Document:

EXHIBIT
4.2

 

BIOSANTE PHARMACEUTICALS, INC.,

 

and

 

U.S. BANK NATIONAL ASSOCIATION,

Trustee

 

 

SUPPLEMENTAL INDENTURE

 

Dated as of October 14, 2009

 

To

 

INDENTURE

 

Dated as of June 24, 2009

 

 

Relating to

 

Cell Genesys, Inc.

 

3.125% Convertible Senior Subordinated Notes due 2013

 

 

SUPPLEMENTAL INDENTURE

 

This SUPPLEMENTAL INDENTURE, dated as of the
14th day of October, 2009, is by and between BIOSANTE PHARMACEUTICALS, INC., a
Delaware corporation (“BioSante”) and U.S. BANK NATIONAL ASSOCIATION, as
trustee under the Indenture referred to below (the “Trustee”).

 

WITNESSETH:

 

WHEREAS, Cell Genesys,
Inc., a Delaware corporation (the “Company”) and the Trustee are parties
to that certain Indenture dated as of June 24, 2009 (as amended, modified and
supplemented from time to time, the “Indenture”), pursuant to which the
Company issued its  3.125% Convertible
Senior Notes due 2013 (the “Securities”);

 

WHEREAS, BioSante and
the Company have entered into an Agreement and Plan of Merger dated as of June 29,
2009 (the “Merger Agreement”), pursuant to which the Company will merge
with and into BioSante and BioSante will continue  as the surviving corporation (the “Merger”);

 

WHEREAS, pursuant to
the Merger Agreement, each share of the Company’s common stock outstanding
immediately prior to the effective time of the consummation of the Merger (the
effective time of the consummation of the Merger, herein the “Effective Time”)
will be converted into the right to receive 0.1828 of a share of common stock
of BioSante;

 

 

WHEREAS, Section 5.1
of the Indenture provides that  the
Company shall not merge with another corporation unless certain conditions
specified therein are satisfied, including, inter alia, that any
resulting successor corporation be organized under the laws of the United
States or any State thereof  and shall
expressly assume, by an indenture supplemental to the Indenture, all of  the obligations of the Company under the
Securities and the Indenture;

 

WHEREAS, Section 9.4
of the Indenture provides, inter alia, that if there occurs a merger of
the Company with another person, as a result of which holders of the Company’s
common stock shall receive stock or other property in exchange for such Company
common stock, then the Company, or the successor corporation, and the Trustee
shall execute a supplemental indenture providing that the Securities shall be
convertible into the kind and amount of shares of stock  or other property which the  Holder of such Securities would have been
entitled to receive upon such merger had such Securities been converted into
common stock of the Company immediately prior to such merger;

 

WHEREAS, Sections 8.1(c),(d) and (h) of the Indenture authorizes the Company and the Trustee without the consent of the Holders to: (i) provide for conversion rights of Holders of Securities if, inter alia, any merger occurs;   (ii) provide for the assumption of the Company’s obligations to the Holders of Securities in the case, inter alia, of a merger pursuant to Article V of the Indenture; and (iii) add or modify any other provisions of the Indenture with respect to matters or questions arising thereunder which the Company and the Trustee may deem necessary or desirable and that will not, in the good faith opinion of the Board of Directors of BioSante (as evidenced by a Board Resolution), adversely affect the interests of the Holders of Securities;
 

WHEREAS, BioSante and
the Trustee desire to execute a supplemental indenture that complies with Section
8.1 of the Indenture and implements the provisions of Sections 5.1 and 9.4
referenced above;

 

WHEREAS, all acts and
things necessary to make this Supplemental Indenture a valid and binding
agreement for the purposes and objects herein expressed have been duly done and
performed, and the execution of this Supplemental Indenture has been in all
respects, duly authorized; and

 

WHEREAS, capitalized
terms not otherwise specifically defined herein are defined as provided in the
Indenture;

 

