Document:

EX-10.1

EXHIBIT 10.1

AMENDMENT

NO. 2

TO

THIRD AMENDED AND RESTATED PRECIOUS METALS AGREEMENT

THIS AMENDMENT NO. 2 TO THIRD AMENDED AND RESTATED PRECIOUS METALS AGREEMENT (this
“Amendment”) is made as of August 1, 2011, by and among THE BANK OF NOVA SCOTIA, a Canadian
chartered bank (the “Metal Lender”); MATERION CORPORATION (f/k/a Brush Engineered Materials
Inc.), an Ohio corporation (“BEM”); MATERION ADVANCED MATERIALS TECHNOLOGIES AND SERVICES
INC. (f/k/a Williams Advanced Materials Inc.), a New York corporation (“WAM”); MATERION
TECHNICAL MATERIALS INC. (f/k/a Technical Materials, Inc.), an Ohio corporation (“TMI”);
MATERION BRUSH INC. (f/k/a Brush Wellman Inc.), an Ohio corporation (“BWI”); MATERION
TECHNOLOGIES INC. (f/k/a Zentrix Technologies Inc.), an Arizona corporation (“ZTI”);
MATERION BREWSTER LLC (f/k/a Williams Acquisition, LLC), a New York limited liability company d/b/a
Pure Tech (“Pure Tech”); MATERION PRECISION OPTICS AND THIN FILM COATINGS CORPORATION
(f/k/a Thin Film Technology, Inc.), a California corporation (“TFT”); MATERION LARGE AREA
COATINGS LLC (f/k/a Techni-Met, LLC), a Delaware limited liability company (“TML”);
MATERION ADVANCED MATERIALS TECHNOLOGIES AND SERVICES CORP. (f/k/a Academy Corporation), a New
Mexico corporation (“AC”); MATERION ADVANCED MATERIALS TECHNOLOGIES AND SERVICES LLC (f/k/a
Academy Gallup, LLC), a New Mexico limited liability company (“AG”); and such other
Subsidiaries of BEM who may from time to time become parties by means of their execution and
delivery with the Metal Lender of a Joinder Agreement under the Precious Metals Agreement (as
defined below). BEM, WAM, TMI, BWI, ZTI, Pure Tech, TFT, TML, AC, AG and such Subsidiaries are
herein sometimes referred to collectively as the “Customers” and each individually as a
“Customer”.

WITNESSETH:

WHEREAS, the Metal Lender and the Customers are parties to a certain Third Amended and
Restated Precious Metals Agreement, effective as of October 1, 2010, as amended by that certain
Amendment No. 1, dated as of March 31, 2011 (as amended, the “Precious Metals Agreement”);
and

WHEREAS, the parties hereto desire to amend certain provisions of the Precious Metals
Agreement as hereinafter provided;

NOW, THEREFORE, for value received and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto hereby amend the Precious Metals
Agreement and agree, effective as of the date first written above, as follows:.

1. Amendments.

(a) The definition of “Gold Loan Limit” appearing in Section 1 of the Precious Metals
Agreement is hereby amended and restated in its entirety to read as follows:

“Gold Loan Limit” means the lesser of (a) the value (as
determined in accordance with Section 2.2 hereof) of 23,781
fine troy ounces of Gold, and (b) One Hundred Seventy-Five Million
Dollars ($175,000,000), minus the Consignment Facility
Indebtedness.

(b) The definition of “Lender Intercreditor Agreement” appearing in Section 1 of the Precious
Metals Agreement is hereby amended and restated in its entirety to read as follows:

“Lender Intercreditor Agreement” means the Amended and
Restated Intercreditor Agreement, dated as of December 28, 2007, by
and between the Collateral Agent (on behalf of the Metal Lender and
Approved Consignors) and the Agent (on behalf of the Lenders under
the Senior Credit Agreement), as amended by (a) Amendment No. 1 to
Amended and Restated Intercreditor Agreement, dated as of March 3,
2008, (b) Amendment No. 2 to Amended and Restated Intercreditor
Agreement, dated as of October 2, 2009, (c) Amendment No. 3 to
Amended and Restated Intercreditor Agreement, dated as of May 7,
2010, (d) Amendment No. 4 to Amended and Restated Intercreditor
Agreement, dated as of September 28, 2010, and (e) Amendment No. 5
to Amended and Restated Intercreditor Agreement, dated as of March
4, 2011, and as may be further amended, restated or supplemented
from time to time.

(c) The definition of “Material Indebtedness” appearing in Section 1 of the Precious Metals
Agreement is hereby amended by deleting the text “$10,000,000” appearing therein and replacing it
with “$20,000,000”.

(d) The definition of “Maturity Date” appearing in Section 1 of the Precious Metals Agreement
is hereby amended and restated in its entirety to read as follows:

“Maturity Date” means September 30, 2013. Any obligations
of the Customers under this Agreement which are not paid when due on
or before the Maturity Date shall remain subject to the provisions
of this Agreement until all Obligations are paid and performed in
full.

(e) The definition of “Senior Credit Agreement” appearing in Section 1 of the Precious Metals
Agreement is hereby amended and restated in its entirety to read as follows:

“Senior Credit Agreement” means that certain Amended and
Restated Credit Agreement, dated as of July 13, 2011, among BEM,
Materion Advanced Materials Technologies and Services Netherlands
B.V., the other foreign Subsidiary borrowers party thereto from time
to time, certain lenders party thereto from time to time, and
JPMorgan Chase, N.A., as administrative agent, as may be amended,
restated or supplemented, or refinanced or otherwise replaced from
time to time. If the Senior Credit Agreement is hereafter amended,
refinanced or otherwise replaced (including, without limitation,
with an unsecured credit facility), the parties hereto shall
negotiate in good faith to make appropriate modifications to this
Agreement acceptable to the parties hereto, such that the applicable
representations, warranties, agreements, covenants and Events of
Default herein conform to their corresponding provisions of such
amended, refinanced or replaced credit facility; provided,
however, that the Metal Lender will not be required to make
any such modifications to the extent they would affect the
Applicable Margin or cause the Metal Lender to surrender, release or
otherwise compromise its security interest in the Collateral.

(f) The last paragraph of Section 1 of the Precious Metals Agreement is hereby amended and
restated in its entirety to read as follows:

To the extent not defined in this Section l, unless the
context otherwise requires, accounting and financial terms used in
this Agreement shall have the meanings attributed to them by GAAP
(provided that, if BEM notifies the Metal Lender
that BEM requests an amendment to any provision hereof to eliminate
the effect of any change occurring after the date hereof in GAAP or
in the application thereof on the operation of such provision (or if
the Metal Lender notifies BEM that it requests an amendment to any
provision hereof for such purpose), regardless of whether any such
notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the
basis of GAAP as in effect and applied immediately before such
change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith), and
all other terms contained in this Agreement shall have the meanings
attributed to them by Article 9 of the Uniform Commercial Code in
force in the State of New York, as of the date hereof to the extent
the same are used or defined therein.

(g) Section 9.12 of the Precious Metals Agreement is hereby amended and restated in
its entirety to read as follows:

9.12 Indebtedness.

The Customers will not, nor will they permit any other Customer
to, create, incur or suffer to exist any Indebtedness, except:

(a) the Obligations;

(b) Indebtedness existing on the date hereof and set forth in
Schedule 9.12 and extensions, renewals and replacements of
any such Indebtedness with Indebtedness of a similar type that does
not increase the outstanding principal amount thereof;

(c) Indebtedness of any Customer to any other Customer or to
any Subsidiary of BEM;

(d) Guarantees by BEM of Indebtedness of any of its
Subsidiaries and by any such Subsidiary of Indebtedness of BEM or
any other such Subsidiary;

(e) Indebtedness of any Customer incurred to finance the
acquisition, construction or improvement of any assets, including
Capitalized Lease Obligations and any Indebtedness assumed in
connection with the acquisition of any such assets or secured by a
Lien on any such assets prior to the acquisition thereof, and
extensions, renewals and replacements of any such Indebtedness that
do not increase the outstanding principal amount thereof;
provided that the aggregate principal amount of Indebtedness
incurred in any Fiscal Year pursuant to this clause (e) shall not
exceed $25,000,000;

(f) contingent obligations (i) by endorsement of instruments
for deposit or collection in the ordinary course of business, (ii)
consisting of the reimbursement obligations in respect of letter of
credit obligations permitted by the Senior Credit Agreement, (iii)
consisting of the guarantees of Indebtedness incurred for the
benefit of any Subsidiary of BEM if the primary obligation is
expressly permitted elsewhere in this Section 9.12, and (iv)
under the Beryllium Contracts;

(g) Indebtedness arising under Swap Agreements and Precious
Metal Hedging Transactions having a Net Marked-to-Market Exposure
not exceeding $50,000,000, which amount shall include the Swap
Agreements and Precious Metal Hedging Transactions in existence on
the Effective Date;

(h) Indebtedness arising under this Agreement and all other
Permitted Precious Metals Agreements in an aggregate principal
amount not to exceed the Aggregate Secured Precious Metal Limit;

(i) Indebtedness arising under or permitted by the Senior
Credit Agreement;

(j) unsecured Indebtedness of a Customer (including unsecured
Subordinated Indebtedness to the extent subordinated to the
Obligations on terms reasonably acceptable to the Metal Lender) in
the form of publicly issued notes, to the extent not otherwise
permitted under this Section 9.12, and any Indebtedness of a
Customer constituting refinancings, renewals or replacements of any
such Indebtedness; provided that (i) both immediately prior
to and after giving effect (including giving effect on a pro forma
basis) thereto, no Default or Event of Default shall exist or would
result therefrom, (ii) such Indebtedness matures after, and does not
require any scheduled amortization or other scheduled payments of
principal prior to, the date that is 181 days after the Maturity
Date (it being understood that any provision requiring an offer to
purchase such Indebtedness as a result of change of control or asset
sale shall not violate the foregoing restriction), (iii) such
Indebtedness is not guaranteed by any Subsidiary of BEM that is not
a Customer (which guarantees, if such Indebtedness is subordinated,
shall be expressly subordinated to the Obligations on terms not less
favorable to the Metal Lender than the subordination terms of such
Subordinated Indebtedness), (iv) the covenants applicable to such
Indebtedness are not more onerous or more restrictive in any
material respect (taken as a whole) than the applicable covenants
set forth in this Agreement and (v) both immediately prior to and
after giving effect (including giving effect on a pro forma basis)
thereto, the Customers would be in compliance with Section
9.17; and

(k) other unsecured Indebtedness in an amount not in excess of
$100,000,000.

