TABLE OF CONTENTS

 

		Page
ARTICLE I. PURCHASE AND SALE OF THE SECURITIES		1
1.1.	Purchase and Sale of the Securities	1
1.2.	Consideration	1
ARTICLE II. CLOSING		1
2.1.	Closing	1
2.2.	Deliveries at Closing	2
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER		2
3.1.	Organization, Good Standing and Qualification	2
3.2.	Authorization	2
3.3.	Capitalization of Monitor	3
3.4.	Title to Assets	3
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER		3
4.1.	Organization, Good Standing and Qualification	3
4.2.	Authorization	3
ARTICLE V. COVENANTS		3
5.1.	Tax Matters	3
5.2.	Inter-company Accounts	4
ARTICLE VI. CONDITIONS TO CLOSING		4
6.1.	Conditions to Obligations of Seller	4
6.2.	Conditions to Obligations of Buyer	5
ARTICLE VII. TERMINATION		5
7.1.	Termination	5
7.2.	In the Event of Termination	6
ARTICLE VIII. MISCELLANEOUS		6
8.1.	Defined Terms	6
8.2.	Notices	7
8.3.	Non Survival of Representations and Warranties	8
8.4.	Rules of Construction	8
8.5.	Titles	8
8.6.	Entire Agreement	8
8.7.	Assignment	8
8.8.	Amendment or Modification	9
8.9.	Waiver	9

 

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8.10.	Severability	9
8.11.	Burden and Benefit	9
8.12.	Governing Law	9
8.13.	Consent to Jurisdiction	9
8.14.	Waiver of Trial by Jury	10
8.15.	Legal Fees	10
8.16.	Specific Performance	10
8.17.	Cumulative Remedies	10
8.18.	Expenses	11
8.19.	Representation by Counsel	11
8.20.	Execution and Counterparts	11
Exhibit A	Convertible Promissory Note

 

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SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (the “ Agreement ”) is made as of the 8th day of September, 2009 by and among 214 Investments, Inc., a Texas corporation (the “ Buyer ”), and MDI, Inc., a Delaware corporation, (“ Seller ”).

 

RECITALS

 

A.            Seller owns all of the issued and outstanding shares of capital stock of Monitor Dynamics, Inc., a Texas corporation and a wholly owned subsidiary of the Seller (“ Monitor ”).

 

B.            Buyer desires to purchase from Seller, and Seller desires to sell to Buyer all of the shares of Monitor (the “ Securities ”), all upon the terms and subject to the conditions hereinafter set forth (the “ Acquisition ”).

 

C.            Buyer, Seller and Monitor desire to make certain representations, warranties, covenants and agreements in connection with the Acquisition and to prescribe various conditions to the Acquisition.

 

AGREEMENT

 

In consideration of the mutual covenants and promises contained in this Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties to this Agreement agree as follows:

 

ARTICLE I.

 

PURCHASE AND SALE OF THE SECURITIES

 

1.1.          Purchase and Sale of the Securities .  Upon the terms and subject to the conditions contained herein, on the Closing Date, Seller hereby agrees to sell, convey, transfer, assign and deliver to Buyer, and Buyer hereby agrees to purchase, acquire and accept from Seller the Securities, constituting all of the issued and outstanding shares of the common stock of Monitor, no par value (the “ Monitor Shares ”).

 

1.2.          Consideration .  Upon the terms and subject to the conditions contained herein, in consideration for the transfer of the Securities pursuant to Section 1.1 hereof, Buyer shall issue to Seller a convertible promissory note in the form attached hereto as Exhibit A (the “ Note ” or the “ Consideration .”)

 

ARTICLE II.

 

CLOSING

 

2.1.          Closing .  The closing of the transactions contemplated herein (the “ Closing ”) may occur simultaneously at 10:00 a.m. local time at the offices of Andrews Kurth LLP, 111 Congress Avenue, Suite 1700, Austin, Texas 78701 or the offices of Seller at 12500

 

 

Network Blvd., San Antonio, Texas upon the meeting or waiver of all conditions to closing contained herein or at such other time, date and location as the parties hereto agree in writing (the “ Closing Date ”).

 

2.2.          Deliveries at Closing.

 

(a)           Deliveries by Buyer .  Upon the terms and subject to the conditions set forth in this Agreement, in reliance on the representations, warranties and agreements of Seller contained herein, in consideration of the sale, conveyance, transfer, assignment and delivery of the Securities, Buyer agrees to deliver to Seller at the Closing on the Closing Date the following:

 

(i)            the Note; and

 

(ii)           a certificate executed by the Chief Executive Officer of Buyer certifying as of the Closing Date all of the matters set forth in Section 6.1(a)  hereof.

