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SECURITIES PURCHASE AGREEMENT

Stock Purchase Agreement

SECURITIES PURCHASE AGREEMENT | Document Parties: SECURITY WITH ADVANCED TECHNOLOGY, INC. You are currently viewing:
This Stock Purchase Agreement involves

SECURITY WITH ADVANCED TECHNOLOGY, INC.

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Title: SECURITIES PURCHASE AGREEMENT
Governing Law: Colorado     Date: 3/27/2007
Industry: Security Systems and Services     Law Firm: Brownstein Hyatt Farber Schreck, P.C.     Sector: Services

SECURITIES PURCHASE AGREEMENT, Parties: security with advanced technology  inc.
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Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

         THIS SECURITIES PURCHASE AGREEMENT (this “ Agreement ”) is made and entered into as of the 26 th day of March, 2007 (the “ Effective Date ”) by and between Security With Advanced Technology, Inc., a Colorado corporation (the “ Company ”), and the investors set forth on Schedule I attached hereto (each, an “ Investor ” and collectively, the “ Investors ”).

RECITAL

         WHEREAS , the Company desires to sell to the Investors, and the Investors desire to purchase from the Company, (i) an aggregate amount of up to $6,000,000, but no less than $4,000,000, of Convertible Promissory Notes (the “ Notes ”) which are convertible into approximately 333,333 shares of the Company’s Series A Preferred Stock, no par value per share (the “ Preferred Stock ”) per $1,000,000 outstanding under the Notes, (ii) approximately 333,333 warrants to purchase shares of the Company’s common stock, no par value per share (the “Common Stock ”) per $1,000,000 invested in the offering exercisable at $4.75 per share expiring four years from the Closing (as defined below), provided that such warrants will not be exercisable for six months following the Closing, (iii) approximately 166,666 warrants to purchase shares of Common Stock per $1,000,000 invested in the offering exercisable at $5.00 per share expiring four years from the Closing, provided that such warrants will not be exercisable for six months following the Closing, and (iv) approximately 333,333 warrants to purchase shares of Common Stock per $1,000,000 invested in the offering exercisable at $9.00 per share whose terms will mirror exactly the Company’s publicly traded warrants (symbol: “SWATW”), provided that the “SWATW” warrants will not be exercisable for six months following the Closing (collectively, the “ Warrants ” and together with the Notes, the “ Securities ”).

AGREEMENT

         NOW, THEREFORE , in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

     1.         AUTHORIZATION AND SALE OF SECURITIES .

                   1.1   Purchase and Sale of Securities . At the Closing, the Company shall sell to the Investors, and the Investors shall purchase from the Company, the Securities, in the denominations set forth on Schedule I for aggregate proceeds to the Company of up to $6,000,000 (the “ Purchase Price ”), but in no event less than $4,000,000.

                   1.2 Closing .   The closing of the purchase and sale of the Securities (the “ Closin g”) will take place at the offices of the Company on the Effective Date, or such other time and location determined by the Company and the Investors (the “ Closing Date ”). At the Closing: (i) the Company shall issue and deliver to the Investors duly executed Notes in the denominations set forth on Schedule I and in the form attached hereto as Exhibit A ; (ii) the Company shall issue and deliver to the Investors duly executed Warrants in the denominations set forth on Schedule I and in the forms attached hereto as Exhibit B ; and (iii) each Investor shall pay to the Company the applicable Purchase Price for the Securities to be purchased by such Investor in the amounts set forth on Schedule I by wire transfer of same day funds to the Company.


     2.             REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby makes the following representations and warranties to the Investors as of the date hereof and as of the Closing Date:

                   2.1 Organization and Qualification .  The Company is an entity duly incorporated, validly existing and in good standing under the laws of the State of Colorado, with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company is not in violation of any of the provisions of its Articles of Incorporation or Bylaws. The Company is duly qualified to conduct business and is in good standing as a foreign corporation in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not have or result in (i) a material adverse effect on the legality, validity or enforceability of this Agreement, the Notes, the Warrants or the Registration Rights Agreement (as defined below) or the Certificate of Amendment to Certificate of Designation (as defined below) (collectively, the “ Transaction Documents ”), (ii) a material adverse effect on the business or financial condition of the Company 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 ”). The Company owns 100% of the outstanding capital stock of Vizer Group, Inc., a Colorado corporation (“ Vizer ”). Vizer owns 100% of the outstanding capital stock of Avurt International, Inc. (“ Avurt ,” and together with Vizer, the “ Merger Subs ”). Except for the Merger Subs, the Company has no direct or indirect subsidiaries.

