Exhibit4.2

 

 

This Exchange Agreement (this “Agreement”) is dated as of April     , 2010, by and between Juma Technology Corp., a Delaware corporation (the “Company”), and Vision Capital Advantage Fund. LP, a holder of certain warrants issued by the Company (the “Holder”).

 

Recitals:

 

WHEREAS, the Holder currently holds the specific classes and number of warrants listed on Exhibit A (collectively, the “Warrants”) to purchase shares of the Company’s common stock, par value $.0001 per share (the “Common Stock”), issued by the Company to the Holder pursuant to certain previously consummated note and warrant financings of the Company (collectively, the “Financings”).  Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the financing documents entered into by the parties pursuant to the applicable Financings.

 

WHEREAS, subject to the terms and conditions set forth herein, the Company and the Holder desire to cancel and terminate the Warrants in full and exchange the Warrants for shares of the Company’s Series C Convertible Preferred Stock, par value $.0001 per share (the “Series C Preferred Stock”), at the exchange rate set forth on Exhibit A.

 

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

 

 

1.           Cancellation of the Warrants; Exchange of Warrants for Series C Preferred Stock.

 

(a)           In consideration of and in express reliance upon the representations, warranties, covenants, terms and conditions of this Agreement, the Holder and the Company agree to the cancellation of the Warrants and the exchange of the Warrants into newly issued shares of Series C Preferred Stock in the amounts set forth on Exhibit A attached hereto.

 

(b)           The closing under this Agreement (the “Closing”) shall take place at the offices of Gersten Savage LLP, 600 Lexington Avenue, 9th Floor, New York, NY 10022 upon the satisfaction or waiver of each of the conditions set forth in Sections 4 and 5 hereof (the “Closing Date”).  At the Closing, the Company shall issue to the Holder the shares of Series C Preferred Stock and the Holder shall deliver to the Company for cancellation the Warrants.

 

(c)           The designation, rights, preferences and other terms and provisions of the Series C Preferred Stock are set forth in the Certificate of Designation of the Relative Rights and Preferences of the Series C Convertible Preferred Stock attached hereto as Exhibit B (the “Certificate of Designation”).

 

(d)           The shares of Series C Preferred Stock issuable upon the exchange of the Warrants and the shares of Common Stock issuable upon conversion of the Series C Preferred Stock are sometimes collectively referred to herein as the “Securities”.

 

 

(a)          The Holder is a corporation, limited liability company or partnership duly incorporated or organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization.

 

(b)           This Agreement has been duly authorized, validly executed and delivered by the Holder and is a valid and binding agreement and obligation of the Holder enforceable against the Holder in accordance with its terms, subject to limitations on enforcement by general principles of equity and by bankruptcy or other laws affecting the enforcement of creditors’ rights generally, and the Holder has full power and authority to execute and deliver the Agreement and the other agreements and documents contemplated hereby and to perform its obligations hereunder and thereunder.

 

(c)           The Holder understands that the Securities are being offered and sold to it in reliance on specific provisions of Federal and state securities laws and that the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Holder set forth herein for purposes of qualifying for exemptions from registration under the Securities Act of 1933, as amended (the “Securities Act”), and applicable state securities laws.  The Holder understands that no United States federal or state agency or any government or governmental agency has passed upon or made any recommendation or endorsement of the Securities.

 

(d)           The Holder is an “accredited investor” (as defined in Rule 501 of Regulation D), and the Holder has such experience in business and financial matters that it is capable of evaluating the merits and risks of an investment in the Securities.  The Holder is not required to be registered as a broker-dealer under Section 15 of the Securities Exchange Act of 1934, as amended, and the Holder is not a broker-dealer.  The Holder acknowledges that an investment in the Securities is speculative and involves a high degree of risk.

