract has
                    given written notice to the Company or any Subsidiary of, or
                    made   a claim, verbal or written, with respect to any breach
                    or   default   thereunder   and the Company has no knowledge of
                    any   notice   of   or claim with respect to any such breach or
                    default   other   than   such notices or claims with respect to
                    any   such   breaches   or   defaults   that   would   not,   either
                    individually   or in the aggregate, be reasonably expected to
                    have   a   Material   Adverse   Effect.

                    (c)   With   respect   to the Contracts listed on Schedule 4.17
                                                                   -------------
               that   were   assigned   to the Company or any Subsidiary by a third
                party,   all   necessary   consents   to   such   assignment   have been
               obtained   other   than   such   contents which the failure to obtain
               would   not   be   reasonably   expected   to   have a Material Adverse
               Effect.

               4.18   Employee   Benefits.   Except   as set forth on Schedule 4.18,
                     ------------------                            -------------
          neither   the   Company   nor   any   of its Subsidiaries has in effect any
          employment   agreements,   consulting agreements, deferred compensation,
          pension   or retirement agreements or arrangements, bonus, incentive or
          profit-sharing   plans   or   arrangements,   or   labor   or   collective
          bargaining   agreements,   written   or   oral.   The   Company   and   its
          Subsidiaries   are   in   compliance   in   all   material respects with all
          applicable   Laws   relating   to   labor,   employment,   fair   employment
          practices,   terms   and   conditions of employment, and wages and hours.

               4.19   Employees.
                     ---------

                    (a)   No   key   executive   Employee,   group   of   Employees nor
               independent   contractors   of   the Company or its Subsidiaries has
               any   plans   to terminate his or her employment or relationship as
               an   Employee   or   independent   contractor with the Company or its
               Subsidiaries.

                    (b) To the best of the Company's knowledge, no key executive
               Employee or any other Employee of the Company or its Subsidiaries
               is   a   party   to   or   is   otherwise   bound   by   any   agreement or
               arrangement   (including,   without   limitation,   confidentiality
               agreements,   non-competition   agreements, licenses, covenants, or
               commitments   of   any nature), or subject to any judgment, decree,
               or   Order   of   any   court   or   Governmental   Body, (i) that would
                conflict   with   such   employee's obligation diligently to promote
               and   further   the   interest of the Company or its Subsidiaries or
               (ii) that would conflict with the Company's (or its Subsidiaries)
               business   as   now   conducted   or   as   proposed   to   be conducted.

                    (c)   Schedule   4.19(c)   sets forth a list of each of the key
                         ----------------
               executive   Employees   of   the   Company   who   have entered into an
               employment   and/or   confidentiality   agreement   with the Company.

               4.20   Litigation. Other than is set forth on Schedule 4.20, there
                     ----------                              -------------
           is   no   action,   suit,   inquiry,   notice   of   violation, proceeding or

<PAGE>

          investigation   pending   or, to the knowledge of the Company, currently
          threatened   against or affecting the Company, any Subsidiary or any of
          their   respective   properties   before   or   by   any   court, arbitrator,
          governmental   or   administrative   agency   and/or   regulatory authority
          (federal,   state,   county,   local   or   foreign),   (collectively,   an
          "ACTION")   which does and/or could (i) adversely affects or challenges
           ------
          the   legality,   validity   or   enforceability of any of the Transaction
          Documents   and/or   the   Transaction   Securities   or   to consummate the
          transactions   contemplated   hereby   or thereby or (ii) could, if there
          were an unfavorable decision, have or reasonably be expected to result
          in,   either   individually   or   in   the   aggregate,   a Material Adverse
          Effect.   The   Commission   has not issued any stop order or other order
          suspending   the   effectiveness   of any registration statement filed by
          the Company or any Subsidiary under the Exchange Act or the Securities
          Act.   The   foregoing includes, without limitation, actions, pending or
          threatened (or any basis therefor known to the Company), involving the
          prior   employment   of   any   of   the   Company's employees, their use in
          connection   with   the   Company's   business   of   any   information   or
          techniques   allegedly proprietary to any of their former employers, or
          their   obligations   under   any   agreements   with   prior employers. The
          Company   is   not   a   party   or subject to the provisions of any order,
          writ,   injunction,   judgment,   or   decree   of   any court or government
          agency   or   instrumentality.

               4.21   Compliance   with Laws; Permits. Neither the Company nor any
                     ------------------------------
          Subsidiary   (i)   is   in default under or in violation of (and no event
          has   occurred   that   has not been waived that, with notice or lapse of
          time   or   both,   would   result   in   a   default   by   the Company or any
           Subsidiary   under),   nor   has   the   Company or any Subsidiary received
          notice   of   a   claim   that   it   is   in   default under or that it is in
          violation of, any indenture, mortgage, decree, lease, license, loan or
          credit agreement or any other agreement or instrument to which it is a
          party or by which it or any of its properties is bound (whether or not
          such   default   or   violation has been waived), (ii) is in violation of
          any   order   of any court, arbitrator or governmental body, or (iii) is
          or   has   been   in   violation of any statute, rule or regulation of any
          governmental   authority,   including   without   limitation   all foreign,
          federal,   state   and   local laws applicable to its business, except in
          the   case   of   clauses   (i),   (ii)   and (iii) as would not result in a
          Material   Adverse   Effect.   Neither   the   Company   nor   any   of   the
          Subsidiaries   has   received   any written notice of any violation of or
          noncompliance   with,   any   federal,  


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