SECURITIES PURCHASE
AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT
(this “ Agreement ”), dated as of March 18,
2009, by and among BBM HOLDINGS, INC., a Utah corporation
(the “ Company ”), and YA GLOBAL INVESTMENTS,
L.P. , a Cayman Islands exempt limited partnership (the “
Buyer ”).
WITNESSETH
WHEREAS , pursuant to that certain Secured Party’s
Bill of Sale of even date herewith between the Company and the
Buyer (the “ Bill of Sale ”) the Buyer shall
sell, assign and transfer to the Company all of the Buyer’s
right, title, and interest in and to the personal property listed
on Exhibit A of the Bill of Sale (the “ Purchased
Assets ”);
WHEREAS , pursuant to the Bill of Sale, the purchase
price to be paid by the Company for the Purchased Assets shall
consist of (a) $100,000 in cash, and (b) a convertible secured
non-recourse debenture of the Company with a face value of $500,000
(the “ Convertible Debenture ”);
WHEREAS , the parties desire to enter into this
Agreement to set forth the terms and conditions of the issuance of
the Convertible Debenture;
WHEREAS , the Convertible Debenture is being issued by
the Company to the Buyer in reliance upon an exemption from
securities registration pursuant to Section 4(2) and/or
Rule 506 of Regulation D (“ Regulation D ”)
as promulgated by the U.S. Securities and Exchange Commission (the
“ SEC ”) under the Securities Act of 1933, as
amended (the “ Securities Act ”);
WHEREAS , the parties desire that, upon the terms and
subject to the conditions contained herein, the Company shall issue
the Buyer, as provided herein, and the Buyer shall accept the
Convertible Debenture in the form attached hereto as “
Exhibit A ”, in the original principal amount of
$500,000, which shall be convertible into shares of the
Company’s common stock, no par value (the “ Common
Stock ”) (as converted, the “ Conversion
Shares ”);
WHEREAS , contemporaneously with the execution and
delivery of this Agreement, (i) the Buyer and the Company, are
executing and delivering a Security Agreement and a Patent Security
Agreement (collectively, the “ Security Documents
”) pursuant to which the Company is providing the Buyer a
first priority perfected security interest in the Purchased Assets;
and
WHEREAS , the Convertible Debenture and the Conversion
Shares collectively are referred to herein as the “
Securities ;”
NOW, THEREFORE , in consideration of the mutual covenants and
other agreements contained in this Agreement the Company and the
Buyer hereby agree as follows:
1. PURCHASE AND
SALE OF CONVERTIBLE DEBENTURES.
(a) Issuance of
Convertible Debenture . Subject to the satisfaction
(or waiver) of the terms and conditions of this Agreement, the
Company agrees to issue to the Buyer at the Closing the Convertible
Debenture in original principal amount of $500,000.
(b) Closing
Date . The Closing of the issuance of the
Convertible Debenture shall take place on March 19, 2009, (or such
other date as is mutually agreed to by the Company and the Buyer)
(the “ Closing Date ”). The Closing
shall occur at the offices of Yorkville Advisors, LLC, 101 Hudson
Street, Suite 3700, Jersey City, New Jersey 07302 (or such other
place as is mutually agreed to by the Company and the
Buyer).
(c) Deliveries by
the Company : At the Closing, the Company shall
deliver to the Buyer the following:
(i) an executed
original of each of the Transaction Documents;
(ii) an executed
original Convertible Debenture in the face amount of
$500,000;
(iii) an opinion of
counsel from counsel to the Company in a form satisfactory to the
Buyer;
(iv) a true copy of a
certificate of good standing evidencing the formation and good
standing of the Company from the secretary of state (or comparable
office) from the jurisdiction in which the Company is incorporated,
as of a date within 10 days of the Closing Date;
(v) a certificate,
executed by the Secretary of the Company and dated as of the
Closing Date, as to (i) the resolutions consistent with Section
3(c) as adopted by the Company’s Board of Directors in a form
reasonably acceptable to the Buyer, (ii) the Certificate of
Incorporation and (iii) the Bylaws, each as in effect at the
Closing Date; and
(vi) proof of filing of
a form UCC-1 or such other forms as may be required to perfect the
Buyer’s security interest in the Purchased Assets.
(d) Deliveries by
the Buyer : At the Closing, the Buyer shall deliver to the
Company the following:
(i) an executed
original of each of the Transaction Documents; and
(ii) an executed
original of the Bill of Sale.
2. BUYER’S
REPRESENTATIONS AND WARRANTIES.
Except as set forth under the corresponding
section of the attached Disclosure Schedules which Disclosure
Schedules shall be deemed a part hereof and to qualify any
representation or warranty otherwise made herein to the extent of
such disclosure, the Buyer hereby makes the representations and
warranties set forth below to the Company:
(a) Investment
Purpose . Each Buyer is acquiring the Securities for
its own account for investment only and not with a view towards, or
for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under the
Securities Act; provided, however, that by making the
representations herein, the Buyer reserves the right to dispose of
the Securities at any time in accordance with or pursuant to an
effective registration statement covering such Securities or an
available exemption under the Securities Act. The Buyer
does not presently have any agreement or understanding, directly or
indirectly, with any Person to distribute any of the
Securities.
