Filed by Bowne Pure Compliance





Exhibit 10.1




SECURITIES PURCHASE AGREEMENT




by and between




IMMEDIATEK, INC.




and




RADICAL HOLDINGS LP




Dated as of July 18, 2008




 


 









 







TABLE OF CONTENTS




	 	 	 	 	 
	ARTICLE I. THE SECURITIES
	 	 	1	 
	Section 1.01 Issuance, Sale and Delivery of the Series B Shares at the Closing
	 	 	1	 
	Section 1.02 Closing
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
	 	 	2	 
	Section 2.01 Organization, Qualifications and Corporate Power
	 	 	2	 
	Section 2.02 Authorization; No Conflict; No Violation
	 	 	3	 
	Section 2.03 Consents and Approvals
	 	 	3	 
	Section 2.04 Validity
	 	 	3	 
	Section 2.05 Authorized Capital Stock
	 	 	3	 
	Section 2.06 Reports and Financial Statements
	 	 	5	 
	Section 2.07 Disclosure Controls and Procedures
	 	 	5	 
	Section 2.08 No Undisclosed Liabilities
	 	 	6	 
	Section 2.09 Events Subsequent to the Balance Sheet Date
	 	 	6	 
	Section 2.10 Litigation; Compliance with Law
	 	 	8	 
	Section 2.11 Proprietary Information
	 	 	9	 
	Section 2.12 Intellectual Property
	 	 	10	 
	Section 2.13 Real Property
	 	 	12	 
	Section 2.14 Assets
	 	 	12	 
	Section 2.15 Insurance
	 	 	12	 
	Section 2.16 Taxes
	 	 	13	 
	Section 2.17 Agreements
	 	 	13	 
	Section 2.18 Loans and Advances
	 	 	15	 
	Section 2.19 Assumptions, Guaranties, Etc. of Indebtedness of Other Persons
	 	 	15	 
	Section 2.20 Significant Customers and Suppliers
	 	 	16	 
	Section 2.21 Offerings
	 	 	16	 
	Section 2.22 Brokers; Financial Advisors
	 	 	16	 
	Section 2.23 Employees
	 	 	16	 
	Section 2.24 Environmental and Safety Laws
	 	 	17	 
	Section 2.25 Employee Benefits
	 	 	17	 
	Section 2.26 Foreign Corrupt Practices Act
	 	 	18	 
	Section 2.27 Illegal or Unauthorized Payments; Political Contributions
	 	 	18	 
	Section 2.28 Pending Changes
	 	 	18	 
	Section 2.29 Investment Company Act
	 	 	18	 
	Section 2.30 Product Liability
	 	 	18	 
	Section 2.31 Books and Records
	 	 	18	 
	Section 2.32 Disclosure
	 	 	19	 
	 
	 	 	 	 
	ARTICLE III. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER
	 	 	19	 
	Section 3.01 Representations and Warranties of the Purchaser
	 	 	19	 
	Section 3.02 Legend
	 	 	20	 






 


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	ARTICLE IV. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER AND THE COMPANY
	 	 	20	 
	Section 4.01 Conditions to the Purchaser’s Obligations at the Closing
	 	 	20	 
	Section 4.02 Conditions to the Company’s Obligations at the Closing
	 	 	21	 
	 
	 	 	 	 
	ARTICLE V. COVENANTS OF THE COMPANY
	 	 	22	 
	Section 5.01 Authorization of Series B Preferred Stock
	 	 	22	 
	Section 5.02 Current Report on Form 8-K
	 	 	22	 
	Section 5.03 Reserve for Preferred Stock Conversion Shares
	 	 	22	 
	Section 5.04 Corporate Existence
	 	 	23	 
	Section 5.05 Preservation of Property and Assets
	 	 	23	 
	Section 5.06 Insurance
	 	 	23	 
	Section 5.07 Inspection, Consultation and Advice
	 	 	23	 
	Section 5.08 Restrictive Agreements Prohibited
	 	 	23	 
	Section 5.09 Transactions with Affiliates
	 	 	24	 
	Section 5.10 Internal Accounting Controls
	 	 	24	 
	Section 5.11 Indemnity
	 	 	24	 
	Section 5.12 Compliance with Laws
	 	 	25	 
	Section 5.13 Keeping of Records and Books of Account
	 	 	25	 
	Section 5.14 Publicity
	 	 	25	 
	 
	 	 	 	 
	ARTICLE VI. MISCELLANEOUS
	 	 	25	 
	Section 6.01 Survival of Agreements
	 	 	25	 
	Section 6.02 Entire Agreement
	 	 	25	 
	Section 6.03 Assignment; Binding Effect
	 	 	25	 
	Section 6.04 Notices
	 	 	26	 
	Section 6.05 Specific Performance; Remedies
	 	 	27	 
	Section 6.06 Submission to Jurisdiction; Waiver of Jury Trial
	 	 	27	 
	Section 6.07 Headings
	 	 	28	 
	Section 6.08 Governing Law
	 	 	28	 
	Section 6.09 Amendments
	 	 	28	 
	Section 6.10 Extensions; Waivers
	 	 	28	 
	Section 6.11 Severability
	 	 	28	 
	Section 6.12 Counterparts; Effectiveness
	 	 	28	 
	Section 6.13 Construction
	 	 	29	 
	Section 6.14 Attorneys’ Fees
	 	 	29	 
	Section 6.15 Brokerage
	 	 	29	 
	Section 6.16 Adjustments for Stock Splits, Etc.
	 	 	29	 
	Section 6.17 Aggregation of Stock
	 	 	29	 
	Section 6.18 Certain Defined Terms
	 	 	30	 
	Section 6.19 Incorporation of Exhibits, Annexes and Schedules
	 	 	30	 
	 






INDEX TO DISCLOSURE SCHEDULES




SCHEDULE 2.05(a) Outstanding Capital Stock

SCHEDULE 2.13(b) Real Property



 


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SECURITIES PURCHASE AGREEMENT




This SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of July 18, 2008, is entered
into by and between Immediatek, Inc., a Nevada corporation (the “Company”), and Radical Holdings
LP, a Texas limited partnership (the “Purchaser”). Certain capitalized terms used herein are
defined in Section 6.19 of this Agreement.



A. The Company has agreed to adopt and file a Certificate of Designation, Rights and
Preferences (the “Certificate of Designation”) establishing the Series B Convertible Preferred
Stock, par value $0.001 per share, of the Company (the “Series B Preferred Stock”), a copy of which
is attached hereto as Exhibit A.



B. The Company desires to issue and sell to the Purchaser, and the Purchaser desires to
purchase from the Company, 69,726 shares of the Series B Preferred Stock (the “Series B Shares” or
the “Shares”) on the terms and subject to the conditions set forth in this Agreement.



C. The Shares will be convertible into that aggregate number of full shares of the Company’s
common stock, par value $0.001 per share (the “Common Stock”), representing at least 1.50809% of
the total voting power of all outstanding shares of capital stock of the Company, including
outstanding Common Stock, subject to adjustment as provided in the Certificate of Designation.



AGREEMENT




NOW, THEREFORE, in consideration of the premises, representations, warranties and the mutual
covenants contained in this Agreement and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:



ARTICLE I.




THE SECURITIES




Section 1.01 Issuance, Sale and Delivery of the Series B Shares at the Closing. At
the Closing (as defined in Section 1.02 hereof), on the terms and subject to the conditions of this
Agreement, the Company shall issue and sell to the Purchaser, and the Purchaser shall purchase from
the Company, the Series B Shares, at a price of $7.17092619 per share (the “Share Purchase Price”)
for an aggregate purchase price of $500,000 (the “Total Purchase Price”), which the Company and the
Purchaser agree to be the fair market value of the Series B Shares as of the date hereof.



Section 1.02 Closing. The Closing shall take place at 10:00 a.m. (local time) at 5424
Deloache Avenue, Dallas, Texas 75220, on July 18, 2008, or at such other location, date and time as
may be agreed upon between the Company and the Purchaser (such closing being called the “Closing”
and such date and time being called the “Closing Date”). At the Closing, the Company shall issue
and deliver to the Purchaser a duly issued certificate representing the Series
B Shares. As payment in full for the Series B Shares, on the Closing Date, the Purchaser
shall pay the Total Purchase Price, by wire transfer or check, to the Company.


 


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ARTICLE II.




REPRESENTATIONS AND WARRANTIES OF THE COMPANY




The Company represents and warrants to the Purchaser, as of the Closing Date, that except as
set forth in the Schedules attached hereto:




Section 2.01 Organization, Qualifications and Corporate Power.



(a) The Company is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Nevada. The Company is duly licensed or qualified to transact
business as a foreign corporation and is in good standing in each jurisdiction in which the nature
of the business transacted by it or the character of the properties owned or leased by it requires
such licensing or qualification, except where the failure to be so licensed, qualified or in good
standing would not result in a Material Adverse Change. The Company has full corporate power and
authority to own and hold its properties and to carry on its business as now conducted and as
proposed to be conducted, to execute, deliver and perform this Agreement and each of the other
Transaction Documents, to issue, sell and deliver the Shares and to issue and deliver the shares of
Common Stock issuable upon conversion of the Shares (collectively, the “Preferred Stock Conversion
Shares”).



(b) Other than IMKI Ventures, Inc., a Delaware corporation, and DiscLive, Inc., a Delaware
corporation, the Company has no Subsidiaries and the Company does not (i) own of record or
beneficially, directly or indirectly, (A) any shares of capital stock or securities exercisable or
exchangeable for, or convertible into, capital stock of any other entity or (B) any participating
interest in any partnership, joint venture or other non-corporate business enterprise or
(ii) control, directly or indirectly, any other entity. The Company has no commitments or plans to
establish any additional Subsidiaries.



(c) Each Subsidiary has been duly formed, organized or incorporated, as the case may be, and
is validly existing as a corporation, limited partnership or limited liability company in good
standing under the laws of its respective jurisdiction of formation, organization or incorporation.
Each Subsidiary has been duly qualified or registered to do business and is in good standing as a
foreign corporation, partnership or limited liability company, as the case may be, in each other
jurisdiction in which the ownership or leasing of its properties or the nature or conduct of its
business as now conducted, and as proposed to be conducted, requires such qualification or
registration, except where the failure to do so would not result in a Material Adverse Change.



 


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Section 2.02 Authorization; No Conflict; No Violation. The execution and delivery by
the Company of this Agreement and each of the other Transaction Documents and the performance of
its obligations hereunder and thereunder; (b) the issuance, sale and delivery to the Purchaser of
the Shares; and (c) the issuance and delivery of the Preferred Stock Conversion Shares have been
duly authorized by all requisite corporate action on the part of the Company’s
Board of Directors and shareholders and will not (i) result in a violation of the Company’s
Articles of Incorporation, as amended or modified (the “Charter”), or the Company’s Bylaws, as
amended or modified (the “Bylaws”), (ii) result in a violation of any applicable law, rule or
regulation, or any applicable order, injunction, judgment or decree of any court or other agency of
government, except such violations that would not result in a Material Adverse Change,
(iii) conflict with, result in a breach of, or constitute (or, with due notice or lapse of time or
both, would constitute) a default under, or give rise to any right of termination, acceleration or
cancellation under, any indenture, agreement, contract, license, arrangement, understanding,
evidence of indebtedness, note, lease or other instrument to which the Company or any of its
properties or assets is bound, (iv) result in the creation or imposition of any Lien, charge,
restriction, claim or encumbrance of any nature whatsoever upon the Company or any of the Company’s
properties or assets, or (v) require any consent, approval, notification, waiver or other similar
action from any third party.



Section 2.03 Consents and Approvals. Subject to the accuracy of the Purchaser’s
representations and warranties set forth in Article III hereof, no registration or filing
with, or consent or approval of or other action by, any federal, state or other governmental agency
or instrumentality or any third party is or will be necessary for (a) the Company’s valid
execution, delivery and performance of this Agreement and the other Transaction Documents, (b) the
Company’s issuance, sale and delivery of the Shares, (c) the Company’s issuance and delivery of the
Preferred Stock Conversion Shares upon conversion of the Shares, other than those which have
previously been obtained or made, or those which are required to be made under federal or state
securities laws, which will be obtained or made, and will be effective within the time periods
required by law.



Section 2.04 Validity. This Agreement and each of the other Transaction Documents
have been duly executed and delivered by the Company and constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with their terms.




Section 2.05 Authorized Capital Stock.



(a) The Company’s authorized capital stock consists of (i) 5,000,000 shares of preferred
stock, par value $0.001 per share (the “Preferred Stock”), of which (A) 4,392,286 shares have been
designated as Series A Preferred Stock and are issued and outstanding, and (B) 69,726 shares shall
be fixed and determined as Series B Preferred Stock pursuant to the Certificate of Designation, and
(iii) 500,000,000 shares of Common Stock. No other series or class of Preferred Stock has been
established or fixed. Immediately after the Closing, the number of shares of Preferred Stock and
Common Stock set forth on Schedule 2.05(a) will be validly issued and outstanding, fully
paid and nonassessable. In addition, immediately prior to the Closing, a sufficient number of
shares of Common Stock will be reserved for issuance upon issuance of the Preferred Stock
Conversion Shares, which shall be subject to adjustment based upon adjustments to the conversion
price of the Series B Preferred Stock. No shares are held in the Company’s treasury. The
designations, powers, preferences, rights, qualifications, limitations and restrictions in respect
of each class and series of the Company’s authorized capital stock, are as set forth in the
Charter, and all such designations, powers, preferences, rights, qualifications, limitations and
restrictions are valid, binding and enforceable and in
accordance with all applicable laws.