NOW,
THEREFORE, in consideration of the foregoing premises and of
other good and valuable consideration, the receipt and validity of which are
hereby acknowledged, BioSante hereby covenants and agrees with the Trustee, for
the equal and proportionate benefit of the respective Holders from time to time
of the Securities, as follows:

 

ARTICLE I

 

AMENDMENTS TO THE INDENTURE

 

On the terms and subject to the conditions
set forth herein, the Indenture is amended as follows:

 

(a)
Section 11.2 of the Indenture is hereby amended by replacing the provision
relating to the address, telephone, facsimile and e-mail for notice to the
Company and its counsel, to provide as follows:

 

2

 

“If to the Company:

 

BioSante Pharmaceuticals, Inc.

111 Barclay Boulevard

Lincolnshire, Illinois  60069

Attention :  Stephen M. Simes - Vice
Chairman, President and Chief Executive Officer

Telephone :  (847) 478-0500

Facsimile:  (847) 478-9260

E-mail:  ssimes@biosantepharma.com

 

With a copy to:

 

Oppenheimer Wolff &
Donnelly LLP

Plaza VII, 45 South Seventh
Street

Suite 3300

Minneapolis, MN  55402-1609

Attention:  Amy Culbert

Telephone:  (612) 607-7287

Facsimile:  (612) 607-7100

E-mail:  aculbert@oppenheimer.com”

 

(b) Based on the final exchange ratio in the
Merger of 0.1828 shares of common stock of BioSante for each share of common
stock of the Company, the table set forth in Section 9.1(b) of the Indenture
and all of the provisions of such Section 9.1(b) following such table are
hereby replaced in their entirety to provide as follows:

 

	
  “STOCK PRICE

  	
   

  	
  3.23

  	
   

  	
  3.77

  	
   

  	
  4.38

  	
   

  	
  4.92

  	
   

  	
  5.53

  	
   

  	
  6.13

  	
   

  	
  6.67

  	
   

  	
  7.28

  	
   

  	
  7.88

  	
   

  	
  8.42

  	
   

  	
  9.03

  	
   

  	
  9.63

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Effective Date

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  May 1, 2009

  	
   

  	
  43.36

  	
   

  	
  30.83

  	
   

  	
  23.03

  	
   

  	
  17.82

  	
   

  	
  14.17

  	
   

  	
  11.50

  	
   

  	
  9.47

  	
   

  	
  7.97

  	
   

  	
  6.77

  	
   

  	
  5.79

  	
   

  	
  5.00

  	
   

  	
  0

  	
   

  
	
  May 1, 2010

  	
   

  	
  31.26

  	
   

  	
  22.48

  	
   

  	
  16.91

  	
   

  	
  13.15

  	
   

  	
  10.49

  	
   

  	
  7.56

  	
   

  	
  6.24

  	
   

  	
  5.26

  	
   

  	
  4.48

  	
   

  	
  3.83

  	
   

  	
  3.31

  	
   

  	
  0

  	
   

  
	
  May 1, 2011

  	
   

  	
  20.06

  	
   

  	
  14.58

  	
   

  	
  11.04

  	
   

  	
  8.63

  	
   

  	
  6.90

  	
   

  	
  3.73

  	
   

  	
  3.08

  	
   

  	
  2.60

  	
   

  	
  2.22

  	
   

  	
  1.90

  	
   

  	
  1.65

  	
   

  	
  0

  	
   

  
	
  May 1, 2012

  	
   

  	
  9.67

  	
   

  	
  7.10

  	
   

  	
  5.41

  	
   

  	
  4.24

  	
   

  	
  3.41

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  May 1, 2013

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  

 

If
the Stock Price and Effective Date are not set forth on the table above and the
Stock Price is:

 

(A)
between two Stock Prices on the table or the Effective Date is between two
dates on the table, the number of shares of Additional Common Stock will be
determined by straight-line interpolation between the number of shares of
Additional Common Stock set forth for the higher and lower Stock Price and the
two Effective Dates, as applicable, based on a 360-day year;

 

(B)
in excess of $9.63 per share (subject to adjustment), no shares of Additional
Common Stock will be issued upon conversion; or

 

(C)
less than $3.23 per share (subject to adjustment), no shares of Additional
Common Stock will be issued upon conversion.

