Current Report — Form 8-K Filing Table of Contents
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2: EX-10.1 Material Contract HTML 157K
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THIS SECURITIES PURCHASE AGREEMENT
(this “Agreement”), dated as
of May 27, 2010, by and among NEOMEDIA TECHNOLOGIES INC., a
Delaware corporation (the “Company”), and the YA
Global Investments, L.P. (the “Buyer”) and/or
collectively the “Parties”.
WITNESSETH
WHEREAS, the Company and the
Buyer are executing and delivering this Agreement in reliance upon an exemption
from securities registration pursuant to Section 4(2) and/or Rule 506 of
Regulation D (“Regulation D”) as
promulgated by the U.S. Securities and Exchange Commission (the “SEC”) under the
Securities Act of 1933, as amended (the “Securities
Act”);
WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
shall issue and sell to the Buyer, as provided herein, and the Buyer shall
purchase (i) a $2,006,137.04 secured convertible debentures in the form attached
hereto as “Exhibit
A” (the “Convertible
Debenture”), which shall be convertible into shares of the Company’s
common stock, par value $0.001 (the “Common Stock”) (as
converted, the “Conversion Shares”),
and (ii) warrants substantially in the form attached hereto as “Exhibit B” (the
“Warrants”), to
acquire up to 5,000,000 additional shares of Common Stock (as exercised, the
“Warrant
Shares”) which shall be funded within five business day following the
date hereof (the “Closing”) for a total
purchase price of $2,006,137.04, (the “Purchase
Price”);
WHEREAS, the Convertible
Debentures are secured by a security interest in certain assets of the Company,
including certain intellectual property and rights to certain intellectual
property as evidenced by the Ratification Agreement of even date herewith (the
“Ratification
Agreement”);
WHEREAS, contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering Irrevocable Transfer Agent Instructions (the “Irrevocable Transfer Agent
Instructions”); and
WHEREAS, the Convertible
Debentures, the Conversion Shares, the Warrants, and the Warrants Shares
collectively are referred to herein as the “Securities”).
NOW, THEREFORE, in
consideration of the mutual covenants and other agreements contained in this
Agreement the Company and the Buyer hereby agree as follows:
1. PURCHASE AND SALE OF
CONVERTIBLE DEBENTURES.
(a) Purchase of Convertible
Debentures. Subject to the satisfaction (or waiver) of the
terms and conditions of this Agreement, the Buyer agrees to purchase at the
Closing and the Company agrees to sell and issue to the Buyer at the Closing the
Convertible Debenture and Warrants to acquire the Warrant
Shares.
(b) Closing. The
Closing of the purchase and sale of the Convertible Debentures and Warrants
shall take place at 10:00 a.m. Eastern Standard Time on the same business day as
the date hereof, subject to notification of satisfaction of the conditions to
the Closing set forth herein and in Sections 6 and 7 below (or such other date
as is mutually agreed to by the Company and the Buyer) (the “Closing
Date”). The Closings shall occur on the respective Closing
Dates at the offices of Yorkville Advisors, LLC, 101 Hudson Street, Suite 3700,
Jersey City, New Jersey07302 (or such other place as is mutually agreed to by
the Company and the Buyer).
(c) Form of
Payment. Subject to the satisfaction of the terms and
conditions of this Agreement, on the Closing Date, (i) the Buyer shall deliver
to the Company such aggregate proceeds for the Convertible Debenture and
Warrants to be issued and sold to such Buyer at the Closing, minus the fees to
be paid directly from the proceeds of the Closing as set forth herein and all
principal and accrued interest on the Promissory Note issued by the Buyer to the
Company on April 1, 2010 in the principal amount of $500,000 (the “April 2010 Note”),
and (ii) the Company shall deliver to the Buyer the Convertible Debenture
and Warrants duly executed on behalf of the Company.
2. BUYER’S REPRESENTATIONS AND
WARRANTIES.
The Buyer
represents and warrants that:
(a) Investment
Purpose. The Buyer is acquiring the Securities for its own
account for investment only and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the Securities Act; provided, however, that
by making the representations herein, the Buyer reserves the right to dispose of
the Securities at any time in accordance with or pursuant to an effective
registration statement covering such Securities or an available exemption under
the Securities Act. The Buyer does not presently have any agreement
or understanding, directly or indirectly, with any Person to distribute any of
the Securities.
(b) Accredited Investor
Status. The Buyer is an “Accredited Investor”
as that term is defined in Rule 501(a)(3) of Regulation D.
(c) Reliance on
Exemptions. The Buyer understands that the Securities are
being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and the
Buyer’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Securities.
(d) Information. The
Buyer and its advisors (and his or, its counsel), if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and information he deemed material to making an informed investment
decision regarding his purchase of the Securities, which have been requested by
the Buyer. The Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and its
management. Neither such inquiries nor any other due diligence
investigations conducted by the Buyer or its advisors, if any, or its
representatives shall modify, amend or affect the Buyer’s right to rely on the
Company’s representations and warranties contained in Section 3
below. The Buyer understands that its investment in the Securities
involves a high degree of risk. The Buyer is in a position regarding
the Company, which, based upon employment, family relationship or economic
bargaining power, enabled and enables such Buyer to obtain information from the
Company in order to evaluate the merits and risks of this
investment. The Buyer has sought such accounting, legal and tax
advice, as it has considered necessary to make an informed investment decision
with respect to its acquisition of the Securities.
(e) No Governmental
Review. The Buyer understands that no United States federal or
state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Securities, or the fairness or
suitability of the investment in the Securities, nor have such authorities
passed upon or endorsed the merits of the offering of the
Securities.
(f) Transfer or
Resale. The Buyer understands that except as provided in the
Registration Rights Agreement: (i) the Securities have not been and are not
being registered under the Securities Act or any state securities laws, and may
not be offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) the Buyer shall have delivered to the Company an
opinion of counsel, in a generally acceptable form, to the effect that such
Securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration requirements, or (C)
the Buyer provides the Company with reasonable assurances (in the form of seller
and broker representation letters) that such Securities can be sold, assigned or
transferred pursuant to Rule 144 or Rule 144A promulgated under the Securities
Act, as amended (or a successor rule thereto) (collectively, “Rule 144”), in each
case following the applicable holding period set forth therein; (ii) any sale of
the Securities made in reliance on Rule 144 may be made only in accordance with
the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of
the Securities under circumstances in which the seller (or the person
through whom the sale is made) may be deemed to be an underwriter (as that term
is defined in the Securities Act) may require compliance with some other
exemption under the Securities Act or the rules and regulations of the SEC
thereunder; and (iii) neither the Company nor any other person is under any
obligation to register the Securities under the Securities Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder.