 


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(i) No Person owns of record any share of the Company’s
capital stock, (ii) no subscription, warrant, option, convertible security, or other right
(contingent or other) to purchase or otherwise acquire equity securities or equity related
securities of the Company is authorized or outstanding, and (iii) there is no commitment by the
Company to issue shares, subscriptions, warrants, options, convertible or exchangeable securities,
or other such rights or to distribute to holders of any of its equity securities any evidence of
indebtedness or asset. The Company has no obligation (contingent or other) to purchase,
repurchase, redeem, retire or otherwise acquire any of its equity securities or equity related
securities or any interest therein or to pay any dividend or make any other distribution in respect
thereof. No stock plan, stock purchase plan, stock option or other agreement or understanding
between the Company and any holder of any equity securities of the Company, or rights to purchase
equity securities of the Company, provides for acceleration or other changes in the vesting
provisions or other terms of such securities, as the result of any merger, sale of stock or assets,
change in control or other similar transaction by the Company. Other than as set forth in this
Agreement, to the Company’s knowledge, there are no voting trusts or agreements, stockholders’
agreements, pledge agreements, buy-sell agreements, rights of first refusal, preemptive rights or
other similar rights or proxies relating to any of the Company’s securities, or agreements relating
to the issuance, sale, redemption, transfer or other disposition of the Company’s securities. All
of the outstanding securities of the Company were issued in compliance with all applicable federal
and state securities laws.



(b) The Shares have been duly authorized by the Company. When the Shares are issued and
delivered against payment therefor, and in accordance with the terms and conditions of this
Agreement, the Shares will be duly and validly issued, fully paid and nonassessable and will be
free and clear of all Liens, charges, restrictions, claims and encumbrances, other than
restrictions on transfer imposed by the Securities Act and applicable state securities laws. The
Preferred Stock Conversion Shares have been duly reserved for issuance upon conversion of the
Series B Preferred Stock and, when so issued in accordance therewith, will be duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock and will be free and clear of
all Liens, charges, restrictions, claims and encumbrances, other than restrictions on transfer
imposed by the Securities Act and applicable state securities laws. Neither the issuance, sale or
delivery of the Shares, nor the issuance or delivery of the Preferred Stock Conversion Shares is
subject to any preemptive right of the Company’s stockholders or to any right of first refusal or
other right in favor of any Person. The consummation of the transactions contemplated hereunder
will not result in any anti-dilution adjustment or other similar adjustment to any of the Company’s
outstanding securities. Any Person with any right (other than the Purchaser) to purchase
securities of the Company, which would be triggered as a result of the transactions contemplated
under this Agreement, has waived such rights.



(c) Immediately after the Closing, the voting power of the Shares will represent at least
1.50809% of the total voting power of all outstanding shares of capital stock of the Company,
including outstanding Common Stock.


 


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Section 2.06 Reports and Financial Statements. The Company has furnished or made
available to the Purchaser true and complete copies of all reports or registration statements it
has filed with the Securities and Exchange Commission (the “SEC”) under the Securities Act and the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), for all periods subsequent
to November 1, 2002, all in the form so filed (collectively the “Company SEC Documents”). As of
their respective filing dates, the Company SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as applicable, and, as of its respective
filing date, no Company SEC Document filed under the Exchange Act contained any untrue statement of
a material fact or omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in the light of the circumstances in which they were made, not
misleading, except to the extent corrected by a subsequently filed document with the SEC prior to
the Closing Date. No Company SEC Document filed under the Securities Act contained an untrue
statement of material fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading at the time such Company SEC Documents
became effective under the Securities Act. The Company’s financial statements, including the notes
thereto, included in the Company SEC Documents (the “Financial Statements”) comply as to form in
all material respects with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles consistently applied (“GAAP”) and present fairly the Company’s
consolidated financial position at the dates thereof and of its operations and cash flows for the
periods specified (subject, in the case of unaudited statements, to normal audit adjustments).
Since the date of the most recent Company SEC Document, the Company has not effected any change in
any method of accounting or accounting practice, except for any such change required because of a
concurrent change in GAAP. No event since November 1, 2004, has occurred that requires the filing
of a Current Report on Form 8-K (an “8-K”) with the SEC for which an 8-K has not been so filed.
Since November 1, 2003, the Company has timely filed all material reports, registration statements
and other filings required by the SEC.




Section 2.07 Disclosure Controls and Procedures.



(a) The Company has established and maintains disclosure controls and procedures (as such term
is defined in Rules 13a-15 and 15d-15 under the Exchange Act) that (i) are designed to ensure that
material information relating to the Company, including its consolidated subsidiaries, is made
known to the Company’s Chief Executive Officer and its Chief Financial Officer by others within
those entities, particularly during the periods in which the filings made by the Company with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act are being prepared, (ii) have been
evaluated for effectiveness as of the end of each of the most recent fiscal year and most recent
fiscal quarter of the Company, and (iii) are effective to perform the functions for which they were
established.



(b) The independent registered public accountants and the Audit Committee of the Board of
Directors, or, if no Audit Committee of the Board of Directors exists, the Board of Directors (the
“Board”) of the Company, have been advised of (i) any significant deficiencies in the design or
operation of internal controls which could adversely affect the Company’s ability to record,
process, summarize and report financial data, and (ii) any fraud, whether or not material, that
involves management or other employees who have a role in the Company’s internal controls; any
material weaknesses in internal controls have been identified for the accountants; and since the
date of the most recent evaluation of such disclosure controls and procedures, there have been no
significant changes in internal controls or in other factors that
could significantly affect internal controls, including any corrective actions with regard to
significant deficiencies and material weaknesses.


 


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(c) The principal executive officer and principal financial officer of the Company have made
all certifications required by the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and any
related rules and regulations promulgated by the SEC, each in effect on the date thereof, and the
statements contained in any such certification were complete and correct as of their respective
dates. The Company is otherwise in material compliance with all applicable provisions of the
Sarbanes-Oxley Act that are effective.



Section 2.08 No Undisclosed Liabilities. The Company has no liabilities (whether
accrued, absolute, contingent or otherwise, known or unknown, and whether due or to become due or
asserted or unasserted), except (a) liabilities provided for in the Financial Statements (other
than liabilities which, in accordance with GAAP, need not be disclosed), (b) liabilities (including
accounts payable) incurred since March 31, 2008 (the “Balance Sheet Date”) in the ordinary course
of business consistent with past practice that are no greater than $10,000 in the aggregate, or
(c) such other liabilities which are no more than $5,000 individually or $10,000 in the aggregate.
The Company knows of no basis for the assertion against the Company of any liabilities not
adequately reflected or reserved against in the Financial Statements.




Section 2.09 Events Subsequent to the Balance Sheet Date. Since March 31, 2008:



(a) there has been no Material Adverse Change nor has any event occurred which could
reasonably be expected to result in any Material Adverse Change;



(b) there has not been any payment of, setting of a record date for, or declaration, setting
aside or authorizing the payment of, any dividend or other distribution in respect of any shares of
capital stock of the Company or any purchase, repurchase, retirement, redemption or other
acquisition by the Company, of any of the outstanding shares of capital stock or other securities
of, or other ownership interest in, the Company;



(c) there has not been any transfer, issue, sale or other disposition by the Company of any
shares of capital stock or other securities of the Company or any grant of options, warrants, calls
or other rights to purchase or otherwise acquire shares of such capital stock or such other
securities;



(d) the Company has not increased the compensation payable or to become payable, or awarded or
paid any bonuses to employees, officers, directors, consultants, advisors, agents, stockholders or
representatives of the Company nor has the Company either entered into any employment, deferred
compensation, severance or similar agreements (nor amended any such agreement) or agreed to
increase the compensation payable or to become payable by it to any of the Company’s employees,
officers, directors, consultants, independent contractors, advisors, agents, shareholders or
representatives or agreed to increase the coverage or benefits available under any severance pay,
deferred compensation, bonus or other incentive compensation, pension or other employee benefit
plan, payment or arrangement made to, for or with such employees, officers, directors, consultants,
independent contractors, advisors, agents, shareholders or representatives;


 


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(e) the Company has not made any loans, advances, guarantees or capital contributions to, or
investments in, any Person, or acquired any assets or securities of any Person involving more than
$1,000 individually or $5,000 in the aggregate, other than ordinary advances for expenses incurred
in the ordinary course of business;



(f) there has not been satisfaction or discharge of any Lien, claim or encumbrance or payment
of any obligation by the Company, except in the ordinary course of business and that has not
resulted in a Material Adverse Change;



(g) there has not been any termination of, or change to, a material contract or arrangement by
which the Company or any of its assets is bound or subject;



(h) there has not been any resignation or termination of employment of any employees,
officers, directors, consultants, advisors, agents or representatives of the Company;



(i) the Company has not transferred or granted any rights under any contracts, leases,
licenses, agreements or Intellectual Property (as defined in Section 2.12 hereof) used by
the Company in its business;



(j) there has not been any damage, destruction or loss, whether or not covered by insurance,
with respect to the property or assets of the Company having a replacement cost of more than $1,000
for any single loss or $5,000 for all such losses in the aggregate;



(k) the Company has not mortgaged, pledged or subjected to any Lien or encumbrance any of its
assets, acquired any assets, or sold, assigned, transferred, conveyed, leased or otherwise disposed
of any assets, except for assets acquired or sold, assigned, transferred, conveyed, leased or
otherwise disposed of in the ordinary course of business consistent with the Company’s past
practice or Liens for taxes not yet due or payable;



(l) the Company has not canceled or compromised any debt or claim, or amended, canceled,
terminated, relinquished, waived or released any contract or right or settled any claim;



(m) the Company has not made, or entered into any binding commitment to make, any capital
expenditures or capital additions or betterments in excess of $5,000 in the aggregate;



(n) the Company has not incurred any debts, obligations or liabilities, whether due or to
become due, except current liabilities incurred in the usual and ordinary course of business, none
of which current liabilities (individually or in the aggregate) has resulted in, or could
reasonably be expected to result in, a Material Adverse Change;



(o) the Company has not entered into any material transaction except for this Agreement and
the other Transaction Documents;



(p) the Company has not encountered, or to its knowledge, been threatened with, any labor
disputes, strikes, slowdowns, work stoppages or labor union organizing activities;


 


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(q) the Company has not made any change in the Company’s accounting principles, methods or
practices or depreciation or amortization policies or rates theretofore adopted;



(r) the Company has not disclosed to any Person any trade secrets or confidential information,
except for disclosures made to Persons subject to valid and enforceable confidentiality agreements
or as required by applicable law;



(s) the Company has not suffered or experienced any change in the relationship or course of
dealings between the Company and any of its suppliers or customers which supply goods or services
to the Company or purchase goods or services from the Company;



(t) the Company has not made any payment to, or received any payment from, or made or received
any investment in, or entered into any transaction or series of related transactions (including,
without limitation, the purchase, sale, exchange or lease of assets, property or services, or the
making of a loan or guarantee) with any Affiliate or any members of their immediate families or any
legal entity controlled by either one of them; and



(u) the Company has not entered into any agreement or commitment (contingent or otherwise) to
do any of the foregoing.




Section 2.10 Litigation; Compliance with Law.



(a) There is no (i) action, suit, claim, proceeding or investigation pending or, to the best
of the Company’s knowledge, threatened, against or affecting the Company or its properties or
assets, at law or in equity, or before or by any federal, state, municipal or other governmental
body, department, commission, board, bureau, agency or instrumentality, domestic or foreign,
(ii) arbitration proceeding pending or, to the best of the Company’s knowledge, threatened, against
or affecting the Company or its properties or assets, or (iii) governmental inquiry pending or, to
the best of the Company’s knowledge, threatened, against or affecting the Company or its properties
or assets (including, without limitation, any inquiry as to the Company’s qualification to hold or
receive any license or permit), and to the best of the Company’s knowledge, there is no basis for
any of the foregoing. The Company is not in default with respect to any order, writ, judgment,
injunction or decree known to or served upon the Company of any court or of any federal, state,
municipal or other governmental body, department, commission, board, bureau, agency or
instrumentality, domestic or foreign. There is no action, suit, proceeding or investigation by the
Company pending, threatened or contemplated against others.



