Document:

ex-10_3.htm

Bonds.com Group, Inc. 8-K

 

Exhibit 10.3

EXCHANGE AGREEMENT

 

This EXCHANGE AGREEMENT (the “Agreement”), dated as of December 5, 2011, is entered into by and between Bonds.com Group, Inc., a Delaware corporation (the “Company”), and the parties set forth on Schedule A hereto (each individually a “Holder” and, collectively, the “Holders”).

 

WHEREAS:

 

A. The Holders are holders of, among other things, shares of the Company’s Series D Convertible Preferred Stock, par value $0.0001 per share (the “Series D Preferred”), or Series D-1 Convertible Preferred Stock, par value $0.0001 per share (the “Series D-1 Preferred,” and collectively with the Series D Preferred, the “Series D/D-1 Preferred”), in each case, as set forth and identified on Schedule A.

 

B. Simultaneously with the execution and delivery of this Agreement, the Company, Daher Bonds Investment Company, a Cayman Islands company (“DBIC”), Mida Holdings, a Cayman Islands company (“Mida”), GFINet Inc., a Delaware corporation (“GFI”), Oak Investment Partners XII, Limited Partnership, a Delaware limited partnership  (“Oak”) and certain other investors (such investors collectively with DBIC, Mida, GFI, and Oak, each a “Buyer,” and collectively, the “Buyers”) are executing and delivering a Unit Purchase Agreement, a copy of which is attached hereto as Exhibit A (the “Purchase Agreement”), pursuant to which the Company will sell units (each a “Unit” and collectively, the “Units”) consisting of (i) shares of its newly created Series E-2 Convertible Preferred Stock, par value $0.0001 per share (the “Series E-2 Preferred”), and (ii) warrants to purchase shares of the Company’s Common Stock, for a purchase price of $100,000 for each Unit.

 

C. The Series E-2 Preferred being issued pursuant to the Purchase Agreement contain certain terms that are different from or in addition to the terms of the Series D/D-1 Preferred.  In order to provide the Holders with the same investment terms as those contemplated by the Series E-2 Preferred (except with respect to certain liquidation preferences as described in the Certificate of Designation (defined below)), the Company and the Holders are executing and delivering this Agreement to effect the exchange of the outstanding shares of Series D Preferred for shares of the Company’s newly created Series E Convertible Preferred Stock, par value $0.0001 per share (the “Series E Preferred”), and the exchange of the outstanding shares of Series D-1 Preferred for the Company’s newly created Series E-1 Convertible Preferred Stock, par value $0.0001 per share (the “Series E-1 Preferred” and, collectively with the Series E Preferred, the “Shares”).

 

D. Simultaneously with the execution and delivery of this Agreement and the Purchase Agreement, (i) the Company, the Buyers, and the holders identified therein are executing and delivering the Second Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”), a copy of which is attached hereto as Exhibit B; and (ii) the Company, the Buyers, and each of the Holders are executing and delivering the Series E Stockholders’ Agreement, a copy of which is attached hereto as Exhibit C (the “Series E Stockholders’ Agreement”).

 

E. This series of financing (including the sale of the Series D/D-1 Preferred, the exchange of the Series D/D-1 Preferred for the Shares and the sale of the Units pursuant to the Purchase Agreement) is referred to as the “Series D/E Financing.”

 

  

  

  

 

F. In order to consummate the transactions contemplated by this Agreement and the Purchase Agreement, the Holders are providing certain contractual consents and agreeing to certain amendments of their existing investment agreements.

 

NOW, THEREFORE, the Company and the Holders hereby agree as follows:

 

1. EXCHANGE OF SECURITIES.

 

(a) Certificate of Designation.  On or prior to the Closing Date (as defined below), the Company shall adopt and file with the Secretary of State of the State of Delaware the Certificate of Designation of Series E Convertible Preferred Stock, Series E-1 Convertible Preferred Stock and Series E-2 Convertible Preferred Stock in the form attached hereto as Exhibit D (the “Certificate of Designation”).

 

(b) Exchange.  Subject to the satisfaction (or waiver) of the conditions set forth in Sections 5 and 6 below, at the Closing (as defined below), the Company shall issue to each of the Holders, and each of the Holders shall acquire from the Company, those shares of Series E Preferred or Series E-1 Preferred, as applicable, set forth opposite such Holder’s name in the column labeled “Acquired Securities” on Schedule A hereto (the “Acquired Securities”), in each case, in exchange for the Series D/D-1 Preferred identified opposite such Holder’s name in the column labeled “Exchanged Securities.”

 

(c) Closing.  The issuance and acquisition of the Acquired Securities and exchange of the Series D/D-1 Preferred (the “Closing”) shall take place remotely via the exchange of documents and signatures at 10:00 a.m., New York City time, on the date hereof (or such other date and time as is mutually agreed to by the Company and the Holders).  The date on which the Closing is actually held is referred to herein as the “Closing Date.”

 

(d) Consideration for the Acquired Securities.  The applicable Acquired Securities are being issued to each Holder in consideration for such Holder’s surrender and exchange of all Series D/D-1 Preferred owned, of record or beneficially, by such Holder.  Immediately upon the Closing, each Holder’s Series D/D-1 Preferred shall be deemed surrendered, transferred and assigned to the Company, and no longer issued and outstanding, regardless of whether any of such instruments are physically delivered to the Company at or after the Closing.

 

(e) Delivery.  On the Closing Date, (i) each Holder shall deliver all Series D/D-1 Preferred owned, beneficially or of record, by such Holder (or an affidavit of lost certificate and customary indemnity with respect thereto) to the Company along with stock powers with respect thereto, and (ii) the Company shall issue to each such Holder the Acquired Securities to be acquired by them at the Closing, free and clear of any mortgage, pledge, hypothecation, rights of others, rights of first refusal, claim, security interest, encumbrance, title, defect, voting trust agreement, option, lien, taxes, charge or similar restrictions or limitations (collectively, “Liens”).

 

2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  The Company represents and warrants to the Holders that:

 

  

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(a) Organization and Qualification.  Each of the Company and its “Subsidiaries” (which for purposes of this Agreement means any entity in which the Company, directly or indirectly, owns at least a majority of the capital stock or other equity or similar interest) are entities duly organized and validly existing in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authorization to own their properties and to carry on their business as now being conducted.  Each of the Company and its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect.  As used in this Agreement, “Material Adverse Effect” means any material adverse effect on the business, properties, assets, operations, results of operations, condition (financial or otherwise) or prospects of the Company and its Subsidiaries, individually or taken as a whole, or on the transactions contemplated hereby or on the other Transaction Documents (as defined in Section 2(b)) or by the agreements and instruments to be entered into in connection herewith or therewith, or on the authority or ability of the Company to perform its obligations under the Transaction Documents.  Except as set forth on Schedule 2(a), the Company has no Subsidiaries and there are no other entities in which the Company, directly or indirectly, owns any of the capital stock or other equity or similar interests.

 

(b) Authorization; Enforcement; Validity.  The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement, the Certificate of Designation, Series E Stockholders’ Agreement, and the Registration Rights Agreement (collectively, the “Transaction Documents”) and to issue the Acquired Securities in accordance with the terms hereof and thereof.  The execution and delivery of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Acquired Securities and the reservation for issuance and the issuance of the Common Stock issuable upon conversion of the Series E Preferred and Series E-1 Preferred has been duly authorized by the Company’s Board of Directors and no further consent or authorization is required by the Company, its Board of Directors or its stockholders.  This Agreement and 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 respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

 

(c) Issuance of Securities.  Except as set forth on Schedule 2(c), the Shares are duly authorized and, upon issuance in accordance with the terms hereof, shall be validly issued and free from all Liens with respect to the issue thereof and the Shares, when issued in accordance with the terms hereof, shall be fully paid and nonassessable with the holders being entitled to all rights accorded to a holder of Series E Preferred and Series E-1 Preferred.  Assuming the accuracy and completeness of each of the Holders’ representations in Section 3, the offer and issuance by the Company of the Shares are exempt from registration under the 1933 Act.

 

(d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby will not (i) result in a violation of the Certificate of Incorporation of the Company, as amended and as in effect on the date hereof (the “Certificate of Incorporation”), the Company’s Bylaws, as amended and as in effect on the date hereof (the “Bylaws”), any memorandum of association, certificate of incorporation, articles of association, bylaws, certificate of formation, any certificate of designation or other constituent documents of the Company or any of its Subsidiaries, or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and the rules and regulations of any Self-Regulatory Organization (as defined below)) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected.  For purposes of this Agreement, “Self-Regulatory Organization” means the Financial Industry Regulatory Authority, Inc. (together with any successor entity, “FINRA”) and any other commission, board, agency or body that is not a Governmental Authority (as defined in Section 2(x)(i)) but is charged with the supervision or regulation of the brokers and dealers that are its members.

 

  

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(e) Consents.  Other than the filing of the Certificate of Designation and as set forth on Schedule 2(e), the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any Governmental Authority or Self-Regulatory Organization or any other Person (as defined in Section 2(p)) in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents, in each case in accordance with the terms hereof or thereof, except for the filing of a Form D after the Closing, which will be timely filed.  All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the Closing Date, except for the filing of a Form D after the Closing, which will be timely filed.  The Company and its Subsidiaries are unaware of any facts or circumstances that might prevent the Company from obtaining or effecting any of the registration, application or filings pursuant to the preceding sentence.  The Company is not in violation of the rules, regulations or requirements that permit trading of the Common Stock on the OTC Bulletin Board (“OTCBB”) operated by FINRA that would reasonably lead to the suspension of the trading of the Common Stock on the OTCBB in the foreseeable future.

 

(f) No General Solicitation; Placement Agent’s Fees.  Neither the Company, nor any of its Subsidiaries or affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Shares.  The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for persons engaged by a Holder or such Holder’s investment advisor) relating to or arising out of the transactions contemplated hereby.  The Company shall pay, and hold each Holder harmless against, any liability, loss or expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in connection with any such claim.  Except as set forth in Schedule 2(f), neither the Company nor any of its Subsidiaries has engaged any placement agent or other agent in connection with the sale of the Shares.

 

(g) No Integrated Offering.  None of the Company, its Subsidiaries, any of their affiliates, or any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of any of the Shares under the 1933 Act, whether through integration with prior offerings or otherwise, or cause this offering of the Shares to require approval of stockholders of the Company for purposes of the 1933 Act or any applicable stockholder approval provisions, including, without limitation, under the rules, regulations or requirements that permit trading of the Common Stock on the OTCBB that would reasonably lead to the suspension of the trading of the Common Stock on the OTCBB.  None of the Company, its Subsidiaries, their affiliates and any Person acting on its or their behalf will take any action or steps referred to in the preceding sentence that would require registration of any of the Shares under the 1933 Act or cause the offering of the Shares to be integrated with other offerings for purposes of any such applicable stockholder approval provisions.

 

  

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(h) SEC Documents; Financial Statements.  Except as set forth in Schedule 2(h), during the two (2) years prior to the date hereof, the Company has timely (including within any additional time periods provided by Rule 12b-25 under the 34 Act (as defined below)) filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the date hereof or prior to the Closing Date, all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein, and the Company’s Schedule TO filed on June 30, 2010, all amendments thereto and all schedules and exhibits thereto and to any such amendments (including, without limitation, each Offer to Exchange filed therewith) being hereinafter referred to as the “SEC Documents”).  The Company has delivered to the Holders or their respective representatives true, correct and complete copies of the SEC Documents not available on the EDGAR system.  Except as set forth in Schedule 2(h) or as corrected by subsequent amendments thereto, as of their respective filing dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents. As of their respective filing dates, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  Except as set forth in Schedule 2(h), as of their respective filing dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto.  Such financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

 

(i) Absence of Certain Changes.  Except as set forth in the SEC Documents, since December 31, 2008, there has been no material adverse change and no material adverse development in the business, properties, operations, condition (financial or otherwise), results of operations or prospects of the Company or its Subsidiaries.  Except as disclosed in Schedule 2(i), since December 31, 2008, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, in excess of $100,000 outside of the ordinary course of business or (iii) had capital expenditures, individually or in the aggregate, in excess of $100,000.  Except as disclosed in Schedule 2(i), neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings against the Company or any of its Subsidiaries or any actual knowledge of any fact which would reasonably lead a creditor to do so.

 

(j) No Undisclosed Events, Liabilities, Developments or Circumstances.  No event, liability, development or circumstance has occurred or exists with respect to the Company or its Subsidiaries or their respective business, properties, prospects, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its shares of Common Stock and which has not been publicly disclosed or disclosed to the Holders.

