-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MGkJf2ck07dqgAbePhj4THPphLNZDzakEluNUu0GxG8FtkriZKgNaShuhEJcvQxb 89or7Z6pVW29v7xVjed1sQ== 0001387131-10-001162.txt : 20101025 0001387131-10-001162.hdr.sgml : 20101025 20101025171548 ACCESSION NUMBER: 0001387131-10-001162 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 17 CONFORMED PERIOD OF REPORT: 20101019 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Termination of a Material Definitive Agreement ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20101025 DATE AS OF CHANGE: 20101025 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Bonds.com Group, Inc. CENTRAL INDEX KEY: 0001179090 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT CONSULTING SERVICES [8742] IRS NUMBER: 383649127 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-51076 FILM NUMBER: 101140384 BUSINESS ADDRESS: STREET 1: 1515 S. FEDERAL HIGHWAY STREET 2: SUITE 212 CITY: BOCA RATON, STATE: FL ZIP: 33432 BUSINESS PHONE: 561-953-5343 MAIL ADDRESS: STREET 1: 1515 S. FEDERAL HIGHWAY STREET 2: SUITE 212 CITY: BOCA RATON, STATE: FL ZIP: 33432 FORMER COMPANY: FORMER CONFORMED NAME: IPORUSSIA INC DATE OF NAME CHANGE: 20020801 8-K 1 bonds-8k_1025.htm CURRENT REPORT bonds-8k_1025.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 19, 2010

BONDS.COM GROUP, INC.
(Exact name of registrant as specified in its charter)

 
Delaware
  
000-51076
  
38-3649127
(State or other jurisdiction of incorporation)
  
(Commission File Number)
  
(IRS Employer Identification No.)
 

529 5th Avenue, 8th Floor
New York, New York 10017
(Address of principal executive offices) (Zip Code)


(212) 946-3998
(Registrant’s telephone number, including area code)


Not Applicable
(Former name or former address, if changed since last report)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 

Item 1.01.
Entry Into a Material Definitive Agreement.

On October 19, 2010, Bonds.com Group, Inc. (“we” or the “Company”) consummated a financing transaction pursuant to which, among other things, we sold equity securities for aggregate consideration equal to $1,950,000, comprised of $750,000 in cash and $1,200,000 through the cancellation of indebtedness owed by our wholly-owned subsidiary Bonds.com Holdings, Inc. (“Holdings”).  As part of this financing transaction, we also received commitments from the purchasers to purchase an additional $1,300,000 of our equity securities, subject to important conditions discussed below.  In connection with these financing transactions, we entered into a series of related material agreements.  This financing is part of a larger financin g transaction that the Company is pursuing (the “Offering”).  There is no assurance that the Company will raise any additional funds pursuant to the Offering.  This financing transaction and the related material agreements are discussed in detail below.

Unit Purchase Agreement with Bonds MX LLC.

On October 19, 2010, we entered into a Unit Purchase Agreement with Bonds MX LLC (the “Bonds MX Purchase Agreement”).  On October 19, 2010, pursuant to the Bonds MX Purchase Agreement, among other things, we sold to Bonds MX LLC (“Bonds MX”) 12 “units” (each a “Series B Unit”), with each such Series B Unit comprised of (a) 100 shares of our newly-created Series B Convertible Preferred Stock, (b) a warrant to purchase 416,667 shares of our Common Stock at a purchase price of $0.24 per share, and (c) the right to receive up to 416,667 shares of our Common Stock if we fail to meet certain performance targets (“Performance Shares”).  The purchase price for each Series B Unit was $100,000, and the aggregate purchase price for the 12 Series B Units sold on October 19, 2010 was $1,200,000.  Bonds MX paid this purchase price through the cancellation of the Amended 15% Promissory Note, dated August 20, 2010, in the principal amount of $1,200,000 issued by Holdings to Bonds MX (the “Bonds MX Note”).  The original issuance of the Bonds MX Note and subsequent amendment thereof were previously reported by the Company pursuant to Current Reports on Form 8-K filed with the Securities and Exchange Commission on July 29 and August 26, 2010.

Additionally, pursuant to the Bonds MX Purchase Agreement, Bonds MX agreed to purchase an additional 8 Series B Units for an aggregate purchase price of $800,000 pursuant to closings on November 1 and December 1, 2010.  Pursuant to the Bonds MX Purchase Agreement, Bonds MX is required to purchase, and the Company is required to sell Bonds MX, 4 Series B Units for a purchase price of $400,000 at each of the November 1 and December 1, 2010 closings. Bonds MX’s obligation to purchase such additional Series B Units is subject to significant conditions, including the conditions that (a) UBS Securities LLC (“UBS Securities”) and its affiliates shall be continuing to perform under the Licensing and Services Agreement, dated January 11, 2010 (the “UBS Commercial Ag reement”), by and among the Company, Bonds.com, Inc. and UBS Securities, in a manner substantially consistent with their current performance thereunder, (b) the UBS Commercial Agreement shall not have been terminated or modified in any manner adverse to the Company, and (c) the representations and warranties of the Company in the Bonds MX Purchase Agreement shall be true and correct in all material respects as of the date when made and as of the date of such additional closing.

Pursuant to the Bonds MX Purchase Agreement, the Company will be required to issue Performance Shares to Bonds MX if and to the extent that it generates less than $7,500,000 in revenue during the 12-month period following the final closing of the Offering.  If the Company generates at least $7,500,000 in revenue during such period, then it is not required to issue any Performance Shares.  If the Company generates zero revenue during such period, then it is required to issue all Performance Shares.  If the Company generates less than $7,500,000 but more than zero in revenue during such period, the Company is required to issue a pro rata portion of the Performance Shares.

 
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The 12 Series B Units sold to Bonds MX on October 19, 2010 constitute, in the aggregate, (a) 1,200 shares of our Series B Convertible Preferred Stock, (b) warrants to purchase 5,000,000 shares of our Common Stock, and (c) the right to receive up to 5,000,000 Performance Shares.  As discussed in more detail below, the Series B Convertible Preferred Stock has a stated value of $1,000 per share and is convertible, at the option of the holder, into shares of our Common Stock at a conversion price of $0.24 per share.  Accordingly, the 1,200 shares of our Series B Convertible Preferred Stock issued at the October 19, 2010 closing are convertible for up to 5,000,000 shares of our Common Stock.

If the additional 8 Series B Units are sold pursuant to the Bonds MX Purchase Agreement, a total of 20 Series B Units will have been sold.  Those 20 Series B Units would constitute, in the aggregate, (b) 2,000 shares of our Series B Convertible Preferred Stock, which would be convertible for up to 8,333,333 shares of our Common Stock, (b) warrants to purchase 8,333,333 shares of our Common Stock, and (c) the right to receive up to 8,333,333 Performance Shares.

Additionally, the Bonds MX Purchase Agreement contains provisions pursuant to which significant adjustments may be made to the terms and amount of securities issued to Bonds MX pursuant to this transaction.  Those adjustment provisions are discussed in more detail below.

Edwin L. Knetzger, III, Co-Chairman and a member of our Board of Directors, provided Bonds MX with $600,000 of the $1,200,000 it loaned Holdings pursuant to the Bonds MX Note, is a significant equity owner in Bonds MX and, pursuant to the Bonds MX Purchase Agreement, agreed to fund $400,000 of the funds Bonds MX will require to consummate the additional closings on November 1 and December 1, 2010.

Unit Purchase Agreement with UBS Americas Inc.

On October 19, 2010, simultaneously with our entry into the Bonds MX Purchase Agreement, we entered into a Unit Purchase Agreement with UBS Americas Inc. (the “UBS Purchase Agreement”).  On October 19, 2010, pursuant to the UBS Purchase Agreement, among other things, we sold to UBS Americas Inc. (“UBS Americas”) 7.5 “units” (each a “Series B-1 Unit”), with each such Series B-1 Unit comprised of (a) 100 shares of our newly-created Series B-1 Convertible Preferred Stock, (b) a warrant to purchase 4,166.67 shares of our existing Series A Participating Preferred Stock (the “Series A Preferred”) at a purchase price of $24.00 per share, and (c) the right to receive up to 4,166.67 shares of our Series A Preferred if we fail to m eet certain performance targets (“Series A Performance Shares”).  The purchase price for each Series B-1 Unit was $100,000, and the aggregate purchase price for the 7.5 Series B-1 Units sold on October 19, 2010 was $750,000 in cash.

Additionally, pursuant to the UBS Purchase Agreement, UBS Americas agreed to purchase an additional 5 Series B-1 Units for an aggregate purchase price of $500,000 pursuant to closings on November 1 and December 1, 2010.  Pursuant to the UBS Purchase Agreement, UBS Americas is required to purchase, and the Company is required to sell UBS, 2.5 Series B-1 Units for a purchase price of $250,000 at each of the November 1 and December 1, 2010 closings. UBS America’s obligation to purchase such additional Series B-1 Units is subject to significant conditions, including the conditions that (a) the corresponding additional closing under the Bonds MX Purchase Agreement shall have occurred and Bonds MX shall have purchased at least 4 units at such corresponding closing, (b) the Company shall not have taken steps to seek protection pursuant to any bankruptcy law, and (c) the representations and warranties of the Company in the UBS Purchase Agreement shall be true and correct in all material respects as of the date when made and as of the date of such additional closing.

 
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Pursuant to the UBS Purchase Agreement, the Company will be required to issue Series A Performance Shares to UBS Americas if and to the extent that it generates less than $7,500,000 in revenue during the 12-month period following the final closing of the Offering.  If the Company generates at least $7,500,000 in revenue during such period, then it is not required to issue any Series A Performance Shares.  If the Company generates zero revenue during such period, then it is required to issue all Series A Performance Shares.  If the Company generates less than $7,500,000 but more than zero in revenue during such period, the Company is required to issue a pro rata portion of the SeriesA Performance Shares.

The 7.5 Series B-1 Units sold to UBS Americas on October 19, 2010 constitute, in the aggregate, (a) 750 shares of our Series B-1 Convertible Preferred Stock, (b) warrants to purchase 31,250 shares of our Series A Preferred, and (c) the right to receive up to 31,250 Series A Performance Shares.  As discussed in more detail below, the Series B-1 Convertible Preferred Stock has a stated value of $1,000 per share and is convertible, at the option of the holder, into shares of our Common Stock at a conversion price of $0.24 per share.  Accordingly, the 750 shares of our Series B-1 Convertible Preferred Stock issued at the October 19, 2010 closing are convertible for up to 3,125,000 shares of our Common Stock.  As further discussed below, the Series B-1 Convertible Preferred Stock may also be mandatorily converted to shares of our Series A Preferred at a conversion price of $24.00 per share (and using the same $1,000 stated value).  Accordingly, the 750 shares of our Series B-1 Convertible Preferred Stock issued at the October 19, 2010 closing could be mandatorily converted into 31,250 shares of our Series A Preferred.

If the additional 5 Series B-1 Units are sold pursuant to the UBS Purchase Agreement, a total of 12.5 Series B-1 Units will have been sold.  Those 12.5 Series B-1 Units would constitute, in the aggregate, (b) 1,250 shares of our Series B-1 Convertible Preferred Stock, which would be convertible for up to 5,208,333 shares of our Common Stock or mandatorily convertible into 52,083 shares of our Series A Preferred, (b) warrants to purchase 52,083 shares of our Series A Preferred, and (c) the right to receive up to 52,083 Series A Performance Shares.

Additionally, the UBS Purchase Agreement contains provisions pursuant to which significant adjustments may be made to the terms and amount of securities issues to UBS Americas pursuant to this transaction.  Those adjustment provisions are discussed in more detail below.

Adjustment Provisions of the Bonds MX and UBS Purchase Agreements.

The Bonds MX and UBS Purchase Agreements contain provisions pursuant to which significant adjustments may be made to the terms and amount of the securities issued to Bonds MX and UBS Americas pursuant to the financing transactions summarized above.

First, if pursuant to any other investment that is part of the Offering, the Company provides a more favorable price to another investor or provides another investor a greater number of warrants or rights to receive a greater  number of Performance Shares or Series A Performance Shares, then applicable adjustments shall be made to the transactions with Bonds MX and UBS Americas (by issuance of additional shares, warrants or rights or by the amendment of the previously issued warrants, depending on the circumstances) so that Bonds MX and UBS Americas receive the same economic bargain as such additional investor.

Second, if, on or before December 15, 2010, the Company shall not have sold securities pursuant to the Offering for an aggregate purchase price of at least $8,000,000 (including the surrender, cancellation or conversion of indebtedness), the Company is required to issue to UBS Americas, Bonds MX and each other purchaser in such Offering who shall have purchased its securities on or before October 31, 2010 (UBS Americas, Bonds MX and each other qualifying purchaser are referred to as a “Protected Purchaser”) additional shares of Series B Convertible Preferred Stock and/or Series B-1 Convertible Preferred Stock (based on the type of security previously purchased by them in the Offering) and shall amend th e warrants issued to each Protected Purchaser, each as summarized below.

 
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The number of additional shares of Series B Convertible Preferred Stock or Series B-1 Convertible Preferred Stock to which each Protected Purchaser shall be entitled shall be determined as follows: (a) UBS Americas shall be issued a number of additional shares of Series B-1 Convertible Preferred Stock such that, taken together with all other shares of capital stock held by UBS Americas or issuable upon exercise or conversion of securities held by UBS Americas, UBS Americas shall hold 19.9% of the capital stock of the Company (assuming for these purposes that no other holder of options, warrants or convertible securities exercises or converts such securities); and (b) each other Protected Purchaser shall be issued a proportionate number of additional shares as the number issued to UBS Americas.

The exercise price of the warrants issued to UBS Americas and each other Protected Purchaser shall be adjusted to equal the effective price per share in such financing after taking into account the foregoing additional issuances.
 
The adjustment provisions in the Bonds MX Purchase Agreement and UBS Purchase Agreement are subject to the limitation that if and to the extent the issuance of any additional shares of capital stock or other securities pursuant to such provisions would result in the Company exceeding its authorized shares of Common Stock or Preferred Stock, then the application of such adjustment provision shall be limited to the extent necessary so that such issuance does not cause the Company to exceed its authorized capital.
 
Series B Stockholders Agreement.

As a requirement of UBS America’s investment, on October 19, 2010, the Company, UBS Americas and Bonds MX entered into a Series B Stockholders’ Agreement setting forth certain agreements among and between the Company and such stockholders (the “Stockholders’ Agreement”).

Pursuant to the Stockholders’ Agreement, in the event that Bonds MX seeks to sell its shares of Series B Convertible Preferred Stock, warrants or shares of Common Stock, UBS Americas shall have the right to sell a pro rata portion of its similar securities along with Bonds MX.  Alternatively, the Company, at its option, may redeem the applicable securities from UBS Americas and Bonds MX would be permitted to sell its shares free of such obligation.  The foregoing obligations do not apply to transfers to certain permitted transferees, bona fide pledges and pledges outstanding as of the date of the Stockholders’ Agreement.  Such obligations also do not apply to sales of less than 10% of the securities held by Bonds MX.

Additionally, if, after the date of the Stockholders’ Agreement, any person acquires shares of Series B Convertible Preferred Stock or Series B-1 Convertible Preferred Stock, the Company shall use its reasonable best efforts to have such stockholder become a party to the Stockholders’ Agreement.  Additionally, the Company is prohibited from issuing any shares of its Series B Convertible Preferred Stock or Series B-1 Convertible Preferred Stock unless the purchaser becomes a party to the Stockholders’ Agreement.

Registration Rights Agreement.

In connection with the financing transactions described above, on October 19, 2010, the Company entered into a Registration Rights Agreement with UBS Americas and Bonds MX (the “Registration Rights Agreement”).  The Registration Rights Agreement requires the Company to file a registration statement with the Securities and Exchange Commission covering the resale of all of the shares of Common Stock issuable upon conversion of the Series B Convertible Preferred Stock and Series B-1 Convertible Preferred Stock sold to UBS Americas and Bonds MX, all of the shares of Common Stock issuable upon exercise of the warrants sold to Bonds MX, all of the Performance Shares and all of the shares of Common Stock issuable to investors who purchase securities as part of the Offering.&# 160; The Company is required to file such registration statement not later than five days following the six month anniversary of the final closing of the Offering.

The Registration Rights Agreement also provides UBS Americas, Bonds MX and any subsequent investors in the same Offering “piggy back” registration rights with respect to certain registration statements filed by the Company for its own sale of shares of Common Stock or resales of shares of Common Stock by other stockholders.

 
5
 

Amendments to Certain Convertible Secured Promissory Notes.

On October 19, 2010, the Company entered into an Amendment No. 2 to Convertible Secured Promissory Notes with the holder of a majority in principal amount of our Convertible Secured Promissory Notes issued on September 24, 2008, an Amendment No. 1 to Convertible Secured Promissory Note with the holder of our Convertible Secured Promissory Note issued on April 30, 2009 and an Amendment No. 1 to Convertible Secured Promissory Notes with the holders of our Convertible Secured Promissory Notes issued on June 8, 2009 (collectively, the “Note Amendments”).  The Note Amendments restructure approximately $2,990,636 of our outstanding Convertible Secured Promissory Notes (the “Subject Notes”) as follows:

 
●
The maturity date of each of the Subject Notes was extended until October 12, 2013; provided, however, that from and after April 12, 2012, the holders of the Subject Notes may make a written demand to the Company for the payment of the entire unpaid principal balance thereof together with all accrued but unpaid interest thereon and the Company shall be required to repay such outstanding principal and interest within ninety (90) days of its receipt of such demand.

 
●
The conversion price of the Subject Notes was fixed at $0.24 per share (which was the then current conversion price of the Subject Notes as a result of adjustments based on the price per share of Common Stock issued in the Company’s recently completed warrant exchange offer).  Such conversion price is subject to further adjustment on the occurrence of certain events described below.  However, except as set forth below, the “full-ratchet” adjustment provision of the Subject Notes was eliminated.

 
●
In the event the Company sells securities pursuant to the Offering at an effective price per common share of less than $0.24, then the conversion price of the Subject Notes shall be reduced to such lower price.  After the completion of the Offering, the Subject Notes will not have any “full-ratchet” adjustment.

 
●
Holders of the Subject Notes shall have the right to receive up to 12,460,983 shares of our Common Stock based on the same performance thresholds and calculations as the Performance Shares issuable to Bonds MX and Series A Performance Shares issuable to UBS Americas (the “Noteholder Performance Shares”).

 
●
If additional securities are issued to UBS Americas and Bonds MX or adjustments are made to the terms of the securities previously issued to them pursuant to the adjustment provisions summarized above, the holders of the Subject Notes would receive the same proportionate adjustment.

Amendment and Release Agreements with John J. Barry III and John J. Barry IV.

On October 19, 2010, the Company entered into an Amendment and Release with John J. Barry III (the “JBIII Amendment and Release”) and an Amendment and Release with John J. Barry IV (the “JBIV Amendment and Release”).

The JBIII Amendment and Release sets forth the following terms and conditions, among others:

 
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●
The Company agreed to make the following payments to John J. Barry III pursuant to the outstanding Grid Promissory Note, dated January 29, 2008, issued by the Company to John J. Barry III in the principal amount of $250,000 (the “Grid Note”): (a) at such time as the aggregate gross proceeds to the Company from the Offering equal a minimum of $2,000,000 (inclusive of the conversion or cancellation of outstanding indebtedness), the Company shall make a $50,000 payment to John J. Barry III (the “Initial JBIII Payment”), (b) at such time as such gross proceeds equal at least $4,000,000, the Company shall pay an additional $100,000 to John J. Barry III, and (c) at such time as such proceeds equal at least $10,000,000, the Company shall pay off the balance of the Grid Note.
 
 
●
Effective upon the Company’s payment of the Initial JBIII Payment, John J. Barry III and certain of his affiliates released the Company and its affiliates from any and all claims that he may have against them, and the Company released John J. Barry III and certain of his affiliates from any and all claims it may have against them.

 
●
To the extent permitted by applicable law, the Company agreed to indemnify John J. Barry III from any claims that any third parties (a) may at any time have against him as a result of, relating to, or arising out of the Offering or any similar or related financing or transaction and/or (b) have ever had or may at any time have as a result of, relating to, or arising from John J. Barry III’s relationship (whether by statute, contract, or otherwise) with the Company.

 
●
From the date of the JBIII Amendment and Release until December 31, 2010, John J. Barry III shall not require any payment of principal or interest or other amounts under the Grid Note except as and to the extent summarized above.  After December 31, 2010, John J. Barry III shall be permitted to seek to enforce the Grid Note in accordance with the provisions thereof.

The JBIV Amendment and Release sets forth the following terms and conditions, among others:

 
●
The Company agreed to make the following outstanding and accelerated payments to John J. Barry IV pursuant to the letter agreement, dated February 26, 2010 (which provides for the payment to John J. Barry IV of approximately $1,200,000 over a period of three years, some of which has previously been paid) (the “Letter Agreement”): (a) at such time as the aggregate gross proceeds to the Company from the Offering equal a minimum of $2,000,000 (inclusive of the conversion or cancellation of outstanding indebtedness), the Company shall make a $50,000 payment to John J. Barry IV (the “Initial JBIV Payment”), (b) at such time as such gross proceeds equal at least $4,000,000, the Company shall pay an additional $100,000 to John J. Barry IV, (c) at such time as such proceeds equal at least $6,000,000, the Company shall pay an additional $240,000, (d) at such time as such proceeds equal at least $8,00 0,000, the Company shall pay an additional $240,000, and (e) at such time as such proceeds equal at least $10,000,000, the Company shall pay the balance of the future payments due under the Letter Agreement (which would equal an additional $340,000).

 
●
Effective upon the Company’s payment of the Initial JBIV Payment, John J. Barry IV and certain of his affiliates released the Company and its affiliates from any and all claims that he may have against them, and the Company released John J. Barry IV and certain of his affiliates from any and all claims it may have against them.
 
 
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●
To the extent permitted by applicable law, the Company agreed to indemnify John J. Barry IV from any claims that any third parties (a) may at any time have against him as a result of, relating to, or arising out of the Offering or any similar or related financing or transaction and/or (b) have ever had or may at any time have as a result of, relating to, or arising from John J. Barry IV’s relationship (whether by statute, contract, or otherwise) with the Company.
 
 
●
From the date of the JBIV Amendment and Release until December 31, 2010, John J. Barry IV shall not require any payment of principal or interest or other amounts under the Letter Agreement except as and to the extent summarized above.  After December 31, 2010, John J. Barry IV shall be permitted to seek to enforce the Letter Agreement in accordance with the provisions thereof.

On October 19, 2010, the Company paid the Initial JBIII Payment and Initial JBIV Payment.

Termination of Revenue Sharing Arrangement; Additional Agreements.

On October 19, 2010, the Company and Radnor Research and Trading Company, LLC terminated the Restated Revenue Sharing Agreement dated November 13, 2009 (the “Revenue Sharing Agreement”).  Prior to its termination, the Revenue Sharing Agreement required the Company to pay Radnor Research and Trading Company, LLC an amount equal to between 14% and 35% of all revenue (net of clearing costs and other allocated costs) generated by transactions on the Bonds.com platform by persons or entities referred to the Company by Radnor Research and Trading Company, LLC.  UBS Securities and other potentially large users of the Bonds.com platform were referred to the Company by Radnor Research and Trading Company, LLC, and the future amounts payable under the Revenue Sharing A greement were potentially very significant.

In order to secure the termination of the Revenue Sharing Agreement and in cancellation of an additional contractual obligation in the potential amount of $432,000, on October 19, 2010, the Company entered into a Termination and Release Agreement with Mark G. Hollo, The Fund LLC and Black-II Trust (the “Termination and Release Agreement”).  Pursuant to the Termination and Release Agreement, among other things, the Company (a) issued to Black-II Trust a warrant to purchase 10,000,000 shares of our Common Stock at a purchase price of $0.24 per share, and (b) agreed to pay Black-II Trust an aggregate of $250,000 in four equal installments at such time, if ever, as the gross proceeds from the Offering (including the conversion of indebtedness) exceeds $5,000,000.  0;In exchange, Mark G. Hollo provided his required consent to the termination of the Revenue Sharing Agreement, and The Fund LLC agreed to terminate the above-referenced contractual obligation.  The foregoing warrant contains, among other things, a single demand registration right on Form S-3 at such time, if ever, as the Company is eligible to use Form S-3 and “piggy back” registration rights with respect to certain registration statements filed by the Company for its own sale of shares of Common Stock or resales of shares of Common Stock by other stockholders.

UBS Americas Exchange Agreement.

On October 19, 2010, the Company and UBS Americas entered into an Exchange Agreement (the “Exchange Agreement”) pursuant to which, among other things, UBS Americas cancelled its Ordinary Purchase Rights Certificate and in exchange the Company issued to UBS Americas 38,896 shares of Series A Preferred.  The Ordinary Purchase Rights Certificate was issued by the Company to UBS Americas on January 11, 2010, and, prior to its cancellation and exchange, evidenced the right to purchase 137,280 shares of our Series A Preferred for a purchase price of $37.50 per share.
 
 
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The foregoing descriptions of the Bonds MX Purchase Agreement, UBS Purchase Agreement, Stockholders’ Agreement, Registration Rights Agreement, Note Amendments, JBIII Amendment and Release, JBIV Amendment and Release, Termination and Release Agreement, Exchange Agreement and other contractual arrangements are summaries only and qualified by reference to the actual documents, which are included as exhibits to this Current Report and incorporated herein by reference.

Item 1.02.
Termination of a Material Definitive Agreement.

As summarized in Item 1.01 above, on October 19, 2010, the Company and Radnor Research and Trading Company, LLC terminated the Revenue Sharing Agreement.  Prior to its termination, the Revenue Sharing Agreement required the Company to pay Radnor Research and Trading Company, LLC an amount equal to between 14% and 35% of all revenue (net of clearing costs and other allocated costs) generated by transactions on the Bonds.com platform by persons or entities referred to the Company by Radnor Research and Trading Company, LLC.  UBS Securities and other potentially large users of the Bonds.com platform were referred to the Company by Radnor Research and Trading Company, LLC, and the future amounts payable under the Revenue Sharing Agreement were potentially very significant.

Item 3.02.
Unregistered Sale of Equity Securities.

As summarized in Item 1.01, above, on October 19, 2010, the Company sold 12 Series B Units to Bonds MX for an aggregate purchase price of $1,200,000, which was paid by the cancellation of the Bonds MX Note, and 7.5 Series B-1 Units to UBS Americas for an aggregate purchase price of $750,000 cash.

Pursuant to the Bonds MX Purchase Agreement, Bonds MX agreed to purchase an additional 8 Series B Units for an aggregate purchase price of $800,000 pursuant to closings on November 1 and December 1, 2010.  Pursuant to the Bonds MX Purchase Agreement, Bonds MX is required to purchase, and the Company is required to sell Bonds MX, 4 Series B Units for a purchase price of $400,000 at each of the November 1 and December 1, 2010 closings, subject to the conditions summarized above.

As summarized in Item 1.01 above, pursuant to the Bonds MX Purchase Agreement, the UBS Purchase Agreement and the Note Amendments, the Company will be required to issue Performance Shares, Series A Performance Shares and Noteholder Performance Shares to Bonds MX, UBS Americas and the holders of the Subject Notes, respectively, if and to the extent that the Company generates less than $7,500,000 in revenue during the 12-month period following the final closing of the Offering.  If the Company generates at least $7,500,000 in revenue during such period, then it is not required to issue any Performance Shares, Series A Performance Shares or Noteholder Performance Shares.  If the Company generates zero revenue during such period, then it is required to issue all Performance Shares, Series A Performance Shares and Notehold er Performance Shares.  If the Company generates less than $7,500,000 but more than zero in revenue during such period, the Company is required to issue a pro rata portion of the Performance Shares, Series A Performance Shares and Noteholder Performance Shares.

The 12 Series B Units sold to Bonds MX on October 19, 2010 constitute, in the aggregate, (a) 1,200 shares of our Series B Convertible Preferred Stock, (b) warrants to purchase 5,000,000 shares of our Common Stock, and (c) the right to receive up to 5,000,000 Performance Shares.  The Series B Convertible Preferred Stock has a stated value of $1,000 per share and is convertible, at the option of the holder, into shares of our Common Stock at a conversion price of $0.24 per share.  Accordingly, the 1,200 shares of our Series B Convertible Preferred Stock issued at the October 19, 2010 closing are convertible for up to 5,000,000 shares of our Common Stock.
 
 
9
 

If the additional 8 Series B Units are sold pursuant to the Bonds MX Purchase Agreement, a total of 20 Series B Units will have been sold.  Those 20 Series B Units would constitute, in the aggregate, (b) 2,000 shares of our Series B Convertible Preferred Stock, which would be convertible for up to 8,333,333 shares of our Common Stock, (b) warrants to purchase 8,333,333 shares of our Common Stock, and (c) the right to receive up to 8,333,333 Performance Shares.

The 7.5 Series B-1 Units sold to UBS Americas on October 19, 2010 constitute, in the aggregate, (a) 750 shares of our Series B-1 Convertible Preferred Stock, (b) warrants to purchase 31,250 shares of our Series A Preferred, and (c) the right to receive up to 31,250 Series A Performance Shares.  The Series B-1 Convertible Preferred Stock has a stated value of $1,000 per share and is convertible, at the option of the holder, into shares of our Common Stock at a conversion price of $0.24 per share.  Accordingly, the 750 shares of our Series B-1 Convertible Preferred Stock issued at the October 19, 2010 closing are convertible for up to 3,125,000 shares of our Common Stock.  The Series B-1 Convertible Preferred Stock may also be mandatorily converted to shares of our Series A Preferred at a conversion price of $ 24.00 per share (and using the same $1,000 stated value).  Accordingly, the 750 shares of our Series B-1 Convertible Preferred Stock issued at the October 19, 2010 closing could be mandatorily converted into 31,250 shares of our Series A Preferred.

If the additional 5 Series B-1 Units are sold pursuant to the UBS Purchase Agreement, a total of 12.5 Series B-1 Units will have been sold.  Those 12.5 Series B-1 Units would constitute, in the aggregate, (b) 1,250 shares of our Series B-1 Convertible Preferred Stock, which would be convertible for up to 5,208,333 shares of our Common Stock or mandatorily convertible into 52,083 shares of our Series A Preferred, (b) warrants to purchase 52,083 shares of our Series A Preferred, and (c) the right to receive up to 52,083 Series A Performance Shares.

The Noteholder Performance Shares constitute up to 12,460,983 shares of our Common Stock.

Additionally, on October 19, 2010, the Company issued Black-II Trust a warrant to purchase 10,000,000 shares of our Common Stock at an purchase price of $0.24 per share.  This warrant was issued in exchange for affiliates of Black-II Trust consenting to terminate the Revenue Sharing Agreement and another contractual arrangement.

On October 19, 2010, the Company issued to UBS Americas 38,896 shares of Series A Preferred in exchange for the cancellation of its previously outstanding Ordinary Purchase Rights Certificate.

The foregoing issuances were made in reliance on the exemptions from registration set forth in Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act based on representations and warranties made by purchasers and other factors.

Item 5.03.
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

In connection with the financing transactions summarized in Item 1.01 above, on October 19, 2010 the Company amended its Certificate of Incorporation by filing (a) a Certificate of Increase of Series A Participating Preferred Stock, which increased the authorized shares of the Company’s Series A Preferred from 200,000 to 450,000 shares, and (b) a Certificate of Designation of Series B Convertible Preferred Stock and B-1 Convertible Preferred Stock (the “Certificate of Designation”) which authorized and created 20,000 shares of Series B Convertible Preferred Stock (the “Series B Preferred”) and 6,000 shares of Series B-1 Convertible Preferred Stock (the “Series B-1 Preferred”).  The shares of Series B Preferred and Series B-1 Preferred Stoc k have the following rights, privileges and preferences, among others, as more fully set forth in the Certificate of Designation:
 
 
10
 

 
●
the Series B Preferred and Series B-1 Preferred each have a stated value of $1,000 and are initially convertible at the option of the holder into shares Common Stock at a conversion price of $0.24 per share, for an initial conversion ratio of 4,167 shares of Common Stock for each share of Series B Preferred and Series B-1 Preferred;
 
 
●
the Series B Preferred is mandatorily convertible into shares of our Common Stock upon our shares of Common Stock attaining a closing trading price equal to 150% of the then applicable conversion price for 20 consecutive trading days on average daily trading volume of at least 250,000 shares;

 
●
the Series B-1 Preferred is mandatorily convertible into shares of our Series A Preferred (at a conversion price of $24.00 per share and using the same $1,000 stated value) upon our shares of Common Stock attaining a closing trading price equal to 150% of the then applicable conversion price for 20 consecutive trading days on average daily trading volume of at least 250,000 shares;

 
●
dividends of 8% per annum shall accrue on the Series B Preferred and Series B-1 Preferred but only be payable as, if and when declared by the Company’s Board of Directors or as part of the liquidation or change of control preference summarized below;

 
●
holders of shares of Series B Preferred and Series B-1 Preferred shall be entitled to a preferential payment (prior to any payment to holders of Series A Preferred or Common Stock) upon a liquidation or change of control, which payment shall be equal to the greater of (1) $1,200 per share plus all accrued but unpaid dividends, or (2) the amount that would have been received by the holder had they optionally converted their shares of Series B Preferred or Series B-1 Preferred into Common Stock prior to the liquidation or change of control;

 
●
holders of Series B Preferred have the right to vote with holders of Common Stock on an as-converted basis; and

 
●
holders of Series B Preferred and Series B-1 Preferred have the right to approve (by a majority of the Series B Preferred and Series B-1 Preferred voting together as a single class) certain corporate actions, including the incurrence of indebtedness for borrowed money unless the Company would have, after giving effect to such incurrence, an EBITDA-to-interest ratio of at least 2:1.

The foregoing description of the rights, privileges and preferences of the Series B Preferred and Series B-1 Preferred is a summary only and its qualified in its entirety by reference to the Certificate of Designation, which is included as an exhibit to this Current Report and incorporated herein by reference.
 
 
11
 

Item 9.01.
Financial Statements and Exhibits.

(d)           Exhibits

Exhibit No.
Description
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
 
 
12
 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: October 25, 2010

   
BONDS.COM GROUP, INC.
     
     
   
By:
 /s/ Michael O. Sanderson
   
Name:
 Michael O. Sanderson
   
Title:
 Chief Executive Officer 
 

 
 
 

Exhibit Index

Exhibit No.
Description
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
 
 EX-3.1 2 ex-3_1.htm CERTIFICATE OF INCREASE ex-3_1.htm
Bonds.com Group, Inc. 8-K
 
 
Exhibit 3.1

CERTIFICATE OF INCREASE
OF
SERIES A PARTICIPATING PREFERRED STOCK
OF
BONDS.COM GROUP, INC.
 
(Pursuant to Section 151 of the General Corporation Law of the State of Delaware)
 
 
BONDS.COM GROUP, INC. (the “Company”), a corporation organized and existing under the General Corporation Law of the State of Delaware, in accordance with the provisions of Section 151(g) thereof, DOES HEREBY CERTIFY:
 
That pursuant to the authority conferred upon the Board of Directors by the Certificate of Incorporation of the Company, the Board of Directors of the Company has adopted the following resolution increasing the number of authorized shares of Series A Participating Preferred Stock of the Company:
 
RESOLVED:  That pursuant to the authority expressly granted and vested in the Board of Directors of the Company in accordance with the provisions of its Certificate of Incorporation, the number of shares of the series of Preferred Stock of the Company designated as Series A Participating Preferred Stock be, and hereby is, increased from 200,000 shares to 450,000 shares; and that the appropriate officers of the Company be and hereby are authorized and directed in the name and on behalf of the Company to execute and file a Certificate of Increase in the form attached hereto with the Secretary of State of the State of Delaware increasing the number of shares constituting the Series A Participating Preferred Stock from 200,000 to 450,000 and to take any and all other actions deemed necessary or appropriate to effectuate this r esolution.

 
 
 

IN WITNESS WHEREOF, the Company has caused this Certificate of Increase to be executed by its duly authorized officer on this 19th day of October, 2010.
 

   
BONDS.COM GROUP, INC.
     
     
   
By:
 /s/ Michael O. Sanderson
   
Name:
 Michael O. Sanderson
   
Title:
 Chief Executive Officer
 
 EX-3.2 3 ex-3_2.htm CERTIFICATE OF DESIGNATION ex-3_2.htm
 
 
Exhibit 3.2

CERTIFICATE OF DESIGNATION
OF THE
SERIES B CONVERTIBLE PREFERRED STOCK
AND
SERIES B-1 CONVERTIBLE PREFERRED STOCK
OF
BONDS.COM GROUP, INC.
 
Bonds.com Group, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), in accordance with the provisions of Section 103 of the Delaware General Corporation Law, DOES HEREBY CERTIFY:
 
That pursuant to the authority vested in the Board of Directors of the Corporation (the “Board of Directors”) in accordance with the provisions of the Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”), on October 15, 2010, the Board of Directors adopted the following resolution creating a series of 20,000 shares of Preferred Stock designated as “Series B Convertible Preferred Stock” and a series of 6,000 shares of Preferred Stock designated as “Series B-1 Convertible Preferred Stock”:
 
RESOLVED, that, pursuant to the authority conferred upon the Board of Directors by Article Sixth of the Certificate of Incorporation of the Corporation dated April 1, 2002, as amended by the Certificate of Amendment dated April 12, 2002, the Certificate of Amendment dated December 18, 2007, the Certificate of Ownership dated December 21, 2007, the Certificate of Correction dated December 23, 2009, the Certificate of Designation dated January 11, 2010 and the Certificate of Amendment dated March 31, 2010, there is hereby created a class of Preferred Stock of the Corporation, $0.0001 par value per share, consisting of 20,000 shares designated as the Series B Convertible Preferred Stock, and a class of Preferred Stock of the Corporation, $0.0001 par value per share, consisting of 6,000 shares designated as the Series B-1 Convertible Pref erred Stock, and that the designation and amount thereof, and the voting powers, preferences and relative participating, optional and other special rights of the shares of such series and the qualifications, limitations and restrictions thereof be as set forth in the Certificate of Designation in the form attached hereto.
 
1.           Series B Convertible Preferred Stock; Series B-1 Convertible Preferred Stock; Stated Value.
 
(a)           There is hereby created out of the authorized and unissued shares of Preferred Stock of the Corporation a series of Preferred Stock designated as the “Series B Convertible Preferred Stock.”  The number of shares constituting such series shall be 20,000 and such series is referred to herein as the “Series B Preferred.”  Such number of shares may not be increased or decreased without the approval of the holders of a majority of the then outstanding shares of Series B Preferred.
 
(b)           There is hereby created out of the authorized and unissued shares of Preferred Stock of the Corporation a series of Preferred Stock designated as the “Series B-1 Convertible Preferred Stock.”  The number of shares constituting such series shall be 6,000 and such series is referred to herein as the “Series B-1 Preferred.”  Such number of shares may not be increased or decreased without the approval of the holders of a majority of the then outstanding shares of Series B-1 Preferred.

 
 
 
 
 
(c)           Stated Value.  For purposes hereof, the “Stated Value” of each share of Series B Preferred or Series B-1 Preferred is $1,000 (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization affecting such shares).
 
2.           Rank and Dividends.
 
(a)              Rank.  Except as permitted by this Certificate of Designation, the Series B Preferred and Series B-1 Preferred shall, with respect to dividends and distributions upon liquidation, winding-up and dissolution of the Corporation, rank (i) pari passu with each other, (ii) senior to the common stock, par value $0.0001 per share, of the Corporation (the “Common Stock”) and the Series A Participating Preferred Stock, par v alue $0.0001 per share of the Corporation (the “Series A Preferred”), and (iii) junior to any class or series of capital stock that ranks senior to the Series B Preferred and Series B-1 Preferred as to dividends or distributions upon liquidation, winding-up and dissolution of the Corporation that is created in accordance with the Section 4(c).
 
(b)              Dividends.  From and after the date of the issuance of any shares of Series B Preferred or Series B-1 Preferred, dividends at the rate per annum of 8% of the applicable Stated Value shall accrue on such shares of Series B Preferred and Series B-1 Preferred (subject to adjustment for any stock splits, stock dividends, recapitalizations or the like) (the “Accruing Dividends”).  Accruing Dividends shall accrue from day to day, whether not earned or declared, and sh all be cumulative.  Notwithstanding anything herein to the contrary, except as set forth in the following sentence of this Section 2(b) or in Section 3(a), Accruing Dividends shall be payable only when, as, and if declared by the Board of Directors and the Corporation shall be under no obligation to pay such Accruing Dividends.  No dividend or other distribution shall be paid, declared or set aside for payment on any share of Common Stock or any series of Preferred Stock expressly made junior to the Series B Preferred and Series B-1 Preferred unless (in addition to the obtaining of any consent required in the Certificate of Incorporation) all Accruing Dividends with respect to each outstanding share of the Series B Preferred and Series B-1 Preferred have been or are simultaneously declared and paid.
 
3.           Liquidation Preference.
 
(a)              Series B Preferred and Series B-1 Preferred Liquidation Preference.  In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, subject to the rights of any series of Preferred Stock which may from time to time come into existence in accordance with the terms of this Certificate of Designation, the holders of Series B Preferred and Series B-1 Preferred shall be entitled to receive by reason of their ownership thereof, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Common Stock or the holders of a ny series of Preferred Stock expressly made junior to the Series B Preferred and Series B-1 Preferred, an amount per share equal to the greater of (i) 120% of the sum of (x) the Stated Value of such share plus (y) the Accruing Dividends relating thereto, and (ii) the amount which such holder would

 
2
 

otherwise have received in respect of such share had all holders of Series B Preferred and Series B-1 Preferred converted their shares of Series B Preferred and Series B-1 Preferred into shares of Common Stock at the then applicable Optional Conversion Price (such amount per share as of any date, the “Liquidation Preference”).  If, upon the occurrence of such event, the assets and funds available for distribution among the holders of the Series B Preferred and Series B-1 Preferred (and any other series of Preferred Stock expressly made pari passu with the Series B Preferred and Series B-1 Preferred with respect to payments upon liquidation, dissolution or winding up, if applicable), shall be in sufficient to permit the payment to such holders of the full preferential amounts to which they are entitled, then, subject to the rights of any series of Preferred Stock which may from time to time come into existence in accordance with the terms of this Certificate of Designation, the entire assets and funds of the Corporation legally available for distribution shall be distributed ratably among the holders of the Series B Preferred and Series B-1 Preferred (and any other series of Preferred Stock expressly made pari passu with the Series B Preferred and Series B-1 Preferred with respect to payments upon liquidation, dissolution or winding up, if applicable) in accordance with the respective full preferential amounts to which such holders are entitled.
 
