Exhibit
10.6
XA, INC.
SECURITIES PURCHASE AGREEMENT
As of October 23, 2006
<PAGE>
THIS
SECURITIES
PURCHASE AGREEMENT,
dated as of this 23th day of October,
2006 (this "AGREEMENT"), between XA, INC., a Nevada corporation
(the "COMPANY"),
---------
-------
and Vision
Opportunity
Master Fund, Ltd. (the "PURCHASER").
---------
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;
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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
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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
$1,250,000 (the
"NOTES") and (ii) warrants to purchase one hundred
and
-----
eighty-seven thousand
five hundred (187,500) shares (subject to adjustment
as
described therein), of
the Company's common stock, par value $0.001 per
share (the
"COMMON STOCK") at an
exercise price of $1.10, and warrants to
------------
purchase one hundred
thousand (100,000) shares at an exercise price of $.30
per
share (subject to adjustment as described
therein), of the Company's
Common Stock (each a
"WARRANT" and collectively the "WARRANTS"). The Notes
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--------
and
Warrants shall hereinafter sometimes be collectively referred to as
the
"SECURITIES." The
names, addresses and principal amount of Notes purchased
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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
$1,250,000, (the "PURCHASE
-----------
--------
PRICE").
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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 may pay qualified Broker Dealers a selling
concession, with
the prior written
consent of the Purchaser, of up to 10%
(after subtracting
the $20,000 in due diligence fees (as provided
below
under Section 8.2(d), and up to $25,000 in legal fees) and an
unaccountable
expense allowance of up to 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") shall take place on October __, 2006, or
at such
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other time,
date or place as the parties hereto may mutually agree;
provided, that
all conditions to the Closing set
forth in this Agreement
--------
have
been satisfied or waived by such date.
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.
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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.
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(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),
<PAGE>
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
------------
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.
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(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
<PAGE>
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 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
Bank
Consent, 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.
<PAGE>
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, 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
<PAGE>
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
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;
<PAGE>
(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 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
<PAGE>
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;
(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
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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.
--------------
<PAGE>
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.
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.
<PAGE>
(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 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.
<PAGE>
(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
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, state,
local or foreign laws,
ordinances, regulations and orders
(including, without limitation, those relating to environmental
protection,
occupational safety
and health, federal
securities laws, equal employment
opportunity, consumer protection, credit reporting,
"truth-in-lending", and
warranties and
trade practices) applicable to its business or to the
business of any
Subsidiary, the violation of, or noncompliance