(g) Legends. The
Buyer agrees to the imprinting, so long as is required by this Section 2(g), of
a restrictive legend in substantially the following form:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS.
Certificates
evidencing the Conversion Shares or Warrant Shares shall not contain any legend
(including the legend set forth above), (i) while a registration statement
(including the Registration Statement) covering the resale of such security is
effective under the Securities Act, (ii) following any sale of such Conversion
Shares or Warrant Shares pursuant to Rule 144, (iii) if such Conversion Shares
or Warrant Shares are eligible for sale under Rule 144, or (iv) if such legend
is not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the staff of the
SEC). The Company shall cause its counsel to issue a legal opinion to
the Company’s transfer agent promptly after the effective date (the “Effective Date”) of a
Registration Statement if required by the Company’s transfer agent to effect the
removal of the legend hereunder. If all or any portion of the
Convertible Debentures or Warrants are exercised by the Buyer while the Buyer is
not an Affiliate of the Company (a “Non-Affiliated
Buyer”) at a time when there is an effective registration statement to
cover the resale of the Conversion Shares or the Warrant Shares, such Conversion
Shares or Warrant Shares shall be issued free of all legends. The
Company agrees that following the Effective Date or at such time as such legend
is no longer required under this Section 2(g), it will, no later than three
Trading Days following the delivery by a Non-Affiliated Buyer to the Company or
the Company’s transfer agent of a certificate representing Conversion Shares or
Warrant Shares, as the case may be, issued with a restrictive legend (such third
Trading Day, the “Legend Removal
Date”), deliver or cause to be delivered to such Non-Affiliated Buyer a
certificate representing such shares that is free from all restrictive and other
legends. The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section. The Buyer acknowledges that
the Company’s agreement hereunder to remove all legends from Conversion Shares
or Warrant Shares is not an affirmative statement or representation that such
Conversion Shares or Warrant Shares are freely tradable. The Buyer
agrees that the removal of the restrictive legend from certificates representing
Securities as set forth in this Section 3(g) is predicated upon the Company’s
reliance that the Buyer will sell any Securities pursuant to either the
registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom, and that if
Securities are sold pursuant to a Registration Statement, they will be sold in
compliance with the plan of distribution set forth therein.
(h) Authorization,
Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyer and is a valid and
binding agreement of the Buyer enforceable in accordance with its terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies.
(i) Receipt of
Documents. The Buyer and his or its counsel has received and
read in their entirety: (i) this Agreement and each representation,
warranty and covenant set forth herein and the Transaction Documents (as defined
herein); (ii) all due diligence and other information necessary to verify the
accuracy and completeness of such representations, warranties and covenants;
(iii) the Company’s Form 10-K for the fiscal year ended December 31, 2009 and
(iv) answers to all questions the Buyer submitted to the Company regarding an
investment in the Company; and the Buyer has relied on the information contained
therein and has not been furnished any other documents, literature, memorandum
or prospectus.
(j) Due Formation of Corporate
Buyer. The Buyer is an exempted limited partnership and has
been formed and validly exists under the laws of the Cayman Islands and has not
been organized for the specific purpose of purchasing the Securities and is not
prohibited from doing so.
(k) No Legal Advice From the
Company. The Buyer acknowledges, that it had the opportunity
to review this Agreement and the transactions contemplated by this Agreement
with his or its own legal counsel and investment and tax
advisors. The Buyer is relying solely on such counsel and advisors
and not on any statements or representations of the Company or any of its
representatives or agents for legal, tax or investment advice with respect to
this investment, the transactions contemplated by this Agreement or the
securities laws of any jurisdiction.
Except as
set forth under the corresponding section of the Disclosure Schedules which
Disclosure Schedules shall be deemed a part hereof and to qualify any
representation or warranty otherwise made herein to the extent of such
disclosure, the Company hereby makes the representations and warranties set
forth below to the Buyer:
(a) Subsidiaries. All
of the direct and indirect subsidiaries of the Company are set forth on Schedule
3(a). The Company owns, directly or indirectly, all of the
capital stock or other equity interests of each subsidiary free and clear of any
liens, and all the issued and outstanding shares of capital stock of each
subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights to subscribe for or purchase
securities.
(b) Organization and
Qualification. The Company and its subsidiaries are
corporations duly organized and validly existing in good standing under the laws
of the jurisdiction in which they are incorporated, and have the requisite
corporate power to own their properties and to carry on their business as now
being conducted. Each of the Company and its subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have or reasonably be expected to
result in (i) a material adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material adverse effect on
the results of operations, assets, business or condition (financial or
otherwise) of the Company and the subsidiaries, taken as a whole, 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”) and no proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such
power and authority or qualification.
(c) Authorization, Enforcement,
Compliance with Other Instruments. (i) The Company has
the requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Convertible Debentures, the Warrants, the
Ratification Agreement, the Irrevocable Transfer Agent Instructions, and each of
the other agreements entered into by the parties hereto in connection with the
transactions contemplated by this Agreement (collectively the “Transaction
Documents”) and to issue the Securities in accordance with the terms
hereof and thereof, (ii) the execution and delivery of the Transaction Documents
by the Company and the consummation by it of the transactions contemplated
hereby and thereby, including, without limitation, the issuance of the
Securities, the reservation for issuance and the issuance of the Conversion
Shares, and the reservation for issuance and the issuance of the Warrant Shares,
have been duly authorized by the Company’s Board of Directors and no further
consent or authorization is required by the Company, its Board of Directors or
its stockholders, (iii) the Transaction Documents have been duly executed and
delivered by the Company, (iv) the Transaction Documents constitute the valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors’ rights and
remedies. The authorized officer of the Company executing the
Transaction Documents knows of no reason why the Company cannot perform any of
the Company’s other obligations under the Transaction Documents.