(b)              Distribution of Remaining Assets.  Subject to the rights of any series of Preferred Stock which may from time to time come into existence in accordance with the terms of this Certificate of Designation, in the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, after the payment of all preferential amounts required to be paid to the holders of shares of Series B Preferred, Series B-1 Preferred and any other series of Preferred Stock having a preference with respect to liquidations, the remaining assets of the Corporation available for distribution to its stockholders shall be distributed among the holders of (i) shares of Series A Preferred in accordance with its liquidation preference and any other series of Preferred Stock which may from time to time come into existence in accordance with the terms of this Certificate of Designation and have the right to participate in such distribution (and, in such case, in accordance with its liquidation preference and participation rights), and (ii) shares of Series A Preferred and Common Stock, pro rata based on the number of shares held by each such holder, treating for this purpose each such share of Series A Preferred as if it had been converted into one hundred (100) shares of Common Stock (subject to appropriate adjustment in the event of any stock split, stock dividend, combination or other similar recapitalization with respect to the Series A Preferred if there is no proportionate action taken with respect to the Common Stock) immediately prior to such liquidation, dissolution or winding up of the Corporat ion and treating any other shares of Preferred Stock in accordance with the terms of their liquidation preference and participation rights.
 
(c)              Certain Acquisitions.  For purposes of this Section 3, a liquidation, dissolution or winding up of the Corporation shall be deemed to occur on a Change of Control (as defined below).  In the event of any such deemed liquidation, provision shall be made in connection with such transaction to ensure that the holders of Series B Preferred and Series B-1 Preferred receive, in connection with such transaction, an amount per share at least equal to the Liquidation Preference.  If the consideration received by the Corporation in any deemed liquidation is other than cash, its value will be deemed its fair market value as determined in good faith by the Board of Directors.  The Corporation shall give each holder of record of Series B Preferred and Series B-1 Preferred written notice of any such impending transaction not later than ten (10) days prior the stockholders’ meeting called to approve

 
3
 

such transaction, or ten (10) days prior to the closing of such transaction, whichever is earlier.  For purposes hereof, “Change of Control” means (i) a sale, transfer, lease, exclusive license or other disposition of all or substantially all of the Corporation’s assets or business, (ii) any merger, consolidation, reorganization or other business combination transaction of the Corporation with or into another entity, other than a transaction in which the holders of at least a majority of the shares of voting capital stock of the Corporation outstanding immediately prior to such transaction continue to hold (either by such shares remaining outstanding or by their being converted into shares of voting capital stock of the surviving entity) a majo rity of the total voting power represented by the shares of voting capital stock or other voting equity of the Corporation or the surviving entity outstanding immediately after such transaction, or (iii) the direct or indirect acquisition (including by way of new issuance by the Corporation (other than issuances of shares in respect of options or warrants existing as of the date hereof, but solely to the extent that the issuance triggered a Change in Control without factoring in any additional purchases made by such Person subsequent to the date hereof (other than purchases pursuant to the foregoing options and warrants), re-sales of stock by existing shareholders, or a tender or exchange offer), in a single transaction or series of related transactions, by any person or entity, or persons or entities acting as a group, of beneficial ownership or a right to acquire beneficial ownership of shares of the Corporation’s capital stock representing at least a majority of the voting power of the then outstand ing shares of capital stock of the Corporation.
 
4.           Voting Rights.
 
(a)              General Manner for Series B Preferred.  On any matter presented to the stockholders of the Corporation for their action or consideration at any meeting of stockholders of the Corporation (or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Series B Preferred shall be entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Series B Preferred Stock are convertible as of the record date for determining stockholders entitled to vote on such matter.  Except as provided by law or by the provisions of Section 4(c), holders of Series B Preferred shall vote together with the holders of Common Stock, and with holders of any other series of Preferred Stock the terms of which so provide, as a single class.
 
(b)              General Manner for Series B-1 Preferred.  Except as may otherwise be required by applicable law or pursuant to the provisions of Section 4(c) below, the Series B-1 Preferred shall not have the right to vote with respect to any matters.  The number of authorized shares of Preferred Stock (other than Series B-1 Preferred) may be increased or decreased (but not below the sum of the number of shares thereof then outstanding and the number of shares required for exercise of any rights to purchase or otherwise acquire shares of Prefer red Stock) by the affirmative vote of the holders of shares of capital stock of the Corporation representing a majority of the votes represented by all outstanding shares of capital stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the Delaware General Corporation Law, and the holders of Series B-1 Preferred shall not have any separate class vote with respect thereto unless expressly required by Section 1(b) or Section 4(c) below.
 
(i)           Approval of Certain Actions by the Corporation.  In addition to any other vote or consent required by law or this Certificate of Designation, for so long as any holder of Series B Preferred and/or Series B-1 Preferred shall continue to hold at least 25% of the total number of shares of Series B Preferred and/or Series B-1 Preferred that such holder shall have purchased from the Corporation, the Corporation shall not (either directly or indirectly by amendment, merger, consolidation, sale of substantially all of its assets, liquidation, dissolu tion, winding-up, reorganization or otherwise), without first obtaining the affirmative vote or written consent of the holders of at least a majority of the Series B Preferred and Series B-1 Preferred then outstanding, voting together as a single class, take any action that:
 
 
4
 
 
(i)           alters the rights, preferences or privileges of the Series B Preferred or Series B-1 Preferred;
 
(ii)          creates any new class or series of shares, or issues any such shares or options or convertible securities exercisable or convertible into such shares, that have a preference over the Series B Preferred or Series B-1 Preferred with respect to dividends or liquidation preferences;
 
(iii)         reclassifies Common Stock or Series A Preferred into shares having a preference over or parity with the Series B Preferred or Series B-1 Preferred with respect to dividends or liquidation preferences;
 
(iv)         authorizes or pays any dividend or other distribution with respect to the Common Stock;
 
(v)          results in (A) the consolidation or merger of the Corporation with or into any other corporation or business entity (other than with or into a wholly-owned domestic subsidiary of the Corporation or with respect to such consolidation or merger where not more than 50% of the voting power of the Corporation is transferred to any party or parties other than the existing stockholders of the Corporation), (B) the sale or other transfer in a single transaction or a series of related transactions of all or substantially all of the assets of the Corporation, or (C) the liquidation, dissolution, winding-up or reorganization of the Corporation if, in each case, such transaction would result in any disproportionate adverse consequences for the holders of Series B Preferred and Series B-1 Preferred (solely in the respect to their rights as stockholders);
 
(vi)         (A) commences a voluntary proceeding seeking liquidation, reorganization or other relief with respect to the Corporation or the debts of the Corporation under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Corporation or a substantial part of the property of the Corporation, (B) consents to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against the Corporation, (C) makes a general assignment for the benefit of creditors, (D) generally results in the failure to pay the debts of the Corporation as they become due, or (E) authorizes any of the foregoing if, in each case, such action would result in any disproportionate adverse consequences for the holders of Series B Preferred and Series B-1 Preferred (solely in the respect to their rights as stockholders);
 
(vii)        incurs indebtedness for borrowed money unless the Corporation would have, after giving pro forma effect to such incurrence, an EBITDA-to-interest ratio of at least 2:1; or

 
5
 
 
(viii)       alters or amends the provisions of this Section 4.
 
5.           Optional Conversion.  The holders of Series B Preferred shall have conversion rights as follows:
 
(a)         Series B Preferred Right to Convert.  Each share of Series B Preferred shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Stated Value applicable to such shares of Series B Preferred by the Optional Conversion Price in effect at the time of conversion (such quotient is referred to as a “Conversion Rate”).  The “Optional Conversion Price” shall initially be $0.24.  Such Optional Conversion Price, and the rate at which shares of Series B Preferred may be converted into shares of Common Stock, shall be subject to adjustment as provided below in Sections 5(e)-(h).
 
(b)         Series B-1 Preferred Stock Right to Convert.  Each share of Series B-1 Preferred shall be convertible, at the option of the holder thereof (but subject to the proviso below), without payment of additional consideration by the holder thereof, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Stated Value applicable to such shares of Series B-1 Preferred by the Series B-1 Optional Conversion Price in effect at the time of conversion; provided, that such conversion may only occur under the following circumstances (i) as part of (A) a widespread public offering or (B) a private offering where no single purchaser (together with its affiliates) acquires more than 2% of the total voting shares of the Corporation outstanding after giving effect to the offering, (ii) as part of a sale to an underwriter for the purpose of underwriting a widely distributed public or private offering set forth in clause (i), (iii) in connection with one or more open market transactions effected on a stock exchange, electronic communication network or similar execution system, or in the over-the-counter market (which may include a sale to one or more broker-dealers acting as market makers or otherwise intending to resell the voting equity sold to them in accordance with their normal business practices), (iv) in a sale to an acquirer which has acquired control of a majority of the total voting equity, or (v) with the written approval of the U.S. Board of Governors of the Federal Reserve System or its staff.  The “Series B-1 Optional Conversion Price” shall initially be $0.24.  Such Series B-1 Optional Conversion Price, and the rate at which shares of Series B-1 Preferred may be converted into shares of Common Stock, shall be subject to adjustment as provided in Sections 5(e)-(h).
 
(c)           Fractional Shares.  When calculating the number of shares of Common Stock into which shares of Series B Preferred or Series B-1 Preferred shall be converted, the Corporation shall calculate to the largest whole share of Common Stock rounding down for any fractional shares of Common Stock into which the shares of Series B Preferred or Series B-1 Preferred would otherwise convert.  No fractional shares of Common Stock shall be issued upon conversion.  In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay the holder cash equal to such fraction multiplied by the then ef fective applicable Optional Conversion Price or Series B-1 Optional Conversion Price, as applicable.  The determination as to whether or not to make any cash payment in lieu of the issuance of fractional shares shall be based upon the total number of shares of Series B Preferred or Series B-1 Preferred being converted at any one time by the holder thereof, not upon each share of Series B Preferred or Series B-1 Preferred being converted.
 
 
6
 
 
(d)           Mechanics of Conversion.
 
(i)           In order for a holder of Series B Preferred or Series B-1 Preferred to convert shares of Series B Preferred or Series B-1 Preferred pursuant to this Section 5, such holder shall surrender the certificate or certificates for such shares of Series B Preferred or Series B-1 Preferred at the office of the transfer agent for the Series B Preferred or Series B-1 Preferred (or at the principal office of the Corporation if the Corporation serves as its own transfer agent), together with written notice that such holder elects to convert all or any number of the shares of the Series B Preferred or Series B-1 Preferred represented by such certificate or cert ificates.  Such notice shall state such holder’s name or the names of the nominees in which such holder wishes the certificate or certificates for shares of Common Stock to be issued.  If required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his or its attorney duly authorized in writing.  5:00 PM local time on the date of receipt of such certificates and notice by the transfer agent (or by the Corporation if the Corporation serves as its own transfer agent) shall be the conversion time (the “Conversion Time”). The Corporation shall, as soon as practicable after the Conversion Time, issue and deliver at such office to such holder of the Series B Preferred or Series B-1 Preferred or to his, her or its nominees, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled, together with cash, as provided in Section 5(c), in lieu of any fractions of a share of Common Stock issuable upon such conversion and a certificate or certificates for the number of shares of Series B Preferred or Series B-1 Preferred representing the remainder of shares of Series B Preferred or Series B-1 Preferred not converted, to the extent that such shares of Series B Preferred or Series B-1 Preferred were tendered to the Corporation.
 
(ii)          The Corporation shall at all times when the Series B Preferred or Series B-1 Preferred shall be outstanding, reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of Series B Preferred or Series B-1 Preferred, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Series B Preferred or Series B-1 Preferred.  Before taking any action that would cause an adjustment reducing the applicable Optional Conversion Price or Series B-1 Optional Conversion Price below the then par value of the capital stock issuable upon conversion, the Corporation will take any corporate action which may be necessary in order that the Corporation may validly and legally issue fully paid and nonassessable shares of Common Stock as shall be sufficient for such purpose.
 
(iii)         Upon any conversion, no adjustment to the Optional Conversion Price shall be made for any accrued or declared but unpaid dividends (including the Accruing Dividends) on Series B Preferred surrendered for conversion or on the Common Stock delivered upon conversion.  If any such dividends exist at the time of conversion, they shall be cancelled.  Upon any conversion, no adjustment to the Series B-1 Optional Conversion Price shall be made for any accrued or declared but unpaid dividends (including the Accruing Dividends) on Series B-1 Preferred surrendered for conversion or on the Common Stock delivered upon conversion.  60;If any such dividends exist at the time of conversion, they shall be cancelled.

 
7
 
 
(iv)          All shares of Series B Preferred or Series B-1 Preferred that shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares, including the rights, if any, to receive notices and to vote, shall immediately cease and terminate on the Conversion Time, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor and payment of any cash in lieu of a fractional share required by Section 5(c).  Any shares of Series B Preferred or Series B-1 Preferred so converted shall be automatically retired and cancelled and may not be reissued as shares of Series B Preferred or Series B-1 Preferred, re spectively, and shall resume the status of authorized but unissued shares of Preferred Stock undesignated as to series, and the Corporation (without the need for stockholder action) may from time to time take such appropriate action as may be necessary to reduce the authorized number of shares of Series B Preferred or Series B-1 Preferred accordingly or to eliminate the designation of the Series B Preferred or the Series B-1 Preferred.
 
(v)           The Corporation shall pay any and all issue and other taxes that may be payable in respect of any issuance or delivery of shares of Common Stock upon conversion of shares of Series B Preferred or Series B-1 Preferred pursuant to this Section 5. The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock in a name other than that in which the shares of Series B Preferred or Series B-1 Preferred so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid.
 
(e)           Adjustment for Stock Splits and Combinations.  If the Corporation shall at any time or from time to time after the date on which a share of Series B Preferred or Series B-1 Preferred was first issued (such date, the “Original Issue Date”) effect a subdivision of the outstanding Common Stock, the Optional Conversion Price and Series B-1 Optional Conversion Price then in effect immediately before that subdivision shall be proportionately decreased.  If the Corporation shall at any time or from time to time after the Original Issue Date combine the outstanding shar es Common Stock, the Optional Conversion Price and Series B-1 Optional Conversion Price then in effect immediately before the combination shall be proportionately increased.  Any adjustment under this Section 5(e) shall become effective at the close of business on the date the subdivision or combination becomes effective.
 
(f)           Adjustment for Certain Dividends and Distributions.  In the event the Corporation at any time, or from time to time after the Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock, then and in each such event the Optional Conversion Price and Series B-1 Optional Conversion Price then in effect shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying each of the Optional Conversion Price and Series B-1

 
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Optional Conversion Price then in effect by a fraction:  (1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and (2) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution; provided, however, if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed th erefor, the Optional Conversion Price and Series B-1 Optional Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Optional Conversion Price and Series B-1 Optional Conversion Price shall be adjusted pursuant to this Section 5(f) as of the time of actual payment of such dividends or distributions; and provided further, that no such adjustment shall be made if the holders of Series B Preferred  and/or Series B-1 Preferred, as the case may be, simultaneously receive an identical dividend or distribution in shares of Common Stock in a number equal to the number of shares of Common Stock that they would have received if all outstanding shares of Series B Preferred and/or Series B-1 Preferred, as the case may be, had been converted into Common Stock immediately prior to such event.
 
(g)           Adjustments for Other Dividends and Distributions.  In the event the Corporation at any time or from time to time after the Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Corporation other than shares of Common Stock, then and in each such event provision shall be made so that the holders of the Series B Preferred and Series B-1 Preferred shall receive upon conversion thereof in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Corporation th at they would have received had the Series B Preferred and Series B-1 Preferred been converted into Common Stock on the date of such event and had they thereafter, during the period from the date of such event to and including the conversion date, retained such securities receivable by them as aforesaid during such period, giving application to all adjustments called for during such period under this Section 5(g); and provided further, that no such adjustment shall be made if the holders of Series B Preferred and/or Series B-1 Preferred, as the case may be, simultaneously receive a dividend or other distribution of such securities in an amount equal to the amount of such securities that they would have received if all outstanding shares of Series B Preferred and/or Series B-1 Preferred, as the case may be,   ;had been converted into Common Stock immediately prior to such event.
 
(h)           Adjustment for Reclassification, Exchange, Merger or Substitution.  If the Common Stock issuable upon the conversion of Series B Preferred and Series B-1 Preferred shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, consolidation, merger or otherwise (other than a subdivision or combination of shares or stock dividend provided for above), then and in each such event the holder of each such share of Series B Preferred and Series B-1 Preferred shall thereafter be convertible (in lieu of the Common Stock into which it was previously convertible) into the kind and amount of shares of stock and other securities and property receivable, upon such reorganization, reclassification, or other change, by holders of the number of shares of Common Stock into which such shares of Series B Preferred and Series B-1 Preferred might have been converted immediately prior to such reorganization, reclassification, consolidation, merger or change, all subject to further adjustment as provided herein.
 
 
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6.           Mandatory Conversion.  In the event that shares of Common Stock trade with a closing price of at least 150% of the Optional Conversion Price then in effect for a period of 20 consecutive trading days on average trading volume of not less than 250,000 shares per day over the subject 20 day trading period (as adjusted ratably for stock splits, reclassifications and other like kind events affecting the Common Stock), (a) all outstanding shares of Series B Preferred shall automatically be converted into shares of Common Stock at the then effective Conversion Rate and (b) all outstanding shares of Series B-1 Preferred shall a utomatically be converted into such number of shares of Series A Preferred as is determined by dividing the Stated Value applicable to such shares of Series B-1 Preferred by the Series B-1 Mandatory Conversion Price (collectively, a “Mandatory Conversion”).  The “Series B-1 Mandatory Conversion Price” shall initially be $24.00 and shall be subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization directly affecting the Series A Preferred or indirectly affecting the Series A Preferred as a result of a stock dividend, stock split, combination or other similar recapitalization affecting the Common Stock.  All certificates evidencing shares of Series B Preferred or Series B-1 Preferred shall, from and after the Mandatory Conversion, be deemed to have been retired and cancelled and the shar es of Series B Preferred or Series B-1 Preferred represented thereby converted into Common Stock or Series A Preferred, as applicable, for all purposes, notwithstanding the failure of the holder or holders thereof to surrender such certificates on or prior to such date.  All rights with respect to the Series B Preferred and Series B-1 Preferred converted pursuant to this Section 6 will terminate immediately upon the triggering of an automatic conversion pursuant to this Section 6, except the right to receive the securities issuable upon conversion.  Such converted Series B Preferred or Series B-1 Preferred may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without need for stockholder action) as may be necessary to reduce the authorized number of shares of Series B Preferred and Series B-1 Preferred accordingly.  All holders of record of shares of Series B Preferred and Series B-1 Preferred shall be sent written notice of the Mandatory Conversion and the place designated for mandatory conversion of all such shares of Series B Preferred and Series B-1 Preferred pursuant to this Section 6.  Such notice need not be sent in advance of the occurrence of the Mandatory Conversion.  Upon receipt of such notice, each holder of shares of Series B Preferred and Series B-1 Preferred shall surrender his, her or its certificate or certificates for all such shares (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation at the place designated in such notice.  If so required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in f orm satisfactory to the Corporation, duly executed by the registered holder or by his, her or its attorney duly authorized in writing.  As soon as practicable after the Mandatory Conversion and the surrender of the certificate or certificates (or lost certificate affidavit and agreement) for Series B Preferred and Series B-1 Preferred, the Corporation shall issue and deliver to such holder, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock or Series A Preferred, as the case may be, issuable on such conversion, together with cash in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion.  Any Accruing Dividends on the converted shares of Series B Preferred and Series B-1 Preferred shall be cancelled, and no adjustment to the Optional Conversion Price or the Series B-1 Mandatory Conversion Price shall be made for any Accruing Dividends.

 
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7.           Fractional Shares.  Series B Preferred and Series B-1 Preferred may be issued in fractions of a share that shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights (if any), receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series B Preferred and Series B-1 Preferred.
 
8.           Notices of Record Date.  In the event of any taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, the Corporation shall mail to each holder of Series B Preferred and Series B-1 Preferred, at least five (5) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the pu rpose of such dividend, distribution or right, and the anticipated amount and character of such dividend, distribution or right; provided, however, that the foregoing obligations may be waived prospectively or retrospectively by holders of shares of Series B Preferred and Series B-1 Preferred representing at least a majority of the outstanding shares of Series B Preferred and Series B-1 Preferred.
 
9.           Notices.  Any notice required by the provisions of this Certificate to be given to the holders of Series B Preferred and/or Series B-1 Preferred shall be deemed to have been sufficiently received (except as otherwise provided herein) (a) upon receipt when personally delivered, (b) one (1) day after being sent by overnight delivery or facsimile providing confirmation or receipt of delivery, or (c) three (3) days after being sent by certified or registered mail, postage and charges prepaid, return receipt requested, and addressed to each holder of record at such holder’s address appearing on the books of the Corporation.
 
* * * * *
 
[Signature page follows.]
 
 
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IN WITNESS WHEREOF, Bonds.com Group, Inc. has caused this Certificate of Designation to be executed by Michael Sanderson, its Chief Executive Officer, this 19th day of October, 2010.
 
   
Bonds.com Group, Inc.
     
     
   
By:
 /s/ Michael Sanderson
   
Name:  
Michael Sanderson
   
Title:
Chief Executive Officer

I, Jeffrey M. Chertoff, hereby certify that I am the duly elected and acting Secretary of Bonds.com Group, Inc., that the foregoing was the duly approved and adopted Certificate of Designation of Bonds.com Group, Inc, that Michael Sanderson is the duly elected and acting Chief Executive Officer of Bonds.com Group, Inc., and that the signature of Michael Sanderson appearing above is his genuine signature.
 
Dated:           October 19, 2010.
 
     
    /s/ Jeffrey M. Chertoff
   
Jeffrey M. Chertoff, Secretary
 
 EX-10.1 4 ex-10_1.htm UNIT PURCHASE AGREEMENT ex-10_1.htm
 
Exhibit 10.1
 
UNIT PURCHASE AGREEMENT
 
This UNIT PURCHASE AGREEMENT (the “Agreement”), dated as of October 19, 2010, is entered into by and between Bonds.com Group, Inc., a Delaware corporation (the “Company”), and Bonds MX, LLC, a Delaware limited liability company (the “Buyer”).  Edwin L. Knetzger, III (“Knetzger”) and Tully Capital Partners (“Tully”) join into this Agreement solely for the purpose of agreeing to be bound by Section 10(n) hereof.
 
WHEREAS:
 
A.           The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act.
 
B.           The Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, Units (as defined below) of securities of the Company, as more fully described in this Agreement.  As used herein, each “Unit” purchased by the Buyer shall consist of:  (i) 100 shares (the “Shares”) of Series B Convertible Preferred Stock (“Series B Preferred Stock”) of the Company, (ii) warrants exercisable for 416,667 shares of common stock of the Company (the “Common Stock”) at a purchase price of $0.24 per share (the “Warrants”), and (iii) the right to receive 416,667 additional shares of Common Stock (the “Performance Shares”) if the Company fails to meet performance targets set forth in Section 7.  The Units, the Shares, the Warrants, the Common Stock to be issued pursuant to the exercise of the Warrants and the Performance Shares are referred to herein as the “Securities.”  The Company will be offering Units to other investors, which offering (the “Offering”) will continue through October 31, 2010, unless the Company elects to extend the period to a date no later than January 31, 2011.
 
C.           In connection with the transactions contemplated by this Agreement, the Company will be selling to UBS Americas Inc. (“UBS”) 12.5 units of securities of the Company pursuant to a Unit Purchase Agreement dated as of the date hereof between the Company and UBS (the “UBS Purchase Agreement”), with each unit consisting of: (i) 100 shares of Series B-1 Convertible Preferred Stock (“Series B-1 Preferred Stock”) of the Company, (ii) warrants exercisable for 4,166.67 shares of Series A Participating Preferred Stock (“Seri es A Preferred Stock”) at a purchase price of $24.00 per share, and (iii) the right to receive 4,166.67 shares of the Company’s Series A Preferred Stock if the Company fails to meet performance targets set forth in Section 7.
 
D.           In connection with the transactions contemplated by this Agreement, the parties hereto and certain other stockholders of the Company are executing and delivering a Series B Stockholders’ Agreement, substantially in the form attached hereto as Exhibit A (the “Stockholders’ Agreement”).

 
 
 
 
E.           In connection with the transactions contemplated by this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement, substantially in the form attached hereto as Exhibit B (the “Registration Rights Agreement”).
 
NOW, THEREFORE, the Company and the Buyer hereby agree as follows:
 
1.           PURCHASE AND SALE OF UNITS.
 
(a)           Certificate of Designation.  On or prior to the First Tranche Closing Date (as defined below) the Company shall adopt and file with the Secretary of State of the State of Delaware the Certificate of Designation in the form attached hereto as Exhibit C (the “Certificate of Designation”).
 
(b)           First Tranche Closing.  Subject to the satisfaction (or waiver) of the conditions set forth in Sections 5 and 6 below, the Company shall issue and sell to the Buyer, and the Buyer agrees to purchase from the Company 12 Units at the first tranche closing (the “First Tranche Closing”).  The First Tranche Closing shall occur at 10:00 a.m., New York City time, on the date hereof (or such other date and time as is mutually agreed to by the Company and the Buyer) at the offices of Bingham McCutchen LLP, 399 Third Avenue, New York, New York 10022.  The date on which the First Tranche Closing is actually held is re ferred to herein as the “First Tranche Closing Date”).
 
(c)           Second Tranche Closing.  Subject to the satisfaction (or waiver) of the conditions set forth in Sections 5 and 6A below, the Company shall issue and sell to the Buyer, and the Buyer agrees to purchase from the Company 4 Units at the second tranche closing (the “Second Tranche Closing”).  The Second Tranche Closing shall occur at 10:00 a.m., New York City time, on November 1, 2010 (or such other date and time as is mutually agreed to by the Company and the Buyer) at the offices of Bingham McCutchen LLP, 399 Third Avenue, New York, New York 10022.  The date on which the Second Tranche Closing is actually held is referred to herein as the “Second Tranche Closing Date.”
 
(d)           Third Tranche Closing.  Subject to the satisfaction (or waiver) of all of the conditions set forth in Sections 5 and 6A below, the company shall issue and sell to the Buyer, and the Buyer agrees to purchase from the Company 4 Units at the third tranche closing (the “Third Tranche Closing”; each of the Second Tranche Closing and the Third Tranche Closing shall be referred to as an “Additional Closing”, the First Tranche Closing and each Additional Closing shall be referred to as a “Closing” and each such date is referred to as a “Closing Date”).  The Third Tranche Closing shall occur at 10:00 a.m., New York City time, on December 1, 2010 (or such other date and time as is mutually agreed to by the Company and the Buyer).
 
(e)           Purchase Price.  The purchase price for each Unit to be purchased by the Buyer at each Closing hereunder shall be One Hundred Thousand Dollars ($100,000.00) (the “Purchase Price”).
 
 
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(f)           Form of Payment.  On the First Tranche Closing Date, (i) the Buyer shall pay the Purchase Price to the Company for the Units to be issued and sold to the Buyer at such Closing by cancellation of the outstanding principal balance under the Existing Note, and, with respect of the balance of the Purchase Price for the Units to be issued and sold to Buyer at such Closing, by wire transfer of immediately available funds in accordance with the Company’s written wire instructions and (ii) the Company shall issue to the Buyer copies of one or more stock certificates, evidencing the number of Shares to be purchased at such Closing by the Buyer free and clear of any mortgage, pledge, hypothec ation, rights of others, rights of first refusal, claim, security interest, encumbrance, title, defect, voting trust agreement, option, lien, taxes, charge or similar restrictions or limitations (collectively, “Liens”).  For purposes of this Agreement, the “Existing Note” means the indebtedness of the Company’s wholly owned subsidiary, Bonds.com Holdings, Inc. (“Holdings”), to the Buyer evidenced by the Amended 15% Promissory Note dated August 20, 2010, executed by Holdings in favor of the Buyer.  The Company and the Buyer acknowledge and agree that the Existing Note, and the entire principal balance thereunder shall be deemed canceled, surrendered and retired in full as of the First Tranche Closing Date, and the Company shall pay to the Buyer within ninety (90) days of the First Tr anche Closing all accrued and unpaid interest under the Existing Note.
 
(g)           Exercise of Warrants.  The Warrants may be exercised at any time from the Closing Date at which such Warrants are issued until the date which is five years from such date (the “Warrant Exercise Period”).  Within the Warrant Exercise Period, the Warrants may be exercised in whole or in part at the price per share of $0.24 per share of Common Stock (the “Warrant Exercise Price”), such number of shares of Common Stock and Warrant Exercise Price are subject to adjustment as set forth in the Warrant Certificate (as defined below), payable by certified wir e transfer to an account designated by the Company.  Upon delivery of a Notice of Exercise Form duly executed in the form attached to the Warrant Certificate (as defined below) hereto (which Notice of Exercise Form may be submitted by delivery to the Company), together with payment of the aggregate Warrant Exercise Price for the shares of Common Stock purchased, the Buyer shall be entitled to receive a certificate or certificates for the shares of Common Stock so purchased.  The Warrants will be certificated in the form attached hereto as Exhibit D (the “Warrant Certificate”).  All Warrants shall include a cashless exercise feature.
 
(h)           Rounding.  When calculating the number of Securities represented by a fraction of a Unit, the Company shall round up to the nearest whole Security.
 
 
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2.           REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  The Company represents and warrants to the Buyer that:
 
(a)           Organization and Qualification.  Each of the Company and its “Subsidiaries” (which for purposes of this Agreement means any entity in which the Company, directly or indirectly, owns at least a majority of the capital stock or other equity or similar interest) are entities duly organized and validly existing in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authorization to own their properties and to carry on their business as now being conducted.
 
(b)           Authorization; Enforcement; Validity.  The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement, the Stockholders’ Agreement, the Certificate of Designation, the Registration Rights Agreement and each of the other agreements to be entered into by the parties hereto in connection with the transactions contemplated by this Agreement including the UBS Purchase Agreement (collectively, the “Transaction Documents”) and to issue the Securities in accordance with the terms hereof and thereof.  The execution and delivery of the Transaction Documents by t he Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Units and the Shares and the reservation for issuance and the issuance of the Common Stock issuable upon exercise of the Warrants have been duly authorized by the Company’s Board of Directors and no further consent or authorization is required by the Company, its Board of Directors or its stockholders.  This Agreement and the other Transaction Documents have been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
 
(c)           Issuance of Securities.  The Securities are duly authorized and, upon issuance in accordance with the terms hereof, shall be validly issued and free from all Liens with respect to the issue thereof and the Shares shall be fully paid and nonassessable with the holders being entitled to all rights accorded to a holder of Series B Preferred Stock.  As of the Closing Date Closing Date at which Warrants are issued, the Company shall have duly authorized and reserved for issuance a number of shares of Common Stock which equals the maximum number of shares of Common Stock issuable upon exercise of such Warrants.
 
3.           BUYER’S REPRESENTATIONS AND WARRANTIES.
 
(a)           Validity; Enforcement.  The Transaction Documents have been duly and validly authorized, executed and delivered on behalf of the Buyer and shall constitute the legal, valid and binding obligations of the Buyer enforceable against the Buyer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

 
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(b)           No Public Sale or Distribution.  The Buyer is acquiring the Securities for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the 1933 Act and the Buyer does not have a present arrangement to effect any distribution of Securities to or through any person or entity; provided, however, that by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to d ispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act.  The Buyer is acquiring the Securities hereunder in the ordinary course of its business.  The Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities.
 
(c)           Accredited Investor Status.  The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.
 
(d)           Reliance on Exemptions.  The Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Securities.
 
(e)           Information.  The Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Buyer.  The Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company.  Neither such inquiries nor any other due diligence investigations conducted by the Buyer or its advisors, if any, or its representatives shall modify, amend or affect the Buyer’s right to rely on the Company’s representations and warranties contained herein.  The Buyer understands that its invest ment in the Securities involves a high degree of risk and is able to afford a complete loss of such investment.  The Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.
 
 
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(f)           Transfer or Resale.  The Buyer understands that: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) the Buyer shall have delivered to the Company an opinion of counsel, in a form reasonably satisfactory to the Company, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) the Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended, (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person through whom the sale is made), may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.  Notwithstanding the foregoing, the Securities may be ple dged in connection with a bona fide margin account or other loan or financing arrangement secured by the Securities and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and if the Buyer effects a pledge of Securities it shall not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document, including, without limitation, this Section 3(f).
 
(g)           General Solicitation.  The Buyer is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or, to the Buyer’s knowledge, any other general solicitation or general advertisement.
 
4.           COVENANTS.
 
(a)           Transfer Restrictions.
 
(i)           The Securities may only be disposed of in compliance with state and federal securities laws.  In connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an affiliate of the Buyer, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the 1933 Act.  As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement.

 
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(ii)          The Buyer agrees to the imprinting, so long as is required by this Section 4(a), of a legend on any of the Securities in the following form:
 
[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
 
(b)           Removal of Legend. Certificates evidencing the Securities shall not contain any legend (including the legend set forth in Section 4(a) hereof): (i) while a registration statement covering the resale of such security is effective under the 1933 Act, or (ii) if such Securities are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Securities and without volume or manner-of-sale restrictions, or (iii) if such legend is not required under applicable requirements of the 1933 Act (including judicial interpretations and pronouncements issued by the staff of the SEC).  The Company agrees t hat at such time as such legend is no longer required under this Section 4(b), it will, no later than three trading days following the delivery by the Buyer to the Company or the Company’s transfer agent of a certificate representing the Securities, as applicable, issued with a restrictive legend along with an acceptable legal opinion and broker representation letter, deliver or cause to be delivered to the Buyer a certificate representing such shares that is free from all restrictive and other legends.  The Company may not make any notation on its records or give instructions to the Company’s transfer agent that enlarge the restrictions on transfer set forth in this Section.
 
(c)           Compliance with 1933 Act.  The Buyer agrees that the Buyer will sell any Securities pursuant to either the registration requirements of the 1933 Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities are sold pursuant to a registration statement, they will be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates representing Securities as set forth in Section 4(b) is predicated upon the Company's reliance upon this understanding.

 
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5.           CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.
 
The obligation of the Company hereunder to issue and sell the Units to the Buyer at the any Closing is subject to the satisfaction, at or before the applicable Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing the Buyer with prior written notice thereof:
 
(i)           The Buyer shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company.
 
(ii)          The Buyer shall have delivered to the Company the Purchase Price for the Units being purchased by the Buyer at such Closing.  Without limitation of the foregoing, the Buyer shall have delivered to the Company the original Existing Note marked “Canceled” at the First Tranche Closing.
 
(iii)         The corresponding tranche closing under the UBS Purchase Agreement shall have occurred (or shall be taking place simultaneously with such Closing).
 
(iv)         The representations and warranties of the Buyer shall be true and correct in all material respects as of the date when made and as of the applicable Closing Date as though made at that time (except for representations and warranties that speak as of a specific date which shall be true and correct as of such specified date), and the Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the applicable Closing Date.
 
6.           CONDITIONS TO THE BUYER’S OBLIGATION TO PURCHASE AT THE FIRST TRANCHE CLOSING.
 
The obligation of the Buyer hereunder to purchase the Units at the First Tranche Closing is subject to the satisfaction, at or before the First Tranche Closing Date, of each of the following conditions, provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
 
(i)           The Company shall have filed the Certificate of Designation with the Secretary of State of Delaware, which shall continue to be in full force and effect as of the First Tranche Closing.
 
(ii)          The Company shall have executed and delivered to the Buyer (i) each of the Transaction Documents and (ii) one or more copies of certificates representing the shares of Series B Preferred Stock being purchased by the Buyer at the First Tranche Closing pursuant to this Agreement.
 
(iii)         The Company shall have executed and delivered to Buyer the Warrant Certificate representing the Warrants issued at the First Tranche Closing.

 
8
 
 
(iv)         The representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as of the First Tranche Closing Date as though made at that time (except for representations and warranties that speak as of a specific date which shall be true and correct as of such specified date) and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the First Tranche Closing Date.
 
6A.           CONDITIONS TO THE BUYER’S OBLIGATION TO PURCHASE AT ANY ADDITIONAL CLOSING.
 
The obligation of the Buyer hereunder to purchase the Units at any Additional Closing is subject to the satisfaction, at or before the corresponding Closing Date, of each of the following conditions, provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
 
(v)          The Company shall have executed and delivered to the Buyer copies of one or more certificates representing the shares of Series B Preferred Stock being purchased by the Buyer at the Additional Closing pursuant to this Agreement.
 
(vi)         The Company shall have executed and delivered to Buyer the Warrant Certificate representing Warrants issued at such Additional Closing.
 
(vii)        (a) UBS Securities LLC (“UBS”) and its Affiliates shall be continuing to perform under that certain Licensing and Services Agreement, dated January 11, 2010 (the “UBS Commercial Agreement”), by and among the Company, Bonds.com, Inc. and UBS, in a manner substantially consistent with their current performance thereunder and (b) the UBS Commercial Agreement shall not have been terminated or modified in any manner adverse to the Company.
 
(viii)       UBS and its Affiliates shall not have altered their performance or course of conduct under, or their interpretation of the parties’ rights under, the UBS Commercial Agreement, in each case, in a manner adverse to the Company.
 
(ix)          The representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as of the date of such Additional Closing as though made at that time (except for representations and warranties that speak as of a specific date which shall be true and correct as of such specified date) and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the applicable Closing Date.
 
 
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7.           PERFORMANCE SHARES.  On the final closing date of the Offering, the Company shall reserve that number of shares of Common Stock equal to the number of Performance Shares issuable to the Buyer hereunder.  If the Company generates less than $7,500,000 in revenue for the 12-month period ending on the first anniversary of the final closing date of the Offering determined in accordance with generally accepted accounting principles consistently applied (the “Performance Period”), the Company shall issue to the Buyer a number of Performance Shares equal to the product of (x) (i) the aggregate number of Performance Shares multiplied by (ii) (A) $7,500,000 minus revenue for the Performance Period, divided by (B) $7,500,000 multiplied by (y) a fraction, the numerator of which is the dollar amount of the Units purchased by the Buyer at all Closings and the denominator of which is $2,000,000.  The Company shall perform the calculation contemplated by this Section 7 within sixty (60) days following the end of the Performance Period and, if applicable, shall issue Performance Shares promptly thereafter.
 
8.           ISSUANCE OF ADDITIONAL SHARES AND WARRANTS.
 
(a)           Protection with Respect to Subsequent Closings in the Offering.
 
(i)           If, pursuant to the Offering, the Company shall sell any “units” at a price per unit that is less than the aggregate “Stated Value” of all shares of Series B Preferred Stock and/or Series B-1 Preferred Stock included in such units, (any such issuance, a “Dilutive Issuance”), the Company shall issue to Buyer, for no additional consideration, a number of shares of Series B Preferred Stock equal to (x) the quotient obtained by dividing (A) the Purchase Price by (B) the per “unit” purchase price paid in the Dilutive Issuance, minus (y) the number of Shares issued to Buyer at all Closings hereunder.
 
(ii)          If, pursuant to the Offering, the Company shall sell any “units” including warrants exercisable for shares of Series B Preferred Stock with an exercise price of less than $0.24 (or warrants exercisable for shares of Series A Preferred Stock with an exercise price of less than $24.00), the Company agrees to amend the Warrant Certificates issued in respect of the Warrants to provide for the same exercise price (with necessary adjustments to account for differences between voting and non-voting securities).
 
(iii)         If any “unit” sold pursuant to the Offering includes warrants exercisable for more than 416,667 shares of Common Stock (or 4,166.67 shares of Series A Preferred Stock), or the right to receive up to more than 416,667 shares of Common Stock (or 4,166.67 shares of Series A Preferred Stock) upon failure to meet the performance targets set forth in Section 7, the Company agrees to issue to Buyer warrants and/or such rights such that Buyer shall hold the same number and composition of warrants and/or such rights per unit purchased as the subsequent purchaser (with necessary adjustments to account for differences between voting and non-voting securities).

 
10
 
 
(b)           Limitation to this Section 8.  Notwithstanding anything to the contrary in this Section 8, if and to the extent the issuance of any shares of capital stock or other securities pursuant to this Section 8 would result in (i) the aggregate number of the Company’s issued and outstanding shares of Common Stock exceeding the number of the Company’s then authorized shares of Common Stock, (ii) the aggregate number of the Company’s issued and outstanding shares of preferred stock exceeding the number of the Company’s then authorized shares of preferred stock, or (iii) the aggregate number of any class or series of preferred stock exceeding the number of the Company’s then authorized shares of such class or series of preferred stock, then the issuance of such shares and/or other securities shall be reduced such that they do not exceed the applicable amount referenced in each of the foregoing clauses (i), (ii) and (iii).  For purposes of the foregoing, (x) the aggregate number of the Company’s issued and outstanding shares of Common Stock shall be calculated on a fully-diluted basis (including, without limitation, assuming the exercise, conversion or exchange of all securities exercisable, convertible or exchangeable, directly or indirectly, for shares of Common Stock and the issuance of any other securities issuable pursuant to this Agreement or any other agreement (and the subsequent exercise, conversion or exchange of any such securities which are exercisable, convertible or exchangeable for shares of Common Stock)), and (y) the aggregate number of the Company’s issued and outstanding shares of preferred stock and any class or series thereof shall be c alculated assuming the exercise, conversion or exchange of all securities exercisable, convertible or exchangeable, directly or indirectly, for shares of preferred stock and such class or series and the issuance of any other securities issuable pursuant to this Agreement or any other agreement (and the subsequent exercise, conversion or exchange of any such securities which are exercisable, convertible or exchangeable for shares of preferred stock or such class or series thereof).  If the foregoing results in the reduction of the number of shares or other securities to be issued to the Buyer and any other person or entity pursuant to this Agreement, then such reduction or limitation shall be applied among Buyer and such other person or entity pro rata based upon the amount of shares or other securities Buyer and such other person or entity would otherwise have been entitled to receive.
 
(c)           Amendment or Waiver by UBS.  Notwithstanding anything to the contrary set forth in this Agreement, the provisions of Section 8 shall be deemed amended and/or waived if and to the same extent as the corresponding provisions in the UBS Purchase Agreement may e amended and/or waived from time to time.
 
9.           TERMINATION.  IN THE EVENT THAT THE FIRST TRANCHE CLOSING SHALL NOT HAVE OCCURRED WITH RESPECT TO THE BUYER ON OR BEFORE TEN (10) BUSINESS DAYS FROM THE DATE HEREOF DUE TO THE COMPANY’S OR THE BUYER’S FAILURE TO SATISFY THE CONDITIONS SET FORTH IN SECTIONS 5 AND 6 ABOVE (AND THE NONBREACHING PARTY’S FAILURE TO WAIVE SUCH UNSATISFIED CONDITION(S)), THE NONBREACHING PARTY SHALL HAVE THE OPTION TO TERMINATE THIS AGREEMENT WITH RESPECT TO SUCH BREACHING PARTY AT THE CLOSE OF BUSINESS ON SUCH DATE WITHOUT LIABILITY OF ANY PARTY TO ANY OTHER PARTY.

