ROOMLINX, INC. SECURITIES PURCHASE AGREEMENT

 

 

This Securities Purchase Agreement (this “Agreement”) is made as of May 4, 2012, by and among RoomLinX, Inc., a Nevada corporation (the “Company”), and the investors signatory hereto.

 

 

A.           The Investors wish to purchase from the Company, and the Company wishes to sell and issue to the Investors, upon the terms and conditions stated in this Agreement, the aggregate number of Units (as hereinafter defined) set forth opposite each Investor’s name on such Investor’s signature page hereto (the “Offering”);

 

B.           The Company and the Investors are executing and delivering this Agreement and completing the Offering in reliance upon the exemption from securities registration afforded by Section 4(2) of the 1933 Act and Rule 506 of Regulation D promulgated thereunder;

 

C.           Contemporaneous with the execution of the Agreement, the parties hereto will become parties to a Registration Rights Agreement, in the form attached hereto as Exhibit B (the “Registration Rights Agreement”), pursuant to which the Company will agree to provide certain registration rights under the 1933 Act and applicable state securities laws with respect to the Shares and the Warrant Shares (each as defined below); and

 

D.           The Company has engaged Craig-Hallum Capital Group LLC to act as placement agent (the “Placement Agent”) in connection with the Offering.

 

 

In consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:

 

1.             Purchase and Sale of Securities.

 

1.1           Sale and Issuance of Securities.  Subject to the terms and conditions of this Agreement and in reliance on the representations and warranties of the Investors set forth or referred to herein, the Company hereby agrees to sell and issue to each investor signatory hereto (collectively the “Investors” and each, individually, an “Investor”), and each Investor hereby severally agrees to purchase from the Company, the Securities (as hereinafter defined), in consideration for the purchase price set forth next to each Investor’s name on Schedule I hereto (with respect to each Investor, the “Purchase Price”).  The Securities shall be sold in “Units”, with the purchase price of each Unit being $2.50.  Each Unit shall consist of (x) one share (each, a “Share”) of Common Stock of the Company, par value $.001 per share (“Common Stock”), and (y) a warrant, in the form attached hereto as Exhibit A (each, a “Warrant”), to purchase one-half of one (0.5) Share pursuant to the terms of the Warrant.  Up to an aggregate of 1,600,000 Units are being offered for sale to Investors hereunder for an aggregate Purchase Price for such Units of $4,000,000, of which the Company is selling 1,200,000 Units on the date of this Agreement to the Investors identified on Schedule I hereto.  The Company shall have the right to issue up to an additional 400,000 Units on the same terms as the Units sold by the Company on the date of this Agreement; provided that the closing of the sale of any such additional Units takes place by the close of business on May 25, 2012.  Each purchaser of any such additional Units shall execute a Joinder to this Agreement and the Registration Rights Agreement, and upon such execution shall be deemed to be an “Investor” under this Agreement and the Registration Rights Agreement.  The Shares, the Warrants, and the shares of Common Stock issuable pursuant to the Warrants (the “Warrant Shares”) are sometimes collectively referred to herein as the “Securities.”

 

 

1.2           Closing.  The closing of the purchase, sale and issuance of the Units hereunder shall take place at the offices of Westerman Ball Ederer Miller & Sharfstein, LLP (“WBEMS”), 1201 RXR Plaza, Uniondale, NY 11556, simultaneous with the execution hereof (the “Closing”).  At the Closing, the Company shall deliver to the Investors (x) duly executed stock certificates representing the Shares being purchased pursuant to Section 1.1 hereof, (y) the Warrants for the prescribed number of Shares of Common Stock pursuant to Section 1.1 hereof, against delivery by the Investors to the Company of a duly executed copy of this Agreement and the Registration Rights Agreement and payment of the Purchase Price for such Securities at the option of the Investor, either via check to the address for the Escrow Agent or via wire transfer using the wire transfer instructions for the Escrow Agent, each of which are set forth on Exhibit D. The date on which the Closing occurs is referred to herein as the “Closing Date”. On Closing Date, the Company and the Placement Agent shall, in accordance with the terms of the Escrow Agreement, cause the Escrow Agent to deliver to the Company the Purchase Price (less any amounts payable to the Placement Agent), on behalf of each Investor with respect to the Units being issued and sold to each Investor at such Closing.

