Exhibit 99.5
SECURITIES PURCHASE
AGREEMENT
This SECURITIES PURCHASE AGREEMENT
(this “ Agreement ”), effective as of this
1 st
day of July, 2009, is made by and
between FNDS3000 Corp , a Delaware corporation (the “
Company ”); and Sherington Holdings, LLC
(“ Investor ”).
BACKGROUND:
A. The Company and Investor are executing and
delivering this Agreement and consummating the transactions
contemplated herein in reliance upon the exemption from securities
registration afforded by Section 4(2) of the Securities Act of
1933, as amended (the “ 1933 Act ”) and
Regulation D promulgated by the United States Securities and
Exchange Commission (the “ SEC ”)
thereunder.
B. Investor desires to purchase and the Company
desires to issue and sell, upon the terms and conditions set forth
in this Agreement (i) Two Million Eight Hundred Fifty Seven
Thousand One Hundred Forty Three (2,857,143) shares (the
“ Purchased Shares ”) of the Company’s
$.001 par value Common Stock (the “ Common Stock
”), at a purchase price of Seventeen and One Half Cents
($0.175) per share and (ii) a warrant, in the form attached
hereto as Exhibit A , to purchase in an amount equal to the
Purchased Shares, fully paid, validly issued and nonassessable
shares of Common Stock at a price equal to twenty cents ($0.20) per
share, which price from time to time may be adjusted in accordance
therewith (the “ New Warrant ”).
C. Contemporaneously with the execution and
delivery of this Agreement, the Company shall issue to the Investor
an amended and restated warrant in the form attached hereto as
Exhibit B (the “ Amended and Restated Warrant
”) which amends and restates that certain warrant issued by
the Company to the Investor on January 6, 2009.
D. Contemporaneously with the execution and
delivery of this Agreement, the Company and the Investor shall
execute and deliver an amendment in the form attached hereto as
Exhibit C (the “ Registration Rights Amendment
”) to that certain Registration Rights Agreement dated as of
January 6, 2009 (as amended by the Registration Rights
Amendment, the “ Registration Rights Agreement
”).
E. Contemporaneously with the execution and
delivery of this Agreement, the Company, the Investor, and certain
other holders of shares of the Company’s Common Stock shall
execute and deliver an amendment in the form attached hereto as
Exhibit D (the Voting Agreement Amendment ”) to
that certain Voting Agreement dated as of December 1, 2008, by
and among the Company, the Investor, and certain holders of shares
of the Company’s Common Stock as identified therein (as
amended by the Voting Agreement Amendment, the “ Voting
Agreement ”).
AGREEMENT:
NOW THEREFORE
, in consideration of the mutual
covenants contained in this Agreement, and for other good and
valuable consideration, the receipt of which is hereby
acknowledged, the Company and Investor, intending to be legally
bound, hereby agree as follows:
1. PURCHASE AND SALE OF COMMON
STOCK AND WARRANT
a. Purchase of Purchased
Shares . On the
Closing Date (as defined below), the Company shall issue and sell
to Investor, and Investor agrees to purchase from the Company, the
Purchased Shares for an aggregate purchase price of Five Hundred
Thousand Dollars ($500,000) (the “ Purchase Price
”). Investor shall pay the Purchase Price by wire transfer of
immediately available funds to the Company, in accordance with the
Company’s written wiring instructions, against delivery of
the Purchased Shares and the Company shall deliver such Purchased
Shares to such Investor, against delivery of such Purchase
Price.
b. Closing Date
. Subject to the satisfaction (or
written waiver) of the conditions thereto set forth in
Section 5 and Section 6 below, and unless this Agreement
is otherwise terminated in accordance herewith, the date and time
of the issuance of the Purchased Shares pursuant to this Agreement
(the “ Closing Date ”) shall be 12:00 noon,
Atlanta, Georgia time on July 1, 2009, or such other mutually
agreed upon time. The closing of the transactions contemplated by
this Agreement (the “ Closing ”) shall occur on
the Closing Date at the offices of Troutman Sanders LLP, 600
Peachtree Street NE, Suite 5200, Atlanta, Georgia 30308, or such
other location as may otherwise be agreed upon by the parties. At
or prior to the Closing, Investor and the Company shall execute any
related agreements or other documents required to be executed
and/or delivered hereunder.