 
11
 
 
10.           MISCELLANEOUS.
 
(a)           Governing Law; Jurisdiction; Jury Trial.  All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of a ny dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT M AY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
 
(b)           Counterparts.  This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature.
 
(c)           Headings.  The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.
 
(d)           Severability.  If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision( s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.  The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 
12
 
 
(e)           Entire Agreement; Amendments.  This Agreement, the Certificate of Designation and all other Transaction Documents supersede all other prior oral or written agreements between the Buyer, the Company, their affiliates and Persons acting on their behalf with respect to the matters discussed herein, and this Agreement, the other Transaction Document and the instruments referenced herein and therein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters.  No provis ion of this Agreement may be amended other than by an instrument in writing signed by the Company and the Buyer and any of their respective successors or assigns.  No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought.
 
(f)           Notices.  Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with an overnight courier service prior to such courier’s deadline for next Business Day delivery to the recipient (all delivery fees and charges prepaid), in each case properly addressed to the party to receive the same.  The add resses and facsimile numbers for such communications shall be:
 
If to the Company:
 
Bonds.com Group, Inc.
529 5th Avenue, 8th Floor
New York, New York 10017
Attention:  Chief Executive Officer
Fax No:  (212) 946-3999
 
with a copy (for informational purposes only) to:
 
Hill Ward Henderson
3700 Bank of America Plaza
101 East Kennedy Boulevard
Tampa, Florida 33602
Telephone: (813) 227-8484
Facsimile:  (813) 221-2900
Attention:  Mark A. Danzi, Esq.
 
 
13
 

If to the Buyer:
 
Bonds MX, LLC
c/o Laidlaw & Company (UK) Ltd.
90 Park Avenue, 31st floor
New York, New York 10016
Facsimile: (212) 297-0670
Attention: Hugh Regan
 
with a copy (for informational purposes only) to:
 
Gibson, Dunn & Crutcher LLP
2029 Century Park East
Los Angeles, California 90067-3026
Facsimile:  (310) 552-7038
Attention: Mark Lahive
 
or to such other address, facsimile number and/or email address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change.  Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.
 
(g)           Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.  The Company and Buyer shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Buyer; provided, that the Buyer may assign some or all of its rights and obligations hereunder to an affiliate of the Buyer, without the consent of the Company, in which event such assignee shall be deemed to be the Buyer hereunder with respect to such assigned rights and obligations; provided that as a condition to any such assignment the assignee shall agree to be bound by the terms of this Agreement as t he Buyer hereunder and the Buyer shall not be relieved of liability for the performance of its obligations hereunder.
 
(h)           No Third Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
 
(i)           Survival of Representations and Warranties and Covenants.  The representations and warranties, covenants and agreements of the Company and the Buyer contained in this Agreement shall survive the Closings.  The Company shall not have any liability hereunder unless a claim is made hereunder prior to the twelve month anniversary of the date of this Agreement, in which case such representation and warranty and covenant shall survive as to such claim until such claim has been finally resolved.

 
14
 
 
(j)           Further Assurances.  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
 
(k)           No Strict Construction; Definition of Business Day.  The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.  As used herein, the term “Business Day” shall mean any day other than (a) a Saturday or Sunday and (b) any day on which banks are required or permitted to be closed in New York, New York.
 
(l)           Remedies.  The Buyer and each holder of the Securities shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law.  Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law.  Furthermore, the Company recognizes that in the event that it fails to perform, obs erve, or discharge any or all of its obligations under the Transaction Documents, any remedy at law may prove to be inadequate relief to the Buyer.  The Company therefore agrees that the Buyer shall be entitled to seek temporary and permanent injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or other security.
 
(m)           Counsel.  The Company and Bonds MX acknowledge that Hill, Ward & Henderson, P.A. acted solely as counsel to the Company and its subsidiaries in the transactions contemplated by this Agreement and that Bonds MX is, or had the opportunity to be, represented by separate counsel in this transaction.
 
(n)           Liability for Certain Buyer Obligations.  Each of Knetzger and Tully shall (i) be severally liable for 50% of the Buyer’s obligations under Section 1 of this Agreement and (ii) cause the Buyer to satisfy the applicable portion of its obligations under Section 1 of the Agreement; provided, however, each of Knetzger’s and Tully’s maximum liability pursuant to this Section 10(n) shall be $400,000 (for an aggregate amount of $800,000).
 
[Signature Page Follows]

 
15
 

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


   
COMPANY:
     
   
BONDS.COM GROUP, INC.
     
   
By:
 /s/ Michael O. Sanderson
   
Name:
 Michael O. Sanderson
   
Title:
 Chief Executive Officer


   
BUYER:
     
   
BONDS MX, LLC
     
   
By:
 /s/ Hugh Regan
   
Name:
 Hugh Regan
   
Title:
 Manager


   
KNETZGER:
     
   
/s/ Edwin L. Knetzger, III
       
       


   
TULLY:
     
   
TULLY CAPITAL PARTNERS
     
   
By:
 /s/ Timothy J. Tully
   
Name:
 Timothy J. Tully
   
Title:
 Managing Member
 
 
16

 
 EX-10.2 5 ex-10_2.htm UNIT PURCHASE AGREEMENT ex-10_2.htm
Bonds.com Group, Inc. 8-K
 
Exhibit 10.2
UNIT PURCHASE AGREEMENT
 
This UNIT PURCHASE AGREEMENT (the “Agreement”), dated as of October 19, 2010, is entered into by and between Bonds.com Group, Inc., a Delaware corporation (the “Company”) and UBS Americas Inc., a Delaware corporation (the “Buyer”).
 
WHEREAS:
 
A.           The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act.
 
B.           The Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, Units (as defined below) of securities of the Company, as more fully described in this Agreement.  As used herein, each “Unit” purchased by the Buyer shall consist of:  (i) 100 shares (the “Shares”) of Series B-1 Convertible Preferred Stock (“Series B-1 Preferred Stock”) of the Company (subject to adjustment as provided in Section 8 below), (ii) warrants exercisable for 4,166.67 shares of Series A Participating Preferred Stock (R 20;Series A Preferred Stock”) at a purchase price of $24.00 per share (the “Warrants”), and (iii) the right to receive 4,166.67 shares (the “Performance Shares”) of the Company’s Series A Preferred Stock if the Company fails to meet performance targets set forth in Section 7.  The Units, the Shares, the Warrants, the Series A Preferred Stock to be issued pursuant to the exercise of the Warrants and the Performance Shares are referred to herein as the “Securities.”
 
C.           Contemporaneously with the execution of this Agreement, the Company is entering into a Unit Purchase Agreement with Bonds MX, LLC (the “Bonds MX Purchase Agreement”), pursuant to which Bonds MX, LLC is committing to purchase an aggregate 20 units of securities of the Company, each of which shall consist of: (i) 100 shares of the Company’s Series B Convertible Preferred Stock (“Series B Preferred Stock”), (ii) warrants exercisable for 416,667 shares of the Company’s common stock par value $.0001 per share (“Common Stock”) at a purchase price of $0.24 per share, and (iii) the right to receive 416,667 shares of Common Stock if the Company fails to meet the performance targets set forth in Section 7.  The aggregate purchase price paid by Bonds MX, LLC pursuant to the Bonds MX Purchase Agreement shall be $2,000,000, including the cancellation of indebtedness totaling at least $1,000,000.
 
D.           In connection with the transactions contemplated by this Agreement, the Company will be offering up to an additional 67.5 units of securities of the Company, each of which shall consist of: (i) 100 shares of Series B Preferred Stock, (ii) warrants exercisable for 416,667 additional shares of Common Stock (or 208,333 additional shares of Common Stock if the unit is purchased after October 31, 2010), and (iii) the right to receive 416,667 shares of Common Stock if the Company fails to meet the performance targets set forth in Section 7.  This offering (the “Offering”) will continue through October 31, 2010, unless the Company elects to extend the period to a date no later than January 31, 2011 .
 
 
 
 
 
E.           In connection with the transactions contemplated by this Agreement, the parties hereto, Bonds MX, LLC and certain other stockholders of the Company are executing and delivering a Series B Stockholders’ Agreement, substantially in the form attached hereto as Exhibit A (the “Stockholders’ Agreement”).
 
F.           In connection with the transactions contemplated by this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement, substantially in the form attached hereto as Exhibit B (the “Registration Rights Agreement”).
 
NOW, THEREFORE, the Company and the Buyer hereby agree as follows:
 
1.           PURCHASE AND SALE OF UNITS.
 
(a)           Certificate of Designation.  On or prior to the First Tranche Closing Date (as defined below), the Company shall adopt and file with the Secretary of State of the State of Delaware the Certificate of Designation in the form attached hereto as Exhibit C (the “Certificate of Designation”).
 
(b)           First Tranche Closing.  Subject to the satisfaction (or waiver) of the conditions set forth in Sections 5 and 6 below, the Company shall issue and sell to the Buyer, and the Buyer agrees to purchase from the Company 7.5 Units at the first tranche closing (the “First Tranche Closing”).  The First Tranche Closing shall occur at 10:00 a.m., New York City time, on the date hereof (or such other date and time as is mutually agreed to by the Company and the Buyer) at the offices of Bingham McCutchen LLP, 399 Third Avenue, New York, New York 10022.  The date on which the First Tranche Closing is actually held is r eferred to herein as the “First Tranche Closing Date.”
 
(c)           Second Tranche Closing.  Subject to the satisfaction (or waiver) of the conditions set forth in Sections 5 and 6A below, the Company shall issue and sell to the Buyer, and the Buyer agrees to purchase from the Company 2.5 Units at the second tranche closing (the “Second Tranche Closing”).  The Second Tranche Closing shall occur at 10:00 a.m., New York City time, on November 1, 2010 (or such other date and time as is mutually agreed to by the Company and the Buyer) at the offices of Bingham McCutchen LLP, 399 Third Avenue, New York, New York 10022.  The date on which the Second Tranche Closing is actually he ld is referred to herein as the “Second Tranche Closing Date.”
 
(d)           Third Tranche Closing.  Subject to the satisfaction (or waiver) of all of the conditions set forth in Sections 5 and 6A below, the company shall issue and sell to the Buyer, and the Buyer agrees to purchase from the Company 2.5 Units at the third tranche closing (the “Third Tranche Closing”; each of the Second Tranche Closing and the Third Tranche Closing shall be referred to as an “Additional Closing”, the First Tranche Closing and each Additional Closing shall be referred to as a “Closing” a nd each such date is referred to as a “Closing Date”).  The Third Tranche Closing shall occur at 10:00 a.m., New York City time, on December 1, 2010 (or such other date and time as is mutually agreed to by the Company and the Buyer) at the offices of Bingham McCutchen LLP, 399 Third Avenue, New York, New York 10022.
 
 
2
 
 
(e)           Purchase Price.  The purchase price for each Unit to be purchased by the Buyer at each Closing hereunder shall be One Hundred Thousand Dollars ($100,000.00) (the “Purchase Price”).
 
(f)           Form of Payment; Delivery.  On each Closing Date, (i) the Buyer shall pay the Purchase Price to the Company for the Units to be issued and sold to the Buyer at such Closing by wire transfer of immediately available funds in accordance with the Company’s written wire instructions and (ii) the Company shall issue to the Buyer one or more stock certificates, evidencing the number of Shares to be purchased at such Closing by the Buyer free and clear of any mortgage, pledge, hypothecation, rights of others, rights of first refusal, claim, security interest, encumbrance, title, defect, voting trust agreement, option, lien, taxes, charge or similar restrictions or limitations (collectively , “Liens”).
 
(g)           Exercise of Warrants.  The Warrants may be exercised at any time from the Closing Date at which such Warrants are issued until the date which is five years from such date (the “Warrant Exercise Period”).  Within the Warrant Exercise Period, the Warrants may be exercised in whole or in part at the price per share of $24.00 per share of Series A Preferred Stock (the “Warrant Exercise Price”), such number of shares of Series A Preferred Stock and Warrant Exercise Price are subject to adjustment as set forth in the Warrant Certificate (as defined below), payable by certified wire transfer to an account designated by the Company.  Upon delivery of a Notice of Exercise Form duly executed in the form attached to the Warrant Certificate (as defined below) hereto (which Notice of Exercise Form may be submitted by delivery to the Company), together with payment of the aggregate Warrant Exercise Price for the shares of Series A Preferred Stock purchased, the Buyer shall be entitled to receive a certificate or certificates for the shares of Series A Preferred Stock so purchased.  The Warrants will be certificated in the form attached hereto as Exhibit D (the “Warrant Certificate”).  All Warrants shall include a cashless exercise feature.
 
(h)           Rounding.  When calculating the number of Securities represented by a fraction of a Unit, the Company shall round up to the nearest whole Security.
 
2.           REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  The Company represents and warrants to the Buyer that:
 
(a)           Organization and Qualification.  Each of the Company and its “Subsidiaries” (which for purposes of this Agreement means any entity in which the Company, directly or indirectly, owns at least a majority of the capital stock or other equity or similar interest) are entities duly organized and validly existing in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authorization to own their properties and to carry on their business as now being conducted.  Each of the Company and each of its Subsidiaries is duly qualified as a foreign entity to do business and is i n good standing (or, with respect to the State of Florida, active status) in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect.  As used in this Agreement, “Material Adverse Effect” means any material adverse effect on the business, properties, assets, operations, results of operations, condition (financial or otherwise) or prospects of the Company and its Subsidiaries, individually or taken as a whole, or on the transactions contemplated hereby or on the other Transaction Documents (as defined in Section 2(b)) or by the agreements and instruments to be entered into in connection herewith or therewith, or on the authority or ab ility of the Company to perform its obligations under the Transaction Documents.  Except as set forth on Schedule 2(a), the Company has no Subsidiaries and there are no other entities in which the Company, directly or indirectly, owns any of the capital stock or other equity or similar interests.
 
 
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(b)           Authorization; Enforcement; Validity.  The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement, the Stockholders’ Agreement, the Certificate of Designation, the Registration Rights Agreement and each of the other agreements to be entered into by the parties hereto in connection with the transactions contemplated by this Agreement (collectively, the “Transaction Documents”) and to issue the Securities in accordance with the terms hereof and thereof.  The execution and delivery of the Transaction Documents by the Company and the consummation by th e Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Units and the Shares and the reservation for issuance and the issuance of the Series A Preferred Stock issuable upon exercise of the Warrants have been duly authorized by the Company’s Board of Directors and no further consent or authorization is required by the Company, its Board of Directors or its stockholders.  This Agreement and the other Transaction Documents have been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
 
(c)           Issuance of Securities.  The Securities are duly authorized and, upon issuance in accordance with the terms hereof, shall be validly issued and free from all Liens with respect to the issue thereof and the Shares shall be fully paid and nonassessable with the holders being entitled to all rights accorded to a holder of Series B-1 Preferred Stock.  As of the First Tranche Closing Date, the Company shall have duly authorized and reserved for issuance a number of shares of Series A Preferred Stock which equals the maximum number of shares of Series A Preferred Stock issuable upon exercise of the Warrants.  The Company shall, so long as any of the Warrants are outstanding, take all action necessary to reserve and keep available out of its authorized and unissued capital stock, solely for the purpose of effecting the exercise of the Warrants, 100% of the number of shares of Series A Preferred Stock issuable upon exercise of the Warrants.  Upon exercise in accordance with the Warrants, the shares of Series A Preferred issued with respect thereto will be validly issued, fully paid and nonassessable and free from all Liens with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Series A Preferred Stock.  Assuming the accuracy and completeness of the Buyer’s representations in Section 3, the offer and issuance by the Company of the Securities is exempt from registration under the 1933 Act.

 
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(d)           No Conflicts.  Except as set forth in Schedule 2(d), the execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby will not (i) result in a violation of the Company’s Certificate of Incorporation, as amended and as in effect on the date hereof (the “Certificate of Incorporation”), or the Company’s Bylaws, as amended and as in effect on the date hereof (the “Bylaws”), any memor andum of association, certificate of incorporation, articles of association, bylaws, certificate of formation, any certificate of designation or other constituent documents of the Company or any of its Subsidiaries, or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and the rules and regulations of any Self-Regulatory Organization (as defined below)) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected.  For purposes of this Agreement, “Self-Regulatory Organization” means the Financial Industry Regulatory Authority, Inc. (together with any successor entity, “FINRA”) and any other commission, board, agency or body that is not a Governmental Authority (as defined in Section 2(x)(i)) but is charged with the supervision or regulation of the brokers and dealers that are its members.
 
(e)           Consents.  Other than the filing of the Certificate of Designation and as set forth on Schedule 2(e), the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any Governmental Authority or Self-Regulatory Organization or any other Person (as defined in Section 2(p)) in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents, in each case in accordance with the terms hereof or thereof, except for the filing of a Form D after the Closing, which will be timely filed.  All consents, authorizations, ord ers, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the First Tranche Closing Date, except for the filing of a Form D after the Closing, which will be timely filed.  The Company and its Subsidiaries are unaware of any facts or circumstances that might prevent the Company from obtaining or effecting any of the registration, application or filings pursuant to the preceding sentence.  The Company is not in violation of the rules, regulations or requirements that permit trading of the Common Stock on the OTC Bulletin Board (“OTCBB”) operated by FINRA that would reasonably lead to the suspension of the trading of the Common Stock on the OTCBB in the foreseeable future.
 
(f)           No General Solicitation; Placement Agent’s Fees.  Neither the Company, nor any of its Subsidiaries or affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities.  The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for persons engaged by the Buyer or its investment advisor) relating to or arising out of the transactions contemplated hereby.  The Company shall pay, and hold the Buyer harmless against, any liabi lity, loss or expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in connection with any such claim.  Except as set forth in Schedule 2(f), neither the Company nor any of its Subsidiaries has engaged any placement agent or other agent in connection with the sale of the Securities.

 
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(g)           No Integrated Offering.  None of the Company, its Subsidiaries, any of their affiliates, and any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of any of the Securities under the 1933 Act, whether through integration with prior offerings or otherwise, or cause this offering of the Securities to require approval of stockholders of the Company for purposes of the 1933 Act or any applicable stockholder approval provisions, including, without limitation, under the rules, regulations or requirements that permit trading of the Common Stock on the OTCBB that would reasonably lead to the suspension of the trading of the Common Stock on the OTCBB.  None of the Company, its Subsidiaries, their affiliates and any Person acting on its or their behalf will take any action or steps referred to in the preceding sentence that would require registration of any of the Securities under the 1933 Act or cause the offering of the Securities to be integrated with other offerings for purposes of any such applicable stockholder approval provisions.
 
(h)           SEC Documents; Financial Statements.  Except as set forth in Schedule 2(h), during the two (2) years prior to the date hereof, the Company has timely (including within any additional time periods provided by Rule 12b-25 under the 34 Act (as defined below)) filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the date hereof or prior to the applicable Closing Date, all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein, and the Company’s Schedule TO filed on June 30, 2010, all amendments thereto and all schedules and exhibits thereto and to any such amendments (including, without limitation, each Offer to Exchange filed therewith) being hereinafter referred to as the “SEC Documents”).  The Company has delivered to the Buyer or its respective representatives true, correct and complete copies of the SEC Documents not available on the EDGAR system.  Except as set forth in Schedule 2(h) or as corrected by subsequent amendments thereto, as of their respective filing dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents. As of their respective filing dates, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  Except as set forth in Schedule 2(h), as of their respective filing dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto.  Such financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

 
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(i)           Absence of Certain Changes.  Except as set forth in the SEC Documents, since December 31, 2008, there has been no material adverse change and no material adverse development in the business, properties, operations, condition (financial or otherwise), results of operations or prospects of the Company or its Subsidiaries.  Except as disclosed in Schedule 2(i), since December 31, 2008, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, in excess of $100,000 outside of the ordinary course of business or (iii) had capital expenditure s, individually or in the aggregate, in excess of $100,000.  Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings against the Company or any of its Subsidiaries or any actual knowledge of any fact which would reasonably lead a creditor to do so.
 
(j)           No Undisclosed Events, Liabilities, Developments or Circumstances.  No event, liability, development or circumstance has occurred or exists with respect to the Company or its Subsidiaries or their respective business, properties, prospects, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its shares of Common Stock and which has not been publicly disclosed or disclosed to the Buyer.
 
(k)           Conduct of Business; Regulatory Permits.  Neither the Company nor any of its Subsidiaries is in violation of any term of or in default under any certificate of designation of any outstanding series of preferred stock of the Company, their respective certificates of incorporation, bylaws or equivalent documents.  Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct its business in violation of any of the foregoing, except for possible violations which could not, individually or i n the aggregate, reasonably be expected to have a Material Adverse Effect.  Without limiting the generality of the foregoing, the Company is not in violation of any of the rules, regulations or requirements that permit trading of the Common Stock on the OTCBB that would reasonably lead to the suspension of the trading of the Common Stock on the OTCBB in the foreseeable future.  The Company and its Subsidiaries possess all certificates, approvals, authorizations and permits required by the appropriate Governmental Authorities or Self-Regulatory Organizations necessary to conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would not have, individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, approval, authorization or permit.

 
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(l)           Foreign Corrupt Practices.  Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other Person acting on behalf of the Company or any of its Subsidiaries has, in the course of its actions for, or on behalf of, the Company or any of its Subsidiaries (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful b ribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.
 
(m)           Sarbanes-Oxley Act.  Except as set forth on Schedule 2(m) or in the SEC Documents, the Company is in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the SEC thereunder that are effective as of the date hereof.
 
(n)           Transactions With Affiliates.  Except as set forth on Schedule 2(n) or in the SEC Documents, none of the officers, directors or employees of the Company or any of its Subsidiaries is presently a party to any transaction with the Company or any of its Subsidiaries (other than for ordinary course services as employees, officers or directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any such officer, director or employee or, to the knowledge of the Company, any cor poration, partnership, trust or other entity in which any such officer, director, or employee has a substantial interest or is an officer, director, trustee or partner.
 
 
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(o)           Equity Capitalization.  Immediately prior to the consummation of the First Tranche Closing and the first closing under the Bonds MX Purchase Agreement, the authorized capital stock of the Company consists of (x) 300,000,000 shares of Common Stock, 103,793,700 shares of which, as of the date hereof, are issued and outstanding and 62,122,855 shares of which are reserved for issuance pursuant to the Company’s employee incentive plan and other options and warrants outstanding and (y) 1,000,000 shares of preferred stock, par value $.0001 per share, (1) 450,000 of which have been designated Series A Preferred S tock and 85,835 of which are issued and outstanding, (2) 20,000 of which have been designated Series B Preferred Stock and none of which are issued and outstanding, and (3) 6,000 of which have been designated Series B-1 Preferred Stock and none of which are issued and outstanding.  All of such outstanding shares have been, or upon issuance will be, validly issued and are fully paid and nonassessable.  The rights, privileges and preferences of the Series B-1 Preferred Stock are as stated in the Certificate of Designation and as provided by the Delaware General Corporation Law.  Immediately prior to the First Tranche Closing and the first closing under the Bonds MX Purchase Agreement, the outstanding shares of the Company’s capital stock are held of record and, to the knowledge of the Company, beneficially by the Persons and in the amounts set forth on Schedule 2(o); provided, that Schedule 2(o) does not identify all record or beneficial owners of less than 5% calculated on a fully diluted basis and including the economic dilution of the outstanding shares of Series A Preferred Stock.  Except as set forth on Schedule 2(o): (i) no shares of the Company’s capital stock are subject to preemptive rights or any other similar rights or any Liens suffered or permitted by the Company; (ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares of capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiari es or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares of capital stock of the Company or any of its Subsidiaries; (iii) there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound; (iv) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its securities under the 1933 Act; (v) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (vi) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; (vii) the Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement; and (viii) the Company and its Subsidiaries have no liabilities or obligations required to be disclosed in the SEC Documents but not so disclosed in the SEC Documents.  The Company has furnished or made available to the Buyer upon the Buyer’s request, true, correct and complete copies of the Certificate of Incorporation and the Bylaws.
 
(p)           Indebtedness and Other Contracts.  Except as disclosed in Schedule 2(p) or in the SEC Documents, neither the Company nor any of its Subsidiaries (i) has any outstanding Indebtedness (as defined below), (ii) is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or instrument would reasonably be expected to result in a Material Adverse Effect, or (iii) is in violation of any term of or in default under any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not result, indivi dually or in the aggregate, in a Material Adverse Effect, or (iv) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of the Company’s officers, has or is expected to have a Material Adverse Effect.  For purposes of this Agreement:  (x) “Indebtedness” of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services, including, without limitation, “capital leases” in accordance with United States generally accepted accounting principles (other than trade payables entered into in the ordinary course of business), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with generally accepted accounting principles, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above; (y) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be pro tected (in whole or in part) against loss with respect thereto; and (z) “Person” means an individual, a limited liability company, a partnership, a limited partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.

 
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(q)           Absence of Litigation.  Except as set forth in the SEC Documents or on Schedule 2(q), there is no action, suit, proceeding, inquiry or investigation before or by any Governmental Authority or Self-Regulatory Organization pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries, the Series B Preferred Stock, the Series B-1 Preferred Stock, the Series A Preferred Stock, the Common Stock or any of the Company’s or the Company’s Subsidiaries’ officers or directors, whether of a civil or criminal nature or otherwise, that, if adversely determined, would, eith er individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
 
(r)           Employee Relations.  Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any member of a union.  Except as set forth on Schedule 2(r), the Company and its Subsidiaries believe that their relations with their employees are good.  No executive officer (as defined in Rule 501(f) of the 1933 Act) of the Company or any of its Subsidiaries has notified the Company or any such Subsidiary that such officer intends to leave the Company or any such Subsidiary or otherwise terminate such o fficer’s employment with the Company or any such Subsidiary.  No executive officer of the Company or any of its Subsidiaries, to the knowledge of the Company or any of its Subsidiaries, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters.  The Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adv erse Effect.
 
 
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(s)           Title.  Except as set forth on Schedule 2(s), the Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free and clear of all Liens except such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and any of its Subsidiaries.  Any real property and facilities held under lease by the Company and any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries.
 
(t)           Intellectual Property Rights.  Except as set forth on Schedule 2(t), the Company and its Subsidiaries own, control or  license adequate valid and enforceable rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, software, documentation, original works of authorship, patents, patent rights, copyrights, inventions, improvements, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights and all applications and registrations therefor (“Intellectual Property Rights”) necessary or appropriate to conduct their respective businesses as now conducted or as proposed to be conducted after the First Tranche Closing Date.  None of the Company’s Intellectual Property Rights has expired or terminated or has been abandoned, or is expected to expire or terminate or are expected to be abandoned within three years from the First Tranche Closing Date.  The Company does not have any knowledge of any infringement by the Company or its Subsidiaries of Intellectual Property Rights of others.  There is no claim, action or proceeding being made or brought, or to the knowledge of the Company or any of its Subsidiaries, being threatened, against the Company or any of its Subsidiaries regarding its Intellectual Property Rights.  Except as set forth on Schedule 2(t), neither the Company nor any of its Subsidiaries is aware of any facts or circumstances which might give rise to any of the foregoing infringements or claims, actions or proceedings.  The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their Intellectual Property Rights.

 
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(u)           Tax Status.  Except as set forth on Schedule 2(u), the Company and each of its Subsidiaries (i) has made or filed all foreign, U.S. federal, state and local income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, whether or not, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply.  There are no material Liens with respect to taxes upon the assets or properties of either the Company or its Subsidiaries, other than with respect to taxes not yet due and payable.  There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim.
 
(v)           Internal Accounting and Disclosure Controls.  Except as set forth in the SEC Documents, the Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accou ntability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any difference.  Except as set forth in the SEC Documents, the Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15 under the 1934 Act) that are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC, including, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated to the Company’s management, including its principal executive officer or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regardin g required disclosure.

 
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(w)           Transfer Taxes.  On each Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the sale and transfer of the Securities to be sold to the Buyer hereunder will be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.
 
(x)           Broker Dealer Entities.
 
(i)           The Company and each Subsidiary of the Company (the “Broker Dealer Entities”) that is required to be registered as a broker or a dealer with the SEC, the securities commission or similar authority of any domestic or foreign governmental or regulatory authority, department, board, instrumentality, agency, court, tribunal arbitrator, commission or other entity (each a “Governmental Authority”) is duly registered as such (and is listed on Schedule 2(x)(i) with its respective jurisdictions of registration and Self-Regulatory Organization memberships), and such registration s are in full force and effect, and each Broker Dealer Entity is a member in good standing with all applicable Self-Regulatory Organizations, and each Broker Dealer Entity’s Uniform Application for Broker Dealer Registration on Form BD, as amended as of the date hereof, and each of its other registrations, forms and other reports filed with any Governmental Authority or Self-Regulatory Organization in connection with its activities as a broker or a dealer and is in compliance in all material respects with the applicable requirements of the 1934 Act and other applicable law and rules and does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and no Broker Dealer Entity has exceeded in any material way with respect to its business, the business activities enumerated in any Self-Regulatory Organization membership agreements or other limitations imposed in connection with its registrations, forms (including Form BDs) and other reports filed with any Governmental Authority or Self-Regulatory Organization.
 
(ii)          Since October 4, 2007, none of the Broker Dealer Entities or any of their respective “associated persons of a broker or dealer” (as defined in the 1934 Act) has been, or currently is, ineligible or disqualified pursuant to Section 15, Section 15B or Section 15C of the 1934 Act to serve as a broker or dealer or as an “associated person of a broker or dealer” (as defined in the 1934 Act), nor is there any legal, administrative, arbitral, or other proceedings, suits, actions, claims, investigations, complaints or hearings by or before a Governmental Authority or Self-Regulatory Organization pending, or threatened in writing, by any Governmental Authority or Self-Regulatory Organization, which would reasonably be expected to become the basis for any s uch ineligibility or disqualification, nor is there any reasonable basis for a proceeding or investigation, whether formal or informal, preliminary or otherwise, that is reasonably likely to result in any such ineligibility or disqualification.
 
(iii)         Each of the Broker-Dealer Entities is in compliance in all material respects with Regulation T of the Board of Governors of the Federal Reserve System and the margin rules or similar rules of a Self-Regulatory Organization of which such Broker-Dealer Entity is a member, including the rules governing the extension or arrangement of credit to customers, and none of the Company or its Subsidiaries other than the Broker Dealer Entities has or does extend or arrange credit for any customer within the meaning of Regulation U or Regulation X of the Board of Governors of the Federal Reserve System.
 
 
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(iv)         Each of the Broker Dealer Entities is in compliance with all applicable regulatory net capital requirements.
 
(v)          To the Company’s knowledge, no facts or circumstances exist that would cause any Self-Regulatory Organization or any other Governmental Authority to revoke or restrict the Broker Dealer Entities’ licenses, permits, approvals, authorizations, consents, registrations, certificates and orders to operate in any jurisdiction as a broker or a dealer after the sale of Units contemplated by this Agreement.
 
(vi)         Each of the Broker Dealer Entities is in compliance with all applicable compliance with all applicable provisions of Regulation ATS under the 1934 Act.
 
(y)           Investment Company Status.  The Company is not, and upon consummation of the sale of the Securities, and for so long as the Buyer holds any Securities, will not be, an “investment company,” a company controlled by an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended.
 
(z)           Stock Option Plans. Each stock option granted by the Company was granted (i) in accordance with the terms of the applicable Company stock option plan (if any) and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date such stock option would be considered granted under generally accepted accounting principles and applicable law. No stock option granted under the Company’s stock option plan has been backdated.  The Company has not knowingly granted, and there is no and has been no Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.
 
(aa)           Disclosure.  The Company understands and confirms that the Buyer will rely on the foregoing representations in effecting transactions in securities of the Company.  To the Company’s knowledge, all disclosures regarding the Company, or any of its Subsidiaries, their business and the transactions contemplated hereby set forth in this Agreement and the other Transaction Documents, including the Schedules hereto and thereto are true and correct and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.  E ach press release issued by the Company or any of its Subsidiaries during the twelve (12) months preceding the date of this Agreement did not at the time of release contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  The Company acknowledges and agrees that the Buyer makes or has made no representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.

 
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3.           BUYER’S REPRESENTATIONS AND WARRANTIES.  
 
(a)           Validity; Enforcement.  The Transaction Documents have been duly and validly authorized, executed and delivered on behalf of the Buyer and shall constitute the legal, valid and binding obligations of the Buyer enforceable against the Buyer in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
 
(b)           No Public Sale or Distribution.  The Buyer is acquiring the Securities for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the 1933 Act and the Buyer does not have a present arrangement to effect any distribution of Securities to or through any person or entity; provided, however, that by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to d ispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act.  The Buyer is acquiring the Securities hereunder in the ordinary course of its business.  The Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities.
 
(c)           Accredited Investor Status.  The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.
 
(d)           Reliance on Exemptions.  The Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Securities.
 
(e)           Information.  The Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Buyer.  The Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company.  Neither such inquiries nor any other due diligence investigations conducted by the Buyer or its advisors, if any, or its representatives shall modify, amend or affect the Buyer’s right to rely on the Company’s representations and warranties contained herein.  The Buyer understands that its invest ment in the Securities involves a high degree of risk and is able to afford a complete loss of such investment.  The Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.

 
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(f)           Transfer or Resale.  The Buyer understands that: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) the Buyer shall have delivered to the Company an opinion of counsel, in a form reasonably satisfactory to the Company, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) the Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 1 44A promulgated under the 1933 Act, as amended, (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person through whom the sale is made), may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.  Notwithstanding the foregoing, the Securities may be pledged in connection with a bona fide margin account or other loan or financing arrang ement secured by the Securities and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and if the Buyer effects a pledge of Securities it shall not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document, including, without limitation, this Section 3(f).
 
(g)           General Solicitation.  The Buyer is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or, to the Buyer’s knowledge, any other general solicitation or general advertisement.
 
4.           COVENANTS.
 
(a)           Form D and Blue Sky.  The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to the Buyer promptly after such filing.  The Company, on or before the First Tranche Closing Date, shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Securities for sale to the Buyer 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), and shall provide evidence of any such action so taken to the Buyer on or prior to the First Tranche Cl osing Date.  The Company shall make all filings and reports relating to the offer and sale of the Securities required under applicable securities or “Blue Sky” laws of the states of the United States following the First Tranche Closing Date.
 
(b)           Reporting Status.  For so long as the Buyer owns any Securities, the Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would otherwise permit such termination.

 
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(c)           Use of Proceeds.  The Company will use the proceeds from the sale of the Securities for general corporate and for working capital purposes and not for the redemption or repurchase of any of its or its Subsidiaries’ equity securities.
 
(d)           Transfer Restrictions.
 
(i)           The Securities may only be disposed of in compliance with state and federal securities laws.  In connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an affiliate of the Buyer, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the 1933 Act.  As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement.
 
(ii)          The Buyer agrees to the imprinting, so long as is required by this Section 4(d), of a legend on any of the Securities in the following form:
 
[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
 
(e)           Removal of Legend. Certificates evidencing the Securities shall not contain any legend (including the legend set forth in Section 4(d) hereof): (i) while a registration statement covering the resale of such security is effective under the 1933 Act, or (ii) if such Securities are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Securities and without volume or manner-of-sale restrictions, or (iii) if such legend is not required under applicable requirements of the 1933 Act (including judicial interpretations and pronouncements issued by the staff of the SEC).  The Company agrees t hat at such time as such legend is no longer required under this Section 4(e), it will, no later than three trading days following the delivery by the Buyer to the Company or the Company’s transfer agent of a certificate representing the Securities, as applicable, issued with a restrictive legend along with an acceptable legal opinion and broker representation letter, deliver or cause to be delivered to the Buyer a certificate representing such shares that is free from all restrictive and other legends.  The Company may not make any notation on its records or give instructions to the Company’s transfer agent that enlarge the restrictions on transfer set forth in this Section.
 
 
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(f)           Compliance with 1933 Act.  The Buyer agrees that the Buyer will sell any Securities pursuant to either the registration requirements of the 1933 Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities are sold pursuant to a registration statement, they will be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates representing Securities as set forth in Section 4(e) is predicated upon the Company's reliance upon this understanding.
 
(g)           Public Announcements.  The Company and the Buyer shall consult with each other before issuing, and provide each other the opportunity to review and comment upon, any press release or other public statement with respect to the transactions contemplated hereby, and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable law or any applicable stock exchange.
 
(h)           Internal Controls.  The Company has in place a plan to address the material weaknesses in its internal control over financial reporting and will, in the six months following the First Tranche Closing Date, take such steps as are commercially reasonable to address the material weaknesses in its internal control over financial reporting identified by the Company’s accountants.
 
(i)           Closing Documents.  On or prior to fourteen (14) calendar days after the First Tranche Closing Date, the Company agrees to deliver, or cause to be delivered, to the Buyer and Bingham McCutchen LLP a complete closing set of the Transaction Documents, the Securities and any other document required to be delivered to any party pursuant to Section 5 or 6 hereof or otherwise.
 
(j)           Additional Purchasers.  The Company shall not sell any additional securities pursuant to the Offering unless the purchasers thereof shall have executed and delivered a joinder to the Stockholders’ Agreement.
 
(k)           Limitations on Issuance of Securities with Anti-Dilution Features.  Other than warrants comprising a portion of the units sold pursuant to the Offering, the Company shall not sell any warrants, convertible debt or other securities convertible into the Company’s Common Stock that include dilution protection provisions other than provisions relating to stock splits, reclassifications, stock dividends and other like kind events.
 
 
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(l)           Schedule Updates.  The Company may, at any time and from time to time after the First Tranche Closing, and not less than five (5) Business Days prior to the Second Tranche Closing or Third Tranche Closing, by notice in accordance with the terms of this Agreement, deliver to the Buyer a proposed supplement or amendment to any one or more Schedules to the Company’s representations and warranties in Section 2 to set forth, include or otherwise identify any updated, additional or changed information from what was previously set forth, included or otherwise identified on such Schedules (each, a “Proposed Schedule Update”). 60; If any matter disclosed in a Proposed Schedule Update would, in absence of the addition of such disclosure to the Schedules to the Company’s representations and warranties in Section 2, cause a failure of the condition to closing set forth in Section 6A(vii), the Buyer shall have no obligation to purchase Units at any Additional Closings scheduled to occur after the date of delivery of such Proposed Schedule Update.  Any information set forth, included or otherwise identified in any Proposed Schedule Update that is approved by the Buyer or that would not (in absence of disclosure) cause a failure of the condition to closing set forth in Section 6A(vii) shall be a “Schedule Update” (it being understood that the Buyer’s purchase of Units at an Additional Closing subsequent to the Company’s timely delivery of a Proposed Schedule Update pursuant to this Section 4(l) shall be deemed an approval of such Propose d Schedule Update).  All information set forth, included or otherwise identified in any Schedule Update in accordance with this Section 4(l) shall be deemed disclosed with respect to the representations and warranties made by the Company at any Closing subsequent to the date such Schedule Updates are approved (or deemed approved), but shall not be deemed disclosed with respect to any representations or warranties made at a Closing prior to the date such Schedule Update is delivered.  For the avoidance of doubt, neither the Buyer’s approval of a Schedule Update nor its purchase of Units at an Additional Closing subsequent to the Company’s timely delivery of a Proposed Schedule Update shall constitute a waiver of any of the Buyer’s remedies relating to any breach of representations or warranties made at a Closing prior to the date such Schedule Update is delivered, including any rights pursuant to Section 9.
 
(m)           The Company shall not amend any of the O’Krepkie Letter (as defined below), the Radnor Engagement Letter Amendment (as defined below), the Radnor Revenue Sharing Agreement Amendment (as defined below) or the Financial Advisory Agreement Termination and Release (as defined below) without the prior written consent of the Buyer.
 
5.           CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.
 
The obligation of the Company hereunder to issue and sell the Units to the Buyer at any Closing is subject to the satisfaction, at or before the applicable Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing the Buyer with prior written notice thereof:
 
(i)           The Buyer shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company.
 
(ii)          The Buyer shall have delivered to the Company the Purchase Price for the Units being purchased by the Buyer at such Closing by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company.
 
 
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(iii)         The representations and warranties of the Buyer shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which are true and correct in all respects) as of the date when made and as of the applicable Closing Date as though made at that time (except for representations and warranties that speak as of a specific date which shall be true and correct as of such specified date), and the Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the applicable Closing Date.
 
(iv)         UBS Securities LLC (“UBS”) and its Affiliates shall be continuing to perform under that certain Licensing and Services Agreement, dated January 11, 2010 (the “UBS Commercial Agreement”), by and among the Company, Bonds.com, Inc. and UBS, in a manner substantially consistent with their current performance thereunder.
 
6.           CONDITIONS TO THE BUYER’S OBLIGATION TO PURCHASE AT THE FIRST TRANCHE CLOSING.
 
The obligation of the Buyer hereunder to purchase the Units at the First Tranche Closing is subject to the satisfaction, at or before the First Tranche Closing Date, of each of the following conditions, provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
 
(i)           The Company shall have filed the Certificate of Designation with the Secretary of State of Delaware, which shall continue to be in full force and effect as of the First Tranche Closing.
 
(ii)          The Company shall have executed and delivered to the Buyer (i) each of the Transaction Documents and (ii) copies of one or more certificates representing the shares of Series B-1 Preferred Stock being purchased by the Buyer at the First Tranche Closing pursuant to this Agreement.
 
(iii)         The Buyer shall have received the opinion of Hill Ward Henderson, the Company’s outside counsel (“Company Counsel”), dated as of the First Tranche Closing Date, in substantially the form attached hereto as Exhibit E.
 
(iv)         The first tranche closing under the Bonds MX Purchase Agreement shall have occurred (or shall be taking place simultaneously with the Closing hereunder), and Bonds MX, LLC shall have shall have executed and delivered the Stockholders’ Agreement to the Buyer.
 
(v)          The Company shall have executed and delivered to Buyer the Warrant Certificate representing Warrants issued at the First Tranche Closing.
 
(vi)         Each of the other parties to the Amendment and Release attached as Exhibit F hereto shall have executed and delivered such agreement to the Company.
 
 
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(vii)        Each of the other parties to the Amendment and Release attached as Exhibit G hereto shall have executed and delivered such agreement to the Company.
 
(viii)       The Company and each of the holders of Convertible Promissory Notes identified on Exhibit H-1 hereto shall have entered into a binding written agreement to modify such Convertible Promissory Notes as set forth in Exhibit H-1 hereto;  the Company and the holder of the Second Amended and Restated Grid Secured Promissory Note, dated November 9, 2009, shall have entered into an amendment in the form attached hereto as Exhibit H-2.
 
(ix)          The exchange offer described in the Offer to Exchange filed with the U.S. Securities and Exchange Commission by the Company on June 30, 2010, as amended, shall have been accepted and consummated in accordance with the terms and conditions set forth in such Offer to Exchange, without regards to any amendments to such Offer to Exchange made after the date hereof, with no less than 80% of the outstanding rights and warrants having been tendered.
 