(b) Accredited
Investor Status . The Buyer is an “
Accredited Investor ” as that term is defined in Rule
501(a)(3) of Regulation D of the SEC.
(c) Reliance on
Exemptions . The Buyer understands that the
Securities are being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States
federal and state securities laws and that the Company is relying
in part upon the truth and accuracy of, and the Buyer’s
compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in
order to determine the availability of such exemptions and the
eligibility of the Buyer to acquire the Securities.
(d) Information
. The Buyer and its advisors (and its counsel) have been
furnished with all materials relating to the business, finances and
operations of the Company and information it deemed material to
making an informed investment decision regarding its acceptance of
the Securities, which have been requested by the
Buyer. The Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of the Company and its
management. Neither such inquiries nor any other due
diligence investigations conducted by the Buyer or its advisors, if
any, or its representatives shall modify, amend nor affect such
Buyer’s right to rely on the Company’s representations
and warranties contained in Section 3 below. The Buyer
understands that its investment in the Securities involves a high
degree of risk. The Buyer is in a position regarding the
Company, which, based upon experience, employment, family
relationship or economic bargaining power, enabled and enables the
Buyer to obtain information from the Company in order to evaluate
the merits and risks of this investment. The Buyer has
sought such accounting, legal and tax advice, as it has considered
necessary to make an informed investment decision with respect to
its acquisition of the Securities.
(e) No Governmental
Review . Each Buyer understands that no United
States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or
endorsement of the Securities, or the fairness or suitability of
the investment in the Securities, nor have such authorities passed
upon or endorsed the merits of the offering of the
Securities.
(f) Transfer or
Resale . The Buyer understands that: (i) the
Securities have not been and are not being registered under the
Securities Act or any state securities laws, and may not be offered
for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) the Buyer shall have delivered to the
Company an opinion of counsel, in a generally acceptable form, to
the effect that such Securities to be sold, assigned or transferred
may be sold, assigned or transferred pursuant to an exemption from
such registration requirements, or (C) the Buyer provides the
Company with reasonable assurances (in the form of seller and
broker representation letters) that such Securities can be sold,
assigned or transferred pursuant to Rule 144 or Rule 144A
promulgated under the Securities Act (or a successor rule thereto)
(collectively, “ Rule 144 ”), in each case
following the applicable holding period set forth therein; (ii) any
sale of the Securities made in reliance on Rule 144 may be made
only in accordance with the terms of Rule 144 and further, if Rule
144 is not applicable, any resale of the Securities under
circumstances in which the seller (or the person through whom
the sale is made) may be deemed to be an underwriter (as that term
is defined in the Securities Act) may require compliance with some
other exemption under the Securities Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company
nor any other person is under any obligation to register the
Securities under the Securities Act or any state securities laws or
to comply with the terms and conditions of any exemption
thereunder.
(g) Legends
. Each Buyer agrees to the imprinting, so long as is
required by this Section 2(g), of a restrictive legend in
substantially the following form:
THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES HAVE BEEN ACQUIRED SOLELY FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS.
Certificates
evidencing the Conversion Shares shall not contain any legend
(including the legend set forth above), (i) while a registration
statement covering the resale of such security is effective under
the Securities Act, (ii) following any sale of such Conversion
Shares pursuant to Rule 144, (iii) if such Conversion Shares are
eligible for sale under Rule 144, or (iv) if such legend is not
required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by
the staff of the SEC). The Company shall cause its
counsel to issue a legal opinion to the Company’s transfer
agent promptly after the effective date (the “ Effective
Date ”) of a registration statement if required by the
Company’s transfer agent to effect the removal of the legend
hereunder. The Buyer acknowledges that the
Company’s agreement hereunder to remove all legends from
Conversion Shares is not an affirmative statement or representation
that such Conversion Shares are freely tradable. The
Buyer agrees that the removal of the restrictive legend from
certificates representing Securities as set forth in this Section
3(g) is predicated upon the Company’s reliance that the Buyer
will sell any Securities pursuant to either the registration
requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom, and
that if Securities are sold pursuant to a registration statement,
they will be sold in compliance with the plan of distribution set
forth therein.
(h) Authorization,
Enforcement . This Agreement has been duly and
validly authorized, executed and delivered on behalf of the Buyer
and is a valid and binding agreement of the Buyer enforceable in
accordance with its terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement
of applicable creditors’ rights and remedies.