 

(e)           The Holder is acquiring the Securities solely for its own account and not with a view to or for sale in connection with distribution.  The Holder does not have a present intention to sell any of the Securities, nor a present arrangement (whether or not legally binding) or intention to effect any distribution of any of the Securities to or through any person or entity; provided, however, that by making the representations herein, the Holder does not agree to hold the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with Federal and state securities laws applicable to such disposition.  The Holder acknowledges that it (i) has such knowledge and experience in financial and business matters such that the Holder is capable of evaluating the merits and risks of the Holder's investment in the Company, (ii) is able to bear the financial risks associated with an investment in the Securities and (iii) has been given full access to such records of the Company and its subsidiaries and to the officers of the Company and the subsidiaries as it has deemed necessary or appropriate to conduct its due diligence investigation.

(f)           The offer and sale of the Securities is intended to be exempt from registration under the Securities Act, by virtue of Section 4(2) thereof.  The Holder understands that the Securities purchased hereunder have not been, and may never be, registered under the Securities Act and that none of the Securities can be sold or transferred unless they are first registered under the Securities Act and such state and other securities laws as may be applicable or the Company receives an opinion of counsel reasonably acceptable to the Company that an exemption from registration under the Securities Act is available (and then the Securities may be sold or transferred only in compliance with such exemption and all applicable state and other securities laws).  The Holder acknowledges that it is familiar with Rule 144 of the rules and regulations of the Commission, as amended, promulgated pursuant to the Securities Act ("Rule 144"), and that the Holder has been advised that Rule 144 permits resales only under certain circumstances.  The Holder understands that to the extent that Rule 144 is not available, the Holder will be unable to sell any Securities without either registration under the Securities Act or the existence of another exemption from such registration requirement.

 

(g)           The Holder has not employed any broker or finder or incurred any liability for any brokerage or investment banking fees, commissions, finders’ structuring fees, financial advisory fees or other similar fees in connection with any of the transactions contemplated by this Agreement.

 

(h)           The Holder acknowledges that the Securities were not offered to the Holder by means of any form of general or public solicitation or general advertising, or publicly disseminated advertisements or sales literature, including (i) any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media, or broadcast over television or radio, or (ii) any seminar or meeting to which the Holder was invited by any of the foregoing means of communications.  The Holder, in making the decision to purchase the Securities, has relied upon independent investigation made by it and the representations, warranties and agreements set forth in this Agreement and the other transaction documents and has not relied on any information or representations made by third parties.

 

 

(a)           The Company has been duly incorporated and is validly existing and, upon the payment of its State of Delaware franchise taxes, will be in good standing under the laws of the State of Delaware, with full corporate power and authority to own, lease and operate its properties and to conduct its business as currently conducted, and is duly registered and qualified to conduct its business and is in good standing in each jurisdiction or place where the nature of its properties or the conduct of its business requires such registration or qualification, except where the failure to register or qualify would not have a Material Adverse Effect.  For purposes of this Agreement, “Material Adverse Effect” shall mean any effect on the business, results of operations, prospects, assets or financial condition of the Company that is material and adverse to the Company and its subsidiaries and affiliates, taken as a whole and/or any condition, circumstance, or situation that would prohibit or otherwise materially interfere with the ability of the Company from entering into and performing any of its obligations under this Agreement in any material respect.

 

(b)           The Securities have been duly authorized by all necessary corporate action and, when paid for or issued in accordance with the terms hereof, the Securities shall be validly issued and outstanding, fully paid and nonassessable, free and clear of all liens, encumbrances and rights of refusal of any kind.

 

(c)           This Agreement has been duly authorized, validly executed and delivered on behalf of the Company and is a valid and binding agreement and obligation of the Company enforceable against the Company in accordance with its terms, subject to limitations on enforcement by general principles of equity and by bankruptcy or other laws affecting the enforcement of creditors’ rights generally, and the Company has full power and authority to execute and deliver the Agreement and the other agreements and documents contemplated hereby and to perform its obligations hereunder and thereunder.

