Document:

altair_10q-ex1004.htm

EXHIBIT 10.4

 

	
  
	
ALTAIRNANO

	
  
	
PRODUCT PURCHASE AGREEMENT

 

This Product Purchase Agreement ("Agreement") is entered into this 4th day of August, 2009 (the "Effective Date") between Altairnano, Inc., a Nevada corporation with principal offices at 204 Edison Way, Reno, NV 89502 ("Altair") and Proterra LLC, a limited liability corporation with principal offices at 16360 Table Mountain
Parkway ("Customer" or “Proterra”).  Altair and Customer may be referred to collectively as the “Parties” or individually as a “Party.”

 

	
1.  
	
DEFINITIONS.  As used herein:

 

"Affiliate" shall mean any person, corporation or other entity, which, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, another person, corporation or entity.

 

"Customer" shall mean the legal entity set forth in the heading of this Agreement, including its employees, third party consultants, contractors, designees and Affiliates.

 

"Product” or “Products" shall mean any and all Altair products described in Exhibit A of this Agreement, inclusive
of embedded Third Party Components including, but not limited to, hardware and firmware components, software object and scripted code, the user manuals and all accompanying materials, and including any and all future products developed and marketed for general availability by Altair including all upgrades and updates regardless of name.

 

"Re-Sale Products" shall mean those products that have not been developed by Altair, not embedded in Products, or otherwise marketed by Altair as a generally available offering.  Re-Sale Products may be comprised of third party products used by Customer
to facilitate the building of Customer's complete solution.

 

"Third Party Components" shall mean any Product components provided by third party vendors to Altair for the sole purpose of being utilized as an embedded component of the Products.

 

	
2.  
	
TERMS OF PURCHASE OF PRODUCTS.  Subject to the terms and conditions of this Agreement, Altair may offer to sell Products to Customer and Customer may purchase such Products on the terms set forth herein.

 

(a)  Terms and Conditions.  All purchases of Products by Customer shall be governed under and subject to the terms and conditions contained in this Agreement.

 

(b)    Purchase Price.  The price for Products as agreed to in an Accepted Order. Future prices are subject to change without notice and Customer shall not rely on a prior quoted price to be the same in the future unless otherwise
agreed to in a signed quote between the Parties. All prices in this Agreement are stated in United States dollars (“USD”).

 

(c)    Order and Acceptance.   All orders for Products submitted by Customer shall be initiated by written purchase orders (including via facsimile or email attachment) sent to Altair and shall request a delivery date within
one (1) year of receipt thereof (a “Purchase Order”).  Purchase Orders shall be deemed to have been accepted by Altair only upon Altair having issued written confirmation of acceptance (an "Accepted Order").  Altair shall notify Customer of the acceptance of a Purchase Order within five (5) business days of its receipt of a Purchase Order or such Purchase Order shall be deemed null and void.

  

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(d)    Taxes.

 

Domestic Customers:  Altair agrees to report and pay all taxes, and assessments imposed by any governmental agency in connection with the distribution and sale of Products to Customer including, but not limited to, any sales, use, excise and other taxes excluding taxes imposed on Altair income.  Altair
will bill directly to Customer, and Customer shall pay all such costs within thirty (30) days after receipt of Altair’s invoice.  If the Customer chooses not to have Altair bill for taxes, a “Certificate of Exemption” or “Resellers Certificate” must be submitted to Altair.

 

International Customers: Customer agrees to report and pay all taxes, customs duties and assessments imposed by any governmental agency in connection with the distribution and sale of Products to Customer including, but not limited to, any sales, use, excise, VAT and other taxes and duties, excluding taxes imposed on Altair
income.  To the extent that Altair is required by statute or regulation to collect and report taxes, duties, customs, or any other costs required by any governmental agency, whether foreign or domestic United States, such taxes, duties, customs, or any other such costs will be billed by Altair directly to Customer, and Customer shall pay all such costs within thirty (30) days after receipt of Altair’s invoice.

 

(e)    Terms of Purchase Orders.  All Customer Purchase Orders shall reference the applicable quote number, be governed by the terms of this Agreement, and nothing contained in any such purchase order shall in any way modify,
supplement or limit the terms and conditions of this Agreement, and any and all such modifying, supplemental or limiting terms are hereby rejected.  In the event of conflicts between anything, including but not limited to pre-printed terms and conditions, contained within Customer's Purchase Order and this Agreement, this Agreement shall take precedence as to such conflicts.

 

(f)    Payment.  Subject to the approval of Customer's credit worthiness by Altair, full payment for the Products, including any freight, taxes or other applicable fees for which Customer is responsible and that may be pre-paid
by Altair, shall be due in full as follows unless otherwise specified in the Order Specifications:

	
  
	
§
	
30% upon acceptance of Customer Purchase Order by Altair for modules or other products

	
  
	
§
	
(manufacturing of product(s) not to start until payment received)

	
  
	
§
	
70% net fifteen (15) days from the date of the earlier to occur of products being ready as of quoted shipment date or actual shipment of product(s) to Customer.

 

Payment shall be made by wire transfer, check, or other instrument approved by Altair, payable in U.S. Dollars.  Customer shall pay interest at the lower of the rate of one and one-half percent (1.5%) per month, or the highest legal rate, on any invoiced amount not paid when due and under such circumstances, Altair,
at its option, reserves the right to revoke or suspend any previously granted terms of credit.  Altair may withhold or suspend its performance under this Agreement in the event that Customer fails to make full and timely payments of outstanding invoices.  Additionally, if Customer pays, or Altair otherwise receives, a lesser amount than the full amount provided for in any individual invoice, such payment or receipt shall not constitute or be construed other than as on account of the earliest
amount due Altair.  Altair may accept any check or payment in any amount without prejudice to Altair's right to recover the balance of the amount due or to pursue any other right or remedy.  No endorsement or statement on any check or payment or in any letter accompanying any check or payment or elsewhere shall constitute or be construed as an accord or satisfaction.  Customer shall pay all of Altair costs and expenses (including reasonable attorneys' fees, costs of collection and
pre and post judgment interest) to enforce and preserve Altair's rights under this Subsection 3(f).

  

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(g)    Shipping.  All Products delivered pursuant to the terms of this Agreement shall be suitably packed for shipment in Altair standard shipping cartons, marked for shipment at Customer's ship to address as set forth on and
attached hereto as Exhibit C (the "Customer Information Form") or to such other address as may be directed in any Purchase Order, and shall be routed in accordance with any attached routing instructions from Customer, and delivered to Customer or its carrier agent Ex Works (Incoterms 2000) Altair manufacturing plant or warehouse, at which time title to such Products and risk of loss shall pass to Customer.  Altair shall use commercially reasonable efforts to have the Products available for shipment
at the times specified either in Customer's Purchase Order or in its written acceptance of Customer's Purchase Orders, provided that in the event of conflict between any such dates, the date on Altair’s written acceptance shall control as to such conflict so long as such written acceptance has been accepted in writing by Customer within ten (10) days following receipt of Altair’s written acceptance.  If no such Customer acceptance in writing is received by Altair as described above, the
Purchase Order shall be deemed null and void.  For the initial set of Purchase Orders for the Product sales identified in Exhibit A hereto a ten (10) business day grace period for late delivery shall be identified in each applicable Purchase Order.  Partial shipments may be made upon written approval of Customer.  No partial shipment of a Purchase Order shall constitute the acceptance of the entire Purchase Order, absent the written acceptance of such Purchase Order.  Unless
otherwise instructed in writing by Customer, Altair shall select the carrier.  Customer shall pay all freight, insurance, and other shipping expenses, as well as the expense for any special packing as may have been requested by Customer in its written instructions to Altair.  Customer agrees that no delivery pursuant to this Agreement shall be construed as a single lot contract under the Uniform Commercial Code.  Remedies provided under a single lot contract shall not apply to any
shipment made under this Agreement.

 

(h)    Product Changes.  Altair shall have the right, in its absolute discretion, without liability to Customer, to change the design or to discontinue the manufacture or sale of any Products covered by this Agreement.  Notwithstanding
the foregoing, for those Accepted Orders in Altair's backlog, prior to any change or discontinuance of manufacture or sale, Altair will fulfill and ship either (a) those exact Products specified on Customer's Purchase Order, inclusive of Altair's quote if referenced on the Purchase Order, or (b) Products of the same or superior functionality in accordance with the fees set forth within the Accepted Order.

 

	
3.  
	
WARRANTIES AND DISCLAIMER.

 

(a)    Standard Limited Warranty.  The Products purchased hereunder are subject to the Altair standard limited warranty for the Products (the "Warranty")

 

(b)    Express Customer Limited Warranty.  Each Product purchased hereunder is warranted against defects in material and workmanship and will substantially conform to Product documentation and published specifications for a period
of three (3) years from the date of shipment of such Product to Customer so long as Customer conforms to required maintenance, operation standards and environmental requirements of the Products (such period, the "Warranty Period").  This Warranty extends only to Customer and will not extend to, nor may it be assigned to, any subsequent purchaser without the written consent of Altair; provided that Customer may use the warranty for the benefit of any customer of Customer which acquires Customer’s
products which have incorporated the Products and are subject to the warranties herein.

  

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(c)    Exclusions.  The express Warranty set forth above is contingent upon the proper use of the Product in the application for which it was intended and will not apply to any Altair Product that has been (i) used for other
than its intended use, (ii) damaged during shipping, (iii) modified or improperly maintained or repaired by a party other than Altair or its designees, or (iv) subjected to physical, environmental or electrical conditions outside of the operating parameters established by Altair for the Product. Said initial operating parameters are identified in Exhibit D hereto and are hereby incorporated by this reference. Customer hereby represents and warrants to Altair and Altair’s suppliers that it will
not use or sell any Products for any of the foregoing purposes.  Without limiting the foregoing, in no event shall any Product or lot of Product that substantially conforms to the specifications therefor be deemed defective or otherwise not in compliance with the terms and conditions of this Agreement.