                   2.2 Authorization; Enforceability .   The execution, delivery and performance by the Company of the Transaction Documents, and the consummation of the transactions contemplated thereby (including, but not limited to, the sale and delivery of the Notes and Warrants, and the subsequent issuance of the Preferred Stock upon conversion of the Notes, the Common Stock upon conversion of the Preferred Stock and the Common Stock upon exercise of the Warrants) have been duly authorized, and no additional corporate or stockholder action is required for the approval thereof (other than the approval of the Company’s stockholders pursuant to The NASDAQ Stock Market Rule 4350(i) with respect to the conversion of the Notes into Preferred Stock and the issuance of the Common Stock into which the Preferred Stock is convertible). The Preferred Stock underlying the Preferred Stock Notes, the Common Stock underlying the Preferred Stock and the Common Stock underlying the Warrants (collectively, the “ Conversion Shares ”) have been duly reserved for issuance by the Company. This Agreement and the other Transaction Documents have been or, to the extent contemplated hereby or by the Transaction Documents, will be duly executed and delivered and constitute, or will constitute (as applicable), the legal, valid and binding agreement of the Company, enforceable against the Company in accordance with their terms, except as may be limited by bankruptcy, reorganization, insolvency, moratorium and similar laws of general application relating to or affecting the enforcement of rights of creditors, and except as enforceability of its obligations hereunder are subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations thereunder.


                   2.3 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 Articles of Incorporation or Bylaws, or (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 debt or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound or affected, or (iii) subject to the Company’s obligation to obtain the approval of the Company’s stockholders pursuant to The NASDAQ Stock Market Rule 4350(i), 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 is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected, except, in the cases of clauses (ii) and (iii), where such conflict, default or violation would not have or result in a Material Adverse Effect.

                   2.4 Filings, Consents and Approvals .   The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than (i) a Form D and applicable state “Blue Sky” filings, (ii) such as have already been obtained or such exemptive filings as are required to be made under applicable securities laws and (iii) filing of an additional listing application with the Nasdaq Stock Market (which will be made prior to the Closing Date).

                   2.5 Issuance of the Securities .   The Securities and the Conversion Shares are duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens, other than any Liens created by or imposed on the holders thereof through no action of the Company. The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to the Securities and the Conversion Shares.

                   2.6 Capitalization.

                             (a)     The authorized and outstanding capitalization of the Company is as described on Schedule II attached hereto. The Company has not issued any capital stock since such filing. All shares of the Company’s issued and outstanding capital stock have been duly authorized, are validly issued and outstanding, and are fully paid and nonassessable. No securities issued by the Company from the date of its incorporation to the date hereof were issued in violation of any statutory or common law preemptive rights. There are no dividends which have accrued or been declared but are unpaid on the capital stock of the Company. All taxes required to be paid by the Company in connection with the issuance and any transfers of the Company’s capital stock have been paid. All securities of the Company have been issued in all material respects in accordance with the provisions of all applicable securities and other laws.


                              (b)     No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase and sale of the Securities and except for employee and director stock options under the Company’s equity compensation plans of approximately (i) 1,674,000 outstanding warrants to purchase approximately 6,878,000 shares of Common Stock, and (ii) 709,000 shares of Preferred Stock, convertible into 709,000 shares of Common Stock, there are no outstanding options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, 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 is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock (“ Common Stock Equivalents”). The issue and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Investors) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities.

        2.7   Litigation . There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the Knowledge of the Company, threatened against the Company or any of its properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “ Action ”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or result in a Material Adverse Effect. Neither the Company nor to the Knowledge of the Company, any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. To the Knowledge of the Company, there has not been and there is not pending or contemplated, any investigation by the Securities and Exchange Commission involving the Company or any current or former director or officer of the Company.

        2.8   Labor Relations . No material labor dispute exists or, to the Knowledge of the Company, is imminent with respect to any of the employees of the Company which could have or result in a Material Adverse Effect.

        2.9   Compliance . The Company (i) is not 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), nor has the Company received notice of a claim that it is in default under or that it is in violation of, any indenture, 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 not in violation of any order of any court, arbitrator or governmental body, or (iii) is not or has not 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) and (iii) as would not have or reasonably be expected to result in a Material Adverse Effect.


        2.10   Intellectual Property.

                              (a)     The Company has the right to use or is the sole and exc


 
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