(x)           The Company and the other parties thereto shall have entered into each of the following: the letter agreement attached as Exhibit I hereto (the “O’Krepkie Letter”), Second Amendment to the Radnor Research and Trading Company Engagement Agreement attached as Exhibit J hereto (the “Radnor Engagement Letter Amendment”), Termination of Restated Revenue Sharing Agreement attached as Exhibit K hereto (the “Radnor Revenue Sharing Agreement Amendment”), and Termination and Release attached as Exhibit L hereto (the “Financial Advisory Agreement Termination and Release”).
 
(xi)          The Company shall have delivered to the Buyer a certificate evidencing the incorporation and good standing of the Company and each of its Subsidiaries in such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction as of a date within ten (10) days of the First Tranche Closing Date.
 
(xii)         The Company shall have delivered to the Buyer a certificate, executed by the Secretary of the Company and dated as of the First Tranche Closing Date, as to (i) the resolutions consistent with Section 2(b) as adopted by the Company’s Board of Directors in a form reasonably acceptable to the Buyer, (ii) the Certificate of Incorporation and (iii) the Bylaws, each as in effect at the First Tranche Closing.
 
 
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(xiii)        The representations and warranties of the Company shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which are true and correct in all respects) as of the date when made and as of the First Tranche Closing Date as though made at that time (except for representations and warranties that speak as of a specific date which shall be true and correct as of such specified date) and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the First Tranche Closing Date.  The Buyer shall have receive d a certificate, executed by the Chief Executive Officer of the Company, dated as of the First Tranche Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Buyer.
 
(xiv)        The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Units.
 
(xv)         The Company shall have delivered to the Buyer such other documents relating to the transactions contemplated by this Agreement as the Buyer or its counsel may reasonably request.
 
6A.           CONDITIONS TO THE BUYER’S OBLIGATION TO PURCHASE AT AN ADDITIONAL CLOSING.
 
The obligation of the Buyer hereunder to purchase the Units at an Additional Closing is subject to the satisfaction, at or before the corresponding Closing Date, of each of the following conditions, provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
 
(i)           The Company shall have executed and delivered to the Buyer one or more certificates representing the shares of Series B-1 Preferred Stock being purchased by the Buyer at the Additional Closing pursuant to this Agreement.
 
(ii)          The corresponding second or third tranche closing under the Bonds MX Purchase Agreement shall have occurred (or shall be taking place simultaneously with such Additional Closing), and the purchaser under the Bonds MX Purchase Agreement shall have purchased at least 4 units at such corresponding closing.
 
(iii)         The Company shall have executed and delivered to Buyer the Warrant Certificate representing Warrants issued at such Additional Closing.
 
(iv)         The Company shall have delivered to the Buyer a certificate evidencing the incorporation and good standing of the Company and each of its Subsidiaries in such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction as of a date within ten (10) days of the applicable Closing Date.
 
 
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(v)          The Company shall have delivered to the Buyer a certificate, executed by the Secretary of the Company and dated as of the applicable Closing Date, as to (i) the Certificate of Incorporation and (ii) the Bylaws, each as in effect at such Additional Closing.
 
(vi)         The Company shall not have taken steps to seek protection pursuant to any bankruptcy law, nor shall the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings against the Company or any of its Subsidiaries or any actual knowledge of any fact which would reasonably lead a creditor to do so.
 
(vii)        After taking into account any Schedule Updates accepted or deemed accepted by Buyer pursuant to Section 4(l), the representations and warranties of the Company shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which are true and correct in all respects) as of the date when made and as of the date of such Additional Closing as though made at that time (except for representations and warranties that speak as of a specific date which shall be true and correct as of such specified date) and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or c omplied with by the Company at or prior to the applicable Closing Date.  The Buyer shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of the applicable Closing Date, to the foregoing effect and to the matters described in Section 6A(vi).
 
7.           PERFORMANCE SHARES.  On the final closing date of the Offering, the Company shall reserve that number of shares of Series A Preferred Stock equal to the number of Performance Shares issuable to Buyer hereunder.  If the Company generates less than $7,500,000 in revenue for the first full twelve calendar months following the final closing date of the Offering, determined in accordance with GAAP consistently applied (the “Performance Period”), the Company shall issue to the Buyer a number of Performance Shares equal to the product of (i) the aggregate number of Performance Shares multiplied by (ii) (A) $7,500,000 minus revenue for the Performance Period, divided by (B) $7,500,000, multiplied by (iii) a fraction, the numerator of which is the dollar amount of Units purchased by Buyer at all Closings, and the denominator of which is $1,250,000.  The Company shall perform the calculation contemplated by this Section 7 within 30 days following the end of the Performance Period and, if applicable, shall issue Performance Shares promptly thereafter.  The issuance of such Performance Shares shall be deemed an adjustment to the Purchase Price.  Notwithstanding anything in the foregoing Section 7, if Buyer, in its sole discretion, determines that accepting all or a portion of the Performance Shares would violate regulatory requirements applicable to Buyer, Buyer may decline to ac cept all or a portion of such Performance Shares.
 
8.           ISSUANCE OF ADDITIONAL SHARES OF SERIES B-1 PREFERRED STOCK AND WARRANTS.
 
(a)           Protection with Respect to Subsequent Closings in the Offering.

 
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(i)           If, pursuant to the Offering, the Company shall sell any “units” at a price per unit that is less than the aggregate “Stated Value” of all shares Series B Preferred Stock and/or Series B-1 Preferred Stock included in such units, (any such issuance, a “Dilutive Issuance”), the Company shall issue to Buyer a number of shares of Series B-1 Preferred Stock equal to (x) the quotient obtained by dividing (A) the Purchase Price by (B) the per “unit” purchase price paid in the Dilutive Issuance, minus (y ) the number of Shares issued to Buyer at all Closings hereunder.
 
(ii)          If, pursuant to the Offering, the Company shall sell any “units” including warrants exercisable for shares of Series B Preferred Stock with an exercise price of less than $0.24 (or warrants exercisable for shares of Series A Preferred Stock with an exercise price of less than $24.00), the Company agrees to amend the Warrant Certificates issued in respect of the Warrants to provide for the same exercise price (with necessary adjustments to account for differences between voting and non-voting securities).
 
(iii)         If any “unit” sold pursuant to the Offering includes warrants exercisable for more than 416,667 shares of Common Stock (or 4,166.67 shares of Series A Preferred Stock), or the right to receive up to more than 416,667 shares of Common Stock (or 4,166.67 shares of Series A Preferred Stock) upon failure to meet the performance targets set forth in Section 7, the Company agrees to issue to Buyer warrants and/or such rights such that Buyer shall hold the same number and composition of warrants and/or such rights per unit purchased as the subsequent purchaser (with necessary adjustments to account for differences between voting and non-voting securities).
(b)           Adjustment Relating to Timing of Closing Offering.  If, on or before December 15, 2010, the Company shall not have sold securities pursuant to the Offering (as the same may be modified or amended from time to time) for an aggregate purchase price of at least $8,000,000 (including the surrender, cancellation or conversion of indebtedness), the Company shall issue to Buyer and each other purchaser in the Offering who shall have purchased its securities on or before October 31, 2010 (Buyer and each other qualifying purchaser, a “Protected Purchaser”) additional shares of Series B Preferred Stock and/or Series B-1 Preferred Stock (based on the type of security previously purchased by them in the Offering) (the “Adjustment Shares”) and shall amend the warrant certificates issued in respect of the warrants purchased by each Protected Purchaser in the Offering to adjust the warrant exercise price to be the Adjusted Warrant Exercise Price (as defined below).
 
The number of Adjustment Shares to which each Protected Purchaser shall be entitled shall be determined as follows:
 
(i)           Buyer shall be issued a number of Adjustment Shares such that, taken together with all other shares of capital stock held by Buyer or issuable upon exercise or conversion of securities held by Buyer, Buyer shall hold 19.9% of the capital stock of the Company (assuming for these purposes that no other holder of options, warrants or convertible securities exercises or converts such securities).

 
24
 
 
(ii)          Each other Protected Purchaser shall be issued a number of Adjustment Shares equal to (x) the number of shares of Series B Preferred Stock and/or Series B-1 Preferred Stock comprised in the units purchased by such Protected Purchaser in the Offering multiplied by (y) a fraction (A) the numerator of which is the number of Adjustment Shares to which Buyer is entitled as calculated pursuant to Section 8(b)(i) and (B) the denominator of which is the number of Shares issued to Buyer at all Closings hereunder.
 
“Adjusted Warrant Exercise Price” shall mean, for all Protected Purchasers, a price per share equal to (x) the Purchase Price divided by (y) the sum of (A) the number of Shares issued to Buyer at all Closings hereunder plus (B) the number of Adjustment Shares to which Buyer is entitled as calculated pursuant to Section 8(b)(i); provided, that the Adjusted Warrant Exercise Price for warrants exercisable for shares of Series A Preferred Stock shall be the price per share calculated pursuant to the immediately preceding clause multiplied by 100.
 
Notwithstanding anything in the foregoing Section 8(b), if Buyer, in its sole discretion, determines that accepting all or a portion of its respective Adjustment Shares would violate regulatory requirements applicable to Buyer, Buyer may decline to accept all or a portion of such Adjustment Shares.
 
(c)           Limitation to this Section 8.  Notwithstanding anything to the contrary in this Section 8, if and to the extent the issuance of any shares of capital stock or other securities pursuant to this Section 8 would result in (i) the aggregate number of the Company’s issued and outstanding shares of Common Stock exceeding the number of the Company’s then authorized shares of Common Stock, (ii) the aggregate number of the Company’s issued and outstanding shares of preferred stock exceeding the number of the Company’s then authorized shares of preferred stock, or (iii) the aggregate number of any class or series of preferred stock exceeding the number of the Company’s then authorized shares of such class or series of preferred stock, then the issuance of such shares and/or other securities shall be reduced such that they do not exceed the applicable amount referenced in each of the foregoing clauses (i), (ii) and (iii).  For purposes of the foregoing, (x) the aggregate number of the Company’s issued and outstanding shares of Common Stock shall be calculated on a fully-diluted basis (including, without limitation, assuming the exercise, conversion or exchange of all securities exercisable, convertible or exchangeable, directly or indirectly, for shares of Common Stock and the issuance of any other securities issuable pursuant to this Agreement or any other agreement (and the subsequent exercise, conversion or exchange of any such securities which are exercisable, convertible or exchangeable for shares of Common Stock)), and (y) the aggregate number of the Company’s issued and outstanding shares of preferred stock and any class or series thereof shall be c alculated assuming the exercise, conversion or exchange of all securities exercisable, convertible or exchangeable, directly or indirectly, for shares of preferred stock and such class or series and the issuance of any other securities issuable pursuant to this Agreement or any other agreement (and the subsequent exercise, conversion or exchange of any such securities which are exercisable, convertible or exchangeable for shares of preferred stock or such class or series thereof).  If the foregoing results in the reduction of the number of shares or other securities to be issued to the Buyer and any other person or entity pursuant to this Agreement, then such reduction or limitation shall be applied among Buyer and such other person or entity pro rata based upon the amount of shares or other securities Buyer and such other person or entity would otherwise have been entitled to receive.

 
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9.           TERMINATION.  IN THE EVENT THAT THE FIRST TRANCHE CLOSING SHALL NOT HAVE OCCURRED WITH RESPECT TO THE BUYER ON OR BEFORE TEN (10) BUSINESS DAYS FROM THE DATE HEREOF DUE TO THE COMPANY’S OR THE BUYER’S FAILURE TO SATISFY THE CONDITIONS SET FORTH IN SECTIONS 5 AND 6 ABOVE (AND THE NONBREACHING PARTY’S FAILURE TO WAIVE SUCH UNSATISFIED CONDITION(S)), THE NONBREACHING PARTY SHALL HAVE THE OPTION TO TERMINATE THIS AGREEMENT WITH RESPECT TO SUCH BREACHING PARTY AT THE CLOSE OF BUSINESS ON SUCH DATE WITHOUT LIABILITY OF ANY PARTY TO ANY OTHER PARTY.
 
10.           MISCELLANEOUS.
 
(a)           Governing Law; Jurisdiction; Jury Trial.  All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of a ny dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT M AY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
 
(b)           Counterparts.  This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature.
 
(c)           Headings.  The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.
 
 
26
 
 
(d)           Severability.  If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision( s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.  The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
 
(e)           Entire Agreement; Amendments.  This Agreement, the Certificate of Designation and all other Transaction Documents supersede all other prior oral or written agreements between the Buyer, the Company, their affiliates and Persons acting on their behalf with respect to the matters discussed herein, and this Agreement, the other Transaction Document and the instruments referenced herein and therein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters.  No provis ion of this Agreement may be amended other than by an instrument in writing signed by the Company and the Buyer and any of their respective successors or assigns.  No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought.
 
(f)           Notices.  Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with an overnight courier service prior to such courier’s deadline for next Business Day delivery to the recipient (all delivery fees and charges prepaid), in each case properly addressed to the party to receive the same.  The add resses and facsimile numbers for such communications shall be:
 
If to the Company:
 
Bonds.com Group, Inc.
529 5th Avenue, 8th Floor
New York, New York 10017
Fax No:  (212) 946-3999
Attention:  Chief Executive Officer

 
27
 
 
with a copy (for informational purposes only) to:
 
Hill Ward Henderson
3700 Bank of America Plaza
101 East Kennedy Boulevard
Tampa, Florida 33602
Telephone: (813) 227-8484
Facsimile:  (813) 221-2900
Attention:  Mark A. Danzi, Esq.
 
If to the Buyer:
 
UBS Americas Inc.
677 Washington Boulevard
Stamford, CT 06901
Telephone: (203) 719-5427
Facsimile: (203) 719-5627
Attention:  Head of Traded Products - Legal
 
with a copy (for informational purposes only) to:
 
Bingham McCutchen LLP
399 Third Avenue
New York, New York 10022
Telephone: (212) 705-7278
Facsimile: (212) 702-3645
Attention: Kenneth A. Kopelman, Esq.
 
or to such other address, facsimile number and/or email address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change.  Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.
 
(g)           Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.  The Company and Buyer shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Buyer; provided, that the Buyer may assign some or all of its rights and obligations hereunder to an affiliate of the Buyer, without the consent of the Company, in which event such assignee shall be deemed to be the Buyer hereunder with respect to such assigned rights and obligations; provided that as a condition to any such assignment the assignee shall agree to be bound by the terms of this Agreement as t he Buyer hereunder and the Buyer shall not be relieved of liability for the performance of its obligations hereunder.

 
28
 
 
(h)           No Third Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
 
(i)           Survival of Representations and Warranties and Covenants.  The representations and warranties, covenants and agreements of the Company and the Buyer contained in this Agreement shall survive the Closings.  The Company shall not have any liability pursuant to Section 9(k)(i) unless a claim is made hereunder prior to the twelve month anniversary of the date of this Agreement, in which case such representation and warranty and covenant shall survive as to such claim until such claim has been finally resolved.
 
(j)           Further Assurances.  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
 
(k)           Indemnification.
 
(i)           Subject to Section 9(i) and the other provisions of this Section 9 (k), in consideration of the Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless the Buyer and each other holder of the Securities and all of their stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in this Agreement or any other certificate, instrument or document contemplated hereby (but not any other Transaction Document), (b) any breach of any covenant, agreement or obligation of the Company contained in this Agreement or the Stockholders’ Agreement or any other certificate, instrument or document contemplated hereby or thereby (but not any other Tran saction Document), or (c) any cause of action, suit or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company) and arising out of or resulting from (i) the execution, delivery, performance or enforcement of this Agreement or any other certificate, instrument or document contemplated hereby (but not any other Transaction Document), (ii) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, or (iii) the status of the Buyer or holder of the Securities as an investor in the Company pursuant to the transactions contemplated by this Agreement; provided that this clause (c) shall not apply if a court of competent jurisdiction has determined that the cause of action, suit or claim is a result of, relates to, arises out of the Buyer’s gross negligence, intentio nal misconduct or fraud.  Notwithstanding anything to the contrary contained in this Agreement: (i) the maximum aggregate amount of Indemnified Liabilities that may be recovered from the Company by the Indemnitees pursuant to this Section 9(k) shall be equal to the Purchase Price; and (ii) the Seller shall not be liable to the Indemnitees for any claim for indemnification pursuant to this Section 9(k) unless and until the aggregate amount of Indemnified Liabilities that may be recovered from the Seller equals or exceeds $100,000 (the “Basket Amount”), in which case the Seller shall be liable only for the Indemnified Liabilities pursuant to this Section 9(k) in excess of the Basket Amount. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under appl icable law.
 
 
29
 

(ii)          The Basket Amount, maximum liability and any Indemnified Liabilities pursuant to this Section 9(k) shall be calculated net of (A) payments actually recovered by an Indemnitee under any insurance policy with respect to such Indemnified Liabilities (net of collection costs, increases in premiums and retro-premiums) and (B) any actual recovery by the Indemnitee from any other Person with respect to such Indemnified Liabilities (net of collection costs); provided; however, that no Indemnitee shall have any obligation to mitigate its losses with respect to any Indemnified Liability.

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

 
30
 
 
(l)           No Strict Construction; Definition of Business Day.  The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.  As used herein, the term “Business Day” shall mean any day other than (a) a Saturday or Sunday and (b) any day on which banks are required or permitted to be closed in New York, New York.
 
(m)           Definition of Knowledge.  “Knowledge,” including the phrase “to the Company’s knowledge,” shall mean the knowledge after reasonable investigation of the officers and senior employees of the Company.
 
(n)           Remedies.  The Buyer and each holder of the Securities shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law.  Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law.  Furthermore, the Company recognizes that in the event that it fails to perform, obs erve, or discharge any or all of its obligations under the Transaction Documents, any remedy at law may prove to be inadequate relief to the Buyer.  The Company therefore agrees that the Buyer shall be entitled to seek temporary and permanent injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or other security.
 
[Signature Page Follows]

 
31
 
 
IN WITNESS WHEREOF, the Buyer and the Company have caused this Unit Purchase Agreement to be duly executed as of the date first written above.
 

   
COMPANY:
     
   
BONDS.COM GROUP, INC.
     
   
By:
 /s/ Michael O. Sanderson
   
Name:
 Michael O. Sanderson
   
Title:
 Chief Executive Officer


   
BUYER:
     
   
UBS AMERICAS INC.
     
   
By:
 /s/ Per Dyrvik
   
Name:
 Per Dyrvik
   
Title:
 Managing Director


   
By:
 /s/ Joan Lavis
   
Name:
 Joan Lavis
   
Title:
 Managing Director
 
 
 
 

Exhibit H-1
 
Restructuring of Convertible Debt

   
ORIGINAL
    
 
  
BORROWING
  
ORIGINAL
DESCRIPTION OF DEBT
  
DATE
  
PRINCIPAL
Second Amended and Restated Grid Secured Promissory Note - Valhalla Investment Partners, L.P.
  
11/09/09
   $ 300,000
Christopher D. Moody Revocable Trust - Convertible Promissory Note
  
09/22/08
   $ 1,236,836
Christopher D. Moody Revocable Trust - Convertible Promissory Note
  
12/12/08
   $ 50,000
Valhalla Investment Partners, L.P. Note Payable - 2008 Loan
  
09/22/08
   $ 203,800
Neil Moody Revocable Trust - Convertible Promissory Note
  
10/20/08
   $ 250,000
Calvin Klein - Tranche 1 - Convertible Promissory Note
  
09/22/08
   $ 200,000
Calvin Klein - Tranche 2 - Convertible Promissory Note
  
11/20/08
   $ 25,000
Calvin Klein - Tranche 3 - Convertible Promissory Note
  
01/30/09
   $ 75,000
John Klein - Tranche 1 - Convertible Promissory Note
  
09/22/08
   $ 125,000
John Klein - Tranche 2 - Convertible Promissory Note
  
11/20/08
   $ 100,000
John Klein - Tranche 3 - Convertible Promissory Note
  
01/30/09
   $ 50,000
John Klein - Tranche 4 - Convertible Promissory Note
  
06/08/09
   $ 50,000
Henryka & Roman Marszalek - Tranche 1 - Convertible Promissory Note
  
10/20/08
   $ 50,000
Henryka & Roman Marszalek - Tranche 2 - Convertible Promissory Note
  
06/08/09
   $ 25,000
John Edward Platecki - Tranche 1 - Convertible Promissory Note
  
10/20/08
   $ 25,000
John Edward Platecki - Tranche 2 - Convertible Promissory Note
  
06/08/09
   $ 25,000
Robert & Rosa Tobiansky - Tranche 1 - Convertible Promissory Note
  
11/20/08
   $ 25,000
Robert & Rosa Tobiansky - Tranche 2 - Convertible Promissory Note
  
12/12/08
   $ 25,000
Bob Jones - Tranche 1 - Convertible Promissory Note
  
04/30/09
   $ 400,000
Susan and Terry McCarthy - Tranche 1 - Convertible Promissory Note
  
06/08/09
   $ 50,000

EX-10.3 6 ex-10_3.htm SERIES B STOCKHOLDERS' AGREEMENT Unassociated Document

Exhibit 10.3
 
SERIES B STOCKHOLDERS’ AGREEMENT
 
This SERIES B STOCKHOLDERS’ AGREEMENT (this “Agreement”) is entered into as of October 19, 2010, by and among Bonds.com Group, Inc., a Delaware corporation (the “Company”), Bonds MX, LLC, a Delaware limited liability company (“Bonds MX”), and UBS Americas Inc., a Delaware corporation (“UBS”) and each other stockholder who shall, subsequent to the date hereof, join in and become a party to this Agreement (each a “Stockholder” and together with UBS and Bonds MX, the “Stockholders”).
 
A.           The Company and UBS are parties to that certain Unit Purchase Agreement, dated as of the date hereof, pursuant to which UBS is purchasing certain Units (as defined therein) of the Company (the “Transaction”).
 
B.           The execution of this Agreement by the Company and the Stockholders is a condition precedent to the consummation of the Transaction.
 
C.           In consideration of the benefits to be derived by the Company and the Stockholders from the consummation of the Transaction, the Company and the Stockholders desire to enter into this Agreement.
 
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein, the parties hereto agree as follows:
 
1.           Definitions.
 
(a)           “Board” means the Company’s board of directors.
 
(b)           “Business Day” means a day on which the New York Stock Exchange is open for business.
 
(c)           “Change of Control” means (i) a sale, transfer, lease, license or other disposition of all or substantially all of the Company’s assets or business, (ii) any merger, consolidation, reorganization or other business combination transaction of the Company with or into another Person, other than a transaction in which the holders of at least a majority of the shares of voting capital stock of the Company outstanding immediately prior to such transaction continue to hold (either by such shares remaining outstanding or by their being converted into shares of voting equity of the surviving Person) a majority of the total voting power represented by the shares of voting capital stock or other voting equity of the Company or the surviving Person outstanding immediately after such transaction, or (iii) the direct or indirect acquisition (including by way of new issuance by the Company (other than issuances of shares in respect of options or warrants existing as of the date hereof, but solely to the extent that the issuance triggered a Change of Control without factoring in any additional purchases made by such Person subsequent to the date hereof (other than purchases pursuant to the foregoing options and warrants)), re-sales of stock by existing shareholders to persons or entities that are not then parties to this Agreement, or a tender or exchange offer), in a single transaction or series of related transactions, by any Person, or Persons acting as a group, of beneficial ownership or a right to acquire beneficial ownership of shares of the Company’s capital stock representing at least a majority of the voting power of the then outstanding shares of capital stock of the Company.
 
 
 
 
 
(d)           “Common Securities” means shares of Common Stock or Warrants to purchase shares of Common Stock.
 
(e)           “Common Stock” means the common stock, par value $0.0001 per share, of the Company.
 
(f)           “Derivatives Transaction” means the sale, purchase or grant of any contract to purchase, contract to sell, option, forward, swap, warrant, scrip, right to subscribe to, call or commitment of any character whatsoever or in any combination, relating to, or securities or rights convertible into, or exercisable or exchangeable for, or the value of which is dependent (in whole or in part) on the value of, any shares of capital stock of the Company, whether such transaction may be settled in cash, securities or otherwise.
 
(g)           “Market Sale” means any sale, transfer or other disposition of Securities in (i) a “brokers’ transaction” (as defined in Rule 144 promulgated under the Securities Act of 1933, as amended, but excluding clause (4) of such definition for purposes hereof), or (ii) a Public Sale using a broker and where clauses (1) and (3) of such definition of “brokers’ transaction” would be satisfied notwithstanding that it’s a Public Sale, in each case, occurring in an exchange or other recognized market (the “Market”) where the average daily volume of the Company’s stock over the prior four weeks has been at least 50,000 shares.
 
(h)           “Permitted Transferee” means:
 
(i)           as to any Stockholder who is a natural person, (A) the successors in interest to such Stockholder, in the case of a transfer upon the death of such Stockholder, provided that such successors in interest would be a Permitted Transferee under clauses (i)(B) or (i)(D) of this definition, (B) such Stockholder’s spouse, parents and descendants (whether by blood or adoption, and including stepchildren) and the spouses of such persons, (C) such Stockholder, with respect to the disposition of the community property interest of such Stockholder’s spouse in all or any part of the Securities upon the death of such spouse, and any transfer occasioned by the incompetence of such Stockholder and (D) in the case of a transfer during such Stockholder’s lifetime, any Person in which no Person has any interest (directly or indirectly) except for any of such Stockholder, such Stockholder’s spouse, parents and descendants (whether by blood or adoption, and including stepchildren) and the spouses of such persons; provided, however, that in respect of any transfer by any Stockholder during such Stockholder’s lifetime pursuant to clause (B) or (D), such Stockholder shall retain voting power over all of the outstanding Shares being transferred;
 
(ii)          as to any Stockholder that is a trust, all the beneficiaries of which are natural persons, such beneficiaries or the grantor of the trust; provided, however, that if such trust is a Permitted Transferee under clause (i)(A) or (i)(D) of this definition, each such beneficiary or grantor of such trust is a Person who would be permitted to have an interest in such trust under such clause (i)(A) or (i)(D);
 
 
2
 

(iii)         as to any Stockholder that is a limited partnership or limited liability company, (A) any limited or general partner, member, officer, employee or affiliate of such Stockholder or (B) any affiliate of any limited or general partner or member of such Stockholder; and
 
(iv)         as to any Stockholder that is a corporation, all affiliates of such Stockholder.
 
(i)           “Person” means an individual, corporation, partnership, limited partnership, trust, association or other legal entity.
 
(j)           “Private Sale” means any sale, transfer or other disposition of Securities by a Selling Stockholder that is not a Market Sale or a Public Sale.
 
(k)           “Public Sale” means (i) a primary sale of any equity securities of the Company by the Company pursuant to a registration statement in which one or more Selling Stockholders participates as a selling stockholder, or (ii) a secondary sale of equity securities of the Company by Selling Stockholders pursuant to a registration statement filed either by the Company for the benefit of such Selling Stockholders or by such Selling Stockholders.  For avoidance of doubt, a Public Sale may also be a Market Sale if it satisfies clause (ii) of the definition thereof.
 
(l)           “Sales” means Private Sales, Public Sales and Market Sales, and includes Derivative Transactions.
 
(m)           “Securities” means Shares and Warrants.
 
(n)           “Selling Stockholder” means any Stockholder other than UBS.
 
(o)           “Series A Preferred Stock” means the Series A Participating Preferred Stock, par value $0.0001 per share, of the Company.
 
(p)           “Series A Securities” means shares of Series A Preferred Stock and Warrants to purchase shares of Series A Preferred Stock.
 
(q)           “Series B Preferred Stock” means the Series B Convertible Preferred Stock, par value $0.0001 per share, of the Company.
 
(r)           “Series B Securities” means shares of Series B Preferred Stock and Series B-1 Preferred Stock and Warrants to purchase shares of Series B Preferred Stock or Series B-1 Preferred Stock.
 
(s)           “Series B-1 Preferred Stock” means the Series B-1 Convertible Preferred Stock, par value $0.0001 per share, of the Company.
 
(t)           “Shares” means the shares of Series B Preferred Stock, Series B-1 Preferred Stock, Series A Preferred Stock and Common Stock.

 
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(u)           “Warrants” means warrants and other rights issued by the Company to purchase shares of Common Stock, Series A Preferred Stock, Series B Preferred Stock or Series B-1 Preferred Stock.
 
2.           UBS Tag-Along Rights With Respect to Sales of Series B Preferred Stock.
 
(a)           Tag-Along Rights.
 
(i)           If, at any time after the date of this Agreement, a Selling Stockholder desires to sell or otherwise transfer, directly or indirectly, through a Derivatives Transaction or otherwise, in a Private Sale 10% or more of the Series B Securities owned by such Selling Stockholder as of the date of this Agreement (or, if the Selling Stockholder has joined this Agreement after the date hereof, as of the date of such joinder), then UBS shall have the right to participate in the proposed Private Sale by such Selling Stockholder as provided in this Section 2(a).  The Selling Stockholder shall give written notice (the “Series B Tag-Along Notice”) to UBS of each proposed Sale at least ten (10) days prior to the proposed effective date of such Private Sale.  The Tag-Along Notice shall set forth the terms and conditions of the Private Sale, including the number of Series B Securities that the Selling Stockholder proposes to sell (the “Offered Series B Securities”), the proposed timing of the Private Sale, the consideration to be paid for the Offered Series B Securities, the identity of the proposed purchaser, and all other material terms and conditions of the Private Sale, including the proposed form of written agreement, if any.  UBS shall have the right to sell to such transferee(s) a portion of its Series B Securities equal to the product of (A) the number of Series B Securities then held by UBS and (B) a fraction (1) the numerator of which shall be the number of Offered Series B Securities, and (2) the denominator of which shall be the total number of Series B Securities held as of the date of this Agreement by the Selling Stockholder(s) participating in such Sale (as adjusted for stock splits, combinations and the like and as reduced by any Sales previously made by such Selling Stockholder(s) subsequent to the date of this Agreement).
 
(ii)          The tag-along rights provided in this Section 2(a) must be exercised by UBS within ten (10) days after its receipt of the Series B Tag-Along Notice, by delivery of a written notice to the Selling Stockholder, with a copy to the Company, indicating UBS’ desire to exercise its rights and specifying the number of Series B Securities (the “Tagging Series B Securities”) it wishes to sell.  The Tagging Series B Securities shall be in the same proportion of Shares and Warrants as the Offered Series B Securities.  The number of Series B Securities that the Selling Stockholder may sell pursuant to this Section 2 shall be reduced by the equivalent amount of the Tagging Series B S ecurities, unless (A) the transferee(s) have indicated their willingness to buy all of the Series B Securities that the Selling Stockholder and UBS desire to sell, (B) the Company, at its sole option, elects to redeem such Tagging Series B Securities or (C) the Selling Stockholder elects to purchase such Tagging Series B Securities. At the closing of such Sale, UBS shall deliver (A) all documents required to be executed in connection with such Private Sale and (B) the certificates for the Series B Securities being sold to the purchaser(s) thereof against receipt of the purchase price therefor paid by certified or bank check or wire transfer.
 
(iii)         In lieu of the transferee(s) purchasing the Tagging Series B Securities pursuant to this Section 2(a), (A) the Company may, at its sole option, elect to redeem such Tagging Series B Securities at the same price per share as such transferee(s) would have paid pursuant to the provisions of Section 2(a) and/or (B) the Selling Stockholder may elect to purchase such Tagging Series B Securities at the same price per share as such transferee(s) would have paid pursuant to the provisions of Section 2(a).  Any such redemption by the Company or purchase by the Selling Stockholder shall be completed prior to or simultaneously with the proposed Sale.
 
 
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(iv)         If UBS properly exercises its tag-along rights under this Section 2(a) and the Tagging Series B Securities are not (A) purchased by the purchaser of the Offered Series B Securities, (B) redeemed by the Company or (C) purchased by the Selling Stockholder, then the Selling Stockholder shall not be permitted to consummate the proposed Sale of the Series B Securities, and any such attempted Sale shall be null and void.
 
(v)          Any notice given by UBS in which it elects to exercise its tag-along rights provided in this Section 2(a) shall be irrevocable and shall constitute a binding agreement to sell (to either the proposed transferee(s) or the Selling Stockholder) or submit for redemption to the Company such Tagging Series B Securities as are included therein on the terms and conditions applicable to such sale or redemption.
 
(b)           Exclusions.  The tag-along and redemption rights provided in this Section 2 shall not apply: (i) in the case of a transfer to a Permitted Transferee, (ii) to a pledge that creates a mere security interest, provided that the pledgee thereof agrees in writing in advance to be bound by and comply with all applicable provisions of this Agreement to the same extent as if it were the Stockholder making such pledge, or (iii) any lien or pledge outstanding as of the date of this Agreement; provided that in the case of clause(s) (i) or (ii), the Stockholder shall deliver not ice to UBS of such pledge, gift or transfer and such Securities shall at all times remain subject to the terms and restrictions set forth in this Agreement and such transferee shall, as a condition to such transfer or pledge, deliver a counterpart signature page to this Agreement as confirmation that such transferee shall be bound by all the terms and conditions of this Agreement as a Stockholder (but only with respect to the securities so transferred to the transferee).  For the purposes of any calculation in this Section 2 using the number of Series B Securities held as of the date of this Agreement, such calculations shall, for a transferee pursuant to this Section 2(b), instead use the number of Series B Securities received by such transferee pursuant hereto.
 
3.           UBS Tag-Along Rights With Respect to Sales of Common Stock.
 
(a)           Private Sales.
 
(i)           If, at any time after the date of this Agreement, a Selling Stockholder desires to sell or otherwise transfer, directly or indirectly, through a Derivatives Transaction or otherwise, in a Private Sale all or any portion of such Selling Stockholder’s Common Securities then UBS shall have the right to participate in the proposed Private Sale by such Selling Stockholder as provided in this Section 3(a).  The Selling Stockholder shall give written notice (the “Tag-Along Notice”) to UBS of each proposed Sale at least ten (10) days prior to the proposed effective date of such Private Sale.  The Tag-Along Notice shall set forth the terms and conditions of the Private Sale, including the number of Common Securities that the Selling Stockholder proposes to sell (the “Offered Securities”), the proposed timing of the Private Sale, the consideration to be paid for the Offered Securities, the identity of the proposed purchaser, and all other material terms and conditions of the Private Sale, including the proposed form of written agreement, if any.  UBS shall have the right to sell to such transferee(s) a portion of its Series A Securities equal to the product of (A) the number of Series A Securities then held by UBS and (B) a fraction (1) the numerator of which shall be the number of Offered Securit ies, and (2) the denominator of which shall be the total number of Common Securities held as of the date of this Agreement by the Selling Stockholder(s) participating in such Sale (as adjusted for stock splits, combinations and the like and as reduced by any Sales previously made by such Selling Stockholder(s) subsequent to the date of this Agreement).  The price per share of Series A Preferred Stock to be paid by such transferee(s) shall be equal to one hundred (100) times the price to be paid by such transferee(s) for each share of Common Stock (subject to equitable adjustment for stock splits, combinations and the like that are made with respect to the Series A Preferred Stock where no corresponding adjustment is made to the Common Stock).
 
 
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(ii)          The tag-along rights provided in this Section 3(a) must be exercised by UBS within ten (10) days after its receipt of the Tag-Along Notice, by delivery of a written notice to the Selling Stockholder, with a copy to the Company, indicating UBS’ desire to exercise its rights and specifying the number of Series A Securities (the “Tagging Securities”) it wishes to sell.  The Tagging Securities shall be in the same proportion of Shares and Warrants as the Offered Securities.  The number of Common Securities that the Selling Stockholder may sell pursuant to this Section 3 shall be reduced by the equivalent amount of the Tagging Securities, unless (A) the transferee(s) have in dicated their willingness to buy all of the Common Securities and Series A Securities that the Selling Stockholder and UBS desire to sell, (B) the Company, at its sole option, elects to redeem such Tagging Securities or (C) the Selling Stockholder elects to purchase such Tagging Securities. At the closing of such Sale, UBS shall deliver (A) all documents required to be executed in connection with such Private Sale and (B) the certificates for the Series A Securities being sold to the purchaser(s) thereof against receipt of the purchase price therefor paid by certified or bank check or wire transfer.
 
(iii)         In lieu of the transferee(s) purchasing the Tagging Securities pursuant to this Section 3(a), (A) the Company may, at its sole option, elect to redeem such Tagging Securities at the same price per share as such transferee(s) would have paid pursuant to the provisions of Section 3(a) and/or (B) the Selling Stockholder may elect to purchase such Tagging Securities at the same price per share as such transferee(s) would have paid pursuant to the provisions of Section 3(a).  Any such redemption by the Company or purchase by the Selling Stockholder shall be completed prior to or simultaneously with the proposed Sale.
 
(iv)         If UBS properly exercises its tag-along rights under this Section 3(a) and the Tagging Securities are not (A) purchased by the purchaser of the Offered Securities, (B) redeemed by the Company or (C) purchased by the Selling Stockholder, then the Selling Stockholder shall not be permitted to consummate the proposed Sale of the Common Securities, and any such attempted Sale shall be null and void.
 
(v)          Any notice given by UBS in which it elects to exercise its tag-along rights provided in this Section 3(a) shall be irrevocable and shall constitute a binding agreement to sell (to either the proposed transferee(s) or the Selling Stockholder) or submit for redemption to the Company such Tagging Securities as are included therein on the terms and conditions applicable to such sale or redemption.
 
 
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(b)           Market Sales.
 
(i)           If, at any time after the date of this Agreement, a Selling Stockholder desires to sell or otherwise transfer, directly or indirectly, through a Derivatives Transaction or otherwise, in a Market Sale all or any portion of such Selling Stockholder’s Common Securities then UBS may request that the Company redeem certain Series A Securities held by UBS as provided in this Section 3(b), and the right of the Selling Stockholder to sell or otherwise transfer any Common Securities in such Market Sale shall be subject to the Company agreeing, at its sole option, to redeem such Series A Securities pursuant to this Section 3(b).  The Selling Stockholder shall give a Tag-Along Notice to UBS and the Company of each proposed Market Sale at least one (1) Business Day prior to the proposed effective date of such Market Sale, subject to the timing set forth in Section 3(b)(iii) below.  The Tag-Along Notice shall set forth the terms and conditions of the Market Sale, including the number of Offered Securities and the proposed timing of the Market Sale and the price per share (the “Redemption Price”) at which the shares of Series A Preferred Stock will be redeemed (which shall be equal to one hundred (100) times the volume weighted average for shares of Common Stock on the Market on the proposed date of such Market Sale (subject to equitable adjustment for stock splits, combinations and the like that are made with respect to the Series A Preferred Stock where no corresponding adjustment is made to the Common Stock)).  The Tag-Along Notice shall be delivered by hand delivery to the addresses set forth on Exhibit B hereto and confirmed telephonically to the Head of Strategic Investments for Equities and Fixed Income at (203) 719-4155, as such addresses and telephone numbers may be updated from time to time by UBS upon written notice to the Company and the Stockholders.
 
(ii)          If UBS exercises its tag-along redemption rights in accordance with Section 2(b)(iii) below, UBS shall request the Company to redeem a portion of its Series A Securities equal to the product of (A) the number of Series A Securities then held by UBS and (B) a fraction (1) the numerator of which shall be the number of Offered Securities, and (2) the denominator of which shall be the total number of Common Securities held as of the date of this Agreement by the Selling Stockholder(s) participating in such Sale (as adjusted for stock splits, combinations and the like and as reduced by any Sales previously made by such Selling Stockholder(s) subsequent to the date of this Agreement).
 
(iii)         If the Tag-Along Notice is delivered prior to 10 a.m. New York time, the tag-along redemption rights provided in this Section 3(b) must be exercised by UBS prior to 5 p.m., New York time, on the date of the Tag-Along Notice and if the Tag-Along Notice is delivered at or after 10 a.m. New York time, the tag-along redemption rights provided in this Section 3(b) must be exercised by UBS prior to 5 p.m., New York time, on the Business Day following its receipt of the Tag-Along Notice.  The tag-along redemption rights shall be exercised by delivery of a written notice (the “Redemption Notice”) to the Selling Stockholder, with a copy to the Company, indicating UBS’ desire to exercise its ri ghts and specifying the number of Tagging Securities it requests to have the Company redeem.  The Tagging Securities shall be in the same proportion of Shares and Warrants as the Offered Securities.  The Company must notify the Selling Stockholder and UBS whether it agrees, in its sole option, to effect the requested redemption within the following applicable timeframe: (A) if the Company receives UBS’ Redemption Notice at least two hours prior to 5 p.m., New York time, on the date of the Redemption Notice, then it must provide such notification prior to 5 p.m., New York time, on such date, or (B) if the Company receives UBS’ Redemption Notice less than two hours prior to 5 p.m. or after 5 p.m., New York time, on the date of the Redemption Notice, then it must provide such notification prior to 11:00 AM, New York time, on the Business Day following the date on which it received UBS’ Redemption N otice.  If the Company agrees, at its sole option, to redeem such Tagging Securities, it shall do so within four Business Days of the receipt by the Company of the Redemption Notice at the price per share set forth in the Tag-Along Notice; provided, however, that if the Selling Stockholder does not consummate the Market Sale set forth in the Tag-Along Notice, the Company shall not be required to redeem the Tagging Securities and for the purposes of this Agreement, the Tag-Along Notice shall be treated as having been withdrawn.

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

 
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(d)           Exclusions.  The tag-along and redemption rights provided in this Section 3 shall not apply: (i) in the case of a transfer to a Permitted Transferee, (ii) to a pledge that creates a mere security interest, provided that the pledgee thereof agrees in writing in advance to be bound by and comply with all applicable provisions of this Agreement to the same extent as if it were the Stockholder making such pledge, or (iii) any lien or pledge outstanding as of the date of this Agreement; provided that in the case of clause(s) (i) or (ii), the Stockholder shall deliver not ice to UBS of such pledge, gift or transfer and such Common Securities shall at all times remain subject to the terms and restrictions set forth in this Agreement and such transferee shall, as a condition to such transfer or pledge, deliver a counterpart signature page to this Agreement as confirmation that such transferee shall be bound by all the terms and conditions of this Agreement as a Stockholder (but only with respect to the securities so transferred to the transferee).  For the purposes of any calculation in this Section 3 using the number of Common Securities or Series A Securities held as of the date of this Agreement, such calculations shall, for a transferee pursuant to this Section 2(c), instead use the number of Securities received by such transferee pursuant hereto.
 
(e)           Volume Exclusions.  In addition to the exclusions set forth in Section 3(d) above, the tag-along rights and related obligations of the Company with respect to redemptions provided in Sections 3(a), 3(b) and 3(c) shall not apply to Sales by a Selling Stockholder of up to 10% of the Common Securities held by such Stockholder as of the date that such Stockholder first became party to this Agreement in any consecutive twelve month period.  The following calculation shall be used in determining the percentage of a Stockholder’s Common Securities that are being sold or otherwise transferred in any given Sale: (x) the number of Common Securities previously sold pursuant to this Sectio n 3(e) and proposed to be sold by a Stockholder divided by (y) the total number of Common Securities held by the Selling Stockholder as of the date of this Agreement (as adjusted for stock splits, combinations and the like).]
 