(d) Capitalization. The
authorized capital stock of the Company consists of 5,000,000,000 shares of
Common Stock par value $0.001 and 25,000,000 shares of Preferred Stock, par
value $0.01 (“Preferred Stock”) of
which 22,707,093 shares of Common Stock are issued and 22,675,678 shares of
Common Stock are outstanding, respectively. The Company’s Preferred Stock
outstanding includes 8,642 shares of its Series C Convertible
Preferred Stock and 25,000 shares of its Series D Convertible Preferred Stock
issued and outstanding, respectively. 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. Except as disclosed in Schedule 3(d): (i) none of the
Company's capital stock is subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company; (ii)
other than as disclosed in the SEC Documents, as
defined herein, there are no outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any capital stock of the Company or any of its subsidiaries,
or contracts, commitments, understandings or arrangements by which the Company
or any of its subsidiaries is or may become bound to issue additional capital
stock of the Company or any of its subsidiaries or options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any capital stock of the Company or any of its subsidiaries;
(iii) there are no outstanding debt securities, notes, credit agreements, credit
facilities or other agreements, documents or instruments evidencing indebtedness
of the Company or any of its subsidiaries or by which the Company or any of its
subsidiaries is or may become bound; (iv) there are no financing statements
securing obligations in any material amounts, either singly or in the aggregate,
filed in connection with the Company or any of its subsidiaries; (v) there are
no outstanding securities or instruments of the Company or any of its
subsidiaries which contain any redemption or similar provisions, and there are
no contracts, commitments, understandings or arrangements by which the Company
or any of its subsidiaries is or may become bound to redeem a security of the
Company or any of its subsidiaries; (vi) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities; (vii) the Company does not have any stock
appreciation rights or "phantom stock" plans or agreements or any similar plan
or agreement; and (viii) the Company and its subsidiaries have no liabilities or
obligations required to be disclosed in the SEC Documents but not so disclosed
in the SEC Documents, other than those incurred in the ordinary course of the
Company's or its subsidiaries' respective businesses and which, individually or
in the aggregate, do not or would not have a Material Adverse
Effect. The Company has furnished to the Buyer true, correct and
complete copies of the Company's Certificate of Incorporation, as amended and as
in effect on the date hereof (the “Certificate of
Incorporation”), and the Company's Bylaws, as amended and as in effect on
the date hereof (the “Bylaws”), and the
terms of all securities convertible into, or exercisable or exchangeable for,
shares of Common Stock and the material rights of the holders thereof in respect
thereto. No further approval or authorization of any stockholder, the
Board of Directors of the Company or others is required for the issuance and
sale of the Securities. There are no stockholders 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 knowledge of the Company,
between or among any of the Company’s stockholders.
(e) Issuance of
Securities. The issuance of the Convertible Debentures and the
Warrants is duly authorized and free from all taxes, liens and charges with
respect to the issue thereof. Upon conversion in accordance with the
terms of the Convertible Debentures or exercise in accordance with the Warrants,
as the case may be, the Conversion Shares and Warrant Shares, respectively, when
issued will be validly issued, fully paid and nonassessable, free from all
taxes, liens and charges with respect to the issue thereof. The
Company has reserved from its duly authorized capital stock the appropriate
number of shares of Common Stock as set forth in this Agreement, subject to
Section 4(e) of this Agreement.
(f) No
Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby (including, without limitation,
the issuance of the Convertible Debentures and the Warrants, and reservation for
issuance and issuance of the Conversion Shares and the Warrant Shares) will not
(i) result in a violation of any certificate of incorporation, certificate of
formation, any certificate of designations or other constituent documents of the
Company or any of its subsidiaries, any capital stock of the Company or any of
its subsidiaries or bylaws of the Company or any of its subsidiaries or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) in any respect under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including foreign, federal and state
securities laws and regulations and the rules and regulations of the Financial
Industry Regulatory Authority’s OTC Bulletin Board) applicable to the Company or
any of its subsidiaries or by which any property or asset of the Company or any
of its subsidiaries is bound or affected; except in the case of each of clauses
(ii) and (iii), such as could not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect. The
business of the Company and its subsidiaries is not being conducted, and shall
not be conducted in violation of any material law, ordinance, or regulation of
any governmental entity. Except as specifically contemplated by this
Agreement and as required under the Securities Act and any applicable state
securities laws, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under or contemplated by this Agreement in accordance with the terms
hereof or thereof. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date
hereof. The Company and its subsidiaries are unaware of any facts or
circumstance, which might give rise to any of the foregoing.
(g) SEC Documents (as defined
herein); Financial Statements. The Company has filed all SEC
Documents, including all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), for
the two years preceding the date hereof (or such shorter period as the Company
was required by law or regulation to file such material) (all of the foregoing
filed prior to the date hereof or amended after the date hereof and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein, being herein defined to be the “SEC
Documents”) on timely basis or has received a valid extension of such time of
filing and has filed any such SEC Document prior to the expiration of any such
extension. The Company has delivered to the Buyer or its
representatives, or made available through the SEC’s website at www.sec.gov, true and
complete copies of the SEC Documents. As of their respective dates,
the SEC Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, 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 the light of the circumstances under
which they were made, not misleading. As of their respective dates,
the financial statements of the Company included in the SEC Documents complied
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect
thereto. Such financial statements have been prepared in accordance
with generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Buyer which is not
included in the SEC Documents, including, without limitation, information
referred to in this Section 2(g) of this Agreement, contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstance under
which they are or were made and not misleading.
(h) 10(b)-5. The
SEC Documents do not include any untrue statements of material fact, nor do they
omit to state any material fact required to be stated therein necessary to make
the statements made, in light of the circumstances under which they were made,
not misleading.
(i) Absence of
Litigation. Except as disclosed in the SEC Documents, there is
no action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
against or affecting the Company, the Common Stock or any of the Company’s
subsidiaries, wherein an unfavorable decision, ruling or finding would have a
Material Adverse Effect.
(j) Acknowledgment Regarding
Buyer’s Purchase of the Convertible Debentures. The Company
acknowledges and agrees that the Buyer is acting solely in the capacity of an
arm’s length purchaser with respect to this Agreement and the transactions
contemplated hereby. The Company further acknowledges that the Buyer
is not acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by the Buyer or any of their respective
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is merely incidental to the Buyer’s purchase of the
Securities. The Company further represents to the Buyer that the
Company’s decision to enter into this Agreement has been based solely on the
independent evaluation by the Company and its representatives.
(k) No General
Solicitation. 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 the
Securities.
(l) 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 require registration of the Securities under the
Securities Act or cause this offering of the Securities to be integrated with
prior offerings by the Company for purposes of the Securities Act.