 

  

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(k) Conduct of Business; Regulatory Permits.  Neither the Company nor any of its Subsidiaries is in violation of any term of or in default under any certificate of designation of any outstanding series of preferred stock of the Company, their respective certificates of incorporation, bylaws or equivalent documents.  Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct its business in violation of any of the foregoing, except for possible violations which could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  Without limiting the generality of the foregoing, the Company is not in violation of any of the rules, regulations or requirements that permit trading of the Common Stock on the OTCBB that would reasonably lead to the suspension of the trading of the Common Stock on the OTCBB in the foreseeable future.  The Company and its Subsidiaries possess all certificates, approvals, authorizations and permits required by the appropriate Governmental Authorities or Self-Regulatory Organizations necessary to conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would not have, individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, approval, authorization or permit.

 

(l) Foreign Corrupt Practices.  Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other Person acting on behalf of the Company or any of its Subsidiaries has, in the course of its actions for, or on behalf of, the Company or any of its Subsidiaries (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

 

(m) Sarbanes-Oxley Act.  Except as set forth on Schedule 2(m) or in the SEC Documents, the Company is in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the SEC thereunder that are effective as of the date hereof.

 

(n) Transactions With Affiliates.  Except as set forth on Schedule 2(n) or in the SEC Documents, none of the officers, directors or employees of the Company or any of its Subsidiaries is presently a party to any transaction with the Company or any of its Subsidiaries (other than for ordinary course services as employees, officers or directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any such officer, director or employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any such officer, director, or employee has a substantial interest or is an officer, director, trustee or partner.

 

  

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(o) Equity Capitalization.  Immediately prior to the Closing, the authorized capital stock of the Company consists of (x) 1,500,000,000 shares of Common Stock, 104,354,190 shares of which, as of the date hereof, are issued and outstanding, 375,455,324 shares of which are reserved for issuance pursuant to the Company’s employee incentive plans and other options and warrants outstanding (which amount includes all shares issuable upon exercise of any options and/or warrants granted or issued by the Company on or prior to the date hereof), and approximately 82,053,189 shares of which are reserved for issuance pursuant to the Company’s outstanding convertible promissory notes (which amount includes all shares issuable upon exercise of any convertible promissory notes issued by the Company on or prior to the date hereof and the maximum number of performance shares potentially issuable to the holders of such promissory notes; provided that such amount includes shares issuable upon conversion of interest on such convertible notes accrued through December 4, 2011), and (y) 1,000,000 shares of preferred stock, par value $.0001 per share, (1) 508,000 of which have been designated Series A Participating Preferred Stock and 85,835 of which are issued and outstanding, (2) 20,000 of which have been designated Series B Convertible Preferred Stock and none of which are issued and outstanding, (3) 6,000 of which have been designated Series B-1 Convertible Preferred Stock and none of which are issued and outstanding, (4) 10,000 of which have been designated Series C Convertible Preferred Stock and all of which are issued and outstanding, (5) 14,500 of which have been designated Series D Preferred and 11,150 of which are issued and outstanding, (6) 1,500 of which have been designated Series D-1 Preferred and 1,250 of which are issued and outstanding, (7) 12,000 of which have been designated Series E Preferred and none of which are issued and outstanding, (8) 1,400 of which have been designated Series E-1 Preferred and none of which are issued and outstanding, and (9) 20,000 of which have been designated Series E-2 Preferred and none of which are issued and outstanding.  All of such outstanding shares have been, or upon issuance will be, validly issued and are fully paid and nonassessable.  The rights, privileges and preferences of each of the series of preferred stock are as set forth in the Company’s Certificate of Incorporation (including, with respect to the Series E Preferred, Series E-1 Preferred and Series E-2 Preferred, the Certificate of Designation) and as provided by the Delaware General Corporation Law.  Immediately prior to the Closing, the outstanding shares of the Company’s capital stock are held of record and, to the knowledge of the Company, beneficially by the Persons and in the amounts set forth on Schedule 2(o); provided, that Schedule 2(o) does not identify all record or beneficial owners of less than 5% calculated on a fully diluted basis.  Except as set forth on Schedule 2(o): (i) no shares of the Company’s capital stock are subject to preemptive rights or any other similar rights or any Liens suffered or permitted by the Company; (ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares of capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares of capital stock of the Company or any of its Subsidiaries; (iii) there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound; (iv) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its securities under the 1933 Act; (v) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (vi) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Shares; (vii) the Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement; and (viii) the Company and its Subsidiaries have no liabilities or obligations required to be disclosed in the SEC Documents but not so disclosed in the SEC Documents.  The Company has furnished or made available to the Holders true, correct and complete copies of the Certificate of Incorporation and the Bylaws.

 

  

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(p) Indebtedness and Other Contracts.  Except as disclosed in Schedule 2(p), neither the Company nor any of its Subsidiaries (i) has any outstanding Indebtedness (as defined below), (ii) is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or instrument would reasonably be expected to result in a Material Adverse Effect, (iii) is in violation of any material term of or in default under any contract, agreement or instrument relating to any Indebtedness or (iv) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of the Company’s officers, has or is expected to have a Material Adverse Effect.  For purposes of this Agreement:  (x) “Indebtedness” of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services, including, without limitation, “capital leases” in accordance with United States generally accepted accounting principles (other than trade payables entered into in the ordinary course of business), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with generally accepted accounting principles, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above; (y) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto; and (z) “Person” means an individual, a limited liability company, a partnership, a limited partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.

 

(q) Absence of Litigation.  Except as set forth in the SEC Documents or on Schedule 2(q), there is no action, suit, proceeding, inquiry or investigation before or by any Governmental Authority or Self-Regulatory Organization pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries, the Series E Preferred, the Series E-1 Preferred, the Series E-2 Preferred, the Series C Preferred, the Series D Preferred, the Series D-1 Preferred, the Series A Preferred, the Common Stock or any of the Company’s or the Company’s Subsidiaries’ officers or directors, whether of a civil or criminal nature or otherwise.

 

  

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(r) Employee Relations.  Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any member of a union.  Except as set forth on Schedule 2(r), the Company and its Subsidiaries believe that their relations with their employees are good.  No executive officer (as defined in Rule 501(f) of the 1933 Act) of the Company or any of its Subsidiaries has notified the Company or any such Subsidiary that such officer intends to leave the Company or any such Subsidiary or otherwise terminate such officer’s employment with the Company or any such Subsidiary.  No executive officer of the Company or any of its Subsidiaries, to the knowledge of the Company or any of its Subsidiaries, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters.  The Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

(s) Title.  Except as set forth on Schedule 2(s), the Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free and clear of all Liens except such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and any of its Subsidiaries.  Any real property and facilities held under lease by the Company and any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries.

 

(t) Intellectual Property Rights.  Except as set forth on Schedule 2(t), the Company and its Subsidiaries own, control or license adequate valid and enforceable rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, software, documentation, original works of authorship, patents, patent rights, copyrights, inventions, improvements, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights and all applications and registrations therefor (“Intellectual Property Rights”) necessary or appropriate to conduct their respective businesses as now conducted or as proposed to be conducted after the Closing Date.  None of the Company’s Intellectual Property Rights has expired or terminated or has been abandoned, or is expected to expire or terminate or are expected to be abandoned within three years from the Closing Date.  The Company does not have any knowledge of any infringement by the Company or its Subsidiaries of Intellectual Property Rights of others.  There is no claim, action or proceeding being made or brought, or to the knowledge of the Company or any of its Subsidiaries, being threatened, against the Company or any of its Subsidiaries regarding its Intellectual Property Rights.  Except as set forth on Schedule 2(t), neither the Company nor any of its Subsidiaries is aware of any facts or circumstances which might give rise to any of the foregoing infringements or claims, actions or proceedings.  The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their Intellectual Property Rights.

 

  

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(u) Tax Status.  Except as set forth on Schedule 2(u), the Company and each of its Subsidiaries (i) has made or filed all foreign, U.S. federal, state and local income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, whether or not shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply.  There are no material Liens with respect to taxes upon the assets or properties of either the Company or its Subsidiaries, other than with respect to taxes not yet due and payable.  There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim.

 

(v) Internal Accounting and Disclosure Controls.  Except as set forth in the SEC Documents, the Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any difference.  Except as set forth in the SEC Documents, the Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15 under the 1934 Act) that are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC, including, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated to the Company’s management, including its principal executive officer or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure.  The Company has implemented a plan to address the material weaknesses in its internal controls over financial reporting identified by the Company’s accountants and has taken such steps as are commercially reasonable to address such material weaknesses.

 

(w) Transfer Taxes.  On the Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the sale and transfer of the Shares to be sold to the Holders hereunder will be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.

 

(x) Broker Dealer Entities.

 

(i) The Company and each Subsidiary of the Company (the “Broker Dealer Entities”) that is required to be registered as a broker or a dealer with the SEC, the securities commission or similar authority of any domestic or foreign governmental or regulatory authority, department, board, instrumentality, agency, court, tribunal arbitrator, commission or other entity (each a “Governmental Authority”) is duly registered as such (and is listed on Schedule 2(x)(i) with its respective jurisdictions of registration and Self-Regulatory Organization memberships), and such registrations are in full force and effect, and each Broker Dealer Entity is a member in good standing with all applicable Self-Regulatory Organizations, and each Broker Dealer Entity’s Uniform Application for Broker Dealer Registration on Form BD, as amended as of the date hereof, and each of its other registrations, forms and other reports filed with any Governmental Authority or Self-Regulatory Organization in connection with its activities as a broker or a dealer and is in compliance in all material respects with the applicable requirements of the 1934 Act and other applicable law and rules and does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and no Broker Dealer Entity has exceeded in any material way with respect to its business, the business activities enumerated in any Self-Regulatory Organization membership agreements or other limitations imposed in connection with its registrations, forms (including Form BDs) and other reports filed with any Governmental Authority or Self-Regulatory Organization.

 

  

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(ii) Since October 4, 2007, none of the Broker Dealer Entities or any of their respective “associated persons of a broker or dealer” (as defined in the 1934 Act) has been, or currently is, ineligible or disqualified pursuant to Section 15, Section 15B or Section 15C of the 1934 Act to serve as a broker or dealer or as an “associated person of a broker or dealer” (as defined in the 1934 Act), nor is there any legal, administrative, arbitral, or other proceedings, suits, actions, claims, investigations, complaints or hearings by or before a Governmental Authority or Self-Regulatory Organization pending, or threatened in writing, by any Governmental Authority or Self-Regulatory Organization, which would reasonably be expected to become the basis for any such ineligibility or disqualification, nor is there any reasonable basis for a proceeding or investigation, whether formal or informal, preliminary or otherwise, that is reasonably likely to result in any such ineligibility or disqualification.

 

(iii) Each of the Broker-Dealer Entities is in compliance in all material respects with Regulation T of the Board of Governors of the Federal Reserve System and the margin rules or similar rules of a Self-Regulatory Organization of which such Broker-Dealer Entity is a member, including the rules governing the extension or arrangement of credit to customers, and none of the Company or its Subsidiaries other than the Broker Dealer Entities has or does extend or arrange credit for any customer within the meaning of Regulation U or Regulation X of the Board of Governors of the Federal Reserve System.

 

(iv) Each of the Broker Dealer Entities is in compliance with all applicable regulatory net capital requirements.

 

(v) To the Company’s knowledge, no facts or circumstances exist that would cause any Self-Regulatory Organization or any other Governmental Authority to revoke or restrict the Broker Dealer Entities’ licenses, permits, approvals, authorizations, consents, registrations, certificates or orders to operate in any jurisdiction as a broker or a dealer after the Closing.

 

(vi) Each of the Broker Dealer Entities is in compliance with all applicable provisions of Regulation ATS under the 1934 Act.

 

(y) Investment Company Status.  The Company is not, and upon consummation of the sale of the Shares, and for so long as any Holder holds any Shares, will not be, an “investment company,” a company controlled by an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended.

 

  

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(z) Stock Option Plans. Each stock option granted by the Company was granted (i) in accordance with the terms of the applicable Company stock option plan (if any) and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date such stock option would be considered granted under generally accepted accounting principles and applicable law. No stock option granted under the Company’s stock option plan has been backdated.  The Company has not knowingly granted, and there is no and has been no Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.

 

(aa) Registration Rights and Voting Rights.  Except as provided in the Registration Rights Agreement and as set forth on Schedule 2(aa)(i), the Company is not under any obligation to register under the Securities Act any of its currently outstanding securities or any securities issuable upon exercise or conversion of its currently outstanding securities. To the Company’s knowledge, except as contemplated in the Registration Rights Agreement, the Series E Stockholders’ Agreement and as set forth on Schedule 2(aa)(ii), no stockholder of the Company has entered into any agreements with respect to the voting of capital shares of the Company.