 

Notwithstanding the foregoing, in no event shall the
total number of shares of Common Stock issuable upon conversion exceed 312.18
per $1,000 of aggregate principal amount of Securities, subject to adjustments
in the same manner as the Conversion Price in Section 9.3.”

 

3

 

(c)  Section 9.3(m)
of the Indenture is hereby amended by replacing the reference to “$0.59” with “$3.23”.

 

ARTICLE II

 

ASSUMPTION OF INDENTURE AND SECURITIES

 

As of the Effective Time, concurrently with
the Merger, BioSante does hereby assume the due and punctual payment of all
amounts payable on the Securities, according to their terms, and subject to Article
III below, the due and punctual performance and observance of all of the
covenants and conditions of the Securities and the Indenture to be performed by
the Company.  As of the Effective Time,
concurrently with the Merger, BioSante shall succeed to, and be substituted
for  and may exercise rights and powers
of, the Company under the Indenture with the same effect as if BioSante had
been initially named as the Company therein.

 

ARTICLE III

 

CONVERSION RIGHTS

 

Subject to and in accordance
with Section 9.4 of the Indenture,  the
Holder of any Securities outstanding as of the Effective Time shall have the
right to convert such Securities into the number of shares of common stock,
$0.0001 par value per share, of BioSante which such Holder would have been
entitled to receive upon the Merger had such Securities been converted into
common stock of the Company immediately prior to the Merger (which, for the
avoidance of doubt, shall equal 268.8172  shares of
common stock of BioSante per $1,000 aggregate principal amount of Securities at
a Conversion Price of $3.72).

 

ARTICLE IV

 

CONDITIONS
TO EFFECTIVENESS

 

This Supplemental Indenture shall become
effective concurrently with the consummation of the Merger and delivery to the
Trustee by BioSante of an Officer’s Certificate and Opinion of Counsel as
required by Section 5.1(c) of the Indenture. 
This Supplemental Indenture shall be automatically null and void if and
in the event that the Merger shall not have been consummated on or before November
30, 2009.  BioSante will promptly notify
the Trustee of the consummation of the Merger and the effectiveness of this
Supplemental Indenture.

 

ARTICLE V

 

MISCELLANEOUS PROVISIONS

 

Section 5.1  Governing Law.  THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK

 

Section 5.2  Definitions.  The terms specifically defined in this
Supplemental Indenture shall have the respective meanings so specified for all
purposes of this Supplemental Indenture. 
All other terms used in this Supplemental Indenture which are defined in
the Indenture, the Trust Indenture Act, or which are by reference therein
defined in the Securities Act (except as herein otherwise expressly provided or
unless the context otherwise requires) shall have the meanings assigned to such
terms in the Indenture, the Trust Indenture Act, and in said Securities Act, as
in force at the date of the execution of this Supplemental Indenture.  The words “herein,” “hereof’ and “hereunder,”
and words of similar import

 

4

 

refer to this Supplemental Indenture as a whole and not to any
particular Article, Section or other Subsection.  The terms specifically defined in this
Supplemental Indenture include the plural as well as the singular.

 

Section 5.3  No Third Party Beneficiaries.  Nothing in this Supplemental Indenture,
expressed or implied, shall give or be construed to give any person, firm or
corporation, other than the parties hereto and their successors hereunder, and
the holders of the Securities, any legal or equitable right, remedy or claim
under or in respect to this Supplemental Indenture, or under any covenant,
condition or provision herein contained; all such covenants, conditions and
provisions being for the sole benefit of the parties hereto and their
successors hereunder and the Holders of the Securities.