(m) Employee
Relations. Neither the Company nor any of its subsidiaries is
involved in any labor dispute or, to the knowledge of the Company or any of its
subsidiaries, is any such dispute threatened. None of the Company’s
or its subsidiaries’ employees is a member of a union and the Company and its
subsidiaries believe that their relations with their employees are
good.
(n) Intellectual Property
Rights. The Company and its subsidiaries own or possess
adequate rights or licenses to use all trademarks, trade names, service marks,
service mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and
rights necessary to conduct their respective businesses as now
conducted. The Company and its subsidiaries do not have any knowledge
of any infringement by the Company or its subsidiaries of trademark, trade name
rights, patents, patent rights, copyrights, inventions, licenses, service names,
service marks, service mark registrations, trade secret or other similar rights
of others, and, to the knowledge of the Company there is no claim, action or
proceeding being made or brought against, or to the Company’s knowledge, being
threatened against, the Company or its subsidiaries regarding trademark, trade
name, patents, patent rights, invention, copyright, license, service names,
service marks, service mark registrations, trade secret or other infringement;
and the Company and its subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing.
(o) Environmental
Laws. The Company and its subsidiaries are (i) in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”),
(ii) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval.
(p) Title. All
real property and facilities held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
subsidiaries.
(q) Insurance. The
Company and each of its subsidiaries is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its subsidiaries are engaged. Neither the
Company nor any such subsidiary has been refused any insurance coverage sought
or applied for and neither the Company nor any such subsidiary has any reason to
believe that it will not be able to renew its 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 at a cost that would not materially
and adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and its subsidiaries, taken as a
whole.
(r) Regulatory
Permits. The Company and its subsidiaries possess all material
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
(s) Internal Accounting
Controls. Except as disclosed in the SEC Documents, the
Company and each of its subsidiaries maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, and (iii) the recorded amounts for assets are
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(t) No Material Adverse
Breaches, etc. Neither the Company nor any of its subsidiaries
is subject to any charter, corporate or other legal restriction, or any
judgment, decree, order, rule or regulation which in the judgment of the
Company’s officers has or is expected in the future to have a Material Adverse
Effect on the business, properties, operations, financial condition, results of
operations or prospects of the Company or its subsidiaries. Neither
the Company nor any of its subsidiaries is in breach of any contract or
agreement which breach, in the judgment of the Company’s officers, has or is
expected to have a Material Adverse Effect on the business, properties,
operations, financial condition, results of operations or prospects of the
Company or its subsidiaries.
(u) Tax
Status. The Company and each of its subsidiaries has made and
filed all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject and (unless and
only to the extent that the Company and each of its subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know of no basis for any such claim.
(v) Certain
Transactions. Except for arm’s length transactions pursuant to
which the Company makes payments in the ordinary course of business upon terms
no less favorable than the Company could obtain from third parties and other
than the grant of stock options disclosed in the SEC Documents, none of the
officers, directors, or employees of the Company is presently a party to any
transaction with the Company (other than for services as independent
contractors, 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 corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
(w) Fees and Rights of First
Refusal. The Company is not obligated to offer the securities
offered hereunder on a right of first refusal basis or otherwise to any third
parties including, but not limited to, current or former shareholders of the
Company, underwriters, brokers, agents or other third parties.
(x) Investment Company.
The Company is not, and is not an affiliate of, and immediately after receipt of
payment for the Securities, will not be or be an affiliate of, an “investment
company” within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that
it will not become subject to the Investment Company Act.
(y) Registration
Rights. No Person has any right to cause the Company to effect
the registration under the Securities Act of any securities of the
Company. There are no outstanding registration statements not yet
declared effective and there are no outstanding comment letters from the SEC or
any other regulatory agency.
(z) Private Placement.
Assuming the accuracy of the Buyer’s representations and warranties set forth in
Section 2, no registration under the Securities Act is required for the offer
and sale of the Securities by the Company to the Buyer as contemplated hereby.
The issuance and sale of the Securities hereunder does not contravene the rules
and regulations of the Primary Market.
(aa) Listing and Maintenance
Requirements. The Company’s Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to terminate, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act nor has the Company received any notification that the SEC is
contemplating terminating such registration. The Company has not, in
the twelve months preceding the date hereof, received notice from any Primary
Market on which the Common Stock is or has been listed or quoted to the effect
that the Company is not in compliance with the listing or maintenance
requirements of such Primary Market. The Company is, and has no
reason to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements.
(bb) Reporting
Status. With a view to making available to the Buyer the benefits
of Rule 144 or any similar rule or regulation of the SEC that may at any time
permit the Buyer to sell securities of the Company to the public without
registration, and as a material inducement to the Buyer’s purchase of the
Securities, the Company represents and warrants to the following: (i) the
Company is, and has been for a period of at least 90 days immediately preceding
the date hereof, subject to the reporting requirements of section 13 or 15(d) of
the Exchange Act (ii) the Company has filed all required reports under section
13 or 15(d) of the Exchange, as applicable, during the 12 months preceding the
date hereof (or for such shorter period that the Company was required to file
such reports), (iii) the Company is not an issuer defined as a “Shell Company,”
and (iv) the Company is not an issuer that has been at any time previously an
issuer defined as a “Shell Company.” For the purposes hereof, the
term “Shell Company” shall mean an issuer that meets the description defined in
paragraph (i)(1)(i) of Rule 144.
(cc) Disclosure. The
Company has made available to the Buyer and its counsel all the information
reasonably available to the Company that the Buyer or its counsel have requested
for deciding whether to acquire the Securities. No representation or
warranty of the Company contained in this Agreement (as qualified by the
Disclosure Schedule) or any of the other Transaction Documents, and no
certificate furnished or to be furnished to the Buyer at the Closing, or any due
diligence evaluation materials furnished by the Company or on behalf of the
Company, including without limitation, due diligence questionnaires, or any
other documents, presentations, correspondence, or information contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made.
(dd) Manipulation of
Price. The Company has not, and to its knowledge no one acting on
its behalf has, (i) taken, directly or indirectly, any action designed to cause
or to result in the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of any of the Securities, (ii)
sold, bid for, purchased, or, paid any compensation for soliciting purchases of,
any of the Securities, or (iii) paid or agreed to pay to any Person any
compensation for soliciting another to purchase any other securities of the
Company, other than, in the case of clauses (ii) and (iii), compensation paid to
the Company’s placement agent in connection with the placement of the
Securities.