 

(bb) Disclosure.  The Company understands and confirms that the Holders will rely on the foregoing representations in effecting transactions in securities of the Company.  To the Company’s knowledge, all disclosures regarding the Company, or any of its Subsidiaries, their business and the transactions contemplated hereby set forth in this Agreement and the other Transaction Documents, including the Schedules hereto and thereto are true and correct and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.  Each press release issued by the Company or any of its Subsidiaries during the twelve (12) months preceding the date of this Agreement did not at the time of release contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  The Company acknowledges and agrees that none of the Holders makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.

 

3. REPRESENTATIONS AND WARRANTIES OF THE HOLDERS.  

 

Each of the Holders, severally but not jointly, makes the following representations and warranties:

 

(a) Validity; Enforcement.  This Agreement has been duly and validly authorized, executed and delivered on behalf of such Holder and shall constitute the legal, valid and binding obligations of such Holder enforceable against such Holder in accordance with its terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

 

  

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(b) No Public Sale or Distribution.  Such Holder is acquiring the Shares to be acquired by him or it hereunder for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the 1933 Act, and such Holder does not have a present arrangement to effect any distribution of such Shares to or through any person or entity; provided, however, that by making the representations herein, such Holder does not agree to hold any of such Shares for any minimum or other specific term and reserves the right to dispose of such Shares at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act.  Such Holder is acquiring the Shares to be acquired by him or it hereunder in the ordinary course of its business.  Such Holder does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of such Shares.

 

(c) Accredited Investor Status.  Such Holder is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.

 

(d) Reliance on Exemptions.  Such Holder understands that the Shares to be acquired by him or it hereunder are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Holder’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Holder set forth herein in order to determine the availability of such exemptions and the eligibility of such Holder to acquire such Shares.

 

(e) Information.  Such Holder and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Shares to be acquired by such Holder hereunder which have been requested by such Holder.  Such Holder and its advisors, if any, have been afforded the opportunity to ask questions of the Company.  Neither such inquiries nor any other due diligence investigations conducted by such Holder or its advisors, if any, or its representatives shall modify, amend or affect such Holder’s right to rely on the Company’s representations and warranties contained herein.  Such Holder understands that its investment in the Shares to be acquired by him or it hereunder involves a high degree of risk and is able to afford a complete loss of such investment.  Such Holder has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Shares to be acquired by him or it hereunder.

 

(f) Transfer or Resale.  Such Holder understands that: (i) the Shares to be acquired by him or it hereunder have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Holder shall have delivered to the Company an opinion of counsel, in a form reasonably satisfactory to the Company, to the effect that such Shares to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Holder provides the Company with reasonable assurance that such Shares can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of such Shares made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of such Shares under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other Person is under any obligation to register such Shares under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.  Notwithstanding the foregoing, the Shares to be acquired by such Holder hereunder may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by such Shares and such pledge of such Shares shall not be deemed to be a transfer, sale or assignment of such Shares hereunder, and if such Holder effects a pledge of such Shares it shall not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document, including, without limitation, this Section 3(f).

 

  

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(g) General Solicitation.  Such Holder is not acquiring the Shares to be acquired by him or it hereunder as a result of any advertisement, article, notice or other communication regarding such Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or, to such Holder’s knowledge, any other general solicitation or general advertisement.

 

4. COVENANTS.

 

(a) Reporting Status.  For so long as any of the Major Holders owns any Shares, the Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would otherwise permit such termination.

 

(b) Transfer Restrictions.

 

(i) The Shares may only be disposed of in compliance with state and federal securities laws.  In connection with any transfer of Shares by any Holder other than pursuant to an effective registration statement or Rule 144, to the Company or to an affiliate of such Holder, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Shares under the 1933 Act.  As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement.

 

(ii) Each of the Holders agrees to the imprinting, so long as is required by this Section 4(b), of a legend on any of the Shares in the following form:

 

[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

  

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(c) Removal of Legend. Certificates evidencing the Shares shall not contain any legend (including the legend set forth in Section 4(b) hereof): (i) while a registration statement covering the resale of such security is effective under the 1933 Act, or (ii) subject to the opinion requirement of the immediately succeeding sentence, if such Shares are eligible for sale under Rule 144, or (iii) if such legend is not required under applicable requirements of the 1933 Act (including judicial interpretations and pronouncements issued by the staff of the SEC).  The Company agrees that at such time as such legend is no longer required under this Section 4(c)), it will, no later than three trading days following the delivery by a Holder to the Company or the Company’s transfer agent of a certificate representing the Shares, as applicable, issued with a restrictive legend along with a reasonably acceptable legal opinion and broker representation letter, deliver or cause to be delivered to such Holder a certificate representing such shares that is free from all restrictive and other legends.  The Company may not make any notation on its records or give instructions to the Company’s transfer agent that enlarge the restrictions on transfer set forth in this Section.

 

(d) Compliance with 1933 Act.  Each Holder agrees that such Holder will only sell any Shares pursuant to either the registration requirements of the 1933 Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Shares are sold pursuant to a registration statement, they will be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates representing Shares as set forth in Section 4(c) is predicated upon the Company's reliance upon this understanding.

 

(e) Public Announcements.  The Company and the Holders shall consult with each other before issuing, and provide each other the opportunity to review and comment upon, any press release or other public statement with respect to the transactions contemplated hereby, and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable law or any applicable stock exchange.

 

(f) Closing Documents.  On or prior to fourteen (14) calendar days after the Closing Date, the Company agrees to deliver, or cause to be delivered, to the Holders a complete closing set of the Transaction Documents, the Shares and any other document required to be delivered to any party pursuant to Section 5 or 6 hereof or otherwise.

 

5. CONDITIONS TO THE COMPANY’S OBLIGATION TO EXCHANGE.

 

The obligation of the Company hereunder to exchange the Series D/D-1 Preferred held by each Holder for the applicable Acquired Securities at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions by such Holder, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing the Holder with prior written notice thereof:

 

(a) Such Holder shall have executed each of this Agreement and the Series E Stockholders’ Agreement and delivered the same to the Company.

 

(b) Such Holder shall have delivered to the Company any and all certificates evidencing its Series D/D-1 Preferred and executed such stock powers as are necessary or appropriate in the Company’s reasonable discretion to transfer all rights in and to the Series D/D-1 Preferred.

 

  

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(c) The Buyers shall have executed and delivered to the Company each of the Purchase Agreement, the Registration Rights Agreement and the Series E Stockholders’ Agreement, and the Initial Closing (as defined in the Purchase Agreement) shall have occurred concurrently with the Closing.

 

(d) The Company and Oak, as the successor to Beacon Capital Strategies, Inc., shall have entered into the Amendment No. 1 to Agreement with Respect to Conversion in the form attached hereto as Exhibit E (the “Determination Agreement Amendment”).

 

(e) The Company and each of Michael O. Sanderson (“Sanderson”) and George O’Krepkie (“O’Krepkie”) shall have entered into amendments to their respective employment agreements in the form attached hereto as Exhibit F (the “Sanderson Amendment”) and Exhibit G (the “O’Krepkie Amendment”), respectively.

 

(f) The representations and warranties of such Holder shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date which shall be true and correct as of such specified date), and such Holder shall have performed, satisfied and complied with in all material respects the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Holder at or prior to the Closing Date.

 

6. CONDITIONS TO EACH HOLDER’S OBLIGATION TO EXCHANGE AT THE CLOSING.

 

The obligation of each of the Holders hereunder to exchange the Series D/D-1 Preferred at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Holders’ benefit and may be waived by the Holders collectively at any time in their discretion by providing the Company with prior written notice thereof from each of the Holders:

 

(a) The Company shall have filed the Certificate of Designation with the Secretary of State of Delaware, which shall continue to be in full force and effect as of the Closing.

 

(b) The Company shall have executed and delivered to each of the Holders copies of one or more certificates representing the shares of Series E Preferred or Series E-1 Preferred being acquired by such Holder at the Closing pursuant to this Agreement.

 

(c) The Company and the Buyers shall have executed and delivered the Purchase Agreement, and the Initial Closing (as defined in the Purchase Agreement) shall have occurred concurrently with the Closing.

 

(d) Each Holder shall have received all the documentation required to consummate the transaction contemplated hereby and other documents and certificates as such Holder may reasonably require, each duly executed and in form and substance reasonably satisfactory to such Holder, including:

 

  

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(i) a certificate signed on behalf of the Company by the Secretary of the Company, dated as of the Closing Date, certifying (A) the resolutions adopted by the Board of Directors or a duly authorized committee thereof approving the transactions contemplated by the Transaction Documents and the issuance of the Shares, (B) the current versions of the Certificate of Incorporation, as amended, and Bylaws, as amended, of the Company and (C) the signatures and authority of the individuals signing this Agreement and related documents on behalf of the Company; and

 

(ii) a certificate signed on behalf of the Company by the Secretary of the Company, dated as of the Closing Date, certifying the incorporation and good standing of the Company and each of its Subsidiaries in such entity’s jurisdiction of formation, as evidenced by and attaching true and complete copies of certificates of the secretary of state (or comparable office) of each such jurisdiction as of a date within five (5) days prior to the Closing Date.

 

(e) The Company, the Buyers, and the Holders (and any other parties identified therein) shall have executed and delivered the Series E Stockholders’ Agreement and the Registration Rights Agreement.

 

(f) The representations and warranties of the Company shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date which shall be true and correct as of such specified date) and the Company shall have performed, satisfied and complied with in all respects the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the Closing Date.  Each of the Holders shall have received a certificate, executed by the Chief Financial Officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Holders.

 

(g) The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Shares.

 

(h) The Company and Oak shall have entered into the Determination Agreement Amendment.

 

(i) The Company shall have entered into the Sanderson Amendment and the O’Krepkie Amendment with Sanderson and O’Krepkie, respectively.

 

(j) The Company shall have delivered to each of the Holders such other documents relating to the transactions contemplated by this Agreement as each of the Holders or its respective counsel may reasonably request.

 

7. MISCELLANEOUS.

 

  

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(a) Governing Law; Jurisdiction; Jury Trial.  All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(b) Counterparts.  This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature or a signature transmitted by email shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile or emailed signature.

 

(c) Headings.  The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

 

(d) Severability.  If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.  The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

(e) Entire Agreement; Amendments.  This Agreement, the Certificate of Designation and all other Transaction Documents supersede all other prior oral or written agreements between the Holders, the Company, their affiliates and Persons acting on their behalf with respect to the matters discussed herein, and this Agreement, the other Transaction Documents and the instruments referenced herein and therein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Holder makes any representation, warranty, covenant or undertaking with respect to such matters.  No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Major Holders and any of their respective successors or assigns.  No provision hereof may be waived other than by an instrument in writing signed by the Company and the Major Holders. Notwithstanding the foregoing, no amendment to this Agreement shall disproportionately and adversely affect the rights of any Holder relative to the rights of all of the Holders without such affected Holder’s consent.

 

  

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(f) Notices.  Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with an overnight courier service prior to such courier’s deadline for next Business Day delivery to the recipient (all delivery fees and charges prepaid), in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:

 

If to the Company:

 

Bonds.com Group, Inc.

529 5th Avenue, 8th Floor

New York, New York 10017

Fax No: (212) 946-3999

Attention: President

 

 

with a copy (for informational purposes only) to:

 

Hill Ward Henderson

3700 Bank of America Plaza

101 East Kennedy Boulevard

Tampa, Florida 33602

Telephone: (813) 227-8484

Facsimile:  (813) 221-2900

Attention:  Mark A. Danzi, Esq.

 

If to the Holders, as set forth on Schedule A hereto;

 

or to such other address, facsimile number and/or email address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change.  Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

 

  

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(g) Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.  Neither the Company nor any Holder shall assign this Agreement or any rights or obligations hereunder without the prior written consent of all of the Holders; provided, that each of the Holders may assign some or all of its rights and obligations hereunder to an affiliate of such Holder, without the consent of the Company or any other Holder, in which event such assignee shall be deemed to be such Holder hereunder with respect to such assigned rights and obligations; provided that as a condition to any such assignment the assignee shall agree to be bound by the terms of this Agreement as a Holder hereunder and such assignor shall not be relieved of liability for the performance of its obligations hereunder.

 

(h) No Third Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

(i) Expenses.  Except as otherwise provided in the Purchase Agreement with respect to certain of the Buyers of Series E-2 Preferred, each of the parties hereto shall bear its own out-of-pocket expenses incurred with respect to the Series D/E Financing.