 

(d)    Limitation of Remedy.  In the event a Product fails to perform substantially as warranted, Altair's sole and exclusive liability and Customer's only remedies for breach of the foregoing Warranty shall be, at Altair's sole
discretion, to repair, have repaired or replace with a functional equivalent each Product or portion thereof found to be defective, provided that:

 

	
  
	
(i)
	
Customer complies with the warranty procedures contained in Section 4 below and returns, at Customer’s expense, the Product that Customer considers defective for examination and testing, provided that if warranty coverage is applicable, Altair shall promptly reimburse Customer for all such costs of shipping. If warranty coverage is not applicable then Customer shall timely direct Altair to either repair the
Product, return it to Customer, or dispose of the Product all at Customers expense, such expense to be paid by Customer to Altair within thirty (30) days of the invoice date therefor. If Customer fails to so direct Altair within thirty (30) days of being advised that warranty coverage does not apply, then Altair may choose any of the noted options and bill Customer for the cost thereof.

 

	
  
	
(ii)
	
Altair shall not be liable under this Warranty if testing and examination by Altair discloses that the Product has been modified or altered in any manner after it was originally shipped by Altair to the Customer;

 

	
  
	
(iii)
	
Altair shall not be liable under this Warranty if testing and examination by Altair discloses that the alleged defect in the Product does not exist or was caused by Customer or by a third person's misuse, neglect, improper installation or testing, unauthorized attempts to repair or any other cause beyond the range of intended use, or by accident, fire or other hazard;

 

	
  
	
(iv)
	
Altair shall not be liable under any Warranty under this Agreement with respect to any Product that is damaged as a result of being returned in a container that is not, or is not functionally similar, to the original shipping container; and

 

	
  
	
(v)
	
If Altair testing and examination does not disclose a defect warranted under this Agreement, Altair shall so advise Customer and Customer shall reimburse Altair for its expense in testing and examining such Product calculated at the Altair standard rate.

 

(e)    No Other Warranty.  EXCEPT FOR THE EXPRESS WARRANTY SET FORTH IN SECTION 3(a) and (b), ABOVE, ALTAIR GRANTS NO, AND HEREBY SPECIFICALLY DISCLAIMS EACH AND EVERY, OTHER WARRANTY,
EXPRESS OR IMPLIED, BY STATUTE OR OTHERWISE, REGARDING THE PRODUCTS, INCLUDING THE IMPLIED WARRANTIES OF FITNESS FOR ANY PURPOSE, QUALITY, MERCHANTABILITY, NON-INFRINGEMENT OR OTHERWISE WITH RESPECT THERETO.  ALTAIR EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES EXTENDED TO THIRD PARTIES.

  

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(f)    Limitation of Liability.  IN NO EVENT SHALL ALTAIR BE LIABLE TO CUSTOMER OR ANY THIRD PARTY FOR COSTS OF PROCUREMENT OF SUBSTITUTE PRODUCTS OR SERVICES, NOR WILL EITHER PARTY
BE LIABLE FOR LOST PROFITS, OR ANY OTHER SPECIAL, INDIRECT, CONSEQUENTIAL OR INCIDENTAL DAMAGES, HOWEVER CAUSED AND UNDER ANY THEORY OF LIABILITY, WHETHER BASED ON BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE), PRODUCT LIABILITY, OR OTHERWISE, ARISING OUT OF OR RELATING TO THE PRODUCTS OR THIS AGREEMENT OR RESULTING FROM THE SALE OF PRODUCTS OR SERVICES BY CUSTOMER OR RESALE OR USE BY ANY CUSTOMER OR ANY TRANSFEREE OF SUCH PRODUCTS OR SERVICES.  ANY LIABILITY OF ALTAIR HEREUNDER WILL BE LIMITED IN
ALL CASES TO THE AMOUNT PAID BY CUSTOMER FOR PRODUCTS.  THIS LIMITATION SHALL APPLY EVEN IF A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.  THE PARTIES ACKNOWLEDGE THAT THE FOREGOING IS A REASONABLE ALLOCATION OF RISK.

 

	
4.  
	
WARRANTY PROCEDURE.

 

In the event that Customer asserts that a Product fails to perform as warranted during the Warranty Period, Customer shall notify Altair via Customer’s assigned Altair sales representative and request a “Return Material Authorization” (RMA) for the product to be returned. Altair will then reasonably question
Customer to determine if a warranty claim applies, if Customer insists then Altair will  provide an RMA number to Customer without prejudice to Altair’s right to assert that no warranty coverage is required if the failure is subject to a limitation or exclusion specifically provided under the terms of Section 3 above.  Within thirty (30) days after its receipt of the RMA number, Customer shall return to Altair or its designee the rejected or asserted defective Product, freight or postage
prepaid in its original shipping carton or a functionally equivalent container.  Altair reserves the right to refuse to accept any rejected or defective Product not bearing an RMA number on the outside of the carton and/or documentation accompanying the shipment such as packing slips.  If the Product is determined to be defective in accordance with Section  3 (Warranty and Disclaimer), Altair will, at its sole option and expense and in accordance with the Altair policy, either repair
the Product,  have it repaired or replace the Product with a functional equivalent and ship it to Customer in accordance with Customer's instruction.  Altair will use all commercially reasonable efforts to ship the repaired or replaced Product within thirty (30) days of its receipt of such Product.  If Customer requires faster turnaround time for the Product, Altair will offer alternatives that may include charges for such expedited service.

 

	
5.  
	
CONFIDENTIALITY.

 

(a)    “Confidential Information” means any information: (i) disclosed by Altair to Customer, which, if in written, graphic, machine-readable or other tangible form is marked as “Confidential” or “Proprietary”,
or which, if disclosed orally or by demonstration, is identified at the time of initial disclosure as confidential and reduced to writing and marked “Confidential” within thirty (30) days of such disclosure; (ii) which is otherwise deemed to be confidential by the terms of this Agreement or (iii) which by its nature or the context in which it was given should rightly be treated as confidential or proprietary information.  Notwithstanding the foregoing, Confidential Information
shall exclude information that Customer can demonstrate by the Customer’s contemporaneous written records (i) was independently developed by Customer without any use of Altair’s Confidential Information or by Customer’s employees or other agents (or independent contractors hired by Customer) who have not been exposed to Altair’s Confidential Information, (ii) becomes known to Customer, without restriction, from a source other than Altair without breach of this Agreement and that
had a right to disclose it, (iii) was in the public domain at the time it was disclosed or becomes in the public domain through no act or omission of Customer, or (iv) was rightfully known to Customer, without restriction, at the time of disclosure.

  

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(b)    Confidentiality Obligation.  Customer shall treat as confidential all of Altair’s Confidential Information and shall not use such Confidential Information benefit of itself or any third party or for any purpose except
as expressly permitted under this Agreement.  Without limiting the foregoing, Customer shall use at least the same degree of care that it uses to prevent the disclosure of its own confidential information of like importance, but in no event with less than reasonable care, to prevent the disclosure of Altair’s Confidential Information. Customer shall not reverse engineer, decompile, disassemble or otherwise determine or attempt to determine any source code, algorithms, samples, device, material,
chemical composition, methods or techniques embodied in any Proprietary Information or any portion thereof.

 

(c)    Confidentiality of Agreement.  The terms and conditions, including the existence, of this Agreement shall be treated as Altair’s Confidential Information and no reference to the terms and conditions of this Agreement or
to activities pertaining thereto can be made in any form of public or commercial advertising without the prior written consent of Altair.

 

(d)    Compelled Disclosure.  If Customer believes that it will be compelled by a court or other authority to disclose Confidential Information of Altair, Customer shall give Altair prompt notice so that Altair may take steps to oppose
such disclosure.

 

(e)    Remedies.  Customer agrees that, due to the unique nature of the Confidential Information, the unauthorized disclosure or use of the Confidential Information of Altair will cause irreparable harm and significant injury to Altair,
the extent of which shall be difficult to ascertain and for which there shall be no adequate remedy at law.  Accordingly, Customer agrees that Altair, in addition to any other available remedies, shall have the right to seek in any court of competent jurisdiction an immediate injunction and other equitable relief enjoining any breach or threatened breach of this Agreement, without the necessity of posting any bond or other security or having to prove substantial harm. Customer shall notify Altair in
writing immediately upon Customer becoming aware of any such breach or threatened breach.  .

 

	
6.  
	
TERM AND TERMINATION.

 

(a)    Term.  This Agreement shall continue in force and in perpetuity from the Effective Date, unless terminated earlier under the provisions of this Section 6.

 

(b)    Termination for Cause.  Either Party shall have the right to terminate this Agreement for cause upon the occurrence of any of the following events:  (i) in the event either Party fails to materially comply
with any of the terms and conditions of this Agreement and such default has not been cured within thirty (30) days (or ten (10) days in the case of failure to pay amounts due hereunder) after written notice to the breaching Party; or (ii) in the event that either Party (A) terminates or suspends its business, (B) becomes subject to any bankruptcy or insolvency proceeding under Federal or state statute, (C) becomes insolvent or subject
to direct control by a trustee, receiver or similar authority, or (D) has wound up or liquidated, voluntarily or otherwise.

 

(c)    Termination for Convenience. Either Party may terminate this agreement at any time after twenty-four (24) months from the Effective Date provided that it has given the other Party sixty (60) days prior written notice.

 

(d)    Fulfillment of Orders upon Termination.  Upon termination of this Agreement for other than Customer's breach as set forth in Section 5 (b) above, Altair shall continue to fulfill Customer's Accepted Orders, provided
the orders were accepted prior to termination, subject to the terms of Section 3 above.

 

(e)    Survival of Certain Terms.  The provisions of Sections 2(c), 2(d), 2(f), 3(c), 3(d), 3(e), 3(f), 5, 6(e), 7(b), 7(c), 7(d), 8 and 9 shall survive the termination of this Agreement for any reason.  All other
rights and obligations of the Parties, except for those rights and obligations that accrued prior to termination, shall cease upon termination of this Agreement.

  

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7.  
	
INTELLECTUAL PROPERTY INFRINGEMENT INDEMNIFICATION.