(ee) Dilutive
Effect. The Company understands and acknowledges that the
number of Conversion Shares issuable upon conversion of the Convertible
Debentures and the Warrant Shares issuable upon exercise of the Warrants will
increase in certain circumstances. The Company further acknowledges
that its obligation to issue Conversion Shares upon conversion of the
Convertible Debentures in accordance with this Agreement and the Convertible
Debentures and its obligation to issue the Warrant Shares upon exercise of the
Warrants in accordance with this Agreement and the Warrants, in each case, is
absolute and unconditional regardless of the dilutive effect that such issuance
may have on the ownership interests of other stockholders of the
Company.
4. COVENANTS.
(a) Best
Efforts. Each party shall use its best efforts to timely
satisfy each of the conditions to be satisfied by it as provided in Sections 6
and 7 of this Agreement.
(b) Form D. If
the Company deems necessary, the Company agrees to file a Form D with respect to
the Securities as required under Regulation D and to provide a copy thereof to
the Buyer promptly after such filing. The Company shall, on or before
the Closing Date, take such action as the Company shall reasonably determine is
necessary to qualify the Securities, or obtain an exemption for the Securities
for sale to the Buyer at the Closing pursuant to this Agreement under applicable
securities or “Blue Sky” laws of the states of the United States, and shall
provide evidence of any such action so taken to the Buyer on or prior to the
Closing Date.
(c) Reporting
Status. With a view to making available to the Buyer the
benefits of Rule 144 or any similar rule or regulation of the SEC that may at
any time permit the Buyer to sell securities of the Company to the public
without registration, and as a material inducement to the Buyer’s purchase of
the Securities, the Company covenants to the following:
(i) from
the date hereof until all the Securities either have been sold by the Buyer, or
may permanently be sold by the Buyer without any restrictions pursuant to Rule
144, (the “Registration Period”)
the Company shall file with the SEC in a timely manner all required reports
under section 13 or 15(d) of the Exchange Act and such reports shall conform to
the requirement of the Exchange Act and the SEC for filing
thereunder;
(ii)
The Company shall furnish to the Buyer so long as the Buyer
owns Securities, promptly upon request, (i) a written statement by the Company
that it has complied with the reporting requirements of Rule 144, (ii) a copy of
the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information as may
be reasonably requested to permit the Buyer to sell such securities pursuant to
Rule 144 without registration; and
(iii) During
the Registration Period the Company shall not terminate its status as an issuer
required to file reports under the Exchange Act even if the Exchange Act or the
rules and regulations thereunder would otherwise permit such
termination.
(d) Use of
Proceeds. The Company will use the proceeds from the sale of
the Convertible Debentures first, to pay all principal and accrued interest on
the April 2010 Note and then, for the general corporate purposes of the Company
and its subsidiaries including, without limitation, NeoMedia Europe
AG.
(e) Reservation of
Shares. Upon the written request of the Buyer, the Company
shall take all action reasonably necessary to at all times have authorized, and
reserved for the purpose of issuance, such number of shares of Common Stock as
shall be necessary to effect the full conversion of the Convertible Debentures
that have been issued hereunder and the full exercise of the Warrants issued
hereunder (the “Share
Reserve”). If at any time the Share Reserve is insufficient to
effect the full conversion of the Convertible Debentures then outstanding or the
full exercise of the Warrants outstanding, the Company shall seek to increase
the Share Reserve accordingly. Furthermore, in the event that the par
value for the Company’s stock is greater than the Closing Bid Price of the
Common Stock for 5 consecutive Trading Days, the Company shall seek to reduce
the par value of its Common Stock to $0.0001 or less or such number as may be
permitted under applicable law. If the Company is required to seek an increase
in its authorized and unissued shares of Common Stock available to increase the
Share Reserve, or reduce the par value of the company’s Common Stock, the
Company shall call and hold a special meeting of the shareholders within sixty
days of notice from the Buyer, for the sole purpose of increasing the number of
shares authorized and/or reducing the par value. The Company’s
management shall recommend to the shareholders to vote in favor of increasing
the number of shares of Common Stock authorized and/or reducing the par value.
Management shall also vote all of its shares in favor of increasing the number
of authorized shares of Common Stock and/or reducing the par value.
(f) Listings or
Quotation. The Company’s Common Stock shall be listed or
quoted for trading on any of (a) the American Stock Exchange, (b) New York Stock
Exchange, (c) the Nasdaq Global Market, (d) the Nasdaq Capital Market, or (e)
the OTC Bulletin Board (which does not include the Pink Sheets LLC) (“OTCBB”) (each, a
“Primary
Market”). The Company shall promptly secure the listing of all
of (i) the Conversion Shares issuable upon conversion of the Convertible
Debentures, (ii) the Warrant Shares issued or issuable upon exercise of the
Warrants, (iii) any additional shares issuable in connection with any
anti-dilution provisions in the Warrants or the Convertible Debentures (without
giving effect to any limitations on exercise set forth in the Warrants or
Convertible Debentures) and (iv) any shares of Common Stock issued or issuable
with respect to the Conversion Shares, the Convertible Debentures, the Warrant
Shares, or the Warrants as a result of any stock split, dividend or other
distribution, recapitalization or similar event or otherwise, without regard to
any limitations on the conversion of the Convertible Debentures or exercise of
the Warrants (the “Registrable
Securities”) upon each national securities exchange and automated
quotation system, if any, upon which the Common Stock is then listed (subject to
official notice of issuance) and shall maintain such listing of all Registrable
Securities from time to time issuable under the terms of the Transaction
Documents.
(g) Fees and
Expenses.
(i) The
Company shall pay all of its costs and expenses incurred by it connection with
the negotiation, investigation, preparation, execution and delivery of the
Transaction Documents.
(ii) The
Company shall pay a structuring and due diligence fee to Yorkville
Advisors, LLC, the Buyer’s investment manager, of $90,000 which shall be paid
directly from the proceeds of the Closing. The structuring and due
diligence fees paid shall be nonrefundable.
(h) Corporate
Existence. So long as any of the Convertible Debentures remain
outstanding, the Company shall not directly or indirectly consummate any merger,
reorganization, restructuring, reverse stock split consolidation, sale of all or
substantially all of the Company’s assets or any similar transaction or related
transactions (each such transaction, an “Organizational
Change”) unless, prior to the consummation an Organizational Change, the
Company obtains the written consent of the Buyer. In any such case,
the Company will make appropriate provision with respect to such holders’ rights
and interests to insure that the provisions of this Section 4(h) will thereafter
be applicable to the Convertible Debentures.