 

(j) Survival of Representations and Warranties and Covenants.  The representations and warranties, covenants and agreements of the Company and each of the Holders contained in this Agreement shall survive the Closing.  The Company shall not have any liability pursuant to Section 7(l)(i) unless a claim is made hereunder prior to the eighteen month anniversary of the date of this Agreement, in which case such representation and warranty or covenant, as the case may be, shall survive as to such claim until such claim has been finally resolved.

 

(k) Further Assurances.  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

(l) Indemnification.

 

(i) Subject to Section 7(j) and the other provisions of this Section 7(l), in consideration of the execution and delivery by each of the Holders of the Transaction Documents and acquiring the Shares thereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless the Holders and each other holder of the Shares and all of their stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in this Agreement or any other certificate, instrument or document contemplated hereby (but not any other Transaction Document), (b) any breach of any covenant, agreement or obligation of the Company contained in this Agreement or the Series E Stockholders’ Agreement or any other certificate, instrument or document contemplated hereby or thereby (but not any other Transaction Document), or (c) any cause of action, suit or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company) and arising out of or resulting from (i) the execution, delivery, performance or enforcement of this Agreement or any other certificate, instrument or document contemplated hereby (but not any other Transaction Document), or (ii) the status of a Holder or holder of the Shares as an investor in the Company pursuant to the transactions contemplated by this Agreement.  Notwithstanding anything to the contrary contained in this Agreement: (A) the maximum aggregate amount of Indemnified Liabilities that may be recovered from the Company by an Indemnitee pursuant to this Section 7(l) shall be equal to $12,400,000 (less the amount of any and all claims indemnified by the Company (x) under a Holder’s respective unit purchase agreement between the Company and such Holder and (y) under that certain Exchange Agreement, dated as of February 2, 2011, among the Company and the holders identified therein); and (B) the Company shall not be liable to the Indemnitees for any claim for indemnification pursuant to this Section 7(l) unless and until the aggregate amount of Indemnified Liabilities that may be recovered from the Company equals or exceeds $100,000 (the “Basket Amount”), in which case the Company shall be liable only for the Indemnified Liabilities pursuant to this Section 7(l) in excess of the Basket Amount. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.

 

  

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(ii) The Basket Amount, maximum liability and any Indemnified Liabilities pursuant to this Section 7(l) shall be calculated net of (A) payments actually recovered as of the date of calculation by an Indemnitee under any insurance policy with respect to such Indemnified Liabilities (net of collection costs, increases in premiums and retro-premiums) and (B) any actual recovery as of the date of calculation by the Indemnitee from any other Person with respect to such Indemnified Liabilities (net of collection costs); provided, however, that no Indemnitee shall have any obligation to mitigate its losses with respect to any Indemnified Liability.

 

(iii) In the event the conclusion, settlement or determination of any action, suit, proceeding, arbitration or dispute between the Company and Duncan-Williams, Inc. related to the matters described on Schedule 2(t) results in the Company issuing shares of capital stock to Duncan-Williams, Inc. or any of its Affiliates, the Company shall issue (and take such steps as are necessary in order to issue) to each of the Holders such number of shares of capital stock and rights to acquire shares of capital stock of the same type and with the same terms as are then held by such Holder so that such Holder’s fully-diluted ownership percentage as of the time immediately prior to the issuance to Duncan Williams, Inc. (the “Measure Time”) is not decreased by such issuance; provided that the relative amount of shares of capital stock and rights to acquire shares of capital stock that are issued to such Holder as a result of the foregoing will be in the same relative amounts as each class or series of capital stock and each right to purchase shares of capital stock held by such Holder as of the Measure Time.  For avoidance of doubt, (A) if such Holder does not own either shares of capital stock or rights to purchase shares of capital stock as of the Measure Time, then none of such securities would be issued pursuant to the foregoing provision, and (B) if, as of the Measure Time, such Holder holds rights to purchase capital stock with different terms, then each such right shall be considered a different right to purchase capital stock and the rights to be issued pursuant to this provision shall be issued in the same relative amounts as such rights held by such Holder as of the Measure Time.  Notwithstanding the foregoing, in no event will shares of capital stock or rights to purchase shares of capital stock be issued to such Holder pursuant to the foregoing provisions to the extent any dilution to such Holder is eliminated through other anti-dilution protection rights (including any reduction of the exercise price of any rights to purchase capital stock).

 

  

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(iv) The parties hereto hereby acknowledge and agree that for purposes of this Section 7(l) in respect of the Company’s representations and warranties set forth in Section 2 (the “Company Warranties”), any and all “Material Adverse Effect,” “material adverse effect,” “materiality” and similar exceptions and qualifiers and any similar thresholds set forth in such Company Warranties shall be disregarded for purposes of determining whether any such Company Warranty has been breached and for purposes of determining the amount of Indemnified Liabilities resulting therefrom.

 

(m) No Strict Construction; Definition of Business Day.  The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.  As used herein, the term “Business Day” shall mean any day other than (a) a Saturday or Sunday and (b) any day on which banks are required or permitted to be closed in New York, New York.

 

(n) Definition of Knowledge and Major Holders.  “Knowledge,” including the phrase “to the Company’s knowledge,” shall mean the knowledge after reasonable investigation of the officers and senior employees of the Company.  “Major Holders” shall mean the Holders that are exchanging at least 1,250 shares of Series D Preferred or Series D-1 Preferred.

 

(o) Remedies.  The Holders and each holder of the Shares shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law.  Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law.  Furthermore, the Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under the Transaction Documents, any remedy at law may prove to be inadequate relief to the Holders.  The Company therefore agrees that the Holders shall be entitled to seek temporary and permanent injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or other security.

 

[Signature Pages Follow]

 

  

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IN WITNESS WHEREOF, the Holders and the Company have caused this Agreement to be duly executed as of the date first written above.

 

	 	

COMPANY:

	 
	 	 	 	 	 
	 	

BONDS.COM GROUP, INC.

	 
	 	 	 	 	 
	 	By:	/s/ John M. Ryan	 
	 	 	Name:	John M. Ryan	 
	 	 	
Title:

	Chief Financial Officer	 

 

 

	 	

HOLDERS:

	 
	 	 	 	 	 
	 	

UBS AMERICAS INC.

	 
	 	 	 	 	 
	 	By:	/s/ Michael Schenick	 
	 	 	Name:	Michael Schenick	 
	 	 	
Title:

	Managing Director	 

 

 

	 	 	 	 	 
	 	By:	/s/ Matthew Alexander	 
	 	 	Name:	Matthew Alexander	 
	 	 	
Title:

	Executive Director	 

 

 

	 	

BONDS MX, LLC

	 
	 	 	 	 	 
	 	 	 	 	 
	 	By:	/s/ Hugh Regan	 
	 	 	Name:	Hugh Regan	 
	 	 	
Title:

	Manager	 
	 	 	 	 	 
	 	 	/s/ Robert Jones	 
	 	 	ROBERT JONES	 

 

 

23ex-10_4.htm

Bonds.com Group, Inc. 8-K

Exhibit 10.4

 

SERIES E STOCKHOLDERS’ AGREEMENT

 

This SERIES E STOCKHOLDERS’ AGREEMENT (this “Agreement”) is entered into as of December 5, 2011, by and among Bonds.com Group, Inc., a Delaware corporation (the “Company”), the stockholders set forth on Schedule A hereto and each other stockholder who shall, subsequent to the date hereof, join in and become a party to this Agreement (each a “Stockholder” and together with the stockholders set forth on Schedule A, the “Stockholders”).

 

WHEREAS:

 

A.           Daher Bonds Investment Company, a Cayman Islands company (“DBIC”), Mida Holdings, a Cayman Islands company, GFINet Inc., a Delaware corporation (“GFI”), Oak Investment Partners XII, Limited Partnership, a Delaware limited partnership (“Oak”) and certain other investors (each a “Buyer” and collectively, the “Buyers”) and the Company are parties to that certain Unit Purchase Agreement, dated as of the date hereof (the “Purchase Agreement”), pursuant to which such Buyers are purchasing certain Units (as defined therein) of the Company (the “Series E-2 Transaction”).

 

B.           The Company and certain of the Stockholders are parties to that certain Exchange Agreement, dated as of the date hereof (the “Exchange Agreement”), pursuant to which such Stockholders are exchanging their shares of the Company’s Series D Convertible Preferred Stock, par value $0.0001 per share (the “Series D Preferred Stock”), and Series D-1 Convertible Preferred Stock, par value $0.0001 per share (the “Series D-1 Preferred Stock”), as the case may be, for shares of the Company’s Series E Convertible Preferred Stock, par value $0.0001 per share (the “Series E Preferred Stock”), and Series E-1 Convertible Preferred Stock, par value $0.0001 per share (the “Series E-1 Preferred Stock”), respectively (the “Exchange Transaction” and, collectively with the Series E-2 Transaction, the “Transactions”).

 

C.           The Company and certain of the Stockholders are parties to that certain Series D Stockholders’ Agreement dated as of February 2, 2011, as amended by Amendment No. 1 to the Series D Stockholders’ Agreement dated as of June 23, 2011 (as so amended, the “Prior Agreement”).

 

D.           Contemporaneously with (or prior to) the execution hereof, (i) each share of the Company’s Series D Preferred Stock shall be exchanged for the number of shares of the Company’s Series E Preferred Stock, and (ii) each share of the Company’s Series D-1 Preferred Stock shall be exchanged for the number of shares of the Company’s Series E-1 Preferred Stock, as set forth in, and pursuant to, the Exchange Agreement.

 

E.           This Agreement supersedes and replaces in its entirety the Prior Agreement.

 

F.           The execution of this Agreement by the Company and the Stockholders is a condition precedent to the consummation of each of the Transactions.

 

G.           In consideration of the benefits to be derived by the Company and the Stockholders from the consummation of the Transactions, the Company and the Stockholders desire to enter into this Agreement.

 

  

  

  

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein, the parties hereto agree as follows:

 

1. Definitions.  Capitalized terms used by not defined herein shall have the meanings set forth in the Purchase Agreement.  As used in this Agreement, the terms set forth below shall have the following meanings:

 

(a) “Board” means the Company’s board of directors.

 

(b) “Business Day” means a day on which the New York Stock Exchange is open for business.

 

(c) “Change of Control” means (i) a consolidation, merger, reorganization or other form of acquisition of or by the Company in which the Company’s stockholders immediately prior to the transaction retain less than 50% of the voting power of, or economic interest in, the surviving or resulting entity (or its parent), (ii) a sale of more than a majority of the Company’s assets, (iii) the acquisition by any person or group of persons of more than 50% of the Company’s outstanding voting securities or (iv) during any period of twenty-four (24) consecutive months, Continuing Directors (as defined below) cease for any reason to constitute a majority of the directors of the Board or the board of directors of the surviving or resulting entity (or its parent).

 

(d) “Common Securities” means shares of Common Stock or Warrants to purchase shares of Common Stock.

 

(e) “Common Stock” means the common stock, par value $0.0001 per share, of the Company.

 

(f) “Continuing Director” means, as of any determination date, any member of the Board or the board of directors of the surviving or resulting entity (or its parent) who: (i) was a member of the Board as of February 2, 2011, (ii) was a member of the Board on the date that was twenty-four (24) months prior to such determination date, (iii) was a Series E Designee, GFI Designee, DBIC Designee or Oak Designee, (iv) was nominated with the approval of a majority of the Continuing Directors who were members of the Board at the time of such nomination or (v) was elected with the approval of holders of at least a majority of the Series E Preferred Stock and Series E-2 Preferred Stock, voting together as a separate class.

 

(g) “Derivatives Transaction” means the sale, purchase or grant of any contract to purchase, contract to sell, option, forward, swap, warrant, scrip, right to subscribe to, call or commitment of any character whatsoever or in any combination, relating to, or securities or rights convertible into, or exercisable or exchangeable for, or the value of which is dependent (in whole or in part) on the value of, any shares of capital stock of the Company, whether such transaction may be settled in cash, securities or otherwise.

 

(h) “Market Sale” means any sale, transfer or other disposition of Securities in (i) a “brokers’ transaction” (as defined in Rule 144 but excluding clause (4) of such definition for purposes hereof), or (ii) a Public Sale using a broker and where clauses (1) and (3) of such definition of “brokers’ transaction” would be satisfied notwithstanding that such transaction constitutes a Public Sale, in each case, occurring on an exchange or other recognized market (the “Market”) where the average daily volume of the Company’s stock over the four week period preceding such transfer or other disposition has been at least 50,000 shares; provided, however, that any sale, transfer or other disposition of Securities made pursuant to Rule 144 shall not be deemed to be a “Market Sale.”