 

(a)    Indemnity.  Altair will defend or settle, at its own expense, any claim, suit or proceeding brought against Customer to the extent it is based upon a claim that any Product under normal use sold pursuant to this Agreement
infringes upon any U.S. patent issued as of the date hereof or copyright, or misappropriates any trade secret, of any third party.  As a condition precedent to such obligation, Customer agrees that it shall promptly notify Altair in writing of any such claim or action and give Altair full information and assistance in connection therewith.  Altair shall have the sole right to control the defense of any such claim or action and the sole right to settle any such claim or action.  If
Customer complies with the provisions hereof, Altair will pay all damages (including reasonable attorneys’ fees) finally awarded to third parties in such action.  If a Product is, or in Altair's opinion might be, held to infringe as set forth above, Altair may, at its option replace or modify such Product so as to avoid infringement, or procure the right for Customer to continue the use and resale of such Product.  If neither of such alternatives is, in Altair's opinion, commercially
reasonable, the infringing Product shall be returned to Altair and Altair's sole liability, in addition to its obligation to reimburse finally awarded damages as set forth above, shall pay to Customer such damages, losses, costs or expenses as are incurred by Customer as a result of such infringement (including attorneys’ and consultants’ fees and costs), including, without limitation, costs of replacement of the Product by a product of equivalent or better functionality. Notwithstanding any of the
foregoing, Altair’s total liability to Customer therefore shall be limited to the purchase price paid by Customer to Altair for the specific Product model and version which is the subject of such claim.

 

(b)    Limitations.  Altair will have no liability for any claim of infringement arising or alleging to have arisen as a result of Customer's particular use or sale of a Product in combination with any items not supplied by Altair
or any modification of a Product by Customer or third parties, or the failure to use the latest version of any software provided for such Product if infringement would have been avoided with such use.

 

(c)    Entire Liability.  THE FOREGOING STATES THE ENTIRE LIABILITY AND OBLIGATION OF ALTAIR TO ANY CUSTOMER OR THIRD PARTY AND THE EXCLUSIVE REMEDY OF ANY CUSTOMER OR THIRD PARTY
WITH RESPECT TO THE ALLEGED OR ACTUAL INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS, INCLUDING BUT NOT LIMITED TO, PATENT, COPYRIGHT AND TRADE SECRET RIGHTS.

 

(d)    Customer Indemnity.  Customer shall indemnify, defend and hold Altair harmless from and against any and all claims brought by any third party, including any Affiliates of Customer and its and their distributors, resellers
and customers, against Altair or Altair’s suppliers arising out of or related to the use or distribution of the Products purchased by Customer hereunder, including (i) any claim arising out of or related to any warranty made by or on behalf of Customer or its Affiliates to its customers and (ii) any use of the Products in violation of Section 3(c); provided, however, that Altair: (a) gives immediate written notice to Customer of the institution of the suit or proceedings; and (b) permits
Customer through its counsel to defend the same and gives Customer all needed information, assistance and authority to enable Customer to do so.  As used herein, “Affiliate” means any entity that controls, is controlled by, or is under common control with Customer, wherein “control” means ownership of at least fifty percent (50%) of the outstanding securities or equity interest in such entity or the right to elect
such entity’s board of directors or otherwise control the activities or operations of such entity.

  

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8.  
	
IMPORT AND EXPORT CONTROLS.

 

(a)    Customer shall, at its own expense, pay all import and export licenses and permits, pay all value-added and other VATs, customs charges and duty fees, and take all other actions required to accomplish the export and import of the Products purchased by Customer.

 

(b)    Customer understands and acknowledges that Altair may be subject to regulation by agencies of the U.S. government, including the U.S. Department of Commerce, which prohibits export or diversion of certain technical products to certain countries, and the U.S. Department of Transportation, which
specifies under what conditions batteries can be transported from one location to another.  Customer warrants and represents to Altair that it will comply in all respects with the transport requirements, and the export and re-export restrictions set forth in the export license for every product shipped to Customer.

 

	
9.  
	
GENERAL PROVISIONS.

 

(a)    Intellectual Property.  Customer acknowledges that the Products sold hereunder contain and embody trade secrets belonging to Altair and Customer shall not, nor shall it cause any third party to, reverse engineer any Products
purchased hereunder.  As between Customer and Altair, Altair shall own all intellectual property and other proprietary rights in and to the Products and all accompanying documentation. Further, as of the Effective Date of this Agreement, Customer waives and releases any and all claims it may have to the Intellectual Property of the Products as such Intellectual Property exists as of the Effective Date. Altair hereby grants to Customer a non-exclusive, world-wide, non-transferable, non-sublicensable,
assignable and perpetual (so long as Customer is not in breach of this Agreement) license to use the software contained in the Product for the sole purpose of supporting the Product as specified in the product documentation. Altair retains for itself all proprietary rights in and to all designs, engineering details, and other data pertaining to any Products and software.

 

(b)    Re-Sale Products.  From time to time, Customer may request that Altair procure for its use other equipment that may be needed in order to build and maintain Customer's complete solution.  Altair may agree to procure
these Re-Sale Products for a fee negotiated with the Customer and act as a limited reseller for these products.  Customer agrees and understands that provision of these Re-Sale Products is offered as a limited resell service to the Customer and Altair disclaims and Customer hereby relieves Altair of any and all liability regarding maintenance and support obligations, warranties, express or implied, including but not limited to warranties of performance, support and maintenance, non-infringement, merchantability
and fitness for a particular use regarding these products.  All warranties as may be offered by the Re-Sale Products vendor may extend directly from the vendor to the Customer but in no event does Altair accept responsibility for procuring such warranties.  Nothing in this Section 9(b) shall be construed to mean that Altair has, maintains, or will ever have, a formal partner, joint venture, or reseller relationship with any manufacturers of the Re-Sale Products.

 

(c)    Governing Law and Jurisdiction.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEVADA, U.S.A, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.  The federal and state courts
within Washoe County, Nevada, U.S.A., shall have exclusive jurisdiction to adjudicate any dispute arising out of or related to this Agreement.  Parties hereby expressly consent to (i) the personal jurisdiction of the federal and state courts within Washoe County, Nevada, (ii) service of process being effected upon it by registered mail or commercial courier sent to the address set forth at the beginning of this Agreement, and (iii) the uncontested enforcement of a final judgment from
such court in any other jurisdiction wherein Customer or any of its assets are present. The Parties specifically waive any local or international law, convention, treaty right or regulation that might provide an alternate construction or application of law.

  

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(d)    Compliance with Laws.  Customer shall observe and comply with all federal, state, and city laws, rules, and regulations effecting goods and services under this Agreement.  Customer shall procure and keep in full
force all permits and licenses necessary to accomplish the work contemplated in this Agreement.  Likewise, Altair shall observe and comply with all federal, state, and city laws, rules, and regulations effecting goods and services under this Agreement.  Altair shall procure and keep in full force all permits and licenses necessary to accomplish the work contemplated in this Agreement. Further Customer warrants and represents to Altair that Customer is fully aware and knowledgeable  of
the U.S. Department of Transportation and United Nations 3090 restriction on use of the Products, will comply with such restrictions and will advise its customers of such restrictions.

 

(e)    Publicity/Disclosure.  Except as required by law or as reasonably required to assert its rights hereunder, neither Party shall disclose the existence or substance of the agreements between the Parties or any terms of this
Agreement without the prior written consent of the other Party. Notwithstanding the foregoing, the Parties acknowledge that each Party may desire to use the other Party’s name in press releases, product brochures and financial reports indicating the Parties’ relationship as seller and customer, and the Parties agree that each Party may use the other Party’s name once in such a manner, after which any additional uses shall be subject to the other Party's consent, which consent shall not be unreasonably
withheld.

 

(f)    Entire Agreement.  This Agreement sets forth the entire Agreement and understanding of the Parties relating to the subject matter herein and merges all prior discussions between them.

 

(g)    Modification.  No alteration, amendment, waiver, cancellation or any other change in any term or condition of this Agreement shall be valid or binding on either Party unless mutually assented to in writing by both Parties.

 

(h)    No Waiver.  The failure of either Party to enforce at any time any of the provisions of this Agreement, or the failure to require at any time performance by the other Party of any of the provisions of this Agreement, shall in
no way be construed to be a present or future waiver of such provisions, nor in any way affect the validity of either Party to enforce each and every such provision thereafter.  The express waiver by either Party of any provision, condition or requirement of this Agreement shall not constitute a waiver of any future obligation to comply with such provision, condition or requirement.

 

(i)    Notices.  Any notice required or permitted by this Agreement shall be in writing and shall be sent by prepaid registered or certified mail, return receipt requested, addressed to the other Party at the addresses set forth
on Exhibit B attached hereto.

 

(j)    Force Majeure.  Nonperformance of either Party shall be excused to the extent that performance is rendered impossible by strike, fire, flood, governmental acts or orders or restrictions, failure of suppliers, or any other
reason where failure to perform is beyond the reasonable control of, and is not caused by the negligence of, the non-performing Party.  Notification of such condition must be made to the other Party within fifteen (15) days of occurrence.

  

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(k)    Assignment and Binding Effect.  This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their successors and assigns, except that both Parties agree that their respective rights and obligations
under this Agreement may not be transferred or assigned, directly or indirectly, by operation of law, merger or otherwise, without the prior written consent of the other Party.  Notwithstanding the foregoing, Customer may assign this Agreement to any parent or subsidiary in which the Customer has a controlling interest, or Affiliate which is in existence as of the Effective Date of this Agreement, or in connection with a sale of all or substantially all of it's assets or stock, provided each such party
agrees to be bound by all terms and conditions of this Agreement, and provided that the assignee is not a competitor of.  Altair may assign this Agreement to any parent or subsidiary in which it has a controlling interest, or Affiliate which is in existence as of the Effective Date of this Agreement, or in connection with a sale or transfer of all or substantially all of its assets or stock, provided each such party agrees to be bound by all terms and conditions of this Agreement.

 

(l)    Independent Contractor.  Any services performed by Altair during the performance of this Agreement, shall be conducted by Altair as an independent contractor and nothing herein shall be deemed to cause this Agreement to
create an agency, partnership, joint venture, or employment relationship between the Parties.