(b) The Company has not received any opinion or memorandum or legal advice from legal counsel
to the effect that it is exposed, from a legal standpoint, to any liability or disadvantage that
may be material to its business, prospects, financial condition, operations, property or affairs.
The Company has complied, in all material respects, with all laws, rules, regulations and orders
applicable to its business, operations, properties, assets, products and services, the Company has
all material permits, licenses and other authorizations required to conduct its business as
presently conducted and the Company has been operating its business
pursuant to and in compliance with the terms of all such permits, licenses and other
authorizations. There is no existing law, rule, regulation or order, and the Company is not aware
of any proposed law, rule, regulation or order, whether federal, state, county or local, which
would prohibit or restrict the Company from, or otherwise adversely affect the Company in,
conducting its business in any jurisdiction in which it is now conducting business.


 


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Section 2.11 Proprietary Information.



(a) No third party has claimed or, to the best of the Company’s knowledge, has reason to
claim, that any Person employed or retained by, or affiliated with, the Company has (i) violated,
or may be violating, any of the terms or conditions of an employment, non-competition or
non-disclosure agreement with such third party, (ii) disclosed, or may be disclosing, or utilized,
or may be utilizing, any trade secret or proprietary information or documentation of such third
party, or (iii) interfered, or may be interfering, in the employment relationship between such
third party and any of its present or former employees. No third party has requested information
from the Company that suggests that such a claim might be contemplated. To the Company’s
knowledge, no Person employed by the Company or an Affiliate of the Company has employed, or
proposes to employ, any trade secret or any information or documentation proprietary to any former
employer, and, to the Company’s knowledge, no Person employed by the Company or an Affiliate of the
Company has violated any confidential relationship that such Person may have had with any third
party in connection with the development, manufacture or sale of any product or proposed product of
the Company or the development or sale of any service or proposed service of the Company, and the
Company has no reason to believe there will be any such employment or violation. Neither the
execution or delivery of this Agreement or any of the other Transaction Documents, nor the conduct
or proposed conduct of the Company’s business, nor the participation of any of the Company’s
officers, directors or employees in the conduct of the Company’s business, will conflict with or
result in a breach of the terms, conditions or provisions of, or constitute a default under, any
contract, covenant or instrument under which any such Person is obligated to a third party.



(b) Each employee, officer, consultant, advisor, agent and representative of the Company has
entered into and executed a Employee Non-Disclosure, Non-Solicitation and Proprietary Information
and Inventions Agreement or Non-Employee Non-Disclosure, Non-Solicitation and Proprietary
Information and Inventions Agreement, as the case may be, substantially in the forms which have
been delivered to the Purchaser (collectively, the “Non-Disclosure and Proprietary Information and
Inventions Agreement”), or an employment or consulting agreement containing substantially similar
terms, and such agreements are in full force and effect. The Company is not aware that any of its
employees, officers, consultants, advisors, agents and representatives is in violation of such
agreements, and the Company will use its best efforts to prevent any such violation. In addition,
to the best of the Company’s knowledge, no current or former employee, officer, director,
consultant, advisor, agent, or representative has excluded works or inventions made prior to his or
her employment or consulting relationship with the Company from his or her assignment of inventions
pursuant to their Non-Disclosure and Proprietary Information and Inventions Agreement.


 


9









 






Section 2.12 Intellectual Property.



(a) The Company has all right, title and interest in and to all patents and patent rights,
trademarks and trademark rights, trade names and trade name rights, service marks and service mark
rights, service names and service name rights, brand names, inventions, processes, formulae,
copyrights and copyright rights, trade dress, business and product names, logos, slogans, trade
secrets, industrial models, processes, designs, methodologies, computer programs (including all
source codes) and related documentation, technical information, manufacturing, engineering and
technical drawings, know-how, concepts and all pending applications for and registrations of
patents, trademarks, service marks and copyrights (together, “Intellectual Property”) necessary for
its business as now conducted and as proposed to be conducted, without any conflict with or
infringement upon the rights of others. All registrations on behalf of the Company with and
applications to governmental or regulatory authorities in respect of all Intellectual Property of
the Company are valid and in full force and effect and are not subject to (i) any suits or other
judicial or administrative proceedings challenging their validity or enforceability, or (ii) any
other actions by the Company to maintain their validity or effectiveness, except for the routine
payment of governmental fees and the submission of oaths or other evidence required by statute.
There are no outstanding options, licenses, security interests, or other interests or agreements of
any kind relating to the Intellectual Property of the Company. No other Person (other than
licensors of software that is generally commercially available, licensors of Intellectual Property
under the agreements disclosed pursuant to paragraph (d) below and non-exclusive licensees of the
Company’s Intellectual Property in the ordinary course of the Company’s business) has any rights to
any of the Intellectual Property owned or used by the Company, and, to the Company’s knowledge, no
other Person is infringing upon, violating or misappropriating any of the Company’s Intellectual
Property.



(b) The Company has not, nor has it received any communications alleging that the Company has
violated, or, by conducting its business as now conducted or as proposed to be conducted, would
violate any of the Intellectual Property of any other Person. The Company is not aware that any
employee of the Company is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment, decree or order of any
court or administrative agency, that would interfere with the use of his or her best efforts to
promote the interests of the Company or that would conflict with the business of the Company as now
conducted or as proposed to be conducted. To the Company’s knowledge, neither the execution and
delivery of this Agreement or any of the other Transaction Documents, nor the carrying on of the
business of the Company by the Company’s employees, nor the conduct of the business of the Company
as now conducted or as proposed to be conducted, will conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any contract, covenant or
instrument under which any of such employees is now obligated. The Company is not aware of any
instances where its employees, agents, advisors, consultants, independent contractors or
representatives, have transferred Intellectual Property of the Company or its Subsidiaries without
the Company’s consent. To the Company’s knowledge, the Company is not required to utilize any
inventions of any of its employees (or people it currently intends to hire) made prior to their
employment by the Company.


 


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(c) The Company is not obligated to pay any royalties or other compensation to any third party
in respect of their ownership, use or license of any of such third party’s Intellectual Property.



(d) The Company has taken reasonable precautions (i) to protect its rights in its Intellectual
Property and (ii) to maintain the confidentiality of its trade secrets, know-how and other
confidential Intellectual Property, and to the Company’s knowledge, there have been no acts or
omissions by the officers, directors, shareholders or employees of the Company, the result of which
would be to compromise the rights of any aspects of the Company to apply for or enforce appropriate
legal protection of any aspects of the Company’s Intellectual Property that are material to the
Company’s business as conducted or as proposed to be conducted at the time of such acts or
omissions.



(e) The products, processes, proprietary technology and other proprietary know-how owned or
used by the Company were developed by the Company’s present or former employees or independent
contractors or consultants. The concepts, inventions and original works of authorship owned or
used by the Company were developed or conceived by employees, independent contractors or
consultants within the scope of their employment or retention by the Company and are connected with
the Company’s underlying products, services, processes and proprietary technology. With respect to
any independent contractors or consultants who were used or employed by the Company in the
development of the products, processes, proprietary technology and other proprietary know-how owned
or used by the Company, each has executed valid “work for hire” agreements and/or assignments of
all rights to such products, processes, proprietary technology and other proprietary know-how. No
portion of the Company’s Intellectual Property was jointly developed with any third party other
than those who have assigned their entire right, title and interest therein to the Company.



(f) Neither the Company nor any Subsidiary has granted or assigned to any other Person the
right to manufacture any products or develop or conduct research on any Intellectual Property or
other services of the Company.



(g) The Company is unaware that any of its officers, employees or consultants has disclosed,
or may be disclosing, or has utilized, or may be utilizing, any trade secret or proprietary
information of any third party; or has unlawfully interfered, or may be unlawfully interfering, in
the employment relationship with any third party and any of its present or former employees.


 


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Section 2.13 Real Property.




(a) The Company does not own any real property.



(b) Schedule 2.13(b) hereto sets forth a complete list of all leases of real property
by, or interests in real property of, the Company (each a “Real Property Lease,” and collectively,
the “Real Property Leases”) as lessee or lessor. Each of the Real Property Leases identified in
Schedule 2.13(b) is a valid and subsisting agreement, duly authorized and entered into and
enforceable in accordance with its terms, and there is no default under any Real Property Lease by
the Company, or to the Company’s knowledge, by any other party thereto, and
no event has occurred that with the lapse of time or the giving of notice or both would
constitute a default thereunder. As a result of each of the Real Property Leases, the Company
holds a valid leasehold interest free and clear of any Liens, charge, restrictions, claims or
encumbrances of any nature whatsoever. The Company has delivered or otherwise made available to
the Purchaser and its counsel, true, correct and complete copies of the Real Property Leases,
together with all amendments, modifications, supplements or side letters effecting the obligations
of any party thereunder. The real property premises leased by the Company under the Real Property
Leases are in good operating condition, normal wear and tear accepted, are reasonably fit and
useable for the purpose for which they are being used, are adequate and sufficient for the
Company’s business, and conform to all material respects to all applicable laws.



Section 2.14 Assets. The Company has good, legal and marketable title to all of its
personal property and assets, in each case free and clear of all Liens, charges, restrictions,
claims or encumbrances of any nature whatsoever. With respect to the material personal property
and material assets that the Company leases (each a “Personal Property Lease,” and collectively,
the “Personal Property Leases”) (a) the Company is in compliance with such Personal Property
Leases, and (b) the Company holds a valid leasehold interest free and clear of any Liens, charges,
restrictions, claims or encumbrances of any nature whatsoever. Each of the Personal Property
Leases is a valid and subsisting agreement, duly authorized and entered into and enforceable in
accordance with its terms, and there is no default under any Personal Property Lease by the Company
or, to the Company’s knowledge, by any other party thereto, and no event has occurred that with the
lapse of time or the giving of notice or both would constitute a default thereunder. The Company
has delivered or otherwise made available to the Purchaser and its counsel true, correct and
complete copies of the Personal Property Leases, together with all amendments, modifications,
supplements or side letters affecting the obligations of any party thereunder. All material items
of personal property and assets owned or leased by the Company are in good operating condition,
normal wear and tear excepted, are reasonably fit and usable for the purposes for which they are
being used, are adequate and sufficient for the Company’s business, and conform in all material
respects with all applicable laws. The carrying value of the Company’s assets on the Financial
Statements is not overstated in any material respect.



Section 2.15 Insurance. There is in full force and effect one or more policies of
insurance issued by insurers of recognized responsibility insuring the Company and its properties,
business and projects against such losses and risks, and in such amounts, on both a per occurrence
and an aggregate basis, as are customary in the case of corporations engaged in the same or similar
business and similarity situated. The Company has not received any notice or communication, either
oral or written (a) regarding the actual or possible cancellation or invalidation of any of such
policies or regarding any actual or possible adjustment in the amount of premiums payable with
respect to any of said policies, (b) regarding any actual or possible refusal of coverage under, or
any actual or possible rejection of any claim under, any of such policies, (c) that the Company
will be unable to renew its existing insurance coverage as and when the same shall expire, or
(d) that the issuer of any such policies may be unwilling or unable to perform any of its
obligations thereunder. There is no pending claim under any of the Company’s insurance policies,
and no event has occurred or condition or circumstance exists that might (with or without notice or
lapse of time), directly or indirectly, give rise to, or serve as a basis for, any such claim. The
Company is not in default with respect to any provision contained
in any insurance policy, and the Company has not failed to give any notice or present any
presently existing claims under any insurance policy in due and timely fashion.


 


12









 





Section 2.16 Taxes. The Company has accurately and timely filed all federal, state,
county and local tax returns and reports required to be filed by it within the applicable period,
and the Company has paid all taxes shown to be due by such returns as well as all other taxes,
assessments and governmental charges which have become due or payable. Such returns and reports
are true and correct in all material respects. The Company has established adequate reserves on
the Financial Statements for all taxes accrued but not yet payable. The Company’s federal income
tax returns have never been audited by the Internal Revenue Service. No claim or deficiency
assessment with respect to, or proposed adjustment of, the Company’s federal, state, county or
local taxes is currently assessed or pending or, to the best of the Company’s knowledge,
threatened, and, to the Company’s knowledge, there is no basis for any such claim, assessment or
adjustment. There is no tax Lien (other than for current taxes not yet due and payable), whether
imposed by any federal, state, county or local taxing authority, outstanding against the Company’s
assets, properties or business. The Company has not executed any waiver of the statute of
limitations on the assessment or collection of any tax or governmental charge. The Company is not
a party to any agreement relating to the sharing, allocation or indemnification of taxes. Neither
the Company nor any of its present or former shareholders has ever made an election pursuant to
Section 1362 or Section 341(f) of the Internal Revenue Code of 1986, as amended (the “Code”), that
the Company be taxed as a Subchapter S corporation or a collapsible corporation or any other
election pursuant to the Code (other than elections that relate solely to methods of accounting,
depreciation or amortization) that would result in a Material Adverse Change. The Company has
withheld or collected from each payment made to each of its employees, the amount of all taxes
(including, but not limited to, federal income taxes, Federal Insurance Contribution Act taxes and
Federal Unemployment Tax Act taxes) required to be withheld or collected therefrom, and has paid
the same to the proper tax receiving officers or authorized depositories. The Company has properly
charged, collected and paid all applicable sales, use and other similar taxes. The Company has
withheld or collected from each payment made to each non-employee the amount of all taxes required
to be withheld or collected therefrom and has paid the same to the proper tax receiving officers or
authorized depositories ,or filed or provided appropriate forms under the Code with respect
thereto.