(i) Due Formation
of Corporate and Other Buyers . The Buyer has been
formed and validly exists and has not been organized for the
specific purpose of purchasing the Securities and is not prohibited
from doing so.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
Except as set forth under the
corresponding section of the Disclosure Schedules which Disclosure
Schedules shall be deemed a part hereof and to qualify any
representation or warranty otherwise made herein to the extent of
such disclosure, the Company hereby makes the representations and
warranties set forth below to the Buyer:
(a) Organization
and Qualification . The Company is a corporation
duly organized and validly existing in good standing under the laws
of Utah, and has the requisite corporate power to own its
properties and to carry on its business as now being
conducted. The Company is duly qualified as a foreign
corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by it
makes such qualification necessary, except to the extent that the
failure to be so qualified or be in good standing would not have or
reasonably be expected to result in (i) a material adverse effect
on the legality, validity or enforceability of any Transaction
Document, (ii) a material adverse effect on the results of
operations, assets, business or condition (financial or otherwise)
of the Company, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material
respect on a timely basis its obligations under any Transaction
Document (any of (i), (ii) or (iii), a “ Material Adverse
Effect ”) and no proceeding has been instituted in any
such jurisdiction revoking, limiting or curtailing or seeking to
revoke, limit or curtail such power and authority or
qualification.
(b) Authorization,
Enforcement, Compliance with Other Instruments
. (i) The Company has the requisite corporate power
and authority to enter into and perform its obligations under this
Agreement, the Convertible Debenture, the Security Documents, the
Bill of Sale, and each of the other agreements entered into by the
parties hereto in connection with the transactions contemplated by
this Agreement (collectively the “ Transaction
Documents ”) and to issue the Securities in accordance
with the terms hereof and thereof, (ii) the execution and delivery
of the Transaction Documents by the Company and the consummation by
it of the transactions contemplated hereby and thereby, including,
without limitation, the issuance of the Securities, the reservation
for issuance and the issuance of the Conversion Shares, have been
duly authorized by the Company’s Board of Directors and no
further consent or authorization is required by the Company, its
Board of Directors or its stockholders, (iii) the Transaction
Documents have been duly executed and delivered by the Company,
(iv) the Transaction Documents constitute the valid and binding
obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of
creditors’ rights and remedies.
(c)
Capitalization . The authorized capital stock of
the Company consists of 50,000,000 shares of Common Stock and
10,000,000 shares of Preferred Stock (“ Preferred
Stock ”) of which 25,247,006 shares of Common Stock and
no shares of Preferred Stock are issued and
outstanding. All of the outstanding shares of capital
stock of the Company are validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and
state securities laws, and none of such outstanding shares was
issued in violation of any preemptive rights or similar rights to
subscribe for or purchase securities. Except as
disclosed in Schedule 3(c), the SEC Documents (as defined below) or
as contemplated in this Agreement: (i) none of the Company’s
capital stock is subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the
Company; (ii) there are no outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into,
or exercisable or exchangeable for, any capital stock of the
Company , or contracts, commitments, understandings or arrangements
by which the Company is or may become bound to issue
additional capital stock of the Company or options,
warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any capital
stock of the Company ; (iii) there are no outstanding debt
securities, notes, credit agreements, credit facilities or other
agreements, documents or instruments evidencing indebtedness of the
Company or by which the Company is or may
become bound; (iv) there are no financing statements securing
obligations in any material amounts, either singly or in the
aggregate, filed in connection with the Company ; (v) there are no
outstanding securities or instruments of the
Company which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings
or arrangements by which the Company is or may become
bound to redeem a security of the Company ; (vi) there are no
securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the
Securities; (vii) the Company does not have any stock appreciation
rights or “phantom stock” plans or agreements or any
similar plan or agreement; and (viii) the Company has no
liabilities or obligations required to be disclosed in the SEC
Documents but not so disclosed in the SEC Documents, other than
those incurred in the ordinary course of the Company’s
business and which, individually or in the aggregate, do not or
would not have a Material Adverse Effect. The Company
has furnished to the Buyers true, correct and complete copies of
the Company’s Certificate of Incorporation, as amended and as
in effect on the date hereof (the “ Certificate of
Incorporation ”), and the Company’s Bylaws, as
amended and as in effect on the date hereof (the “
Bylaws ”), and the terms of all securities convertible
into, or exercisable or exchangeable for, shares of Common Stock
and the material rights of the holders thereof in respect
thereto. No further approval or authorization of any
stockholder, the Board of Directors of the Company or others is
required for the issuance and sale of the
Securities. There are no stockholders agreements, voting
agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or,
to the knowledge of the Company, between or among any of the
Company’s stockholders.
(d) Issuance of
Securities . The issuance of the Convertible
Debenture is duly authorized and free from all taxes, liens and
charges with respect to the issue thereof. Upon
conversion in accordance with the terms of the Convertible
Debenture the Conversion Shares, when issued, will be validly
issued, fully paid and nonassessable, free from all taxes, liens
and charges with respect to the issue thereof. The
Company has reserved from its duly authorized capital stock the
appropriate number of shares of Common Stock as set forth in this
Agreement.
(e) No
Conflicts . The execution, delivery and
performance of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby
and thereby (including, without limitation, the issuance of the
Convertible Debenture and reservation for issuance and issuance of
the Conversion Shares) will not (i) result in a violation of any
certificate of incorporation, certificate of formation, any
certificate of designations or other constituent documents of the
Company , any capital stock of the Company or bylaws of the Company
or (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) in any
respect under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment
or decree (including foreign, federal and state securities laws and
regulations) applicable to the Company or by which any property or
asset of the Company is bound or affected; except in the case of
each of clauses (ii) and (iii), such as could not, individually or
in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect.