 

(b)           Deliveries by Seller .  Upon the terms and subject to the conditions set forth in this Agreement, in reliance upon the representations, warranties and agreements of Buyer contained herein and the issuance and delivery of the Note, Seller agrees to deliver (or cause to be delivered) to Buyer the following:

 

(i)            share certificates representing the Monitor Shares, duly endorsed or accompanied by duly executed instruments of transfer; and

 

(ii)           a certificate executed by the Chief Executive Officer of Seller certifying as of the Closing Date all of the matters set forth in Section 6.2(a)  hereof.

 

ARTICLE III.

 

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller hereby represents and warrants to Buyer as follows, except as otherwise set forth on the Seller Disclosure Schedules, which representations and warranties are, as of the date hereof, and will be, as of the Closing Date, true and correct:

 

3.1.          Organization, Good Standing and Qualification .  The Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to enter into the Transaction Documents. Monitor is a corporation duly organized, validly existing and in good standing under the laws of the State of Texas.

 

3.2.          Authorization .  All corporate action on the part of Seller necessary for the authorization, execution and delivery of the Transaction Documents, the performance of all obligations of Seller hereunder and thereunder and the transfer of the Securities to Buyer has been taken or will be taken prior to the Closing, and the Transaction Documents, when executed and delivered by the Seller, shall constitute valid and legally binding obligations of Seller, enforceable against Seller in accordance with their respective terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other

 

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laws of general application relating to or affecting the enforcement of creditors’ rights generally, or (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

 

3.3.          Capitalization of Monitor . The Monitor Shares have been validly issued, are fully paid and non-assessable, and constitute all of the issued and outstanding shares of Monitor. MDI owns the Monitor Shares free and clear of all liens, charges, security interests, encumbrances, restrictions and claims, and upon the Closing, MDI will transfer the Monitor Shares free and clear of all liens, charges, security interests, encumbrances, restrictions and claims.

 

3.4.          Title to Assets . Monitor will, on the Closing Date, have good and marketable title to all of its assets, free and clear of all liabilities, liens, claims and encumbrances (except liens for taxes not yet due).

 

ARTICLE IV.

 

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer hereby represents and warrants to the Seller as follows, except as is set forth on the Buyer Disclosure Schedules, which representations and warranties are, as of the date hereof, and will be, as of the Closing Date, true and correct:

 

4.1.          Organization, Good Standing and Qualification .  The Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Texas and has all requisite corporate power and authority to carry on its business as presently conducted and as currently proposed to be conducted.

 

4.2.          Authorization .  All corporate action on the part of the Buyer necessary for the authorization, execution and delivery of the Transaction Documents, the performance of all obligations of the Buyer hereunder and thereunder and the authorization, issuance and delivery of the Note has been taken or will be taken prior to the Closing, and the Transaction Documents, when executed and delivered by the Buyer, shall constitute valid and legally binding obligations of the Buyer, enforceable against the Buyer in accordance with their respective terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors’ rights generally, or (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

 

ARTICLE V.

COVENANTS

 

Each of Seller and Buyer covenant and agree with the other as follows:

 

5.1.          Tax Matters .

 

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(a)           Tax Records .  The Buyer and the Seller agree (i) to retain all books and records with respect to Tax matters pertinent to Monitor, its assets or business relating to any Taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by the Buyer, any extensions thereof) of the respective Taxable periods, and to abide by all record retention agreements entered into with any Taxing Authority, and (ii) to give the Buyer reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the Buyer so requests, the Seller shall allow the Buyer to take possession of such books and records at the Buyer’s expense.

 

(b)           Transfer Taxes .  All sales and transfer taxes, deed taxes, conveyance fees, recording charges and similar taxes imposed as a result of the transactions contemplated by this Agreement, together with any interest, penalties or additions to such transfer taxes, shall be borne by the Buyer.

 

5.2.          Inter-company Accounts . At the Closing, all inter-company accounts other than the Note, between Monitor and MDI, will be cleared at no expense to any of the entities.

 

ARTICLE VI.

 

CONDITIONS TO CLOSING

 

6.1.          Conditions to Obligations of Seller .  The obligations of Seller to consummate the transactions provided for hereby are subject, in the discretion of Seller, to the satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which may be waived by Seller:

 

(a)           Representations, Warranties and Covenants .  All representations and warranties of the Buyer contained in this Agreement shall be true and correct in all material respects at and as of the date of this Agreement and at and as of the Closing Date and the Buyer shall have performed and satisfied in all material respects all agreements and covenants required hereby to be performed by it prior to or on the Closing Date.