Section 2.17 Agreements.



(a) The Company is not a party to or otherwise bound by any written or oral agreement,
instrument, commitment or restriction, which, assuming due performance by the parties thereto,
individually or in the aggregate could reasonably be expected to result in a Material Adverse
Change. The Company is not a party to, nor is it or any of its assets or properties bound by, any
written or oral:




(i) distributor, dealer, marketing, manufacturer’s representative or sales
agency agreement which is not terminable on less than ninety (90) days notice
without cost or other liability to the Company;




(ii) agreement with any labor union or collective bargaining agreement;


 


13









 






(iii) agreement with any supplier containing any provision permitting any party
other than the Company to renegotiate the price or other terms, or containing any
pay-back or other similar provision, upon the occurrence of a failure by the Company
to meet its obligations under the agreement when due or the occurrence of any other
event;




(iv) agreement for the future purchase of fixed assets or for the future
purchase of materials, supplies, services or equipment in excess of its normal
operating requirements or at an excessive price, or any agreement that will result
in a loss to the Company upon completion of performance;




(v) agreement for the employment of any officer, employee or other Person
(whether of a legally binding nature or in the nature of informal understandings) on
a full-time, part-time or consulting basis which is not terminable on notice without
cost or other liability to the Company;




(vi) bonus, pension, profit-sharing, retirement, hospitalization, insurance,
stock purchase, stock option or other plan, agreement or understanding pursuant to
which benefits are provided to any employees, officers, directors, consultants,
advisors, agents, stockholders or representatives of the Company;




(vii) loan agreement, credit agreement, promissory note, indenture,
subordination agreement, letter of credit or other agreement relating to the
borrowing of money or to the mortgaging or pledging of, or otherwise placing a Lien
or security interest on, any asset of the Company;




(viii) guaranty of any obligation for borrowed money or otherwise;




(ix) acquisition, sale or lease agreement outside of the Company’s ordinary
course of business;




(x) partnership or joint venture agreement;




(xi) agreement, or group of related agreements with the same party or any group
of affiliated parties, under which the Company has advanced or agreed to advance
money or has agreed to lease any property as lessee or lessor;




(xii) assignment, license or other agreement with respect to any form of
intangible property;




(xiii) agreement under which it has granted any Person an exclusive right to
market or distribute any of the Company’s products or services;




(xiv) agreement under which it has limited or restricted its right to operate
or to compete with any Person in any respect;


 


14









 






(xv) agreement with any federal, state, municipal or other governmental body,
department, commission, board, bureau, agency or instrumentality, domestic or
foreign;




(xvi) confidentiality agreement or standstill agreement, other than those made
in the ordinary course of business; or




(xvii) binding commitment or agreement to enter into any of the foregoing.



(b) The Company and, to the best of the Company’s knowledge, each other party thereto:
(i) has performed all the obligations required to be performed by them to date (or each
non-performing party has received a valid, enforceable and irrevocable written waiver with respect
to its non-performance), and (ii) has received no notice of default and are not in default (or,
with due notice or lapse of time or both, would be in default) under any agreement, contract,
license, understanding, evidence of indebtedness, note, indenture, instrument, commitment, plan or
arrangement to which the Company is a party or by which it or its property or assets may be bound.
The Company has no present expectation or intention of terminating or not fully performing any of
its obligations under any agreement, contract, license, understanding, evidence of indebtedness,
note, indenture, instrument, commitment, plan or arrangement, and the Company has no knowledge of
any breach or anticipated breach by the other party to any agreement, contract, license,
understanding, evidence of indebtedness, note, indenture, instrument, commitment, plan or
arrangement to which the Company is a party. The Company is in full compliance with all of the
terms and provisions of its Charter and Bylaws.



(c) No previous or current party to any agreement or contract with the Company hereto has
given written notice to the Company of, or made any claim with respect to, a desire or intention to
exercise any optional termination, cancellation or acceleration right thereunder, and the Company
has no knowledge of any notice of, or claim with respect to, any such desire or intention. Each of
these agreements is valid and enforceable against the Company in accordance with its terms.



Section 2.18 Loans and Advances. The Company does not have any outstanding loans or
advances to any Person and is not obligated to make any such loans or advances, except, in each
case, for ordinary course advances to employees of the Company in respect of reimbursable business
expenses anticipated to be incurred by them in connection with their performance of services for
the Company.



Section 2.19 Assumptions, Guaranties, Etc. of Indebtedness of Other Persons. The
Company has not assumed, guaranteed, endorsed or otherwise become directly or contingently liable
for any indebtedness of any other Person (including, without limitation, liability by way of
agreement, contingent or otherwise, to purchase, to provide funds for payment, to supply funds to
or otherwise invest in such Person, or to otherwise assure any creditor of such Person against
loss), except for guaranties by endorsement of negotiable instruments for deposit or collection in
the ordinary course of business.


 


15









 





Section 2.20 Significant Customers and Suppliers. No customer or supplier which was
significant to the Company during the period covered by the Financial Statements or which has been
significant to the Company thereafter, has terminated or breached, materially reduced or threatened
to terminate, breach or materially reduce its purchases from or provision of products or services
to the Company, as the case may be.



Section 2.21 Offerings. Assuming the accuracy of the Purchaser’s representations and
warranties set forth in Article III hereof, the Company has complied with the Securities
Act and all applicable state securities laws in connection with (i) the offer, issuance and sale of
all previously issued securities of the Company, (ii) the offer, issuance and sale of the Shares,
and (iii) upon conversion of the Shares, the issuance and delivery of the Preferred Stock
Conversion Shares, and all of the foregoing issuances are exempt from the registration requirements
of the Securities Act and any applicable state securities laws, and neither the Company nor any
authorized agent acting on its behalf has taken any action that could cause the loss of such
exemptions. Neither the Company nor any Person authorized or employed by the Company as agent,
broker, dealer or otherwise in connection with the offering or sale of the Shares, the Preferred
Stock Conversion Shares or any security of the Company similar to the foregoing has offered the
Shares, the Preferred Stock Conversion Shares or any such similar security for sale to, or
solicited any offer to buy the Shares, the Preferred Stock Conversion Shares or any such similar
security from, or otherwise approached or negotiated with respect thereto with, any Person or
Persons other than Persons who are “accredited investors” as defined in Regulation D of the
Securities Act. Neither the Company nor any Person acting on its behalf has taken or will take any
other action (including, without limitation, any offer, issuance or sale of any security of the
Company under circumstances which might require the integration of such security with the Shares or
the Preferred Stock Conversion Shares under the Securities Act or the rules and regulations of the
SEC promulgated thereunder), in either case so as to subject the offering, issuance or sale of the
Shares and the Preferred Stock Conversion Shares to the registration provisions of the Securities
Act. Neither the Company nor any Person acting on its behalf has offered the Shares or the
Preferred Stock Conversion Shares to any Person by means of general or public solicitation or
general or public advertising, such as by newspaper or magazine advertisements, by broadcast media,
or at any seminar or meeting whose attendees were solicited by such means.



Section 2.22 Brokers; Financial Advisors. No agent, broker, investment banker,
finder, financial advisor or other Person is or will be entitled to any broker’s or finder’s fee or
any other commission or similar fee from the Company, directly or indirectly, in connection with
the transactions contemplated by this Agreement and the other Transaction Documents, and no Person
is entitled to any fee or commission or like payment from the Company in respect thereof based in
any way on agreements, arrangements or understandings made by or on the Company’s behalf.




Section 2.23 Employees.



(a) To the Company’s knowledge, no key employee or independent contractor and no group of the
Company’s key employees or independent contractors has any plans to terminate his, her or its
employment or relationship as an employee or independent contractor with the Company, nor does the
Company have any present intention to terminate the
employment of any key employee or independent contractor, or group of employees or independent
contractors.


 


16









 





(b) To the Company’s knowledge, no employee of the Company is a party to or is otherwise bound
by any agreement or arrangement (including, without limitation, confidentiality agreements,
noncompetition agreements, licenses, covenants or commitments of any nature) or subject to any
judgment, decree, or order of any court or governmental body, (i) that would conflict with such
employee’s ability to perform his or her duties that have been assigned to him or her or (ii) that
would conflict with the Company’s business as now conducted or as proposed to be conducted.



(c) The Company is not delinquent in payments to any of its employees for any wages, salaries,
commissions, bonuses or other direct compensation for any services performed through the date
hereof or amounts required to be reimbursed to them through the date hereof. The Company is in
compliance with all applicable federal, state and local laws, rules and regulations respecting
employment, employment practices, labor, terms and conditions of employment and wages and hours.
The Company is neither bound by nor subject to (and none of its assets or properties is bound by or
subject to) any written or oral commitment or arrangement with any labor union, and no labor union
has, to the best of the Company’s knowledge, sought to represent any of the Company’s employees,
representatives or agents. There is no labor strike, dispute, slowdown or stoppage pending or, to
the best of the Company’s knowledge, threatened against or involving the Company.



Section 2.24 Environmental and Safety Laws. The Company is not in violation of any
applicable laws relating to the environment or occupational health and safety which is likely to
result in a Material Adverse Change and no material expenditures are or will be required in order
to comply with any such existing laws.



Section 2.25 Employee Benefits. All employment agreements, consulting agreements with
individuals, deferred compensation, incentive compensation, stock option or other equity-based
stock awards, pension or retirement agreements, whether or not subject to the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), or arrangements, bonus, incentive or
profit-sharing plans or arrangements, or labor or collective bargaining agreements, (“Benefit
Plans”) covering employees (the “Plans”), to the extent subject to ERISA, are in compliance with
ERISA, the Code and all other applicable laws. Each Plan which is an “employee pension benefit
plan” within the meaning of Section 3(2) of ERISA (a “Pension Plan”) and which is intended to be
qualified under Section 401(a) of the Code, has received a favorable determination letter from the
Internal Revenue Service and the Company is not aware of any circumstances likely to result in
revocation of any such favorable determination letter. There is no pending or, to the best of the
Company’s knowledge, threatened litigation relating to the Plans. Neither the Company nor any of
its Affiliates has engaged in a transaction with respect to any Plan that, assuming the taxable
period of such transaction expired as of the date hereof, could subject the Company or any
Affiliate to a tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA
in an amount which would be material. No Pension Plan of the Company or any ERISA Affiliate (as
defined below) is, nor has any Pension Plan of the Company or any ERISA Affiliate ever been,
subject to Title IV of ERISA or Section 412 of the Code. Neither the Company, any of its
Affiliates nor an entity which is considered
one employer with the Company under Section 4001 of ERISA or Section 414 of the Code (an
“ERISA Affiliate”) has contributed to a “multi-employer plan,” within the meaning of Section 3(37)
of ERISA. All contributions required to be made under the terms of any Benefit Plan have been
timely made or have been reflected on the Financial Statements. No ERISA Affiliate maintains or
has ever maintained any “employee benefit plan” as that term is defined in Section 3(3) of ERISA or
any other employee benefit policy, arrangement or the like which could result in any liability of
the Company.


 


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Section 2.26 Foreign Corrupt Practices Act. Neither the Company, nor to the best of
the Company’s knowledge, any employees, officers, directors, consultants, advisors, agents,
shareholders or representatives of the Company or other Person acting on behalf of the Company, has
taken any action that would cause the Company to be in violation of the Foreign Corrupt Practices
Act of 1977, as amended (the “FCPA”), or any rules and regulations thereunder. Each of the
Company’s internal management and accounting practices and controls are adequate to ensure
compliance with the FCPA. There is not now, and there has never been, any employment by the
Company of any governmental or political official in any country in the world.



Section 2.27 Illegal or Unauthorized Payments; Political Contributions. Neither the
Company nor, to the best of the Company’s knowledge, any of the Company’s employees, officers,
directors, consultants, advisors, agents, shareholders or representatives has, directly or
indirectly, made or authorized any payment, contribution or gift of money, property, or services,
in contravention of applicable law: (a) as a kickback or bribe to any Person or (b) to any
political organization, or the holder of or any aspirant to any elective or appointive public
office, except for personal political contributions not involving the direct or indirect use of the
Company’s funds.



Section 2.28 Pending Changes. There is no pending or, to the Company’s knowledge,
threatened change in any law, rule, regulation or order applicable to its business, operations,
properties, assets, products and services which is likely to result in a Material Adverse Change.



Section 2.29 Investment Company Act. The Company is not, nor is it directly or to its
knowledge, indirectly Controlled by or acting on behalf of, any Person that is, an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.



Section 2.30 Product Liability. The Company has no liabilities (and, to the Company’s
knowledge, there is no basis for any present or future action against the Company giving rise to
any liability) arising out of any injury to individuals or property as a result of ownership,
possession or use of any product designed, manufactured, sold, leased or delivered by or any
services performed or delivered by the Company.