2. INVESTOR’S
REPRESENTATIONS AND WARRANTIES . Investor hereby represents and warrants to the
Company that:
a. Investment
Purpose . As of the
date hereof, Investor is purchasing the Purchased Shares and
acquiring the New Warrant, the Amended and Restated Warrant, and
the shares of Common Stock issuable upon exercise thereof (the
“ Warrant Shares ” and, collectively with the
Purchased Shares, the New Warrant, and the Amended and Restated
Warrant, the “ Securities ”) for its own account
and not with a present view towards the public sale or distribution
thereof, except pursuant to sales registered or exempted from
registration under the 1933 Act; provided , however ,
that by making the representations herein, Investor does not agree
to hold any of the Securities for any minimum or other specific
term and reserves the right to dispose of the Securities at any
time in accordance with or pursuant to a registration statement or
an exemption under the 1933 Act.
b. Accredited Investor
Status . Investor is
an “accredited investor” as that term is defined in
Rule 501(a) of Regulation D promulgated under the 1933 Act (an
“ Accredited Investor ”).
c. Reliance on
Exemptions . Investor
understands that the Securities are being offered and sold to it in
reliance upon specific exemptions from the registration
requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and
Investor’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of Investor set
forth herein in order to determine the availability of such
exemptions and the eligibility of Investor to acquire the
Securities.
d. Information
. Investor and its advisors, if any,
have been furnished with all materials relating to the business,
finances and operations of the Company and materials relating to
the offer and sale of the Securities which have been requested by
Investor or its advisors. Investor and its advisors, if any, have
been afforded the opportunity to ask questions of and receive
answers from the Company. Neither the Company nor any person acting
on its behalf has offered or sold Investor the Securities by means
of any form of general solicitation or general advertising.
Investor is sophisticated and has such knowledge and experience in
financial and business matters that Investor is capable of
evaluating the risks of its investment in the Company. Investor is
able to bear the economic risks inherent
in its investment in the Company. However, no
inquiry nor any other due diligence investigation conducted by
Investor or any of its advisors or representatives shall modify,
amend or affect Investor’s right to rely on the
Company’s representations and warranties to
Investor.
e. Governmental
Review . Investor
understands that no United States federal or state agency or any
other government or governmental agency has passed upon or made any
recommendation or endorsement of the Securities.
f. Transfer or
Re-sale . Investor
understands that (i) except as provided in the Registration
Rights Agreement, the sale or re-sale of the Securities has not
been and is not being registered under the 1933 Act or any
applicable state securities laws, and the Securities may not be
transferred unless (A) the Securities are sold pursuant to an
effective registration statement under the 1933 Act,
(B) Investor shall have delivered to the Company an opinion of
counsel that shall be in form, substance and scope reasonably
satisfactory to the Company and customary for opinions of counsel
in comparable transactions to the effect that the Securities to be
sold or transferred may be sold or transferred pursuant to an
exemption from such registration; and (ii) neither the Company
nor any other person is under any obligation to register such
Securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder
(in each case, other than pursuant to the Registration Rights
Agreement). Notwithstanding the foregoing or anything else
contained herein to the contrary, the Securities may be pledged as
collateral in connection with a bona fide margin account or
other lending arrangement.
g. Legends
. Investor understands that until
such time as the Purchased Shares and Warrant Shares have been
registered under the 1933 Act as contemplated by the Registration
Rights Agreement or otherwise may be sold without any restriction
as to the number of securities as of a particular date that can
then be immediately sold, the Purchased Shares and Warrant Shares
may bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of the
certificates for such Securities):
“The securities represented by
this certificate have not been registered under the Securities Act
of 1933, as amended. The securities may not be sold, transferred or
assigned in the absence of an effective registration statement for
the securities under said Act or an applicable exemption
therefrom.”
The legend set forth above shall be
removed and the Company shall issue a certificate without such
legend to the holder of any Security upon which it is stamped, if,
unless otherwise required by applicable state securities laws,
(i) such Security is registered for sale under an effective
registration statement filed under the 1933 Act or otherwise may be
sold pursuant to an exemption from registration without any
restriction as to the number of securities as of a particular date
that can then be immediately sold, or (ii) such holder
provides the Company with an opinion of counsel, in form, substance
and scope reasonably satisfactory to the Company and customary for
opinions of counsel in comparable transactions, to the effect that
a public sale or transfer of such Security may be made without
registration under the 1933 Act, which opinion shall be accepted by
the Company so that the sale or transfer is effected. Investor
agrees to sell all Securities, including those represented by a
certificate from which the legend has been removed, in compliance
with applicable prospectus delivery requirements, if
any.
h. Authorization;
Enforcement .