 

  

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(i) “Permitted Transferee” means:

 

(i) as to any Stockholder who is a natural person, (A) the successors in interest to such Stockholder, in the case of a transfer upon the death of such Stockholder, provided that such successors in interest would be a Permitted Transferee under clauses (i)(B) or (i)(D) of this definition, (B) such Stockholder’s spouse, parents and descendants (whether by blood or adoption, and including stepchildren) and the spouses of such persons, (C) such Stockholder, with respect to the disposition of the community property interest of such Stockholder’s spouse in all or any part of the Securities upon the death of such spouse, and any transfer occasioned by the incompetence of such Stockholder and (D) in the case of a transfer during such Stockholder’s lifetime, any Person in which no Person has any interest (directly or indirectly) except for any of such Stockholder, such Stockholder’s spouse, parents and descendants (whether by blood or adoption, and including stepchildren) and the spouses of such persons; provided, however, that in respect of any transfer by any Stockholder during such Stockholder’s lifetime pursuant to clause (B) or (D), such Stockholder shall retain voting power over all of the outstanding Shares being transferred;

 

(ii) as to any Stockholder that is a trust, all the beneficiaries of which are natural persons, such beneficiaries or the grantor of the trust; provided, however, that if such trust is a Permitted Transferee under clause (i)(A) or (i)(D) of this definition, each such beneficiary or grantor of such trust is a Person who would be permitted to have an interest in such trust under such clause (i)(A) or (i)(D);

 

(iii) as to any Stockholder that is a limited partnership or limited liability company, (A) any limited or general partner, member, officer, employee or affiliate of such Stockholder or (B) any affiliate of any limited or general partner or member of such Stockholder; and

 

(iv) as to any Stockholder that is a corporation, all affiliates of such Stockholder.

 

(j) “Person” means an individual, corporation, partnership, limited partnership, trust, association or other legal entity.

 

(k) “Preferred Securities” means the Series A Securities, the Series C Preferred Stock and the shares of Common Stock issued to a Stockholder upon the conversion of shares of Series C Preferred Stock, the Series E Securities and the shares of Common Stock issued to a Stockholder upon the conversion of shares of Series C Preferred Stock, Series E Preferred Stock, Series E-1 Preferred Stock or Series E-2 Preferred Stock.

 

(l) “Private Sale” means any sale, transfer or other disposition of Securities by a Selling Stockholder that is not a Market Sale or a Public Sale.

 

(m) “Public Sale” means (i) a primary sale of any equity securities of the Company by the Company pursuant to a registration statement in which one or more Stockholders participates as a selling stockholder, or (ii) a secondary sale of equity securities of the Company by Stockholders pursuant to a registration statement filed either by the Company for the benefit of such Stockholders or by such Stockholders.  For the avoidance of doubt, a Public Sale may also be a Market Sale if it satisfies clause (ii) of the definition thereof.

 

  

3

  

 

(n) “Required Stockholders” means the holder(s) of at least 66.6% of the Series E Securities.

 

(o) “Rule 144” means Rule 144 (or any successor provisions) promulgated under the Securities Act of 1933, as amended.

 

(p) “Sales” means Private Sales, Public Sales and Market Sales, and includes Derivative Transactions.

 

(q) “Securities” means Shares and Warrants.

 

(r) “Series A Preferred Stock” means the Series A Participating Preferred Stock, par value $0.0001 per share, of the Company.

 

(s) “Series A Securities” means shares of Series A Preferred Stock and Warrants to purchase shares of Series A Preferred Stock.

 

(t) “Series C Certificate of Designation” means that certain Certificate of Designation of Series C Convertible Preferred Stock of the Company adopted by the Company and filed with the Delaware Secretary of State prior to the execution hereof.

 

(u) “Series C Preferred Stock” means the Series C Convertible Preferred Stock, par value $0.0001 per share, of the Company.

 

(v) “Series E Certificate of Designation” means that certain Certificate of Designation of Series E Convertible Preferred Stock, Series E-1 Convertible Preferred Stock and Series E-2 Convertible Preferred Stock of the Company adopted by the Company and filed with the Delaware Secretary of State prior to the execution hereof.

 

(w) “Series E Preferred Stock” means the Series E Convertible Preferred Stock, par value $0.0001 per share, of the Company.

 

(x) “Series E Securities” means shares of Series E Preferred Stock, Series E-1 Preferred Stock and Series E-2 Preferred Stock and Warrants to purchase shares of Series E Preferred Stock, Series E-1 Preferred Stock or Series E-2 Preferred Stock.

 

(y) “Series E Stockholder” means each holder of Series E Securities.

 

(z) “Series E-1 Preferred Stock” means the Series E-1 Convertible Preferred Stock, par value $0.0001 per share, of the Company.

 

(aa) “Series E-2 Preferred Stock” means the Series E-2 Convertible Preferred Stock, par value $0.0001 per share, of the Company

 

  

4

  

 

(bb) “Shares” means the shares of Series E Preferred Stock, Series E-1 Preferred Stock, Series E-2 Preferred Stock, Series C Preferred Stock, Series A Preferred Stock and Common Stock.

 

(cc) “Warrants” means warrants and other rights issued by the Company to purchase shares of Common Stock, Series A Preferred Stock, Series E Preferred Stock, Series E-1 Preferred Stock or Series E-2 Preferred Stock, as the case may be.

 

2. Tag-Along Rights With Respect to Sales of Series E Preferred Stock, Series E-1 Preferred Stock and Series E-2 Preferred Stock.

 

(a) Tag-Along Rights.

 

(i) If, at any time after the date of this Agreement, a Series E Stockholder desires to sell or otherwise transfer, directly or indirectly, through a Derivatives Transaction or otherwise, in a Private Sale 10% or more of the Series E Securities owned by such Series E Stockholder as of the date of this Agreement (or, if the Series E Stockholder has joined this Agreement after the date hereof, as of the date of such joinder) (a “Selling Stockholder”), then each of the Series E Stockholders shall have the right to participate in the proposed Private Sale by such Selling Stockholder as provided in this Section 2(a).  The Selling Stockholder shall give written notice (the “Series E Tag-Along Notice”) to each of the Series E Stockholders of each proposed Sale of such Series E Securities at least ten (10) days prior to the proposed effective date of such Private Sale.  The Tag-Along Notice shall set forth the terms and conditions of the Private Sale, including the number of Series E Securities that the Selling Stockholder proposes to sell (the “Offered Series E Securities”), the proposed timing of such Private Sale, the consideration to be paid for the Offered Series E Securities, the identity of the proposed purchaser, and all other material terms and conditions of such Private Sale, including the proposed form of written agreement, if any.  Each of the other Series E Stockholders shall have the right to sell to such transferee(s) a portion of its Series E Securities equal to the product of (A) the number of Series E Securities then held by such Series E Stockholder and (B) a fraction (1) the numerator of which shall be the number of Offered Series E Securities, and (2) the denominator of which shall be the total number of Series E Securities held as of the date of this Agreement by the Series E Stockholders (including the Selling Stockholder) participating in such Sale (as adjusted for stock splits, combinations and the like and as reduced by any Sales previously made by such Series E Stockholder(s) (including any that are Selling Stockholder(s)) subsequent to the date of this Agreement).

 

(ii) Each Series E Stockholder that desires to exercise the tag-along rights to participate in the proposed Private Sale as provided in this Section 2(a) (a “Series E Tagging Stockholder” and, collectively, the “Series E Tagging Stockholders”) must exercise such tag-along rights within ten (10) days after its receipt of the Series E Tag-Along Notice, by delivery of a written notice to the Selling Stockholder, with a copy to the Company, indicating such Series E Tagging Stockholder’s desire to exercise its rights and specifying the number of Series E Securities (the “Tagging Series E Securities”) it wishes to sell.  The Tagging Series E Securities shall be in the same proportion of Shares and Warrants as the Offered Series E Securities.  The number of Series E Securities that the Selling Stockholder may sell pursuant to this Section 2 shall be reduced by the equivalent amount of the Tagging Series E Securities, unless (A) the transferee(s) have indicated their willingness to buy all of the Series E Securities that the Selling Stockholder and Series E Tagging Stockholders desire to sell, (B) the Company, at its sole option, elects to redeem such Tagging Series E Securities or (C) the Selling Stockholder elects to purchase such Tagging Series E Securities. At the closing of such Sale, each Series E Tagging Stockholder shall deliver (A) all documents required to be executed in connection with such Private Sale and (B) the certificates for the Series E Securities being sold to the purchaser(s) thereof against receipt of the purchase price therefor paid by certified or bank check or wire transfer.

 

  

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(iii) In lieu of the transferee(s) purchasing the Tagging Series E Securities pursuant to this Section 2(a), (A) the Company may, at its sole option, elect to redeem such Tagging Series E Securities at the same price per share as such transferee(s) would have paid pursuant to the provisions of Section 2(a) and/or (B) the Selling Stockholder may elect to purchase such Tagging Series E Securities at the same price per share as such transferee(s) would have paid pursuant to the provisions of Section 2(a).  Any such redemption by the Company or purchase by the Selling Stockholder shall be completed prior to or simultaneously with the proposed Sale.

 

(iv) If a Series E Tagging Stockholder properly exercises its tag-along rights under this Section 2(a) and the Tagging Series E Securities are not (A) purchased by the purchaser of the Offered Series E Securities, (B) redeemed by the Company or (C) purchased by the Selling Stockholder, then the Selling Stockholder shall not be permitted to consummate the proposed Sale of the Series E Securities, and any such attempted Sale shall be null and void.

 

(v) Any notice given by a Series E Tagging Stockholder in which it elects to exercise its tag-along rights provided in this Section 2(a) shall be irrevocable and shall constitute a binding agreement to sell (to either the proposed transferee(s) or the Selling Stockholder, as the case may be) or submit for redemption to the Company such Tagging Series E Securities as are included therein on the terms and conditions applicable to such sale or redemption.

 

(b) Exclusions.  The tag-along and redemption rights provided in this Section 2 shall not apply: (i) in the case of a transfer to a Permitted Transferee, (ii) to a pledge that creates a mere security interest, provided that the pledgee thereof agrees in writing in advance to be bound by and comply with all applicable provisions of this Agreement to the same extent as if it were the Stockholder making such pledge, (iii) to any lien or pledge outstanding as of the date of this Agreement, (iv) to any sale, transfer or other disposition of Securities pursuant to Rule 144 or (v) to a transfer of the Series C Preferred Stock pursuant to the Beacon APA (as defined in Section 4(a)) (A) from the Company to the escrow agent, (B) from the escrow agent to the Company or any of its affiliates or to Beacon (as defined in Section 4(a)) or any of its stockholders or (C) from Beacon to any of its stockholders; provided that in the case of clause(s) (i) or (ii), the Stockholder shall deliver notice to each of the Series E Stockholders of such pledge, gift or transfer and such Securities shall at all times remain subject to the terms and restrictions set forth in this Agreement and such transferee shall, as a condition to such transfer or pledge, deliver a counterpart signature page to this Agreement as confirmation that such transferee shall be bound by all the terms and conditions of this Agreement as a Stockholder (but only with respect to the securities so transferred to the transferee).  For the purposes of any calculation in this Section 2 using the number of Series E Securities held as of the date of this Agreement, such calculations shall, for a transferee pursuant to this Section 2(b), instead use the number of Series E Securities received by such transferee pursuant hereto.

 

  

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3. Tag-Along Rights With Respect to Sales of Common Stock.

 

(a) Private Sales.