 

(m)    Foreign Corrupt Practices Act.  Customer shall not act in any fashion or take any action which would render Altair liable for a violation of the U.S. Foreign Corrupt Practices Act, which prohibits the offering, giving or
promising to offer or give, directly or indirectly, money or anything of value to any official of a government, political party or instrumentality thereof in order to assist it or Altair in obtaining or retaining business.

 

(n)    Further Assurances.  Customer agrees, upon request by Altair, to promptly execute, acknowledge and deliver such further documents as are reasonably necessary to fulfill the purposes of this Agreement.

 

(o)    Remedies.  The remedies stated herein are in addition to all other remedies at law or in equity.

 

(p)    Legal Expenses.  The prevailing Party in any legal action brought by one Party against the other and arising out of this Agreement shall be entitled, in addition to any other rights and remedies it may have, to reimbursement
for its expenses, including court costs, pre and post judgment interest, reasonable attorneys' fees and costs of collection.

 

(q)    Severability.  If any provision in this Agreement is found or held to be invalid or unenforceable in any respect, such unenforceability will not affect any other provisions of this Agreement.

 

(r)    Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

 

(s)    Headings Descriptive.  The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.

 

(t)    Singular and Plural.  When required by the context hereof, the singular includes the plural and vice versa.

 

 

	
  
	
SIGNATURE PAGE IMMEDIATELY FOLLOWS

  

10 of 16

  

 

IN WITNESS WHEREOF, the Parties have executed this Altair, Inc. Product Purchase Agreement effective as of the date first set forth above.

 

        

	
ALTAIRNANO INC.

 

/s/Terry M. Copeland
	  	
PROTERRA LLC

 

/s/ Jeffery J Granato

	
Authorized Signature
	  	
Authorized Signature

	
By:    Jeffery J Granato
	  	
By:     Jeffery J Granato

	
Date: 8/4/09
	  	
Date: 8/5/09

	
Title: President & CEO
	  	
Title: President & CEO

	
Phone:  *****************
	  	
Phone: ****************

	
Email:   *****************
	  	
Email: ****************

 

  

11 of 16

  

Exhibit A

Purchase Terms

Master Timing, Pricing & Payment Schedule:

 

	
Application

 
	
Line Description

 
	
Sales Price

per Module

(USD)
	
Quantity of

Modules per Buses
	
Total Price (USD)
	
Master Agreement
	
Purchase Order
	
Initial 30% Payment
	
Product Availability
	
Remaining

70% Payment Due
	
Remaining 70% Payment

	
Burbank

 
	
xxxxx-50Ah module
	
*****
	
**

 
	
*******
	
05-Aug-09
	
06-Aug-09
	
*****
	
17-Sept-09
	
2-Oct-09
	
*****

	
Foothill Transit – Bus1

 
	
xxxxx-50Ah module
	
*****
	
**

 
	
*******
	
05-Aug-09
	
06-Aug-09
	
*****
	
16-Nov-09
	
1-Dec-09
	
*****

	
Altoona

 
	
xxxxx-50Ah module
	
*****
	
**

 
	
*******
	
05-Aug-09
	
06-Aug-09
	
*****
	
4-Dec-09
	
19-Dec-09
	
*****

	
Foothill Transit – Bus 2

 
	
xxxxx-50Ah module
	
*****
	
**

 
	
*******
	
05-Aug-09
	
06-Aug-09
	
*****
	
15-Dec-09
	
3—Dec-09
	
*****

	
Foothill Transit – Bus3

 
	
xxxxx-50Ah module
	
*****
	
**

 
	
*******
	
05-Aug-09
	
06-Aug-09
	
*****
	
15-Jan-10
	
30-Jan-10
	
*****

	
Fort Lewis

 
	
xxxxx-50Ah module
	
*****
	
**

 
	
*******
	
05-Aug-09
	
06-Aug-09
	
*****
	
15-Feb-10
	
2-Mar-10
	
*****

	
UN / DOT Compliant Shipping Box

 
	
xxxxx-50Ah module
	
*****
	
**

 
	
*******
	
05-Aug-09
	
06-Aug-09
	
*****
	
15-Dec-09
	
31-Dec-09
	
*****

	  	  	  	
Total Value
	
898,400
	  	  	  	  	  	  

Timing is based on receipt and acceptance of Master Contract by August 5, 2009, Purchase Order for all Battery Modules by August 5, 2009, receipt of 30% of above total value due as down payment in two payments, first payment of $30,000.00 USD due no later than 12:00pm PST on August 6, 2009 and second payment of $239,520.00
USD due by August 12, 2009.  Notwithstanding the above chart, remaining 70% of Purchase Order payment is due Net 15 days upon earlier to occur of Product being ready for shipment on quoted availability date or earlier shipment thereof.  Payments are to be made by wire transfer.  A Day for Day delay slippage shall apply, however timing cannot be guaranteed beyond August 12, 2009.

All payments are to be made via wire transfer per the following information:

    Bank:  ***** **** ****

                ********

                *** ** ****

                ***

Routing No.:     **********

Account No:     **********

SWIFT Code:    ***********

Account Name: ******** ***.

All modules will be FOB Altairnano’s dock in Anderson, IN.

Altairnano, Inc.

3019 Enterprise Drive

Anderson, IN 46013

  

12 of 16

  

Module build timing is subject to Payment Terms being agreed to and met.

Availability Dates are as follow:

	
  ·      
	
Burbank Bus – ** Modules *******: September 17, 2009

	
  ·      
	
Foothill Bus 1 – ** Modules *******: November 16, 2009

	
  ·      
	
Altoona Bus – **  Modules *******: December 4, 2009

	
  ·      
	
Foothill Buss 2 – **  Modules *******: December 15, 2209

	
  ·      
	
Foothill Bus 3 – **  Modules  *******: January 15, 2010

	
  ·      
	
Fort Lewis Bus – **  Modules *******: February 15, 2010

****************************:

****************************************************************************** ************************************************************************************************************************************************************* **************************************************************************** ********

Additional Notes:

 

	
·
	
Additional Purchase Orders will not be accepted until all payments for prior Purchase Orders are brought current.

	
·
	
Timing commitments will not be maintained if payments are delayed.

	
·
	
Proterra must timely return shipping boxes at its cost to Altair or subsequent shipments will be delayed. If shipping boxes are returned damaged or otherwise unusable, shipment of batteries will be delayed and Proterra shall be liable for cost of replacement shipping boxes. Return shipping boxes to Altair’s facility located in Anderson, IN.

    Altairnano, Inc.

    3019 Enterprise Drive

    Anderson, IN 46013

Failure to operate battery modules within Altair recommended parameters as provided with batteries will void all warranties.

***************************************************************************

*****************************************************************************

****************************************************************************** ***************************************************************************** *************************************************************************** ******************************************************************************* **********************************************.

  

13 of 16

  

 

Exhibit B

Notices

 

	
If to Altair:
	
If to Customer:

	
Name: *************
	
Name: *************

	
Address: 204 Edison Way
	
Address: 16360 Table Mountain Parkway

	
Address (2)
	
Address (2):

	
City: Reno
	
City: Golden

	
State/Code: NV
	
State/Code: CO / 80403

	
Country: USA
	
Country: USA

	
Phone: *************
	
Phone: *************

	
Fax: ****************
	
Fax: ***************

	
Email: *******************
	
Email: ******************

  

14 of 16

  

Exhibit C

Customer Information Form

 

	
Customer Primary Business Contact
	
Customer Accounts Payable Contact

	
Name: *************
	
Name: *************

	
Title: Business Development Director
	
Title: Controller

	
Address: 2364 Worden St.
	
Address: 16360 Table Mountain Parkway

	
Address (2):
	
Address (2):

	
City: San Diego
	
City: Golden

	
State/ZIP: CA
	
State/ZIP: CO / 80403

	
Country/Postal Code: 92107
	
Country/Postal Code: USA

	
Phone: *************
	
Phone: *************

	
Fax: *************
	
Fax: *************

	
Email: *************
	
Email: *************

 

Bill To/Ship To must be filled in:

	
Customer Bill To
	
Customer Ship To

	
Legal Entity Name: Proterra LLC
	
Name: Proterra LLC

	
Dept:
	
Dept:

	
Attn: *************
	
Attn: *************

	
Address: 16360 Table Mountain Parkway
	
Address: 16360 Table Mountain Parkway

	
Address (2):
	
Address (2):

	
City: Golden
	
City: Golden

	
State/ZIP: CO / 80403
	
State/ZIP: CO / 80403

	
Country/Postal Code: USA
	
Country/Postal Code: USA

	
Phone: *************
	
Phone: *************

	
Fax: *************
	
Fax: *************

  

15 of 16

  

Exhibit D

Product Operating Parameters

 

	
  
	
·    368 volts nominal

	
  
	
·    288 V to 448 V operating voltage

	
  
	
·    -40°C to +55°C operating and storage temperature

	
  
	
o    Temperatures must be measured at the individual cell locations, not the average system temperature – This will need to be a function of the BMS

	
  
	
o    For maximum life Altairnano recommends operating and storing the battery system at ≤+35° Celsius

 

 

 

 

 

 

16 of 16EX-10.1  SECURITIES PURCHASE AGREEMENT

          THIS SECURITIES PURCHASE AGREEMENT (this “
Agreement”), dated as of March 26, 2008, by and among National Automation Services, Inc. a Colorado corporation, with headquarters located at 2053 Pabco, Henderson, NV 89011 (the “
Company”), and the Buyers listed on Schedule I attached hereto (individually, a “Buyer” or collectively “
Buyers”).
 WITNESSETH:
 