Section 2.31 Books and Records. The Company’s books of account, ledgers, order books,
records and documents accurately and completely reflect in accordance with usual and customary
prudent business practices all material information relating to the Company’s business, the
location and collection of the Company’s assets and the nature of all transactions giving rise to
the Company’s obligations and accounts receivable. The Company has previously delivered or made
available to the Purchaser and its counsel complete and correct copies of and
all minutes and consents reflecting meetings and actions taken by the Company’s Board of
Directors and its shareholders.


 


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Section 2.32 Disclosure. The Company has disclosed to the Purchaser all facts
material to the Company’s business, operations, assets, liabilities, prospects, properties,
condition (financial or otherwise) and results of operations. Neither this Agreement, nor any
Schedule or Exhibit to this Agreement, nor any other statements, documents or certificates made or
delivered in connection herewith or therewith contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained herein and therein not
misleading in light of the circumstances under which such statements were made. None of the
statements, documents, certificates or other items prepared or supplied by the Company with respect
to the transactions contemplated hereby contains an untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained therein not misleading in light of
the circumstances under which such statements were made. There is no fact which the Company has
not disclosed to the Purchaser and its counsel in writing and of which the Company is aware which
has resulted in, or could result in, a Material Adverse Change. As of the date hereof, no facts
have come to the Company’s attention that would, in its opinion, require the Company to revise or
amplify the assumptions underlying such projections and other estimates or the conclusions derived
therefrom.



ARTICLE III.




REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER




Section 3.01 Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Company that:



(a) it is an “accredited investor” within the meaning of Rule 501 of Regulation D under the
Securities Act;



(b) it has sufficient knowledge and experience in investing in companies similar to the
Company in terms of the Company’s stage of development so as to be able to evaluate the risks and
merits of its investment in the Company and it is able financially to bear the risks thereof,
including a total loss of its investment;



(c) it has had an opportunity to ask questions and receive answers from the Company regarding
the Company and the terms and conditions of the offering of the Shares. The foregoing, however,
does not in any way limit or modify the representations and warranties made by the Company in
Article II;



(d) the Shares and the Preferred Stock Conversion Shares being purchased by it are being
acquired for its own account for the purpose of investment and not with a view to, or for resale in
connection with, any distribution thereof within the meaning of the Securities Act;



(e) it understands that (i) the Shares and the Preferred Stock Conversion Shares have not been
registered under the Securities Act or any state securities laws by reason of their issuance in a
transaction exempt from the registration requirements of the Securities Act and such laws, (ii) the
Shares and, upon conversion thereof, the Preferred Stock Conversion
Shares must be held indefinitely, unless a subsequent disposition thereof is registered under
the Securities Act or is exempt from such registration, and (iii) the Shares and the Preferred
Stock Conversion Shares will bear the legend to such effect set forth in Section 3.02
hereof;


 


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(f) this Agreement and the other Transaction Documents to which it is a party constitutes the
Purchaser’s valid and legally binding obligation, enforceable in accordance with its terms. The
Purchaser represents that it has full power and authority to enter into this Agreement and each of
the other Transaction Documents to which it is a party; and



(g) this Agreement and each of the other Transaction Documents to which the Purchaser is a
party have been duly executed and delivered by the Purchaser.



Section 3.02 Legend. The Purchaser acknowledges that the certificates evidencing the
Shares and the Preferred Stock Conversion Shares will bear the legend set forth below or
substantially similar legend:




The securities represented hereby have not been registered under the Securities
Act of 1933, as amended (the “Act”), or under the securities laws of certain states.
these securities are subject to restrictions on transferability and resale and may
not be transferred or resold except as permitted under the Act and the applicable
state securities laws, pursuant to registration or exemption therefrom. The issuer
of these securities may require an opinion of counsel (which may be counsel for the
Company) in form and substance satisfactory to the issuer to the effect that any
proposed transfer or resale is in compliance with the Act and any applicable state
securities laws.



The legend set forth above shall be removed by the Company from any certificate evidencing Shares
or Preferred Stock Conversion Shares, and the Company shall issue a certificate without such legend
to the holder thereof, if requested, upon delivery to the Company of an opinion by counsel (which
may be counsel for the Company) that such security can be freely transferred in a public sale
without a registration statement being in effect and that such transfer will not jeopardize the
exemption or exemptions from registration pursuant to which the Company issued the Shares or
Preferred Stock Conversion Shares; provided, however, that no opinion from counsel
shall be required for any dispositions pursuant to Rule 144(k) under the Securities Act.



ARTICLE IV.




CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER AND THE COMPANY




Section 4.01 Conditions to the Purchaser’s Obligations at the Closing. The
Purchaser’s obligation to purchase and pay for the Series B Shares being purchased by it on the
Closing Date is subject to the satisfaction of the following conditions, any of which may be waived
in whole or in part by the Purchaser and which conditions the Company agrees to cause to be
satisfied:



(a) Representations and Warranties to be True and Correct. The representations and warranties
of the Company under this Agreement shall be true, complete and correct at and as of the Closing
Date, except that representations and warranties that are
applicable to a particular date by their terms shall be true, complete and correct as of such
applicable date.


 


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(b) Performance. The Company shall have performed and complied with all agreements and
covenants contained herein required to be performed or complied with by it prior to or at such
Closing Date.



(c) All Proceedings to be Satisfactory. All corporate and other proceedings to be taken by
the Company in connection with the transactions contemplated hereby and all documents incident
thereto shall be reasonably satisfactory in form and substance to the Purchaser and its counsel,
and the Purchaser and its counsel shall have received all such counterpart originals or certified
or other copies of such documents as they reasonably may request.



(d) Approvals. The Company shall have obtained any and all consents, waivers, registrations,
approvals or authorizations, with or by any governmental body and all consents, waivers, approvals
or authorizations of any other Person required for the valid execution of this Agreement and each
of the other Transaction Documents and for the consummation of the transactions contemplated hereby
and thereby.



(e) No Injunction. No governmental body or any other Person shall have issued an order,
injunction, judgment, decree, ruling or assessment which shall then be in effect restraining or
prohibiting the completion of the transactions contemplated hereby or under any of the other
Transaction Documents, nor shall any such order, injunction, judgment, decree, ruling or assessment
be pending or, to the Company’s knowledge, threatened.



(f) Certificate of Designation. The Certificate of Designation shall have been adopted by the
Company’s Board of Directors and duly filed with the Secretary of State of the State of Nevada or
such other appropriate authority or agency of the State of Nevada, and the Purchaser shall have
received a certified copy of the filed Certificate of Designation.



(g) Material Adverse Change. As of the Closing, there shall not have occurred a Material
Adverse Change.



(h) Supporting Documents. The Purchaser and its counsel shall have received such additional
supporting documents and other information with respect to the Company’s operations and affairs as
the Purchaser or its counsel reasonably may request. All such documents shall be satisfactory in
form and substance to the Purchaser and its counsel.



Section 4.02 Conditions to the Company’s Obligations at the Closing. The Company’s
obligation to sell and issue the Shares on the Closing Date is subject to the satisfaction, on or
before such Closing Date, of the following conditions, any of which may be waived in whole or in
part by the Company:



(a) Representations and Warranties to be True and Correct. The representations and warranties
of the Purchaser contained in Article III shall be true, complete and correct at and as of
the Closing, with the same effect as though such representations and warranties had been made on
and as of such date.


 


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(b) Approvals. The Purchaser shall have obtained any and all consents, waivers, approvals or
authorizations, with or by any governmental body and all consents, waivers, approvals or
authorizations of any other Person required for the valid execution of this Agreement and each of
the other Transaction Documents and for the consummation of the transactions contemplated hereby
and thereby.



(c) No Injunction. No governmental body or any other Person shall have issued an order,
injunction, judgment, decree, ruling or assessment which shall then be in effect restraining or
prohibiting the completion of the transactions contemplated hereby, nor, to the Company’s
knowledge, shall any such order, injunction, judgment, decree, ruling or assessment be threatened
or pending.



ARTICLE V.




COVENANTS OF THE COMPANY





The Company covenants and agrees with the Purchaser that:



Section 5.01 Authorization of Series B Preferred Stock. The Company shall deliver to
the Purchaser a certified copy of the Certificate of Designation for the Series B Preferred Stock,
and as executed and filed with the Nevada Secretary of State. The Company shall also deliver to
the Purchaser a certified copy of resolutions duly adopted by the Board of Directors ratifying,
authorizing and approving the issuance, sale and delivery of the Shares to the Purchaser pursuant
to this Agreement and the establishment of the reserve for issuance of the Preferred Stock
Conversion Shares.



Section 5.02 Current Report on Form 8-K. The Company shall prepare and file with the
SEC a Current Report on Form 8-K, within the filing deadlines of the instructions of such form,
which shall contain all information required by Form 8-K in respect of this Agreement. The
Purchaser and its counsel shall have the right to review, comment on and approve the contents of
such Form 8-K. The Company agrees that the information contained in the Form 8-K shall be true and
correct in all material respects without any omission of any material fact which is required to
make such information not false or misleading.



Section 5.03 Reserve for Preferred Stock Conversion Shares. The Company shall at all
times reserve and keep available out of its authorized but unissued shares of Common Stock, for the
purpose of issuing the Preferred Stock Conversion Shares upon conversion of the Series B Preferred
Stock and otherwise complying with the terms of this Agreement such number of its duly authorized
shares of Common Stock as shall be sufficient to effect the conversion of the Series B Preferred
Stock or otherwise to comply with the terms of this Agreement. If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of
the Series B Preferred Stock or otherwise to comply with the terms of this Agreement, the Company
will forthwith take such corporate action as may be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes.
The Company will use its best efforts to obtain any authorization, consent, approval or other
action by or make any filing with any court or governmental or administrative body that may be
required under applicable state securities laws
in connection with the issuance of shares of Common Stock upon conversion of the Series B
Preferred Stock.


 


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Section 5.04 Corporate Existence. The Company shall preserve and maintain, and cause
each Subsidiary to preserve and maintain, its corporate existence, rights, franchises and
privileges in the jurisdiction of its incorporation, and qualify and remain qualified, and cause
each Subsidiary to qualify and remain qualified, as a foreign corporation in each jurisdiction in
which such qualification is necessary or desirable in view of its business and operations or the
ownership or lease of its properties.



Section 5.05 Preservation of Property and Assets. The Company shall use its best
efforts to secure, preserve and maintain, and cause any Subsidiary to use its best efforts to
secure, preserve and maintain, all licenses and other rights to use the patents, processes,
licenses, permits, trademarks, trade names, inventions, copyrights or other Intellectual Property
rights owned or possessed by it and deemed by the Company to be material to the conduct of its
business or the business of any Subsidiary. The Company shall also use its best efforts to
maintain and preserve, and cause each Subsidiary to use its best efforts to maintain and preserve,
all of its other properties and assets necessary for the proper conduct of its business, in good
repair, working order and condition, ordinary wear and tear excepted, and, from time to time, make
all necessary and proper repairs, renewals, replacements, additions and improvements thereto; and
the Company and its Subsidiaries will at all times comply with each material provision of all
leases to which any of them is a party or under which any of them occupies property.



Section 5.06 Insurance. The Company shall obtain and maintain, and cause each of its
Subsidiaries to maintain, as to its respective properties and business, with financially sound and
reputable insurers, insurance against such casualties and contingencies and of such types and in
such amounts as is customary for companies similarly situated.



Section 5.07 Inspection, Consultation and Advice. The Company shall permit, and cause
each any of its Subsidiaries to permit, the Purchaser and such persons as it may designate, at
Purchaser’s expense, to visit and inspect any of the properties of the Company and any Subsidiary,
examine their books and take copies and extracts therefrom, discuss the affairs, finances and
accounts of the Company and any Subsidiary with their officers, employees and public accountants
(and the Company hereby authorizes said accountants to discuss with such holder and such designees
such affairs, finances and accounts), and consult with and advise the management of the Company and
any Subsidiary as to the Company’s affairs, finances and accounts, all at reasonable times and upon
reasonable notice, provided that the Purchaser shall cause the persons they so designate to
maintain any and all information relating to the Company confidential. In the event of the
Company’s breach of any of the covenants contained in this Article V, the Company shall be
responsible for the fees and expenses incurred by Purchaser in enforcing its rights under this
Article V.



Section 5.08 Restrictive Agreements Prohibited. Neither the Company nor any
Subsidiary shall become a party to any agreement that by its terms restricts the Company’s
performance of this Agreement, any of the other Transaction Documents, the Restated Articles or the
Bylaws.


 


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Section 5.09 Transactions with Affiliates. Except for transactions contemplated by
this Agreement, neither the Company nor any Subsidiary shall enter into any transaction with any
director, officer, employee or holder of more than five percent (5%) of the outstanding capital
stock of any class or series of capital stock of the Company or any Subsidiary (other than the
Purchaser and its Affiliates), member of the family of any such Person, or any corporation,
partnership, trust or other entity in which any such Person, or member of the family of any such
Person, is a director, officer, trustee, partner or holder of more than five percent (5%) of the
outstanding capital stock thereof.