(h) Section 9.14 of the Precious Metals Agreement is hereby amended and restated in
its entirety to read as follows:

9.14 Liens.

No Customer will create, incur, or suffer to exist any Lien in,
of, or on any of the Collateral of such Customer, except the
following (collectively, “Permitted Liens”):

(a) Liens created pursuant to any Precious Metals Document;

(b) Liens arising in connection with Permitted Precious Metals
Agreements subject to the Metal Intercreditor Agreement to the
extent required by Section 9.21;

(c) Liens arising in connection with the Senior Credit
Agreement subject to the Lender Intercreditor Agreement;

(d) any Lien on any property or asset of any Customer existing
on the date hereof and set forth in Schedule 9.14;
provided that (i) such Lien shall not apply to any other
property or asset of a Customer and (ii) such Lien shall secure only
those obligations which it secures on the date hereof and
extensions, renewals and replacements thereof that do not increase
the outstanding principal amount thereof;

(e) any Lien existing on any property or asset prior to the
acquisition thereof by any Customer or existing on any property or
asset of any Person that becomes a Customer after the date hereof
prior to the time such Person becomes a Customer; provided
that (i) such Lien is not created in contemplation of or in
connection with such acquisition or such Person becoming a Customer,
as the case may be, (ii) such Lien shall not apply to any other
property or assets of a Customer and (iii) such Lien shall secure
only those obligations which it secures on the date of such
acquisition or the date such Person becomes a Customer, as the case
may be, and extensions, renewals and replacements thereof that do
not increase the outstanding principal amount thereof;

(f) Liens on assets acquired, constructed or improved by any
Customer; provided that (i) such security interests secure
Indebtedness permitted by Section 9.12(e), (ii) the
Indebtedness secured thereby does not exceed the cost of acquiring,
constructing or improving such assets and (iii) such security
interests shall not apply to any other property or assets of the
Customer;

(g) Liens for taxes, fees, assessments, or other governmental
charges or levies on the property of any Customer if such Liens (i)
shall not at the time be delinquent or (ii) subject to the
provisions of Section 9.5, do not secure obligations in
excess of $15,000,000 and a stay of enforcement of such Lien is in
effect;

(h) Liens imposed by law, such as carrier’s, warehousemen’s,
and mechanic’s Liens and other similar Liens arising in the ordinary
course of business which secure payment of obligations not more than
ten days past due or which are being contested in good faith by
appropriate proceedings diligently pursued and for which adequate
reserves shall have been provided on the Customer’s books;

(i) statutory Liens in favor of landlords of real property
leased by a Customer; provided that, the Customer is current
with respect to payment of all rent and other material amounts due
to such landlord under any lease of such real property;

(j) Liens arising out of pledges or deposits under worker’s
compensation laws, unemployment insurance, old age pensions, or
other social security or retirement benefits, or similar legislation
or to secure the performance of bids, tenders, or contracts (other
than for the repayment of Indebtedness) or to secure indemnity,
performance, or other similar bonds for the performance of bids,
tenders, or contracts (other than for the repayment of Indebtedness)
or to secure statutory obligations (other than liens arising under
ERISA or Environmental Laws) or surety or appeal bonds, or to secure
indemnity, performance, or other similar bonds;

(k) the equivalent of the types of Liens discussed in clauses
(g) through (j) above, inclusive, in any jurisdiction in which the
Customer is engaged in business or owns property or assets;

(l) Liens arising from judgments or orders under circumstances
that do not constitute an Event of Default under Section
10.1(k);

(m) Liens in favor of or asserted by any Client in Client
Metals under or in connection with any Client-Customer Arrangement;
and

(n) other Liens not otherwise permitted above so long as the
aggregate principal amount of the obligations subject to such Liens
does not at any time exceed $20,000,000.

The Permitted Liens referred to in this Section 9.14,
excluding those referred to in clauses (e), (g) and (n) above, are
referred to in this Agreement as “Permitted Metal Liens”.

(i) Section 10.1(k) of the Precious Metals Agreements is hereby amended by deleting
the text “$5,000,000” appearing therein and replacing it with “$20,000,000”.

(j) Schedule 1 to the Precious Metals Agreement is hereby amended and restated in its
entirety to read as set forth in Annex I hereto.

2. Representations and Warranties. To induce the Metal Lender to enter into this
Amendment, each Customer hereby represents and warrants to the Metal Lender that: (a) such
Customer has full power and authority, and has taken all action necessary, to execute and deliver
this Amendment and to fulfill its obligations hereunder and to consummate the transactions
contemplated hereby; (b) the making and performance by such Customer of this Amendment do not and
will not violate any law or regulation of the jurisdiction of its organization or any other law or
regulation applicable to it; (c) this Amendment has been duly executed and delivered by such
Customer and constitutes the legal, valid and binding obligation of such Customer, enforceable
against it in accordance with its terms, except as enforceability may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors’ rights generally and except as
the same may be subject to general principles of equity; and (d) on and as of the date hereof,
after giving effect to this Amendment, no Default or Event of Default exists under the Precious
Metals Agreement.

3. Governing Law. This Amendment shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and performed in such State.

4. Integration. The Precious Metals Agreement, as amended hereby, together with the
other Precious Metal Documents, is intended by the parties as the final, complete and exclusive
statement of the transactions evidenced by the Precious Metals Agreement. All prior or
contemporaneous promises, agreements and understandings, whether oral or written, are deemed to be
superseded by the Precious Metals Agreement, as amended hereby, and no party is relying on any
promise, agreement or understanding not set forth in the Precious Metals Agreement, as amended
hereby. The Precious Metals Agreement, as amended hereby, may not be amended or modified except by
a written instrument describing such amendment or modification executed by the Customers and the
Metal Lender. The parties hereto agree that this Amendment shall in no manner affect or impair the
liens and security interests evidenced or granted by the Precious Metals Agreement or in connection
therewith.

5. Ratification. Except as amended hereby, the Precious Metals Agreement shall remain
in full force and effect and is in all respects hereby ratified and affirmed.

6. Signatures. This Amendment may be executed by the parties hereto in several
counterparts hereof and by the different parties hereto on separate counterparts hereof, each of
which shall be an original and all of which shall together constitute one and the same agreement.
Delivery of an executed signature page of this Amendment by electronic transmission shall be
effective as an in hand delivery of an original executed counterpart hereof.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned parties have caused this Amendment to be executed by
their duly authorized officers as of the date first written above.

	 	 	 
	CUSTOMERS:	 	 
	MATERION CORPORATION

By:/s/ Michael C. Hasychak

Michael C. Hasychak

Vice President, Treasurer and Secretary

	 	MATERION ADVANCED MATERIALS TECHNOLOGIES

AND SERVICES INC.

By: /s/ Michael C. Hasychak

—

Michael C. Hasychak

Vice President, Treasurer and Secretary
	MATERION TECHNICAL MATERIALS INC.

By: /s/ Michael C. Hasychak

	 	MATERION BRUSH INC.

By: /s/ Michael C. Hasychak
	 

	 	 
	Michael C. Hasychak

Vice President, Treasurer and Secretary

	 	Michael C. Hasychak

Vice President, Treasurer and Secretary
	MATERION TECHNOLOGIES INC.

By: /s/ Michael C. Hasychak

	 	MATERION BREWSTER LLC

By:
	 

	 	

	Michael C. Hasychak

Chief Financial Officer and Secretary

	 	Michael C. Hasychak

Treasurer
	MATERION PRECISION OPTICS AND THIN FILM

COATINGS CORPORATION

By: /s/ Gary W. Schiavoni

Gary W. Schiavoni

Secretary

	 	MATERION LARGE AREA COATINGS LLC

By: /s/ Gary W. Schiavoni

—

Gary W. Schiavoni

Asst. Secretary and Asst. Treasurer

	MATERION ADVANCED MATERIALS TECHNOLOGIES

AND SERVICES CORP.

By: /s/ Richard W. Sager

Richard W. Sager

	 	MATERION ADVANCED MATERIALS TECHNOLOGIES

AND SERVICES LLC

By: /s/ Richard W. Sager
	
 
	 	 
	President

	 	Richard W. Sager

Manager
	METAL LENDER:

	 	

	 

	 	

	THE BANK OF NOVA SCOTIA

By:/s/ Bimaldas

	 	

By: /s/ Sangeeta Shah
	 

	 	 
	Name: Bimaldas

	 	Name: Sangeeta Shah
	 

	 	 
	Title: Director

	 	Title: Associate Director
	 

	 	

ANNEX I

AMENDED AND RESTATED SCHEDULE 1 (APPROVED LOCATIONS)

SCHEDULE 1

APPROVED LOCATIONS

	 	 	 
	Approved Domestic Locations

	 

	Materion Advanced Materials Technologies and

Services Inc. (f/k/a Williams Advanced

Materials Inc.)

2978 Main Street

Buffalo, New York 14214

	 	Materion Technical Materials Inc.

(f/k/a Technical Materials, Inc.)

5 Wellington Road

Lincoln, Rhode Island 02865

	 

	 	 
	Materion Advanced Materials Technologies and

Services Inc. (f/k/a Williams Advanced

Materials Inc.)

2080 Lockport Road

Wheatfield, New York 14304

	 	Materion Large Area Coatings LLC (f/k/a

Techni-Met, LLC)

300 Lamberton Road

Windsor, Connecticut 06095
	 

	 	 
	Materion Brewster LLC (f/k/a Williams

Acquisition, LLC)

42 Mt. Ebo Road South

Brewster, New York 10509

	 	Materion Large Area Coatings LLC (f/k/a

Techni-Met, LLC)

30 East Newberry Rd.

Bloomfield, Connecticut 06002
	 

	 	 
	Materion Precision Optics and Thin Film

Coatings LLC (f/k/a Thin Film Technology,

Inc.)

153 Industrial Way

Buellton, CA 93427

	 	Cerac, inc. (a Materion Advanced Materials

Technologies and Services site)

404-407 N. 13th St. and

1316 W. St. Paul St.

Milwaukee, Wisconsin 53233
	 

	 	 
	Materion Technologies Inc. (f/k/a Zentrix

Technologies Inc.)

Newburyport Industrial Park

22 Graf Road

Newburyport, Massachusetts 01950

	 	Materion Advanced Materials Technologies and

Services Inc. (f/k/a Williams Advanced

Materials Inc.)

3500 Thomas Rd, Suite C

Santa Clara, California 95054
	 

	 	 
	Materion Brush Inc. (f/ka/ Brush Wellman Inc.)

14710 W. Portage River South Rd.

Elmore, Ohio 43416-9502

	 	Materion Brush Inc. (f/ka/ Brush Wellman Inc.)

27555 College Park Drive

Warren, Michigan 48088
	 

	 	 
	Materion Advanced Materials Technologies and

Services Corp. (f/k/a Academy Corporation)

6905 Washington Avenue NE

Albuquerque, New Mexico 87109

	 	Materion Advanced Materials Technologies and

Services Corp. (f/k/a Academy Corporation)

5531 Midway Park Place NE

Albuquerque, New Mexico 87109
	 

	 	 
	Materion Advanced Materials Technologies and

Services Corp. (f/k/a Academy Corporation)

5520 Midway Park Place NE

Albuquerque, New Mexico 87109

	 	Materion Advanced Materials Technologies and

Services Corp. (f/k/a Academy Corporation)

5941 Midway Park Place NE

Albuquerque, New Mexico 87109
	 

	 	 
	Materion Advanced Materials Technologies and

Services LLC (f/k/a Academy Gallup, LLC)

1257 North Highway 491

Gallup, New Mexico 87301

	 	

	 

	 	

	 	 	 	 	 
	Approved Foreign Locations

	 

	Materion Advanced Materials
	 	Materion Czech S.R.O. (f/k/a OMC
	Technologies and Services Far East
	 	Scientific, Czech S.R.O)
	Pte. Ltd. (f/k/a Williams Advanced
Materials Far East PTE Ltd.)
110 Paya Lebar Road #02-01
	 	Prumyslova ul.
	Singapore Warehouse
	 	440 01 Louny
	Singapore 409009
	 	Czech Republic
	 
	 	 	 	 
	Materion Advanced Materials
	 	Seagate
	Technologies and Services Far East
Pte. Ltd. (f/k/a Williams Advanced
Materials Far East PTE Ltd.)
10 Arumugan Rd.
	 	1 Disc Drive
	Lion Industrial Bldg.
	 	Springtown Industrial Estate
	Singapore Warehouse
	 	Londonderry, Northern Ireland
	Singapore 4099957
	 	BT48 OBF United Kingdom
	 
	 	 	 	 
	Materion Advanced Materials
	 	Materion Advanced Materials
	Technologies and Services Taiwan
	 	Technologies and Services Suzhou Ltd.
	Co. Ltd. (f/k/a Williams Advanced
	 	(f/k/a Williams Advanced Materials
	Materials Technology Taiwan Co.,
	 	(Suzhou) Ltd.)
	Ltd.)
No. 19 Zhongxing 1st St.
	 	No. 28, Su Tong Road
	Luzhu Shiang, Taoyuan County
	 	Suzhou Industrial Park
	Taiwan, ROC
	 	China  215021
	 
	 	 	 	 
	Materion Ireland Holdings Limited
	 	Materion Advanced Materials
	(f/k/a OMC Scientific Holdings
	 	Technologies and Services Inc. (f/k/a
	Limited)
	 	Williams Advanced Materials Inc.) –
	Ballysimon Road
	 	Philippines
	Limerick, Ireland
	 	Bldg. 8365 Argionaut Highway
	 
	 	Cubi Pt.
	 