 

Section 5.4  Acceptance by Trustee.  The Trustee accepts the amendment of the
Indenture effected by this Supplemental Indenture and agrees to execute the
trust created by the Indenture as hereby amended, but only upon the terms and
conditions set forth in the Indenture, including the terms and provisions
defining and limiting the liabilities and responsibilities of the Trustee,
which terms and provisions shall in like manner define and limit its
liabilities and responsibilities in the performance of the trust created by the
Indenture as hereby amended.

 

Section 5.5  Legend on Securities.  After the consummation of the Merger, any
Securities authenticated and delivered in substitution for, or in lieu of,
Securities then outstanding and all Securities presented or delivered to the
Trustee on and after the Effective Time for such purpose shall be either
restated to give the effect to the Supplemental Indenture or, in lieu thereof,
shall bear a legend substantially as follows:

 

The consideration received upon conversion of
the principal amount of this Security shall be determined with reference to
shares of the common stock, $0.0001 par value per share, of BioSante
Pharmaceuticals, Inc., a Delaware corporation, at a Conversion Price per share
of $3.72 as of the consummation of the Merger, such Conversion Price being
subject to certain adjustments as set forth in the Indenture.  Reference herein to “Common Stock of the
Company” or the “Company’s Common Stock” shall be deemed to be to the Common
Stock of BioSante Pharmaceuticals, Inc. 
The Indenture, dated as of June 24, 2009, referred to in this Security
has been amended by a Supplemental Indenture dated as of October 14, 2009 to
provide for such convertibility. 
Reference is hereby made to the Supplemental Indenture, copies of which
are on file with BioSante Pharmaceuticals, Inc. for a statement of the
amendments therein made.

 

Nothing contained in this Supplemental
Indenture shall require the holder of any Securities to submit or exchange such
Security prior to the consummation of the Merger in order to obtain the
benefits of any provisions hereunder.

 

BioSante hereby agrees to provide for the
reproduction of the above legend on the Securities without materially obscuring
the text of the Securities.

 

Anything herein contained to the contrary
notwithstanding, the Trustee shall not at any time be under any responsibility
to acquire or cause any Security now or hereafter outstanding to be presented
or delivered to it for any purpose provided for in this Section 5.5.

 

Section 5.6  Effect on Indenture and Securities.  Except as expressly supplemented by this
Supplemental Indenture, the Indenture and 
the Securities issued thereunder and the obligations created thereby are
in all respects ratified and confirmed and except as expressly supplemented by
this Supplemental Indenture, all of the rights, remedies, terms, conditions,
covenants and agreements of the Indenture and the Securities issued thereunder
shall remain in full force and effect.

 

5

 

Section 5.7  Trust Indenture Act.  If any provision of this Supplemental
Indenture limits, qualifies or conflicts with (a) another provision of this
Supplemental Indenture, or (b) any provision of the Indenture, which in each
case is required to be included by any of the provisions of Section 310 to 317,
inclusive, of the Trust Indenture Act, such required provision shall control.

 

Section 5.8  Recitals.  The recitals contained in this Supplemental
Indenture shall be taken as statements of the BioSante, and the Trustee assumes
no responsibility for their correctness. 
The Trustee makes no representations as to the validity or sufficiency
of this Supplemental Indenture.

 

Section 5.9  Counterparts.  This Supplemental Indenture may be executed
in any number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.

 

[Signatures on next page]

 

6

 

IN WITNESS WHEREOF, the parties hereto have
caused this Supplemental Indenture to be duly executed, and their respective
corporate seals to be hereunto affixed and attested, all as of the day and year
first above written.

 

	
   

  	
  BIOSANTE PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Phillip B. Donenberg

  
	
   

  	
  Name:

  	
  Phillip B. Donenberg

  
	
   

  	
  Title:

  	
  Chief Financial Officer, Treasurer and Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paula Oswald

  
	
   

  	
  Name:

  	
  Paula Oswald

  
	
   

  	
  Title:

  	
  Vice President

  

 

7GULFSTREAM INTERNATIONAL GROUP, INC.

