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
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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
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--------
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.
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<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,