 

(i) If, at any time after the date of this Agreement, a Stockholder desires to sell or otherwise transfer, directly or indirectly, through a Derivatives Transaction or otherwise, in a Private Sale all or any portion of such Stockholder’s Common Securities (a “Common Selling Stockholder”), then each holder of Preferred Securities shall have the right to participate in the proposed Private Sale by such Common Selling Stockholder as provided in this Section 3(a).  The Common Selling Stockholder shall give written notice (the “Tag-Along Notice”) to each holder of Preferred Securities of each proposed Private Sale of such Common Securities at least ten (10) days prior to the proposed effective date of such Private Sale.  The Tag-Along Notice shall set forth the terms and conditions of the Private Sale, including the number of Common Securities that the Common Selling Stockholder proposes to sell (the “Offered Securities”), the proposed timing of such Private Sale, the consideration to be paid for the Offered Securities, the identity of the proposed purchaser, and all other material terms and conditions of the Private Sale, including the proposed form of written agreement, if any.  Each holder of Preferred Securities shall have the right to sell to such transferee(s) a portion of its Preferred Securities equal to the product of (A) the number of Preferred Securities then held by such Stockholder and (B) a fraction (1) the numerator of which shall be the number of Offered Securities, and (2) the denominator of which shall be the total number of Common Securities held as of the date of this Agreement by the holders of Preferred Securities, including the Common Selling Stockholder participating in such Sale (as adjusted for stock splits, combinations and the like and as reduced by any Sales previously made by such holder of Preferred Securities and the Common Selling Stockholder subsequent to the date of this Agreement).  The price per share of Series A Preferred Stock to be paid by such transferee(s) shall be equal to one hundred (100) times the price to be paid by such transferee(s) for each share of Common Stock (subject to equitable adjustment for stock splits, combinations and the like that are made with respect to the Series A Preferred Stock where no corresponding adjustment is made to the Common Stock).  The price per share of Series C Preferred Stock to be paid by such transferee(s) shall be equal to (X) the Conversion Shares (as defined in the Series C Certificate of Designation) divided by the number of shares of Series C Preferred Stock issued and outstanding as of the Series C Original Issue Date (as defined in the Series C Certificate of Designation) times (Y) the price to be paid by such transferee(s) for each share of Common Stock (subject to equitable adjustment for stock splits, combinations and the like that are made with respect to the Series C Preferred Stock where no corresponding adjustment is made to the Common Stock).  The price per share of Series E Preferred Stock, Series E-1 Preferred Stock and Series E-2 Preferred Stock to be paid by such transferee(s) shall be equal to the Conversion Rate (as defined in the Series E Certificate of Designation) times the price to be paid by such transferee(s) for each share of Common Stock (subject to equitable adjustment for stock splits, combinations and the like that are made with respect to the Series E Preferred Stock, Series E-1 Preferred Stock or Series E-2 Preferred Stock, as applicable, where no corresponding adjustment is made to the Common Stock).

 

  

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(ii) Each holder of Preferred Securities that desires to exercise the tag-along rights to participate in the proposed Private Sale as provided in Section 2(a) (a “Preferred Tagging Stockholder” and, collectively, the “Preferred Tagging Stockholders”) must exercise such tag-along rights within ten (10) days after its receipt of the Tag-Along Notice, by delivery of a written notice to the Common Selling Stockholder, with a copy to the Company, indicating the desire of such Preferred Tagging Stockholder to exercise its rights and specifying the number and series of Preferred  Securities (the “Tagging  Securities”) it wishes to sell.  The Tagging Securities shall be in the same proportion of Shares and Warrants as the Offered Securities.  The number of Common Securities that the Common Selling Stockholder may sell pursuant to this Section 3 shall be reduced by the equivalent amount of the Tagging Securities, unless (A) the transferee(s) have indicated their willingness to buy all of the Common Securities and Preferred Securities that the Common Selling Stockholder and Preferred Tagging Stockholders desire to sell, (B) the Company, at its sole option, elects to redeem such Tagging Securities or (C) the Common Selling Stockholder elects to purchase such Tagging Securities. At the closing of such Sale, each of the Preferred Tagging Stockholders shall deliver (A) all documents required to be executed in connection with such Private Sale and (B) the certificates for the Tagging Securities being sold to the purchaser(s) thereof against receipt of the purchase price therefor paid by certified or bank check or wire transfer.

 

(iii) In lieu of the transferee(s) purchasing the Tagging Securities pursuant to this Section 3(a), (A) the Company may, at its sole option, elect to redeem such Tagging Securities at the same price per share as such transferee(s) would have paid pursuant to the provisions of Section 3(a) and/or (B) the Common Selling Stockholder may elect to purchase such Tagging Securities at the same price per share as such transferee(s) would have paid pursuant to the provisions of Section 3(a).  Any such redemption by the Company or purchase by the Common Selling Stockholder shall be completed prior to or simultaneously with the proposed Sale.

 

(iv) If a Preferred Tagging Stockholder properly exercises its tag-along rights under this Section 3(a) and the Tagging Securities are not (A) purchased by the purchaser of the Offered Securities, (B) redeemed by the Company or (C) purchased by the Common Selling Stockholder, then the Common Selling Stockholder shall not be permitted to consummate the proposed Sale of the Common Securities, and any such attempted Sale shall be null and void.

 

(v) Any notice given by a Preferred Tagging Stockholder in which it elects to exercise its tag-along rights provided in this Section 3(a) shall be irrevocable and shall constitute a binding agreement to sell (to either the proposed transferee(s) or the Common Selling Stockholder, as the case may be) or submit for redemption to the Company such Tagging Securities as are included therein on the terms and conditions applicable to such sale or redemption.

 

(b) Market Sales.

 

  

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(i) If, at any time after the date of this Agreement, a Stockholder desires to sell or otherwise transfer, directly or indirectly, through a Derivatives Transaction or otherwise, in a Market Sale all or any portion of such Stockholder’s Common Securities (a “Market Selling Stockholder”) then each of the holders of Preferred Securities may request that the Company redeem certain Preferred Securities held by such holder of Preferred Securities as provided in this Section 3(b), and the right of the Market Selling Stockholder to sell or otherwise transfer any Common Securities in such Market Sale shall be subject to the Company agreeing, at its sole option, to redeem such Preferred Securities pursuant to this Section 3(b).  The Market Selling Stockholder shall give written notice (the “Market Tag-Along Notice”) to each of the holders of Preferred Securities and the Company of each proposed Market Sale at least one (1) Business Day prior to the proposed effective date of such Market Sale, subject to the timing set forth in Section 3(b)(iii) below.  The Market Tag-Along Notice shall set forth the terms and conditions of the Market Sale, including the number of Offered Securities and the proposed timing of the Market Sale and the price per share (the “Redemption Price”) at which the respective Preferred Securities will be redeemed (which, in the case of (a) the Series A Securities shall be equal to one hundred (100) times the volume weighted average for shares of Common Stock on the Market on the proposed date of such Market Sale (subject to equitable adjustment for stock splits, combinations and the like that are made with respect to the Series A Preferred Stock where no corresponding adjustment is made to the Common Stock), (b) the Series C Preferred Stock shall be equal to (X) the Conversion Shares (as defined in the Series C Certificate of Designation) divided by the number of shares of Series C Preferred Stock issued and outstanding as of the Series C Original Issue Date (as defined in the Series C Certificate of Designation) times (Y) the volume weighted average for shares of Common Stock on the Market on the proposed date of such Market Sale (subject to equitable adjustment for stock splits, combinations and the like that are made with respect to the Series C Preferred Stock where no corresponding adjustment is made to the Common Stock) and (c) the Series E Securities shall be equal to Conversion Rate (as defined in the Series E Certificate of Designation) times the volume weighted average for shares of Common Stock on the Market on the proposed date of such Market Sale (subject to equitable adjustment for stock splits, combinations and the like that are made with respect to the Series E Preferred Stock, Series E-1 Preferred Stock or Series E-2 Preferred Stock, as applicable, where no corresponding adjustment is made to the Common Stock)).  The Market Tag-Along Notice shall be delivered by hand delivery to the addresses and confirmed telephonically to the individuals set forth on Schedule B hereto, as such addresses and telephone numbers may be updated from time to time by each of the holders of Preferred Securities upon written notice to the Company and the Stockholders.

 

(ii) If a Stockholder exercises its tag-along redemption rights in accordance with Section 3(b)(iii) below, such Stockholder shall request the Company to redeem a portion of its Preferred Securities equal to the product of (A) the number of Preferred Securities then held by such Stockholder and (B) a fraction (1) the numerator of which shall be the number of Offered Securities, and (2) the denominator of which shall be the total number of Common Securities held as of the date of this Agreement by the Market Selling Stockholder and the holders of Preferred Securities participating in such Sale (as adjusted for stock splits, combinations and the like and as reduced by any Sales previously made by the Market Selling Stockholder and such holders of Preferred Securities subsequent to the date of this Agreement).

 

  

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(iii) If the Market Tag-Along Notice is delivered prior to 10 a.m. New York time, the tag-along redemption rights provided in this Section 3(b) must be exercised in respect of the Preferred Securities by the holders of Preferred Securities prior to 5 p.m., New York time, on the date of the Market Tag-Along Notice and if the Market Tag-Along Notice is delivered at or after 10 a.m. New York time, the tag-along redemption rights provided in this Section 3(b) must be exercised by the holders of Preferred Securities prior to 5 p.m., New York time, on the Business Day following its receipt of the Market Tag-Along Notice.  The tag-along redemption rights shall be exercised by delivery of a written notice (the “Redemption Notice”) to the Market Selling Stockholder, with a copy to the Company, indicating such Stockholder’s desire to exercise its rights and specifying the number and series of Preferred Securities it requests to have the Company redeem.  The Preferred Securities shall be in the same proportion of Shares and Warrants as the Offered Securities.  The Company must notify the Market Selling Stockholder and each of the holders of Preferred Securities whether it agrees, in its sole option, to effect the requested redemption within the following applicable timeframe: (A) if the Company receives such holder of Preferred Securities’ Redemption Notice at least two hours prior to 5 p.m., New York time, on the date of the Redemption Notice, then it must provide such notification prior to 5 p.m., New York time, on such date, or (B) if the Company receives such holder of Preferred Securities’ Redemption Notice less than two hours prior to 5 p.m. or after 5 p.m., New York time, on the date of the Redemption Notice, then it must provide such notification prior to 11:00 AM, New York time, on the Business Day following the date on which it received such Redemption Notice.  If the Company agrees, at its sole option, to redeem such Preferred Securities, it shall do so within four Business Days of the receipt by the Company of the Redemption Notice at the price per share set forth in the Market Tag-Along Notice; provided, however, that if the Market Selling Stockholder does not consummate the Market Sale set forth in the Market Tag-Along Notice, the Company shall not be required to redeem the Preferred Securities and for the purposes of this Agreement, the Market Tag-Along Notice shall be treated as having been withdrawn.

 

(iv) If a Stockholder properly exercises its tag-along redemption rights under this Section 3(b) and the Company does not agree to redeem the Preferred Securities, then the Market Selling Stockholder may elect to purchase the Preferred Securities at a price per share equal to the Redemption Price.

 

(v) If a Stockholder properly exercises its tag-along redemption rights under this Section 3(b) and (A) the Company does not agree to redeem the Preferred Securities and (B) the Market Selling Stockholder does not elect to purchase such Preferred Securities, then the Market Selling Stockholder(s) shall not be permitted to consummate the proposed Sale of the Common Securities, and any such attempted Sale shall be null and void.

 

(vi) If a Stockholder properly exercises its tag-along redemption rights under this Section 3(b) and the Company agrees to redeem the Preferred Securities but fails to do so for any reason, then the Market Selling Stockholder(s) shall, within two Business Days of such failure by the Company, purchase the Preferred Securities at the Redemption Price.

 

(vii) Any notice given by a Stockholder in which it elects to exercise its tag-along redemption rights provided in this Section 3(b) shall be irrevocable and shall constitute a binding agreement to submit for redemption or sell to the Market Selling Stockholder such Preferred Securities as are included therein on the terms and conditions applicable to such redemption or sale.