Exhibit 10.1

NOTE PURCHASE AGREEMENT

This Note Purchase Agreement ("Agreement"), is made and entered into as of the 7th day of October 2009 by and between GULFSTREAM INTERNATIONAL GROUP, INC., a Delaware corporation (the “Company”) having an executive office located at 3201 Griffin Road, 4th Floor, Fort Lauderdale, Florida 33312; and GULFSTREAM FUNDING II, LLC, a Delaware limited liability company (the “Lender”) having an address c/o Taglich Brothers Inc., 275 Madison Avenue, Suite 1618, New York, NY 10016. The Company and the Lender is hereinafter sometimes referred to individually as a “Party” and collectively as the “Parties.”

RECITALS:

A.

the Company desires to borrow funds from the Lender in to provide it with additional working capital.

B.

The Lender is willing to make a subordinated loans in the maximum principal amount of $1,500,000 to the Company (the “Loans “) to be evidenced by the Company’s $1,500,000 12% subordinated note due January 15, 2010 in the form of Exhibit A annexed hereto and made a part hereof (the “Note”).

C.

As a material inducement to cause the Lender to enter into this Agreement, make the Loans and purchase the Note, the Company has agreed to enter into this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants, agreements, repre­sentations and warranties contained in this Agreement, the Parties hereto agree as follows:

DEFINITIONS

As used in this Agreement, the following terms shall have the meanings set forth below: 

“Applicable Law” means any domestic or foreign law, statute, regulation, rule, policy, guideline or ordinance applicable to the Company and its Subsidiaries. 

“Affiliate” means any one or more Person controlling, controlled by or under common control with any other Person or their affiliate.

“Business Day” shall mean any day, excluding Saturday, Sunday and any other day on which national banks located in New York, New York shall be closed for business.

“Certificate of Incorporation” shall mean the certificate of incorporation of the Company, as amended to date.

“Closing Date” shall mean the date upon which the transactions contemplated by this Agreement shall be consummated.

“Common Stock” shall mean the shares of common stock of the Company that are authorized for issuance pursuant to the Certificate of Incorporation.

“Dollar” and “$” means lawful money of the United States of America. 

“Exchange Act” means the Securities Exchange Act of 1934, as amended. 

“Financial Statements” shall have the meaning as is defined in Section 3.4 of this Agreement. 

“GAAP” means generally accepted accounting principles in the United States of America as promulgated by the American Institute of Certified Public Accountants and the Financial Accounting Standards Board or any successor Institutes concerning the treatment of any accounting matter. 

“Knowledge” means the knowledge after reasonable inquiry. 

“Material Adverse Effect” with respect to any entity or group of entities means any event, change or effect that has or would have a materially adverse effect on the financial condition, business or results of operations of the Company and its Subsidiaries, when taken as a consolidated whole. 

“National Securities Exchange” means the collective reference to the New York Stock Exchange, the NYSE Amex Exchange, the Nadaq Stock Exchange, the FINRA OTC Bulletin Board or any other recognized national securities exchange in the United States.

“Person” means any individual, corporation, partnership, trust or unincorporated organization or a government or any agency or political subdivision thereof. 

 

“Subsidiary” of any Person means another Person, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of which) is owned directly or indirectly by such first Person.

“Tax” (and, with correlative meaning, “Taxes” and “Taxable”) means: 

(i) any income, alternative or add-on minimum tax, gross receipts tax, sales tax, use tax, ad valorem tax, transfer tax, franchise tax, profits tax, license tax, withholding tax, payroll tax, employment tax, excise tax, severance tax, stamp tax, occupation tax, property tax, environmental or windfall profit tax, custom, duty or other tax, impost, levy, governmental fee or other like assessment or charge of any kind whatsoever together with any interest or any penalty, addition to tax or additional amount imposed with respect thereto by any governmental or Tax authority responsible for the imposition of any such tax (domestic or foreign), and 

(ii) any liability for the payment of any amounts of the type described in clause (i) above as a result of being a member of an affiliated, consolidated, combined or unitary group for any Taxable period, and 

(iii) any liability for the payment of any amounts of the type described in clauses (i) or (ii) above as a result of any express or implied obligation to indemnify any other person. 