4.           Certain Sales.  At any time on or after October 19, 2015, to the extent UBS holds  any shares of Series B-1 Preferred Stock or Warrants for shares of Series B-1 Preferred Stock (the “Remaining Securities”), UBS may provide notice to the Company of its desire to sell all or any portion of the Remaining Securities.  Upon receipt of such notice, the Company will use its commercially reasonable efforts to assist UBS in facilitating a sale, transfer or other disposition of the Remaining Securities (which, for avoidance of doubt, shall not include any obligation to pursue or consummate a Change of Control ).  Alternatively, upon receipt of such notice, the Company may, at its sole option, redeem the Remaining Securities at a price per share equal to (x) the number of shares of Common Stock into which a share of Series B-1 Preferred Stock would be convertible pursuant to Section 5(b) of the Certificate of Designation relating to the Series B-1 Preferred Stock, multiplied by (y) the fair market value of a share of Common Stock as determined in accordance with Section 3(d) of the Certificate of Designation relating to the Series A Preferred Stock.
 
5.           No Mandatory Redemption.  For avoidance of doubt and notwithstanding anything to the contrary herein, any redemption of Shares or other securities by the Company referenced herein shall not be mandatory and shall be made only at the Company’s sole and exclusive option, unless and then only to the extent specifically agreed to by the Company (at its sole and exclusive option) in writing in response to a redemption request made under this Agreement.
 
6.           Miscellaneous
 
(a)           Notices.  Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one business day after deposit with an overnight courier service prior to such service’s deadline for next-business day delivery to the recipient (all delivery charges prepaid), in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:

 
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If to the Company:
 
Bonds.com Group, Inc.
529 5th Avenue, 8th Floor
New York, New York 10017
Facsimile:  (212) 946-3999
Attention:  Chief Executive Officer

with a copy (for informational purposes only) to:
 
Hill Ward Henderson
3700 Bank of America Plaza
101 East Kennedy Boulevard
Tampa, Florida 33602
Telephone: (813) 227-8484
Facsimile:  (813) 221-2900
Attention:  Mark A. Danzi, Esq.
 
If to any Stockholder, at the address and facsimile number set forth on Exhibit A hereto,
 
or to such other address, facsimile number and/or email address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change.  Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.
 
(b)           Further Instruments and Actions.  The Company and each Stockholder shall execute such further instruments and take such further action as may reasonably be necessary to carry out the intent of this Agreement and to enforce rights and obligations pursuant hereto.  No Stockholder shall vote any Shares, or to take any other action, that would defeat, impair, be inconsistent with or adversely affect the stated intentions of the parties under this Agreement.
 
(c)           Additional Stockholders.  Notwithstanding anything to the contrary contained herein, if after the date hereof, any person or entity acquires Series B Securities, the Company shall use its reasonable best efforts to have such stockholder become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement and such stockholder shall thereafter be deemed a “Stockholder” for all purposes hereunder.  In addition, the Company will not issue any Series B Securities unless the purchaser thereof becomes a pa rty to this Agreement by executing and delivering an additional counterpart signature page to this Agreement and such stockholder shall thereafter be deemed a “Stockholder” for all purposes hereunder  No action or consent by the Stockholders shall be required for such joinder to this Agreement by such additional stockholder(s), so long as such additional stockholder has agreed in writing to be bound by all of the obligations as a “Stockholder” hereunder.

 
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(d)           Successors and Assigns.  This Agreement and the rights and obligations of the parties hereunder shall inure to the benefit of, and be binding upon, their respective successors, assigns and legal representatives.  The rights of the Stockholders hereunder are only assignable or transferable in connection with the transfer of any shares held by such Stockholder.  The rights of UBS hereunder shall only be transferable to an affiliate of UBS.
 
(e)           Governing Law; Jurisdiction; Jury Trial.  All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of a ny dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT M AY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
 
(f)           Counterparts.  This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature.
 
(g)           Headings.  The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.
 
(h)           Severability.  If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereo f and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.  The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 
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(i)           Entire Agreement; Amendments.  This supersedes all other prior oral or written agreements between the Company, the Stockholders, their affiliates and Persons acting on their behalf with respect to the matters discussed herein, and this Agreement contains the entire understanding of the parties with respect to the matters covered herein and therein.  No provision of this Agreement may be amended other than by an instrument in writing signed by the Company, the Stockholders and any of their respective successors or assigns.  No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought.
 
(j)           No Third Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
 
(k)           Injunctive Relief.  Without limiting the right of any party to seek any remedy available to such party for the breach or threatened breach of this Agreement, the parties agree that injunctive relief may be sought by any party to enjoin any breach or threatened breach of this Agreement without having to prove irreparable harm or actual damages and each party hereto waives any defense to any such action for injunctive relief that there is an adequate remedy at law for such breach or threatened breach.
 
(l)           Copies of this Agreement.  The Company shall supply, free of charge, a copy of this Agreement to any Stockholder upon written request from such Stockholder to the Company at its principal office.
 
(m)           Termination. The provisions of this Agreement shall terminate upon the earlier to occur of (i) the date UBS no longer owns any Shares or (ii) a Change of Control pursuant to which UBS shares of Series A Preferred Stock are treated in accordance with Section 3 of the Certificate of Designation relating to the Series A Preferred Stock and shares of Series B-1 Preferred Stock are treated in accordance with Section 3 of the Certificate of Designation relating to the Series B-1 Preferred Stock.
 
[The remainder of this page has been intentionally left blank.]
 
 
 
 
 
 
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
 

   
BONDS.COM GROUP, INC.
     
   
By:
  /s/ Michael O. Sanderson
   
Name:
 Michael O. Sanderson
   
Title:
 CEO


   
UBS AMERICAS INC.
     
   
By:
  /s/ Per Dyrvik 
   
Name:
 Per Dyrvik
   
Title:
 Managing Director


   
By:
  /s/ Joan Lavis 
   
Name:
 Joan Lavis
   
Title:
 Managing Director


   
BONDS MX, LLC
     
   
By:
  /s/ Hugh Regan 
   
Name:
 Hugh Regan
   
Title:
 Member Manager
 
 
 

[Signature Page to the Stockholders’ Agreement]
 EX-10.4 7 ex-10_4.htm REGISTRATION RIGHTS AGREEMENT Unassociated Document
 
Exhibit 10.4

 
REGISTRATION RIGHTS AGREEMENT
 
REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of October 19, 2010, by and among Bonds.com Group, Inc., a Delaware corporation (the “Company”), and UBS Americas Inc., a Delaware corporation, Bonds MX, LLC, a Delaware limited liability company, and each other buyer who shall, subsequent to the date hereof, join in and become a party to this Agreement (each a “Buyer” and collectively, the “Buyers”).
 
WHEREAS:
 
A.           Contemporaneously with the execution hereof, pursuant to one or more Unit Purchase Agreements (each, a “Unit Purchase Agreement”), the Company has agreed, upon the terms and subject to the conditions set forth in the Unit Purchase Agreements, to issue and sell to Buyers units consisting of (i) shares of the Company’s Series B Preferred Stock (the “Series B Preferred Stock”) or Series B-1 Preferred Stock (the “Series B-1 Preferred Stock”); (ii) warrants which will be exercisable to purchase shares of the Company’s Common Stock or Series A Participating Preferred Stock and (iii) the right to receive shares of the Company’s Common Stock or Series A Participating Preferred Stock if the Company fails to meet the performance targets set forth therein (collectively, together with any capital stock of the Company issued thereon as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise, the “Securities”).
 
B.           The transactions contemplated by the Unit Purchase Agreements are part of an offering (the “Offering”) of up to 100 units of securities of the Company for an aggregate purchase price of $10,000,000 which will continue through October 15, 2010, unless the Company elects to extend the period to a date no later than January 31, 2011.
 
C.           To induce the Buyers to execute and deliver the Unit Purchase Agreements, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “1933 Act”), and applicable state securities laws.
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each of the Buyers hereby agree as follows:
 
1.           Definitions. As used in this Agreement, the following terms shall have the following meanings:
 
a.           “1933 Act” means the Securities Act of 1933, as amended.
 
b.           “1934 Act” means the Exchange Act of 1934, as amended.
 
c.           “Business Day” means any day other than Saturday, Sunday or any other day on which commercial banks in the City of New York are authorized or required by law to remain closed.

 
 
 

d.           “Buyer” means a Buyer or any transferee or assignee thereof to whom a Buyer assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 8 and any transferee or assignee thereof to whom a transferee or assignee assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 8.
 
e.           “Effective Date” means the date a Registration Statement is declared effective by the SEC.
 
f.           “Effectiveness Deadline” means the date that is 150 days after the date of the Filing Deadline.
 
g.           “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.
 
h.           “register,” “registered,” and “registration” refer to a registration effected by preparing and filing one or more Registration Statements (as defined below) in compliance with the 1933 Act and pursuant to Rule 415 and the declaration or ordering of effectiveness of such Registration Statement(s) by the SEC.
 
i.           “Registrable Securities” means (i) any Securities that are shares of Common Stock and (ii) any shares of Common Stock that are issued or issuable upon conversion or exercise of Securities.
 
j.           “Registration Statement” means a registration statement or registration statements of the Company filed under the 1933 Act covering the Registrable Securities.
 
k.           “Required Holders” means the holders of at least a majority of the Registrable Securities.
 
l.            “Rule 415” means Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous or delayed basis.
 
m.          “SEC” means the United States Securities and Exchange Commission.
 
2.           Registration.
 
a.           Mandatory Registration.
 
(i)           The Company agrees, as soon as practicable after date of the date that is six months after the final closing date of the Offering but no later than five (5) business days after such date (the “Filing Deadline”), to file with the SEC a Registration Statement under the Act covering the resale of all of the Registrable Securities; provided, that the Company shall not be required to register for resale pursuant to this Section 2(a) any Registrable Securities that may be sold without restriction by a Buyer pursuant to Rule 144 promulgated under the 1933 Act. The Company shall use commercially reasonable efforts to have the Registration Stateme nt declared effective by the SEC as soon as practicable, but in no event later than the Effectiveness Deadline. By 9:30 am on the Business Day following the Effective Date, the Company shall file with the SEC in accordance with Rule 424 under the 1933 Act, the final prospectus to be used in connection with sales pursuant to such Registration Statement. The Company and each Buyer hereby acknowledge that in accordance with Rule 415, the Company may not be allowed to register all of the Registrable Securities in the Registration Statement. If this occurs, the Company, upon a request by the Required Holders, shall be required to file additional Registration Statements to include any of the Registrable Securities that were not registered in the Registration Statement, provided that such Registrable Securities can be registered at such time to comply with Rule 415.

 
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(ii)           Ineligibility for Form S-3. In the event that Form S-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (i) register the resale of the Registrable Securities on another appropriate form reasonably acceptable to the Required Holders and (ii) undertake to register the Registrable Securities on Form S-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by the SEC.
 
(iii)           Delay at Company’s Option.  Notwithstanding the foregoing obligations, if the Company furnishes to the Buyers a certificate signed by the Company’s chief executive officer stating that in the good faith judgment of the Company’s Board of Directors it would be materially detrimental to the Company and its stockholders for a Registration Statement contemplated by Section 2(a) to either become effective or remain effective for as long as such Registration Statement(s) otherwise would be required to remain effective, because such action would (A) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (B) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (C) render the Company unable to comply with requirements under the 1933 Act or 1934 Act, then the Company shall have the right to defer taking action with respect to such filing, and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period of not more than one hundred twenty (120) days after the Filing Deadline.
 
b.           Piggy Back Registration Rights.  If, at any time there is not an effective Registration Statement covering the Registrable Securities, and the Company shall determine to prepare and file with the SEC a Registration Statement relating to an offering for its own account or the account of others under the 1933 Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the 1933 Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to the Buyers a written notice of such determination at least twenty days prior to the filing of any such Registration Statement and shall automatically include in such Registration Statement all Registrable Securities for resale and offer on a continuous basis pursuant to Rule 415; provided, however, that (i) if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the Registration Statement filed in connection with such registration, the Company determines for any reason not to proceed with such registration, the Company will be relieved of its obligation to register any Registrable Securities in connection with such registration, (ii) in case of a determination by the Company to delay registration of its securities, the Company will be permitted to delay the registration of Registrable Securities for the same period as the delay i n registering such other securities, (iii) each Buyer is subject to confidentiality obligations with respect to any information gained in this process or any other material non-public information he, she or it obtains, (iv) each Buyer is subject to all applicable laws relating to insider trading or similar restrictions; and (v) if all of the Registrable Securities of the Buyers cannot be so included due to Rule 415, then the Company may reduce the number of the Buyers’ Registrable Securities covered by such Registration Statement to the maximum number which would enable the Company to conduct such offering in accordance with the provisions of Rule 415.  The Company shall cause any Registration Statement filed under Section 2.a to be declared effective under the 1933 Act as promptly as possible after the filing thereof. By 5:00 p.m. Eastern Time on the business day immediately following the Effective Date of such Registration Statement, the Company shall file with the S EC in accordance with Rule 424 under the 1933 Act the final prospectus to be used in connection with sales pursuant to such Registration Statement (whether or not such filing is technically required under such Rule).

 
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c.           Allocation of Registrable Securities; Cut Back. The initial number of Registrable Securities included in any Registration Statement and any increase in the number of Registrable Securities included therein shall be allocated pro rata among the Buyers according to the total amount of securities entitled to be included therein owned by each Buyer or in such other proportions as shall mutually be agreed to by such Buyers. In no event shall the Company include any securities other than Registrable Securities on any Registration Statement without the prior written consent of the Required Holders; provided, that to the extent required by any agreement or covenant of the Company in effect on the date hereof granting registration rights to any holder of its securities, the Company may include such securities on any Registration Statement without the consent of the Required Holders, even if such inclusion reduces the number of Registrable Securities covered by such Registration Statement.  In the event all of the Registrable Securities cannot be included in a Registration Statement under this Section 2 due to Rule 415 or underwriter cutbacks, then the Company, unless otherwise prohibited by the SEC, shall cause the Registrable Securities of the Buyers to be included in such Registration Statement to be reduced pro rata based on the number of Registrable Securities held by all of the Buyers.
 
3.           Registration Procedures. At such time as the Company is obligated to file a Registration Statement with the SEC pursuant to Section 2, the Company will use commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:
 
a.           The Company shall keep each Registration Statement effective pursuant to Rule 415 at all times until the earlier of (i) the date as of which each Buyer may sell all of the Registrable Securities covered by such Registration Statement without restriction pursuant to Rule 144(k) (or any successor thereto) promulgated under the 1933 Act and is not otherwise prohibited by the SEC or any statute, rule, regulation or other applicable law from selling any such Registrable Securities pursuant to such Rule or (ii) the date on which each Buyer shall have sold all of the Registrable Securities covered by such Registration Statement (the “Registration Period”). The Company shall use commercially reasonable efforts to ensure that each Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein (in the case of prospectuses, in the light of the circumstances in which they were made) not misleading.

 
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b.           The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration Statement and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep such Registration Statement effective at all times during the Registration Period, and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of i n accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement. In the case of amendments and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 3(b)) by reason of the Company filing a report on Form 10-Q, Form 10-K or any analogous report under the 1934 Act, the Company shall have incorporated such report by reference into such Registration Statement, if applicable, or shall file such amendments or supplements with the SEC on the same day on which the 1934 Act report is filed which created the requirement for the Company to amend or supplement such Registration Statement.
 
c.           The Required Holders shall have the right to select one legal counsel to review and oversee any registration pursuant to this Agreement (“Legal Counsel”), as designated by the Required Holders. The Company and Legal Counsel shall reasonably cooperate with each other in performing the Company’s obligations under this Agreement.  The Company shall (A) permit Legal Counsel to review and comment upon (i) a Registration Statement at least five (5) Business Days prior to its filing with the SEC and (ii) all amendments and supplements to all Registration Statements (except for Annual Reports on Form 10-K, and Reports on Form 10- Q and any similar or successor reports) within a reasonable number of days prior to their filing with the SEC, and (B) not file any Registration Statement or amendment or supplement thereto in a form to which Legal Counsel reasonably objects. The Company shall not submit a request for acceleration of the effectiveness of a Registration Statement or any amendment or supplement thereto without the prior approval of Legal Counsel, which consent shall not be unreasonably withheld. The Company shall furnish to Legal Counsel, without charge, (i) copies of any correspondence from the SEC or the staff of the SEC to the Company or its representatives relating to any Registration Statement, (ii) promptly after the same is prepared and filed with the SEC, one copy of any Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference, if requested by the Buyers, and all exhibits and (iii) upon the effectiveness of any Registration Statem ent, one copy of the prospectus included in such Registration Statement and all amendments and supplements thereto. The Company shall reasonably cooperate with Legal Counsel in performing the Company’s obligations pursuant to this Section 3.
 
d.           The Company shall furnish to the Buyers, without charge, (i) promptly after the same is prepared and filed with the SEC, at least one copy of such Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference, if requested by the Buyers, all exhibits and each preliminary prospectus, (ii) upon the effectiveness of any Registration Statement, ten (10) copies of the prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as the Buyers may reasonabl y request) and (iii) such other documents, including copies of any preliminary or final prospectus, as the Buyers may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by the Buyers.

 
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e.           The Company shall use commercially reasonable efforts to (i) register and qualify, unless an exemption from registration and qualification applies, the resale by Buyers of the Registrable Securities covered by a Registration Statement under such other securities or “blue sky” laws of all applicable jurisdictions in the United States, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and q ualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(e), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify Legal Counsel and Buyers of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.
 
f.           The Company shall notify Legal Counsel and Buyers in writing of the happening of any event, as promptly as practicable after becoming aware of such event, as a result of which the prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided that in no event shall such notice contain any material, nonpublic information), and, subject to Section 3(o), promptly prepare a supplement or amendment to such Registration Statement to correct such untrue statement or omission, and deliver ten (10) copies of such supplement or amendment to Legal Counsel and Buyers (or such other number of copies as Legal Counsel or Buyers may reasonably request). The Company shall also promptly notify Legal Counsel and Buyers in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to Legal Counsel and Buyers by facsimile on the same day of such effectiveness and by overnight mail), (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, and (iii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be approp riate.

 
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g.           The Company shall use commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify Legal Counsel and Buyers of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.
 
h.           The Company shall notify the Buyers in writing of the happening of any event, as promptly as practicable after becoming aware of such event, as a result of which the prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided that in no event shall such notice contain any material, nonpublic information), and, subject to Section 3(o), promptl y prepare a supplement or amendment to such Registration Statement to correct such untrue statement or omission, and deliver ten (10) copies of such supplement or amendment to the Buyers (or such other number of copies as the Buyers may reasonably request).
 
i.           The Company shall promptly notify the Buyers in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to the Buyers by facsimile on the same day of such effectiveness and by overnight mail), (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, and (iii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate.
 
j.            The Company shall hold in confidence and not make any disclosure of information concerning the Buyers provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement. The Company agrees that it shall, upo n learning that disclosure of such information concerning a Buyer is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to the Buyer and allow such Buyer, at the Buyer’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.
 
k.           The Company shall cooperate with the Buyers and, to the extent applicable, facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the Buyers may reasonably request and registered in such names as the Buyers may request.

 
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l.            If requested by a Buyer, the Company shall (i) as soon as practicable incorporate in a prospectus supplement or post-effective amendment such information as the Buyer reasonably requests to be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) as soon as practicable make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplem ent or post-effective amendment; and (iii) as soon as practicable, supplement or make amendments to any Registration Statement if reasonably requested by a Buyer holding any Registrable Securities.
 
m.          The Company shall use commercially reasonable efforts to cause the Registrable Securities covered by a Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities.
 
n.           The Company shall otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder.
 
o.           Notwithstanding anything to the contrary herein, at any time after the Effective Date, the Company may delay the disclosure of material, non-public information concerning the Company the disclosure of which at the time is not, in the good faith opinion of the Board of Directors of the Company and its counsel, in the best interest of the Company and, in the opinion of counsel to the Company, otherwise required (a “Grace Period”); provided, that the Company shall promptly (i) notify the Buyers in writing of the existence of material, non-public information giving rise to a Grace Period (provided tha t in each notice the Company will not disclose the content of such material, non-public information to the Buyers) and the date on which the Grace Period will begin, and (ii) notify the Buyers in writing of the date on which the Grace Period ends; and, provided further, that no Grace Period shall exceed sixty (60) consecutive days and during any three hundred sixty five (365) day period such Grace Periods shall not exceed an aggregate of one hundred twenty (120) days and the first day of any Grace Period must be at least two (2) trading days after the last day of any prior Grace Period (each, an “Allowable Grace Period”). For purposes of determining the length of a Grace Period above, the Grace Period shall begin on and include the date the Buyers receive the notice referred to in clause (i) and shall end on and include the later of the date the Buyers receive the notice referred to in clause (ii) and the date referred to in such no tice. The provisions of Section 3(g) hereof shall not be applicable during the period of any Allowable Grace Period. Upon expiration of the Grace Period, the Company shall again be bound by the first sentence of Section 3(f) with respect to the information giving rise thereto unless such material, non-public information is no longer applicable. Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of a Buyer in connection with any sale of Registrable Securities with respect to which such Buyer has entered into a contract for sale, and delivered a copy of the prospectus included as part of the applicable Registration Statement (unless an exemption from such prospectus delivery requirements exists), prior to the Buyer’s receipt of the notice of a Grace Period and for which the Buyer has not yet settled.

 
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4.           Obligations of the Buyers.
 
a.           At least five Business Days prior to the first anticipated filing date of a Registration Statement, the Company shall notify each Buyer in writing of the information the Company requires from such Buyer if such Buyer elects to have any of such Buyer’s Registrable Securities included in such Registration Statement. It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a Buyer that such Buyer shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Secur ities held by it as shall be reasonably required to effect the effectiveness of the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request.
 
b.           Each Buyer, by such Buyer’s acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Registration Statement hereunder, unless such Buyer has notified the Company in writing of such Buyer’s election to exclude all of such Buyer’s Registrable Securities from such Registration Statement.
 
c.           Each Buyer agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(g) or the first sentence of Section 3(f), such Buyer will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until such Buyer’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 3 (g) or the first sentence of Section 3(f) or receipt of notice that no supplement or amendment is required. Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of a Buyer in accordance with the terms of the Unit Purchase Agreement in connection with any sale of Registrable Securities with respect to which such Buyer has entered into a contract for sale prior to such Buyer’s receipt of a notice from the Company of the happening of any event of the kind described in Section 3(g) or the first sentence of Section 3(f) and for which such Buyer has not yet settled.
 
d.           Each Buyer covenants and agrees that it will comply with the prospectus delivery requirements of the 1933 Act as applicable to it or an exemption therefrom in connection with sales of Registrable Securities pursuant to the Registration Statement.
 
5.           Expenses of Registration. All reasonable expenses, other than underwriting discounts, commissions and stock transfer taxes with respect to the Registrable Securities, incurred in connection with registrations, filings or qualifications pursuant to Section 2(a), including, without limitation, all registration, listing and qualifications fees, printers and ac counting fees, and fees and disbursements of counsel for the Company and one counsel for the Buyers (such fees and disbursements of counsel for the Buyers shall not exceed $20,000) shall be paid by the Company.

 
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6.           Indemnification.  In the event any Registrable Securities are included in a Registration Statement under this Agreement:
 
a.           To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Buyer, the directors, officers, managers, members, partners, employees, agents, representatives of, and each Person, if any, who controls each Buyer within the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Person”), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or several, (collectively, “Claims”) incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto (“Indemnified Damages”), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered (“Blue Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in the light of the circumstances under which the statements therein were made, not misleading, (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement or (iv) any violation of this Agreement (the matters in the foregoing clauses (i) through (iv) being, collectively, “Violations”). Subject to Section 6(c), the Company shall reimburse the Indemnified Persons, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): shall not apply to a Claim (a) arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in wri ting to the Company by or on behalf of any Buyer expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto or the omission or alleged omission in such written information to state a material fact required to be stated therein or necessary to make the statements therein not misleading, if such prospectus was timely made available by the Company pursuant to Section 3(d); (b) to the extent such Claim is based on a failure of the Buyer to deliver or to cause to be delivered the prospectus made available by the Company, including a corrected prospectus, if such prospectus or corrected prospectus was timely made available by the Company pursuant to Section 3(d); (c) in which amounts are paid in se ttlement of any Claim and such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld or delayed; (d) in which a Buyer fails to cease all offers and sales of Registrable Securities in accordance with Section 4(c) herein; and (e) arising out of or based upon a breach by any Buyer of such Buyer’s obligations set forth herein. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Buyers pursuant to Section 8.

 
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b.           In connection with any Registration Statement in which any Buyer is participating, to the fullest extent permitted by law, such Buyer agrees to severally and not jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its officers who signs the Registration Statement and each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act (each, an “Indemn ified Party”), against any Claim or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Buyer expressly for use in connection with such Registration Statement; and, subject to Section 6(c), such Buyer will reimburse any legal or other expenses reasonably incurred by an Indemnified Party in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6(b) and the agreemen t with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Buyer, which consent shall not be unreasonably withheld or delayed. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Buyers pursuant to Section 8.
 
c.           Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so d esires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses of not more than one counsel for such Indemnified Person or Indemnified Party to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding. In the case of an Indemnified Person, legal counsel referred to in the immediately preceding sentence shall be selected by the Required Holders. The Indemnified Party or Indemnified Person 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 or Indemnified Person which relates to such action or Claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person reasonably apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnified Party or Indemnified Person, consent to entry of any judgme nt or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such Claim or litigation, and such settlement shall not include any admission as to fault on the part of the Indemnified Party. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action.

 
11
 
 
d.           The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred.
 
e.           The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.
 
7.           Contribution. To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no Person involved in the sale of Registrable Securities which Person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with such sale shall be entitled to contribution from any Person involved in such sale of Registrable Securities who was not guilty of fraudulent misrepresentation; and (ii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities pursuant to such Registration Statement.
 
8.           Assignment of Registration Rights. The rights under this Agreement shall be automatically assignable by the Buyer to any transferee of at least 25% of such Buyer’s Registrable Securities if: (i) the Buyer agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, contemporaneous with such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee, and (b) the securities with respect to which suc h registration rights are being transferred or assigned; (iii) such transfer is made pursuant to a privately negotiated, non-market disposition of Registrable Securities and immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the 1933 Act and applicable state securities laws; and (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein.

 
12
 
 
9.           Amendment of Registration Rights. Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Required Holders. Any amendment or waiver effected in accordance with this Section 9 shall be binding upon each Buyer and the Company. No such amendment shall be effective to the extent that it applies to less than all of the holders of the Registrable Securities. 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 this Agreement unless the same consideration also is offered to all of the parties to this Agreement.
 
10.           Miscellaneous.
 
a.           A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities.
 
b.           Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally, (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party), so long as such facsimile is followed by mail delivery of the same information contained in such facsimile, or (iii) one Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses for such communications shall be:
 
If to Company:
 
Bonds.com Group, Inc.
529 5th Avenue, 8th Floor
New York, New York 10017
Facsimile:  (212) 946-3999
Attention:  Chief Executive Officer
 
with a copy to:
 
Hill Ward Henderson
3700 Bank of America Plaza
101 East Kennedy Boulevard
Tampa, Florida 33602
Telephone: (813) 227-8484
Facsimile:  (813) 221-2900
Attention:  Mark A. Danzi, Esq
 
If to a Buyer, to the address set forth underneath such Buyer’s name on the signature page hereto.

 
13
 

Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, or (B) provided by a courier or overnight courier service shall be rebuttable evidence of personal service, or receipt from a nationally recognized overnight delivery service in accordance with clause (i) or (iii) above, respectively.
 
c.           Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.
 
d.           All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any tra nsaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUD ICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
 
e.           This Agreement and the instruments referenced herein constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement and the instruments referenced herein supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof.
 
f.           Subject to the requirements of Section 8, this Agreement shall inure to the benefit of and be binding upon the permitted successors and assigns of each of the parties hereto.
 
g.          The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
 
h.          This Agreement may be executed in identical counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

 
14
 
 
i.           Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
 
j.           All consents and other determinations required to be made by any Buyer pursuant to this Agreement shall be made, unless otherwise specified in this Agreement, by the Required Holders.
 
k.          The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party.
 
l.           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.
 
m.          Currency. As used herein, “Dollar”, “US Dollar” and “$” each mean the lawful money of the United States.
 
Remainder of Page Intentionally Left Blank.
 
 
 
 

 
 
15
 

IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first written above.
 
 
   
COMPANY:
     
   
BONDS.COM GROUP, INC.
     
   
By:
  /s/ Michael O. Sanderson 
   
Name:
 Michael O. Sanderson
   
Title:
 CEO

 
   
BUYERS:
     
   
UBS AMERICAS INC.
     
   
By:
  /s/ Per Dyrvik 
   
Name:
 Per Dyrvik 
   
Title:
 Managing Director
       
       
   
By:
  /s/ Joan Lavis 
   
Name:
 Joan Lavis 
   
Title:
 Managing Director 

 
   
Address for notices:
     
   
677 Washington Boulevard
Stamford, CT 06901
Fax: (203) 719-5627
Attention: Head of Traded Products--Legal

 
   
BUYERS:
     
   
BONDS MX, LLC
     
   
By:
  /s/ Hugh Regan 
   
Name:
 Hugh Regan 
   
Title:
 Member Manager 
EX-10.5 8 ex-10_5.htm AMENDMENT 2 TO CONVERTIBLE SECURED PROMISSORY NOTE Unassociated Document

Exhibit 10.5
 
AMENDMENT NO. 2 TO SECURED CONVERTIBLE PROMISSORY NOTES

This AMENDMENT NO. 2 TO SECURED CONVERTIBLE PROMISSORY NOTES (this “Amendment”), dated as of October 19, 2010, is entered into by and among BONDS.COM GROUP, INC., a Delaware corporation (the “Company”), and BURTON W. WIAND (the “Majority Holder”), in his capacity as the Receiver appointed by the United States District Court for the Middle District of Florida, Tampa Division, in the action styled Securities and Exchange Commission v. Arthur Nadel, et al., Case No: 8:09-cv-87-T-26TBM.

BACKGROUND

A.           The Company, the Majority Holder and the other persons and entities identified on Schedule I to this Amendment (the Majority Holder and such other persons and entities, the “Holders”) are parties to a Secured Convertible Note and Warrant Purchase Agreement, dated on or about September 24, 2008 (the “Purchase Agreement”) pursuant to which, among other things, the Company issued Secured Convertible Promissory Notes, dated on or about September 22, 2008, to the Holders in the principal amounts set for th on Schedule I (collectively, the “Notes”).

B.           The Notes provide that they may be amended with the written agreement of holders of Notes representing at least a majority of the principal amount outstanding under all of the Notes.  The Majority Holder holds Notes representing at least a majority of the principal amount outstanding under the Notes.

C.           On September 21, 2010, the Company and the Majority Holder entered into an Amendment No. 1 to Secured Convertible Promissory Notes pursuant to which, among other things, the maturity date of the notes was extended thirty (30) days from September 22, 2010 until Ocotber 22, 2010.

D.           The Company is seeking to raise up to $10,000,000 through the sale of equity securities pursuant to the terms of the Unit Purchase Agreement substantially in the form provided to the Receiver’s counsel on the date hereof and as supplemented by the version thereof to be filed by the Company with the U.S. Securities and Exchange Commission pursuant to a Current Report on Form 8-K (the “Unit Purchase Agreement”) and similar purchase agreements with other propsective investors (collectively, the “Proposed Financing”).  The Company requires capital to continue its operations.  Prospective investors in the Proposed Financing have indicated they will not invest in the Company unless the terms of the Notes are revised in accordance with the terms of this Amendment.  The Majority Holder recognizes there is significant risk the Company will not be able to repay any portion of the Notes if the Company is unable to raise additional capital.  Accordingly, the Majority Holder is agreeing to the revisions to the Notes provided for in this Amendment, among other reasons, in order to improve the chances the Company will repay all or a portion of the Notes and in order to induce the prospective investors to invest in the Company.  The Majority Holder acknowledges there is no guarantee all or any portion of the Proposed Financing will be consummated or that changes will not be made to the terms of the Proposed Financing.

AGREEMENT

In consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

Section 1.             Amendment Applies to All Notes.  Pursuant to Section 8 of each of the Notes, this Amendment amends and changes the terms of all of the Notes in the manner set forth herein.

 
 
 

Section 2.             Effectiveness of this Amendment.  This Amendment and the amendments and changes to the terms of the Notes set forth herein are subject to, conditioned upon and shall not be effective until both (a) the consummation of the first closing under the Unit Purchase Agreement (the “UPA Closing”) and (b) the approval of this Amendment by by the United States District Court for the Middle District of Florida, Tampa Division, in the action styled Securities and Exchange Commission v. Arthur Nadel, et al., Case No: 8:09-cv-87-T-26TBM (the ̶ 0;Court Approval”), but upon both the UPA Closing and the Court Approval, this Amendment and such amendments and changes shall be automatically effective, binding and enforceable in all respects without any further action.

Section 3.             Amendment to Section 1(a) of the Notes.  Section 1(a) of all of the Notes is hereby amended by deleting such section in its entirety and replacing it with the following:

“Repayment.  Unless otherwise repaid, exchanged or converted as provided herein, the entire unpaid principal balance of this Note, together with all accrued but unpaid interest thereon, shall be due and payable in full on October 12, 2013; provided, however, that from and after April 12, 2012, the holder or holders of at least a majority of the principal amount outstanding under all of the Notes may make a written demand to the Maker for the payment of the entire unpaid principal balance of this Note together with all accrued but unpaid interest thereon and the Maker shall be required to repay such principal and interest outst anding under all of the Notes within ninety (90) days of its receipt of such demand.  The date on which payment of the entire unpaid principal balance of this Note, together with all accrued but unpaid interest thereon is due and payable is referred to herein as the “Maturity Date.”  Payee’s conversion rights shall be extinguished upon payment in full of all principal and accrued interest and all other amounts due hereunder on or after the Maturity Date.  Interest shall accrue and be payable in arrears on the Maturity Date.”

Section 4.             Amendment to Section 1(c) of the Notes.  Section 1(c) of the all of the Notes is hereby amended by deleting such section in its entirety and replacing it with the following:

“Manner of Payment.  Unless otherwise repaid, exchange or converted as provided herein, Maker shall send a written notice to Payee not later than September 15, 2013 requesting that Payee inform the Maker as to whether Payee wishes (in his, her or its sole discretion) to have the outstanding principal and interest due under this Note repaid on October 12, 2013 in either: (i) immediately available funds, (ii) shares of Common Stock at a price per share equal to the then existing Conversion Price (as defined below), or (iii) a combination of both immediately available funds and Common Stock at a price per share equal to the then existing Conversion price (the “Form of Payment Instruction ”).  Payee shall provide the Form of Payment Instruction to the Maker in writing no later than three days prior to the Maturity Date. Maker shall make payment in accordance with the Form of Payment Instruction and the terms of this Note no later than 5:30 p.m. E.S.T. on the date when due.  Each payment of principal and of interest shall be paid by Maker without setoff or counterclaim to Payee at Payee’s address set forth below, or to such other location or accounts within the United States as Payee may specify in writing to Maker from time to time.  Notwithstanding the foregoing, in the event that the Maker does not receive the Form of Payment Instruction within the time frame set forth above, the Maker shall be entitled to choose whether to repay the Note in immediately available funds or shares of Common Stock.”

Section 5.             Amendment to Section 3(a) of the Notes.  Section 3(a) of the all of the Notes is hereby amended by deleting such section in its entirety and replacing it with the following:

 
2
 

“Generally.  At any time at which there is principal or interest outstanding under this Note, the Payee shall be entitled (at his, her or its sole discretion) upon written notice to the Maker to convert all or a portion of the principal and interest due hereunder into shares of Common Stock of the Maker.  Such conversion shall occur upon the date of the provision of such written notice and shall be effectuated at a price per share equal to $0.24 per share (as adjusted for stock splits, combinations and the like) (the “Conversion Price”).  The Conversion Price shall be subject to adjustment as follows:

(i)           Adjustment with Respect to Subsequent Closings in the Proposed Financing.  If, pursuant to the Proposed Financing, the Maker shall sell any (A) “units” at a price per unit that is less than the aggregate “Stated Value” of all shares of Series B Convertible Preferred Stock of the Maker (“Series B Stock”) and Series B-1 Convertible Preferred Stock of the Maker (“Series B - -1 Stock”) included in such units, then the Conversion Price shall be adjusted to a new Conversion Price equal to the product of (1) the then current Conversion Price, multiplied by (2) a fraction, the numerator of which shall be the price per unit divided by the number of shares of Series B Stock and/or Series B-1 Stock included therein and the denominator of which shall be the “Stated Value” of such shares; (B) shares of Series B Stock with a conversion price of less than $0.24 or warrants to purchase shares of Common Stock at an exercise price of less than $0.24 per share, then the Conversion Price shall be adjusted to a new Conversion Price equal to such lower price; or (C) warrants to purchase shares of Series A Stock at an exercise price of less than $24.00 per share or shares of Series B-1 Stock with a conversion price (for conversion to shares of Series A Participating Preferred Stock of the Maker (“Series A Stoc k”)) of less than $24.00, then the Conversion Price shall be adjusted to a new Conversion Price equal to such lower price divided by 100.

(ii)          Adjustment with Respect to Timing of Closing of Proposed Offering.  If pursuant to Section 8(b) of the Unit Purchase Agreement the exercise price of the warrants to purchase shares of Common Stock issued pursuant to the Proposed Financing is reduced to an exercise price lower than $0.24 per share, then the Conversion Price shall be reduced to such lower price.

(iii)         Waiver and Limitation.  Notwithstanding anything herein to the contrary, (A) the Conversion Price shall not be adjusted pursuant to Section 3(a)(i) if the Buyer under the Unit Purchase Agreement waives the application of the Section 8(a) thereof, (B) the Conversion Price shall not be adjusted pursuant to Section 3(a)(ii) if the Buyer under the Unit Purchase Agreement waives the application of the Section 8(b) thereof; (C) Section 3(a)(i) shall be deemed amended and adjusted in a manner reasonably equivalent to any amendment or adjustment to Section 8(a) of the Unit Purchase Agreement agreed to by the Buyer thereunder, and (D) Section 3(a)(ii) shall be deemed amended and adjusted in a manner reasonably equivalent to any amendment or adjustment to Section 8(b) of the Unit Purchase Agreement agreed to by the Buyer thereunder.  If any adjustment pursuant to Section 3(a)(i) or (ii) would result in the aggregate number of the Company’s issued and outstanding shares of Common Stock exceeding the number of the Company’s then authorized shares of Common Stock, then such adjustment shall be limited to the extent necessary to avoid such excess.  For purposes of the foregoing, the aggregate number of the Company’s  issued and outstanding shares of Common Stock shall be calculated on a f ully-diluted basis (including, without limitation, assuming the exercise, conversion or exchange of all securities exercisable, convertible or exchangeable, directly or indirectly, for shares of Common Stock and the issuance of any other securities issuable pursuant to any agreement (and the subsequent exercise, conversion or exchange of any such securities which are exercisable, convertible or exchangeable for shares of Common Stock)).”

 
3
 
 
Section 6.             Addition of Section 17 to the Notes.  Each of the Notes is hereby amended by inserting the following as a new Section 17 thereto:

“17.           Performance Shares.  The Maker shall reserve 10,169,316 shares of its Common Stock in the aggregate (the “Performance Shares”) for issuance, if any, pursuant to the terms of this Section 17.  If the Maker generates less than $7,500,000 in revenue for the 12-month period ending on the first anniversary of the final closing date of the Proposed Financing (the “Performance Period”), the Maker shall issue to Payee a number of the Performance Shares equal to the pro duct of (a) the product of (i) the aggregate number of Perfomance Shares multiplied by (ii) the quotient of (A) $7,500,000 minus the revenue for the Performance period, divided by (B) $7,500,000, multipled by (b) a fraction, the numerator of which is the unpaid principal balance of this Note, and denominator of which is the aggregate unpaid principal balance under all of the Notes.”

For avoidance of doubt, no Payee under any of the Notes shall receive, as a result of this Amendment, more than the number of Maximum Performance Shares set forth opposite their name on Schedule I hereto.

Section 7.             Representation by Majority Holder.  The Majority Holder is the legal holder of each of the Notes identified next to its name on Schedule I and has all necessary right, power and authority to exercise rights with respect thereto, including entering into this Amendment.

Section 8.             Representation of the Company.  The Company represents and warrants that it has used its commercially reasonable best efforts to obtain from holders of other secured indebtedness their agreement to subordinate their security interest in the Company’s “bonds.com” domain name to the security interest therein held by the Majority Holder with respect to its Notes.  Set forth on Schedule II hereto is a list of each other holder of secured indebtedness of the Company, which list identifies whether the holder (or its authori zed person or agent) has executed a subordination agreement in the form agreed to by the Majority Holder.

Section 9.             Effect of Modification and Amendment.  Each of the Notes shall be deemed to be modified and amended solely in accordance with the express provisions of this Amendment and the respective rights, duties and obligations of the parties under the Notes shall continue to be determined, exercised and enforced under the Notes subject in all respects to the modifications and amendments set forth in this Amendment.  All the other terms of the Notes shall continue in full force and effect.  In the event of inconsistency between the terms of this Amendment and the terms of the Notes, the terms of this Amendment shall govern.

Section 10.           Counterparts.  This Amendment may be executed in any number of counterparts, each of which shall be deemed an original instrument, and all of which together shall constitute one agreement.  A facsimile or electronic signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile or electronic signature.

(Signature Pages Follow)

 
4
 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date set forth above.


BONDS.COM GROUP, INC.
  
     
By:
  /s/ Michael O. Sanderson  
Name:
Michael Sanderson
  
Title:
Chief Executive Officer
  


MAJORITY HOLDER:
  
   
BURTON W. WIAND, RECEIVER
  
     
By:
  /s/ Burton W. Wiand  
Name:
Burton W. Wiand
  
Title:
Court-appointed Receiver in the action styled
Securities and Exchange Commission v. Arthur
Nadel, et al., Case No: 8:09-cv-87-T-26TBM.
  