Investor has all requisite corporate or similar power to enter into
the Transaction Agreements (as defined herein) to which it will be
a party and to carry out and perform its obligations under the
Transaction Agreements. All limited liability company action on the
part of Investor or its members or managers necessary for the
authorization, execution, delivery
and performance of such Transaction Agreements
and the consummation of the transactions contemplated hereby and
thereby has been taken. Assuming the Transaction Agreements
constitute the legal, valid and binding agreements of the Company,
each of the Transaction Agreements to which Investor is or will be
a party constitute or will when executed, as applicable, constitute
a legal, valid and binding obligation of Investor, enforceable
against Investor in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or fraudulent
conveyance and similar laws relating to or affecting creditors
generally or by general equity principles, including without
limitation concepts of materiality, reasonableness, good faith and
fair dealing (regardless of whether considered in a proceeding in
equity or at law).
3. REPRESENTATIONS AND
WARRANTIES OF THE COMPANY . The Company represents and warrants to
Investor that:
a. Organization and
Qualification . The
Company and each of its Subsidiaries (as defined below), if any, is
duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is organized, with full power
and authority (corporate or otherwise) to own, lease, use and
operate its properties and to carry on its business as and where
now owned, leased, used, operated and conducted. Schedule
3(a) sets forth a list of all of the Subsidiaries of the
Company and the jurisdiction in which each is incorporated or
organized. The Company and each of its Subsidiaries is duly
qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which its ownership or use of
property or the nature of the business conducted by it makes such
qualification necessary except where the failure to be so qualified
or in good standing would not have a Material Adverse Effect. For
purposes of this Agreement, “ Material Adverse Effect
” means any material adverse effect on the business,
operations, assets or financial condition of the Company or its
Subsidiaries, if any, taken as a whole, or on the transactions
contemplated hereby or by the agreements or instruments to be
entered into in connection herewith. “ Subsidiaries
” means any corporation or other organization, whether
incorporated or unincorporated, in which the Company owns, directly
or indirectly, any equity or other ownership interest.
b. Authorization;
Enforcement . The
Company has all requisite corporate power to enter into this
Agreement, the Other Purchase Agreements (as defined in
Section 6(a)(iii) below), the Registration Rights Amendment,
the Voting Agreement Amendment, the New Warrant, the Amended and
Restated Warrant, and the Other Warrants (as defined in
Section 6(a)(iii) below) (collectively, the “
Transaction Agreements ”), and to carry out and
perform its obligations under the terms of the Transaction
Agreements. All corporate action on the part of the Company
necessary for the authorization, execution, delivery and
performance of the Transaction Agreements and the consummation of
the transactions contemplated hereby and thereby has been taken.
Assuming this Agreement constitutes the legal, valid and binding
agreement of Investor, this Agreement constitutes a legal, valid
and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or fraudulent conveyance and
similar laws relating to or affecting creditors generally or by
general equity principles, including without limitation concepts of
materiality, reasonableness, good faith and fair dealing
(regardless of whether considered in a proceeding in equity or at
law) and except as rights to indemnity may be limited by applicable
federal and state securities laws and principles of public policy.
Upon execution by the other parties thereto, and assuming that they
constitute legal, valid and binding agreements of the other parties
thereto, each of the Transaction Agreements constitute a legal,
valid and binding obligation of the Company, enforceable against
the Company in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or fraudulent
conveyance and similar laws relating to or affecting creditors
generally or by general equity principles, including without
limitation concepts of materiality, reasonableness, good faith and
fair dealing (regardless of whether considered in a proceeding in
equity or at law) and except as rights to indemnity may be limited
by applicable federal and state securities laws and principles of
public policy.
c.
Capitalization .