	 	Subic Bay Freeport Zone
	 
	 	Philippines  2222
	 
	 	 	 	 
	Approved Refiners / Fabricators

	 

	Coining of America
	 	Johnson Matthey Limited
	280 Midland Avenue
	 	130 Glidden Road
	Saddle Brook, New Jersey 07663
	 	Brampton, Ontario, Canada L6W 3M8
	 
	 	 	 	 
	Sigmund Cohn Corp.
	 	Johnson Matthey
	121 South Columbus Avenue
	 	Orchard Road
	Mount Vernon, New York 10553
	 	Royston, Hertfordshire, England SG8 5HE
	 
	 	 	 	 
	Sofield Mfg.
	 	Johnson Matthey
	2 Main Street
	 	2001 Nolte Drive
	Ridgefield Park, New Jersey 07660
	 	West Deptford, New Jersey 08066
	 
	 	 	 	 
	NuTec Metal Joining Products
	 	Rohm & Haas Electric Materials LLC
	12999 Plaza Drive
	 	272 Buffalo Avenue
	Cleveland, Ohio 44193
	 	Freeport, New York 11520
	 
	 	 	 	 
	BASF Catalysts, LLC
	 	Sabin Metal Corp.
	554 Engelhard Drive
	 	300 Pantigo Place
	Seneca, South Carolina 29679
	 	East Hampton, New York 11937
	 
	 	 	 	 
	Heraeus Metal Processing, Inc.
	 	Seagate Technology
	13429 Alondra Blvd.
	 	7801 Computer Ave.
	Santa Fe Springs, California 90670
	 	Bloomington, MN 55435
	 
	 	 	 	 
	Marian, Inc.
	 	Marian, Inc.
	1011 East Saint Clair Street
	 	2787 South Freeman Road
	Indianapolis, Indiana 46202
	 	Monticello, Indiana  47960
	 
	 	 	 	 

	 	 	 
	Approved Subconsignees and Approved Subconsignee Locations
	 
	Honeywell

830 Arapaho Road

Richardson, Texas 75081
	 	International Rectifier

a Hexfet America Facility

41915 Business Park Drive

Temecula, California 92590

	 
	 	 

	Triquint Semiconductor

500 W. Renner Road

Richardson, Texas 75083-3938
	 	International Rectifier

Cardiff Road

Newport

South Wales, England NP10 8YJ

	 
	 	 

	Triquint Semiconductor

2300 N.E. Brookwood Pkwy.

Hillsboro, Oregon 97124
	 	Hewlett Packard

1055 NE Circle Blvd.

Chemical Storage Building

Corvallis, OR 97330

	 
	 	 

	Triquint Semiconductor

1818 Highway 441, S

Apopka, Florida 32703
	 	PPG Industries

400 Park Drive, Works #6

Carlisle, Pennsylvania 17013

	 
	 	 

	PPG Industries

7400 Central Freeway

Wichita Falls, Texas 76306
	 	PPG Industries

4004 Fairview Industrial Drive SE, Works #12

Salem, Oregon 97302

	 
	 	 

	Approved Storage Facility Locations
	 
	Materion Advanced Materials

Technologies and Services Inc.

(f/k/a Williams Advanced

Materials Inc.)

2978 Main Street

Buffalo, New York 14214
	 	Materion Advanced Materials Technologies

and Services Corp. (f/k/a Academy

Corporation)

5531 Midway Park Place NE

Albuquerque, New Mexico 87109

	 
	 	 

	Materion Advanced Materials

Technologies and Services Corp.

(f/k/a Academy Corporation)

6905 Washington Avenue NE

Albuquerque, New Mexico 87109
	 	Materion Advanced Materials Technologies

and Services Corp. (f/k/a Academy

Corporation)

5941 Midway Park Place NE

Albuquerque, New Mexico 87109ompg_1012.htm

 

Exhibit 10.12

 

SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT

 

This SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (the “Agreement”) is dated as of June __, 2011 by and among Options Media Group Holdings, Inc., a Nevada corporation (the “Company”), and each of the purchasers of shares of Series A Convertible Preferred Stock of the Company identified on the signature pages hereto (individually, a “Purchaser” and collectively, the “Purchasers”).

 

The parties hereto agree as follows:

 

ARTICLE I.

 

PURCHASE AND SALE OF PREFERRED STOCK

 

Section 1.01 Purchase and Sale of Stock. Upon the following terms and conditions, the Company shall issue and sell to the Purchasers and each of the Purchasers shall purchase from the Company, the number of shares of the Company’s Series A Convertible Preferred Stock, par value $0.001 per share, at a purchase price equal to $100 per share (the “Preferred Shares”), convertible into shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), in the amounts set forth on the signature pages hereto. The designation, rights, preferences and other terms and provisions of the Series A Convertible Preferred Stock are set forth in the Certificate of Designation attached hereto as Exhibit A (the “Certificate of Designation”). The Company and the Purchasers are executing and delivering this Agreement in accordance with and in reliance upon the exemption from securities registration afforded by Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”), or Section 4(2) of the Securities Act.  All funds shall be deposited and held in escrow with Grushko & Mittman, P.C., 515 Rockaway Avenue, Valley Stream, NY 11581, and promptly refunded without interest or deduction unless at least $1,000,000 of Preferred Shares and Warrants have been sold and paid for by June 30, 2011.

 

Section 1.02 Warrants. The Company agrees to issue to each of the Purchasers a warrant in substantially the form attached hereto as Exhibit B (the “Warrants”),  to purchase a number of shares of Common Stock equal to one hundred percent (100%) of the number of Conversion Shares (as defined in Section 1.03 hereof) initially issuable upon conversion of such Purchaser’s Preferred Shares purchased. The number of Warrants each Purchaser shall be issued pursuant to this Agreement is set forth on the signature pages hereto. The Warrants shall have an initial term of five (5) years from the Closing Date and shall have an exercise price per share equal to the Warrant Price (as defined in the applicable Warrant), subject to adjustment pursuant to the terms of the Warrants.

 

Section 1.03 Conversion Shares. The Company has authorized, and has reserved and covenants to continue to reserve, free of preemptive rights and other similar contractual rights of shareholders, a number of shares of Common Stock equal to one hundred twenty-five percent (125%) of the number of shares of Common Stock as shall from time to time be sufficient to effect the conversion of all of the Preferred Shares and exercise of the Warrants then outstanding. Any shares of Common Stock issuable upon conversion of the Preferred Shares and exercise of the Warrants (and such shares when issued) are herein referred to as the “Conversion Shares” and the “Warrant Shares,” respectively. The Preferred Shares, the Conversion Shares and the Warrant Shares are sometimes collectively referred to as the “Shares”.

 

  

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Section 1.04 Purchase Price and Closing. Subject to the terms and conditions hereof, the Company agrees to issue and sell to the Purchasers and, in consideration of and in express reliance upon the representations, warranties, covenants, terms and conditions of this Agreement, each Purchaser, severally but not jointly with respect to the amounts set forth on such Purchaser’s signature page hereto, agrees to purchase the Preferred Shares and the Warrants for an aggregate purchase price of up to $1,900,000 (the “Purchase Price”). The closing of the purchase and sale of the Preferred Shares and the Warrants to be acquired by the Purchasers from the Company under this Agreement shall take place at the offices of Grushko & Mittman, P.C., 515 Rockaway Avenue, Valley Stream, New York 11581 (the “Closing”) at 10:00 a.m., New York time (i) on or before June 30, 2011; provided, that all of the conditions set forth in Article IV hereof and applicable to the Closing shall have been fulfilled or waived in accordance herewith, or (ii) at such other time and place or on such date as the Purchasers and the Company may agree upon (the “Closing Date”). Subject to the terms and conditions of this Agreement, the Company shall deliver or cause to be delivered to the Escrow Agent (as hereinafter defined) prior to the Closing (x) a certificate for the number of Preferred Shares set forth on such Purchaser’s signature page hereto, (y) a Warrant to purchase such number of shares of Common Stock as is set forth on such Purchaser’s signature page hereto and (z) any other documents required to be delivered pursuant to Article IV hereof.

 

Section 1.05 Escrow.  Pending the Closing, all funds paid hereunder shall be deposited by the Purchasers in a separate account maintained by Grushko & Mittman, P.C. (the “Escrow Agent”) for the benefit of Purchasers (the “Escrow Account”). At the Closing, the Purchase Price shall be paid by the Purchasers to the Company by wire transfer pursuant to the release of the funds held in the Escrow Account to an account designated in writing by the Company prior to the Closing.

 

ARTICLE II.

 

REPRESENTATIONS AND WARRANTIES

 

Section 2.01 Representations and Warranties of the Company. The Company hereby represents and warrants to the Purchasers, as of the date hereof and the Closing Date (except as set forth on the Schedule of Exceptions attached hereto with each numbered Schedule corresponding to the section number herein), as follows:

 

(a) Organization, Good Standing and Power. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada and has the requisite corporate power to own, lease and operate its properties and assets and to conduct its business as it is now being conducted. The Company does not have any subsidiaries except as set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, including the accompanying financial statements filed with the Commission on May 17, 2011 (the “Form 10-K”), or on Schedule 2.01(g) hereto. The Company and each such subsidiary 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 or property owned by it makes such qualification necessary except for any jurisdiction(s) (alone or in the aggregate) in which the failure to be so qualified will not have a Material Adverse Effect (as defined in Section 2.01(c) hereof) on the Company’s financial condition.

 

(b) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and perform this Agreement, the Escrow Agreement by and among the Company, the Purchasers and the Escrow Agent, dated as of the date hereof, substantially in the form of Exhibit C attached hereto (the “Escrow Agreement”), the Certificate of Designation and the Warrants (collectively, the “Transaction Documents”), to issue and sell the Shares and the Warrants in accordance with the terms hereof and otherwise carry out its obligations thereunder. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action, and no further consent or authorization of the Company or its Board of Directors or shareholders is required. This Agreement has been duly executed and delivered by the Company. The other Transaction Documents will have been duly executed and delivered by the Company at the Closing. Each of the Transaction Documents constitutes, or shall constitute when executed and delivered, a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application.

 

  

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(c) Capitalization. The authorized capital stock of the Company, the number of shares of such capital stock issued and outstanding, and the number of shares of capital stock reserved for issuance upon the exercise or conversion of all outstanding warrants, stock options, and other securities issued by the Company are set forth on Schedule 2.01(c) hereto. All of the outstanding shares of the Common Stock and any other outstanding security of the Company have been duly and validly authorized, are validly issued, fully paid and nonassessable and were issued in accordance with the registration or qualification provisions of the Securities Act, or pursuant to valid exemptions therefrom. Except as set forth in this Agreement and as set forth on Schedule 2.01(c) hereto, no shares of Common Stock or any other security of the Company are entitled to preemptive rights, registration rights, rights of first refusal or similar rights and there are no outstanding options, warrants, scrip, rights to subscribe to, call or commitments of any character whatsoever granted by the Company or existing pursuant to agreements to which the Company is a party and relating to, or securities or rights convertible into, any shares of capital stock of the Company. Furthermore, except as set forth in this Agreement and as set forth on Schedule 2.01(c) hereto, there are no contracts, commitments, understandings, or arrangements by which the Company is or may become bound to issue additional shares of the capital stock of the Company or options, securities or rights convertible into shares of capital stock of the Company. Except as set forth on Schedule 2.01(c) hereto, the Company is not a party to or bound by any agreement or understanding granting registration or anti-dilution rights to any person with respect to any of its equity or debt securities. Except as set forth on Schedule 2.01(c) hereto, the Company is not a party to, and it has no knowledge of, any agreement or understanding restricting the voting or transfer of any shares of the capital stock of the Company. Except as disclosed on Schedule 2.01(c) or 2.01(k) hereto, (i) there are no outstanding debt securities, or other form of material debt of the Company or any of its subsidiaries, (ii) there are no outstanding securities of the Company or any of its subsidiaries that contain any redemption or similar provisions, and there are no contracts, commitments, understandings, agreements or arrangements by which the Company or any of its subsidiaries is or may become bound to redeem a security of the Company or any of its subsidiaries, (iii) the Company does not have any stock appreciation rights or “phantom stock” plans or agreements, or any similar plan or agreement and (iv) as of the date of this Agreement, except as disclosed on Schedule 2.01(c) hereto, to the Company’s and each of its subsidiaries’ knowledge, no Person (as defined below) or group of related Persons beneficially owns or has the right to acquire by agreement with or by obligation binding upon the Company, beneficial ownership of in excess of 5% of the Common Stock. Except as set forth on Schedule 2.01(c), any Person with any right to purchase securities of the Company that would be triggered as a result of the transactions contemplated hereby or by any of the other Transaction Documents has waived such rights or the time for the exercise of such rights has passed. Except as set forth on Schedule 2.01(c) hereto, there are no options, warrants or other outstanding securities of the Company, the vesting of which will be accelerated by the transactions contemplated hereby or by any of the other Transaction Documents. The Company has furnished or made available to the Purchasers true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (the “Articles”), and the Company’s Bylaws as in effect on the date hereof (the “Bylaws”). For purposes of this Agreement, “Person” shall mean an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. For the purposes of this Agreement, “Material Adverse Effect” means any material adverse effect on the business, operations, assets, properties, prospects or financial condition of the Company and its subsidiaries, taken as a whole, and/or any condition, circumstance, or situation that would prohibit or otherwise interfere with the ability of the Company to perform any of its obligations under the Transaction Documents in any material respect.