[COUNTERPART SIGNATURE PAGE TO AMENDMENT NO. 2 TO SECURED CONVERTIBLE PROMISSORY NOTES]

 
 
 

Schedule I

Name of Holder
  
Original Principal
Amount of Note
  
Maximum
Performance Shares
Burton W. Wiand, as Receiver, as holder of Note originally issued to Neil Moody Revocable Trust
   $ 250,000.00     1,041,667
Burton W. Wiand, as Receiver, as holder of Note originally issued to Christopher D. Moody Revocable Trust
   $ 1,236,836.00     5,153,483
Burton W. Wiand, as Receiver, as holder of Note originally issued to Christopher D. Moody Revocable Trust
   $ 50,000.00     208,333
Burton W. Wiand, as Receiver, as holder of Note originally issued to Valhalla Investment Partners
   $ 203,800.00     849,167
Calvin Klein
   $ 200,000.00     833,333
Calvin Klein
   $ 25,000.00     104,167
Calvin Klein
   $ 75,000.00     312,500
John Klein
   $ 125,000.00     520,833
John Klein
   $ 100,000.00     416,667
John Klein
   $ 50,000.00     208,333
Henryka & Roman Marszalek
   $ 50,000.00     208,333
John E. Platecki
   $ 25,000.00     104,167
Robert & Rosa Tobiansky
   $ 25,000.00     104,167
Robert & Rosa Tobiansky
   $ 25,000.00     104,167
 
 
 
 

Schedule II

Name of Holder
  
Original Principal
Amount of Note
  
Executed
Subordination Agreement
Calvin Klein
   $ 200,000.00  
Executed
Calvin Klein
   $ 25,000.00  
Executed
Calvin Klein
   $ 75,000.00  
Executed
John Klein
   $ 125,000.00  
Executed
John Klein
   $ 100,000.00  
Executed
John Klein
   $ 50,000.00  
Executed
John Klein
   $ 50,000.00  
Executed
Henryka & Roman Marszalek
   $ 50,000.00  
Executed
Henryka & Roman Marszalek
   $ 25,000.00  
Executed
John E. Platecki
   $ 25,000.00  
Executed
John E. Platecki
   $ 25,000.00  
Executed
Robert & Rosa Tobiansky
   $ 25,000.00  
Executed*
Robert & Rosa Tobiansky
   $ 25,000.00  
Executed*
Robert & Rosa Tobiansky
   $ 25,000.00  
Executed*
Robert Jones
   $ 400,000.00  
Executed
Susan & Terry McCarthy
   $ 50,000.00  
Executed
Nevaheel Consortium LLC
   $ 350,000.00  
Not Executed
Erwin Haas
   $ 125,000.00  
Not Executed
Marco Strub
   $ 50,000.00  
Not Executed
Bruno Widmer
   $ 50,000.00  
Not Executed
Jan Barcikowski
   $ 25,000.00  
Not Executed
Spouting Rock Investments, LLC
   $ 50,000.00  
Not Executed

*Executed by Roberty Tobiansky, who has represented to the Company he has authority to execute for his wife Rosa Tobiansky.
 EX-10.6 9 ex-10_6.htm AMENDMENT TO CONVERTIBLE SECURED PROMISSORY NOTE Unassociated Document

Exhibit 10.6
 
AMENDMENT NO. 1 TO SECURED CONVERTIBLE PROMISSORY NOTE

This AMENDMENT NO. 1 TO SECURED CONVERTIBLE PROMISSORY NOTE (this “Amendment”), dated as of October 12, 2010, is entered into by and among BONDS.COM GROUP, INC., a Delaware corporation (the “Company”), and ROBERT JONES (the “Holder”).

BACKGROUND

A.           The Company, the Holder are parties to a Secured Convertible Note and Warrant Purchase Agreement, dated on or about April 30, 2009 (the “Purchase Agreement”) pursuant to which, among other things, the Company issued a Secured Convertible Promissory Note, dated on or about April 30, 2009, to the Holder in the principal amount of $400,000 (the “Note”).

B.           The Note provides that it may be amended with the written agreement of the Holder.

C.           The Company is seeking to raise up to $10,000,000 through the sale of equity securities pursuant to the terms of the Unit Purchase Agreement in substantially the form attached hereto as Exhibit A (the “Unit Purchase Agreement”) and similar purchase agreements with other propsective investors (collectively, the “Proposed Financing”).  The Company requires capital to continue its operations.  Prospective investors in the Proposed Financing have indicated they will not invest in th e Company unless the terms of the Note is revised in accordance with the terms of this Amendment.  The Holder recognizes there is significant risk the Company will not be able to repay any portion of the Note if the Company is unable to raise additional capital.  Accordingly, the Holder is agreeing to the revisions to the Note provided for in this Amendment, among other reasons, in order to improve the chances the Company will repay all or a portion of the Note and in order to induce the prospective investors to invest in the Company.  The Holder acknowledges there is no guarantee all or any portion of the Proposed Financing will be consummated or that changes will not be made to the terms of the Proposed Financing.

AGREEMENT

In consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

Section 1.                      Amendment Applies to All Notes.  This Amendment amends and changes the terms of all the Note in the manner set forth herein.

Section 2.                      Effectiveness of this Amendment.  This Amendment and the amendments and changes to the terms of the Note set forth herein are subject to, conditioned upon and shall not be effective until the consummation of the first closing under the Unit Purchase Agreement (the “UPA Closing”), but upon the UPA Closing this Amendment and such amendments and changes shall be automatically effective, binding and enforceable in all respects without any further action.

Section 3.                      Amendment to Section 1(a) of the Note.  Section 1(a) of the Note is hereby amended by deleting such section in its entirety and replacing it with the following:

“Repayment.  Unless otherwise repaid, exchanged or converted as provided herein, the entire unpaid principal balance of this Note, together with all accrued but unpaid interest thereon, shall be due and payable in full on October 12, 2013; provided, however, that from and after April 12, 2012, the Holder may make a written demand to the Maker for the payment of the entire unpaid principal balance of this Note together with all accrued but unpaid interest thereon and the Maker shall be required to repay such principal and

 
 
 

interest outstanding under all of the Notes within ninety (90) days of its receipt of such demand.  The date on which payment of the entire unpaid principal balance of this Note, together with all accrued but unpaid interest thereon is due and payable is referred to herein as the “Maturity Date.”  Payee’s conversion rights shall be extinguished upon payment in full of all principal and accrued interest and all other amounts due hereunder on or after the Maturity Date.  Interest shall accrue and be payable in arrears on the Maturity Date.”

Section 4.                      Amendment to Section 1(c) of the Note.  Section 1(c) of the Note is hereby amended by deleting such section in its entirety and replacing it with the following:

“Manner of Payment.  Unless otherwise repaid, exchange or converted as provided herein, Maker shall send a written notice to Payee not later than September 15, 2013 requesting that Payee inform the Maker as to whether Payee wishes (in his, her or its sole discretion) to have the outstanding principal and interest due under this Note repaid on October 12, 2013 in either: (i) immediately available funds, (ii) shares of Common Stock at a price per share equal to the then existing Conversion Price (as defined below), or (iii) a combination of both immediately available funds and Common Stock at a price per share equal to the then existing Conversion price (the “Form of Payment Instruction ”).  Payee shall provide the Form of Payment Instruction to the Maker in writing no later than three days prior to the Maturity Date. Maker shall make payment in accordance with the Form of Payment Instruction and the terms of this Note no later than 5:30 p.m. E.S.T. on the date when due.  Each payment of principal and of interest shall be paid by Maker without setoff or counterclaim to Payee at Payee’s address set forth below, or to such other location or accounts within the United States as Payee may specify in writing to Maker from time to time.  Notwithstanding the foregoing, in the event that the Maker does not receive the Form of Payment Instruction within the time frame set forth above, the Maker shall be entitled to choose whether to repay the Note in immediately available funds or shares of Common Stock.”

Section 5.                      Amendment to Section 3(a) of the Note.  Section 3(a) of the Note is hereby amended by deleting such section in its entirety and replacing it with the following:

“Generally.  At any time at which there is principal or interest outstanding under this Note, the Payee shall be entitled (at his, her or its sole discretion) upon written notice to the Maker to convert all or a portion of the principal and interest due hereunder into shares of Common Stock of the Maker.  Such conversion shall occur upon the date of the provision of such written notice and shall be effectuated at a price per share equal to $0.24 per share (as adjusted for stock splits, combinations and the like) (the “Conversion Price”).  The Conversion Price shall be subject to adjustment as follows:

(i)           Adjustment with Respect to Subsequent Closings in the Proposed Financing.  If, pursuant to the Proposed Financing, the Maker shall sell any (A) “units” at a price per unit that is less than the aggregate “Stated Value” of all shares of Series B Convertible Preferred Stock of the Maker (“Series B Stock”) and Series B-1 Convertible Preferred Stock of the Maker (“Series B-1 Stock”) included in such units, then the Conversion Price shall be adjusted to a new Conversion Price equal to the product of (1) the then current Conversion Price, multiplied by (2) a fraction, the numerator of which shall be the price per unit divided by the number of shares of Series B Stock and/or Series B-1 Stock included therein and the denominator of which shall be the “Stated Value” of such shares; (B) shares of Series B Stock with a conversion price of less than $0.24 or
 

 
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warrants to purchase shares of Common Stock at an exercise price of less than $0.24 per share, then the Conversion Price shall be adjusted to a new Conversion Price equal to such lower price; or (C) warrants to purchase shares of Series A Stock at an exercise price of less than $24.00 per share or shares of Series B-1 Stock with a conversion price (for conversion to shares of Series A Participating Preferred Stock of the Maker (“Series A Stock”)) of less than $24.00, then the Conversion Price shall be adjusted to a new Conversion Price equal to such lower price divided by 100.

(ii)           Adjustment with Respect to Timing of Closing of Proposed Offering.  If pursuant to Section 8(b) of the Unit Purchase Agreement the exercise price of the warrants to purchase shares of Common Stock issued pursuant to the Proposed Financing is reduced to an exercise price lower than $0.24 per share, then the Conversion Price shall be reduced to such lower price.

(iii)           Waiver and Limitation.  Notwithstanding anything herein to the contrary, (A) the Conversion Price shall not be adjusted pursuant to Section 3(a)(i) if the Buyer under the Unit Purchase Agreement waives the application of the Section 8(a) thereof, (B) the Conversion Price shall not be adjusted pursuant to Section 3(a)(ii) if the Buyer under the Unit Purchase Agreement waives the application of the Section 8(b) thereof; (C) Section 3(a)(i) shall be deem ed amended and adjusted in a manner reasonably equivalent to any amendment or adjustment to Section 8(a) of the Unit Purchase Agreement agreed to by the Buyer thereunder, and (D) Section 3(a)(ii) shall be deemed amended and adjusted in a manner reasonably equivalent to any amendment or adjustment to Section 8(b) of the Unit Purchase Agreement agreed to by the Buyer thereunder.  If any adjustment pursuant to Section 3(a)(i) or (ii) would result in the aggregate number of the Company’s issued and outstanding shares of Common Stock exceeding the number of the Company’s then authorized shares of Common Stock, then such adjustment shall be limited to the extent necessary to avoid such excess.  For purposes of the foregoing, the aggregate number of the Company’s  issued and o utstanding shares of Common Stock shall be calculated on a fully-diluted basis (including, without limitation, assuming the exercise, conversion or exchange of all securities exercisable, convertible or exchangeable, directly or indirectly, for shares of Common Stock and the issuance of any other securities issuable pursuant to any agreement (and the subsequent exercise, conversion or exchange of any such securities which are exercisable, convertible or exchangeable for shares of Common Stock)).”

Section 6.                      Addition of Section 17 to the Notes.  The Note is hereby amended by inserting the following as a new Section 17 thereto:

“17.           Performance Shares.  The Maker shall reserve 1,666,667 shares of its Common Stock in the aggregate (the “Performance Shares”) for issuance, if any, pursuant to the terms of this Section 17.  If the Maker generates less than $7,500,000 in revenue for the 12-month period ending on the first anniversary of the final closing date of the Proposed Financing (the “Performance Period”), the Maker shall issue to Payee a number of the Performance Shares equal to the prod uct of (a) the aggregate number of Perfomance Shares multiplied by (b) the quotient of (A) $7,500,000 minus the revenue for the Performance period, divided by (B) $7,500,000.”

For avoidance of doubt, the Payee shall not receive, as a result of this Amendment, more than 1,666,667 Performance Shares.

 
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Section 7.                      Representation by Holder.  The Holder is the legal holder of each of the Note and has all necessary right, power and authority to exercise rights with respect thereto, including entering into this Amendment.
 
Section 8.                      Effect of Modification and Amendment.  The Note shall be deemed to be modified and amended solely in accordance with the express provisions of this Amendment and the respective rights, duties and obligations of the parties under the Note shall continue to be determined, exercised and enforced under the Note subject in all respects to the modifications and amendments set forth in this Amendment.  All the other terms of the Note shall continue in full force and effect.  In the event of inconsistency between the terms of this Amendment and the terms of the Note, the terms of this Amendment shall govern.

Section 9.                      Counterparts.  This Amendment may be executed in any number of counterparts, each of which shall be deemed an original instrument, and all of which together shall constitute one agreement.  A facsimile or electronic signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile or electronic signature.

(Signature Pages Follow)

 
 
 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date set forth above.



BONDS.COM GROUP, INC.
     
     
     
By:
  /s/  Michael O. Sanderson  
Name:  
Michael Sanderson
  
Title:
Chief Executive Officer
  



HOLDER:
     
     
     
 /s/ Robert Jones   
ROBERT JONES
  

EX-10.7 10 ex-10_7.htm AMENDMENT TO CONVERTIBLE SECURED PROMISSORY NOTE Unassociated Document
 
Exhibit 10.7

AMENDMENT NO. 1 TO SECURED CONVERTIBLE PROMISSORY NOTES

This AMENDMENT NO. 1 TO SECURED CONVERTIBLE PROMISSORY NOTES (this “Amendment”), dated as of October 12, 2010, is entered into by and among BONDS.COM GROUP, INC., a Delaware corporation (the “Company”), and the persons identified on Schedule I hereto (the “Holders”).

BACKGROUND

A.           The Company and the Holders are parties to a Secured Convertible Note and Warrant Purchase Agreement, dated on or about June 8, 2009 (the “Purchase Agreement”) pursuant to which, among other things, the Company issued Secured Convertible Promissory Notes, dated on or about June 8, 2009, to the Holders in the principal amounts set forth on Schedule I (collectively, the “Notes”).

B.           The Notes provide that they may be amended with the written agreement of holders of Notes representing at least a majority of the principal amount outstanding under all of the Notes.  The Holders hold Notes representing at least a majority of the principal amount outstanding under the Notes.

C.           The Company is seeking to raise up to $10,000,000 through the sale of equity securities pursuant to the terms of the Unit Purchase Agreement in substantially the form attached hereto as Exhibit A (the “Unit Purchase Agreement”) and similar purchase agreements with other propsective investors (collectively, the “Proposed Financing”).  The Company requires capital to continue its operations.  Prospective investors in the Proposed Financing have indicated they will not invest in th e Company unless the terms of the Notes are revised in accordance with the terms of this Amendment.  The Holders recognize there is significant risk the Company will not be able to repay any portion of the Notes if the Company is unable to raise additional capital.  Accordingly, the Holders are agreeing to the revisions to the Notes provided for in this Amendment, among other reasons, in order to improve the chances the Company will repay all or a portion of the Notes and in order to induce the prospective investors to invest in the Company.  The Holders acknowledge there is no guarantee all or any portion of the Proposed Financing will be consummated or that changes will not be made to the terms of the Proposed Financing.

AGREEMENT

In consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

Section 1.                      Amendment Applies to All Notes.  Pursuant to Section 8 of each of the Notes, this Amendment amends and changes the terms of all of the Notes in the manner set forth herein.

Section 2.                      Effectiveness of this Amendment.  This Amendment and the amendments and changes to the terms of the Notes set forth herein are subject to, conditioned upon and shall not be effective until the consummation of the first closing under the Unit Purchase Agreement (the “UPA Closing”), but upon the UPA Closing this Amendment and such amendments and changes shall be automatically effective, binding and enforceable in all respects without any further action.

Section 3.                      Amendment to Section 1(a) of the Notes.  Section 1(a) of the all of the Notes is hereby amended by deleting such section in its entirety and replacing it with the following:

“Repayment.  Unless otherwise repaid, exchanged or converted as provided herein, the entire unpaid principal balance of this Note, together with all accrued but unpaid interest thereon, shall be due and payable in full on October 12, 2013; provided, however, that

 
 
 

from and after April 12, 2012, the holder or holders of at least a majority of the principal amount outstanding under all of the Notes may make a written demand to the Maker for the payment of the entire unpaid principal balance of this Note together with all accrued but unpaid interest thereon and the Maker shall be required to repay such principal and interest outstanding under all of the Notes within ninety (90) days of its receipt of such demand.  The date on which payment of the entire unpaid principal balance of this Note, together with all accrued but unpaid interest thereon is due and payable is referred to herein as the “Maturity Date.”  Payee’s conversion rights shall be extinguished upon payment in full of all principal a nd accrued interest and all other amounts due hereunder on or after the Maturity Date.  Interest shall accrue and be payable in arrears on the Maturity Date.”

Section 4.                      Amendment to Section 1(c) of the Notes.  Section 1(c) of all of the Notes is hereby amended by deleting such section in its entirety and replacing it with the following:

“Manner of Payment.  Unless otherwise repaid, exchange or converted as provided herein, Maker shall send a written notice to Payee not later than September 15, 2013 requesting that Payee inform the Maker as to whether Payee wishes (in his, her or its sole discretion) to have the outstanding principal and interest due under this Note repaid on October 12, 2013 in either: (i) immediately available funds, (ii) shares of Common Stock at a price per share equal to the then existing Conversion Price (as defined below), or (iii) a combination of both immediately available funds and Common Stock at a price per share equal to the then existing Conversion price (the “Form of Payment Instruction ”).  Payee shall provide the Form of Payment Instruction to the Maker in writing no later than three days prior to the Maturity Date. Maker shall make payment in accordance with the Form of Payment Instruction and the terms of this Note no later than 5:30 p.m. E.S.T. on the date when due.  Each payment of principal and of interest shall be paid by Maker without setoff or counterclaim to Payee at Payee’s address set forth below, or to such other location or accounts within the United States as Payee may specify in writing to Maker from time to time.  Notwithstanding the foregoing, in the event that the Maker does not receive the Form of Payment Instruction within the time frame set forth above, the Maker shall be entitled to choose whether to repay the Note in immediately available funds or shares of Common Stock.”

Section 5.                      Amendment to Section 3(a) of the Notes.  Section 3(a) of the all of the Notes is hereby amended by deleting such section in its entirety and replacing it with the following:

“Generally.  At any time at which there is principal or interest outstanding under this Note, the Payee shall be entitled (at his, her or its sole discretion) upon written notice to the Maker to convert all or a portion of the principal and interest due hereunder into shares of Common Stock of the Maker.  Such conversion shall occur upon the date of the provision of such written notice and shall be effectuated at a price per share equal to $0.24 per share (as adjusted for stock splits, combinations and the like) (the “Conversion Price”).  The Conversion Price shall be subject to adjustment as follows:

(i)           Adjustment with Respect to Subsequent Closings in the Proposed Financing.  If, pursuant to the Proposed Financing, the Maker shall sell any (A) “units” at a price per unit that is less than the aggregate “Stated Value” of all shares of Series B Convertible Preferred Stock of the Maker (“Series B Stock”) and Series B-1 Convertible Preferred Stock of the Maker (“Series B-1 Stock”) included in such units, then the Conversion Price shall be adjusted to a new Conversion Price equal to the product of (1)

 
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the then current Conversion Price, multiplied by (2) a fraction, the numerator of which shall be the price per unit divided by the number of shares of Series B Stock and/or Series B-1 Stock included therein and the denominator of which shall be the “Stated Value” of such shares; (B) shares of Series B Stock with a conversion price of less than $0.24 or warrants to purchase shares of Common Stock at an exercise price of less than $0.24 per share, then the Conversion Price shall be adjusted to a new Conversion Price equal to such lower price; or (C) warrants to purchase shares of Series A Stock at an exercise price of less than $24.00 per share or shares of Series B-1 Stock with a conversion price (for conversion to shares of Series A Participating Preferred Stock of the Maker (“Series A Stock”)) of less than $24.00, then the Conversion Price shall be adjusted to a new Conversion Price equal to such lower price divided by 100.

(ii)           Adjustment with Respect to Timing of Closing of Proposed Offering.  If pursuant to Section 8(b) of the Unit Purchase Agreement the exercise price of the warrants to purchase shares of Common Stock issued pursuant to the Proposed Financing is reduced to an exercise price lower than $0.24 per share, then the Conversion Price shall be reduced to such lower price.

(iii)           Waiver and Limitation.  Notwithstanding anything herein to the contrary, (A) the Conversion Price shall not be adjusted pursuant to Section 3(a)(i) if the Buyer under the Unit Purchase Agreement waives the application of the Section 8(a) thereof, (B) the Conversion Price shall not be adjusted pursuant to Section 3(a)(ii) if the Buyer under the Unit Purchase Agreement waives the application of the Section 8(b) thereof; (C) Section 3(a)(i) shall be deem ed amended and adjusted in a manner reasonably equivalent to any amendment or adjustment to Section 8(a) of the Unit Purchase Agreement agreed to by the Buyer thereunder, and (D) Section 3(a)(ii) shall be deemed amended and adjusted in a manner reasonably equivalent to any amendment or adjustment to Section 8(b) of the Unit Purchase Agreement agreed to by the Buyer thereunder.  If any adjustment pursuant to Section 3(a)(i) or (ii) would result in the aggregate number of the Company’s issued and outstanding shares of Common Stock exceeding the number of the Company’s then authorized shares of Common Stock, then such adjustment shall be limited to the extent necessary to avoid such excess.  For purposes of the foregoing, the aggregate number of the Company’s  issued and o utstanding shares of Common Stock shall be calculated on a fully-diluted basis (including, without limitation, assuming the exercise, conversion or exchange of all securities exercisable, convertible or exchangeable, directly or indirectly, for shares of Common Stock and the issuance of any other securities issuable pursuant to any agreement (and the subsequent exercise, conversion or exchange of any such securities which are exercisable, convertible or exchangeable for shares of Common Stock)).”

Section 6.                      Addition of Section 17 to the Notes.  Each of the Notes is hereby amended by inserting the following as a new Section 17 thereto:

“17.           Performance Shares.  The Maker shall reserve 625,000 shares of its Common Stock in the aggregate (the “Performance Shares”) for issuance, if any, pursuant to the terms of this Section 17.  If the Maker generates less than $7,500,000 in revenue for the 12-month period ending on the first anniversary of the final closing date of the Proposed Financing (the “Performance Period”), the Maker shall issue to Payee a number of the Performance Shares equal to the produc t of (a) the product of (i) the aggregate number of Perfomance Shares multiplied by (ii) the quotient of (A) $7,500,000 minus the revenue for the Performance period, divided by (B) $7,500,000, multipled by (b) a fraction, the

 
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numerator of which is the unpaid principal balance of this Note, and denominator of which is the aggregate unpaid principal balance under all of the Notes.”

For avoidance of doubt, no Payee under any of the Notes shall receive, as a result of this Amendment, more than the number of Maximum Performance Shares set forth opposite their name on Schedule I hereto.

Section 7.                      Representation by Holders.  Each Holder represents and warrants that he, she or they is or are the legal holder of each of the Notes identified next to his, her or their name on Schedule I and has or have all necessary right, power and authority to exercise rights with respect thereto, including entering into this Amendment.

Section 8.                      Effect of Modification and Amendment.  Each of the Notes shall be deemed to be modified and amended solely in accordance with the express provisions of this Amendment and the respective rights, duties and obligations of the parties under the Notes shall continue to be determined, exercised and enforced under the Notes subject in all respects to the modifications and amendments set forth in this Amendment.  All the other terms of the Notes shall continue in full force and effect.  In the event of inconsistency between the terms of this A mendment and the terms of the Notes, the terms of this Amendment shall govern.

Section 9.                      Counterparts.  This Amendment may be executed in any number of counterparts, each of which shall be deemed an original instrument, and all of which together shall constitute one agreement.  A facsimile or electronic signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile or electronic signature.

(Signature Pages Follow)

 
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date set forth above.


BONDS.COM GROUP, INC.
     
     
     
By:
  /s/ Michael O. Sanderson  
Name:  
Michael Sanderson
  
Title:
Chief Executive Officer
  



HOLDERS:
     
     
     
 /s/ John Klein   
JOHN KLEIN
  


 /s/ Henryka and Roman Marszalek   
HENRYKA AND ROMAN MARSZALEK
  


 /s/ John E. Plateki   
JOHN EDWARD PLATEKI
  


 /s/ Susan and Terry McCarthy   
SUSAN AND TERRY MCCARTHY
  



[COUNTERPART SIGNATURE PAGE TO AMENDMENT NO. 1 TO SECURED CONVERTIBLE PROMISSORY NOTES]
 
 
 

Schedule I


Name of Holder
  
Original Principal Amount of Note
    
Maximum Performance Shares
  
John Klein
   $ 50,000.00       208,333  
Henryka & Roman Marszalek
   $ 25,000.00       104,167  
John E. Platecki
   $ 25,000.00       104,167  
Susan and Terry McCarthy
   $ 50,000.00       208,333  

EX-10.8 11 ex-10_8.htm AMENDMENT AND RELEASE ex-10_8.htm
Exhibit 10.8

AMENDMENT AND RELEASE
 
THIS AMENDMENT AND RELEASE (this “Agreement”), dated as of October ___, 2010, is entered into between Bonds.com Group, Inc., a Delaware corporation (the “Company”), John J. Barry III (“JB III”) and each of the other parties identified on the signature page hereto (collectively with JB III, the “JB III Parties”).  Defined terms not ot herwise defined herein shall have the meanings set forth in the Grid Note (as defined below).
 
Background
 
The Company issued a Grid Promissory Note, dated January 29, 2008, to JB III (as amended, the “Grid Note”).  The principal amount outstanding under the Grid Note is $250,000.
 
The Company desires to consummate an equity financing, or series of related equity financings, pursuant to which the Company will sell shares of its capital stock (the “Equity Financing”) to an investor or group of investors (the “Investors”).  JB III has been provided with detailed information and been given an opportunity to ask questions and obtain additional information regarding the Equity Financing.
 
JB III and the other JB III Parties are shareholders of the Company, and, as a result, will benefit from the Equity Financing.  The execution and delivery of this Agreement is a condition to the Investors consummating the Equity Financing.  Additionally, simultaneously with the execution of this Agreement, other shareholders of the Company are waiving contractual restrictions on JB III’s and the other JB III Parties’ sale of their shares in order to induce JB III and the other JB III Parties to enter into this Agreement.  In order to induce the Investors to invest in the Company and consummate the Equity Financing, to induce such other shareholders to waive such restrictions and to benefit from the mutual release set forth herein, the Company and JB III and the other JB III Parties agree to th e amendments, releases and other terms set forth in this Agreement.
 
Operative Terms
 
The parties agree as follows:
 
1.           Payment of Principal.  At such time as the aggregate gross proceeds to the Company from the Equity Financing equal a minimum of $2,000,000 (inclusive of the conversion or cancellation of outstanding indebtedness), the Company shall, within 5 business days, make a payment to JB III in the amount of $50,000 (the “Initial Payment”).  The Company shall, within 5 business days, make the following additional payments in satisfaction of the Grid Note at such time that the aggregate gross proceeds to the Company from the Equity Financing (inclusive of the conversion or cancellation of outstanding i ndebtedness) (the “Aggregate Gross Proceeds”) equal the amounts set forth below:

Aggregate Gross Proceeds
Payment
$4,000,000
$100,000
$10,000,000
Remaining accrued and unpaid interest and principal due


 
 
 

All payments by the Company shall be applied first to accrued and unpaid interest and then to principal.  The Company may at any time voluntarily pay all principal and accrued interest under the Grid Note.
 
2.           JB III’s Release of the Company.  Effective immediately upon the Company’s payment to JB III of the Initial Payment, JB III and each of the other JB III Parties, for himself, itself, herself and their respective heirs, successors, affiliates, managers, members, trustees, beneficiaries and assigns and anyone claiming by or through them (collectively, the “Releasing Parties”), irrevocably and unconditionally releases, waives, and forever discharges the Company, Bonds.com Holdings, Inc., Bonds.com Inc., each of their respective parents, subsidiaries and affiliates, and each of their and thei r respective parents’, subsidiaries’ and affiliates’ directors, officers, agents, attorneys, present and former employees, partners, investors, shareholders, insurers, predecessors, successors, assigns, and representatives, from any and all actual or potential claims, direct, indirect or derivative complaints, liabilities, obligations, promises, actions, causes of action, liabilities, agreements, damages, costs, debts, and expenses of any kind, whether known or unknown, that the Releasing Parties (a) may at any time in the future have as a result of, relating to or arising out of the Equity Financing or any similar or related financing or transaction and/or (b) have ever had or now have from the beginning of time through the date the undersigned executes this Agreement (collectively, the “Released Claims”); provided, however, that this release shall not release any claims under the Grid Note (as modified hereby) or any covenants contained in this Agreement.  Without limitation, the Released Claims include all claims arising out of, related to or connected with any law, rule or regulation of the State of Florida, the State of New York; any other law, rule or regulation of any other state; any local ordinance; workers' compensation statutes; unemployment compensation laws; and any other federal, state or local statute, rule, regulation or ordinance; any obligations under, arising out of, or related to any actual or quasi-contracts; common law claims, including but not limited to claims of intentional or negligent infliction of emotional distress, negligent hiring, retention, training or supervision, defamation, invasion of privacy, breach of a covenant of good faith and fair dealing, breach of fiduciary duty, fraud, misrepresentation, breach of express or implied contract, promissory estoppel, negligence or wrongful termination of employment; any claims for or to past or future unpaid salary, commissions, bonuses, incentive payments, expense reimbursements, health care benefits, life insurance, disability insurance and any other income or benefits the Releasing Parties received or claim they should receive; and all other claims of any kind, including but not limited to any claims for attorneys’ fees.
 
3.           Company’s Release of JB III Parties.  Effective immediately upon the Company’s payment to JB III of the Initial Payment, the Company, Bonds.com Holdings, Inc., Bonds.com, Inc., and each of their respective predecessors, successors, assigns, transferees, members, managers, shareholders, officers, directors, present and former employees, parents, subsidiaries, affiliates, attorneys, investors, insurers, representatives, and agents (the “Company Releasing Parties”), irrevocably and unconditionally release, waive, and forever discharge JB III, each of the other JB III Parties and their respec tive heirs, family members, predecessors, successors, assigns, transferees, members, managers, shareholders, officers, directors, present and former employees, parents, subsidiaries, affiliates, attorneys, investors, insurers, representatives, and agents from any and all actual or potential direct, indirect, or derivative claims, complaints, liabilities, obligations, promises, actions, causes of action, liabilities, agreements, damages, costs, debts, and expenses of any kind, whether known or unknown, that the Company Releasing
 

 
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Parties (a) may at any time in the future have as a result of, relating to, or arising out of the Equity Financing or any similar or related financing or transaction and/or (b) have ever had or now have from the beginning of time through the date the Company executes this Agreement; provided that such release does not include any claims related to or arising out of (i) any covenants contained in this Agreement, and (ii) JB III’s or any other JB III Parties’  obligations under Paragraph 4 of the letter agreement, dated as of February 26, 2010, between the Company, John J. Barry IV, JB  III and Holly A.W. Barry (the “Letter Agreement”).  Without limitation, the Released Claims include all claims arising out of, related to or connected with any law, rule or regulation of the State of Florida, the State of New York; any other law, rule or regulation of any other state; any local ordinance; workers' compensation statutes; unemployment compensation laws; and any other federal, state or local statute, rule, regulation or ordinance; any obligations under, arising out of, or related to any actual or quasi-contracts; common law claims, including but not limited to claims of intentional or negligent infliction of emotional distress, negligent hiring, retention, training or supervision, defamation, invasion of privacy, breach of a covenant of good faith and fair dealing, breach of fiduciary duty, fraud, misrepresentation, breach of express or implied contract, promissory estoppel, negligence or wrongful termination of employment; any claims for or to past or future unpaid salary, commiss ions, bonuses, incentive payments, expense reimbursements, health care benefits, life insurance, disability insurance and any other income or benefits the Releasing Parties received or claim they should receive; and all other claims of any kind, including but not limited to any claims for attorneys’ fees.
 
4.           Indemnification With Regard to Third-Party Claims.  To the extent permitted by applicable law, the Company, Bonds.com Holdings, Inc., Bonds.com, Inc., and each of their respective predecessors, successors, assigns, transferees, parents, subsidiaries, and affiliates hereby agree to indemnify JB III and his heirs, family members, predecessors, successors, assigns, transferees, members, managers, shareholders, officers, directors, present and former employees, parents, subsidiaries, affiliates, attorneys, investors, insurers, representatives, and agents and hold them harmless from any and all actual or potential claims, demands, complaints, liabilities, obligations, promises, actions, causes of ac tion, liabilities, agreements, damages, costs, debts, and expenses, including court costs and attorneys’ fees, of any kind, whether known or unknown, that any third parties (a) may at any time have as a result of, relating to, or arising out of the Equity Financing or any similar or related financing or transaction and/or (b) have ever had or may at any time have as a result of, relating to, or arising from JB III’s relationship (whether by statute, contract, or otherwise) with the Company Releasing Parties.
 
5.           Forbearance; Effect of Modification and Amendment of Grid Note.  From the date of this Agreement until December 31, 2010, JB III shall not require any payment of principal or interest or other amounts under the Grid Note except as and to the extent required pursuant to Section 1 above.  After December 31, 2010, JB III shall be permitted to seek to enforce the Grid Note in accordance with the provisions thereof.  No default by the Company of the Grid Note shall be deemed to have occurred between the date of this Agreement and December 31, 2010 so long as the Company complies with this Agreement.  The Grid Note shall be deemed to be modified and amended solely in acc ordance with the express provisions of this Agreement and the respective rights, duties and obligations of the parties under the Grid Note shall continue to be determined, exercised and enforced under the Grid Note subject in all respects to the modifications and amendments set forth in this Agreement.  All the other terms of
 

 
3
 

the Grid Note shall continue in full force and effect.  In the event of inconsistency between the terms of this Agreement and the terms of the Grid Note, the terms of this Agreement shall govern.
 
6.           Representations and Warranties by the JB III Parties.  The JB III Parties jointly and severally represent and warrant to the Company that they have not assigned, sold or transferred to any person or entity any Released Claims or any rights with respect thereto.  The JB III Parties jointly and severally represent and warrant to the Company that this Agreement constitutes a valid, binding and enforceable obligation of each of them.  There is no affiliate of the JB III Parties or any other family member or related person of the JB III Parties who or which is not a party to this Agreement that owns, beneficially or of record, any shares of capital stock of the Company.
 
7.           Representations and Warranties by the Company.  The Company represents and warrants to the JB III Parties that this Agreement constitutes a valid, binding and enforceable obligation of the Company.
 
8.           Acknowledgement Regarding Letter Agreement.  The Company acknowledges and agrees that the voting obligations of Paragraph 4 of the Letter Agreement are not binding upon a transferee of shares of Common Stock who obtains such shares from JB III or a any other JB III Party pursuant to an arms-length transaction in which JB III or such JB III Party sells, assigns and transfers all record and beneficial ownership (including, without limitation, all direct and indirect rights to vote, or direct or influence the voting of, such shares) of such shares to such transferee and such transferee is neither an affiliate, family member nor other related person of JB III or such other JB III Party.
 
9.           Counterparts.  This Agreement may be executed in two or more counterparts and by facsimile signature or otherwise, and each of such counterparts shall be deemed an original and all of such counterparts together shall constitute one and the same agreement.
 
[Signature pages follow]

 
4
 

IN WITNESS WHEREOF, this Amendment and Release is executed as of the date first set forth above.

   
BONDS.COM GROUP, INC.
  
       
       
   
By:
  /s/ Michael O. Sanderson   
   
Name:  
 Michael O. Sanderson   
   
Title:
 CEO   
       
       
     /s/ John J. Barry III   
   
JOHN J. BARRY III
  
       
   
JOHN J. BARRY III AND HOLLY A.W. BARRY
  
       
       
     /s/ John J. Barry III   
   
JOHN J. BARRY III
  
       
       
     /s/ Holly A.W. Barry   
   
HOLLY A.W. BARRY
  
       
   
DUNCAN FAMILY, LLC
  
       
       
   
By:
  /s/ John J. Barry III   
   
Name:  
John J. Barry, III, Managing Member
  
       
       
       
   
By:
  /s/ Holly A.W. Barry   
   
Name:  
Holly A.W. Barry, Managing Member
  
       
   
DUNCAN FAMILY REVOCABLE TRUST
  
       
       
   
By:
  /s/ John J. Barry III   
   
Name:  
John J. Barry, III, Co-Trustee
  
       
       
       
   
By:
  /s/ Holly A.W. Barry  
   
Name:  
Holly A.W. Barry, Co-Trustee
  


5
EX-10.9 12 ex-10_9.htm AMENDMENT AND RELEASE Unassociated Document
 
Exhibit 10.9
 
AMENDMENT AND RELEASE
 
THIS AMENDMENT AND RELEASE (this “Agreement”), dated as of October ___, 2010, is entered into between Bonds.com Group, Inc., a Delaware corporation (the “Company”), and John J. Barry IV (“JB IV”) and each of the other parties identified on the signature page hereto (collectively with JB IV, the “JB IV Parties”).  Defined terms not otherwi se defined herein shall have the meanings set forth in the Letter Agreement (as defined below).
 
Background
 
The Company and JB IV entered into a letter agreement, dated as of February 26, 2010 (the “Letter Agreement”), pursuant to which, among other things, the Company agreed to make certain payments to JB IV.  The unpaid amount of the payments contemplated by Paragraph 8 of the Letter Agreement is $975,000 (the “Obligations”).
 
The Company desires to consummate an equity financing, or series of related equity financings, pursuant to which the Company will sell shares of its capital stock (the “Equity Financing”) to an investor or group of investors (the “Investors”).  JB IV has been provided with detailed information and been given an opportunity to ask questions and obtain additional information regarding the Equity Financing.
 
JB IV and the other JB IV Parties are shareholders of the Company, and, as a result, will benefit from the Equity Financing.  The execution and delivery of this Agreement is a condition to the Investors consummating the Equity Financing.  Additionally, simultaneously with the execution of this Agreement, other shareholders of the Company are waiving contractual restrictions on JB IV’s and the other JB IV Parties’ sale of their shares in order to induce JB IV and the other JB IV Parties to enter into this Agreement.  In order to induce the Investors to invest in the Company and consummate the Equity Financing, to induce such other shareholders to waive such restrictions and to benefit from the mutual release set forth herein, the Company and JB IV and the other JB IV Parties agree to the amendm ents and releases and other terms set forth in this Agreement.  Additionally, JB IV and the other JB IV Parties wish to induce the Company to terminate the non-compete, non-solicit and other obligations of JB IV terminated by Section 8 hereof.
 
Operative Terms
 
The parties agree as follows:
 
1.           Payment of the Obligations.  At such time as the aggregate gross proceeds to the Company from the Equity Financing equal a minimum of $2,000,000 (inclusive of the conversion or cancellation of outstanding indebtedness), the Company shall, within 5 business days, make a payment to JB IV in the amount of $50,000 (the “Initial Payment”).  The Company shall make the following additional payments to JB IV in payment of the Obligations after such time as the aggregate gross proceeds to the Company from the Equity Financing (inclusive of the conversion or cancellation of outstanding indebtedness) (the “Aggregate Gross Proceeds”) equal the amounts set forth below (each such payment to be made no later than the first available payroll cycle following the deposit of such gross proceeds):

 
 
 

Aggregate Gross Proceeds
Payment
$4,000,000
$100,000
$6,000,000
$240,000
$8,000,000
$240,000
$10,000,000
$345,000

The Company may at any time voluntarily pay all of the Obligations.  All payments made under this Agreement will be applied to the Obligations.  All payments under this Agreement will be subject to any legally required tax or similar withholding (but shall be credited against the Obligations in the gross, pre-tax and withholding amounts).

2.           JB IV’s Release of the Company.  Effective immediately upon the Company’s payment to JB IV of the Initial Payment, JB IV and each of the other JB IV Parties, for himself, herself, itself and their respective heirs, successors, affiliates, managers, members, trustees, beneficiaries and assigns, and anyone claiming by or through them (collectively, the “Releasing Parties”), irrevocably and unconditionally releases, waives, and forever discharges the Company, Bonds.com Holdings, Inc., Bonds.com Inc., each of their respective parents, subsidiaries and affiliates, and each of their and their r espective parents’, subsidiaries’ and affiliates’ directors, officers, agents, attorneys, present and former employees, partners, investors, shareholders, insurers, predecessors, successors, assigns, and representatives, from any and all actual or potential, direct, indirect or derivative claims, complaints, liabilities, obligations, promises, actions, causes of action, liabilities, agreements, damages, costs, debts, and expenses of any kind, whether known or unknown, that the Releasing Parties (a) may at any time in the future have as a result of, relating to or arising out of the Equity Financing or any similar or related financing or transaction and/or (b) have ever had or now have from the beginning of time through the date the undersigned executes this Agreement (collectively, the “Released Claims”); provided that this release shall not release any claims under Paragraph 8 of the Letter Agreement solely as it relates to the Obligations (as modified hereby) or any covenants contained in this Agreement.  Without limitation, the Released Claims include all claims arising out of, related to or connected with any law, rule or regulation of the State of Florida, the State of New York; any other law, rule or regulation of any other state; any local ordinance; workers' compensation statutes; unemployment compensation laws; and any other federal, state or local statute, rule, regulation or ordinance; any obligations under, arising out of, or related to any actual or quasi-contracts; common law claims, including but not limited to claims of intentional or negligent infliction of emotional distress, negligent hiring, retention, training or supervision, defamation, invasion of privacy, breach of a covenant of good faith and fair dealing, breach of fiduciary duty, fraud , misrepresentation, breach of express or implied contract, promissory estoppel, negligence or wrongful termination of employment; any claims for or to past or future unpaid salary, commissions, bonuses, incentive payments, expense reimbursements, health care benefits, life insurance, disability insurance and any other income or benefits the Releasing Parties received or claim they should receive; and all other claims of any kind, including but not limited to any claims for attorneys’ fees.
 