The authorized capital stock of the Company consists solely of
5,000,000 shares of Preferred Stock, par value $.001, none of which
are issued and outstanding and 100,000,000 shares of Common Stock,
par value $0.001 per share, of which, after giving effect to the
issuance of the Purchased Shares as contemplated by this Agreement
and the Other Shares (as defined in Section 6(a)(iii)),
(i) 40,562,786 will be issued and outstanding, (ii) no
shares will be held in treasury, (iii) 17,387,361 shares will
be reserved for issuance upon the exercise of options and warrants
outstanding (other than the New Warrant, the Other Warrants, and
the Amended and Restated Warrant), and (iv) 6,333,715 shares
will be reserved for issuance upon the exercise of certain
convertible notes outstanding and interest thereon, all of which
convertible notes were issued to Investor. All of such outstanding
shares of capital stock are, or upon issuance will be, duly
authorized, validly issued, fully paid and nonassessable. No shares
of capital stock of the Company are subject to preemptive rights or
any other similar rights of the shareholders of the Company or any
liens or encumbrances imposed through the actions or failure to act
of the Company. Except as disclosed in Schedule 3(c) , as of
the effective date of this Agreement, (1) there are no
outstanding options, warrants, scrip, rights to subscribe for,
puts, calls, rights of first refusal, agreements, understandings,
claims or other commitments or rights of any character whatsoever
relating to, or securities or rights convertible into or
exchangeable for any shares of capital stock of the Company or any
of its subsidiaries, or arrangements by which the Company or any of
its subsidiaries is or may become bound to issue additional shares
of capital stock of the Company or any of its subsidiaries,
(2) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the
sale of any of its or their securities under the 1933 Act (except
the Registration Rights Agreement) and (3) there are no
anti-dilution or price adjustment provisions contained in any
security issued by the Company (or in any agreement providing
rights to security holders) that will be triggered by the issuance
of the Purchased Shares or the Other Shares, the New Warrant, the
Other Warrants, the Warrant Shares, or the shares of Common Stock
issuable upon exercise of the Other Warrants (the “ Other
Warrant Shares ”). The Company has furnished to Investor
true and correct copies of the Company’s Articles of
Incorporation as in effect on the date hereof (“ Articles
of Incorporation ”), the Company’s By-laws, as in
effect on the date hereof (the “ By-laws ”), and
the terms of all securities convertible into or exercisable for
Common Stock of the Company and the material rights of the holders
thereof in respect thereto.
d. Issuance of
Shares . The
Purchased Shares and the Other Shares are duly authorized and, when
purchased and issued at the Closing in accordance herewith, will be
validly issued, fully paid and non-assessable, and free from all
taxes, liens, claims and encumbrances with respect to the issue
thereof other than restrictions on transfer provided under
applicable state and federal securities laws and shall not be
subject to preemptive rights or other similar rights of
shareholders of the Company and will not impose personal liability
upon the holder thereof. The Company has available for issuance the
Common Stock initially issuable upon the exercise of the New
Warrant, the Amended and Restated Warrant, and the Other Warrants
(as if such exercise occurred on the date hereof). The Warrant
Shares and Other Warrant Shares are duly authorized and reserved
for issuance and, when purchased and issued upon exercise of the
New Warrant, the Amended and Restated Warrant, or the Other
Warrants (as applicable) in accordance their terms, will be validly
issued, fully paid and non-assessable, and free from all taxes,
liens, claims and encumbrances with respect to the issue thereof
other than restrictions on transfer provided under applicable state
and federal securities laws and shall not be subject to preemptive
rights or other similar rights of shareholders of the Company and
will not impose personal liability upon the holder
thereof.
e. Acknowledgment of
Dilution . The
Company understands and acknowledges the potentially dilutive
effect to the Common Stock upon the issuance of the Purchased
Shares and Other
Shares and the Warrant Shares and Other Warrant
Shares upon exercise of the New Warrant, the Amended and Restated
Warrant, or the Other Warrants (as applicable). The Company further
acknowledges that its obligation to issue Warrant Shares upon
exercise of the New Warrant or the Amended and Restated Warrant (as
applicable) in accordance with this Agreement and the New Warrant
or the Amended and Restated Warrant (as applicable) is absolute and
unconditional regardless of the dilutive effect that such issuance
may have on the ownership interests of other shareholders of the
Company.