 

(d) Issuance of Shares and Warrants. The Preferred Shares and the Warrants to be issued at the Closing have been duly authorized by all necessary corporate action and the Preferred Shares, when paid for or issued in accordance with the terms hereof, shall be validly issued and outstanding, fully paid and nonassessable and entitled to the rights and preferences set forth in the Certificate of Designation. When the Conversion Shares and the Warrant Shares are issued in accordance with the terms of the Certificate of Amendment and the Warrants, respectively, such shares will be duly authorized by all necessary corporate action and validly issued and outstanding, fully paid and nonassessable, and the holders shall be entitled to all rights accorded to a holder of Common Stock.

 

  

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(e) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company, the performance by the Company of its obligations under the Certificate of Designation, and the consummation by the Company of the transactions contemplated herein and therein do not and will not (i) conflict with or violate any provision of the Company’s Articles or Bylaws or the organizational documents of any subsidiary of the Company, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Company or any subsidiary of the Company is a party or by which it or its properties or assets are bound, (iii) create or impose a lien, mortgage, security interest, charge or encumbrance of any nature on any property of the Company or any subsidiary of the Company under any agreement or any commitment to which the Company or any subsidiary of the Company is a party or by which the Company is bound or by which any of its respective properties or assets are bound or (iv) result in a violation of any federal, state, local or foreign statute, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries are bound or affected, except, in all cases other than violations pursuant to clauses (i) and (iv) above, for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect.

 

(f) Commission Documents, Financial Statements.  The Company is required to file Forms 10-K, 10-Q and 8-K under Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the Commission pursuant to the reporting requirements of the Exchange Act, including material filed pursuant to Section 15(d) of the Exchange Act from January 1, 2010 through the date hereof (all of the foregoing including filings incorporated by reference therein being referred to herein as the “Commission Documents”).  The Company has delivered or made available to each of the Purchasers true and complete copies of the Commission Documents.  The Company has not provided to the Purchasers any material non-public information or other information which, according to applicable law, rule or regulation, was required to have been disclosed publicly by the Company but which has not been so disclosed, other than with respect to the transaction contemplated by this Agreement.  At the times of their respective filings, the Commission Documents complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder and other federal, state and local laws, rules and regulations applicable to such documents and, as for their respective dates, none of the Commission Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  The financial statements of the Company included in the Commission Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission or other applicable rules and regulations with respect thereto.  Such financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements), and fairly present in all material respects the financial position of the Company and its subsidiaries as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

 

  

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(g) Subsidiaries.  Schedule 2.01(g) hereto sets forth each subsidiary of the Company, showing the jurisdiction of its incorporation or organization and showing the percentage of each Person’s ownership. For the purposes of this Agreement, “subsidiary” shall mean any corporation or other entity of which at least a majority of the securities or other ownership interest having ordinary voting power (absolutely or contingently) for the election of directors or other persons performing similar functions are at the time owned directly or indirectly by the Company and/or any of its other subsidiaries. All of the outstanding shares of capital stock of each subsidiary have been duly authorized and validly issued, and are fully paid and nonassessable. There are no outstanding preemptive, conversion or other rights, options, warrants or agreements granted or issued by or binding upon any subsidiary for the purchase or acquisition of any shares of capital stock of any subsidiary or any other securities convertible into, exchangeable for or evidencing the rights to subscribe for any shares of such capital stock. Neither the Company nor any subsidiary is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of the capital stock of any subsidiary or any convertible securities, rights, warrants or options of the type described in the preceding sentence. Neither the Company nor any subsidiary is party to, nor has any knowledge of, any agreement restricting the voting or transfer of any shares of the capital stock of any subsidiary.

 

(h) No Material Adverse Change. Since December 31, 2010, neither the Company nor any subsidiary has experienced or suffered any Material Adverse Effect or any event, occurrence or development that could reasonably be expected to result in a Material Adverse Effect.

 

(i) No Undisclosed Liabilities. Neither the Company nor any of its subsidiaries has any liabilities, obligations, claims or losses (whether liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent or otherwise) other than those incurred in the ordinary course of the Company’s or its subsidiaries respective businesses since December 31, 2010 and which, individually or in the aggregate, do not or would not have a Material Adverse Effect on the Company or its subsidiaries.

 

(j) No Undisclosed Events or Circumstances. No event or circumstance has occurred or exists with respect to the Company or its subsidiaries or their respective businesses, properties, prospects, operations or financial condition, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed.

 

  

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(k) Indebtedness. Schedule 2.01(k) hereto sets forth as of a recent date all outstanding secured and unsecured Indebtedness of the Company or any subsidiary, or for which the Company or any subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of Indebtedness of others, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. Neither the Company nor any subsidiary is in default with respect to any Indebtedness.

 

(l) Title to Assets. Each of the Company and its subsidiaries has good and marketable title to all of its real and personal property reflected in the Form 10-K, free and clear of any mortgages, pledges, charges, liens, security interests or other encumbrances, except for those that, individually or in the aggregate, do not cause and are not reasonably likely to cause a Material Adverse Effect. All leases of the Company and each of its subsidiaries are valid and subsisting and in full force and effect.

 

(m) Actions Pending. Except as disclosed in the Commission Documents, there is no action, suit, claim, investigation, arbitration, alternate dispute resolution proceeding or any other proceeding pending or, to the knowledge of the Company, threatened, against or involving the Company, any subsidiary or any of their respective properties or assets. There are no outstanding orders, judgments, injunctions, awards or decrees of any court, arbitrator or governmental or regulatory body against the Company or any subsidiary.

 

(n) Compliance with Law. The business of the Company and its subsidiaries has been and is presently being conducted in accordance with all applicable federal, state, local and foreign governmental laws, rules, regulations and ordinances, except for such noncompliance that, individually or in the aggregate, would not cause a Material Adverse Effect. The Company and each of its subsidiaries have all franchises, permits, licenses, consents and other governmental or regulatory authorizations and approvals necessary for the conduct of its business as now being conducted by it unless the failure to possess such franchises, permits, licenses, consents and other governmental or regulatory authorizations and approvals, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

(o) Taxes. The Company and each of its subsidiaries has accurately prepared and filed all federal, state, foreign and other tax returns required by law to be filed by it, has paid or made provisions for the payment of all taxes shown to be due and all additional assessments, and adequate provisions have been and are reflected in the financial statements of the Company and its subsidiaries for all current taxes and other charges to which the Company or any subsidiary is subject and that are not currently due and payable. None of the federal income tax returns of the Company or any subsidiary have been audited by the Internal Revenue Service (the “IRS”). The Company has no knowledge of any additional assessments, adjustments or contingent tax liability (whether federal or state) of any nature whatsoever, whether pending or threatened against the Company or any subsidiary for any completed tax period, nor of any basis for any such assessment, adjustment or contingency.

 

  

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(p) Certain Fees. Except as set forth on Schedule 2.01(p) hereto, no brokers, finders or financial advisory fees or commissions will be payable by the Company or any subsidiary or any Purchaser with respect to the transactions contemplated by this Agreement. The Purchasers shall have no obligation with respect to any fees or with respect to any claims (other than such fees or commissions owed by a Purchaser pursuant to written agreements executed by such Purchaser which fees or commissions shall be the sole responsibility of such Purchaser) made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement.

 

(q) Disclosure. Neither this Agreement or the Schedules hereto nor any other documents, certificates or instruments furnished to the Purchasers by or on behalf of the Company or any subsidiary in connection with the transactions contemplated by this Agreement (the “Disclosure Materials”) contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made herein or therein, in the light of the circumstances under which they were made herein or therein, not misleading.

 

(r) Intellectual Property. Except as disclosed on Schedule 2.01(r), the Company and each of the subsidiaries owns or possesses all patents, trademarks, domain names (whether or not registered) and any patentable improvements or copyrightable derivative works thereof, websites and intellectual property rights relating thereto, service marks, trade names, copyrights, licenses and authorizations as set forth in the Form 10-K, and all rights with respect to the foregoing, which are necessary for the conduct of its business as now conducted without any conflict with the rights of others.

 

(s) Environmental Compliance. The Company and each of its subsidiaries have obtained all approvals, authorization, certificates, consents, licenses, orders and permits or other similar authorizations of all governmental authorities, or from any other person, that are required under any Environmental Laws and used in its business or in the business of any of its subsidiaries, unless the failure to possess such approvals, authorizations, certificates, consents, licenses, orders or permits, individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect. “Environmental Laws” shall mean all applicable laws relating to the protection of the environment, including, without limitation, all requirements pertaining to reporting, licensing, permitting, controlling, investigating or remediating emissions, discharges, releases or threatened releases of hazardous substances, chemical substances, pollutants, contaminants or toxic substances, materials or wastes, whether solid, liquid or gaseous in nature, into the air, surface water, groundwater or land, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of hazardous substances, chemical substances, pollutants, contaminants or toxic substances, material or wastes, whether solid, liquid or gaseous in nature. Except for such instances as would not individually or in the aggregate have a Material Adverse Effect, the Company and each of its subsidiaries are also in compliance with all other limitations, restrictions, conditions, standards, requirements, schedules and timetables required or imposed under all Environmental Laws and there are no past or present events, conditions, circumstances, incidents, actions or omissions relating to or in any way affecting the Company or its subsidiaries that violate or may violate any Environmental Law after the Closing Date or that may give rise to any environmental liability, or otherwise form the basis of any claim, action, demand, suit, proceeding, hearing, study or investigation (i) under any Environmental Law, or (ii) based on or related to the manufacture, processing, distribution, use, treatment, storage (including without limitation underground storage tanks), disposal, transport or handling, or the emission, discharge, release or threatened release of any hazardous substance.

 

  

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(t) Books and Record Internal Accounting Controls. The books and records of the Company and its subsidiaries accurately reflect in all material respects the information relating to the business of the Company and its subsidiaries, the location and collection of their assets, and the nature of all transactions giving rise to the obligations or accounts receivable of the Company or any subsidiary. The Company and each of its subsidiaries maintain a system of internal accounting controls sufficient, in the judgment of the Company, 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 GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate actions are taken with respect to any differences. The Company has established disclosure controls and procedures for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company, including its subsidiaries, is made known to the certifying officers by others within those entities.

 

(u) Material Agreements. Except as disclosed on Schedule 2.01(u), neither the Company nor any subsidiary is a party to any written or oral contract, instrument, agreement, commitment, obligation, plan or arrangement, a copy of which would be required to be filed with the Commission as an exhibit to a registration statement on Form S-1 or applicable form (collectively, “Material Agreements”) if the Company or any subsidiary were registering securities under the Securities Act that has not been so filed with the Commission and publicly available at the Commission’s EDGAR website. The Company and each of its subsidiaries have in all material respects performed all the obligations required to be performed by them to date under the foregoing agreements, have received no notice of default and are not in default under any Material Agreement now in effect, the result of which could cause a Material Adverse Effect. No written or oral contract, instrument, agreement, commitment, obligation, plan or arrangement of the Company or of any subsidiary limits or shall limit the payment of dividends on the Company’s Preferred Shares, other preferred stock, if any, or its Common Stock.