Section 5.10 Internal Accounting Controls. The Company shall devise and maintain a
system of internal accounting controls sufficient to provide reasonable assurances that
(a) transactions are executed in accordance with Company management’s general or specific
authorization, (b) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP or any other criteria applicable to such statements, and to
maintain accountability for assets, (c) access to assets is permitted only in accordance with
Company management’s general or specific authorization, and (d) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.




Section 5.11 Indemnity.



(a) The Company agrees to indemnify, defend and hold harmless the Purchaser (and its partners
(and each officer and director thereof), directors, managers, officers, members, stockholders,
employees, Affiliates, agents and permitted assigns) (collectively, “Purchaser Indemnified
Parties”) from and against any and all losses, claims, liabilities, damages, deficiencies, costs or
expenses (including, without limitation, interest, penalties, reasonable attorneys’ fees,
disbursements and related charges and any costs or expenses that a Purchaser Indemnified Party
incurs to enforce its right to indemnification) (collectively, “Losses”) based upon, arising out of
or otherwise in respect of (i) any material inaccuracy in or material breach of any
representations, warranties, covenants or agreements of the Company contained in this Agreement or
any of the other Transaction Documents or (ii) any taxes of the Company and its affiliates relating
to periods prior to the Closing.



(b) The Purchaser agrees to indemnify, defend and hold harmless the Company and its directors,
officers, employees, Affiliates, agents and control persons (collectively, the “Company Indemnified
Parties”) from and against any and all Losses based upon, arising out of or otherwise in respect of
any material inaccuracy in or material breach of any representations, warranties, covenants or
agreements of the Purchaser contained in this Agreement or any of the other Transaction Documents.



(c) The provisions of this Section 5.11 shall not limit or impair any right or remedy
arising from breach of this Agreement or any of the other Transaction Documents. In addition to
any other remedy provided by law, injunctive relief may be obtained to enjoin the breach, or
threatened breach, of any provision of this Agreement and each party shall be entitled to specific
performance by the others of their obligations hereunder and thereunder. All remedies, either
under this Agreement, by law or as may otherwise be afforded to the Purchaser or the Company, as
the case may be, shall be cumulative.


 


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Section 5.12 Compliance with Laws. The Company shall comply, and cause each
Subsidiary to comply, with all applicable laws, rules, regulations and orders.



Section 5.13 Keeping of Records and Books of Account. The Company shall keep, and
cause each Subsidiary to keep, adequate records and books of account, in which complete entries
will be made in accordance with GAAP consistently applied, reflecting all financial transactions of
the Company and any Subsidiary, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other purposes in
connection with its business shall be made.



Section 5.14 Publicity. Except as may be required by law, the Company shall not issue
or cause the publication of any press release, advertisement or other public communication relating
to (a) the Purchaser (or any Affiliate of the Purchaser) or (b) this Agreement or any of the other
Transaction Documents, without the Purchaser’s prior written consent.



ARTICLE VI.

MISCELLANEOUS




Section 6.01 Survival of Agreements. Except as otherwise provided herein or therein,
all covenants, agreements, representations and warranties made in any of the Transaction Documents
or any certificate or instrument delivered to the Purchaser or the Company pursuant to or in
connection with any of the Transaction Documents shall survive the execution and delivery of all of
the Transaction Documents, the issuance, sale and delivery of the Shares, and the issuance and
delivery of the Preferred Stock Conversion Shares for a period of one year following the Closing
Date; provided, however, that the representations and warranties of the Company in Section
2.16 hereof shall continue thereafter and shall survive until the expiration of the applicable
statute of limitations. All statements contained in any certificate or other instrument delivered
by the Company or the Purchaser hereunder or thereunder or in connection herewith or therewith
shall be deemed to constitute representations and warranties made by the Company or the Purchaser,
as the case may be.



Section 6.02 Entire Agreement. This Agreement, together with the Schedules hereto and
any certificates, documents, instruments and writings that are delivered pursuant hereto and
thereto, constitute the entire agreement and understanding of the parties in respect of the subject
matter hereof and supersede all prior understandings, agreements or representations by or among the
parties, written or oral, to the extent they relate in any way to the subject matter hereof.



Section 6.03 Assignment; Binding Effect. No party may assign either this Agreement or
any of its rights, interests or obligations hereunder without the prior written approval of the
other parties; provided, however, that without the consent of any other party
hereto the rights of the Purchaser hereunder are assignable to an Affiliate of the Purchaser. All
of the terms, agreements, covenants, representations, warranties and conditions of this Agreement
are binding upon, and inure to the benefit of and are enforceable by, the parties and their
respective successors and permitted assigns, whether so expressed or not. Without limiting the
generality of the foregoing, all representations, covenants and agreements benefiting the Purchaser
shall inure to the benefit of any and all subsequent holders from time to time of the Shares or the
Preferred Stock Conversion Shares, as the case may be. Nothing in this Agreement shall create
or be deemed to create any third-party beneficiary rights in any Person not a party to this
Agreement except as provided below. Whether or not any express assignment has been made, the
provisions of this Agreement which are for the benefit of the Purchaser as a purchaser or holder of
the Shares (or any securities pursuant to which the Shares may be converted or exercised into) are
also for the benefit of and enforceable by any subsequent holder of such Shares or other securities
to the same extent they would have been enforceable by the Purchaser. Upon any permitted
assignment, the references in this Agreement to the Purchaser shall also apply to any such assignee
unless the context otherwise requires.


 


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Section 6.04 Notices. All notices, requests and other communications provided for or
permitted to be given under this Agreement must be in writing and shall be given by personal
delivery, by certified or registered United States mail (postage prepaid, return receipt
requested), by a nationally recognized overnight delivery service for next day delivery, or by
facsimile transmission, as follows (or to such other address as any party may give in a notice
given in accordance with the provisions hereof):




If to the Purchaser:




Radical Holdings LP

c/o Radical Management LLC

5424 Deloache Avenue

Dallas, Texas 75220

Fax: (214) 696-6310

Attn: President




With a copy to (which does not constitute notice):




Robert S. Hart

5424 Deloache Avenue

Dallas, Texas 75220

Fax: (214) 696-3380




If to the Company:




Immediatek, Inc.

320 South Walton

Dallas, Texas 75220

Phone: (214) 744-8801

Fax: (214) 214-744-8811

Attn: Darin Divinia, President



All notices, requests or other communications will be effective and deemed given only as follows:
(i) if given by personal delivery, upon such personal delivery, (ii) if sent by certified or
registered mail, on the fifth business day after being deposited in the United States mail,
(iii) if sent for next day delivery by overnight delivery service, on the date of delivery as
confirmed by written confirmation of delivery, or (iv) if sent by facsimile, upon the transmitter’s
confirmation of receipt of such facsimile transmission, except that if such confirmation is
received after 5:00
p.m. (in the recipient’s time zone) on a business day, or is received on a day that is not a
business day, then such notice, request or communication will not be deemed effective or given
until the next succeeding business day. Notices, requests and other communications sent in any
other manner, including by electronic mail, will not be effective.


 


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Section 6.05 Specific Performance; Remedies. Each party acknowledges and agrees that
the other parties would be damaged irreparably if any provision of this Agreement were not
performed in accordance with its specific terms or were otherwise breached. Accordingly, the
parties will be entitled to an injunction or injunctions to prevent breaches of the provisions of
this Agreement and to enforce specifically this Agreement and its provisions in any action or
proceeding instituted in any court of the United States or any state thereof having jurisdiction
over the parties and the matter, in addition to any other remedy to which they may be entitled, at
law or in equity. Except as expressly provided herein, the rights, obligations and remedies
created by this Agreement are cumulative and in addition to any other rights, obligations or
remedies otherwise available at law or in equity. Except as expressly provided herein, nothing
herein will be considered an election of remedies.




Section 6.06 Submission to Jurisdiction; Waiver of Jury Trial.



(a) Submission to Jurisdiction. Any action, suit or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with, this Agreement or the
transaction contemplated hereby shall only be brought in any federal court located in Dallas
County, Texas or any Texas state court located in Dallas County, Texas, and each party consents to
the exclusive jurisdiction and venue of such courts (and of the appropriate appellate courts
therefrom) in any such action, suit or proceeding and irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying of the venue of any
such action, suit or proceeding in any such court or that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum. Process in any such action,
suit or proceeding may be served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, service of process on such party
as provided in Section 6.04 shall be deemed effective service of process on such party.



(b) Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES THAT ANY DISPUTE THAT MAY ARISE OUT
OF OR RELATING TO THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE SUCH PARTY HEREBY EXPRESSLY WAIVES ITS RIGHT TO JURY TRIAL OF ANY DISPUTE BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OTHER AGREEMENTS RELATING HERETO OR ANY DEALINGS AMONG THEM
RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. THE SCOPE OF THIS WAIVER IS INTENDED TO
ENCOMPASS ANY AND ALL ACTIONS, SUITS AND PROCEEDINGS THAT RELATE TO THE SUBJECT MATTER OF THE
TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS,
AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY REPRESENTS THAT (i) NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT IN THE EVENT OF ANY
ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) SUCH PARTY UNDERSTANDS
AND WITH THE ADVICE OF COUNSEL HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) SUCH PARTY
MAKES THIS WAIVER VOLUNTARILY AND (iv) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND REPRESENTATIONS IN THIS SECTION 6.06(b).


 


27









 





Section 6.07 Headings. The article and section headings contained in this Agreement
are inserted for convenience only and will not affect in any way the meaning or interpretation of
this Agreement.



Section 6.08 Governing Law. This Agreement will be governed by, and construed in
accordance with, the laws of the State of Texas, without giving effect to any choice of law
principles.



Section 6.09 Amendments. This Agreement may not be amended or modified without the
written consent of the Company and the Purchaser.



Section 6.10 Extensions; Waivers. Any party may, for itself only, (a) extend the time
for the performance of any of the obligations of any other party under this Agreement, (b) waive
any inaccuracies in the representations and warranties of any other party contained herein or in
any document delivered pursuant hereto, and (c) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein. Any such extension or waiver will be
valid only if set forth in a writing signed by the party to be bound thereby. No waiver by any
party of any default, misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, may be deemed to extend to any prior or subsequent default, misrepresentation
or breach of warranty or covenant hereunder or affect in any way any rights arising because of any
prior or subsequent occurrence. Neither the failure nor any delay on the part of any party to
exercise any right or remedy under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right or remedy preclude any other or further exercise of the
same or of any other right or remedy.



Section 6.11 Severability. The provisions of this Agreement will be deemed severable
and the invalidity or unenforceability of any provision will not affect the validity or
enforceability of the other provisions hereof; provided that if any provision of this Agreement, as
applied to any party or to any circumstance, is judicially determined not to be enforceable in
accordance with its terms, the parties agree that the court judicially making such determination
may modify the provision in a manner consistent with its objectives such that it is enforceable,
and/or to delete specific words or phrases, and in its modified form, such provision will then be
enforceable and will be enforced.



Section 6.12 Counterparts; Effectiveness. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original but all of which together will
constitute one and the same instrument. This Agreement will become effective when one or more
counterparts have been signed by each of the parties and delivered to the other parties. For
purposes of determining whether a party has signed this Agreement or any document contemplated
hereby or any amendment or waiver hereof, only a handwritten original signature
on a paper document or a facsimile copy of such a handwritten original signature shall
constitute a signature, notwithstanding any law relating to or enabling the creation, execution or
delivery of any contract or signature by electronic means.


 


28









 





Section 6.13 Construction. This Agreement has been freely and fairly negotiated among
the parties. If an ambiguity or question of intent or interpretation arises, this Agreement will
be construed as if drafted jointly by the parties and no presumption or burden of proof will arise
favoring or disfavoring any party because of the authorship of any provision of this Agreement.
Any reference to any law will be deemed to refer to such law as in effect on the date hereof and
all rules and regulations promulgated thereunder, unless the context requires otherwise. The words
“include,” “includes,” and “including” will be deemed to be followed by “without limitation.”
Pronouns in masculine, feminine, and neuter genders will be construed to include any other gender,
and words in the singular form will be construed to include the plural and vice versa, unless the
context otherwise requires. The words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder,”
and words of similar import refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited. The parties intend that each representation, warranty,
and covenant contained herein will have independent significance. If any party has breached any
covenant contained herein in any respect, the fact that there exists another covenant relating to
the same subject matter (regardless of the relative levels of specificity) which the party has not
breached will not detract from or mitigate the fact that the party is in breach of the first
covenant.



Section 6.14 Attorneys’ Fees. If any dispute among any parties arises in connection
with this Agreement, the prevailing party in the resolution of such dispute in any action or
proceeding will be entitled to an order awarding full recovery of reasonable attorneys’ fees and
expenses, costs and expenses (including experts’ fees and expenses and the costs of enforcing this
Section 6.14) incurred in connection therewith, including court costs, from the
non-prevailing party.