          WHEREAS, the Company and the Buyer(s) are executing and delivering this Agreement in reliance upon an exemption from securities registration pursuant to Section 4(2) and/or Rule 506 of Regulation D (“
Regulation D”) as promulgated by the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “
1933 Act”);
           WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to the Buyer(s), as provided herein, and the Buyer(s) shall purchase up to Ten Million Dollars ($10,000,000) of secured redeemable debentures (the “
Redeemable Debentures”), of which One Million Five Hundred Thousand Dollars ($1,500,000) shall be funded on the date hereof (the “
First Closing”), with any remaining balance purchased on dates mutually agreed to by the Company and Buyers and contingent upon the Company using such funds for acquisitions which shall be subject to Buyer’s consent for a total purchase price of up to Ten Million Dollars ($10,000,000), (the “
Purchase Price”) in the respective amounts set forth opposite each Buyer(s) name on Schedule I (the “
Subscription Amount”); and
           WHEREAS, the aggregate proceeds of the sale of the Redeemable Debentures contemplated hereby shall be held in escrow pursuant to the terms of an escrow agreement substantially in the form of the Escrow Agreement attached hereto as
Exhibit B (the “Escrow Agreement”); and
           WHEREAS, contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Security Agreement substantially in the form attached hereto as
Exhibit C (the “Security Agreement”) pursuant to which the Company has agreed to provide the Buyer a security interest in Pledged Collateral (as this term is defined in the Security Agreement dated the date hereof) to secure Company’s obligations under this Agreement, the Redeemable Debenture, the Warrant, the Security Agreement, and the Escrow Agreement (collectively, the “Transaction Documents”) or any other obligations of the Company to the Buyer;

          NOW, THEREFORE, in consideration of the mutual covenants and other agreements contained in this Agreement the Company and the Buyer(s) hereby agree as follows:

 
                1.
PURCHASE AND SALE OF REDEEMABLE DEBENTURES. 
                (a) Purchase of Redeemable Debentures. Subject to the satisfaction (or waiver) of the terms and conditions of this Agreement, each Buyer agrees, severally and not jointly, to purchase at each Closing (as defined herein below) and the Company agrees to sell and issue to each Buyer, severally and not jointly, at such Closing, Redeemable Debentures in an aggregate amount of up to Ten Million Dollars ($10,000,000.00) (the “Purchase Price”) in amounts corresponding with the Subscription Amount set forth opposite each Buyer’s name on Schedule I hereto, as follows: (i) Buyer(s) shall purchase an aggregate of One Million Five Hundred Thousand Dollars ($1,500,000.00) of Redeemable Debentures (the “First Closing”) on the date hereof (or such other date as may be mutually agreed to by Buyers and the Company) on the date set forth in such letter (the “First Certificate”); (ii) any remaining purchase shall take place (each, an “Additional Closing”) on such date as may be mutually agreed to by Buyers and the Company with any and all such purchases contingent upon the Company using such funds for acquisitions which shall be subject to Buyer’s consent (each, including the First Closing individually referred to as a “Closing” and collectively referred to as the “Closings”). All Redeemable Debentures purchased by Buyer shall have a maturity date of thirty (30) months from such Redeemable Debenture’s respective Closing. Upon execution hereof by a Buyer, the Buyer shall wire transfer the Subscription Amount set forth opposite his name on Schedule I in same-day funds or a check payable to: “James G. Dodrill II, P.A. as Escrow Agent for Trafalgar - National Automation”, which Subscription Amount shall be held in escrow pursuant to the terms of the Escrow Agreement (as hereinafter defined) and disbursed in accordance therewith.

               (b) Closing Date. The First Closing of the purchase and sale of the Redeemable Debentures shall take place at 10:00 a.m. Eastern Standard Time on the date of this Agreement, subject to notification of satisfaction of the conditions to the First Closing set forth in Sections 6 and 7 below, (or such later date as is mutually agreed to by the Company and the Buyer(s)) (the “First Closing Date”). Any Additional Closings of the purchase-and sale of the Redeemable Debentures shall take place on or before such date as is mutually agreed to by the Company and the Buyers, subject to notification of satisfaction of the conditions to the Additional Closings set forth in Sections 6 and 7 below (or such later date as is mutually agreed to by the Company and the Buyer(s)) (the “Additional Closing Dates”, and together with the First Closing Date, the “Closing Dates”). The Closings shall occur on their respective Closing Dates at the offices of James G. Dodrill II, P.A., 5800 Hamilton Way, Boca Raton, FL 33496 (or such other place as is mutually agreed to by the Company and the Buyer(s)).

               (c) Escrow Arrangements; Form of Payment. Upon execution hereof by Buyer(s) and pending the Closings, the portion of the Purchase Price for the Redeemable Debentures to be purchased in the First Closing shall be deposited in an escrow account with James G. Dodrill II, P.A., as escrow agent (the “Escrow Agent”), pursuant to the terms of an escrow agreement between the Company, the Buyer(s) and the Escrow Agent in the form attached hereto as Exhibit B (the “Escrow Agreement”). Such portion of the Purchase Price for the Redeemable Debentures to be purchased in any Additional Closings shall be deposited into the Escrow Account prior to such applicable Closing Date. Subject to the satisfaction of the terms and conditions of this Agreement, on each of the Closing Dates, (i) the Escrow Agent shall deliver to the Company in accordance with the terms of the Escrow Agreement that portion of the Escrow Funds (as that term is defined in the Escrow Agreement) equal to the gross amount of the Redeemable Debentures being purchased by such Buyer(s) as set forth on Schedule I (minus the fees and expenses as set forth herein which shall be paid directly from the Escrow Funds at each Closing) by wire transfer of immediately available funds and (ii) the Company shall deliver to each Buyer, Redeemable Debentures which such Buyer(s) is purchasing in amounts indicated opposite such Buyer’s name on Schedule I, duly executed on behalf of the Company.

2
 
 

               (d) “Closing Date Exchange Rate” means the Euro to US dollar spot exchange rate as quoted in the London edition of the Financial Times on the Closing Date.

               (e) “Repayment Exchange Rate” means in relation to each date of a Redemption Notice, the Euro to US dollar spot exchange rate as quoted in the London edition of the Financial Times on such date.

               (f) If on the date of any Redemption Notice, the Repayment Exchange Rate is less than the Closing Date Exchange Rate then the payment due to Holder shall be increased by the same percentage as results from dividing the Closing Date Exchange Rate by the relevant Repayment Exchange Rate. By way of example, if the payment due in respect of a particular Redemption Notice would, but for this Section 1.08, be $1,000 and if the Closing Date Exchange Rate is 1.80 and the relevant Repayment Exchange Rate is 1.75, then $1,028.57 will be paid in relation to that Redemption Notice.

               (g) If on the date any payment of principal or interest is due (each, a “Repayment Date”), the Cash Payment Date Exchange Rate, as defined below is less than the Closing Date Exchange Rate then the amount of cash required to satisfy the amounts due at such time shall be increased by the same percentage as results from dividing the Closing Date Exchange Rate by the relevant Cash Payment Date Exchange Rate. “Cash Payment Date Exchange Rate” means in relation to each Repayment Date the Euro to US dollar spot exchange rate as quoted in the London edition of the Financial Times on such date. By way of example, if the amount of cash required to repay all amounts due on such date would, but for this Section 1.08, be $1,000 and if the Closing Date Exchange Rate is 1.80 and the relevant Repayment Date Exchange Rate is 1.75 then the amount of cash from the Cash Payment required to repay all amounts due on such date will be $1,028.57.

               2.
BUYER’S REPRESENTATIONS AND WARRANTIES. 
           Each Buyer represents and warrants, severally and not jointly, that:

                    (a)
Investment Purpose. Each Buyer is acquiring the Redeemable Debentures for its own account for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the 1933 Act.

                    (b)
Accredited Investor Status. Each Buyer is an “Accredited investor” as that term is defined in Rule 501(a)(3) of Regulation D.

                    (c)
Reliance on Exemptions. Each Buyer understands that the Redeemable Debentures 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 Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire such securities.

3
 
 

                    (d)
Information. Each Buyer and its advisors (and his or, its counsel), if any, have been furnished with all materials relating to the business, finances and operations of the Company and information he deemed material to making an informed investment decision regarding his purchase of the Redeemable Debentures, which have been requested by such Buyer. Each Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company and its management. Neither such inquiries nor any other due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect such Buyer’s right to rely on the Company’s representations and warranties contained in Section 3 below. Each Buyer understands that its investment in the Redeemable Debentures involves a high degree of risk. Each Buyer is in a position regarding the Company, which, based upon employment, family relationship or economic bargaining power, enabled and enables such Buyer to obtain information from the Company in order to evaluate the merits and risks of this investment. Each Buyer has sought such accounting, legal and tax advice, as it has considered necessary to make an informed investment decision with respect to its acquisition of the Redeemable Debentures.

                    (e)
No Governmental Review. Each Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Redeemable Debentures, or the fairness or suitability of the investment in the Redeemable Debentures, nor have such authorities passed upon or endorsed the merits of the offering of the Redeemable Debentures.

                    (f)
Transfer or Resale. Each Buyer understands that: (i) the Redeemable Debentures 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, or (B) such Buyer shall have delivered to the Company an opinion of counsel, in a generally acceptable form, to the effect that such securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration requirements; (ii) any sale of such securities made in reliance on Rule 144 under the 1933 Act (or a successor rule thereto) (“
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 securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 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 securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.

                    (g)
Legends. Each Buyer understands that the certificates or other instruments representing the Redeemable Debentures shall bear a restrictive legend in substantially the following form (and a stop transfer order may be placed against transfer of such certificates):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN

4
 
 

ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, GENERALLY ACCEPTABLE TO COMPANY’S COUNSEL, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.

The legend set forth above shall be removed and the Company within three (3) business days shall issue a certificate without such legend to the holder of the security upon which it is stamped, if, unless otherwise required by state securities laws, (i) in connection with a sale transaction, provided the securities are registered under the 1933 Act or (ii) in connection with a sale transaction, after such holder provides the Company with an opinion of counsel, which opinion shall be in form, substance and scope reasonably acceptable to counsel for the Company, to the effect that a public sale, assignment or transfer of the securities may be made without registration under the 1933 Act.

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

                    (i)
Receipt of Documents. Each Buyer and his or its counsel has received and read in their entirety: (i) this Agreement and each representation, warranty and covenant set forth herein, and the Transaction Documents; (ii) all due diligence and other information necessary to verify the accuracy and completeness of such representations, warranties and covenants; and (iii) answers to all questions each Buyer submitted to the Company regarding an investment in the Company; and each Buyer has relied on the information contained therein and has not been furnished any other documents, literature, memorandum or prospectus.