 

(v) Transactions with Affiliates. Except as set forth in the Form 10-K, or a Form 10-Q or a Form 8-K filed with the Commission after the filing date of the Form 10-K or as contemplated by Schedule 3.16(a), there are no loans, leases, agreements, contracts, royalty agreements, management contracts or arrangements or other continuing transactions between (i) the Company or any subsidiary on the one hand, and (ii) on the other hand, any officer or director of the Company, or any of its subsidiaries, or any person owning 5% or more of any class of the Company’s voting securities or any member of the immediate family of such officer, director or shareholder or any corporation or other entity controlled by such officer, director or shareholder, or a member of the immediate family of such officer, director or shareholder (each an “Affiliate”).

 

(w) Securities Act of 1933. Based in material part upon the representations herein of the Purchasers, the Company has complied and will comply with all applicable federal and state securities laws in connection with the offer, issuance and sale of the Preferred Shares and the Warrants hereunder. Neither the Company nor anyone acting on its behalf, directly or indirectly, has sold, offered to sell or solicited offers to buy any of the Preferred Shares, the Warrants or similar securities to, or solicited offers with respect thereto from, or entered into any preliminary conversations or negotiations relating thereto with, any person, or has taken or will take any action so as to bring the issuance and sale of any of the Preferred Shares and the Warrants under the registration provisions of the Securities Act and applicable state securities laws, and neither the Company nor any of its affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of any of the Preferred Shares and the Warrants.

 

  

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(x) Governmental Approvals. Except for the filing of any notice subsequent to the Closing Date that may be required under applicable state and/or federal securities laws (which if required, shall be filed on a timely basis), including the filing of a Form D and the filing of the Certificate of Designation with the Secretary of State for the State of Nevada, no authorization, consent, approval, license, exemption of, filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, is or will be necessary for, or in connection with, the execution or delivery of the Preferred Shares and the Warrants, or for the performance by the Company of its obligations under the Transaction Documents.

 

(y) Employees. Neither the Company nor any subsidiary has any collective bargaining arrangements or agreements covering any of its employees. Except as set forth on Schedule 2.01(y) hereto, neither the Company nor any subsidiary has any employment contract, agreement regarding proprietary information, non-competition agreement, non-solicitation agreement, confidentiality agreement, or any other similar contract or restrictive covenant, relating to the right of any officer, employee or consultant to be employed or engaged by the Company or such subsidiary. No officer, consultant or key employee of the Company or any subsidiary whose termination, either individually or in the aggregate, could have a Material Adverse Effect, has terminated or, to the knowledge of the Company, has any present intention of terminating his or her employment or engagement with the Company or any subsidiary.

 

(z) Absence of Certain Developments. Except as set forth on Schedule 2.01(z) hereto, since December 31, 2010 except as disclosed in the Form 10-K or Form 10-Q filed for the three months ended March 31, 2011, neither the Company nor any subsidiary has:

 

(i) issued any stock, bonds or other corporate securities or any rights, options or warrants with respect thereto;

 

(ii) borrowed any amount or incurred or become subject to any liabilities (absolute or contingent) in excess of $50,000, except current liabilities incurred in the ordinary course of business that are comparable in nature and amount to the current liabilities incurred in the ordinary course of business during the comparable portion of its prior fiscal year, as adjusted to reflect the current nature and volume of the Company’s or such subsidiary’s business;

 

(iii) discharged or satisfied any material lien or encumbrance or paid any material obligation or liability (absolute or contingent), other than current liabilities paid in the ordinary course of business;

 

(iv) declared or made any payment or distribution of cash or other property to shareholders with respect to its stock, or purchased or redeemed, or made any agreements so to purchase or redeem, any shares of its capital stock;

 

(v) sold, assigned or transferred any other tangible assets, or canceled any material debts or claims, except in the ordinary course of business;

 

  

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(vi) sold, assigned or transferred any material patent rights, trademarks, trade names, copyrights, trade secrets or other intangible assets or intellectual property rights, or disclosed any proprietary confidential information to any person except to customers in the ordinary course of business or to the Purchasers or their representatives;

 

(vii) suffered any substantial losses or waived any rights of material value, whether or not in the ordinary course of business, or suffered the loss of any material amount of prospective business from an existing customer;

 

(viii) made any changes in employee compensation except in the ordinary course of business and consistent with past practices;

 

(ix) made capital expenditures or commitments therefor that aggregate in excess of $100,000;

 

(x) entered into any other contract or agreement involving payment obligations of more than $100,000 other than in the ordinary course of business, or entered into any other material contract or agreement involving payment obligations of more than $100,000 or performable over a period of more than one year, whether or not in the ordinary course of business;

 

(xi) made charitable contributions or pledges;

 

(xii) suffered any material damage, destruction or casualty loss, whether or not covered by insurance;

 

(xiii) experienced any material problems with labor or management in connection with the terms and conditions of their employment; or

 

(xiv) entered into an agreement, written or otherwise, to take any of the foregoing actions.

 

(aa) Investment Company Act Status. The Company is not, and as a result of and immediately upon the Closing will not be, an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.

 

(bb) ERISA. No liability to the Pension Benefit Guaranty Corporation has been incurred with respect to any Plan (as defined below) by the Company or any of its subsidiaries that is or would be materially adverse to the Company and its subsidiaries. The execution and delivery of this Agreement and the issuance and sale of the Preferred Shares and Warrants will not involve any transaction that is subject to the prohibitions of Section 406 of ERISA or in connection with which a tax could be imposed pursuant to Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), provided that, if any of the Purchasers, or any Person that owns a beneficial interest in any of the Purchasers, is an “employee pension benefit plan” (within the meaning of Section 3(2) of ERISA) with respect to which the Company is a “party in interest” (within the meaning of Section 3(14) of ERISA), the requirements of Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met. As used in this Section 2.01(bb), the term “Plan” shall mean an “employee pension benefit plan” (as defined in Section 3 of ERISA) that is or has been established or maintained, or to which contributions are or have been made, by the Company or any subsidiary or by any trade or business, whether or not incorporated, which, together with the Company or any subsidiary, is under common control, as described in Section 414(b) or (c) of the Code.

 

  

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(cc) Dilutive Effect. The Company understands and acknowledges that its obligation to issue Conversion Shares upon conversion of the Preferred Shares in accordance with this Agreement and the Certificate of Designation and its obligation to issue the Warrant Shares upon the exercise of the Warrants in accordance with this Agreement and the Warrants, is, in each case, absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interest of other shareholders of the Company.

 

(dd) No Integrated Offering. Except as disclosed on Schedule 2.01(dd), neither the Company, nor any subsidiary nor any of its or their affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would cause the offering of the Preferred Shares and Warrants pursuant to this Agreement to be integrated with prior offerings by the Company for purposes of the Securities Act that would prevent the Company from selling the Preferred Shares and Warrants pursuant to Rule 506 under the Securities Act, or any applicable exchange-related shareholder approval provisions, nor will the Company or any of its affiliates or subsidiaries take any action or steps that would cause the offering of the Preferred Shares and Warrants to be integrated with other offerings. The Company does not have any registration statement pending or effective before the Commission or currently under the Commission’s review.

 

(ee) Sarbanes-Oxley Act. The Company is in compliance with the provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), if applicable, and the rules and regulations promulgated thereunder that are effective, and intends to comply with other applicable provisions of the Sarbanes-Oxley Act and the rules and regulations promulgated thereunder upon the effectiveness of such provisions.

 

(ff) Independent Nature of Purchasers. The Company acknowledges that the obligations of each Purchaser under the Transaction Documents are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under the Transaction Documents. The Company acknowledges that to the best of its knowledge, the decision of each Purchaser to purchase securities pursuant to this Agreement has been made by such Purchaser independently of any other purchase and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company or of its subsidiaries that may have been made or given by any other Purchaser or by any agent or employee of any other Purchaser, and no Purchaser or any of its agents or employees shall have any liability to any Purchaser (or any other person) relating to or arising from any such information, materials, statements or opinions. The Company acknowledges that nothing contained herein, or in any Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. The Company acknowledges that each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. The Company acknowledges that it has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by the Purchasers.

 

  

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(gg) Insurance. The Company and its subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and its subsidiaries are engaged. To the best of Company’s knowledge, such insurance contracts and policies are valid and in full force and effect. Neither the Company nor any 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 without a significant increase in cost.

 

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

 

(ii) Foreign Corrupt Practices. Neither the Company nor any subsidiary, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company or any subsidiary, has (i) directly or indirectly, used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

 

(jj) Off-Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company or any subsidiary of the Company and an unconsolidated or other off balance sheet entity that is not disclosed in its financial statements that should be disclosed in accordance with GAAP and that would be reasonably likely to have a Material Adverse Effect.

 

(kk) Manipulation of Price. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result or that could reasonably be expected to cause or result, in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Shares or (ii) other than any placement agent, sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Shares and Warrants.

 

(ll) No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents. The Company’s accountants are set forth in the Form 10-K. To the Company’s knowledge, such accountants are an independent registered public accounting firm as required by the Securities Act.

 

  

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(mm) Material Non-Public Information. Except with respect to the transactions contemplated hereby that will be publicly disclosed pursuant to Section 3.13 hereto, the Company has not provided any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information.

 

(nn) Solvency.  Based on the financial condition of the Company as of the Closing Date (and assuming that the Closing shall have occurred), (i) the Company’s fair saleable value of its assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business for the current fiscal year as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its debt when such amounts are required to be paid.  The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).

 

(oo) Listing.  The Company’s common stock is quoted on the OTC QB Markets (“OTCQB”) under the symbol OPMG.  The Company has not received any oral or written notice that its common stock is not eligible nor will become ineligible for quotation on the OTCQB nor that its common stock does not meet all requirements for the continuation of such quotation.  The Company satisfies all the requirements for the continued quotation of its common stock on the OTCQB.

 

(pp) DTC Status.  The Company’s transfer agent is a participant in, and the Common Stock is eligible for transfer pursuant to the Depository Trust Company Automated Securities Transfer Program

 

(qq) Survival. The foregoing representations and warranties shall survive the Closing Date.

 

Section 2.02 Representations and Warranties of the Purchasers. Each of the Purchasers hereby makes the following representations and warranties to the Company with respect solely to itself and not with respect to any other Purchaser:

 

(a) Organization and Standing of the Purchasers. If the Purchaser is an entity, such Purchaser is a corporation, limited liability company or partnership duly incorporated or organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization.

 

(b) Authorization and Power. Each Purchaser has the requisite power and authority to enter into and perform this Agreement and to purchase the Preferred Shares and Warrants being sold to it hereunder. The execution, delivery and performance of this Agreement by such Purchaser and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary corporate or partnership action, and no further consent or authorization of such Purchaser or its Board of Directors, shareholders, or partners, as the case may be, is required. This Agreement has been duly authorized, executed and delivered by such Purchaser and constitutes, or shall constitute when executed and delivered, a valid and binding obligation of the Purchaser enforceable against the Purchaser in accordance with the terms thereof.

 

  

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(c) Purchase For Own Account. Each Purchaser is acquiring the Preferred Shares and the Warrants solely for its own account and not with a view to or for sale in connection with distribution of such Preferred Shares or Warrants in violation of the Securities Act. Each Purchaser does not have a present intention to sell the Preferred Shares or the Warrants, nor a present arrangement (whether or not legally binding) or intention to effect any distribution of the Preferred Shares or the Warrants to or through any Person; provided, however, that by making the representations herein and subject to Section 2.02(g) below, such Purchaser does not agree to hold the Shares or the Warrants for any minimum or other specific term and reserves the right to dispose of the Shares or the Warrants at any time in accordance with federal and state securities laws applicable to such disposition. Each Purchaser acknowledges that it is able to bear the financial risks associated with an investment in the Preferred Shares and the Warrants and that it has been given full access to such records of the Company and its subsidiaries and to the officers of the Company and its subsidiaries and received such information as it has deemed necessary or appropriate to conduct its due diligence investigation and has sufficient knowledge and experience in investing in companies similar to the Company in terms of the Company’s stage of development so as to be able to evaluate the risks and merits of its investment in the Company.