 

(b)           No Actions or Court Orders .  No suit, action, investigation, inquiry or other proceeding by any governmental body or other Person or legal or administrative proceeding shall have been instituted or threatened which seeks to restrain, enjoin, prevent the consummation of or otherwise affect the transactions contemplated by the Transaction Documents or which questions the validity or legality of the transactions contemplated hereby or thereby or the ability of Seller to transfer the Securities free and clear of any Encumbrances.

 

(c)           Authorization .  The Acquisition and the Transaction Documents shall have been ratified by the Board of Directors of Seller in office subsequent to the Closing of the transactions contemplated by that certain Stock Purchase Agreement, by and between MDI Investments, LLC, dated as of August 28, 2009.

 

(d)           Other Deliveries .  Buyer shall have delivered to the Seller each of the items set forth in Section 2.2(a) hereof.

 

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6.2.          Conditions to Obligations of Buyer .  The obligations of Buyer to consummate the transactions provided for hereby are subject, in the discretion of Buyer, to the satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which may be waived by Buyer:

 

(a)           Representations, Warranties and Covenants .  All representations and warranties of the Seller contained in this Agreement shall be true and correct in all material respects at and as of the date of this Agreement and at and as of the Closing Date and the Seller shall have performed and satisfied in all material respects all agreements and covenants required hereby to be performed by them prior to or on the Closing Date.

 

(b)           No Actions or Court Orders .  No suit, action, investigation, inquiry or other proceeding by any governmental body or other Person or legal or administrative proceeding shall have been instituted or threatened which seeks to restrain, enjoin, prevent the consummation of or otherwise affect the transactions contemplated by the Transaction Documents or which questions the validity or legality of the transactions contemplated hereby.

 

(c)           Other Deliveries .  Buyer shall have received from the Seller, or such other parties, as applicable, each of the items set forth in Section 2.2(b)  hereof.

 

ARTICLE VII.

 

TERMINATION

 

7.1.          Termination .

 

This Agreement may be terminated at any time prior to Closing:

 

(a)           By mutual written consent of Buyer and Seller;

 

(b)           By Buyer if there is a material breach of any representation or warranty set forth in Article III hereof or any covenant or agreement to be complied with or performed by the Seller pursuant to the terms of this Agreement or the failure of a condition set forth in Section 6.2 to be satisfied (and such condition is not waived in writing by Buyer) on or prior to the Closing Date, or the occurrence of any event which results or would result in the failure of a condition set forth in Section 6.2 hereof to be satisfied on or prior to the Closing Date, provided that Buyer may not terminate this Agreement prior to the Closing if Seller has not had an adequate opportunity to cure such failure; or

 

(c)           By Seller if there is a material breach of any representation or warranty set forth in Article IV hereof or of any covenant or agreement to be complied with or performed by Buyer pursuant to the terms of this Agreement or the failure of a condition set forth in Section 6.1 hereof to be satisfied (and such condition is not waived in writing by Seller) on or prior to the Closing Date, or the occurrence of any event which results or would result in the failure of a condition set forth in Section 6.1 hereof to be satisfied on or prior to the Closing Date; provided that Seller may not terminate this Agreement prior to the Closing if Buyer has not had an adequate opportunity to cure such failure.

 

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7.2.          In the Event of Termination .  In the event of termination of this Agreement:

 

(a)           Each party will destroy or redeliver all documents, work papers and other material of any other party relating to the transactions contemplated hereby, whether so obtained before or after the execution hereof, to the party furnishing the same;

 

(b)           No party hereto shall have any Liability to any other party to this Agreement, except as stated in subsections (a), (b) and (c) of this Section 7.2 and except for any breach of this Agreement occurring prior to the proper termination of this Agreement.

 

The foregoing provisions shall not limit or restrict the availability of specific performance or other injunctive relief to the extent that specific performance or such other relief would otherwise be available to a party hereunder.

 

ARTICLE VIII.

 

MISCELLANEOUS

 

8.1.          Defined Terms .  As used herein, the terms below shall have the following meanings.  Any such term, unless the context otherwise requires, may be used in the singular or plural, depending upon the reference.

 

“ Affiliate ” shall have the meaning set forth in the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“ Business Day ” shall mean a day other than Saturday, Sunday or any day on which banks located in the State of Texas are authorized or obligated to close.

 

“ Encumbrance ” shall mean any claim, lien, pledge, option, charge, community property