“Tax Return” means any return, declaration, form, claim for refund or information return or 

-2-

statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

SECTION 1.

 PURCHASE AND SALE OF THE NOTE 

1.1

The Note and Payment.

(a)

On the Closing Date and subject to and upon the terms and conditions of this Agreement, the Company shall sell, assign, transfer and deliver the Note to the Lender

(b)

On the Closing Date, and against receipt of the Note, the Lender shall fund the proceeds of the Loans to the Company by wire transfer of immediately available funds to an account designated by the Company.

1.2

Exemption from Registration.  The Parties intend that the Note to be issued by the Company to the Lender shall be exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(2) of the Securities Act and the rules and regulations promulgated thereunder.

1.3

Closing and Closing Date. 

The closing of the transactions contemplated hereby (the “Closing”) will take place simultaneous with the execution and delivery of this Agreement on October 7, 2009 or on such other date as the Company and the Lender shall agree (the “Closing Date”).

SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE LENDER.   

The Lender hereby represents and warrants to the Company as follows:

2.1

Organization and Good Standing.  The Lender is a limited liability company duly organized and validly existing under the laws of the State of Delaware.  

2.2

Authority.  

The Lender has the power to enter into this Agreement and to perform its covenants and agreements hereunder.  The execution and delivery of this Agreement and the consummation of the transaction contemplated hereby have been duly authorized by the Board of Managers of the Lender.  The execution and performance of this Agreement will not violate or conflict with any provision of the certificate of formation or operating agreement of the Lender.

2.3

Investment Purpose.  As of the date hereof and the Closing Date the Lender is purchasing the Note for its own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the Securities Act; provided, however, that by making the representations herein, the Lender does not agree to hold any of the Note for any minimum or other specific term and reserves the right to dispose of the Note at any time in accordance with the Securities Act.

2.4

Accredited Investor.  The Lender is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D under the Securities Act (an “Accredited Investor”).  Further, the Lender represents that it is a sophisticated investor, can bear the economic risk of this Investment for an

-3-

indefinite period of time, and has such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of this Investment. 

2.5

Reliance on Exemptions.  the Lender understands that the Note is being offered and sold to it in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Lender’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Lender set forth herein in order to determine the availability of such exemptions and the eligibility of the Lender to acquire the Note.

2.6

Information.  The Lender and its advisors, if any, have had the opportunity to ask questions of management of the Company and have been furnished with all information relating to the business, finances and operations of the Company and information relating to the offer and sale of the Note which have been requested by the Lender or its advisors.  Neither such inquiries nor any other due diligence investigation conducted by the Lender or any of its advisors or representatives shall modify, amend or affect the Lender’s right to rely on the representations and warranties of the Company contained herein.  The Lender understands that its investment in the Note involves a significant degree of risk.  The Lender further represents to the Company that the Lender’s decision to enter into this Agreement has been based solely on the independent evaluation of the Lender and the representations and warranties of the Company contained in this Agreement.

SECTION 3.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY. 

The Company hereby represents and warrants to the Lender, as follows:

3.1

Organization and Good Standing.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.  The Company has the corporate power to own its own property and to carry on its business as now being conducted and is duly qualified to do business in any jurisdiction where so required except where the failure to so qualify would have no material negative impact.

3.2

Authority.  The Company has the corporate power to enter into this Agreement and to perform its obligations hereunder, including the issuance of the Note.  The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by the Board of Directors of the Company as required by Delaware law.  The execution and performance of this Agreement will not constitute a material breach of any agreement, indenture, mortgage, license or other instrument or document to which the Company is a party and will not violate any judgment, decree, order, writ, rule, statute, or regulation applicable to the Company or its properties.  The execution and performance of this Agreement will not violate or conflict with any provision of the respective Certificate of Incorporation or by-laws of the Company.