 

(d) Status of Purchasers. Such Purchaser is an “accredited investor” as defined in Regulation D promulgated under the Securities Act. Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act and such Purchaser is not a broker-dealer.

 

(e) Opportunities for Additional Information. Each Purchaser acknowledges that such Purchaser has had the opportunity to ask questions of and receive answers from, or obtain additional information from, the executive officers of the Company concerning the financial and other affairs of the Company, and to the extent deemed necessary in light of such Purchaser’s personal knowledge of the Company’s affairs, such Purchaser has asked such questions and received answers to the full satisfaction of such Purchaser, and such Purchaser desires to invest in the Company. Neither such inquiries nor any other investigation conducted by or on behalf of such Purchaser or its representatives or counsel shall modify, amend or affect such Purchaser’s right to rely on the truth, accuracy and completeness of the Schedule of Exceptions and the Company’s representations and warranties contained in the Transaction Documents.

 

(f) No General Solicitation. Each Purchaser acknowledges that the Preferred Shares and the Warrants were not offered to such Purchaser by means of any form of general or public solicitation or general advertising, or publicly disseminated advertisements or sales literature, including (i) any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media, or broadcast over television or radio or (ii) any seminar or meeting to which such Purchaser was invited by any of the foregoing means of communications.

 

(g) Rule 144. Such Purchaser understands that the Preferred Shares and Warrants must be held indefinitely unless such Shares and Warrants are registered under the Securities Act or an exemption from registration is available. Such Purchaser acknowledges that such Purchaser is familiar with Rule 144 of the rules and regulations of the Commission, as amended, promulgated pursuant to the Securities Act (“Rule 144”), and that such person has been advised that Rule 144 permits resales only under certain circumstances. Such Purchaser understands that to the extent that Rule 144 is not available, such Purchaser will be unable to sell any Preferred Shares and Warrants without either registration under the Securities Act or the existence of another exemption from such registration requirement.

 

  

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(h) General. Such Purchaser understands that the Preferred Shares and Warrants are being offered and sold in reliance on a transactional exemption from the registration requirement of federal and state securities laws and the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of such Purchaser set forth herein in order to determine the applicability of such exemptions and the suitability of such Purchaser to acquire the Preferred Shares and Warrants.

 

(i) Survival. The foregoing representations and warranties shall survive the Closing Date.

 

ARTICLE III.

 

COVENANTS

 

The Company covenants with the Purchasers as follows (subject to the provisions of Section 6.03 hereof), which covenants are for the benefit of the Purchasers and their permitted assignees.

 

Section 3.01 Legend. Each certificate representing the Preferred Shares and the Warrants, and, if appropriate, securities issued upon conversion thereof, shall be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required by applicable state securities or “blue sky” laws):

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

 

The Company agrees to reissue certificates representing any of the Conversion Shares and the Warrant Shares without the legend set forth above if at such time, prior to making any transfer of any such securities, such holder thereof shall give written notice to the Company describing the manner and terms of such transfer and removal as the Company may reasonably request. Such proposed transfer and removal will not be effected until: (a) either (i) a registration statement under the Securities Act covering such proposed disposition has been filed by the Company with the Commission and has become effective under the Securities Act, or (ii) registration and qualification under the Securities Act and state securities laws are not required (in which event the Company shall provide its transfer agent with any required legal opinions) or (iii) such security can be sold pursuant to Rule 144 under the Securities Act (in which event the Company shall provide its transfer agent with any required legal opinions); and (b) compliance with applicable state securities or “blue sky” laws has been effected or a valid exemption exists with respect thereto.  The Company will reserve such shares without any legend within three (3) Trading Days (the “Legend Removal Date”) of request by the holder.  In the case of any proposed transfer under this Section 3.01, the Company will comply with any such applicable state securities or “blue sky” laws, but shall in no event be required (x) to qualify to do business in any state where it is not then qualified, or (y) to take any action that would subject it to tax or to the general service of process in any state where it is not then subject.  Whenever a certificate representing the Conversion Shares or the Warrant Shares is required to be issued to a Purchaser without a legend, in lieu of delivering physical certificates representing the Conversion Shares or the Warrant Shares (provided that a registration statement under the Securities Act providing for the resale of the Conversion Shares or the Warrant Shares is then in effect, as the case may be, or the Conversion Shares or the Warrant Shares may be sold pursuant to Rule 144 of the Securities Act without restriction), the Company shall cause its transfer agent to electronically transmit the Conversion Shares or the Warrant Shares, as the case may be, to a Purchaser by crediting the account of such Purchaser’s Prime Broker with the Depository Trust Company (“DTC”) through its Deposit Withdrawal Agent Commission (“DWAC”) system (to the extent not inconsistent with any provisions of this Agreement).

 

  

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Section 3.02 Liquidated Damages. In addition to such Purchasers’ other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, for each $2,000 of Conversion Shares or the Warrant Shares (based on the greater of (i) the purchase price of such Commission Shares or Warrant Shares, or (ii) the VWAP (as defined hereinafter) of the Common Stock on the date (a) such securities are submitted to the transfer agent, or (b) are delivered for removal of the restrictive legend, or (c) if the Commission Shares or Warrant Shares are not required to be delivered or have not yet been issued on the date request for legend removal is made, $10 per Trading Day (increasing to $20 per Trading Day five (5) Trading Days after such damages have begun to accrue) for each Trading Day after the fourth (4th) Trading Day following the Legend Removal Date until such certificate is delivered without a legend. Nothing herein shall limit such Purchasers’ rights to pursue actual damages for the Company’s failure to deliver certificates representing any securities as required by the Transaction Documents, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

 

For purposes hereof, “VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market (as defined hereinafter), the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time); or (b) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the holder and reasonably acceptable to the Company.

 

 For purposes hereof, “Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE Amex Equities, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the OTC Bulletin Board, or OTCQB or any successor market succeeding to its functions of reporting prices, whichever is the principal such market or exchange.

 

Section 3.03 Securities Compliance. The Company shall notify the Commission in accordance with its rules and regulations, of the transactions contemplated by any of the Transaction Documents, including filing a Form D with respect to the Preferred Shares, Warrants, Conversion Shares and Warrant Shares as required under Regulation D, and shall take all other necessary action and proceedings as may be required and permitted by applicable law, rule and regulation, for the legal and valid issuance of the Preferred Shares, the Warrants, the Conversion Shares and the Warrant Shares to the Purchasers or subsequent holders. The Company shall take such action as the Company shall reasonably determine is necessary to be taken in order to obtain an exemption for or to qualify the Preferred Shares, Warrants, Conversion Shares and Warrant Shares for sale to the Purchasers at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification). The Company shall make all filings and reports relating to the offer and sale of the Preferred Shares, Warrants, Conversion Shares and Warrant Shares required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing Date. In addition, the Company shall take all such actions and make any filings as may be required under applicable law in connection with the offer and sale of any Preferred Shares and Warrants in any foreign jurisdictions, along with the subsequent issuances of any Conversion Shares and Warrant Shares in such foreign jurisdictions.

 

  

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Section 3.04 Reporting Obligations and Sales of Unregistered Securities.

 

(a) So long as any Purchaser holds any Preferred Shares or Warrants (the “Public Reporting Period”), the Company shall comply in all respects with its reporting and filing obligations under the Exchange Act and shall not take any action or file any document (whether or not permitted by the Securities Act or the rules promulgated thereunder) to terminate or suspend its reporting and filing obligations under the Exchange Act or Securities Act, except as permitted herein. The Company further covenants that it will take such further action as the Purchasers may reasonably request, all to the extent required from time to time to enable the Purchasers to sell the Preferred Shares and Warrants, without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 promulgated under the Securities Act. Upon the request of the Purchasers, the Company shall deliver to the Purchasers a written certification of a duly authorized officer as to whether it has complied with such requirements.

 

(b) At any time during the Public Reporting Period, if the Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c) (a “Public Information Failure”) then, in addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell the Securities, an amount in cash equal to two percent (2.0%) of the aggregate Purchase Price of such Purchaser’s Preferred Shares, Warrants, Conversion Shares and Warrant Shares on the day of a Public Information Failure and on every thirtieth (30th) day (prorated for periods totaling less than thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that such public information is no longer required for the Purchasers to transfer the Shares and Warrant Shares pursuant to Rule 144, without transfer restrictions. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Public Information Failure, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

 

Section 3.05 Compliance with Laws. The Company shall comply, and cause each subsidiary to comply, with all applicable laws, rules, regulations and orders, noncompliance with which could have a Material Adverse Effect.

 

Section 3.06 Keeping of Records and Books of Account. The Company shall keep and cause each subsidiary to keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied, reflecting all financial transactions of the Company and its subsidiaries, and in which, for each fiscal year, all proper reserves for depreciation, depletion, obsolescence, amortization, taxes, bad debts and other purposes in connection with its business shall be made.

 

Section 3.07 Amendments. The Company shall not amend or waive any provision of the Certificate or Bylaws of the Company in any way that would adversely affect the liquidation preferences, dividends rights, conversion rights or voting rights of the Preferred Shares; provided, however, that (i) any other class or series of equity securities which by its terms shall rank senior to the Preferred Shares may be created and issued with the prior written consent of the holders of a majority of the Preferred Shares then outstanding and (ii) any creation and issuance of another series of Junior Stock (as defined in the Certificate of Designation) or any other class or series of equity securities which by its terms shall rank junior or pasi passu to the Preferred Shares shall not be deemed to materially and adversely affect such rights, preferences or privileges.

 

  

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Section 3.08 Other Agreements. The Company shall not enter into any agreement in which the terms of such agreement would restrict or impair the right or ability to perform of the Company or any subsidiary under any Transaction Document, including, without limitation, the payment of dividends on the Preferred Shares.

 

Section 3.09 Use of Proceeds. The net proceeds from the sale of the Shares hereunder shall be used by the Company for the purposes set forth on Schedule 3.09; provided, however, the net proceeds from the sale of the Preferred Shares and Warrants hereunder shall not be used to redeem any Common Stock or securities convertible, exercisable or exchangeable into Common Stock.

 

Section 3.10 Reservation of Shares. So long as any of the Preferred Shares or Warrants remain outstanding, the Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than one hundred fifty percent (150%) of the aggregate number of shares of Common Stock needed to provide for the issuance of the Conversion Shares and the Warrant Shares.

 

Section 3.11 Disclosure of Material Information. The Company covenants and agrees that neither it nor any other person acting on its behalf has provided or will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms that each Purchaser shall be relying on the foregoing representations in effecting transactions in securities of the Company.

 

Section 3.12 Integration.  The Company shall not, and shall use its best efforts to ensure that no affiliate of the Company shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Preferred Shares and Warrants in a manner that would require the registration under the Securities Act of the sale of the Preferred Shares and Warrants to the Purchasers.

 

Section 3.13 Disclosure of Transaction. The Company shall file with the Commission a Current Report on Form 8-K (the “Form 8-K”) describing the material terms of the transactions contemplated hereby (and attaching as exhibits thereto this Agreement, the Certificate of Designation, the form of Warrant and the Press Release) as soon as practicable following the Closing Date but in no event later than four (4) Trading Days following the Closing Date, which Form 8-K shall be subject to prior review and comment by the Purchasers. The Purchasers shall be provided with at least two Trading Days to review the Form 8-K prior to its filing. “Trading Day” means any day during which the New York Stock Exchange (or other principal exchange on which the Common Stock is traded) shall be open for trading.