                    (j)
Due Formation of Corporate and Other Buyers. If the Buyer(s) is a corporation, trust, partnership or other entity that is not an individual person, it has been formed and validly exists and has not been organized for the specific purpose of purchasing the Redeemable Debentures and is not prohibited from doing so.

                    (k)
No Legal Advice From the Company. Each Buyer acknowledges, that it had the opportunity to review this Agreement and the transactions contemplated by this Agreement with his or its own legal counsel and investment and tax advisors. Each Buyer is relying solely on such counsel and advisors and not on any statements or representations of the Company or any of its representatives or agents for legal, tax or investment advice with respect to this investment, the transactions contemplated by this Agreement or the securities laws of any jurisdiction.

5
 
 

               3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. 
           Except as otherwise provided in the Company Disclosure Schedule delivered herewith, the Company represents and warrants as of the date hereof and as of the Closing Date to each of the Buyers that:

                    (a)
Organization and Qualification. The Company and its subsidiaries are corporations duly organized and validly existing in good standing under the laws of the jurisdiction in which they are incorporated, and have the requisite corporate power to own their properties and to carry on their business as now being conducted. Each of the Company and its subsidiaries is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries taken as a whole.

                    (b)
Authorization, Enforcement, Compliance with Other Instruments. (i) The Company has the requisite corporate power and authority to enter into and perform this Agreement, the Transaction Documents, and any related agreements, and to issue the Redeemable Debentures in accordance with the terms hereof and thereof, (ii) the execution and delivery of this Agreement, the Transaction Documents and any related agreements by the Company and the consummation by it of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Redeemable Debentures, have been duly authorized by the Company’s Board of Directors and no further consent or authorization is required by the Company, its Board of Directors or its stockholders, (iii) this Agreement, the Transaction Documents and any related agreements have been duly executed and delivered by the Company, (iv) this Agreement, the Transaction Documents and any related agreements constitute the valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors’ rights and remedies. The Company knows of no reason why the Company cannot perform any of the Company’s obligations under this Agreement or the Transaction Documents.

                    (c)
Capitalization. The authorized capital stock of the Company consists of 50,000,000 shares of Common Stock, par value $0.001 per share and no shares of Preferred Stock. As of the date hereof, the Company has 41,050,081 shares of Common Stock and no shares of Preferred Stock issued and outstanding. All of such outstanding shares have been validly issued and are fully paid and nonassessable. No shares of Common Stock are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company. As of the date of this Agreement, (i) 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, 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, any shares of capital stock of the Company or any of its subsidiaries, (ii) there are no

6
 
 

outstanding debt securities other than existing credit lines and (iii) there are no agreements or arrangements under which the Company or any of its subsidiaries is obligated to register the sale of any of their securities under the 1933 Act and (iv) there are no outstanding registration statements and there are no outstanding comment letters from the SEC or any other regulatory agency. There are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Redeemable Debentures as described in this Agreement. The Company has furnished to the Buyer true and correct copies of the Company’s Certificate of Incorporation, as amended and as in effect on the date hereof (the “
Certificate of Incorporation”), and the Company’s By-laws, as in effect on the date hereof (the “
By-laws”), and the terms of all securities convertible into or exercisable for Common Stock and the material rights of the holders thereof in respect thereto other than stock options issued to employees and consultants. 

                    (d)
Issuance of Securities. The Redeemable Debentures are duly authorized and, upon issuance in accordance with the terms hereof, shall be duly issued, fully paid and nonassessable, are free from all taxes, liens and charges with respect to the issue thereof.

                    (e)
No Conflicts. The execution, delivery and performance of this Agreement, the Transaction Documents and any related agreements 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 Articles of Incorporation or the By-laws or (ii), to the best knowledge of the Company, 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 agreement, indenture or instrument to which the Company or any of its subsidiaries is a party, or result in a violation of any law, rule, regulation, order, judgment or decree (including United States federal and state securities laws and regulations and the rules and regulations of The National Association of Securities Dealers Inc.’s OTC Bulletin Board on which the Common Shares are quoted) 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. To the best knowledge of the Company, neither the Company nor its subsidiaries is in violation of any term of or in default under its Articles of Incorporation or By-laws or their organizational charter or by-laws, respectively, or, any material contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute, rule or regulation applicable to the Company or its subsidiaries. The business of the Company and its subsidiaries is not being conducted, and shall not be conducted in violation of any material law, ordinance, or regulation of any governmental entity. Except as specifically contemplated by this Agreement and as required under the 1933 Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under or contemplated by this Agreement in accordance with the terms hereof, All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof, except for any required post-Closing notice filings under applicable United States federal or state securities laws, if any.

                    (f) Intentionally Omitted.

7
 
 

                    (g)
No Material Misstatement or Omission. None of the materials provided to the Buyer(s) by the Company and none of the representation and warranties made in this Agreement or any of the other Transaction Documents include any untrue statements of material fact, nor do the materials provided to the Buyer(s) by the Company and the representations and warranties made in this Agreement or any of the other Transaction Documents omit to state any material fact required to be stated therein necessary to make the statements made, in light of the circumstances under which they were made, not misleading.

                    (h)
Absence of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending against or affecting the Company, the Common Stock or any of the Company’s subsidiaries, wherein an unfavorable decision, ruling or finding would (i) have a material adverse effect on the transactions contemplated hereby or (ii) adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under, this Agreement or any of the Transaction Documents have a material adverse effect on the business, operations, properties, financial condition or results of operations of the Company and its subsidiaries taken as a whole.

                    (i)
Acknowledgment Regarding Buyer’s Purchase of the Redeemable Debentures. The Company acknowledges and agrees that the Buyer(s) is acting solely in the capacity of an arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that the Buyer(s) is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by the Buyer(s) or any of their respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to such Buyer’s purchase of the Redeemable Debentures. The Company further represents to the Buyer that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation by the Company and its representatives.

                    (j)
No General Solicitation. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the 1933 Act) in connection with the offer or sale of the Redeemable Debentures.

                    (k)
No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the Redeemable Debentures under the 1933 Act or cause this offering of the Redeemable Debentures to be integrated with prior offerings by the Company for purposes of the 1933 Act.

                    (l)
Employee Relations. Neither the Company nor any of its subsidiaries is involved in any labor dispute nor, to the knowledge of the Company or any of its subsidiaries, is any such dispute threatened. None of the Company’s or its subsidiaries’ employees is a member of a union and the Company and its subsidiaries believe that their relations with their employees are good.

8
 
 

                    (m)
Intellectual Property Rights. The Company and its subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and rights necessary to conduct their respective businesses as now conducted. The Company and its subsidiaries do not have any knowledge of any infringement by the Company or its subsidiaries of trademark, trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, trade secret or other similar rights of others, and, to the knowledge of the Company there is no claim, action or proceeding being made or brought against, or to the Company’s knowledge, being threatened against, the Company or its subsidiaries regarding trademark, trade name, patents, patent rights, invention, copyright, license, service names, service marks, service mark registrations, trade secret or other infringement; and the Company and its subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.

                    (n)
Environmental Laws. The Company and its subsidiaries are (i) in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“
Environmental Laws”), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval.

                    (o)
Title. Any real property and facilities held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its subsidiaries.

                    (p)
Insurance. The Company and each of its subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its subsidiaries are engaged. Neither the Company nor any such subsidiary has been refused any insurance coverage sought or applied for and neither the Company nor any such subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not materially and adversely affect the condition, financial or otherwise, or the earnings, business or operations of the Company and its subsidiaries, taken as a whole.

                    (q)
Regulatory Permits. The Company and its subsidiaries possess all material certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct their respective businesses, and neither the Company nor any such subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit.

9
 
 

                    (r)
Internal Accounting Controls. 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 accountability, and (iii) the recorded amounts for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

                    (s)
No Material Adverse Breaches, etc. Neither the Company nor any of its subsidiaries is subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers has or is expected in the future to have a material adverse effect on the business, properties, operations, financial condition, results of operations or prospects of the Company or its subsidiaries. Neither the Company nor any of its subsidiaries is in breach of any contract or agreement which breach, in the judgment of the Company’s officers, has or is expected to have a material adverse effect on the business, properties, operations, financial condition, results of operations or prospects of the Company or its subsidiaries.

                    (t)
Tax Status. The Company and each of its subsidiaries has made and filed all federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject and (unless and only to the extent that the Company and each of its subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim.

                    (u)
Certain Transactions. Except for arm’s length transactions pursuant to which the Company makes payments in the ordinary course of business upon terms no less favorable than the Company could obtain from third parties and other than the grant of stock options disclosed to the Buyer, none of the officers, directors, or employees of the Company is presently a party to any transaction with the Company (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

                    (v)
Fees and Rights of First Refusal. The Company is not obligated to offer the securities offered hereunder on a right of first refusal basis or otherwise to any third parties including, but not limited to, current or former shareholders of the Company, underwriters, brokers, agents or other third parties. 

10
 
 

               4.
COVENANTS.
                     (a)
Best Efforts. Each party shall use its best efforts timely to satisfy each of the conditions to be satisfied by it as provided in Sections 6 and 7 of this Agreement.

                    (b)
Form D. The Company agrees to file a Form D with respect to the Redeemable Debentures as required under Regulation D and to provide a copy thereof to each Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary to qualify the Redeemable Debentures, or obtain an exemption for the Redeemable Debentures for sale to the Buyers at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of any such action so taken to the Buyers on or prior to the Closing Date.

                    (c)
Reporting Status. Until the date on which none of the Redeemable Debentures are outstanding (the “
Registration Period”), the Company, upon becoming a reporting company under Section 13 or 15(d) of the 1934 Act, shall file in a timely manner all reports required to be filed with the SEC pursuant to the 1934 Act and the regulations of the SEC thereunder, 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. 

                    (d)
Use of Proceeds. The Company will use the proceeds from the sale of the Redeemable Debentures for the purposes of completing acquisitions and for working capital.