 

  

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(c) Public Sales.  If at any time any Stockholder proposes a Public Sale that is not also a Market Sale (a “Subject Public Sale”), the Company or such Stockholder, as the case may be, shall provide written notice (the “Offering Notice”) of the Subject Public Sale to the holders of Preferred Securities at least twenty (20) Business Days prior to the proposed effective date of the Subject Public Sale (the “Offering Date”), setting forth the anticipated terms and conditions of the Subject Public Sale.  Upon receipt of an Offering Notice, each holder of Preferred Securities may elect to request that the Company redeem a portion of its Preferred Securities equal to the product of (i) the number of Preferred Securities then held by such Stockholder and (ii) a fraction (A) the numerator of which shall be the number of Common Securities to be sold by the Stockholder proposing such Public Sale (a “Public Sale Selling Stockholder”), and (B) the denominator of which shall be the total number of Common Securities held by the Public Sale Selling Stockholder and holders of Preferred Securities participating in such Sale as of the date of this Agreement (as adjusted for stock splits, combinations and the like and as reduced by any Sales previously made by the Public Sale Selling Stockholder and such holders of Preferred Securities).  The redemption rights provided in this Section 3(c) must be exercised by such holder of Preferred Securities within ten (10) Business Days of the delivery of the Offering Notice by delivering a written notice (an “Offering Redemption Notice”) to the Company, with a copy to the Public Sale Selling Stockholder, stating the number and series of Preferred Securities requested to be redeemed pursuant thereto. The Preferred Securities requested to be redeemed shall be in the same proportion of Shares and Warrants as the Common Securities proposed to be sold in the Subject Public Sale.  The redemption price per share in the case of (a) the Series A Securities shall be equal to one hundred (100) times the price per share of Common Stock received in the Public Sale by the Public Sale Selling Stockholder, before underwriter discounts or commissions (subject to equitable adjustment for stock splits, combinations and the like that are made with respect to the Series A Preferred Stock, where no corresponding adjustment is made to the Common Stock), (b) the Series C Preferred Stock shall be equal to (X) the Conversion Shares (as defined in the Series C Certificate of Designation) divided by the number of shares of Series C Preferred Stock issued and outstanding as of the Series C Original Issue Date (as defined in the Series C Certificate of Designation) times (Y) the price per share of Common Stock received in the Public Sale by the Public Sale Selling Stockholder, before underwriter discounts or commissions (subject to equitable adjustment for stock splits, combinations and the like that are made with respect to the Series C Preferred Stock, where no corresponding adjustment is made to the Common Stock) and (c) the Series E Securities shall be equal to Series E Conversion Rate, Series E-1 Conversion Rate or Series E-2 Conversion Rate, as applicable (as such terms are defined in the Series E Certificate of Designation) times the price per share of Common Stock received in the Public Sale by the Public Sale Selling Stockholder, before underwriter discounts or commissions (subject to equitable adjustment for stock splits, combinations and the like that are made with respect to the Series E Preferred Stock, Series E-1 Preferred Stock or Series E-2 Preferred Stock, where no corresponding adjustment is made to the Common Stock) (the respective “Offering Redemption Price”).  Upon receiving an Offering Redemption Notice pursuant to this Section 3(c), the Company shall have two (2) Business Days to notify the holders of Preferred Securities and the Public Sale Selling Stockholder whether it will, at its sole option, redeem the Securities requested in the Offering Redemption Notice.  If it agrees to redeem such Securities, it shall also within such time frame set a date for redemption (the respective “Redemption Date”), which date shall be no later than five (5) Business Days prior to the Offering Date.  If the Company does not agree to redeem any Preferred Securities subject to an Offering Redemption, then the Selling Stockholder may elect to purchase such Preferred Securities at a price per share equal to the Offering Redemption Price.  If (A) the Company does not agree to redeem any Preferred Securities subject to an Offering Redemption and (B) the Public Sale Selling Stockholder does not elect to purchase such Preferred Securities, or if after having so agreed, the Company fails to redeem or the Public Sale Selling Stockholder fails to purchase, any Preferred Securities subject to an Offering Redemption Notice pursuant to this Section 3(c), the Public Sale Selling Stockholder(s) may not consummate the Subject Public Sale.  Any notice given by a Stockholder in which it elects to exercise its offering redemption rights provided in this Section 3(c) shall be irrevocable and shall constitute a binding agreement to submit for redemption or sell to the Public Sale Selling Stockholder such Preferred Securities as are included therein on the terms and conditions applicable to such redemption or sale.

 

  

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(d) Exclusions.  The tag-along and redemption rights provided in this Section 3 shall not apply: (i) in the case of a transfer to a Permitted Transferee, (ii) to a pledge that creates a mere security interest, provided that the pledgee thereof agrees in writing in advance to be bound by and comply with all applicable provisions of this Agreement to the same extent as if it were the Stockholder making such pledge, (iii) to any lien or pledge outstanding as of the date of this Agreement, (iv) to any sale, transfer or other disposition of Securities pursuant to Rule 144, (v) to a transfer of the Series C Preferred Stock pursuant to the Beacon APA (A) from the Company to the escrow agent, (B) from the escrow agent to the Company or any of its affiliates or to Beacon or any of its stockholders or (C) from Beacon to any of its stockholders or (vi) to any sale, transfer or other disposition of Securities following a Mandatory Conversion (as defined in the Series E Certificate of Designation); provided that in the case of clause(s) (i) or (ii), the Stockholder shall deliver notice to the holders of Preferred Securities of such pledge, gift or transfer and such Common Securities shall at all times remain subject to the terms and restrictions set forth in this Agreement and such transferee shall, as a condition to such transfer or pledge, deliver a counterpart signature page to this Agreement as confirmation that such transferee shall be bound by all the terms and conditions of this Agreement as a Stockholder (but only with respect to the securities so transferred to the transferee).  For the purposes of any calculation in this Section 3 using the number of Common Securities or Preferred Securities held as of the date of this Agreement, such calculations shall, for a transferee pursuant to this Section 3(d), instead use the number of Securities received by such transferee pursuant hereto.

 

(e) Volume Exclusions.  In addition to the exclusions set forth in Section 3(d) above, the tag-along rights and related obligations of the Company with respect to redemptions provided in Sections 3(a), 3(b) and 3(c) shall not apply to Sales by a Stockholder of up to 10% of the Common Securities held by such Stockholder as of the date that such Stockholder first became party to this Agreement in any consecutive twelve month period.  The following calculation shall be used in determining the percentage of a Stockholder’s Common Securities that are being sold or otherwise transferred in any given Sale: (x) the number of Common Securities previously sold pursuant to this Section 3(e) by such Stockholder and proposed to be sold by such Stockholder divided by (y) the total number of Common Securities held by such Stockholder as of the date of this Agreement (as adjusted for stock splits, combinations and the like).

 

4. Preemptive Rights.

 

  

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(a) If the Company or any of its Subsidiaries proposes to issue additional equity securities, including any warrants, options or other rights to acquire equity of the Company or any of its subsidiaries or debt securities that are convertible into or exchangeable or exercisable for equity securities of the Company or any of its Subsidiaries (with the exception of any issuance (i) in connection with any acquisition of assets of another Person by the Company or any of its Subsidiaries, whether by purchase of stock, merger, consolidation, purchase of all or substantially all of the assets of such Person or otherwise (excluding any issuance for purposes of financing such transaction) approved by the Board and the requisite holders of the Series E Preferred Stock and Series E-2 Preferred Stock to the extent required under the Series E Certificate of Designation, (ii) Exempted Securities (as such term is defined in the Series E Certificate of Designation), (iii) in an underwritten public offering resulting in gross proceeds of at least $50,000,000 and at a price per share pursuant to which the Company’s market capitalization would be at least $175,000,000 and (iv) approved by holders of the majority of the Series E Preferred Stock and Series E-2 Preferred Stock, voting as a separate class (in each case, having been approved in accordance with the terms of this Agreement and the Series E Certificate of Designation, to the extent applicable)) (“Preemptive Securities”), the Company shall provide written notice (an “Issuance Notice”) to each holder of Preferred Securities of such anticipated issuance no later than twenty-two (22) Business Days prior to the anticipated issuance date.  Such notice shall set forth the principal terms and conditions of the issuance, including a description of the Preemptive Securities proposed to be issued, the proposed purchase price for such Preemptive Securities and the anticipated issuance date.  Each holder of Preferred Securities shall have the right to purchase a number of Preemptive Securities determined by multiplying (i) the number of Preemptive Securities proposed to be issued, by (ii) a fraction, the numerator of which is the number of shares of Preferred Stock held by such Stockholder on an as-converted basis at the time the Issuance Notice for such Preemptive Securities is given and the denominator of which is the total number of shares of the Company’s Common Stock issued and outstanding on a fully-diluted, as converted, basis on the date of the Issuance Notice (the “Pro Rata Portion”).  Each holder of Preferred Securities that desires to purchase Preemptive Securities at the price and on the terms and conditions specified in the Company’s notice must deliver an irrevocable written notice to the Company (a “Preemptive Exercise Notice”) no later than ten (10) Business Days after the delivery of the Issuance Notice, setting forth (x) the number of such Preemptive Securities for which such right is exercised (which such number shall not exceed such Stockholder’s Pro Rata Portion of such Preemptive Securities) and (y) the maximum number of additional Preemptive Securities that such Stockholder would be willing to purchase in excess of such Stockholder’s Pro Rata Portion in the event that any other Stockholder or other Person entitled to exercise preemptive rights with respect to such issuance elects not to purchase its full Pro Rata Portion of such Preemptive Securities.

 

(b) In the event the Stockholders with preemptive rights pursuant to clause (a) above do not purchase all such Preemptive Securities in accordance with the procedures set forth in such clause (a), the Company shall have one hundred twenty (120) days after the anticipated issuance date to sell to other Persons the remaining Preemptive Securities at the price and on such terms and conditions that are no more favorable to such other Persons than those specified in the Company’s notices to the Stockholders pursuant to Section 4(a).  If the Company fails to sell such Preemptive Securities within one hundred twenty (120) days of the anticipated issuance date provided in the notices given to the Stockholders pursuant to Section 4(a), the Company shall not thereafter issue or sell any Preemptive Securities without first offering such Preemptive Securities to the holders of Preferred Securities in the manner provided in this Section 4.

 

(c) The election by a Stockholder not to exercise its preemptive rights under this Section 4 in any one instance shall not affect such Stockholder’s right (other than in respect of a reduction in its Pro Rata Portion) as to any future issuances under this Section 4.

 

(d) All costs and expenses incurred by the Company in connection with its obligations under this Section 4, including all attorneys fees and charges, all accounting fees and charges and all finders, brokerage or investment banking fees, charges or commissions, shall be paid by the Company.

 

  

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(e) Notwithstanding any provision hereof to the contrary, in lieu of complying with the provisions of this Section 4, the Company may elect to give the Issuance Notice to the Stockholders with preemptive rights pursuant to Section 4(a) within ten (10) days after the issuance of Preemptive Securities and thereafter give such Stockholders the right to purchase such number of Preemptive Securities as would provide them with the same ownership as if the Issuance Notice and preemptive rights had been provided prior to the issuance of the Preemptive Securities, all on the same terms and conditions as would otherwise apply under this Section 4.

 

(f) The preemptive rights under this Section 4 shall terminate on such date as of which less than 25% of the shares of Series E Preferred Stock and Series E-2 Preferred Stock collectively issued in the Transactions remain outstanding.

 

5. Certain Sales.  At any time on or after December 5, 2016, to the extent a Stockholder holds any Preferred Securities (the “Remaining Securities”), such Stockholder may provide notice to the Company of its desire to sell all or any portion of the Remaining Securities.  Upon receipt of such notice, the Company will use its commercially reasonable efforts to assist such Stockholder in facilitating a sale, transfer or other disposition of the Remaining Securities (which, for avoidance of doubt, shall not include any obligation to pursue or consummate a Change of Control).  Alternatively, upon receipt of such notice, the Company may, at its sole option, redeem the Remaining Securities at a price per share equal to (x) the number of shares of Common Stock into which a share of the Remaining Securities would be convertible pursuant to the certificate of designation relating to such series of Shares, multiplied by (y) the fair market value of a share of Common Stock as determined in accordance with the terms of the certificate of designation relating to such series of Shares.

 

6. No Mandatory Redemption.  For the avoidance of doubt and notwithstanding anything to the contrary herein, any redemption of Shares or other securities by the Company referenced herein shall not be mandatory and shall be made only at the Company’s sole and exclusive option, unless and then only to the extent specifically agreed to by the Company (at its sole and exclusive option) in writing in response to a redemption request made under this Agreement.

 

7. Series E, Oak, DBIC and GFI Board Designees.

 

(a) For so long as the Stockholders set forth on Schedule C hereto (the “Series E Designee Holders”) collectively own (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) at least (A) 25% of the Series E Preferred Stock and/or Series E-2 Preferred Stock issued in the Transactions or (B) in the event of a conversion of the Series E Preferred Stock and/or Series E-2 Preferred Stock, 25% of the Common Stock underlying the Series E Preferred Stock and/or Series E-2 Preferred Stock, as applicable, issued in the Transactions, (i) the Company will nominate and use its reasonable best efforts to cause to be elected and cause to remain a director on the Board and (ii) each Stockholder, at each annual meeting of the stockholders of the Company, or at any meeting of the stockholders of the Company at which members of the Board are to be elected, or whenever members of the Board are to be elected by written consent, agrees to vote or act with respect to all shares of voting capital stock of the Company registered in its name or beneficially owned by it as of the date hereof and any and all securities of the Company legally or beneficially acquired by such Stockholder after the date hereof, so as to elect, and not to vote to remove, one person designated in writing collectively by the Series E Designee Holders (the “Series E Designee”).  Subject to the following sentence, the consent of each of the Series E Designee Holders holding at least 8% of the outstanding shares of Series E Preferred Stock or Series E-2 Preferred Stock as of the date hereof, as set forth on Schedule C hereto (each, an “8% Series E Designee Holder”), shall be required in respect of the designation of the Series E Designee, for so long as such 8% Series E Designee Holder shall hold at least 25% of the shares of Series E Preferred Stock and/or Series E-2 Preferred Stock it acquired as of the date hereof.  Notwithstanding the foregoing, for so long as Oak continues to own at least 25% of the shares of Series E Preferred Stock acquired by it in the Transactions (or, in the event of a conversion of the Series E Preferred Stock, 25% of the Common Stock underlying the Series E Preferred Stock it acquired in the Transactions), the Series E Designee shall be designated by Oak in its sole discretion, and in such event Oak shall be deemed to be the “Series E Designee Holders.”