 

Section 3.14 Variable Offering Restriction. Subject to the consent of a Majority in Interest [as defined in Section 6.11], for so long as Preferred Shares or Warrants are outstanding, the Company will not enter into or exercise any Equity Line of Credit or similar agreement, nor issue nor agree to issue any floating or Variable Priced Equity Linked Instruments nor any of the foregoing or equity with price reset rights (collectively, the “Variable Rate Restrictions”).   For purposes hereof, “Equity Line of Credit” shall include any transaction involving a written agreement between the Company and an investor or underwriter whereby the Company has the right to “put” its securities to the investor or underwriter over an agreed period of time and at an agreed price or price formula, and “Variable Priced Equity Linked Instruments” shall include: (A) any debt or equity securities which are convertible into, exercisable or exchangeable for, or carry the right to receive additional shares of Common Stock either (1) at any conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for Common Stock at any time after the initial issuance of such debt or equity security, or (2) with a fixed conversion, exercise or exchange price that is subject to being reset at some future date at any time after the initial issuance of such debt or equity security due to a change in the market price of the Company’s Common Stock since date of initial issuance, and (B) any amortizing convertible security which amortizes prior to its maturity date, where the Company is required or has the option to (or any investor in such transaction has the option to require the Company to) make such amortization payments in shares of Common Stock which are valued at a price that is based upon and/or varies with the trading prices of or quotations for Common Stock at any time after the initial issuance of such debt or equity security (whether or not such payments in stock are subject to certain equity conditions).

 

  

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Section 3.15 Offering Restrictions.  For so long as any Preferred Shares or Warrants are outstanding, except for the Excepted Issuances (defined below), the Company will not enter into an agreement to issue nor issue any equity, convertible debt or other securities convertible into Common Stock or equity of the Company nor modify any of the foregoing which may be outstanding at anytime, without the prior written consent of the Purchasers, if the issue price or purchase price of any Common Stock or Common Stock component of any of the foregoing is or could become equal to or less than the conversion price of the Preferred Shares.

 

“Excepted Issuances” shall mean (i) full or partial consideration in connection with a bona fide strategic merger, acquisition, consolidation or purchase of substantially all of the securities or assets of a corporation or other entity so long as such issuances are not for the purpose of raising capital and which holders of such securities or debt are not at any time granted registration rights, and which have been approved by a Majority in Interest, (ii) the Company’s issuance of securities in connection with bona fide strategic license agreements and other bona fide partnering arrangements so long as such issuances are not for the purpose of raising capital and which holders of such securities or debt are not at any time granted registration rights, and which have been approved by a Majority in Interest, (iii) the Company’s issuance of Common Stock or the issuances or grants of options to purchase Common Stock to employees, directors, and consultants, pursuant to plans described on Schedule 3.15 , (iv) securities upon the exercise or exchange of or conversion of any securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement on the terms disclosed in the Commission Documents and which securities are also described on Schedule 3.15, (v) as a result of the exercise of Warrants or conversion of Preferred Shares which are granted or issued pursuant to this Agreement on the unamended terms in effect on the Closing Date,

 

Section 3.16 Negative Covenants.   So long as at least 500 shares of Preferred Stock are outstanding, without the consent of the holders of at a majority of the Preferred Shares then outstanding, the Company will not and will not permit any of its Subsidiaries to directly or indirectly:

 

(a) create, incur, assume or suffer to exist any pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim, security interest, security title, mortgage, security deed or deed of trust, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any lease or title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the Uniform Commercial Code or comparable law of any jurisdiction) (each, a “Lien”) upon any of its property, whether now owned or hereafter acquired except for: (a) Liens imposed by law for taxes that are not yet due or are being contested in good faith and for which adequate reserves have been established in accordance with generally accepted accounting principles; (b) carriers’, warehousemen’s, mechanic’s, material men’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 30 days or that are being contested in good faith and by appropriate proceedings; (c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations; (d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business; (e) Liens created with respect to the financing of the purchase of new property in the ordinary course of the Company’s business up to the amount of the purchase price of such property; (f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property and (g) Liens in existence on the date hereof and set forth on Schedule 3.16(a) hereto, and (h) Liens otherwise set forth on Schedule 3.16(a) hereto;

 

  

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(b) amend its articles of incorporation, bylaws or its charter documents so as to materially and adversely affect any rights of the Purchasers;

 

(c) repay, repurchase or offer to repay, repurchase or otherwise acquire or make any cash dividend or cash distribution in respect of any of its Common Stock, preferred stock, or other equity securities other than to the extent permitted or required under the Transaction Documents;

 

(d) except as set forth on Schedule 3.16(d) hereto, engage in any transactions with any officer, director, employee or any Affiliate of the Company, including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $100,000 (excluding sales commissions) other than (i) for payment of salary, or fees for services rendered, pursuant to and on the terms of a written contract in effect at least five days prior to the Closing Date, a copy of which has been provided to the Purchaser at least four days prior to the Closing Date, which contracts may be extended on terms customary and reasonable within the marketplace, (ii) reimbursement for authorized expenses incurred on behalf of the Company, (iii) for other employee benefits, including stock option agreements under any stock option plan of the Company disclosed in the Commission Documents, or (iv) other transactions disclosed in the Commission Documents; or

 

(e) pay or redeem any financing related debt or past due obligations or securities outstanding as of the Closing Date, or past due obligations, except vendor obligations, which in management’s good faith, reasonable judgment must be paid to avoid disruption of the Company’s businesses, except as set forth on Schedule 3.16(e) or except any sums owed to Harris Cramer LLP or the Company’s auditors as of the Closing Date.

 

Section 3.17 Piggy-Back Registrations.   If at any time the Preferred Shares are outstanding, there is not an effective registration statement covering all of the Conversion Shares, and Warrant Shares and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, but excluding Forms S-4 or S-8 and similar forms which do not permit such registration, then the Company shall send to each holder of any of the Preferred Shares, Warrants, Conversion Shares or Warrant Shares written notice of such determination and, if within fifteen calendar days after receipt of such notice, any such holder shall so request in writing, the Company shall include in such registration statement all or any part of the Conversion Shares and Warrant Shares such holder requests to be registered, subject to customary underwriter cutbacks applicable to all holders of registration rights and any cutbacks in  accordance with guidance provided by the Securities and Exchange Commission (including, but not limited to, Rule 415).  The obligations of the Company under this Section may be waived by any holder of any of such securities entitled to registration rights under this Section 3.17.  The holders whose Conversion Shares and Warrant Shares are included or required to be included in such registration statement are granted the same rights, benefits, liquidated or other damages and indemnification granted to other holders of securities included in such registration statement.  Notwithstanding anything to the contrary herein, the registration rights granted hereunder to the holders of securities shall not be applicable for such times as all such Conversion Shares and Warrant Shares may be sold by the holder thereof without restriction pursuant to Section 144(b)(1) of the 1933 Act.  In no event shall the liability of any holder of such securities or permitted successor in connection with any Conversion Shares and Warrant Shares included in any such registration statement be greater in amount than the dollar amount of the net proceeds actually received by such Purchaser upon the sale of the Conversion Shares and Warrant Shares sold pursuant to such registration or such lesser amount in proportion to all other holders of Securities included in such registration statement. All expenses incurred by the Company in complying with this Section 3.17, including, without limitation, all registration and filing fees, printing expenses (if required), fees and disbursements of counsel and independent public accountants for the Company, fees and expenses (including reasonable counsel fees) incurred in connection with complying with state securities or “blue sky” laws, fees of the FINRA, transfer taxes, and fees of transfer agents and registrars, are called “Registration Expenses.” All underwriting discounts and selling commissions applicable to the sale of registrable securities are called "Selling Expenses."  The Company will pay all Registration Expenses in connection with the registration statement under this Section 3.17.  Selling Expenses in connection with each registration statement under this Section 3.17 shall be borne by the holder and will be apportioned among such holders in proportion to the number of Conversion Shares included therein for a holder relative to all the securities included therein for all selling holders, or as all holders may agree.

 

  

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Section 3.18 DTC Program.  Until the end of the Public Reporting Period, the Company will employ as the transfer agent for the Conversion Shares and Warrant Shares a participant in the Depository Trust Company Automated Securities Transfer Program.

 

ARTICLE IV.

 

CONDITIONS

 

Section 4.01 Conditions Precedent to the Obligation of the Company to Sell the Preferred Shares and Warrants. The obligation hereunder of the Company to issue and sell the Preferred Shares and the Warrants to the Purchasers is subject to the satisfaction or waiver, at or before the Closing, of each of the conditions set forth below. These conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion.

 

(a) Accuracy of Each Purchaser’s Representations and Warranties. The representations and warranties of each Purchaser shall be true and correct in all respects as of the date when made and as of the Closing Date as though made at that time, except for representations and warranties that are expressly made as of a particular date, which shall be true and correct in all material respects as of such date.

 

(b) Performance by the Purchasers. Each Purchaser shall have performed, satisfied and complied in all respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Purchaser at or prior to the Closing.

 

(c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by this Agreement.

 

  

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(d) Delivery of Purchase Price. The Purchase Price for the Preferred Shares and Warrants shall have been delivered to the Escrow Agent.

 

(e) Delivery of Transaction Documents. The Transaction Documents shall have been duly executed and delivered by the Purchasers and, with respect to the Escrow Agreement, by the Escrow Agent, to the Company.

 

Section 4.02 Conditions Precedent to the Obligation of the Purchasers to Purchase the Preferred Shares and Warrants. The obligation hereunder of each Purchaser to acquire and pay for the Preferred Shares and the Warrants is subject to the satisfaction or waiver, at or before the Closing, of each of the conditions set forth below. These conditions are for each Purchaser’s sole benefit and may be waived by such Purchaser at any time in its sole discretion.

 

(a) Accuracy of the Company’s Representations and Warranties. Each of the representations and warranties of the Company shall be true and correct in all respects as of the date when made and as of the Closing Date as though made at that time, except for representations and warranties that are expressly made as of a particular date, which shall be true and correct in all respects as of such date.

 

(b) Performance by the Company. The Company shall have performed, satisfied and complied in all respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing.

 

(c) No Suspension, Etc. Trading in the Company’s Common Stock shall not have been suspended by the Commission or the OTCQB and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg Financial Markets (“Bloomberg”) shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by Bloomberg, or on the New York Stock Exchange, nor shall a banking moratorium have been declared either by the United States or New York State authorities, nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity or crisis of such magnitude in its effect on, or any material adverse change in any financial market which, in each case, in the judgment of such Purchaser, makes it impracticable or inadvisable to purchase the Preferred Shares.

 

(d) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by this Agreement.

 

(e) No Proceedings or Litigation. No action, suit or proceeding before any arbitrator or any governmental authority shall have been commenced, and no investigation by any governmental authority shall have been threatened, against the Company or any subsidiary, or any of the officers, directors or affiliates of the Company or any subsidiary seeking to restrain, prevent or change the transactions contemplated by this Agreement, or seeking damages in connection with such transactions.

 

  

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(f) Certificate of Designation. The Certificate of Designation in the form of Exhibit A attached hereto shall have been accepted for filing with the Secretary of State of Nevada.

 

(g) Certificates. The Company shall have executed and delivered to the Purchasers the certificates (in such denominations as such Purchaser shall request) for the Preferred Shares and the Warrants being acquired by such Purchaser at the Closing (in such denominations as such Purchaser shall request).

 

(h) Resolutions. The Board of Directors of the Company shall have adopted resolutions consistent with Section 2.01(b) hereof in a form reasonably acceptable to the Purchasers (the “Resolutions”).

 

(i) Reservation of Shares. The Company shall have reserved out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Preferred Shares and the exercise of the Warrants, a number of shares of Common Stock equal to one hundred fifty percent (150%) of the aggregate number of Conversion Shares issuable upon conversion of the Preferred Shares outstanding on the Closing Date and the number of Warrant Shares issuable upon exercise of the number of Warrants assuming such Warrants were granted on the Closing Date.

 

(j) Escrow Agreement. The Company and the Escrow Agent shall have executed and delivered the Escrow Agreement to the Purchasers.