3.3

Exchange Act Filings; Exchange Listing.  

(a)

The Company has timely filed and will continue to file (in each case, subject to 12b-25 extensions) all Form 10-KSB, Form 8-K, Form 10-Q, Form 14-A Proxy Statements and other forms and periodic reports (collectively, SEC Reports”) required to be filed under the Exchange Act, and is a full reporting company under Section 13 or 15(d) of the Exchange Act..

-4-

(b)

The disclosures set forth and to be set forth in the SEC Reports are and will be true and correct in all material respects, do not and will not contain any untrue statement of a material fact or omit or will omit to state any fact necessary to make any statement therein not materially misleading.

(c)

The Common Stock is listed for trading on the NYSE:Amex Exchange (the “AMEX”) and, except as otherwise disclosed in the SEC Reports, the Company has (i) complied in all material respects with the rules and regulations of the AMEX, and (ii) no reason to believe that its Common Stock will be delisting from trading on such securities exchange. 

3.4

the Company Financial Statements.  

The Company has furnished to the Lender the unaudited consolidated balance sheet as at December 31, 2008 and consolidated statement of operations and statement of cash flows of the Company and its Subsidiaries for the fiscal year then ended, and the unaudited consolidated balance sheet as at June 30, 2009 and the unaudited consolidated statement of operations of the Company and its Subsidiaries for the six months then ended (collectively, the “Company Financial Statements”).  Except as set forth on the balance sheet dated June 30, 2009, as at June 30, 2009, the Company and its Subsidiaries has no other material assets and has incurred no other material liabilities, debts or obligations, whether fixed, contingent or otherwise required to be set forth on a balance sheet prepared in accordance with GAAP.  The books of account and other financial records of the Company are in all respects complete and correct in all material respects and are maintained in accordance with good business and accounting practices. 

3.5

No Material Adverse Effects.

Except as set forth in the SEC Reports or disclosed in  Schedule 3.5 hereto, since June 30, 2009: 

(a)

there has not been any material adverse change in the financial position of the Company and its Subsidiaries (collectively, the “Company Group”) except changes arising in the ordinary course of business, which changes will in no event have a Material Adverse Effect on the financial position of the Company Group, and will be consistent with the representations made by the Company hereunder.

(b)

there has not been any damage, destruction or loss that would have a Material Adverse Effect on the assets, prospective business, operations or condition (financial or otherwise) of the  Company Group whether or not covered by insurance;

(c)

there has not been any declaration setting aside or payment of any dividend or distribution with respect to any redemption or repurchase of  the Common Stock;

(d)

there has not been any sale of an asset (other than in the ordinary course of business) or any mortgage pledge by the Company Group of any properties or assets; or

(e)

there has not been adoption or modification of any pension, profit sharing, retirement, stock bonus, stock option or similar plan or arrangement.

(f)

there has not been any loans or advance to any shareholder, officer, director, employee, consultant, agent or other representative or made any other loans or advance otherwise than in the ordinary course of business;

-5-

(g)

except in the ordinary course of business, there has not been any increase in the annual level of compensation of any executive employee of the Company Group; and

(h)

the Company Group has not issued any equity securities or rights to acquire equity securities.

3.6

Taxes.  The Company Group has timely filed all material tax, governmental and/or related forms and reports (or extensions thereof) due or required to be filed and has paid or made adequate provisions for all taxes or assessments which have become due as of the Closing Date, and there are no deficiencies outstanding.

3.7

Compliance with Laws.   The Company Group has complied with all federal, state, county and local laws, ordinances, regulations, inspections, orders, judgments, injunctions, awards or decrees applicable to it or its business, which, if not complied with, would have a Material Adverse Effect.

3.8

Actions and Proceedings.  The Company Group is not a Party to any pending litigation or, to its knowledge, any governmental proceedings are threatened against the Company Group, that could reasonably be expected to have a Material Adverse Effect.