 

  

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(b) Subject to applicable law and the rules and regulations of the Securities and Exchange Commission and any securities exchange or quotation system on which the Company’s securities are listed or quoted, the 8% Series E Designee Holders shall have the right to require that the Series E Designee be a member of each principal committee of the Board.

 

(c) For so long as Oak continues to own at least 25% of the shares of Series E Preferred Stock or Series E-2 Preferred Stock acquired by it in the Transactions (or, in the event of a conversion of the Series E-1 Preferred Stock or Series E-2 Preferred Stock, 25% of the Common Stock underlying the Series E Preferred Stock or Series E-2 Preferred Stock it acquired in the Transactions), (i) the Company will nominate and use its reasonable best efforts to cause to be elected and cause to remain a director on the Board and (ii) each Stockholder, at each annual meeting of the stockholders of the Company, or at any meeting of the stockholders of the Company at which members of the Board are to be elected, or whenever members of the Board are to be elected by written consent, agrees to vote or act with respect to all shares of voting capital stock of the Company registered in its name or beneficially owned by it as of the date hereof and any and all securities of the Company legally or beneficially acquired by such Stockholder after the date hereof, so as to elect, and not to vote to remove, one person designated by Oak (the “Oak Designee”), which Oak Designee shall, for the avoidance of doubt, be in addition to Oak’s rights in respect of the Series E Designee pursuant to Section 7(a) hereof.

 

(d) For so long as DBIC continues to own at least 25% of the shares of Series E-2 Preferred Stock acquired by it in the Series E-2 Transaction (or, in the event of a conversion of the Series E-2 Preferred Stock, 25% of the Common Stock underlying the Series E-2 Preferred Stock it acquired in the Series E-2 Transaction), (i) the Company will nominate and use its reasonable best efforts to cause to be elected and cause to remain a director on the Board and (ii) each Stockholder, at each annual meeting of the stockholders of the Company, or at any meeting of the stockholders of the Company at which members of the Board are to be elected, or whenever members of the Board are to be elected by written consent, agrees to vote or act with respect to all shares of voting capital stock of the Company registered in its name or beneficially owned by it as of the date hereof and any and all securities of the Company legally or beneficially acquired by such Stockholder after the date hereof, so as to elect, and not to vote to remove, two people designated by DBIC (the “DBIC Designees”).

 

(e) For so long as GFI continues to own at least 25% of the shares of Series E Preferred Stock or Series E-2 Preferred Stock acquired by it in the Transactions (or, in the event of a conversion of the Series E Preferred Stock or Series E-2 Preferred Stock, 25% of the Common Stock underlying the Series E Preferred Stock or Series E-2 Preferred Stock it acquired in the Transactions), (i) the Company will nominate and use its reasonable best efforts to cause to be elected and cause to remain a director on the Board and (ii) each Stockholder, at each annual meeting of the stockholders of the Company, or at any meeting of the stockholders of the Company at which members of the Board are to be elected, or whenever members of the Board are to be elected by written consent, agrees to vote or act with respect to all shares of voting capital stock of the Company registered in its name or beneficially owned by it as of the date hereof and any and all securities of the Company legally or beneficially acquired by such Stockholder after the date hereof, so as to elect, and not to vote to remove, one person designated by GFI (the “GFI Designee”).

 

  

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(f) It shall be a condition precedent to the Company’s obligations under Sections 7(a), (c), (d) and (e), respectively, that (i) the Series E Designee Holders and the Series E Designee, Oak and the Oak Designee, DBIC and the DBIC Designees, and GFI and the GFI Designee, respectively, shall timely furnish to the Company such information regarding the Series E Designee Holders and the Series E Designee, Oak and the Oak Designee, DBIC and the DBIC Designees, and GFI and the GFI Designee, respectively, as shall be reasonably necessary for the Company to comply with its disclosure and other obligations under applicable law and the rules and regulations of the Securities and Exchange Commission and any securities exchange or quotation system on which the Company’s securities are listed or quoted, (ii) the Series E Designee Holders, Oak, DBIC and GFI, respectively, shall comply with applicable law and the rules and regulations of the Securities and Exchange Commission with respect to their right to designate the Series E Designee, the Oak Designee, the DBIC Designees and the GFI Designee, respectively, and (iii) the Series E Designee, Oak Designee, DBIC Designees and the GFI Designee, respectively, shall comply with applicable law and the rules and regulations of the Securities and Exchange Commission with respect to his or her membership on the Board.

 

(g) In addition to the foregoing rights set forth in this Section 7, so long as any Stockholder (other than Jefferies) holding at least 8% of the outstanding shares of Series E Preferred Stock, Series E-1 Preferred Stock or Series E-2 Preferred Stock as of the date hereof owns at least 25% of the shares of Series E Preferred Stock, Series E-1 Preferred Stock or Series E-2 Preferred Stock, respectively, acquired by it in the Transactions, such Stockholder shall have the right to appoint one non-voting representative to attend each meeting of the Board and each committee thereof (an “Investor Observer”).  Each Investor Observer will be entitled to receive copies of all notices, minutes, consents and other materials and information that the Company provides to the Board; provided that (a) the Investor Observer shall execute a confidentiality agreement in a form reasonably acceptable to the Company and the investor designating such Investor Observer, and (b) the Company may require such Investor Observer to be recused from any meeting and may redact such materials on advice of counsel in connection with matters involving the attorney-client privilege or conflicts of interest.

 

(h) Each Stockholder agrees to vote, or cause to be voted, all voting Shares owned by such Stockholder, or over which such Stockholder has voting control, from time to time and at all times, in whatever manner as shall be necessary to ensure that the size of the Board shall be set and remain at no more than seven directors.

 

(i) The provisions of Section 7(h) shall terminate and be of no further force or effect on the date immediately prior to the date, if any, on which shares of Common Stock are listed on the New York Stock Exchange, the NYSE Amex, the NASDAQ Stock Market or any successor to any of the foregoing.

 

(j) For so long as Jefferies & Company, Inc. (“Jefferies”) owns at least twenty-five percent (25%) of the shares of Series E Preferred Stock acquired in connection with the Exchange Transaction, Jefferies shall be entitled to appoint two (2) non-voting representatives to attend each meeting of the Company’s Board of Directors and each committee thereof (the “Jefferies Observers”).  The Jefferies Observers will be entitled to receive copies of all notices, minutes, consents and other materials and information that the Company provides to the Board; provided that (a) the Jefferies Observers shall execute a confidentiality agreement in a form reasonably acceptable to the Company and Jefferies, and (b) the Company may require the Jefferies Observers to be recused from any meeting and may redact such materials on advice of counsel in connection with matters involving the attorney-client privilege or conflicts of interest.  Such observer rights in this Section 7(j) supersede and are in lieu of all other observer rights granted to Jefferies prior to the date hereof.

 

  

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8. Affirmative Covenant.  If any Applicable Action is required to be approved pursuant to Section 4(e) of the Series E Certificate of Designation and is approved pursuant to Section 4(e) of the Series E Certificate of Designation, then Oak and any other Stockholder who owns, beneficially or of record, shares of Series C Preferred Stock shall (a) provide an affirmative vote or written consent (with respect to all shares of Series C Preferred Stock held of record or beneficially by them or over which they exercise voting control) for such Applicable Action pursuant to Section 4(d) of the Series C Certificate of Designation, or (b) in lieu of the affirmative vote or written consent contemplated by the foregoing clause (a), provide an affirmative vote or written consent (with respect to all shares of Series C Preferred Stock held of record or beneficially by them or over which they exercise voting control) to waive the provisions of Section 4(d) of the Series C Certificate of Designation (pursuant to Section 11 of the Series C Certificate of Designation) with respect to such Applicable Action.  As used herein, the term “Applicable Action” means any action with respect to which the Company is required to obtain the affirmative vote or written consent of any holders Series C Preferred Stock pursuant to Section 4(d) of the Series C Certificate of Designation (whether together as a single class with the holders of Series D Preferred Stock and Series D-1 Preferred Stock or acting on their own due to the Series D Preferred Stock and Series D-1 Preferred Stock not being entitled to participate in such affirmative vote or written consent for any reason).

9. Miscellaneous.

 

(a) Notices.  Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one business day after deposit with an overnight courier service prior to such service’s deadline for next-business day delivery to the recipient (all delivery charges prepaid), in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:

 

	
If to the Company:

 

	
Bonds.com Group, Inc.

529 5th Avenue, 8th Floor

New York, New York 10017

Facsimile: (212) 946-3999

Attention: President

 

	
with a copy (for informational purposes only) to:

 

	
Hill Ward Henderson

3700 Bank of America Plaza

101 East Kennedy Boulevard, Suite 3700

Tampa, Florida 33602

Facsimile: (813) 221-2900

Attention: Mark A. Danzi, Esq.

 

  

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If to any Stockholder, at the address and facsimile number set forth on Schedule A hereto,

 

or to such other address, facsimile number and/or email address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change.  Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

 

(b) Further Instruments and Actions.  The Company and each Stockholder shall execute such further instruments and take such further action as may reasonably be necessary to carry out the intent of this Agreement and to enforce rights and obligations pursuant hereto.  No Stockholder shall vote any Shares, or take any other action, that would defeat, impair, be inconsistent with or adversely affect the stated intentions of the parties under this Agreement.

 

(c) Additional Stockholders.  Notwithstanding anything to the contrary contained herein, if after the date hereof any person or entity acquires Series A Securities or Series E Securities, the Company shall use its reasonable best efforts to have such stockholder become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement and such stockholder shall thereafter be deemed a “Stockholder” for all purposes hereunder.  In addition, the Company will not issue any Series E Securities unless the purchaser thereof becomes a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement and such stockholder shall thereafter be deemed a “Stockholder” for all purposes hereunder.  No action or consent by the Stockholders shall be required for such joinder to this Agreement by such additional stockholder(s), so long as such additional stockholder has agreed in writing to be bound by all of the obligations of a “Stockholder” hereunder.

 

(d) Successors and Assigns.  This Agreement and the rights and obligations of the parties hereunder shall inure to the benefit of, and be binding upon, their respective successors, assigns and legal representatives.  The rights of the Stockholders hereunder are only assignable or transferable in connection with the transfer of any shares held by such Stockholder.  The rights of UBS hereunder shall only be transferable to an affiliate of UBS.

 

(e) Governing Law; Jurisdiction; Jury Trial.  All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

  

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(f) Counterparts.  This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature or a signature transmitted by email shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile or emailed signature.

 

(g) Headings.  The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

 

(h) Severability.  If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.  The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

(i) Entire Agreement; Amendments.  This supersedes all other prior oral or written agreements between the Company, the Stockholders, their affiliates and Persons acting on their behalf with respect to the matters discussed herein (including, without limitation, the Prior Agreement), and this Agreement contains the entire understanding of the parties with respect to the matters covered herein and therein.  No provision of this Agreement may be amended or waived other than by an instrument in writing signed by the Company and the Required Stockholders.  Notwithstanding the foregoing, no amendment to this Agreement shall disproportionately and adversely affect the rights of any Stockholder relative to the rights of all of the Stockholders without such affected Stockholder’s consent.

 

  

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(j) No Third Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

(k) Injunctive Relief.  Without limiting the right of any party to seek any remedy available to such party for the breach or threatened breach of this Agreement, the parties agree that injunctive relief may be sought by any party to enjoin any breach or threatened breach of this Agreement without having to prove irreparable harm or actual damages and each party hereto waives any defense to any such action for injunctive relief that there is an adequate remedy at law for such breach or threatened breach.

 

(l) Copies of this Agreement.  The Company shall supply, free of charge, a copy of this Agreement to any Stockholder upon written request from such Stockholder to the Company at its principal office.

 

(m) Termination. The provisions of this Agreement shall terminate upon the earlier to occur of (i) the date that the Stockholders no longer own any Shares or (ii) a Change of Control pursuant to which Preferred Securities are treated in accordance with Section 3 of the Series E Certificate of Designation; provided, however, that one or more provisions of this Agreement may terminate earlier pursuant to the terms thereof.

 

[The remainder of this page has been intentionally left blank.]

 

  

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

 

	 	

BONDS.COM GROUP, INC.

	 
	 	 	 	 	 
	 	 	 	 	 
	 	By:	 /s/ John M. Ryan	 
	 	 	Name:	John M. Ryan	 
	 	 	
Title:

	Chief Financial Officer	 

 

[Signature Page to Series E Stockholders’ Agreement]

 

 

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