 

(k) Minimum Escrow Deposit.  The Purchasers shall have deposited at least $1,000,000 into the Escrow Account and shall have delivered executed signature pages to this Agreement to the Company committing to purchase at least an aggregate of $1,000,000 of Preferred Shares and Warrants

 

(l) Secretary’s Certificate. The Company shall have delivered to the Purchasers a secretary’s certificate, dated as of the Closing Date, as to (i) the Resolutions, (ii) the Articles, (iii) the Bylaws, (iv) the Certificate of Designation, each as in effect at the Closing, and (v) the authority and incumbency of the officers of the Company executing the Transaction Documents and any other documents required to be executed or delivered in connection therewith.

 

(m) Officer’s Certificate. The Company shall have delivered to the Purchasers a certificate of an executive officer of the Company, dated as of the Closing Date, confirming the accuracy of the Company’s representations, warranties and covenants as of the Closing Date and confirming the compliance by the Company with the conditions precedent set forth in this Section 4.02 as of the Closing Date.

 

(n) Material Adverse Effect. Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably could have or result in a Material Adverse Effect.

 

(o) Opinions of Counsel. At the Closing, the Purchasers shall have received an opinion of counsel to the Company dated the date of the Closing and in such form as is reasonably acceptable to the Purchasers.

 

  

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ARTICLE V.

 

INDEMNIFICATION

 

Section 5.01 General Indemnity. The Company agrees to indemnify and hold harmless the Purchasers (and their respective directors, officers, managers, partners, members, shareholders, affiliates, agents, successors and assigns) from and against any and all losses, liabilities, deficiencies, costs, damages and expenses (including, without limitation, reasonable attorneys’ fees, charges and disbursements) incurred by the Purchasers as a result of any inaccuracy in or breach of the representations, warranties or covenants made by the Company herein.

 

Section 5.02 Indemnification Procedure. Any party entitled to indemnification under this Article V (an “indemnified party”) will give written notice to the indemnifying party of any matters giving rise to a claim for indemnification; provided, that the failure of any party entitled to indemnification hereunder to give notice as provided herein shall not relieve the indemnifying party of its obligations under this Article V except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any action, proceeding or claim is brought against an indemnified party in respect of which indemnification is sought hereunder, the indemnifying party shall be entitled to participate in and, unless in the reasonable judgment of the indemnified party a conflict of interest between it and the indemnifying party may exist with respect to such action, proceeding or claim, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. In the event that the indemnifying party advises an indemnified party that it will contest such a claim for indemnification hereunder, or fails, within thirty (30) days of receipt of any indemnification notice to notify, in writing, such person of its election to defend, settle or compromise, at its sole cost and expense, any action, proceeding or claim (or discontinues its defense at any time after it commences such defense), then the indemnified party may, at its option, defend, settle or otherwise compromise or pay such action or claim. In any event, unless and until the indemnifying party elects in writing to assume and does so assume the defense of any such claim, proceeding or action, the indemnified party’s costs and expenses arising out of the defense, settlement or compromise of any such action, claim or proceeding shall be losses subject to indemnification hereunder. The indemnified party shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the indemnified party which relates to such action or claim. The indemnifying party shall keep the indemnified party fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. If the indemnifying party elects to defend any such action or claim, then the indemnified party shall be entitled to participate in such defense with counsel of its choice at its sole cost and expense. The indemnifying party shall not be liable for any settlement of any action, claim or proceeding effected without its prior written consent, which consent shall not be unreasonably withheld. Notwithstanding anything in this Article V to the contrary, the indemnifying party shall not, without the indemnified party’s prior written consent, settle or compromise any claim or consent to entry of any judgment in respect thereof which imposes any future obligation on the indemnified party or which does not include, as an unconditional term thereof, the giving by the claimant or the plaintiff to the indemnified party of a release from all liability in respect of such claim. The indemnification required by this Article V shall be made by periodic payments of the amount thereof during the course of investigation or defense, as and when bills are received or expense, loss, damage or liability is incurred, so long as the indemnified party irrevocably agrees to refund such moneys if it is ultimately determined by a court of competent jurisdiction that such party was not entitled to indemnification. The indemnity agreements contained herein shall be in addition to (a) any cause of action or similar rights of the indemnified party against the indemnifying party or others, and (b) any liabilities the indemnifying party may be subject to pursuant to the law. To the extent that the foregoing undertaking by the Company is unenforceable for any reason, the Company will make the maximum contribution to the payment and satisfaction of each of the indemnified liabilities that is permissible under applicable law.

 

  

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ARTICLE VI.

 

MISCELLANEOUS

 

Section 6.01 Fees and Expenses. Except as otherwise set forth in this Agreement and the other Transaction Documents, each party shall pay the fees and expenses of its advisors, counsel, accountants and other experts, if any, and all other expenses, incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement, provided that the Company shall pay all reasonable attorneys’ and escrow agent fees and expenses (including disbursements and out-of-pocket expenses) incurred by the Purchasers in connection with the preparation, negotiation, execution and delivery of this Agreement and the other Transaction Documents and the transactions contemplated thereunder, which payment shall be $20,000.  The Company and the Purchasers hereby agree that the prevailing party in any suit, action or proceeding arising out of or relating to the Shares, this Agreement or the other Transaction Documents, shall be entitled to reimbursement for reasonable legal fees from the non-prevailing party. The Company shall pay all transfer agent fees, stamp or other similar taxes and duties levied in connection with issuance of the Shares or the removal of any restrictive legends therefrom in accordance with the terms of this Agreement and the other Transaction Documents.

 

Section 6.02 Specific Enforcement, Consent to Jurisdiction.

 

(a) The Company and the Purchasers acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement or the other Transaction Documents were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof or thereof, this being in addition to any other remedy to which any of them may be entitled by law or equity.

 

(b) Each of the Company and the Purchasers (i) hereby irrevocably submits to the jurisdiction of the United States District Court sitting in the Southern District of New York and the courts of the State of New York located in New York county for the purposes of any suit, action or proceeding arising out of or relating to this Agreement or any of the other Transaction Documents or the transactions contemplated hereby or thereby and (ii) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Each of the Company and the Purchasers consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 6.02 shall affect or limit any right to serve process in any other manner permitted by law.

 

Section 6.03 Entire Agreement; Amendment. This Agreement (including all exhibits and schedules hereto) and the Transaction Documents contain the entire understanding and agreement of the parties with respect to the matters covered hereby and, except as specifically set forth herein or in the Transaction Documents, neither the Company nor any of the Purchasers makes any representations, warranty, covenant or undertaking with respect to such matters and they supersede all prior understandings and agreements with respect to said subject matter, all of which are merged herein. No provision of this Agreement may be waived or amended other than by a written instrument signed by the Company and the holders of at a majority of the Preferred Shares then outstanding, and no provision hereof may be waived other than by a written instrument signed by the party against whom enforcement of any such amendment or waiver is sought. No such amendment shall be effective to the extent that it applies to less than all of the holders of the Preferred Shares then outstanding. No consideration shall be offered or paid to any person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents or holders of Preferred Shares, as the case may be.

 

  

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Section 6.04 Notices. Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery by telex (with correct answer back received), telecopy, e-mail or facsimile at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

 

(a) If to the Company:

 

Options Media Group Holdings, Inc.

123 NW 13th Street, Suite 300

Boca Raton, Florida 33432

Attn:  Scott Frohman, CEO

Fax No.: (954) 208-9862

 

with copies to:

Harris Cramer LLP

3507 Kyoto Gardens Drive, Suite 320

Palm Beach Gardens, FL 33410

Fax No.: (561) 659-0701

 

(b) If to any Purchaser at the address of such Purchaser set forth on the signature pages hereto, with copies to:

 

Grushko & Mittman, P.C.

515 Rockaway Avenue

Valley Stream, New York 11581

Attention: Edward M. Grushko, Esq.

Fax No.: (212) 697-3575

Any party hereto may from time to time change its address for notices by giving at least ten (10) days written notice of such changed address to the other party hereto.

 

Section 6.05 Waivers. No waiver by either party of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provisions, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter.

 

  

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Section 6.06 Headings. The article, section and subsection headings in this Agreement are for convenience only and shall not constitute a part of this Agreement for any other purpose and shall not be deemed to limit or affect any of the provisions hereof.

 

Section 6.07 Successors and Assigns; Restrictions on Transfer. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchasers.

 

Section 6.08 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.

 

Section 6.09 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction. This Agreement shall not be interpreted or construed with any presumption against the party causing this Agreement to be drafted. Each party hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all rights to a trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

 

Section 6.10 Survival. The representations and warranties of the Company and the Purchasers shall survive the execution and delivery hereof and the Closing hereunder for the applicable statute of limitations period.

 

Section 6.11 Consent.   As used in this Agreement and the Transaction Documents and any other agreement delivered in connection herewith, “Consent of the Purchasers” or similar language means the consent of holders of not less than seventy-five percent (75%) of the outstanding Preferred Shares, with respect to the Preferred Shares, or Warrants with respect to the Warrants, on the date consent is requested (such Purchasers being a “Majority in Interest”).  A Majority in Interest may consent to take or forebear from any action permitted under or in connection with the Transaction Documents, modify any Transaction Documents or waive any default or requirement applicable to the Company, subsidiaries or Purchasers under the Transaction Documents provided the effect of such action does not waive any accrued interest or damages and further provided that the relative rights of the Purchasers to each other remains unchanged.

 

Section 6.12 Successor Laws.  References in the Transaction Documents to laws, rules, regulations and forms shall also include successors to and functionally equivalent replacements of such laws, rules, regulations and forms.

 

Section 6.13 Maximum Liability.   In no event shall the liability of the Purchasers or permitted successor hereunder or under any Transaction Document or other agreement delivered in connection herewith be greater in amount than the dollar amount of the net proceeds actually received by such Purchaser or successor upon the sale of Conversion Shares.

 

Section 6.14 Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement and shall become effective when counterparts have been signed by each party and delivered to the other parties hereto, it being understood that all parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or e-mail, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile or e-mail signature were the original thereof.

 

  

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Section 6.15 Publicity. The Company agrees that it will not disclose, and will not include in any public announcement, the name of the Purchasers without the consent of the Purchasers unless and until such disclosure is required by law or applicable regulation, and then only to the extent of such requirement.

 

Section 6.16 Severability. The provisions of this Agreement and the Transaction Documents are severable and, in the event that any court of competent jurisdiction shall determine that any one or more of the provisions or part of the provisions contained in this Agreement or the Transaction Documents shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement or the Transaction Documents and such provision shall be reformed and construed as if such invalid or illegal or unenforceable provision, or part of such provision, had never been contained herein, so that such provisions would be valid, legal and enforceable to the maximum extent possible.

 

Section 6.17 Further Assurances. From and after the date of this Agreement, upon the request of any Purchaser or the Company, each of the Company and the Purchasers shall execute and deliver such instruments, documents and other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement, the Preferred Shares, the Conversion Shares, the Warrants, the Warrant Shares, the Certificate of Designation and the other Transaction Documents.

 

[SIGNATURE PAGE FOLLOWS]

 

  

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[COMPANY SIGNATURE PAGES TO SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officer as of the date first above written.

 

	 	OPTIONS MEDIA GROUP HOLDINGS, INC.	 
	 	 	 	 
	
 

	
By: 

	/s/ Scott Frohman	 
	 	 	Name: Scott Frohman	 
	 	 	Title: Chief Executive Officer	 
	 	 	 	 

 

  

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[PURCHASER SIGNATURE PAGES TO

 

SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

Name of Purchaser: __________________________________________________________

 

Signature of Authorized Signatory of Purchaser: ____________________________________

 

Name of Authorized Signatory: _________________________________________________

 

Title of Authorized Signatory: __________________________________________________

 

Email Address of Purchaser: ___________________________________________________

 

Fax Number of Purchaser: _____________________________________________________

 

Address for Notice of Purchaser: _______________________________________________

 

________________________________________________________________________

 

________________________________________________________________________

 

Address for Delivery of Securities for Purchaser (if not same as above): __________________

 

_________________________________________________________________________

 

_________________________________________________________________________

 

Subscription Amount: $______________________________________________________

 

Preferred Shares:____________________________________________________________

 

Warrant Shares: ____________________________________________________________

 

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