 

1.3           Defined Terms Used in this Agreement.  In addition to the terms defined elsewhere in this Agreement, the following terms used in this Agreement shall be construed to have the meanings set forth below.

 

“Escrow Agent” means Private Bank Minnesota, who shall act as the escrow agent in connection with the Offering pursuant to the terms of an Escrow Agreement.

 

“Escrow Agreement” means the Escrow Agreement in the form attached hereto as Exhibit C.

 

“Material Adverse Effect” means any of (i) a material and adverse effect on the legality, validity or enforceability of this Agreement or the Registration Rights Agreement, (ii) a material and adverse effect on the results of operations, assets, properties, business or condition (financial or otherwise) of the Company and its subsidiaries, taken as a whole, or (iii) a material and adverse impairment to the Company’s ability to perform on a timely basis its obligations under this Agreement or the Registration Rights Agreement.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

 

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Subsidiary” means any “subsidiary,” as defined in Rule 1-02(x) of the Regulation S-X promulgated by the Securities and Exchange Commission (the “Commission”) under the Securities Exchange Act of 1934, as amended, of the Company.

 

2.             Representations and Warranties of the Company.  The Company hereby represents and warrants to the Investors that:

 

2.1           Organization, Good Standing and Qualification.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and has all requisite corporate power and authority to carry on its business as presently conducted or proposed to be conducted and to own or lease the properties and assets it now owns or holds under lease.  The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure so to qualify would have a Material Adverse Effect.  Each of the Company’s Subsidiaries is duly organized, validly existing and in good standing under the laws of their respective jurisdictions of organization as specified in the SEC Reports (as hereinafter defined).

 

2.2           Capitalization.  As of the date hereof, the authorized capital stock of the Company consists of:

 

(a)           5,000,000 shares of preferred stock, par value $.20 per share (“Preferred Stock”), of which 720,000 shares have been designated as Series A Preferred Stock, all of which are issued and outstanding, 2,000,000 shares have been designated Series B Preferred Stock, none of which are issued and outstanding, and 1,400 shares have been designated Series C Preferred Stock, none of which are issued and outstanding, in each case immediately prior to the execution hereof.  All of the outstanding shares of Preferred Stock have been duly authorized, are fully paid and nonassessable.

 

(b)           200,000,000 Shares of Common Stock, of which 5,118,877 Shares are issued and outstanding.  All of the outstanding Shares of Common Stock have been duly authorized, are fully paid and nonassessable.

 

 

(c)           Except as may be disclosed on Schedule 2.2 hereto or in the SEC Reports (as hereinafter defined), (i) the Company has not issued any capital stock since its most recently filed SEC Reports, (ii) 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 (as hereinafter defined).  Except as a result of the transactions contemplated hereby and as may be disclosed on Schedule 2.2 hereto or in the SEC Reports, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable 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 or any Subsidiary is or may become bound to issue additional shares of Common Stock.  The issuance 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 any of such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.  No further approval or authorization of any Company stockholder or the Company’s board of directors is required for the issuance and sale of the Securities.  There are no stockholder agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the Company’s knowledge, between or among any of the Company’s stockholders.  Except as contemplated by the Registration Rights Agreement and except for the Company’s obligation to maintain effective its currently outstanding registration statements, no person has the right to require the Company to register any securities of the Company under the Securities Act, whether on a demand basis or in connection with the registration of securities of the Company for its own account or for the account of any other Person other than as set forth on Schedule 2.2 of the Disclosure Schedule.  Except as may be disclosed on Schedule 2.2 hereto or in the SEC Reports, the Company does not have outstanding stockholder purchase rights or “poison pill” or any similar arrangement in effect giving any person the right to purchase any equity interest in the Company upon the occurrence of certain events.