(i)
Transactions With
Affiliates. So long as any Convertible Debentures are
outstanding, the Company shall not, and shall cause each of its subsidiaries not
to, enter into, amend, modify or supplement, or permit any subsidiary to enter
into, amend, modify or supplement any agreement, transaction, commitment, or
arrangement with any of its or any subsidiary’s officers, directors, person who
were officers or directors at any time during the previous two years,
stockholders who beneficially own five percent or more of the Common Stock, or
Affiliates (as defined below) or with any individual related by blood, marriage,
or adoption to any such individual or with any entity in which any such entity
or individual owns a five percent or more beneficial interest (each a “Related Party”),
except for (a) customary employment arrangements and benefit programs on
reasonable terms, (b) any investment in an Affiliate of the
Company, (c) any agreement, transaction, commitment, or arrangement
on an arms-length basis on terms no less favorable than terms which would have
been obtainable from a person other than such Related Party, (d) any agreement,
transaction, commitment, or arrangement which is approved by a majority of the
disinterested directors of the Company; for purposes hereof, any director who is
also an officer of the Company or any subsidiary of the Company shall not be a
disinterested director with respect to any such agreement, transaction,
commitment, or arrangement. “Affiliate” for
purposes hereof means, with respect to any person or entity, another person or
entity that, directly or indirectly, (i) has a ten percent or more equity
interest in that person or entity, (ii) has ten percent or more common ownership
with that person or entity, (iii) controls that person or entity, or
(iv) shares common control with that person or entity. “Control” or “controls” for
purposes hereof means that a person or entity has the power, direct or indirect,
to conduct or govern the policies of another person or entity.
(j) Transfer
Agent. The Company covenants and agrees that, in the event
that the Company’s agency relationship with the transfer agent should be
terminated for any reason prior to a date which is two years after the Closing
Date, the Company shall immediately appoint a new transfer agent and shall
require that the new transfer agent execute and agree to be bound by the terms
of the Irrevocable Transfer Agent Instructions (as defined herein).
(k) Restriction on Issuance of
the Capital Stock. So long as any Convertible Debentures are outstanding,
the Company shall not, without the prior written consent of the Buyer, (i) issue
or sell shares of Common Stock or Preferred Stock without consideration or for a
consideration per share less than the bid price of the Common Stock determined
immediately prior to its issuance, (ii) issue any preferred stock, warrant,
option, right, contract, call, or other security or instrument granting the
holder thereof the right to acquire Common Stock without consideration or for a
consideration less than such Common Stock’s Bid Price determined immediately
prior to it’s issuance, (iii) enter into any security instrument granting the
holder a security interest in any and all assets of the Company, or (iv) file
any registration statement on Form S-8.
(l) Short
Position. Neither the Buyer nor any of its affiliates have an
open short position in the Common Stock of the Company, and the Buyer agrees
that it shall not, and that it will cause its affiliates not to, engage in any
short sales of or hedging transactions with respect to the Common Stock as long
as any Convertible Debentures shall remain outstanding.
(m) Rights of First
Refusal. So long as any portion of Convertible Debentures are
outstanding, if the Company intends to raise additional capital by the issuance
or sale of capital stock of the Company, including without limitation shares of
any class of common stock, any class of preferred stock, options, warrants or
any other securities convertible or exercisable into shares of common stock
(whether the offering is conducted by the Company, underwriter, placement agent
or any third party) the Company shall be obligated to offer to the Buyer such
issuance or sale of capital stock, by providing in writing the principal amount
of capital it intends to raise and outline of the material terms of such capital
raise, prior to the offering such issuance or sale of capital stock to any
third parties including, but not limited to, current or former officers or
directors, current or former shareholders and/or investors of the obligor,
underwriters, brokers, agents or other third parties. The Buyer shall have
ten business days from receipt of such notice of the sale or issuance of capital
stock to accept or reject all or a portion of such capital raising
offer.
(n) Lockup
Agreements. Within fifteen (15) days hereof, the Company shall
obtain from each officer and director a lockup agreement in the form attached
hereto as Exhibit
C.
(o) Additional Registration
Statements. During the Registration Period, the Company will
not file a registration statement under the Securities Act relating to
securities that are not the Securities.
(p) Review of Public
Disclosures. All SEC filings (including, without limitation,
all filings required under the Exchange Act, which include Forms 10-Q, 10-K and
8-K, etc) and other public disclosures made by the Company, including, without
limitation, all press releases, investor relations materials, and scripts of
analysts meetings and calls, shall be reviewed and approved for release by the
Company’s attorneys and, if containing financial information, the Company’s
independent certified public accountants.
(q) Disclosure of
Transaction. Within four Business Days following the date of
this Agreement, the Company shall file a Current Report on Form 8-K describing
the terms of the transactions contemplated by the Transaction Documents in the
form required by the Exchange Act and attaching the material Transaction
Documents (including, without limitation, this Agreement, the form of the
Convertible Debenture, the form of Warrant and the form of the Registration
Rights Agreement) as exhibits to such filing.
(r) Further
Assurances. At any time or from time to time upon the request
of the Buyer, the Company will, at its expense, promptly execute, acknowledge
and deliver such further documents and do such other acts and things as Buyer
may reasonably request in order to effect fully the purposes of the Transaction
Documents, including providing Buyer with any information reasonably requested
by it. In furtherance and not in limitation of the foregoing, the
Company shall take such actions as Buyer may reasonably request from time to
time to ensure that the obligations are secured by substantially all of the
assets of Company.
5. TRANSFER AGENT
INSTRUCTIONS.