f. No Conflicts
. The execution, delivery and
performance of the Transaction Agreements, the Purchased Shares,
and the Other Shares, by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby
(including, without limitation, the issuance and reservation for
issuance of the Warrant Shares and Other Warrant Shares) will not
(i) conflict with or result in a violation of any provision of
the Articles of Incorporation or By-laws or (ii) violate or
conflict with, or result in a breach of any provision of, or
constitute a default (or an event which with notice or lapse of
time or both could become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture, patent, patent license, software license
or instrument to which the Company or any of its Subsidiaries is a
party, or (iii) to the Company’s knowledge, result in a
violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and
regulations of any self-regulatory organizations to which the
Company or its securities are subject) applicable to the Company or
any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected. Neither
the Company nor any of its Subsidiaries is in violation of its
Articles of Incorporation, By-laws or other organizational
documents and neither the Company nor any of its Subsidiaries is in
material default (and no event has occurred which with notice or
lapse of time or both could put the Company or any of its
Subsidiaries in default) under, and neither the Company nor any of
its Subsidiaries has taken any action or failed to take any action
that would give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture
or instrument to which the Company or any of its Subsidiaries is a
party or by which any property or assets of the Company or any of
its Subsidiaries is bound or affected. The businesses of the
Company and its Subsidiaries, if any, are not being conducted, and
shall not be conducted so long as Investor owns any of the
Securities, in violation of any law, ordinance or regulation of any
governmental entity. Except as specifically contemplated by this
Agreement or the Other Purchase Agreements and as required under
the 1933 Act and any applicable state securities laws, the Company
is not required to obtain any consent, authorization or order of,
or make any filing or registration with, any court, governmental
agency, regulatory agency, self regulatory organization or stock
market or any third party in order for it to execute, deliver or
perform any of its obligations under this Agreement, the Other
Purchase Agreements, the Purchased Shares, the Other Shares, the
New Warrant, the Other Warrants and the Amended and Restated
Warrant in accordance with the terms hereof or thereof or to issue
and sell the Purchased Shares or the Other Shares and to issue the
Warrant Shares or Other Warrant Shares upon exercise of the New
Warrant, the Amended and Restated Warrant, or the Other Warrants
(as applicable). Except as disclosed in Schedule 3(f) , all
consents, authorizations, orders, filings and registrations which
the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date
hereof.
g. SEC Documents; Financial
Statements . Except
as disclosed in Schedule 3(g) , the Company has timely filed
all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended
(the “ 1934 Act ”) (all of the foregoing filed
prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents (other
than exhibits to such documents) incorporated by reference therein,
being hereinafter referred to herein as the “ SEC
Documents ”). As of their respective dates, the SEC
Documents complied in all material respects with the requirements
of the 1933 Act, and the Sarbanes-Oxley Act of 2002, as applicable,
and the rules and
regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents
contained, at the time they were filed with the SEC, and as of the
date hereof do not contain, any untrue statement of a material fact
or omitted or omit 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. None of the statements made in any such SEC Documents
is, or has been, required to be amended or updated under applicable
law (except for such statements as have been amended or updated in
subsequent filings prior the date hereof). As of their respective
dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with United States
generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed or
summary statements) and fairly present the consolidated financial
position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except
as set forth in the financial statements of the Company included in
the SEC Documents, or as otherwise disclosed on Schedule
3(g) , the Company has no liabilities, contingent or otherwise,
other than (1) liabilities incurred in the ordinary course of
business subsequent to April 14, 2009 and (2) obligations
under contracts and commitments incurred in the ordinary course of
business and not required under generally accepted accounting
principles to be reflected in such financial statements, which,
individually or in the aggregate, are not material to the financial
condition or operating results of the Company.
h. Absence of Certain
Changes . Except as
set forth on Schedule 3(h) , since April 14, 2009,
there has been no material adverse change and no material adverse
development in the assets, liabilities, business, properties,
operations, financial condition, results of operations or prospects
of the Company or any of its Subsidiaries.
i. Absence of
Litigation . Except
as set forth on Schedule 3(i) , there is no action, suit,
claim, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or
body pending or, to the knowledge of the Company or any of its
Subsidiaries, threatened against or affecting the Company or any of
its Subsidiaries, or their officers or directors in their capacity
as such, that could reasonably be expected to have a Material
Adverse Effect. Schedule 3(i) contains a complete list and
summary description of any pending or, to the knowledge of the
Company, proceeding threatened in writing against or affecting the
Company or any of its Subsidiaries, without regard to whether it
would have a Material Adverse Effect.
j. Intellectual
Property .
(i) The Company and each of its Subsidiaries owns or
possesses the requisite licenses or rights to use all patents,
patent applications, patent rights, inventions, know-how, trade
secrets, trademarks, trademark applications, service marks, service
names, trade names and copyrights (“ Intellectual
Property ”) material and necessary to enable it to
conduct its business as now operated (and, except as set forth in
Schedule 3(j) hereof, as presently contemplated to be
operated in the future). There is no claim or action by any person
pertaining