3.           Company’s Release of JB IV Parties.  Effective immediately upon the Company’s payment to JB IV of the Initial Payment, the Company, Bonds.com Holdings, Inc., Bonds.com, Inc., and each of their respective predecessors, successors, assigns, transferees, members, managers, shareholders, officers, directors, present and former employees, parents, subsidiaries, affiliates, attorneys, investors, insurers, representatives, and agents (the “Company Releasing Parties”), irrevocably and unconditionally release, waive, and forever discharge JB IV, each of the other JB IV Parties and their respective heirs, family members, predecessors, successors, assigns, transferees, members, managers, shareholders, officers, directors, present and former employees, parents, subsidiaries, affiliates, attorneys, investors, insurers, representatives, and agents from any and all actual or potential direct, indirect, or derivative claims, complaints, liabilities, obligations, promises, actions, causes of action, liabilities, agreements, damages, costs, debts, and expenses of any kind, whether known or unknown, that the Company Releasing Parties (a) may at any time in the future have as a result of, relating to, or arising out of the Equity Financing or any similar or related financing or transaction and/or (b) have ever had or now have from the beginning of time through the date the Company executes this Agreement; provided that such release does not include any claims related to or arising out of (i) any covenants contained in this Agreement, and (ii) JB IV’s or any other JB IV Parties’  obligations under Paragraph 4 of the Letter Agreement.  Without limitation, the Released Claims include all claims arising out of, related to or connected with any law, rule or regulation of the State of Florida, the State of New York; any other law, rule or regulation of any other state; any local ordinance; workers' compensation statutes; unemployment compensation laws; and any other federal, state or local statute, rule, regulation or ordinance; any obligations under, arising out of, or related to any actual or quasi-contracts; common law claims, including but not limited to claims of intentional or negligent infliction of emotional distress, negligent hiring, retention, training or supervision, defamation, invas ion of privacy, breach of a covenant of good faith and fair dealing, breach of fiduciary duty, fraud, misrepresentation, breach of express or implied contract, promissory estoppel, negligence or wrongful termination of employment; any claims for or to past or future unpaid salary, commissions, bonuses, incentive payments, expense reimbursements, health care benefits, life insurance, disability insurance and any other income or benefits the Releasing Parties received or claim they should receive; and all other claims of any kind, including but not limited to any claims for attorneys’ fees.

 
2
 
 
4.           Indemnification With Regard to Third-Party Claims.  To the extent permitted by applicable law, the Company, Bonds.com Holdings, Inc., Bonds.com, Inc., and each of their respective predecessors, successors, assigns, transferees, parents, subsidiaries, and affiliates hereby agree to indemnify JB IV and his heirs, family members, predecessors, successors, assigns, transferees, members, managers, shareholders, officers, directors, present and former employees, parents, subsidiaries, affiliates, attorneys, investors, insurers, representatives, and agents and hold them harmless from any and all actual or potential claims, demands, complaints, liabilities, obligations, promises, actions, causes of act ion, liabilities, agreements, damages, costs, debts, and expenses, including court costs and attorneys’ fees, of any kind, whether known or unknown, that any third parties (a) may at any time have as a result of, relating to, or arising out of the Equity Financing or any similar or related financing or transaction and/or (b) have ever had or may at any time have as a result of, relating to, or arising from JB IV’s relationship (whether by statute, contract, or otherwise) with the Company Releasing Parties.
 
5.           Forbearance; Effect of Modification and Amendment of the Letter Agreement.  From the date of this Agreement until December 31, 2010, no payments shall be deemed due and JB IV shall not require any payments of the Obligations except as and to the extent required pursuant to Section 1 above.  After December 31, 2010, JB IV shall be permitted to seek to enforce payment of the Obligations in accordance with the provisions of Paragraph 8 of the Letter Agreement.  No default by the Company of the Letter Agreement shall be deemed to have occurred between the date hereof and December 31, 2010 so long as the Company complies with this Agreement.  For avoidance of doubt, the Company and JB IV agree that Paragraph 10 of the Letter Agreement is hereby superseded, deleted, and rendered null, void and of no force and effect.  The Company acknowledges and agrees that the voting obligations of Paragraph 4 of the Letter Agreement are not binding upon a transferee of shares of Common Stock who obtains such shares from JB IV or a any other JB IV Party pursuant to an arms-length transaction in which JB IV or such JBIV Party sells, assigns and transfers all record and beneficial ownership (including, without limitation, all direct and indirect rights to vote, or direct or influence the voting of, such shares) of such shares to such transferee and such transferee is neither an affiliate, family member nor other related person of JB IV or such other JB IV Party.  The Letter Agreement shall be deemed to be modified, amended and released solely in accordance with the provisions of this Agre ement and the respective rights, duties and obligations of the parties under the Letter Agreement shall continue to be determined, exercised and enforced under the Letter Agreement subject in all respects to the modifications, amendments and releases set forth in this Agreement.  In the event of inconsistency between the terms of this Agreement and the terms of the Letter Agreement, the terms of this Agreement shall govern.
 
6.           Representations and Warranties by the JB IV Parties.  The JB IV Parties jointly and severally represent and warrant to the Company that they have not assigned, sold or transferred to any person or entity any Released Claims or any rights with respect thereto.  The JB IV Parties jointly and severally represent and warrant to the Company that this Agreement constitutes a valid, binding and enforceable obligation of each of them.  There is no affiliate of the JB IV Parties or any other family member or related person of the JB IV Parties who or which is not a party to this Agreement that owns, beneficially or of record, any shares of capital stock of the Company.

7.           Representations and Warranties by the Company.  The Company represents and warrants to the JB IV Parties that this Agreement constitutes a valid, binding and enforceable obligation of the Company.

8.           Counterparts.  This Agreement may be executed in two or more counterparts and by facsimile signature or otherwise, and each of such counterparts shall be deemed an original and all of such counterparts together shall constitute one and the same agreement.

[Signature pages follow]

 
3
 
 
IN WITNESS WHEREOF, this Amendment and Release is executed as of the date first set forth above.
 
 
   
BONDS.COM GROUP, INC.
     
   
By:
  /s/ Michael O. Sanderson 
   
Name:
 Michael O. Sanderson 
   
Title:
 CEO 
 
 
   
 /s/ John J. Barry IV
     JOHN J. BARRY IV
   
 
  
 
   
OTIS ANGEL, LLC
     
   
By:
  /s/ John J. Barry IV
   
Name:
 John J. Barry IV,  Authorized Person
 
 
   
SIESTA CAPITAL, LLC
     
   
By:
  /s/ John J. Barry IV
   
Name:
 John J. Barry IV,  Authorized Person
 
 
   
BOND PARTNERS, LLC
     
   
By:
  /s/ John J. Barry IV
   
Name:
 John J. Barry IV,  Authorized Person
 
 
   
JOHN J. BARRY IV REVOCABLE TRUST U/A/D NOVEMBER 9, 2001
     
   
By:
  /s/ John J. Barry IV
   
Name:
 John J. Barry IV,  Trustee
 
 
 
4
 EX-10.10 13 ex-10_10.htm COMMON STOCK PURCHASE WARRANT Unassociated Document
 
Exhibit 10.10
 
THE OFFER AND SALE OF THIS COMMON STOCK PURCHASE WARRANT AND THE SHARES OF COMMON STOCK THAT MAY BE PURCHASED HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE.  THIS COMMON STOCK PURCHASE WARRANT AND THE SHARES OF COMMON STOCK THAT MAY BE PURCHASED HEREUNDER MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND REGISTRATION OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM
 
BONDS.COM GROUP, INC.
 
COMMON STOCK PURCHASE WARRANT
 
Date of Issuance: October 19, 2010
 
THIS IS TO CERTIFY that BLACK-II TRUST, and its transferees, successors and assigns (the “Holder”), for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, is entitled to purchase from BONDS.COM GROUP, INC., a Delaware corporation (the “Company”), at the price of $0.24 per share (the “Exercise Price”), at any time after the date hereof (the “ Commencement Date”) and expiring on October 18, 2015 (the “Expiration Date”), Ten Million (10,000,000) (the “Aggregate Number”) shares of the fully paid and nonassessable Common Stock, par value $0.0001 per share (the “Common Stock”), of the Company (as such number may be adjusted as provided herein).
 
Capitalized terms used herein shall have the meanings ascribed to such terms in Section 10 hereof unless otherwise defined herein.
 
SECTION 1.
The Warrant; Transfer and Exchange; Registration Rights.
 
(a)           The Warrant.  This Common Stock Purchase Warrant (this “Warrant”) is issued under and pursuant to the Termination and Release, dated as of the date hereof, by and between the Holder and the Company.  This Warrant and the rights and privileges of the Holder hereunder may be exercised by the Holder in whole or in part as provided herein and, as more fully set forth in Sections 1(b) and 8 hereof, may be transferred (subject to applicable securities laws and regulations) by the Holder to any other Person or Persons at any time or from time to time, in whole or in part.
 
(b)           Transfer and Exchanges.  The Company shall initially record this Warrant on a register to be maintained by the Company with its other stock books and, subject to Section 8 hereof, from time to time thereafter shall reflect the transfer of this Warrant on such register when surrendered for transfer in accordance with the terms hereof and properly endorsed, accompanied by appropriate instructions, and further accompanied by payment in cash or by check, bank draft or money order payable to the order of the Company, in United States currency, of an amount equal to any stamp or other tax or governmental charge or fee required to be paid in connection with the transfer thereof.  Upon any such transfer, a new warrant or warrants shall be issued to the transferee and the Holder (in the event this Warrant is only partially transferred) and the surrendered warrant shall be canceled.  Each such transferee shall succeed to all of the rights of the Holder with respect to the Warrant being so transferred; provided, however, that, in the event this Warrant is partially
 

 
 
 

transferred, the Holder and such transferee shall hold rights in respect of this Warrant in proportion to their respective interests in this Warrant.  This Warrant may be exchanged at the option of the Holder, when surrendered at the Principal Office, for another warrant or other warrants of like tenor and representing in the aggregate the right to purchase a like number of shares of Common Stock.
 
(c)           Registration Rights.  The Holder shall have the registration rights set forth on Exhibit B.  Notwithstanding anything herein to the contrary, (i) the registration rights set forth in Section 2(a) of Exhibit B shall not be transferable except to a transferee who acquires all of this Warrant or all of the shares issued upon the exercise hereof, and (ii) the registration rights set forth in Section 2(c) shall be transferable to a transferee who acquires at least 25% of the rights represented by thi s Warrant or the shares issued upon exercise hereof.
 
SECTION 2.
Exercise.
 
(a)           Right to Exercise.  At any time after the Commencement Date and on or before the Expiration Date, the Holder, in accordance with the terms hereof, may exercise this Warrant, in whole at any time or in part from time to time, by delivering this Warrant to the Company during normal business hours on any Business Day at the Principal Office, together with the Election to Purchase, in the form attached hereto as Exhibit A and made a part hereof (the “Election to Purchase”), duly executed, and payment of the Exercise Price per share for the number of shares to b e purchased (the “Exercise Amount”), as specified in the Election to Purchase.  If the Expiration Date is not a Business Day, then this Warrant may be exercised on the next succeeding Business Day.
 
(b)           Payment of Exercise Price.  Payment of the Exercise Price shall be made to the Company by either of the following means (or any combination of such means): (i) in cash or other immediately available funds, payable by certified wire transfer to an account designated by the Company or (ii) as provided in Section 2(c).  The amount of the Exercise Price to be paid shall equal the product of (A) the Exercise Amount multiplied by (B) the Exercise Price per share.
 
(c)           Cashless Exercise.  The Holder shall have the right to pay all or a portion of the Exercise Price by making a “Cashless Exercise” pursuant to this Section 2(c), in which case the portion of the Exercise Price to be so paid shall be paid by reducing the number of shares of Common Stock otherwise issuable pursuant to the Election to Purchase (the “Exercise Shares”) by an amount (the “Cashless Exercise Shares”) equal to (i) the Exercise Price multiplied by the Exercise Shares and divided by (ii) the Fair Market Value Per Share of the Co mmon Stock determined as of the Business Day immediately preceding the date of such exercise of this Warrant.  The number of shares of Common Stock to be issued to the Holder as a result of a Cashless Exercise will therefore be equal to the Exercise Shares minus the Cashless Exercise Shares.
 
(d)           Issuance of Shares of Common Stock.  Upon receipt by the Company of this Warrant at the Principal Office in proper form for exercise, and accompanied by payment of the Exercise Price as aforesaid, the Company shall immediately cause the shares of Common Stock to be registered in the name of the Holder in the Register of Stockholders of the Company and the Holder shall then be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that certificates representing such shares of Common Stock may not then be actually delivered.  Upon such surrender of this Warrant and payment of the Exercise Price as aforesaid, the Company shall issue and cause to be delivered with all reasonable dispatch to, or upon the written order of, the Holder (and in such name or names as the Holder may designate) a
 

 
-2-
 

certificate or certificates for a number of shares of Common Stock equal to the Exercise Amount, subject to any reduction as provided in Section 2(c) for a Cashless Exercise.
 
(e)           Fractional Shares.  The Company shall not be required to deliver fractions of shares of Common Stock upon exercise of this Warrant.  If any fraction of a share of Common Stock would be deliverable upon an exercise of this Warrant, the Company may, in lieu of delivering such fraction of a share of Common Stock, make a cash payment to the Holder in an amount equal to the same fraction of the Fair Market Value Per Share of the Common Stock determined as of the Business Day immediately preceding the date of exercise of this Warrant.
 
(f)           Partial Exercise.  In the event of a partial exercise of this Warrant, the Company shall issue to the Holder a Warrant in like form for the unexercised portion thereof.
 
SECTION 3.
Payment of Taxes.
 
The Company shall pay all stamp taxes attributable to the issuance of shares or other securities issuable upon the exercise of this Warrant or issuable pursuant to Section 6 hereof.
 
SECTION 4.
Replacement Warrant.
 
In case this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue and deliver in exchange and substitution for and upon cancellation of the mutilated Warrant, or in lieu of and in substitution for the Warrant lost, stolen or destroyed, a new Warrant of like tenor and representing an equivalent right or interest, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction of such Warrant and upon receipt of indemnity reasonably satisfactory to the Company (provided, that if the Holder is a financial institution or other institutional investor, its personal undertaking to provide an indemnity is hereby deemed to be reasonably satisfactory to the Company).
 
SECTION 5.
Reservation of Capital Stock and Other Covenants.
 
(a)           Reservation of Authorized Capital Stock.  The Company shall at all times ensure that it has sufficient authorized and unissued capital, free of preemptive rights, to enable the Company at any time to fulfill all of its obligations hereunder upon the exercise of this Warrant.
 
(b)           Affirmative Actions to Permit Exercise and Realization of Benefits.  If any shares of Common Stock to be issued upon the exercise of this Warrant, or any shares or other securities to be issued pursuant to Section 6 hereof, or any shares of Common Stock require registration with or approval of any Governmental Authority under any federal or state law (other than securities laws) before such shares or other securities may be validly delivered upon exercise of this Warrant or conversion of the Common Stock or other securities that may be purchased hereunder, then the Company covenants that it will, at its sole expense, secure such registration or approval, as the case may be.
 
(c)           Validly Issued Shares.  The Company covenants that all shares of Common Stock delivered upon exercise of this Warrant, assuming full payment of the Exercise Price, shall, upon delivery by the Company, be duly authorized and validly issued, fully paid and nonassessable, free from all stamp taxes, liens and charges with respect to the issue or delivery thereof and otherwise free of all other security interests, encumbrances and claims of any nature whatsoever other than such security interests, encumbrances and claims granted by the Holder.
 

 
-3-
 

SECTION 6.
Adjustments.
 
Under certain conditions, the Aggregate Number is subject to adjustment as set forth in this Section 6.  
 
(a)           Adjustments to Aggregate Number.  The Aggregate Number, after taking into consideration any prior adjustments pursuant to this Section 6, shall be subject to adjustment from time to time as follows and, thereafter, as adjusted, shall be deemed to be the Aggregate Number hereunder.
 
(i)           Stock Dividends; Subdivisions, Combinations an Reclassifications.  In case at any time or from time to time the Company shall:
 
(A)           issue to the holders of the Common Stock a dividend payable in, or other distribution of, Common Stock (a “Stock Dividend”),
 
(B)           subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, including, without limitation, by means of a stock split (a “Stock Subdivision”),
 
(C)           combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock (a “Stock Combination”), or
 
(D)           issue any shares of its capital stock in a reclassification of the Common Stock (a “Stock Reclassification”),
 
then the number of shares of Common Stock purchasable upon exercise of this Warrant, if any, immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of shares of Common Stock or other securities of the Company which it would have owned or have been entitled to receive had this Warrant been exercised in advance thereof.
 
(ii)           Miscellaneous.  The following provisions shall be applicable to the making of adjustments of the Aggregate Number provided above in this Section 6(a):
 
(A)           The adjustments required by the preceding paragraphs of this Section 6(a) shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that no adjustment of the Aggregate Number that would otherwise be required shall be made (except in the case of a Stock Subdivision, Stock Combination or Stock Reclassification as provided for in Section 6(a)(i) hereof) unless and until such adjustment either by itself or with other adjustments not previously made adds or subtracts at least one one-hundredth of one share to or from the Aggregate Number immediately prior to the making of such adjustment.  Any adjustment representing a change of less than such minimum amount (except as aforesaid) shall be carried forward and made a s soon as such adjustment, together with other adjustments required by this Section 6(a) and not previously made, would result in a minimum adjustment.  For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence. 
 
(B)           In computing adjustments under this Section 6(a), fractional interests in Common Stock shall be taken into account to the nearest one-thousandth of a share.
 

 
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(C)           If the Company shall take a record of the holders of the Common Stock for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution to shareholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled.
 
(b)           Adjustment to Exercise Price.  
 
(i)           Upon any adjustment to the Aggregate Number or of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder pursuant to Section 6(a)(i), the Holder shall thereafter be entitled to purchase such Aggregate Number of shares of Common Stock or other securities resulting from such adjustment at an Exercise Price per share of Common Stock or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the Aggregate Number prior to such adjustment and dividing by the Aggregate Number immediately following such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for s uch event.
 
(ii)           In case at any time or from time to time the Company shall pay a dividend or make a distribution in cash, securities or other assets to the holders of Common Stock, other than (x) as described in Sections 6(a)(i)(A) and 6(a)(i)(D) above or (y) regular quarterly or other periodic dividends (any such non-excluded event being referred to as an “Extraordinary Dividend”), then the Exercise Price shall be decreased by the amount of cash and/or the fair market value (as determined by the board of directors of the Company, in good faith) of any securities or other asse ts paid on each share of Common Stock in respect of such Extraordinary Dividend.  An adjustment made pursuant to this Section 6(b)(ii) shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.   
 
(c)           Changes in Common Stock.  In case at any time the Company shall initiate any transaction or be a party to any transaction (including, without limitation, a merger, consolidation, share exchange, sale, lease or other disposition of all or substantially all of the Company’s assets, liquidation, recapitalization or reclassification of the Common Stock) in connection with which the previous outstanding Common Stock shall be changed into or exchanged for different securities of the Company or Capital Stock or other securities of another corporation or interests in a non-corporate entity or other property (including cash) or any combination of the foregoing (each such transaction being herein cal led a “Transaction”), then, as a condition of the consummation of the Transaction, lawful, enforceable and adequate provision shall be made so that the Holder shall be entitled to elect, by written notice to the Company, to receive (i) in exchange for the surrender of this Warrant to the Company and the same Exercise Price (rather than the exercise thereof), the securities or other property (including cash) to which such Holder would have been entitled upon consummation of the Transaction if such Holder had exercised this Warrant and (if applicable) converted the shares of Common Stock issuable hereunder immediately prior thereto, (ii) a new warrant in form and substance similar to, and in exchange for, this Warrant to purchase all or a portion of such securities or other property to which such Holder would have been entitled upon consummation of the Transaction if such Holder had exercised this Warrant and (if applicable) converted the shares of Common Stock issuable hereunder immediately prior thereto, for the same Exercise Price, or (iii) upon exercise of this Warrant at any time on or after the consummation of the Transaction but prior to the Expiration Date, in lieu of the Warrant Shares issuable upon such
 

 
-5-
 

exercise prior to such consummation, the securities or other property (including cash) to which such Holder would have been entitled upon consummation of the Transaction if such Holder had exercised this Warrant and (if applicable) converted the shares of Common Stock issuable hereunder immediately prior thereto (subject to adjustments from and after the consummation date as nearly equivalent as possible to the adjustments provided for in this Section 6).  The Company will not effect any Transaction unless prior to the consummation thereof each corporation or other entity (other than the Company) which may be required to deliver any new warrant, securities or other property as provided herein shall assume by written instrument the obligation to deliver to such Holder such new warrant, securities or other property as in accordanc e with the foregoing provisions such Holder may be entitled to receive.  The foregoing provisions of this Section 6(c) shall similarly apply to successive Transactions.
 
(d)           Other Action Affecting Capital Stock. 
 
(i)           Other Action.  In case at any time or from time to time the Company shall take any action of the type contemplated in Section 6(a) or (c) hereof but not expressly provided for by such provisions, then, unless in the opinion of the Company’s Board of Directors such action will not have a material adverse effect upon the rights of the Holder (taking into consideration, if necessary, any prior actions which the Company’s Board of Directors deemed not to materially adversely affect the rights of the Holder), the Aggregate Number shall be adjusted in such manner and at such time as the Company’s Board of Directors may in good faith determine to be equitable in the circumstances.
 
(e)           Notices.
 
(i)           Notice of Proposed Actions.  In case the Company shall propose (A) to pay any dividend payable in stock of any class to the holders of the Common Stock or to make any other distribution to the holders of the Common Stock, (B) to offer to the holders of the Common Stock rights to subscribe for or to purchase any Convertible Securities or additional shares of Common Stock or shares of stock of any class or any other securities, warrants, rights or options (other than the exercise of pre-emptive rights by a holder), (C) to effect any reclassification of the Common Stock, (D) to effect any recapitalization, stock subdivision, stock combination or other capital reorganization, (E) to effect any consol idation or merger, share exchange, or sale, lease or other disposition of all or substantially all of its property, assets or business, (F) to effect the liquidation, dissolution or winding up of the Company, (G) effect a Change of Control (provided that notice of a Change of Control shall only be provided upon the Company entering into a definitive agreement with respect to such Change of Control and such information not being material non public information) or (H) to effect any other action which would require an adjustment under this Section 6, then in each such case the Company shall give to the Holder written notice of such proposed action, which shall specify the date on which a record is to be taken for the purposes of such stock dividend, stock subdivision, stock combination, distribution or rights, or the approximate date on which such reclassification, recapitalization, reorganization, consolidation, merger, share exchange, sale, lease, transfer, disposition, liquidation, dissolution, winding up o r other transaction is expected to take place and the expected date of participation therein by the holders of Common Stock (as applicable), if any such date is to be fixed, or the date on which the transfer of Common Stock (as applicable) is expected to occur, and shall also set forth such facts with respect thereto as shall be reasonably necessary to indicate the effect of such action on the Common Stock (as applicable) and on the Aggregate Number after giving effect to any adjustment which will be required as a result of such action.  Such notice shall be so given in the case of any action covered by clause (A) or (B) above at least 10 Business Days prior to the record date for determining holders of the Common
 

 
-6-
 

Stock (as applicable) for purposes of such action and, in the case of any other such action, at least 10 Business Days prior to the earlier of the date of the taking of such proposed action or the date of participation therein by the holders of Common Stock (as applicable).
 
(ii)           Adjustment Notice.  Whenever the Aggregate Number is to be adjusted pursuant to this Section 6, unless otherwise agreed by the Holder, the Company shall promptly (and in any event within 10 Business Days after the event requiring the adjustment) prepare a certificate signed by the Chief Financial Officer of the Company, setting forth, in reasonable detail, the event requiring the adjustment and the method by which such adjustment is to be calculated.  The certificate shall set forth, if applicable, a description of the basis on which the Company's Board of Directors in good faith determined, as applicable, the Fair Market Value Per Share or the fair market value of any evidences of ind ebtedness, shares of stock, other securities, warrants, other subscription or purchase rights, or other property or the equitable nature of any adjustment under Section 6(c) or (d) hereof, the new Aggregate Number and, if applicable, any new securities or property to which the Holder is entitled.  The Company shall promptly cause a copy of such certificate to be delivered to the Holder.  Any other determination of fair market value shall first be determined in good faith by the Company's Board of Directors and be based upon an arm’s length sale of such indebtedness, shares of stock, other securities, warrants, other subscription or purchase rights or other property, such sale being between a willing buyer and a willing seller.  In the case of any such determination of fair market value, the Holder may object to the determination in such certificate by giving written notice within 10 Business Days of the receipt of such certificate and, if the Holder and the Company cannot agree to the fair market value within 10 Business Days of the date of the Holder’s objection, the fair market value shall be determined by a national or regional investment bank or a national accounting firm mutually selected by the Holder and the Company, the fees and expenses of which shall be paid 50% by the Company and 50% by the Holders that did not agree with the valuation determined by the Company unless such determination results in a fair market value more than 110% of the fair market value determined by the Company in which case such fees and expenses shall be paid by the Company.  The Company shall keep at the Principal Office copies of all such certificates and cause the same to be available for inspection at said office during normal business hours by the Holder or any prospective purchaser of this Warrant (in whole or in part) if so designated by the Holder.
 
SECTION 7.
No Impairment.
 
The Company will not, by amendment of its organizational documents or through any reorganization, recapitalization, transfer of assets, consolidation, merger, share exchange, dissolution or any other voluntary and deliberate action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, including, without limitation, the adjustments required under Section 6 hereof, and will at all times in good faith assist in the carrying out of all such terms and in taking of all such action as may be necessary or appropriate to protect the rights of the Holder against other impairment.  Without limiting the generality of the foregoing and notwithstanding any other provision of this Warrant to the contrary (including by way of implication), the Company (a) will not increase the par value of any shares of Com mon Stock receivable on the exercise of this Warrant above the amount payable therefor on such exercise and (b) will take all such action as may be necessary or appropriate so that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock on the exercise of this Warrant.
 

 
-7-
 

SECTION 8.
Transfers of this Warrant.
 
(a)           Generally.  Subject to the restrictions set forth in this Sections 1 and 8 of this Warrant, the Holder may at any time and from time to time freely transfer this Warrant and the Warrant Shares in whole or in part.
 
(b)           Compliance with Securities Laws.  The Holder agrees that this Warrant and the Warrant Shares may not be sold or otherwise disposed of except pursuant to an effective registration statement under the Securities Act and applicable state securities laws or pursuant to an applicable exemption from the registration requirements of the Securities Act and such state securities laws.  In the event that the Holder transfers this Warrant or the Warrant Shares pursuant to an applicable exemption from registration, the Company may request, at the Holder’s expense, an opinion of counsel that the proposed transfer does not violate the Securities Act and applicable state securities laws. 
 
(c)           Restrictive Securities Legend.  For so long as the Warrant Shares have not been registered under the Securities Act pursuant to the registration rights set forth on Exhibit B or otherwise, the certificate representing the Warrant Shares shall bear the restrictive legend set forth below:
 
“The offer and sale of the shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, or the securities laws of any State and may not be sold or otherwise disposed of except pursuant to an effective registration statement under such Act and applicable State securities laws or pursuant to an applicable exemption from the registration requirements of such Act and such laws.”
 
SECTION 9.
Events of Non-Compliance and Remedies.
 
(a)           Events of Non-Compliance.  If the Company fails to keep and fully and promptly perform and observe in any material respect any of the terms, covenants or representations contained or referenced herein within 30 days from the earlier to occur of (i) written notice from the Holder specifying what failure has occurred, or requesting that a specified failure be remedied or (ii) an executive officer of the Company becoming aware of such failure (an “Event of Non-Compliance”), the Holder shall be entitled to the remedies set forth in subsection (b) hereof.
 
(b)           Remedies.  On the occurrence of an Event of Non-Compliance, in addition to any remedies the Holder may have under applicable law the Holder may bring any action for injunctive relief or specific performance of any term or covenant contained herein, the Company hereby acknowledging that an action for money damages may not be adequate to protect the interests of the Holder hereunder.
 
SECTION 10.
Definitions.
 
As used herein, in addition to the terms defined elsewhere herein, the following terms shall have the following meanings.  
 
“Aggregate Number” has the meaning set forth in the Preamble.
 

 
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“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in the State of New York are authorized or required by law or executive order to close.
 
“Capital Stock” means (a) with respect to any Person that is a corporation, any and all shares, interests or equivalents in capital stock (whether voting or nonvoting, and whether common or preferred) of such corporation, and (b) with respect to any Person that is not a corporation, any and all partnership, membership, limited liability company or other equity interests of such Person that confer on a Person the right to receive a share of the profits and losses of, or the distribution of assets of, the issuing Person; and in each case, any and all warrants, rights or options to purchase any of the foregoing.
 
“Cashless Exercise Shares” has the meaning set forth in Section 2(c).
 
“Change of Control” shall mean (i) a sale, transfer, lease, exclusive license or other disposition of all or substantially all of the Company’s assets or business, (ii) any merger, consolidation, reorganization or other business combination transaction of the Company with or into another entity, other than a transaction in which the holders of at least a majority of the shares of voting capital stock of the Company outstanding immediately prior to such transaction continue to hold (either by such shares remaining outstanding or by their being converted into shares of voting capital stock of the surviving entity) a majority of the total voting power represented by the shares of voting capital stock or other voting equity of the Company or the surviving enti ty outstanding immediately after such transaction, or (iii) the direct or indirect acquisition (including by way of new issuance by the Company (other than issuances of shares in respect of options or warrants existing as of the date hereof, but solely to the extent that the issuance triggered a Change of Control without factoring in any additional purchases made by such Person subsequent to the date hereof (other than purchases pursuant to the foregoing options and warrants), re-sales of stock by existing shareholders, or a tender or exchange offer), in a single transaction or series of related transactions, by any person or entity, or persons or entities acting as a group, of beneficial ownership or a right to acquire beneficial ownership of shares of the Company’s capital stock representing at least a majority of the voting power of the then outstanding shares of capital stock of the Company.
 
 “Commencement Date” has the meaning set forth in the Preamble. 
 
“Common Stock” means the Company’s Common Stock, par value $0.0001 per share.
 
“Company” has the meaning set forth in the Preamble.
 
“Convertible Securities” means (i) evidences of indebtedness, shares of stock or other securities (including, without limitation, options and warrants) that are directly or indirectly convertible, exercisable or exchangeable, with or without payment of additional consideration in cash or property, for shares of Common Stock (as applicable), either immediately or upon the onset of a specified date or the happening of a specified event or (ii) stock appreciation rights, phantom stock rights or other rights with equity features.
 
“Election to Purchase” has the meaning set forth in Section 2(a).
 
“Event of Non-Compliance” has the meaning set forth in Section 9(a).
 

 
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“Exercise Amount” has the meaning set forth in Section 2(a).
 
“Exercise Price” has the meaning set forth in the Preamble.
 
“Exercise Shares” has the meaning set forth in Section 2(c).
 
“Expiration Date” has the meaning set forth in the Preamble.
 
“Extraordinary Dividend” has the meaning set forth in Section 6(b)(ii).
 
“Fair Market Value Per Share” means, with respect to a share of Common Stock on any date: (a) if the shares are listed or admitted for trading on any national securities exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market, the last reported sales price as reported on such exchange or market; (b) if the shares are not listed or admitted for trading on any national securities exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market, the average of the last reported closing bid and asked quotation for the shares as reported on the National Association of Securities Dealers Automated Quotation System (“NASDAQ”) or a similar service if NASDAQ is n ot reporting such information; and (c) if the shares are not listed or admitted for trading on any national securities exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market or quoted by NASDAQ or a similar service, the average of the last reported bid and asked quotation for the shares as quoted by a market maker in the shares (or if there is more than one market maker, the bid and asked quotation shall be obtained from two market makers and the average of the lowest bid and highest asked quotation).  In the absence of any available public quotations for the Common Stock, the Board of Directors of the Company shall determine in good faith the fair value of the Common Stock.
 
“Governmental Authority” means the government of any nation, state, city, locality or other political subdivision of any thereof, any entity or person exercising executive, legislative, judicial, arbitral, regulatory or administrative functions of or pertaining to government, regulation or compliance.
 
“Holder” or “Holders” means any holder of an interest in this Warrant or the outstanding Warrant Shares.
 
“Person” means any individual, firm, corporation, partnership, limited liability company, joint venture, incorporated or unincorporated association, joint stock company, Governmental Authority, or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity.
 
“Principal Office” means the Company’s principal office as set forth in Section 15 hereof or such other principal office of the Company in the United States of America the address of which first shall have been set forth in a notice to the Holder.
 
“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations thereunder as the same shall be in effect at the time.
 
“Stock Combination” has the meaning set forth in Section 6(a)(i)(C).
 
“Stock Dividend” has the meaning set forth in Section 6(a)(i)(A).
 

 
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“Stock Reclassification” has the meaning set forth in Section 6(a)(i)(D).
 
“Stock Subdivision” has the meaning set forth in Section 6(a)(i)(B). 
 
“Transaction” has the meaning set forth in Section 6(c).
 
“Transaction Documents” means this Warrant and the Termination and Release and any other agreements or documents delivered in connection herewith or therewith.
 
“Warrant” has the meaning set forth in Section 1(a).
 
“Warrant Shares” means (a) the shares of Common Stock issued or issuable upon exercise of this Warrant in accordance with its terms and (b) all other shares of the Company’s Capital Stock issued with respect to such shares by way of stock dividend, stock split or other reclassification or in connection with any merger, consolidation, recapitalization or other reorganization affecting the Company’s Capital Stock.
 
SECTION 11.
Survival of Provisions.
 
Notwithstanding the full exercise by the Holder of its rights to purchase Common Stock hereunder, the provisions of Sections 9 through 21 of this Warrant shall survive such exercise and the Expiration Date.
 
SECTION 12.
Delays, Omissions and Waivers.
 
It is agreed that no delay or omission to exercise any right, power or remedy accruing to the Holder upon any breach or default of the Company under this Warrant shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  It is further agreed that any waiver, permit, consent or approval of any kind or character on the Holder’s part of any breach or default under this Warrant, or any waiver on the Holder’s part of any provisions or conditions of this Warrant must be in writing and that all remedies, either under this Warrant, or b y law or otherwise afforded to the Holder, shall be cumulative and not alternative.
 
SECTION 13.
Rights of Transferees.
 
Subject to Section 8, the rights granted to the Holder hereunder of this Warrant shall pass to and inure to the benefit of all subsequent transferees of all or any portion of this Warrant (provided that the Holder and any transferee shall hold such rights in proportion to their respective ownership of this Warrant and Warrant Shares) until extinguished pursuant to the terms hereof.
 
SECTION 14.
Captions.
 
The titles and captions of the Sections and other provisions of this Warrant are for convenience of reference only and are not to be considered in construing this Warrant.
 

 
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SECTION 15.
Notices.
 
All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first-class mail, return receipt requested, telecopy, overnight courier service or personal delivery:
 
If to the Company:   
Bonds.com Group, Inc.
529 5th Avenue, 8th Floor
New York, New York 10017
Attention:  Chief Executive Officer
Fax No:  (212) 946-3999
   
With a copy to:
Hill Ward Henderson
3700 Bank of America Plaza
101 East Kennedy Boulevard
Tampa, Florida 33602
Attention:   Mark A. Danzi, Esq.
Fax No.:  (813) 221-2900
   
If to the Holder:
BLACK-II TRUST
PO Box 1380
Boynton Beach, Florida 33425
Care of:  Mark G. Hollo
 
 
 
All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial overnight courier service; five Business Days after being deposited in the mail, postage prepaid, if mailed; and when receipt is acknowledged, if telecopied.
 
SECTION 16.
Successors and Assigns.
 
This Warrant shall be binding upon and inure to the benefit of the parties hereto and their respective successors or heirs and personal representatives and permitted assigns; provided, that the Company shall have no right to assign its rights, or to delegate its obligations, hereunder without the prior written consent of the Holder except as otherwise expressly provided herein. 
 
SECTION 17.
Governing Law, Jurisdiction, Jury Trial.
 
All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action o r proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and
 

 
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consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
 
SECTION 18.
Severability.
 
If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof.  The parties hereto further agree to replace such invalid, illegal or unenforceable provision of this Agreement with a valid, legal and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid, illegal or unenforceable provision.
 
SECTION 19.
Entire Agreement.
 
This Warrant, together with the other Transaction Documents, contains the entire agreement among the parties with respect to the subject matter hereof and thereby supersedes all prior and contemporaneous agreements or understandings with respect thereto.
 
SECTION 20.
Headings.
 
The headings in this Warrant are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
 
SECTION 21.
No Strict Construction.
 
The Company and the Holder each acknowledge that they have been represented by counsel in connection with this Warrant, the other Transaction Documents and the transactions contemplated hereby and thereby.  The Company and the Holder have participated jointly in the negotiation and drafting of this Warrant and the other Transaction Documents.  In the event an ambiguity or question of intent or interpretation arises under any provision of this Warrant or any Transaction Document, this Warrant or such other Transaction Documents shall be construed as if drafted jointly by the parties thereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Warrant or any other Transaction Document.
 
SECTION 22.
Representations, Warranties and Covenants.
 
The Company hereby represents, warrants and covenants to the Holder that so long as the Holder holds this Warrant or any Warrant Shares that the Company will not, directly or indirectly, create or otherwise cause or suffer to exist or become effective any restriction or encumbrance on the ability of the Company to perform and comply with its obligations under this Warrant.
 

 
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SECTION 23.
Investment and Taxation Representations.
 
In connection with the issuance of this Warrant, Holder represents to the Company the following:
 
(a)           Holder is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire this Warrant.  Holder is acquiring the Warrant for investment for his or her own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), or under any applicable provision of state law.
 
(b)           Holder understands that this warrant and the shares issuable upon the exercise hereof have not been registered under the Securities Act by reason of a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Holder’s investment intent as expressed herein.
 
(c)           Holder further acknowledges and understands that this Warrant and any shares of Common Stock issued upon the exercise hereof must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration (including SEC Rule 144) is available.  Holder understands that the certificate(s) evidencing the Common Stock securities will be imprinted with a legend which prohibits the transfer of the securities unless they are registered or such registration is not required in the opinion of counsel for the Company.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.  SIGNATURE PAGE FOLLOWS.]
 
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IN WITNESS WHEREOF, the Company has caused this Warrant to be issued and executed in its corporate name by its duly authorized officers and its corporate seal to be affixed hereto as of the date below written.
DATED:  October 19, 2010 
  
BONDS.COM GROUP, INC.
  
       
   
By:
  /s/ Michael O. Sanderson   
   
Name:   
Michael Sanderson
  
   
Title:
Chief Executive Officer
  


 
-15-
 

EXHIBIT A
NOTICE OF EXERCISE; ELECTION TO PURCHASE
 
To:
   
  
 
           
  
 
           
  
 
1.           The undersigned, pursuant to the provisions of the attached Warrant, hereby elects to exercise this Warrant with respect to ________ shares of Common Stock (the “Exercise Amount”).  Capitalized terms used but not otherwise defined herein have the meanings ascribed thereto in the attached Warrant.
 
2.           The undersigned herewith tenders payment for such shares in the following manner (please check type, or types, of payment and indicate the portion of the Exercise Price to be paid by each type of payment): 
 
_______  Exercise for Cash
_______  Cashless Exercise
 
3.           Please issue a certificate or certificates representing the shares issuable in respect hereof under the terms of the attached Warrant, as follows:
 
 
              
 
(Name of Record Holder/Transferee)
 
and deliver such certificate or certificates to the following address:
 
 
              
 
(Address of Record Holder/Transferee)
 
4.           The undersigned represents that the aforesaid shares are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares.
 
 
5.           If the Exercise Amount is less than all of the shares of Common Stock purchasable hereunder, please issue a new warrant representing the remaining balance of such shares, as follows:
 
 
              
 
(Name of Record Holder/Transferee)
 
   and deliver such warrant to the following address:
 
  
              
 
(Address of Record Holder/Transferee)

 
              
 
(Signature)

   
  
              
(Date)
    

 

 
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EXHIBIT B
 
Registration Rights
 
The Company hereby grants Holder the following rights with respect to the registration of the Common Stock  issuable upon exercise of the Warrant to which this Exhibit B is attached (the “Warrant”) and certain other shares of Common Stock held by or issuable to the Black-II Trust or Mark G. Hollo (the “Hollo Parties”).   Capitalized terms used herein and not defined shall have the meanings given to them in the Warrant.
 
1.           Definitions. As used herein, the following terms shall have the following meanings:
 
a.           “1933 Act” means the Securities Act of 1933, as amended.
 
b.           “1934 Act” means the Exchange Act of 1934, as amended.
 
c.           “Business Day” means any day other than Saturday, Sunday or any other day on which commercial banks in the City of New York are authorized or required by law to remain closed.
 
d.           “Effective Date” means the date a Registration Statement is declared effective by the SEC.
 
e.           “Form S-3” means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the SEC that permits incorporation of substantial information by reference to other documents filed by the Company with the SEC.
 
f.           “register,” “registered,” and “registration” refer to a registration effected by preparing and filing one or more Registration Statements (as defined below) in compliance with the 1933 Act and pursuant to Rule 415 and the declaration or ordering of effectiveness of such Registration Statement(s) by the SEC.
 
g.           “Registrable Securities” means (i) any shares of Common Stock issued or issuable upon exercise of the Warrant, (ii) any shares of Common Stock that are held by or issuable to the Hollo Parties as of the date of the Warrant, and (iii) any shares of Common Stock issued or issuable upon conversion or exercise of options, warrants or purchase rights held by the Hollo Parties as of the date of the Warrant; provided, however that no shares of Common Stock issued or issuable shall be deemed Registrable Securities fro m and after the date they may be sold without volume limitations pursuant to Rule 144 (or any successor thereto).
 
h.           “Registration Statement” means a registration statement or registration statements of the Company filed under the 1933 Act covering the Registrable Securities.
 
i.           “Rule 415” means Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous or delayed basis.
 
j.           “SEC” means the United States Securities and Exchange Commission.
 