 

2.3           Authorization.  All corporate action on the part of the Company necessary for the authorization, execution, delivery and performance of the Transaction Documents (as defined below) and the authorization, issuance and delivery of the Securities has been taken, and no further consent or authorization is required by the Company, its board of directors or its stockholders.  The Transaction Documents, when executed and delivered by the Company and assuming due execution and delivery by the Investors, shall constitute a valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms, except 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, and as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

 

2.4           Valid Issuance of Shares.  The Shares, when issued, sold and delivered in accordance with the terms hereof for the consideration expressed herein, and any Shares of Common Stock issued upon the exercise of the Warrants, will be duly and validly issued, fully paid and nonassessable and free and clear of all liens, encumbrances and restrictions on transfer, other than restrictions on transfer under applicable state and federal securities laws or those created by the Investors.  All such Shares of Common Stock, and Shares of Common Stock issuable upon exercise of the Warrants, will be issued in compliance with all applicable United States federal and state securities laws and regulations and rules of the OTC Bulletin Board.

 

 

2.5           No Conflicts.  The execution, delivery and performance of this Agreement, the Warrants, and the Registration Rights Agreement (including the sale and issuance of the Securities) (collectively, 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 or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) violate, conflict with, or constitute a breach or default (or an event that with notice or lapse of time or both would become a breach or 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 or Subsidiary debt or otherwise) or other agreement or understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) 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 or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), as would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.

 

2.6           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) the filing with the Commission of one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement, (ii) filings required by state securities laws, (iii) the filing of a Notice of Sale of Securities on Form D with the Commission under Regulation D of the Securities Act, (iv) the filings required in accordance with Section 5.10 and (v) those that have been made or obtained prior to the date of this Agreement.

 

2.7           Title to Assets.  The Company and each Subsidiary has good and marketable title to all assets owned by it, in each case free from any and all liens and other defects in title that could reasonably be expected to affect the value thereof or interfere with the use made or currently planned to be made thereof by them, other than as disclosed in the SEC Reports.  The Company and each Subsidiary holds any leased real or personal property under valid and enforceable leases with no terms or exceptions that would materially interfere with the use made or currently planned to be made thereof.

 

 

2.8           SEC Reports; Financial Statements.  The Company has filed all reports required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof (the foregoing materials together with all other reports filed by the Company with the Commission since January 1, 2009 being collectively referred to herein as the “SEC Reports”).  The Company is current with its filing obligations under the Exchange Act and all SEC Reports have been filed on a timely basis or the Company has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.  As of their respective dates, the SEC Reports filed by the Company with the Commission complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports filed by the Company with the Commission, when filed, contained any untrue statement of a material fact or omitted 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.  The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared from the books and records of the Company in accordance with United States Generally Accepted Accounting Principles (“GAAP”) applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.  Except as set forth in the SEC Reports and for liabilities or obligations incurred in the ordinary course of business since December 31, 2011, neither the Company nor any of its Subsidiaries has any material liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) required by GAAP to be set forth on a consolidated balance sheet of the Company or in the notes thereto.  The disclosure contained in Item 9A (Management’s Report on Internal Control over Financial Reporting) set forth in the Company’s most recent Annual Report on Form 10-K is true and correct in all material respects.

 

2.9           Material Changes.  Since the date of the latest audited financial statements included within the SEC Reports, except as set forth in the SEC Reports or as described on Schedule 2.9, (i) the Company has not altered its method of accounting or the identity of its auditors, (ii) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, (iii) the Company has not issued any equity securities, (iv) there has not been any event, occurrence or development that has had or that could reasonably be expected to have a Material Adverse Effect, (v) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice, and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the SEC, (vi) there has not been any material damage, destruction or loss, whether or not covered by insurance, to any assets or properties of the Company or its Subsidiaries, (vii) there has not been any change or amendment to the Company’s Certificate of Incorporation or Bylaws, or material change to any material contract or arrangement by which the Company or any Subsidiary is bound or to which any of their respective assets or properties is subject, (viii) there has not been any material transaction entered into by the Company or a Subsidiary other than in the ordinary course of business, and (ix) the Company has not suffered the loss or threatened loss of any key employee, supplier or customer which has had or could reasonably be expected to have a Material Adverse Effect.  The Company does not have pending before the Commission any request for confidential treatment of information.