3.9

Access to Records.  The corporate financial records, minute books, and other documents and records of the Company have been made available to the Lender prior to the Closing hereof.

3.11

Brokers or Finders.  No broker's or finder's fee will be payable by the Company in connection with the transactions contemplated by this Agreement, nor will any such fee be incurred as a result of any actions of the Company.

3.12

Expenses.

It is understood and agreed that following the execution of this Agreement, any and all legal or other fees and expenses with respect to any filings, documentation and related matters with respect to the consummation of the transactions contemplated hereby shall be the sole responsibility of the Company, and that the Lender shall not be responsible for any such expenses or legal or other fees.

SECTION 4.  SURVIVAL OF REPRESENTATIONS AND WARRANTIES 

Notwithstanding any right of either Party to investigate the affairs of the other Party, each Party has the right to rely fully upon representations, warranties, covenants and agreements of the other Party contained in this Agreement or in any document delivered to one by the other or any of their representatives, in connection with the transactions contemplated by this Agreement.  All such representations, warranties, covenants and agreements shall survive the execution and delivery hereof and the closing hereunder for twelve (12) months following the Closing.

SECTION 5.  MISCELLANEOUS

5.1

Waivers.  The waiver of a breach of this Agreement or the failure of any Party hereto to exercise any right under this Agreement shall in no way constitute waiver as to future breach whether similar or dissimilar in nature or as to the exercise of any further right under this Agreement.

5.2

Amendment.  This Agreement may be amended or modified only by an instrument of equal formality signed by the Parties or the duly authorized representatives of the respective Parties.

-6-

5.3

Assignment.  This Agreement is not assignable except by operation of law.

5.4

Notice.  Any notice or statement given under this Agreement shall be deemed to have been given if sent by registered mail addressed to the other Party at the address indicated above or at such other address which shall have been furnished in writing to the addressor.

5.5

Governing Law.  This Agreement shall be construed, and the legal relations between the Parties determined, in accordance with the laws of the State of New York, thereby precluding any choice of law rules which may direct the application of the laws of any other jurisdiction.

5.6

Publicity.  No publicity release or announcement concerning this Agreement or the transactions contemplated hereby shall be issued by either Party hereto at any time from the signing hereof without advance approval in writing of the form and substance by the other Party.

5.7

Entire Agreement.  This Agreement and the Note executed in connection with the consummation of the transactions contemplated herein contain the entire agreement among the Parties with respect to the transactions contemplated hereby, and supersedes all prior agreements, written or oral, with respect hereof.

5.8

Headings.  The headings in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

5.9

Severability of Provisions.  The invalidity or unenforceability of any term, phrase, clause, paragraph, restriction, covenant, agreement or provision of this Agreement shall in no way affect the validity or enforcement of any other provision or any part thereof.

5.10

Counterparts.  This Agreement may be executed in any number of counterparts, each of which when so executed, shall constitute an original copy hereof, but all of which together shall consider but one and the same document.

5.11

Binding Effect.  This Agreement shall be binding upon the Parties hereto and inure to the benefit of the Parties, their respective heirs, administrators, executors, 

successors and assigns.

5.12

Press Releases.  The Parties will mutually agree as to the wording and timing of any informational releases concerning this transaction prior to and through Closing.

[the balance of this page intentionally left blank – signature pages follow]

-7-

IN WITNESS WHEREOF, the Parties have executed this Agreement on the date first above written.

					
	 
	 
	 
	GULFSTREAM INTERNATIONAL GROUP, INC.  

(a Delaware corporation)

	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	 
	By: 

	/s/ DAVID HACKETT

	 
	 
	 
	 
	David Hackett, President

				
	 
	 
	GULFSTREAM FUNDING II, LLC  

(a Delaware limited liability company)

	 
	 
	 

	 
	 
	 
	 

	 
	 
	By: 

	/s/ ROBERT SCHROEDER

	 
	 
	 
	Robert Schroeder, Managing Member

-8-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00163-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00163-of-00352.parquet"}]]