                    (e)
Reservation of Shares. The Company shall take all action reasonably necessary to at all times have authorized, and reserved for the purpose of issuance, such number of shares of Common Stock as shall be necessary to effect the issuance of the shares upon exercise of the Warrants (as defined below). If at any time the Company does not have available such shares of Common Stock as shall from time to time be sufficient to effect the issuance of all shares upon exercise of the Warrants, the Company shall file a preliminary proxy statement with the Securities and Exchange Commission within ten (10) business day and shall call and hold a special meeting of the shareholders as soon as practicable after such occurrence, for the sole purpose of increasing the number of shares authorized. The Company’s management shall recommend to the shareholders to vote in favor of increasing the number of shares of Common Stock authorized. Management shall also vote all of its shares in favor of increasing the number of authorized shares of Common Stock.

                    (f)
Fees and Expenses.
                     (i) Each of the Company and the Buyer(s) shall pay all costs and expenses incurred by such party in connection with the negotiation, investigation, preparation, execution and delivery of this Agreement the Transaction Documents and any other documents relating to this transaction.

                    (ii) The Company has agreed to pay a legal and documentation review fee to Buyer of Seventeen Thousand Five Hundred Dollars ($17,500), of which Ten Thousand Dollars ($10,000) remains outstanding and shall be paid directly from the proceeds of the First Closing.

11
 
 

                    (iii) The Company has agreed to pay a Due Diligence Fee to Buyer of Fifteen Thousand Dollars ($15,000), one-half of which has been paid prior to this date and one-half of which shall be paid directly from the proceeds of the First Closing.

                    (iv) The Company shall issue to the Buyer warrants to purchase one hundred thousand (100,000) shares of the Company’s Common Stock for every One Million Dollars ($1,000,000) of Redeemable Debentures purchased by the Buyer. The warrants shall be exercisable for a period of five (5) years at an exercise price equal to $0.001 per share (“
Warrants”). The Warrants shall be issued in full at each Closing and shall be exercised on a cash basis provided that the Company is not in Default and the shares underlying the Warrants hold one demand registration right and standard and customary anti-dilution protection. Upon the Buyer purchasing an aggregate of Five Million Dollars ($5,000,000) worth of Redeemable Debentures, the Buyer shall receive an additional Warrant to purchase one percent (1%) of the fully diluted outstanding Common Stock of the Company (the “One Percent Warrant”). Upon the Buyer purchasing an aggregate of Ten Million Dollars ($10,000,000) worth of Redeemable Debentures, the Warrant coverage shall increase to two percent (2%) of the fully diluted outstanding Common Stock of the Company. 

                    (v) The Company shall pay to the Buyer a Commitment Fee equal to five percent (5%) of the principal amount of each Redeemable Debenture which shall be paid directly from the proceeds of and proportionally upon each Closing. The total cost of capital to the Company shall not exceed thirteen percent (13%).

                    (vi) The Company shall pay to the Buyer a Loan Commitment Fee equal to two percent (2%) of the principal amount of each Redeemable Debenture which shall be paid directly from the proceeds of and proportionally upon each Closing.

                    (g)
Corporate Existence. So long as any of the Redeemable Debentures remain outstanding, the Company shall not directly or indirectly consummate any merger, reorganization, restructuring, reverse stock split consolidation, sale of all or substantially all of the Company’s assets or any similar transaction or related transactions (each such transaction, an “Organizational Change”) unless, prior to the consummation an Organizational Change, the Company obtains the written consent of each Buyer. In any such case, the Company will make appropriate provision with respect to such holders’ rights and interests to insure that the provisions of this Section 4(g) will thereafter be applicable to the Redeemable Debentures.

                    (h)
Transactions With Affiliates. So long as any Redeemable Debentures are outstanding, the Company shall not, and shall cause each of its subsidiaries not to, enter into, amend, modify or supplement, or permit any subsidiary to enter into, amend, modify or

12
 
 

supplement any agreement, transaction, commitment, or arrangement with any of its or any subsidiary’s officers, directors, persons who were officers or directors at any time during the previous two (2) years, stockholders who beneficially own five percent (5%) or more of the Common Stock, or Affiliates (as defined below) or with any individual related by blood, marriage, or adoption to any such individual or with any entity in which any such entity or individual owns a five percent (5%) or more beneficial interest (each a “
Related Party”), except for (a) customary employment arrangements and benefit programs on reasonable terms, (b) any investment in an Affiliate of the Company, (c) any agreement, transaction, commitment, or arrangement on an arms-length basis on terms no less favorable than terms which would have been obtainable from a person other than such Related Party, (d) any agreement transaction, commitment, or arrangement which is approved by a majority of the disinterested directors of the Company, for purposes hereof, any director who is also an officer of the Company or any subsidiary of the Company shall not be a disinterested director with respect to any such agreement, transaction, commitment, or arrangement. “
Affiliate” for purposes hereof means, with respect to any person or entity, another person or entity that, directly or indirectly, (i) has a ten percent (10%) or more equity interest in that person or entity, (ii) has ten percent (10%) or more common ownership with that person or entity, (iii) controls that person or entity, or (iv) shares common control with that person or entity. “
Control” or “controls” for purposes hereof means that a person or entity has the power, direct or indirect, to conduct or govern the policies of another person or entity. 

                    (i)
Transfer Agent. The Company covenants and agrees that, in the event that the Company’s agency relationship with the transfer agent should be terminated for any reason prior to a date which is two (2) years after the Closing Date, the Company shall immediately appoint a new transfer.

                    (j)
Restriction on Issuance of the Capital Stock. So long as any Redeemable Debentures are outstanding, the Company shall not, without the prior written consent of the Buyer(s), (i) issue or sell shares of Common Stock or Preferred Stock without consideration or for a consideration per share less than the bid price of the Common Stock determined immediately prior to its issuance except for issuances to Richardson & Patel, LLP, (ii) issue any preferred stock, warrant, option, right, contract, call, or other security instrument granting the holder thereof, the right to acquire Common Stock without consideration or for a consideration less than such Common Stock’s bid price value determined immediately prior to it’s issuance, (iii) enter into any security instrument granting the holder a security interest in any and all assets of the Company, or (iv) file any registration statement on Form S-8 other than on behalf of Richardson & Patel, LLP. 

                    (k)
Restriction on “Short” Position. Neither the Buyer nor any of its affiliates have an open short position in the Common Stock of the Company, and the Buyer agrees that it shall not, and that it will cause its affiliates not to, engage in any short sales with respect to the Common Stock as long as any Redeemable Debentures shall remain outstanding.

                    (l)
Restriction on Incurring Additional Debt. The Company shall not incur any additional debt without the prior written approval of the Buyer with the exception of equipment purchases and real estate acquisitions used in the normal course of business.

13
 
 

               5.
Intentionally Omitted.
                6.
CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.
           The obligation of the Company hereunder to issue and sell the Redeemable Debentures to the Buyer(s) at the Closings is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion:

                    (a) Each Buyer shall have executed this Agreement, and the Transaction Documents and delivered the same to the Company.

                    (b) The Buyer(s) shall have delivered to the Escrow Agent the Purchase Price for Redeemable Debentures in respective amounts as set forth next to each Buyer as outlined on Schedule I attached hereto and the Escrow Agent shall have delivered the net proceeds to the Company by wire transfer of immediately available U.S. funds pursuant to the wire instructions provided by the Company.

                    (c) The representations and warranties of the Buyer(s) shall be true and correct in all material respects as of the date when made and as of each Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and the Buyer(s) shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Buyer(s) at or prior to such Closing Date.

                    (d) The Company shall have filed a form UCC-1 with regard to the Pledged Property and Pledged Collateral as detailed in the Security Agreement dated the date hereof and provided proof of such filing to the Buyer(s).

               7.
CONDITIONS TO THE BUYER’S OBLIGATION TO PURCHASE.
           The obligation of the Buyer(s) hereunder to purchase the Redeemable Debentures at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions:

                    (a) The Company shall have executed this Agreement the Transaction Documents and any other documents relating to this transaction and delivered the same to the Buyer(s).

                    (b) The trading in the Common Shares on the pink sheets, or the over-the-counter bulletin board upon the company’s listing thereon, shall not have been suspended for any reason.

                    (c) The representations and warranties of the Company shall be true and correct in all material respects (except to the extent that any of such representations and warranties is already qualified as to materiality in Section 3 above, in which case, such

14
 
 

representations and warranties shall be true and correct without further qualification) as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date. If requested by the Buyer, the Buyer shall have received a certificate, executed by the President 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 Buyer including, without limitation an update as of the Closing Date regarding the representation contained in Section 3(c) above.

                    (d) The Company shall have executed and delivered to the Buyer(s) the Redeemable Debentures in the respective amounts set forth opposite each Buyer(s) name on Schedule I attached hereto.

                    (e) The Buyer(s) shall have received an opinion of counsel from counsel to the Company in a form satisfactory to the Buyer(s).

                    (f) The Company shall have provided to the Buyer(s) a certificate of good standing from the secretary of state from the state in which the company is incorporated.

                    (g) As of the Closing Date, the Company shall have reserved out of its authorized and unissued Common Stock, solely for the purpose of issuing shares of Common Stock upon exercise of the Warrant, shares of Common Stock to effect the issuance of the shares of Common Stock upon exercise of the Warrants.

                    (h) Intentionally omitted.

                    (i) Upon issuance of the Company’s audits, and prior to the Company filing a Form 10 or other registration statement with the Securities and Exchange Commission, the Company shall provide to the Buyer an acknowledgement, to the satisfaction of the Buyer, from the Company’s independent certified public accountants as to its ability to provide all consents required in order to file a registration statement in connection with this transaction.

                    (j) The Company shall file a form UCC-1 or such other forms as may be required to perfect the Buyer’s interest in the Pledged Collateral as detailed in the Security Agreement dated the date hereof, providing the Buyer with a senior lien on all of the Company’s assets and intellectual property and provided proof of such filing to the Buyer(s).

                    (k) The satisfactorily completion of all due diligence.

                    (1) With respect to each Additional Closing, such Closings shall only occur, and the Buyer shall only purchase Redeemable Debentures for which the proceeds are being used for acquisitions to which Buyer has consented.