Section 6.15 Brokerage. Each party hereto will indemnify and hold harmless the others
against and in respect of any claim for brokerage or other commissions relative to this Agreement
or to the transactions contemplated hereby, based in any way on agreements, arrangements or
understandings made or claimed to have been made by such party with any third party.



Section 6.16 Adjustments for Stock Splits, Etc. Wherever in this Agreement there is a
reference to a specific number of shares of the Company’s capital stock of any class or series
(other than with respect to the Series B Preferred Stock, the Series B Shares, the Shares or the
Preferred Stock Conversion Shares), then, upon the occurrence of any subdivision, combination or
stock dividend of such class or series of stock, the specific number of shares so referenced in
this Agreement will automatically be proportionally adjusted to reflect the effect of such
subdivision, combination or stock dividend on the outstanding shares of such class or series of
stock.



Section 6.17 Aggregation of Stock. All shares of Common Stock owned or acquired by
the Purchaser or its Affiliated entities or persons (assuming full conversion, exchange and
exercise of all convertible, exchangeable and exercisable securities into Common Stock) shall be
aggregated together for the purpose of determining the availability of any right under this
Agreement.


 


29









 






Section 6.18 Certain Defined Terms. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to both the singular and
plural forms of the terms defined):



“Affiliate” means, with respect to any Person, (i) any other Person of which securities or
other ownership interests representing more than twenty percent (20%) of the voting interests are,
at the time such determination is being made, owned, Controlled or held, directly or indirectly, by
such Person, or (ii) any other Person which, at the time such determination is being made, is
Controlling, Controlled by or under common Control with, such Person. As used herein, “Control,”
whether used as a noun or verb, refers to the possession, directly or indirectly, of the power to
direct, or cause the direction of, the management or policies of a Person, whether through the
ownership of voting securities or otherwise.



“Company” shall have the meaning set forth in the preambles of this Agreement. For purposes
of Article II, the term “Company” shall include its Subsidiaries, unless context clearly
indicates otherwise.



“Lien” shall mean a mortgage, deed of trust, pledge, hypothecation, assignment, encumbrance,
lien (statutory or otherwise, including, without limitation, any lien for taxes), security
interest, preference, participation interest, priority or security agreement or preferential
arrangement of any kind or nature whatsoever, including, without limitation, any conditional sale
or other title retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing and the filing of any document under the law of any applicable
jurisdiction to evidence any of the foregoing.



“Material Adverse Change” shall mean a material adverse change in the Company’s business,
operations, assets, liabilities, prospects, properties, condition (financial or otherwise) or
results of operations.



“Person” shall mean an individual, corporation, trust, partnership, limited liability company,
joint venture, unincorporated organization, government body or any agency or political subdivision
thereof, or any other entity.



“Subsidiary” shall mean, as to the Company, any corporation of which more than fifty percent
(50%) of the outstanding stock having ordinary voting power to elect a majority of the Board of
Directors of such corporation (irrespective of whether or not at the time stock of any other class
or classes of such corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned by the Company, or by one or more of
its subsidiaries, or by the Company and one or more of its subsidiaries.



“Transaction Documents” shall mean this Agreement, the Certificate of Designation, and any
other documents or agreements required as a condition to the Closing or required to be delivered by
the Company to the Purchaser.



Section 6.19 Incorporation of Exhibits, Annexes and Schedules. The exhibits, annexes
and schedules identified in this Agreement are incorporated herein by reference and made a part
hereof for all purposes.



SIGNATURE PAGE FOLLOWS



 


30









 









SECURITIES
PURCHASE AGREEMENT


Signature Page




IN WITNESS WHEREOF, the Company and the Purchaser have executed this Securities Purchase
Agreement as of the day and year first above written.



	 	 	 	 	 
	 	COMPANY:




IMMEDIATEK, INC.,

a Nevada corporation

 	 
	 	By:  	/s/ DARIN DIVINIA
 	 
	 	 	Name:  	Darin Divinia 	 
	 	 	Title:  	President and Chief Executive Officer 	 



	 	 	 	 	 
	 	 	PURCHASER:
	 
	 	 	 	 
	 	 	RADICAL HOLDINGS LP,

a Texas limited partnership
	 
	 	 	 	 
	 

	 	By:
	 	Radical Management LLC,

a Texas limited liability company,

its general partner






	 	 	 	 	 
	 	By:  	/s/ MARK CUBAN
 	 
	 	 	Name:  	Mark Cuban 	 
	 	 	Title:  	President 	 
	 




 


 









 







Exhibit A




Form of Certificate of Designation




See Attached




 


 









 




	 	 	 
	

	 	ROSS MILLER

Secretary of State

204 North Carson Street, Ste 1

Carson City, Nevada 89701-4299

(775) 684 5708

Website: www.nvsos.gov






Certificate of Designation

(PURSUANT TO NRS 78.1955)




			
	 	 	 
	USE BLACK INK ONLY — DO NOT HIGHLIGHT
	 	ABOVE SPACE IS FOR OFFICE USE ONLY
	 	 	 






Certificate of Designation For

Nevada Profit Corporations 

(Pursuant to NRS 78.1955)




1. Name of corporation:



Immediatek, Inc.



2. By resolution of the board of directors pursuant to a provision in the articles of incorporation
this certificate establishes the following regarding the voting powers, designations, preferences,
limitations, restrictions and relative rights of the following class or series of stock.



RESOLVED, that, pursuant to the authority vested in the Board of Directors by the provisions of
Article V of the Restated Articles and in accordance with the provisions of NRS 78.1955, the Board
of Directors hereby creates and provides for the issue of a series of Preferred Stock consisting of
69,726 shares herein designated as the “Series B Convertible Preferred Stock” (the “Series B
Preferred Stock”), having the powers, designations, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or restrictions thereof, of
the shares of such series (in addition to the powers, designations preferences and relative,
participating, optional or other special rights, and the qualifications, limitations or
restrictions thereof, set forth in the Restated Articles that are applicable to the Preferred Stock
of all series) are hereby fixed as follows (certain terms used herein being defined in Section B.1. hereof):



Continuation attached.



3. Effective date of filing: (optional)



(must not be later than 90 days after the certificate is filed)




4. Signature: (required)






Signature of Officer




Filing Fee: $175.00



IMPORTANT: Failure to include any of the above information and submit with the proper fees may
cause this filing to be rejected.




			
	 	 	 
	This form must be accompanied by appropriate fees.
	 	Nevada Secretary of State Stock Designation
	 
	 	Revised: 7-1-08
	 	 	 





 


 









 





A. PROVISIONS RELATING TO THE SERIES B PREFERRED STOCK




1. Dividends. The holders of the Series B Preferred Stock shall not be entitled to any
preferential dividends. The holders of the Series B Preferred Stock shall be entitled to
participate on an as-converted basis in any cash dividends declared and paid on the Common Stock.




2. Liquidation.



(a) Upon any Liquidation Event, the holders of shares of Series B Preferred Stock then
outstanding, pari passu with holders of the Series A Convertible Preferred Stock (the “Series A
Preferred Stock”) then outstanding, shall be entitled to receive, out of the funds and assets of
the Corporation legally available therefor (the “Available Assets and Funds”), before any payment
shall be made to the holders of shares of Junior Stock, an amount per share equal to the greater of
(i) the Stated Value for a share of Series B Preferred Stock or (ii) the amount such holder would
have received had such holder converted such share of Series B Preferred Stock into shares of
Common Stock immediately prior to such Liquidation Event. If, upon any such Liquidation Event, the
Available Assets and Funds shall be insufficient to pay the holders of shares of Series B Preferred
Stock and the Series A Preferred Stock the full amount to which they shall be entitled, the holders
of shares of Series B Preferred Stock and Series A Preferred Stock and any other Parity Stock shall
share ratably in any distribution of the Available Assets and Funds in proportion to the respective
amounts that would otherwise be payable in respect of the shares held by them upon such
distribution if all amounts payable on or with respect to such shares were paid in full.



3. Ranking. The Series B Preferred Stock shall, with respect to redemption rights,
rights on liquidation, winding up, corporate reorganization and dissolution, rank pari passu with
Series A Preferred Stock and senior to the Junior Stock.




4. Optional Redemption.



(a) Holders’ Redemption Rights. Upon an Event of Default, the holders of a
Majority-in-Interest of the Series B Preferred Stock then outstanding may require the Corporation
to redeem the Series B Preferred Stock at any time or from time to time, in whole but not in part,
at a redemption price per share equal to the Stated Value, plus declared and unpaid dividends, if
any, to the Redemption Date (the “Redemption Price”). Such redemption shall be effected in
accordance with the procedures set forth in subsections A.4.(b) and A.4.(c) hereof.



(b) Notice. Upon an Event of Default, the Corporation shall mail notice of such Event
of Default within ten (10) days of such Event of Default to the holders of record of the Series B
Preferred Stock. Within a twenty-day period following such notice by the Company to the holders of
the Series B Preferred Stock, each record holder of the Series B Preferred Stock shall be entitled
to provide notice to the Corporation of his election to require the Company to redeem the
outstanding shares of Series B Preferred Stock. In the event that the holders of a
Majority-in-Interest of the Series B Preferred Stock then outstanding elect to require the
Corporation to redeem shares of the Series B Preferred Stock pursuant to this subsection
A.4., the Corporation shall mail notice of such redemption by first-class mail, postage
prepaid, and mailed not less than ten (10) days nor more than sixty (60) days after the date the
holders of a Majority-in-Interest of the Series B Preferred Stock elected to cause the redemption
of



 1





 


 












 



the Series B Preferred Stock (each such date, a “Redemption Date”) to the holders of record of the shares of
Series B Preferred Stock to be redeemed, at their respective addresses as such addresses shall
appear in the records of the Corporation; provided, however, that failure to give such notice or
any defect therein or in the mailing thereof shall not affect the validity of the proceeding for
the redemption of any shares so to be redeemed. Each such notice shall state: (i) the Redemption
Date, (ii) the number of shares of Series B Preferred Stock to be redeemed, (iii) the Redemption
Price, and (iv) the place or places where certificates for such shares are to be surrendered for
payment of the Redemption Price.




(c) Right of the Holders of Series B Preferred Stock upon Redemption. Following
the Redemption Date, said shares of Series B Preferred Stock to be redeemed shall no longer be
deemed to be outstanding and shall not have the status of shares of Series B Preferred Stock, and
all rights of the holders thereof as stockholders of the Company (except the right to receive the
applicable Redemption Price on the Redemption Date) shall cease, unless the Corporation defaults in
the payment of the Redemption Price on the Redemption Date, in which case all rights of the holders
to whom payment of the Redemption Price was not made on the Redemption Date shall continue until
the Redemption Price is paid to such holders, and such holders shall have the rights of the terms
of the Series B Preferred Stock set forth herein.




5. Conversion.



(a) Right to Convert. Subject to and in compliance with this Section A.5.,
each share of Series B Preferred Stock shall be convertible, at the option of the holder thereof,
at any time and from time to time, into that number of fully paid and nonassessable shares of
Common Stock as is determined by dividing the Stated Value for such share by the Conversion Price
(defined below) for such share in effect at the time of conversion. The price at which shares of
Common Stock shall be deliverable upon conversion of Series B Preferred Stock without the payment
of additional consideration by the holder thereof (the “Conversion Price”) shall initially be
$2.162676 per share. Such initial Conversion Price shall be subject to adjustment from time to time
as provided in this Section A.5.



(b) Mechanics of Conversion. Each holder of Series B Preferred Stock who desires to
convert the same into shares of Common Stock shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Series B
Preferred Stock or Common Stock, and shall give written notice to the Corporation at such office
that such holder elects to convert the same and shall state therein the number of shares of Series
B Preferred Stock being converted. Thereupon, the Corporation shall promptly issue and deliver at
such office to such holder a certificate or certificates for the number of shares of Common Stock
to which such holder is entitled. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of such surrender of the certificate representing the
shares of Series B Preferred Stock to be converted, and the person entitled to receive the shares
of Common Stock issuable upon such conversion shall be treated for all purposes as the record
holder of such shares of Common Stock on such date.


 


2









 





(c) Adjustments for Stock Splits and Combinations. If the Corporation at any time or
from time to time after the Original Issue Date (as defined below) effects a subdivision of the
outstanding Common Stock, the Conversion Price then in effect immediately before the subdivision
shall be proportionately decreased, and conversely, if the Corporation at any time or from time to
time after the Original Issue Date combines the outstanding shares of Common
Stock into a smaller number of shares, the Conversion Price then in effect immediately before the
combination shall be proportionately increased. Any adjustment under this subsection
A.5.(c) shall become effective at the close of business on the date the subdivision or
combination becomes effective. “Original Issue Date” means the date on which shares of Series B
Preferred Stock are originally issued under this Certificate of Designation.