(a) The
Company shall issue the Irrevocable Transfer Agent Instructions to its transfer
agent, and any subsequent transfer agent, irrevocably appointing David Gonzalez,
Esq. as the Company’s agent for purpose instructing its transfer agent to issue
certificates or credit shares to the applicable balance accounts at The
Depository Trust Company (“DTC”), registered in
the name of the Buyer or its respective nominee(s), for the Conversion Shares
and the Warrant Shares issued upon conversion of the Convertible Debentures or
exercise of the Warrants as specified from time to time by the Buyer to the
Company upon conversion of the Convertible Debentures or exercise of the
Warrants. The Company shall not change its transfer agent without the
express written consent of the Buyer, which may be withheld by the Buyer in its
sole discretion. The Company warrants that no instruction other than
the Irrevocable Transfer Agent Instructions referred to in this Section 5, and
stop transfer instructions to give effect to Section 2(g) hereof (in the case of
the Conversion Shares or Warrant Shares prior to registration of such shares
under the Securities Act) will be given by the Company to its transfer agent,
and that the Securities shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement and the
other Transaction Documents. If the Buyer effects a sale, assignment
or transfer of the Securities in accordance with Section 2(f), the Company shall
promptly instruct its transfer agent to issue one or more certificates or credit
shares to the applicable balance accounts at DTC in such name and in such
denominations as specified by such Buyer to effect such sale, transfer or
assignment and, with respect to any transfer, shall permit the
transfer. In the event that such sale, assignment or transfer
involves Conversion Shares or Warrant Shares sold, assigned or transferred
pursuant to an effective registration statement or pursuant to Rule 144, the
transfer agent shall issue such Securities to the Buyer, assignee or transferee,
as the case may be, without any restrictive
legend. Nothing in this Section 5 shall affect in any way
the Buyer’s obligations and agreement to comply with all applicable securities
laws upon resale of Conversion Shares. The Company acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to the
Buyer by vitiating the intent and purpose of the transaction contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law
for a breach of its obligations under this Section 5 will be inadequate and
agrees, in the event of a breach or threatened breach by the Company of the
provisions of this Section 5, that the Buyer shall be entitled, in addition
to all other available remedies, to an injunction restraining any breach and
requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being
required.
6. CONDITIONS TO THE COMPANY’S
OBLIGATION TO SELL.
The
obligation of the Company hereunder to issue and sell the Convertible Debentures
to the Buyer at the Closings is subject to the satisfaction, at or before the
Closing Dates, of each of the following conditions, provided that these
conditions are for the Company’s sole benefit and may be waived by the Company
at any time in its sole discretion:
(a) The
Buyer shall have executed the Transaction Documents and delivered them to the
Company.
(b) The
Buyer shall have delivered to the Company the Purchase Price for the Convertible
Debentures and Warrants minus any fees to be paid directly from the proceeds the
Closings as set forth herein, by wire transfer of immediately available U.S.
funds pursuant to the wire instructions provided by the Company.
(c) The
representations and warranties of the Buyer shall be true and correct in all
material 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
specific date), and the Buyer shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the Buyer at or
prior to the Closing Date.
7. CONDITIONS TO THE BUYER’S
OBLIGATION TO PURCHASE. The obligation of the Buyer hereunder
to purchase the Convertible Debentures at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Buyer’s sole benefit and
may be waived by the Buyer at any time in its sole discretion:
(a) The
Company shall have executed the Transaction Documents and delivered the same to
the Buyer.
(b) The
Common Stock shall be authorized for quotation or trading on the Primary Market,
trading in the Common Stock shall not have been suspended for any reason, and
all the Conversion Shares issuable upon the conversion of the Convertible
Debentures shall be approved for listing or trading on the Primary
Market.
(c) The
representations and warranties of the Company shall be true and correct in all
material respects (except to the extent that any of such representations and
warranties is already qualified as to materiality in Section 3 above, in which
case, such representations and warranties shall be true and correct without
further qualification) 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 specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Date
(d) The
Company shall have executed and delivered to the Buyer the Convertible Debenture
and Warrants.
(e) The
Buyer shall have received an opinion of counsel from counsel to the Company in a
form satisfactory to the Buyer.
(f) The
Company shall have provided to the Buyer a true copy of a certificate of good
standing evidencing the formation and good standing of the Company from the
secretary of state (or comparable office) from the jurisdiction in which the
Company is incorporated, as of a date within 10 days of the Closing
Date.
(g) The
Company shall have delivered to the Buyer a certificate, executed by the
Secretary of the Company and dated as of the Closing Date, as to (i) the
resolutions consistent with Section 3(c) as adopted by the Company's Board of
Directors in a form reasonably acceptable to such Buyer, (ii) the Certificate of
Incorporation and (iii) the Bylaws, each as in effect at the
Closing.
(h) The
Company and its subsidiaries shall have executed and delivered to the Buyer the
Ratification Agreement and all conditions to effectiveness thereof shall have
been satisfied as determined by the Buyer in its sole and exclusive
discretion.
(i)
The Irrevocable Transfer Agent Instructions, in form and
substance satisfactory to the Buyer, shall have been delivered to and
acknowledged in writing by the Company’s transfer agent.
8. INDEMNIFICATION.
(a) In
consideration of the Buyer’s execution and delivery of this Agreement and
acquiring the Convertible Debentures and the Conversion Shares hereunder, and in
addition to all of the Company’s other obligations under this Agreement, the
Company shall defend, protect, indemnify and hold harmless the Buyer and each
other holder of the Convertible Debentures and the Conversion Shares, and all of
their officers, directors, employees and agents (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Buyer Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Buyer Indemnitee is a party to the
action for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and disbursements (the “Indemnified
Liabilities”), incurred by the Buyer Indemnitees or any of them as a
result of, or arising out of, or relating to (a) any misrepresentation or breach
of any representation or warranty made by the Company in this Agreement, the
Convertible Debentures or the other Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (b) any
breach of any covenant, agreement or obligation of the Company contained in this
Agreement, or the other Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby, or (c) any cause of
action, suit or claim brought or made against such Buyer Indemnitee and arising
out of or resulting from the execution, delivery, performance or enforcement of
this Agreement or any other instrument, document or agreement executed pursuant
hereto by any of the parties hereto, any transaction financed or to be financed
in whole or in part, directly or indirectly, with the proceeds of the issuance
of the Convertible Debentures or the status of the Buyer or holder of the
Convertible Debentures the Conversion Shares, as a Buyer
of Convertible Debentures in the Company. To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities, which is permissible under applicable
law.
(b) In
consideration of the Company’s execution and delivery of this Agreement, and in
addition to all of the Buyer’s other obligations under this Agreement, the Buyer
shall defend, protect, indemnify and hold harmless the Company and all of its
officers, directors, employees and agents (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the “Company Indemnitees”)
from and against any and all Indemnified Liabilities incurred by the Indemnitees
or any of them as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the Buyer
in this Agreement, instrument or document contemplated hereby or thereby
executed by the Buyer, (b) any breach of any covenant, agreement or obligation
of the Buyer contained in this Agreement, the Transaction Documents
or any other certificate, instrument or document contemplated hereby or thereby
executed by the Buyer, or (c) any cause of action, suit or claim brought or made
against such Company Indemnitee based on material misrepresentations or due to a
material breach and arising out of or resulting from the execution, delivery,
performance or enforcement of this Agreement, the Transaction Documents or any
other instrument, document or agreement executed pursuant hereto by any of the
parties hereto. To the extent that the foregoing undertaking by the
Buyer may be unenforceable for any reason, the Buyer shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities, which is permissible under applicable law.