 

2.10           Litigation.  There are no pending actions, suits or proceedings against or affecting the Company, its Subsidiaries or any of its or their properties or assets; and to the Company’s knowledge, no such actions, suits or proceedings are threatened or contemplated and no basis exists for any such actions, suits or proceedings.  Neither the Company nor any Subsidiary, nor any director or officer thereof (in his or her capacity as such), 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.  There has not been, and to the knowledge of the Company, there is not pending any investigation by the Commission involving the Company or any current or former director or officer of the Company (in his or her capacity as such).

 

 

2.11           Tax Matters.  The Company and each Subsidiary has accurately prepared and timely filed all federal, state, local and foreign tax returns required to have been filed by the Company or such Subsidiary with all appropriate governmental agencies and timely and completely paid all taxes shown thereon or otherwise owed by it.  The charges, accruals and reserves on the books of the Company in respect of taxes for all fiscal periods are adequate in all material respects, and there are no material unpaid assessments against the Company or any Subsidiary nor, to the Company’s knowledge, any basis for the assessment of any additional taxes, penalties or interest for any fiscal period or audits by any federal, state or local taxing authority except for any assessment which is not material to the Company and its Subsidiaries, taken as a whole.  All taxes and other assessments and levies that the Company or any Subsidiary is required to withhold or to collect for payment have been duly withheld and collected and paid to the proper governmental authority or third party when due.  There are no tax liens or claims pending or, to the Company’s knowledge, threatened against the Company or any Subsidiary or any of their respective assets or property.  There are no outstanding tax sharing agreements or other such arrangements between the Company and any Subsidiary or other corporation or entity.

 

2.12           Compliance.  Neither the Company nor any Subsidiary (i) is 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 or any Subsidiary under), nor has the Company or any Subsidiary 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 in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.

 

2.13           Labor Matters.  Except as may be disclosed in the SEC Reports:

 

(a)           Neither the Company nor any Subsidiary is a party to or bound by any collective bargaining agreements or other agreements with labor organizations.  Neither the Company nor any Subsidiary has violated any laws, regulations, orders or contract terms, affecting the collective bargaining rights of employees, labor organizations or any laws, regulations or orders affecting employment discrimination, equal opportunity employment, or employees’ health, safety, welfare, wages and hours.

 

(b)            (i) There are no labor disputes existing, or to the Company’s knowledge, threatened, involving strikes, slow-downs, work stoppages, job actions, disputes, lockouts or any other disruptions of or by the Company’s or any Subsidiary’s employees, (ii) there are no unfair labor practices or petitions for election pending or, to the Company’s knowledge, threatened before the National Labor Relations Board or any other federal, state or local labor commission relating to the Company’s or any Subsidiary’s employees, (iii) no demand for recognition or certification heretofore made by any labor organization or group of employees is pending with respect to the Company or any Subsidiary and (iv) to the Company’s knowledge, the Company and each Subsidiary enjoys good labor and employee relations with its employees and labor organizations.

 

 

(c)           The Company and each Subsidiary is, and at all times has been, in compliance in all material respects with all applicable laws respecting employment (including laws relating to classification of employees and independent contractors) and employment practices, terms and conditions of employment, wages and hours, and immigration and naturalization.  There are no claims pending against the Company or any Subsidiary before the Equal Employment Opportunity Commission or any other administrative body or in any court asserting any violation of Title VII of the Civil Rights Act of 1964, the Age Discrimination Act of 1967, 42 U.S.C. §§ 1981 or 1983 or any other federal, state or local Law, statute or ordinance barring discrimination in employment.

 

(d)           Neither the Company nor any Subsidiary is a party to, or bound by, any employment or other contract or agreement that contains any severance, termination pay or change of control liability or obligation, including, without limitation, any “excess parachute payment,” as defined in Section 280G(b) of the Internal Revenue Code.

 

(e)           Each of the Company’s employees and each employee of each Subsidiary is a Person who is either a United States citizen or a permanent resident entitled to work in the United States.  To the Company’s knowledge, neither the Company nor any Subsidiary has any liability for the improper classification by the Company or such Subsidiary of such employees as independent contractors or leased employees prior to the Closing.