(d) Adjustments for Certain Dividends and Distributions. If the Corporation at any
time or from time to time after the Original Issue Date makes or issues, or fixes a record date for
the determination of holders of Common Stock entitled to receive, a dividend or other distribution
payable in Additional Shares of Common Stock, then and in each such event the Conversion Price then
in effect shall be adjusted as of the time of such issuance or, in the event such record date is
fixed, as of the close of business on such record date, so that it will equal the price determined
by multiplying the Conversion Price then in effect by a fraction (1) the numerator of which is the
total number of shares of Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date and (2) the denominator of which shall be the
total number of shares of Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares of Common Stock
issuable in payment of such dividend or distribution; provided, however, that if such record date
is fixed and such dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Conversion Price shall be recomputed accordingly as of the close of business on
such record date and thereafter the Conversion Price shall be adjusted pursuant to this
subsection A.5.(d) as of the time of actual payment of such dividends or distributions.



(e) Adjustments for Dividends and Other Distributions. In the event the Corporation at
any time or from time to time after the Original Issue Date makes or issues, or fixes a record date
for the determination of holders of Common Stock entitled to receive, a dividend or other
distribution payable in securities of the Corporation other than shares of Common Stock, then and
in each such event provision shall be made so that the holders of Series B Preferred Stock shall
receive upon conversion thereof, in addition to the number of shares of Common Stock receivable
thereupon, the amount of securities of the Corporation which they would have received had their
Series B Preferred Stock been converted into Common Stock on the date of such event and had they
thereafter, during the period from the date of such event to and including the conversion date,
retained such securities receivable by them as aforesaid during such period, subject to all other
adjustments called for during such period under this Section A.5 with respect to the rights
of the holders of the Series B Preferred Stock.



(f) Adjustment for Reclassification, Exchange and Substitution. In the event that, at
any time or from time to time after the Original Issue Date, the Common Stock issuable upon the
conversion of the Series B Preferred Stock is changed into the same or a different number of shares
of any class or classes of stock, whether by recapitalization, reclassification or otherwise (other
than a subdivision or combination of shares or stock dividend or a reorganization, merger,
consolidation or sale of assets, provided for elsewhere in this Section A.5), then and in
any such event each holder of Series B Preferred Stock shall have the right thereafter to convert
such Series B Preferred Stock into the kind and amount of stock and other securities and property
receivable upon such recapitalization, reclassification or other change, by holders of shares of
Common Stock into which such shares of Series B Preferred Stock could have been converted
immediately prior to such recapitalization, reclassification or change, all subject to further
adjustment as provided herein.


 


3









 





(g) No Adjustment for Certain Issuances. Notwithstanding anything to the
contrary herein, no adjustment will be made to the Conversion Price (1) for issuances of Common
Stock upon conversion of shares of the Series B Preferred Stock or the Series A Preferred Stock; or
(2) for issuances of Common Stock, options, warrants or other convertible securities as a dividend
or distribution on the Series B Preferred Stock.




(h) Sale of Shares.




(1) If at any time or from time to time after the Original Issue Date, the Corporation
issues or sells, or is deemed by the express provisions of this subsection A.5.(h)
to have issued or sold, Additional Shares of Common Stock (as hereinafter defined), other
than as a dividend or other distribution on any class of stock as provided in subsection
A.5.(d) above and other than upon a subdivision or combination of shares of Common Stock
as provided in subsection A.5.(c) above, then and in each such event the Conversion
Price then in effect shall be adjusted as of the time of such issuance or sale so that it
will equal the price determined by multiplying the Conversion Price then in effect by a
fraction (1) the numerator of which is the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or sale and (2) the denominator
of which shall be the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or sale plus the number of shares of Common
Stock issued or sold.




(2) For the purpose of the adjustment required under this subsection A.5.(h),
if the Corporation issues or sells any rights or options for the purchase of, or stock or
other securities convertible or exchangeable, with or without consideration, into Additional
Shares of Common Stock (such convertible or exchangeable stock or securities being
hereinafter referred to as “Convertible Securities”), then in each case the Corporation
shall be deemed to have issued at the time of the issuance of such rights or options or
Convertible Securities the maximum number of Additional Shares of Common Stock issuable upon
exercise or conversion thereof. No further adjustment of the Conversion Price, adjusted upon
the issuance of such rights, options or Convertible Securities, shall be made as a result of
the actual issuance of Additional Shares of Common Stock on the exercise of any such rights
or options or the conversion of any such Convertible Securities.




If any such rights or options, or the conversion or exchange privilege represented by
any such Convertible Securities, shall expire without having been exercised, the Conversion
Price adjusted upon the issuance of such rights, options or Convertible Securities shall be
readjusted to the Conversion Price which would have been in effect had an adjustment been
made on the basis that the only Additional Shares of Common Stock so issued were the
Additional Shares of Common Stock, if any, actually issued or sold on the exercise of such
rights or options or rights of conversion or exchange of such Convertible Securities.
Further, if any shares of Common Stock issuable upon the exercise or conversion of options
or warrants that are issued and outstanding on the Original Issue Date shall no longer be
issuable thereunder due to expiration, termination or otherwise, the Conversion Price shall
be adjusted as of the time of such expiration so that it will equal the price determined by
multiplying the Conversion
Price then in effect by a fraction (1) the numerator of which is the total number of
 shares of Common Stock issued and outstanding immediately prior to the time of such
expiration,
plus the number of shares of Common Stock no longer exercisable pursuant to such option or
warrant and (2) the denominator of which shall be the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such expiration.


 


4









 









(3) For the purpose of the adjustment required under this subsection
A.5.(h), if the Corporation issues or sells any rights or options for the purchase of
Convertible Securities, then in each such case the Corporation shall be deemed to have
issued at the time of the issuance of such rights or options the maximum number of
Additional Shares of Common Stock issuable upon conversion or exchange of the total amount
of Convertible Securities covered by such rights or options. No further adjustment of the
Conversion Price, adjusted upon the issuance of such rights or options, shall be made as a
result of the actual issuance of the Convertible Securities upon the exercise of such rights
or options or upon the actual issuance of Additional Shares of Common Stock upon the
conversion of such Convertible Securities. The provisions of paragraph (2) above for the
readjustment of the Conversion Price upon the expiration of rights or options or the rights
of conversion or exchange of Convertible Securities shall apply mutatis
mutandis to the rights, options and Convertible Securities referred to in this
paragraph (3).



(i) Notices of Record Date. In the event of (a) any taking by the Corporation
of record of the holders of any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other distribution, or (ii) any capital
reorganization of the Corporation, any reclassification or recapitalization of the capital stock of
the Corporation, any merger or consolidation of the Corporation with or into any other corporation,
or any transfer of all or substantially all of the assets of the Corporation to any other Person or
any voluntary or involuntary dissolution, liquidation or winding up of the Corporation, the
Corporation shall mail to each holder of Series B Preferred Stock at least thirty (30) days prior
to the record date specified therein, a notice specifying (1) the date on which any such record is
to be taken for the purpose of such dividend or distribution and a description of such dividend or
distribution, (2) the date on which any such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding up is expected to become effective, and
(3) the date, if any, that is to be fixed, as to when the holders of record of Common Stock (or
other securities) shall be entitled to exchange their shares of Common Stock (or other securities)
for securities or other property deliverable upon such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding up.



(j) Fractional Shares. No fractional shares of Common Stock shall be issued
upon conversion of Series B Preferred Stock. If more than one share of Series B Preferred Stock
shall be surrendered for conversion at any one time by the same holder, the number of full shares
of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate
number of shares of Series B Preferred Stock so surrendered. In lieu of any fractional share to
which the holder would otherwise be entitled, the Corporation shall pay cash equal to the product
of such fraction multiplied by the Fair Market Value of one share of the Corporation’s Common Stock
on the date of conversion.


 


5









 





(k) Reservation of Stock Issuable Upon Conversion. The Corporation shall at all
times reserve and keep available out of its authorized but unissued shares of Common Stock, solely
for the purpose of effecting the conversion of the shares of the Series B Preferred Stock, such
number of its shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of the Series B Preferred Stock; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding shares of the Series B Preferred Stock, the Corporation will take such
corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.



(1) Notices. All notices and other communications required by the provisions of
this Section A.5 shall be in writing and shall be deemed to have been duly given if
delivered personally, mailed by certified mail (return receipt requested) or sent by overnight
delivery service, cable, telegram, facsimile transmission or telex to each holder of record at the
address of such holder appearing on the books of the Corporation. Notice so given shall, in the
case of notice so given by mail, be deemed to be given and received on the fourth calendar day
after posting, in the case of overnight delivery service, on the date of actual delivery and, in
the case of notice so given by cable, telegram, facsimile transmission, telex or personal delivery,
on the date of actual transmission or, as the case may be, personal delivery.



(m) Payment of Taxes. The Corporation will pay all taxes (other than taxes based
upon income) and other governmental charges that may be imposed with respect to the issue or
delivery of shares of Common Stock upon conversion of shares of Series B Preferred Stock,
including, without limitation, any tax or other charge imposed in connection with any transfer
involved in the issue and delivery of shares of Common Stock in a name other than that in which the
shares of Series B Preferred Stock so converted were registered.



(n) No Dilution or Impairment. The Corporation shall not amend its Amended and
Restated Articles of Incorporation or participate in any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, for
the purpose of avoiding, or seeking to avoid, the observance or performance of any of the terms to
be observed or performed hereunder by the Corporation, but will at all times in good faith assist
in carrying out all such action as may be reasonably necessary or appropriate in order to protect
the conversion rights of the holders of the Series B Preferred Stock against dilution or other
impairment.



6. Voting. The holders of shares of Series B Preferred Stock shall be entitled
to vote on all matters required or permitted to be voted upon by the stockholders of the
Corporation and, except to the extent specifically provided herein, each holder shall be entitled
to the number of votes equal to the largest number of full shares of Common Stock into which all
shares of Series B Preferred Stock held by such holder could be converted, pursuant to the
provisions of Section A.5, at the record date for the determination of the stockholders
entitled to vote on such matters or, if no record date is established, at the date such vote is
taken or any written consent of stockholders is first executed. Except as otherwise expressly
provided herein or as required by law, the holders of Series B Preferred Stock shall vote together
as a single class with the holders of Series A Preferred Stock and Common Stock on all matters.


 


6









 





B. GENERAL PROVISIONS




1. Definitions. As used herein with respect to the Series B Preferred
Stock, the following terms have the following meanings:



“Additional Shares of Common Stock” means all shares of Common Stock issued after the
Original Issue Date, in each event other than shares of Common Stock issued upon conversion of the
Series A Preferred Stock or the Series B Preferred Stock.



“Common Stock”  means the common stock of the Corporation, $0.001 par value per share.



An “Event of Default” shall exist if within 45 days from the Original Issue Date any representation
or warranty made or deemed made by or on behalf of the Corporation in the Purchase Agreement, or
any amendment or modification thereof or waiver thereunder, or in any report, certificate,
financial statement or other document furnished pursuant to or in connection the Purchase
Agreement, or any amendment or modification thereof or waiver thereunder, shall prove to have been
materially incorrect when made or deemed made.



“Fair Market Value” means (i) if the Common Stock is listed on a national securities exchange, the
closing sale price per share on the principal exchange on which the Common Stock is listed as
reported by such exchange, (ii) if the Common Stock is quoted in the National Market System, the
closing sale price per share as reported by Nasdaq, (iii) if the Common Stock is traded in the
over-the-counter market but not quoted in the National Market System, the average of the closing
bid and asked quotations per share as reported by Nasdaq, or any other nationally accepted
reporting medium if Nasdaq quotations shall be unavailable, or (iv) if none of the foregoing
applies, the fair market value of such stock as reasonably determined in good faith by the Board of
Directors of the Corporation.



“Junior Stock” means shares of Common Stock and any other class or series of capital stock of the
Corporation that by its express terms provides that is ranks junior to the Series A Preferred Stock
and Series B Preferred Stock as to distribution of assets on liquidation, dissolution or winding
up.



“Liquidation Event”means the liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, and also includes (i) the acquisition of the Corporation by another
entity by means of any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation) that results in the sale, disposition or
other transfer of more than fifty percent (50%) of the outstanding voting power of the Corporation
or (ii) a sale, exclusive license or other disposition of all or substantially all of the assets of
the Corporation.



“Majority-in-Interest” means the holders of a majority of the Series B Preferred Stock.



“Parity Stock” means Series A Preferred Stock and any class or series of capital stock of the
Corporation ranking on a parity with the Series B Preferred Stock as to distribution of assets on
liquidation, dissolution or winding up.



“Person” means any individual, corporation, partnership, trust, joint venture, organization,
association, government or agency or political subdivision thereof, or any other entity.



“Purchase Agreement” means that certain Securities Purchase Agreement, dated as of July 18, 2008,
by and between the Corporation and Radical Holdings LP.



“Stated Value” means a stated value per share equal to $7.17092619 with respect to the Series B
Preferred Stock.





 


7












 







Schedule 2.05(a)




Outstanding Capital Stock




	 	 	 	 	 
	Series A
	 	 	4,392,286	 
	Series B
	 	 	69,726	 
	Common
	 	 	535,321	 






 


 









 





Schedule 2.13(b)




Real Property




Real property lease for 320 S. Walton, Dallas, Texas.