9. GOVERNING LAW:
MISCELLANEOUS.
(a) Governing
Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New Jersey without regard to the
principles of conflict of laws. The parties further agree that any
action between them shall be heard in Hudson County, New Jersey, and expressly
consent to the jurisdiction and venue of the Superior Court of New Jersey,
sitting in Hudson County and the United States District Court for the District
of New Jersey sitting in Newark, New Jersey for the adjudication of any civil
action asserted pursuant to this Paragraph.
(b) Counterparts. This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other
party.
(c) Headings. The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
(d) Severability. If
any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
(e) Entire Agreement,
Amendments. This Agreement supersedes all other prior oral or
written agreements between the Buyer, the Company, their affiliates and persons
acting on their behalf with respect to the matters discussed herein, and this
Agreement and the instruments referenced herein contain the entire understanding
of the parties with respect to the matters covered herein and therein and,
except as specifically set forth herein or therein, neither the Company nor any
Buyer makes any representation, warranty, covenant or undertaking with respect
to such matters. No provision of this Agreement may be waived or
amended other than by an instrument in writing signed by the party to be charged
with enforcement.
(f) Notices. Any
notices, consents, waivers, or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered (i) upon receipt, when delivered personally; (ii) upon
confirmation of receipt, when sent by facsimile; (iii) three days after being
sent by U.S. certified mail, return receipt requested, or (iv) one day after
deposit with a nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be:
Each
party shall provide five days’ prior written notice to the other party of any
change in address or facsimile number.
(g) Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and
assigns. Neither the Company nor the Buyer shall assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the other party hereto.
(h) No Third Party
Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
person.
(i) Survival. Unless
this Agreement is terminated under Section 9(l), all agreements, representations
and warranties contained in this Agreement or made in writing by or on behalf of
any party in connection with the transactions contemplated by this Agreement
shall survive the execution and delivery of this Agreement and the
Closing.
(j) Publicity. The
Company and the Buyer shall have the right to approve, before issuance any press
release or any other public statement with respect to the transactions
contemplated hereby made by any party; provided, however, that the Company shall
be entitled, without the prior approval of the Buyer, to issue any press release
or other public disclosure with respect to such transactions required under
applicable securities or other laws or regulations (the Company shall use its
best efforts to consult the Buyer in connection with any such press release or
other public disclosure prior to its release and Buyer shall be provided with a
copy thereof upon release thereof).
(k) Further
Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(l) Termination. In
the event that the Closing shall not have occurred on or before five business
days from the date hereof due to the Company’s or the Buyer’s failure to satisfy
the conditions set forth in Sections 6 and 7 above (and the non-breaching
party’s failure to waive such unsatisfied condition(s)), the non-breaching party
shall have the option to terminate this Agreement with respect to such breaching
party at the close of business on such date without liability of any party to
any other party; provided, however, that if this Agreement is terminated by the
Company pursuant to this Section 9(l), the Company shall remain obligated to
reimburse the Buyer for the fees and expenses of Yorkville Advisors, LLC
described in Section 4(g) above.
(m) Brokerage. The
Company represents that no broker, agent, finder or other party has been
retained by it in connection with the transactions contemplated hereby and that
no other fee or commission has been agreed by the Company to be paid for or on
account of the transactions contemplated hereby.
(n) No Strict
Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any
party.
[REMAINDER
PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Buyer and the Company
have caused their respective signature page to this Securities Purchase
Agreement to be duly executed as of the date first written above.
COMPANY:
NEOMEDIA
TECHNOLOGIES INC.
By:
/s/
Michael W. Zima
Name: Michael
W. Zima
Title: Chief
Financial Officer
BUYER:
YA
GLOBAL INVESTMENTS, L.P.
By:
Yorkville
Advisors, LLC
Its:
Investment
Manager
By:
/s/ Gerald
Eicke
Name:
Gerald
Eicke
Its:
Managing
Member
LIST OF
EXHIBITS:
Disclosure
Schedule
Exhibit A
– Form of Convertible Debenture
Exhibit B
– Form of Warrant
Exhibit C
– Form of Lockup Agreement
DISCLOSURE
SCHEDULE
Please
refer to the Officers’ Statement.
EXHIBIT
C
LOCKUP
AGREEMENT
The
undersigned hereby agrees that for a period commencing on May __, 2010 and
expiring on the date thirty days after the date that all amounts owed to YA
Global Investments, L.P. (the “Buyer”), under the Secured Convertible Debentures
issued to the Buyer pursuant to the Securities Purchase Agreement between
NeoMedia Technologies Inc. (the “Company”) and the Buyer dated May __, 2010 have
been paid (the “Lock-up Period”), he, she or it will not, directly or
indirectly, without the prior written consent of the Buyer, issue, offer, agree
or offer to sell, sell, grant an option for the purchase or sale of, transfer,
pledge, assign, hypothecate, distribute or otherwise encumber or dispose of any
securities of the Company, including common stock or options, rights, warrants
or other securities underlying, convertible into, exchangeable or exercisable
for or evidencing any right to purchase or subscribe for any common stock
(whether or not beneficially owned by the undersigned), or any beneficial
interest therein (collectively, the “Securities”) except in accordance with the
volume limitations set forth in Rule 144(e) of the General Rules and Regulations
under the Securities Act of 1933, as amended, for so long as the undersigned
maintains an executive, officer or director relationship with the
Company.
In
order to enable the aforesaid covenants to be enforced, the undersigned hereby
consents to the placing of legends and/or stop-transfer orders with the transfer
agent of the Company’s securities with respect to any of the Securities
registered in the name of the undersigned or beneficially owned by the
undersigned, and the undersigned hereby confirms the undersigned’s investment in
the Company.
Dated:
_______________, 2010
Signature
Name:
Address:
City,
State, Zip Code:
Print
Social Security Number
or
Taxpayer I.D.
Number
Dates Referenced Herein and Documents Incorporated by Reference