 

2.14           Regulatory Permits.  The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses, except where the failure to possess such permits could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any such permits.

 

2.15           Intellectual Property Rights.  The Company and the Subsidiaries own, or have valid and enforceable rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that are necessary or material for use in connection with their respective businesses as described in the SEC Reports  (collectively, the “Intellectual Property Rights”). To the Company’s knowledge, the conduct of the Company’s and its Subsidiaries’ businesses as currently conducted does not infringe or otherwise impair or conflict with any Intellectual Property rights of any third party or any confidentiality obligation owed to a third party.  To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another person of any of the Intellectual Property Rights.  The consummation of the transactions contemplated hereby and by the other Transaction Documents will not result in the alteration, loss, impairment of or restriction on the Company’s or any of its Subsidiaries’ ownership or right to use any of the Intellectual Property which is necessary for the conduct of Company’s and each of its Subsidiaries’ respective businesses as described in the SEC Reports, or as currently conducted or currently proposed to be conducted.

 

 

2.16           Insurance.  The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged.  The Company has no reason to believe that it will not be able to renew its and the Subsidiaries’ existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business on terms consistent with market for the Company’s and such Subsidiaries’ respective lines of business.  Schedule 2.16 lists and describes all insurance policies maintained by the Company.

 

2.17           Transactions With Affiliates and Employees.  Except as set forth in the SEC Reports, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company, is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

 

2.18           Certain Registration Matters.  Assuming the accuracy of the Investors’ representations and warranties set forth in Section 3, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Investors under the Transaction Documents.

 

2.19           Investment Company.  The Company is not, and is not an affiliate of, and immediately following the Closing will not have become, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

2.20           Sarbanes-Oxley Act Compliance.  The Company is in compliance with all applicable provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated by the Securities and Exchange Commission thereunder.  The Company makes and keeps accurate books and records, and maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  Except as disclosed in the SEC Reports, the Company’s internal control over financial reporting is effective and none of the Company, its board of directors or audit committee is aware of any “significant deficiencies” or “material weaknesses” (each as defined by the Public Company Accounting Oversight Board) in its internal control over financial reporting, or any fraud, whether or not material, that involves management or other employees of the Company who have a significant role in the Company’s internal controls; and since the end of the latest audited fiscal year, there has been no change in the Company’s internal control over financial reporting (whether or not remediated) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.  The Company has established and maintains disclosure controls and procedures (as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”) Rules 13a-15 and 15d-15) that are effective for ensuring that material information about the Company and its Subsidiaries is made known to the principal executive officer and the principal financial officer.  The Company has utilized such controls and procedures in preparing the financial statements and other disclosures in the SEC Reports.

 

 

2.21           No Integrated Offering.  Neither the Company nor any of its affiliates, nor any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of the Securities Act or any applicable stockholder approval provision of any trading market on which any of the securities of the Company are listed or designated.

 

2.22           Application of Takeover Protections.  The Company has taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s Certificate of Incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Investors as a result of the Investors and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including, without limitation, the Company’s issuance of the Securities and the Investors’ ownership of the Securities.

 

2.23           Certain Fees.  Other than fees payable to the Placement Agent, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other person with respect to the transactions contemplated by this Agreement.  The Investors shall have no obligation with respect to any fees or with respect to any claims (other than such fees or commissions owed by an Investor pursuant to written agreements executed by such Investor which fees or commissions shall be the sole responsibility of such Investor) made by or on behalf of other persons for fees of a type contemplated in this Section 2.23 that may be due in connection with the transactions contemplated by this Agreement.

 

2.24           General Solicitation.  The Company has not offered or sold the Securities by means of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

 

2.25           Use of Proceeds.  The net proceeds of the sale of the Securities hereunder shall be used by the Company for working capital and general corporate purposes, but shall not be used by the Company to prepay debt obligations of the Company or any Subsidiary that are outstanding as of the date hereof.  For avoidance of doubt, the foregoing shall not prohibit the Company from using proceeds of the sale of Securities for the scheduled payments (but not prepayment) of currently outstanding debt, nor shall it preclude the Company from incurring additional debt in the ordinary course of business and using such proceeds to repay such debt.