15
 
 

               8.
INDEMNIFICATION.
                     (a) In consideration of the Buyer’s execution and delivery of this Agreement and acquiring the Redeemable Debentures hereunder, and in addition to all of the Company’s other obligations under this Agreement, the Company shall defend, protect, indemnify and hold harmless the Buyer(s) and each other holder of the Redeemable Debentures, and all of their officers, directors, employees and agents (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “
Buyer indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Buyer Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by the Buyer Indemnitees or any of them as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in this Agreement, the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in this Agreement, or the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, or (c) any cause of action, suit or claim brought or made against such Indemnitee by a third party and arising out of or resulting from the execution, delivery, performance or enforcement of this Agreement or any other instrument, document or agreement executed pursuant hereto by any of the Indemnities, any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Redeemable Debentures or the status of the Buyer or holder of the Redeemable Debentures, as a Buyer of Redeemable Debentures in the Company. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities, which is permissible under applicable law. 

                    (b) In consideration of the Company’s execution and delivery of this Agreement, and in addition to all of the Buyer’s other obligations under this Agreement, the Buyer shall defend, protect, indemnify and hold harmless the Company and all of its officers, directors, employees and agents (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “
Company Indemnitees”) from and against any and all Indemnified Liabilities incurred by the Indemnitees or any of them as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Buyer(s) in this Agreement, the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby executed by the Buyer, (b) any breach of any covenant, agreement or obligation of the Buyer(s) contained in this Agreement, the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby executed by the Buyer, or (c) any cause of action, suit or claim brought or made against such Company Indemnitee based on material misrepresentations or due to a material breach and arising out of or resulting from the execution, delivery, performance or enforcement of this Agreement, the Transaction Documents or any other certificate instrument, document or agreement executed pursuant hereto by any of the Company Indemnities. To the extent that the foregoing undertaking by each Buyer may be unenforceable for any reason, each Buyer shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities, which is permissible under applicable law. 

16
 
 

               9.
GOVERNING LAW: MISCELLANEOUS.
                     (a)
Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Florida without regard to the principles of conflict of laws. The parties further agree that any action between them shall be heard in Broward County, Florida and expressly consent to the jurisdiction and venue of the State Court sitting in Broward County, Florida and the United States District Court for the Southern District of Florida for the adjudication of any civil action asserted pursuant to this Paragraph.

                    (b)
Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party.

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

                    (d)
Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

                    (e)
Entire Agreement Amendments. This Agreement supersedes all other prior oral or written agreements between the Buyer(s), the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement.

                    (f)
Notices. Any notices, consents, waivers, or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon confirmation of receipt, when sent by facsimile; (iii) three (3) days after being sent by U.S. certified mail, return receipt requested, or (iv) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

17
 
 

	
 
	  

	 If to the Company, to:
	 National Automation Services, Inc.

	
 
	 2053 Pabco

	  
	 Henderson, NV 89011

	  
	 Attention: Mr. Bob Chance, President

	  
	 Telephone: (702) 642-7720

	  
	 Facsimile: (702) 564-5411

	  
	  

	 With a copy to:
	 Richardson & Patel, LLP

10900 Wilshire Boulevard, Suite 500 
Los Angeles, CA 90024 
Attention: Peter Hogan 
Telephone: (310) 208-1182

Facsimile: (310) 208-1154

	  
	  

	 With Copy to:
	 James G. Dodrill II, P.A. 
5800 Hamilton Way 
Boca Raton, FL 33496

Attention:        Jim Dodrill, Esq. 
Telephone:      (561) 862-0529

Facsimile:       (561) 892-7787

           If to the Buyer(s), to its address and facsimile number on

Schedule I, with copies to the Buyer’s counsel as set forth on Schedule I. Each party shall provide five (5) days’ prior written notice to the other party of any change in address or facsimile number.

                    (g)
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. Neither the Company nor any Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other party hereto.

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

                    (i)
Survival. Unless this Agreement is terminated under Section 9(1), the representations and warranties of the Company and the Buyer(s) contained in Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and 9, and the indemnification provisions set forth in Section 8, shall survive the Closing for a period of two (2) years following the date on which the Redeemable Debentures are redeemed in full. The Buyer(s) shall be responsible only for its own representations, warranties, agreements and covenants hereunder.

18
 
 

                    (j)
Publicity. The Company and the Buyer(s) shall have the right to approve, before issuance any press release or any other public statement with respect to the transactions contemplated hereby made by any party; provided, however, that the Company shall be entitled, without the prior approval of the Buyer(s), to issue any press release or other public disclosure with respect to such transactions required under applicable securities or other laws or regulations (the Company shall use its best efforts to consult the Buyer(s) in connection with any such press release or other public disclosure prior to its release and Buyer(s) shall be provided with a copy thereof upon release thereof).

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

                    (l)
Termination. In the event that the Closing shall not have occurred with respect to the Buyers on or before five (5) business days from the date hereof due to the Company’s or the Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7 above (and the non-breaching party’s failure to waive such unsatisfied condition(s)), the non-breaching party shall have the option to terminate this Agreement with respect to such breaching party at the close of business on such date without liability of any party to any other party; provided, however, that if this Agreement is terminated by the Company pursuant to this Section 9(1), the Company shall remain obligated to pay the Buyer(s) for the structuring fee described in Section 4(g) above.

                    (m)
No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parlies to express their mutual intent, and no rules of strict construction will be applied against any party.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
19
 
 

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

	
 
	  
	  
	  

	  
	 COMPANY:
	  

	  
	 
NATIONAL AUTOMATION SERVICES, INC.
	  

	  
	  
	  
	  

	  
	 By:
	 /s/ Bob Chance
	
 

	  
	  
	 
 	  

	  
	 Name:
	 Bob Chance
	  

	  
	 Title:
	 President
	  

	  
	  
	  
	  

	  
	 BUYER:
	  

	  
	 
TRAFALGAR CAPITAL SPECIALIZED INVESTMENT FUND, LUXEMBOURG 
	 
 

	  

	  
	 By:
	 Trafulgar Capital Sarl
	  

	  
	 Its:
	 General Partner
	  

	  
	  
	  
	  

	  
	 By:
	  
	  

	  
	  
	 
 	  

	  
	 Name:
	 Andrew Garai
	  

	  
	 Title:
	 Chairman of the Board
	  

20
 
 

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

	
 
	  
	  
	  

	  
	 COMPANY:
	  

	  
	 
NATIONAL AUTOMATION SERVICES, INC.
	  

	  
	  
	  
	  

	  
	 By:
	  
	  

	  
	  
	 
 	  

	  
	 Name:
	 Bob Chance
	  

	  
	 Title:
	 President
	  

	  
	  
	  
	  

	  
	 
BUYER:
	  

	
 
	 TRAFALGAR CAPITAL SPECIALIZED INVESTMENT FUND, LUXEMBOURG 
	  

	  

	  
	 By:
	 Trafulgar Capital Sarl
	  

	  
	 Its:
	 General Partner
	  

	  
	  
	  
	  

	  
	 By:
	 /s/ Andrew Garai
	
 

	  
	  
	 
 	  

	  
	 Name:
	 Andrew Garai
	  

	  
	 Title:
	 Chairman of the Board
	  

 20

 
 
SCHEDULE I 
 SCHEDULE OF BUYERS

	
 
	  
	  
	  
	  
	
 
	  
	  
	  
	  

	
Name
	  
	 Signature
	
 
	 Address/Facsimile

Number of Buyer
	  
	
Amount of Subscription

	 
 	  
	 
 	  
	 
 	  
	 
 
	  
	  
	  
	  
	  
	  
	 8-10 Rue Mathias Hardt
	  
	  
	  

	 Trafalgar Capital Specialized
	 
 
	 By:
	
 
	 Trafalgar Capital Sarl
	  
	 BP 3023
	  
	 $
	 10,000,000

	 Investment Fund, Luxembourg
	  
	 Its:
	  
	 General Partner
	  
	 L-1030 Luxembourg

Facsimile: 011-44-207-405-0161
	  
	  
	  

	  
	  
	 By:
	  
	  
	  
	
and
001-786-323-1651
	  
	  
	  

	  
	  
	  
	  
	 
 	  
	  
	  
	  
	  

	  
	  
	 Name:
	  
	 Andrew Garai
	  
	  
	  
	  
	  

	  
	  
	 Its:
	  
	 Chairman of the Board
	  
	  
	  
	  
	  

Buyer’s Counsel:
 James G. Dodrill II, P.A.
5800 Hamilton Way

Boca Raton, FL 33496 
Telephone: (561) 862-0529 
Facsimile: (561) 892-7787
 

 EXHIBIT A

[RESERVED]
 21
 

 EXHIBIT B 

FORM OF ESCROW AGREEMENT 
 

 EXHIBIT C 

FORM OF SECURITY AGREEMENT 
 

 SCHEDULE I 

SCHEDULE OF BUYERS
 	  
	  
	  
	  
	
 
	  
	  
	  
	  
	
 

	 Name
	  
	 
Signature
	  
	
Address/Facsimile 
Number of Buyer
	
 
	 Amount of Subscription

	 
 	 
 
	 
 	  
	 
 	  
	 
 
	  
	  
	  
	  
	  
	  
	 8-10 Rue Mathias Hardt
	  
	  
	  

	 Trafalgar Capital Specialized
	 
 
	 By:
	
 
	 Trafalgar Capital Sarl
	  
	 BP 3023
	  
	 $
	 10,000,000

	 Investment Fund, Luxembourg
	  
	 Its:
	  
	 General Partner
	  
	 L-1030 Luxembourg

Facsimile: 011-44-207-405-0161
	  
	  
	  

	  
	  
	 By:
	  
	  /s/ Andrew Garai
	  
	 and 001-786-323-1651
	  
	  
	  

	  
	  
	  
	  
	 
 	  
	  
	  
	  
	  

	  
	  
	 Name:
	  
	 Andrew Garai
	  
	  
	  
	  
	  

	  
	  
	 Its:
	  
	 Chairman of the Board
	  
	  
	  
	  
	  

 Buyer’s Counsel:

James G. Dodrill II, P.A.
5800 Hamilton Way 
Boca Raton, FL 33496 
Telephone: (561) 862-0529

Facsimile: (561) 892-7787

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00161-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00161-of-00352.parquet"}]]