 

(d)           The execution and delivery of the Agreement and the consummation of the transactions contemplated by this Agreement by the Company, will not (i) conflict with or result in a breach of or a default under any of the terms or provisions of: (A) the Company’s certificate of incorporation or by-laws, or (B) of any provision of any indenture, mortgage, deed of trust or other agreement or instrument to which the Company is a party or by which it or any of its properties or assets is bound, (ii) result in a violation of any provision of any law, statute, rule, regulation, or any existing applicable decree, judgment or order by any court, Federal or state regulatory body, administrative agency, or other governmental body having jurisdiction over the Company, or any of its properties or assets or (iii) result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to the terms of any agreement or instrument to which any of them is a party or by which any of them may be bound or to which any of their property or any of them is subject, except in the case of clauses (i)(B), (ii) or (iii) for any such conflicts, breaches, or defaults or any liens, charges, or encumbrances which would not have a Material Adverse Effect.

 

(e)           The delivery and issuance of the Securities in accordance with the terms of and in reliance on the accuracy of the Holder’s representations and warranties set forth in this Agreement will be exempt from the registration requirements of the Securities Act.

 

(f)           No consent, approval or authorization of or designation, declaration or filing with any governmental authority on the part of the Company is required in connection with the valid execution and delivery of this Agreement or the offer, sale or issuance of the Securities or the consummation of any other transaction contemplated by this Agreement (other than any filings which may be required to be made by the Company with the Secretary of State of Delaware or the Securities and Exchange Commission (the “Commission”) or pursuant to any state or “blue sky” securities laws subsequent to the Closing).

 

(g)           There is no action, suit, claim, investigation or proceeding pending or, to the knowledge of the Company, threatened against the Company which questions the validity of this Agreement or the transactions contemplated hereby or any action taken or to be taken pursuant thereto.  There is no action, suit, claim, investigation or proceeding pending or, to the knowledge of the Company, threatened, against or involving the Company or any subsidiary, or any of their respective properties or assets which, if adversely determined, is reasonably likely to result in a Material Adverse Effect.

(h)           The Company has complied and will comply with all applicable federal and state securities laws in connection with the offer, issuance and delivery of the Securities hereunder.  Neither the Company nor anyone acting on its behalf, directly or indirectly, has or will sell, offer to sell or solicit offers to buy any of the Securities, or similar securities to, or solicit offers with respect thereto from, or enter into any preliminary conversations or negotiations relating thereto with, any person, or has taken or will take any action so as to bring the issuance and sale of any of the Securities under the registration provisions of the Securities Act and applicable state securities laws.  Neither the Company nor any of its affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of any of the Securities.

 

(i)           The Company has not employed any broker or finder or incurred any liability for any brokerage or investment banking fees, commissions, finders’ structuring fees, financial advisory fees or other similar fees in connection with any of the transactions contemplated by this Agreement.

 

 

(a)           The Company shall have executed and delivered this Agreement.

 

(b)           Each of the representations and warranties of the Company shall be true and correct in all respects as of the date when made and as of the Closing Date as though made at that time, except for representations and warranties that speak as of a particular date, which shall be true and correct in all respects as of such date.

 

(c)           No statute, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement at or prior to the Closing Date.

 

 

(a)           if to the Company:

 

Juma Technology Corp.

154 Toledo Street

Farmingdale, New York 11735

Attention: Chief Executive Officer

Tel. No.: (631) 300-1000

Fax No.: (631) 270-1105

 

with a copy to:

 

Gersten Savage LLP

600 Lexington Avenue, 9th Floor

New York, New York 10022

Attention: Jay Kaplowitz, Esq.

Tel. No.: (212) 752-9700

Fax No.: (212) 980-5192

 

(b)           if to a Holder:

 

To the applicable address set forth on the signature page hereto

 

with a copy to:

 

Sadis & Goldberg LLP

551 Fifth Avenue, 21st Floor

New York, New York 10176

Attention: Paul Fasciano, Esq.

Tel. No.: (212) 573-8025

Fax No.: (212) 573-8026

 

All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; when receipt is acknowledged, if telecopied; or when actually received or refused if sent by other means.

 

 

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IN WITNESS WHEREOF, this Exchange Agreement was duly executed on the date first written above.