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