 
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2.           Registration.
 
a.           Demand Registration.  From and after the date that the Company is eligible to register the Registrable Securities on Form S-3 and thereafter until the earlier of such date as the Company is no longer eligible to register the Registrable Securities on Form S-3 or the date five (5) years after the date of the Warrant, if the Company receives a request from the Holder to register all of the Registrable Securities, then the Company shall, as soon as practicable and in any event within ninety (90) days after the date such request is given by the Holder, file a registration statement under the Securities Act on Form S-3 cover ing all Registrable Securities, subject to the limitations of Section 2(b).
 
b.           Notwithstanding the foregoing obligations, if the Company furnishes to Holder a certificate signed by the Company’s chief executive officer stating that in the good faith judgment of the Company’s Board of Directors it would be materially detrimental to the Company and its stockholders for such registration statement to either become effective or remain effective for as long as such registration statement otherwise would be required to remain effective, because such action would (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with req uirements under the Securities Act or Exchange Act, then the Company shall have the right to defer taking action with respect to such filing, and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period of not more than one hundred twenty (120) days after the request of the Holder is given; provided, however, that the Company may not invoke this right more than once in any twelve (12) month period; and provided further that the Company shall not register any securities for its own account or that of any other stockholder during such one hundred twenty (120) day period other than pursuant to a registration relating to the sale of securities to employees of the Company pursuant to a stock option, stock purchase, or similar plan; a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities; or a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered.  The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 2(a) (x) during the period that is ninety (90) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is one hundred eighty (180) days after the effective date of, a Company-initiated registration, provided, that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; (y) after the Company has effected one registration pursuant to Section 2(a), or (z) if the Registrable Securities may be sold by the Holder without volume limitations pursuant to Rule 144 (or any successor rule).
 
c.           Piggy Back Registration Rights.  If, at any time there is not an effective Registration Statement covering the Registrable Securities, and the Company shall determine to prepare and file with the SEC a Registration Statement relating to an offering for its own account or the account of others under the 1933 Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the 1933 Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business
 

 
-18-
 

or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to the Holder a written notice of such determination at least twenty days prior to the filing of any such Registration Statement and shall automatically include in such Registration Statement all Registrable Securities for resale and offer on a continuous basis pursuant to Rule 415; provided, however, that (i) if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the Registration Statement filed in connection with such registration, the Company determines for any reason not to proceed with such registration, the Company wi ll be relieved of its obligation to register any Registrable Securities in connection with such registration, (ii) in case of a determination by the Company to delay registration of its securities, the Company will be permitted to delay the registration of Registrable Securities for the same period as the delay in registering such other securities, (iii) Holder is subject to confidentiality obligations with respect to any information gained in this process or any other material non-public information he, she or it obtains, (iv) Holder is subject to all applicable laws relating to insider trading or similar restrictions; (v) if all of the Registrable Securities of the Holder cannot be so included due to Rule 415, then the Company may first reduce the number of the Holder’s Registrable Securities covered by such Registration Statement to the maximum number which would enable the Company to conduct such offering in accordance with the provisions of Rule 415; (vi) if the Registration Statement is for a thi rd party, then the Company shall not be required to include the Registrable Securities in such Registration Statement if not permitted by any agreement with such third party existing prior to the date hereof; and (vii) the Company shall not be required to include any such Registrable Securities in such Registration Statement if they may be sold by the Holder without volume limitations pursuant to Rule 144 (or any successor thereto).
 
3.           Registration Procedures. At such time as the Company is obligated to file a Registration Statement with the SEC pursuant to Section 2(a), the Company will use commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:
 
a.           The Company shall keep each Registration Statement effective pursuant to Rule 415 at all times until the earlier of (i) the date as of which Holder may sell all of the Registrable Securities covered by such Registration Statement without volume restrictions pursuant to Rule 144 (or any successor thereto) promulgated under the 1933 Act and is not otherwise prohibited by the SEC or any statute, rule, regulation or other applicable law from selling any such Registrable Securities pursuant to such Rule or (ii) the date on which Holder shall have sold all of the Registrable Securities covered by such Registration Statement (the “Registration Period ”). The Company shall use commercially reasonable efforts to ensure that each Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein (in the case of prospectuses, in the light of the circumstances in which they were made) not misleading.
 
b.           The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration Statement and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep such Registration Statement effective at all times during the Registration Period, and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended
 

 
-19-
 

methods of disposition by the seller or sellers thereof as set forth in such Registration Statement. In the case of amendments and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 3(b)) by reason of the Company filing a report on Form 10-Q, Form 10-K or any analogous report under the 1934 Act, the Company shall have incorporated such report by reference into such Registration Statement, if applicable, or shall file such amendments or supplements with the SEC on the same day on which the 1934 Act report is filed which created the requirement for the Company to amend or supplement such Registration Statement.
 
c.           The Company shall furnish to the Holder, without charge, (i) promptly after the same is prepared and filed with the SEC, at least one copy of such Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference, if requested by Holder, all exhibits and each preliminary prospectus, (ii) upon the effectiveness of any Registration Statement, ten (10) copies of the prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as Holder may reasonably request) and (iii) such other documents, including copies of any preliminary or final prospectus, as Hol der may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by Holder.
 
d.           The Company shall use commercially reasonable efforts to (i) register and qualify, unless an exemption from registration and qualification applies, the resale by Holder of the Registrable Securities covered by a Registration Statement under such other securities or “blue sky” laws of all applicable jurisdictions in the United States, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effe ct at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify Holder of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky ” laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.
 
e.           The Company shall notify Holder in writing of the happening of any event, as promptly as practicable after becoming aware of such event, as a result of which the prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided that in no event shall such notice contain any material, nonpublic information), and, subject to Section 3(l), promptly prepare a supplement or amendment to such Registration Statement to correct such untrue statement or omission, and deliver ten (10) copies
 

 
-20-
 

of such supplement or amendment to Holder (or such other number of copies as Holder may reasonably request).
 
f.           The Company shall use commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify Holder of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.
 
g.           The Company shall notify Holder in writing of the happening of any event, as promptly as practicable after becoming aware of such event, as a result of which the prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided that in no event shall such notice contain any material, nonpublic information), and, subject to Section 3(l), promptly prepare a supplement or amendment to suc h Registration Statement to correct such untrue statement or omission, and deliver ten (10) copies of such supplement or amendment to Holder (or such other number of copies as Holder may reasonably request).
 
h.           The Company shall hold in confidence and not make any disclosure of information concerning Holder provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement. The Company agrees that it shall, upon lea rning that disclosure of such information concerning Holder is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to Holder and allow Holder, at Holder’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.
 
i.           The Company shall cooperate with Holder and, to the extent applicable, facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as Holder may reasonably request and registered in such names as Holder may request.
 
j.           If requested by Holder, the Company shall (i) as soon as practicable incorporate in a prospectus supplement or post-effective amendment such information as the Holder reasonably requests to be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) as soon as
 

 
-21-
 

practicable make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) as soon as practicable, supplement or make amendments to any Registration Statement if reasonably requested by Holder holding any Registrable Securities.
 
k.           The Company shall otherwise use commercially reasonable efforts  to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder.
 
l.           Notwithstanding anything to the contrary herein, at any time after the Effective Date, the Company may delay the disclosure of material, non-public information concerning the Company the disclosure of which at the time is not, in the good faith opinion of the Board of Directors of the Company and its counsel, in the best interest of the Company and, in the opinion of counsel to the Company, otherwise required (a “Grace Period”); provided, that the Company shall promptly (i) notify Holder in writing of the existence of material, non-public information giving rise to a Grace Period (provided that in each notice the Comp any will not disclose the content of such material, non-public information to Holder) and the date on which the Grace Period will begin, and (ii) notify Holder in writing of the date on which the Grace Period ends; and, provided further, that no Grace Period shall exceed sixty (60) consecutive days and during any three hundred sixty five (365) day period such Grace Periods shall not exceed an aggregate of one hundred twenty (120) days and the first day of any Grace Period must be at least two (2) trading days after the last day of any prior Grace Period (each, an “Allowable Grace Period”). For purposes of determining the length of a Grace Period above, the Grace Period shall begin on and include the date Holder receives the notice referred to in clause (i) and shall end on and include the later of the date Holder receives the notice referred to in clause (ii) and the date referred to in such notice. The provisions of Section 3(e) hereof shall not be applicable during the period of any Allowable Grace Period. Upon expiration of the Grace Period, the Company shall again be bound by the first sentence of Section 3(g) with respect to the information giving rise thereto unless such material, non-public information is no longer applicable. Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of Holder in connection with any sale of Registrable Securities with respect to which Holder has entered into a contract for sale, and delivered a copy of the prospectus included as part of the applicable Registration Statement (unless an exemption from such prospectus delivery requirements exists), prior to Holder’s receipt of the notice of a Grace Period and for which Holder has not yet s ettled.
 
4.           Obligations of Holder.
 
a.           At least five Business Days prior to the first anticipated filing date of a Registration Statement, the Company shall notify Holder in writing of the information the Company requires from Holder if Holder elects to have any of Holder’s Registrable Securities included in such Registration Statement. It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of Holder that Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably re quired to effect the effectiveness of the registration
 

 
-22-
 

of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request.
 
b.           Holder, by such Holder’s acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Registration Statement hereunder, unless Holder has notified the Company in writing of Holder’s election to exclude all of Holder’s Registrable Securities from such Registration Statement.
 
c.           Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(e) or the first sentence of Section 3(f), Holder will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(g) or the first sentence of Section 3(f) or receipt of notice that no supplement or amendment is required. Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended shares of Common Stock to a transferee of Holder in connection with any sale of Registrable Securities with respect to which Holder has entered into a contract for sale prior to Holder’s receipt of a notice from the Company of the happening of any event of the kind described in Section 3(g) or the first sentence of Section 3(f) and for which Holder has not yet settled.
 
d.           Holder covenants and agrees that it will comply with the prospectus delivery requirements of the 1933 Act as applicable to it or an exemption therefrom in connection with sales of Registrable Securities pursuant to the Registration Statement.
 
5.           Expenses of Registration. All reasonable expenses, other than underwriting discounts, commissions and stock transfer taxes with respect to the Registrable Securities, incurred in connection with registrations, filings or qualifications pursuant to Section 2, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, and fees and disbursements of counsel for the Company shall be paid by the Company. Holder shall be responsible for fees and expenses of its own counsel.
 
6.           Other Registration Rights.  The foregoing registration rights are in addition to, and shall not be exclusive of or in any way replace or amend, any other registration rights which Holder may be entitled to.
 
* * * * *
 
 
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 EX-10.11 14 ex-10_11.htm COMMON STOCK PURCHASE WARRANT Unassociated Document

Exhibit 10.11
 
THE OFFER AND SALE OF THIS COMMON STOCK PURCHASE WARRANT AND THE SHARES OF COMMON STOCK THAT MAY BE PURCHASED HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE.  THIS COMMON STOCK PURCHASE WARRANT AND THE SHARES OF COMMON STOCK THAT MAY BE PURCHASED HEREUNDER MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND REGISTRATION OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM
 
BONDS.COM GROUP, INC.
 
COMMON STOCK PURCHASE WARRANT
 
Date of Issuance: October 19, 2010
 
THIS IS TO CERTIFY that Bonds MX, LLC, a Delaware limited liability company, and its transferees, successors and assigns (the “Holder”), for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, is entitled to purchase from BONDS.COM GROUP, INC., a Delaware corporation (the “Company”), at the price of $0.24 per share (the “Exercise Price”), at any time after the date hereof (the “Commencement Date”) and expiring on October 19, 2015 (the “Expiration Date”), Five Million Four and 00/100 (5,000,004) (the “Aggregate Number”) shares of the fully paid and nonassessable Common Stock, par value $0.0001 per share (the “Common Stock”), of the Company (as such number may be adjusted as provided herein).
 
Capitalized terms used herein shall have the meanings ascribed to such terms in Section 10 hereof unless otherwise defined herein.
 
SECTION 1.                The Warrant; Transfer and Exchange.
 
(a)           The Warrant.  This Common Stock Purchase Warrant (this “Warrant”) is issued under and pursuant to the Unit Purchase Agreement, dated as of October 19, 2010, by and between the Holder and the Company (the “Unit Purchase Agreement”).  This Warrant and the rights and privileges of the Holder hereunder may be exercised by the Holder in whole or in part as provided herein, shall survive any termination of the Unit Purchase Agreement and, as more fully set forth in Sections 1(b) and 8 hereof, may be transferred (subject to applicab le securities laws and regulations) by the Holder to any other Person or Persons at any time or from time to time, in whole or in part, regardless of whether the Holder retains any or all rights under the Unit Purchase Agreement.
 
(b)           Transfer and Exchanges.  The Company shall initially record this Warrant on a register to be maintained by the Company with its other stock books and, subject to Section 8 hereof, from time to time thereafter shall reflect the transfer of this Warrant on such register when surrendered for transfer in accordance with the terms hereof and properly endorsed, accompanied by appropriate instructions, and further accompanied by payment in cash or by check, bank draft or money order payable to the order of the Company, in United States currency, of an amount equal to any stamp or other tax or governmental charge or fee required to be paid in connection with the transfer thereof.  Upon any such transfer, a new warrant or warrants shall be issued to the transferee and the Holder (in the event this Warrant is only partially transferred) and the surrendered warrant shall be canceled.  Each such transferee shall succeed to all of the rights of the Holder with respect to the Warrant being so transferred; provided, however, that, in the event this Warrant is partially transferred, the Holder and such transferee shall hold rights in respect of this Warrant in proportion to their respective interests in this Warrant.  This Warrant may be exchanged at the option of the Holder, when surrendered at the Principal Office, for another warrant or other warrants of like tenor and representing in the aggregate the right to purchase a like number of shares of Common Stock.
 
 
 
 
 
SECTION 2.                Exercise.
 
(a)           Right to Exercise.  At any time after the Commencement Date and on or before the Expiration Date, the Holder, in accordance with the terms hereof, may exercise this Warrant, in whole at any time or in part from time to time, by delivering this Warrant to the Company during normal business hours on any Business Day at the Principal Office, together with the Election to Purchase, in the form attached hereto as Exhibit A and made a part hereof (the “Election to Purchase”), duly executed, and payment of the Exercise Price per share for the number of shares to b e purchased (the “Exercise Amount”), as specified in the Election to Purchase.  If the Expiration Date is not a Business Day, then this Warrant may be exercised on the next succeeding Business Day.
 
(b)           Payment of Exercise Price.  Payment of the Exercise Price shall be made to the Company by either of the following means (or any combination of such means): (i) in cash or other immediately available funds, payable by certified wire transfer to an account designated by the Company or (ii) as provided in Section 2(c).  The amount of the Exercise Price to be paid shall equal the product of (A) the Exercise Amount multiplied by (B) the Exercise Price per share.
 
(c)           Cashless Exercise.  The Holder shall have the right to pay all or a portion of the Exercise Price by making a “Cashless Exercise” pursuant to this Section 2(c), in which case the portion of the Exercise Price to be so paid shall be paid by reducing the number of shares of Common Stock otherwise issuable pursuant to the Election to Purchase (the “Exercise Shares”) by an amount (the “Cashless Exercise Shares”) equal to (i) the Exercise Price multiplied by the Exercise Shares and divided by (ii) the Fair Market Value Per Share of the Co mmon Stock determined as of the Business Day immediately preceding the date of such exercise of this Warrant.  The number of shares of Common Stock to be issued to the Holder as a result of a Cashless Exercise will therefore be equal to the Exercise Shares minus the Cashless Exercise Shares.
 
(d)           Issuance of Shares of Common Stock.  Upon receipt by the Company of this Warrant at the Principal Office in proper form for exercise, and accompanied by payment of the Exercise Price as aforesaid, the Company shall immediately cause the shares of Common Stock to be registered in the name of the Holder in the Register of Stockholders of the Company and the Holder shall then be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that certificates representing such shares of Common Stock may not then be actually delivered.  Upon such surrender of this Warrant and payment of the Exercise Price as aforesaid, the Company shall issue and cause to be delivered with all reasonable dispatch to, or upon the written order of, the Holder (and in such name or names as the Holder may designate) a certificate or certificates for a number of shares of Common Stock equal to the Exercise Amount, subject to any reduction as provided in Section 2(c) for a Cashless Exercise.
 
(e)           Fractional Shares.  The Company shall not be required to deliver fractions of shares of Common Stock upon exercise of this Warrant.  If any fraction of a share of Common Stock would be deliverable upon an exercise of this Warrant, the Company may, in lieu of delivering such fraction of a share of Common Stock, make a cash payment to the Holder in an amount equal to the same fraction of the Fair Market Value Per Share of the Common Stock determined as of the Business Day immediately preceding the date of exercise of this Warrant.

 
2
 
 
(f)           Partial Exercise.  In the event of a partial exercise of this Warrant, the Company shall issue to the Holder a Warrant in like form for the unexercised portion thereof.
 
SECTION 3.                Payment of Taxes.
 
The Company shall pay all stamp taxes attributable to the issuance of shares or other securities issuable upon the exercise of this Warrant or issuable pursuant to Section 6 hereof.
 
SECTION 4.                Replacement Warrant.
 
In case this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue and deliver in exchange and substitution for and upon cancellation of the mutilated Warrant, or in lieu of and in substitution for the Warrant lost, stolen or destroyed, a new Warrant of like tenor and representing an equivalent right or interest, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction of such Warrant and upon receipt of indemnity reasonably satisfactory to the Company (provided, that if the Holder is a financial institution or other institutional investor, its personal undertaking to provide an indemnity is hereby deemed to be reasonably satisfactory to the Company).
 
SECTION 5.                Reservation of Capital Stock and Other Covenants.
 
(a)           Reservation of Authorized Capital Stock.  The Company shall at all times ensure that it has sufficient authorized and unissued capital, free of preemptive rights, to enable the Company at any time to fulfill all of its obligations hereunder upon the exercise of this Warrant.
 
(b)           Affirmative Actions to Permit Exercise and Realization of Benefits.  If any shares of Common Stock to be issued upon the exercise of this Warrant, or any shares or other securities to be issued pursuant to Section 6 hereof, or any shares of Common Stock require registration with or approval of any Governmental Authority under any federal or state law (other than securities laws) before such shares or other securities may be validly delivered upon exercise of this Warrant or conversion of the Common Stock or other securities that may be purchased hereunder, then the Company covenants that it will, at its sole expense, secure such registration or approval, as the case may be.
 
(c)           Validly Issued Shares.  The Company covenants that all shares of Common Stock delivered upon exercise of this Warrant, assuming full payment of the Exercise Price, shall, upon delivery by the Company, be duly authorized and validly issued, fully paid and nonassessable, free from all stamp taxes, liens and charges with respect to the issue or delivery thereof and otherwise free of all other security interests, encumbrances and claims of any nature whatsoever other than such security interests, encumbrances and claims granted by the Holder.
 
SECTION 6.                Adjustments.
 
Under certain conditions, the Aggregate Number is subject to adjustment as set forth in this Section 6.  

 
3
 

(a)           Adjustments to Aggregate Number.  The Aggregate Number, after taking into consideration any prior adjustments pursuant to this Section 6, shall be subject to adjustment from time to time as follows and, thereafter, as adjusted, shall be deemed to be the Aggregate Number hereunder.
 
(i)           Stock Dividends; Subdivisions, Combinations an Reclassifications.  In case at any time or from time to time the Company shall:
 
(A)           issue to the holders of the Common Stock a dividend payable in, or other distribution of, Common Stock (a “Stock Dividend”),
 
(B)           subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, including, without limitation, by means of a stock split (a “Stock Subdivision”),
 
(C)           combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock (a “Stock Combination”), or
 
(D)           issue any shares of its capital stock in a reclassification of the Common Stock (a “Stock Reclassification”),
 
then the number of shares of Common Stock purchasable upon exercise of this Warrant, if any, immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of shares of Common Stock or other securities of the Company which it would have owned or have been entitled to receive had this Warrant been exercised in advance thereof.
 
(ii)           Miscellaneous.  The following provisions shall be applicable to the making of adjustments of the Aggregate Number provided above in this Section 6(a):
 
(A)           The adjustments required by the preceding paragraphs of this Section 6(a) shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that no adjustment of the Aggregate Number that would otherwise be required shall be made (except in the case of a Stock Subdivision, Stock Combination or Stock Reclassification as provided for in Section 6(a)(i) hereof) unless and until such adjustment either by itself or with other adjustments not previously made adds or subtracts at least one one-hundredth of one share to or from the Aggregate Number immediately prior to the making of such adjustment.  Any adjustment representing a change of less than such minimum amount (except as aforesaid) shall be carried forward and made a s soon as such adjustment, together with other adjustments required by this Section 6(a) and not previously made, would result in a minimum adjustment.  For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence. 
 
(B)           In computing adjustments under this Section 6(a), fractional interests in Common Stock shall be taken into account to the nearest one-thousandth of a share.
 
(C)           If the Company shall take a record of the holders of the Common Stock for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution to shareholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled.

 
4
 

(b)           Adjustment to Exercise Price.  
 
(i)           Upon any adjustment to the Aggregate Number or of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder pursuant to Section 6(a)(i), the Holder shall thereafter be entitled to purchase such Aggregate Number of shares of Common Stock or other securities resulting from such adjustment at an Exercise Price per share of Common Stock or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the Aggregate Number prior to such adjustment and dividing by the Aggregate Number immediately following such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for s uch event.
 
(ii)           In case at any time or from time to time the Company shall pay a dividend or make a distribution in cash, securities or other assets to the holders of Common Stock, other than (x) as described in Sections 6(a)(i)(A) and 6(a)(i)(D) above or (y) regular quarterly or other periodic dividends (any such non-excluded event being referred to as an “Extraordinary Dividend”), then the Exercise Price shall be decreased by the amount of cash and/or the fair market value (as determined by the board of directors of the Company, in good faith) of any securities or other asse ts paid on each share of Common Stock in respect of such Extraordinary Dividend.  An adjustment made pursuant to this Section 6(b)(ii) shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.   
 
(c)           Changes in Common Stock.  In case at any time the Company shall initiate any transaction or be a party to any transaction (including, without limitation, a merger, consolidation, share exchange, sale, lease or other disposition of all or substantially all of the Company’s assets, liquidation, recapitalization or reclassification of the Common Stock) in connection with which the previous outstanding Common Stock shall be changed into or exchanged for different securities of the Company or Capital Stock or other securities of another corporation or interests in a non-corporate entity or other property (including cash) or any combination of the foregoing (each such transaction being herein cal led a “Transaction”), then, as a condition of the consummation of the Transaction, lawful, enforceable and adequate provision shall be made so that the Holder shall be entitled to elect, by written notice to the Company, to receive (i) in exchange for the surrender of this Warrant to the Company and the same Exercise Price (rather than the exercise thereof), the securities or other property (including cash) to which such Holder would have been entitled upon consummation of the Transaction if such Holder had exercised this Warrant and (if applicable) converted the shares of Common Stock issuable hereunder immediately prior thereto, (ii) a new warrant in form and substance similar to, and in exchange for, this Warrant to purchase all or a portion of such securities or other property to which such Holder would have been entitled upon consummation of the Transaction if such Holder had exercised this Warrant and (if applicable) converted the shares of Common Stock issuable hereunder immediately prior thereto, for the same Exercise Price, or (iii) upon exercise of this Warrant at any time on or after the consummation of the Transaction but prior to the Expiration Date, in lieu of the Warrant Shares issuable upon such exercise prior to such consummation, the securities or other property (including cash) to which such Holder would have been entitled upon consummation of the Transaction if such Holder had exercised this Warrant and (if applicable) converted the shares of Common Stock issuable hereunder immediately prior thereto (subject to adjustments from and after the consummation date as nearly equivalent as possible to the adjustments provided for in this Section 6).  The Company will not effect any Transaction unless prior to the consummation thereof each corporation or other entity (other than the Company) which may be required to deliver any new warran t, securities or other property as provided herein shall assume by written instrument the obligation to deliver to such Holder such new warrant, securities or other property as in accordance with the foregoing provisions such Holder may be entitled to receive.  The foregoing provisions of this Section 6(c) shall similarly apply to successive Transactions.
 
 
5
 
 
(d)           Other Action Affecting Capital Stock. 
 
(i)           Other Action.  In case at any time or from time to time the Company shall take any action of the type contemplated in Section 6(a) or (c) hereof but not expressly provided for by such provisions, then, unless in the opinion of the Company’s Board of Directors such action will not have a material adverse effect upon the rights of the Holder (taking into consideration, if necessary, any prior actions which the Company’s Board of Directors deemed not to materially adversely affect the rights of the Holder), the Aggregate Number shall be adjusted in such manner and at such time as the Company’s Board of Directors may in good faith determine to be equitable in the circumstances.
 
(e)           Notices.
 
(i)           Notice of Proposed Actions.  In case the Company shall propose (A) to pay any dividend payable in stock of any class to the holders of the Common Stock or to make any other distribution to the holders of the Common Stock, (B) to offer to the holders of the Common Stock rights to subscribe for or to purchase any Convertible Securities or additional shares of Common Stock or shares of stock of any class or any other securities, warrants, rights or options (other than the exercise of pre-emptive rights by a holder), (C) to effect any reclassification of the Common Stock, (D) to effect any recapitalization, stock subdivision, stock combination or other capital reorganization, (E) to effect any consol idation or merger, share exchange, or sale, lease or other disposition of all or substantially all of its property, assets or business, (F) to effect the liquidation, dissolution or winding up of the Company, (G) effect a Change of Control (provided that notice of a Change of Control shall only be provided upon the Company entering into a definitive agreement with respect to such Change of Control and such information not being material non public information) or (H) to effect any other action which would require an adjustment under this Section 6, then in each such case the Company shall give to the Holder written notice of such proposed action, which shall specify the date on which a record is to be taken for the purposes of such stock dividend, stock subdivision, stock combination, distribution or rights, or the approximate date on which such reclassification, recapitalization, reorganization, consolidation, merger, share exchange, sale, lease, transfer, disposition, liquidation, dissolution, winding up o r other transaction is expected to take place and the expected date of participation therein by the holders of Common Stock (as applicable), if any such date is to be fixed, or the date on which the transfer of Common Stock (as applicable) is expected to occur, and shall also set forth such facts with respect thereto as shall be reasonably necessary to indicate the effect of such action on the Common Stock (as applicable) and on the Aggregate Number after giving effect to any adjustment which will be required as a result of such action.  Such notice shall be so given in the case of any action covered by clause (A) or (B) above at least 10 Business Days prior to the record date for determining holders of the Common Stock (as applicable) for purposes of such action and, in the case of any other such action, at least 10 Business Days prior to the earlier of the date of the taking of such proposed action or the date of participation therein by the holders of Common Stock (as applicable).

 
6
 

(ii)           Adjustment Notice.  Whenever the Aggregate Number is to be adjusted pursuant to this Section 6, unless otherwise agreed by the Holder, the Company shall promptly (and in any event within 10 Business Days after the event requiring the adjustment) prepare a certificate signed by the Chief Financial Officer of the Company, setting forth, in reasonable detail, the event requiring the adjustment and the method by which such adjustment is to be calculated.  The certificate shall set forth, if applicable, a description of the basis on which the Company's Board of Directors in good faith determined, as applicable, the Fair Market Value Per Share or the fair market value of any evidences of ind ebtedness, shares of stock, other securities, warrants, other subscription or purchase rights, or other property or the equitable nature of any adjustment under Section 6(c) or (d) hereof, the new Aggregate Number and, if applicable, any new securities or property to which the Holder is entitled.  The Company shall promptly cause a copy of such certificate to be delivered to the Holder.  Any other determination of fair market value shall first be determined in good faith by the Company's Board of Directors and be based upon an arm’s length sale of such indebtedness, shares of stock, other securities, warrants, other subscription or purchase rights or other property, such sale being between a willing buyer and a willing seller.  In the case of any such determination of fair market value, the Holder may object to the determination in such certificate by giving written notice within 10 Business Days of the receipt of such certificate and, if the Holder and the Company cannot agree to the fair market value within 10 Business Days of the date of the Holder’s objection, the fair market value shall be determined by a national or regional investment bank or a national accounting firm mutually selected by the Holder and the Company, the fees and expenses of which shall be paid 50% by the Company and 50% by the Holders that did not agree with the valuation determined by the Company unless such determination results in a fair market value more than 110% of the fair market value determined by the Company in which case such fees and expenses shall be paid by the Company.  The Company shall keep at the Principal Office copies of all such certificates and cause the same to be available for inspection at said office during normal business hours by the Holder or any prospective purchaser of this Warrant (in whole or in part) if so designated by the Holder.
 
SECTION 7.                No Impairment.
 
The Company will not, by amendment of its organizational documents or through any reorganization, recapitalization, transfer of assets, consolidation, merger, share exchange, dissolution or any other voluntary and deliberate action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, including, without limitation, the adjustments required under Section 6 hereof, and will at all times in good faith assist in the carrying out of all such terms and in taking of all such action as may be necessary or appropriate to protect the rights of the Holder against other impairment.  Without limiting the generality of the foregoing and notwithstanding any other provision of this Warrant to the contrary (including by way of implication), the Company (a) will not increase the par value of any shares of Com mon Stock receivable on the exercise of this Warrant above the amount payable therefor on such exercise and (b) will take all such action as may be necessary or appropriate so that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock on the exercise of this Warrant.
 
SECTION 8.                Transfers of this Warrant.
 
(a)           Generally.  Subject to the restrictions set forth in this Sections 1 and 8 of this Warrant, the Holder may at any time and from time to time freely transfer this Warrant and the Warrant Shares in whole or in part.
 
(b)           Compliance with Securities Laws.  The Holder agrees that this Warrant and the Warrant Shares may not be sold or otherwise disposed of except pursuant to an effective registration statement under the Securities Act and applicable state securities laws or pursuant to an applicable exemption from the registration requirements of the Securities Act and such state securities laws.  In the event that the Holder transfers this Warrant or the Warrant Shares pursuant to an applicable exemption from registration, the Company may request, at the Holder’s expense, an opinion of counsel that the proposed transfer does not violate the Securities Act and applicable state securities laws. 

 
7
 
 
(c)           Restrictive Securities Legend.  For so long as the Warrant Shares have not been registered under the Securities Act pursuant to the Registration Rights Agreement, the certificate representing the Warrant Shares shall bear the restrictive legend set forth below:
 
“The offer and sale of the shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, or the securities laws of any State and may not be sold or otherwise disposed of except pursuant to an effective registration statement under such Act and applicable State securities laws or pursuant to an applicable exemption from the registration requirements of such Act and such laws.”
 
SECTION 9.                Events of Non-Compliance and Remedies.
 
(a)           Events of Non-Compliance.  If the Company fails to keep and fully and promptly perform and observe in any material respect any of the terms, covenants or representations contained or referenced herein within 30 days from the earlier to occur of (i) written notice from the Holder specifying what failure has occurred, or requesting that a specified failure be remedied or (ii) an executive officer of the Company becoming aware of such failure (an “Event of Non-Compliance”), the Holder shall be entitled to the remedies set forth in subsection (b) hereof.
 
(b)           Remedies.  On the occurrence of an Event of Non-Compliance, in addition to any remedies the Holder may have under applicable law the Holder may bring any action for injunctive relief or specific performance of any term or covenant contained herein, the Company hereby acknowledging that an action for money damages may not be adequate to protect the interests of the Holder hereunder.
 
SECTION 10.              Definitions.
 
As used herein, in addition to the terms defined elsewhere herein, the following terms shall have the following meanings.  
 
“Aggregate Number” has the meaning set forth in the Preamble.
 
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in the State of New York are authorized or required by law or executive order to close.
 
“Capital Stock” means (a) with respect to any Person that is a corporation, any and all shares, interests or equivalents in capital stock (whether voting or nonvoting, and whether common or preferred) of such corporation, and (b) with respect to any Person that is not a corporation, any and all partnership, membership, limited liability company or other equity interests of such Person that confer on a Person the right to receive a share of the profits and losses of, or the distribution of assets of, the issuing Person; and in each case, any and all warrants, rights or options to purchase any of the foregoing.

 
8
 

“Cashless Exercise Shares” has the meaning set forth in Section 2(c).
 
“Change of Control” shall mean (i) a sale, transfer, lease, exclusive license or other disposition of all or substantially all of the Company’s assets or business, (ii) any merger, consolidation, reorganization or other business combination transaction of the Company with or into another entity, other than a transaction in which the holders of at least a majority of the shares of voting capital stock of the Company outstanding immediately prior to such transaction continue to hold (either by such shares remaining outstanding or by their being converted into shares of voting capital stock of the surviving entity) a majority of the total voting power represented by the shares of voting capital stock or other voting equity of the Company or the surviving enti ty outstanding immediately after such transaction, or (iii) the direct or indirect acquisition (including by way of new issuance by the Company (other than issuances of shares in respect of options or warrants existing as of the date hereof, but solely to the extent that the issuance triggered a Change of Control without factoring in any additional purchases made by such Person subsequent to the date hereof (other than purchases pursuant to the foregoing options and warrants), re-sales of stock by existing shareholders, or a tender or exchange offer), in a single transaction or series of related transactions, by any person or entity, or persons or entities acting as a group, of beneficial ownership or a right to acquire beneficial ownership of shares of the Company’s capital stock representing at least a majority of the voting power of the then outstanding shares of capital stock of the Company.
 
 “Commencement Date” has the meaning set forth in the Preamble. 
 
“Common Stock” means the Company’s Common Stock, par value $0.0001 per share.
 
“Company” has the meaning set forth in the Preamble.
 
“Convertible Securities” means (i) evidences of indebtedness, shares of stock or other securities (including, without limitation, options and warrants) that are directly or indirectly convertible, exercisable or exchangeable, with or without payment of additional consideration in cash or property, for shares of Common Stock (as applicable), either immediately or upon the onset of a specified date or the happening of a specified event or (ii) stock appreciation rights, phantom stock rights or other rights with equity features.
 
“Election to Purchase” has the meaning set forth in Section 2(a).
 
“Event of Non-Compliance” has the meaning set forth in Section 9(a).
 
“Exercise Amount” has the meaning set forth in Section 2(a).
 
“Exercise Price” has the meaning set forth in the Preamble.
 
“Exercise Shares” has the meaning set forth in Section 2(c).
 
“Expiration Date” has the meaning set forth in the Preamble.
 
“Extraordinary Dividend” has the meaning set forth in Section 6(b)(ii).
 
 
9
 

“Fair Market Value Per Share” means, with respect to a share of Common Stock on any date: (a) if the shares are listed or admitted for trading on any national securities exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market, the last reported sales price as reported on such exchange or market; (b) if the shares are not listed or admitted for trading on any national securities exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market, the average of the last reported closing bid and asked quotation for the shares as reported on the National Association of Securities Dealers Automated Quotation System (“NASDAQ”) or a similar service if NASDAQ is not reporting such information; and (c) if the shares are not listed or admitted for trading on any national securities exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market or quoted by NASDAQ or a similar service, the average of the last reported bid and asked quotation for the shares as quoted by a market maker in the shares (or if there is more than one market maker, the bid and asked quotation shall be obtained from two market makers and the average of the lowest bid and highest asked quotation).  In the absence of any available public quotations for the Common Stock, the Board of Directors of the Company shall determine in good faith the fair value of the Common Stock.
 
“Governmental Authority” means the government of any nation, state, city, locality or other political subdivision of any thereof, any entity or person exercising executive, legislative, judicial, arbitral, regulatory or administrative functions of or pertaining to government, regulation or compliance.
 
“Holder” or “Holders” means any holder of an interest in this Warrant or the outstanding Warrant Shares.
 
“Person” means any individual, firm, corporation, partnership, limited liability company, joint venture, incorporated or unincorporated association, joint stock company, Governmental Authority, or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity.
 
“Principal Office” means the Company’s principal office as set forth in Section 15 hereof or such other principal office of the Company in the United States of America the address of which first shall have been set forth in a notice to the Holder.
 
“Registration Rights Agreement” means the Registration Rights Agreement dated as of the date hereof among the Company and Bonds MX, LLC, as amended or supplemented from time to time.
 
“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations thereunder as the same shall be in effect at the time.
 
“Stock Combination” has the meaning set forth in Section 6(a)(i)(C).
 
“Stock Dividend” has the meaning set forth in Section 6(a)(i)(A).
 
“Stock Reclassification” has the meaning set forth in Section 6(a)(i)(D).
 
“Stock Subdivision” has the meaning set forth in Section 6(a)(i)(B). 
 
“Transaction” has the meaning set forth in Section 6(c).
 
“Transaction Documents” means this Warrant, the Unit Purchase Agreement and the Registration Rights Agreement, and any other agreements or documents delivered in connection herewith or therewith.
 
 
10
 

“Unit Purchase Agreement” has the meaning set forth in Section 1(a).
 
“Warrant” has the meaning set forth in Section 1(a).
 
“Warrant Shares” means (a) the shares of Common Stock issued or issuable upon exercise of this Warrant in accordance with its terms and (b) all other shares of the Company’s Capital Stock issued with respect to such shares by way of stock dividend, stock split or other reclassification or in connection with any merger, consolidation, recapitalization or other reorganization affecting the Company’s Capital Stock.
 
SECTION 11.              Survival of Provisions.
 
Notwithstanding the full exercise by the Holder of its rights to purchase Common Stock hereunder, the provisions of Sections 9 through 21 of this Warrant shall survive such exercise and the Expiration Date.
 
SECTION 12.              Delays, Omissions and Waivers.
 
It is agreed that no delay or omission to exercise any right, power or remedy accruing to the Holder upon any breach or default of the Company under this Warrant shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  It is further agreed that any waiver, permit, consent or approval of any kind or character on the Holder’s part of any breach or default under this Warrant, or any waiver on the Holder’s part of any provisions or conditions of this Warrant must be in writing and that all remedies, either under this Warrant, or b y law or otherwise afforded to the Holder, shall be cumulative and not alternative.
 
SECTION 13.              Rights of Transferees.
 
Subject to Section 8, the rights granted to the Holder hereunder of this Warrant shall pass to and inure to the benefit of all subsequent transferees of all or any portion of this Warrant (provided that the Holder and any transferee shall hold such rights in proportion to their respective ownership of this Warrant and Warrant Shares) until extinguished pursuant to the terms hereof.
 
SECTION 14.              Captions.
 
The titles and captions of the Sections and other provisions of this Warrant are for convenience of reference only and are not to be considered in construing this Warrant.
 
SECTION 15.              Notices.
 
All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first-class mail, return receipt requested, telecopy, overnight courier service or personal delivery:
 
If to the Company:
Bonds.com Group, Inc.
529 5th Avenue, 8th Floor
New York, New York 10017
Attention:  Chief Executive Officer
Fax No:  (212) 946-3999
   
With a copy to:
Hill Ward Henderson
3700 Bank of America Plaza
101 East Kennedy Boulevard
Tampa, Florida 33602
Attention:   Mark A. Danzi, Esq.
Fax No.:  (813) 221-2900
   
If to the Holder:
Bonds MX, LLC
c/o Laidlaw & Company (UK) Ltd.
90 Park Avenue, 31st floor
New York, New York 10016
Attention: Hugh Regan
Fax No.: (212) 297-0670
   
With a copy to:
Gibson, Dunn & Crutcher LLP
2029 Century Park East
Los Angeles, CA 90067
Attention:  Mark Lahive

All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial overnight courier service; five Business Days after being deposited in the mail, postage prepaid, if mailed; and when receipt is acknowledged, if telecopied.
 
SECTION 16.              Successors and Assigns.
 
This Warrant shall be binding upon and inure to the benefit of the parties hereto and their respective successors or heirs and personal representatives and permitted assigns; provided, that the Company shall have no right to assign its rights, or to delegate its obligations, hereunder without the prior written consent of the Holder except as otherwise expressly provided herein. 
 
SECTION 17.              Governing Law, Jurisdiction, Jury Trial.
 
All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action o r proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
 
 
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SECTION 18.              Severability.
 
If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof.  The parties hereto further agree to replace such invalid, illegal or unenforceable provision of this Agreement with a valid, legal and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid, illegal or unenforceable provision.
 
SECTION 19.              Entire Agreement.
 
This Warrant, together with the other Transaction Documents, contains the entire agreement among the parties with respect to the subject matter hereof and thereby supersedes all prior and contemporaneous agreements or understandings with respect thereto.
 
SECTION 20.              Headings.
 
The headings in this Warrant are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
 
SECTION 21.              No Strict Construction.
 
The Company and the Holder each acknowledge that they have been represented by counsel in connection with this Warrant, the other Transaction Documents and the transactions contemplated hereby and thereby.  The Company and the Holder have participated jointly in the negotiation and drafting of this Warrant and the other Transaction Documents.  In the event an ambiguity or question of intent or interpretation arises under any provision of this Warrant or any Transaction Document, this Warrant or such other Transaction Documents shall be construed as if drafted jointly by the parties thereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Warrant or any other Transaction Document.
 
SECTION 22.              Representations, Warranties and Covenants.
 
The Company hereby represents, warrants and covenants to the Holder that so long as the Holder holds this Warrant or any Warrant Shares that the Company will not, directly or indirectly, create or otherwise cause or suffer to exist or become effective any restriction or encumbrance on the ability of the Company to perform and comply with its obligations under this Warrant.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.  SIGNATURE PAGE FOLLOWS.]
 

 

 
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IN WITNESS WHEREOF, the Company has caused this Warrant to be issued and executed in its corporate name by its duly authorized officers and its corporate seal to be affixed hereto as of the date below written.
 

DATED:  October 19, 2010 
  
BONDS.COM GROUP, INC.
     
   
By:
  /s/ Michael O. Sanderson 
   
Name:
Michael Sanderson
   
Title:
Chief Executive Officer
 
 
 
 

EXHIBIT A
NOTICE OF EXERCISE; ELECTION TO PURCHASE
 
To:
   
  
 
           
  
 
           
  
 
1.           The undersigned, pursuant to the provisions of the attached Warrant, hereby elects to exercise this Warrant with respect to ________ shares of Common Stock (the “Exercise Amount”).  Capitalized terms used but not otherwise defined herein have the meanings ascribed thereto in the attached Warrant.
 
2.           The undersigned herewith tenders payment for such shares in the following manner (please check type, or types, of payment and indicate the portion of the Exercise Price to be paid by each type of payment): 
 
_______  Exercise for Cash
_______  Cashless Exercise
 
3.           Please issue a certificate or certificates representing the shares issuable in respect hereof under the terms of the attached Warrant, as follows:
 
 
              
 
(Name of Record Holder/Transferee)
 
and deliver such certificate or certificates to the following address:
 
 
              
 
(Address of Record Holder/Transferee)
 
4.           The undersigned represents that the aforesaid shares are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares.
 
5.           If the Exercise Amount is less than all of the shares of Common Stock purchasable hereunder, please issue a new warrant representing the remaining balance of such shares, as follows:
 
 
              
 
(Name of Record Holder/Transferee)
 
and deliver such warrant to the following address:
 
  
              
 
(Address of Record Holder/Transferee)

 
              
 
(Signature)

   
  
              
(Date)
    

EX-10.12 15 ex-10_12.htm UBS SERIES A PURCHASE WARRANT Unassociated Document
 
Exhibit 10.12
 
THE OFFER AND SALE OF THIS SERIES A PREFERRED STOCK PURCHASE WARRANT AND THE SHARES OF SERIES A PREFERRED STOCK THAT MAY BE PURCHASED HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE.  THIS SERIES A PREFERRED STOCK PURCHASE WARRANT AND THE SHARES OF SERIES A PREFERED STOCK THAT MAY BE PURCHASED HEREUNDER MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND REGISTRATION OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM
 
BONDS.COM GROUP, INC.
 
SERIES A PREFERRED STOCK PURCHASE WARRANT
 
Date of Issuance: October 19, 2010
 
THIS IS TO CERTIFY that UBS Americas Inc., a Delaware corporation, and its transferees, successors and assigns (the “Holder”), for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, is entitled to purchase from BONDS.COM GROUP, INC., a Delaware corporation (the “Company”), at the price of $24.00 per share (the “Exercise Price”), at any time after the date hereof (the “Commencement Date”) and expiring on October 19, 2015 (the “Expiration Date”), thirty one-thousand, two hundred and fifty (31,250) (the “Aggregate Number”) shares of the fully paid and nonassessable Series A Participating Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), of the Company (as such number may be adjusted as provided herein).
 
Capitalized terms used herein shall have the meanings ascribed to such terms in Section 10 hereof unless otherwise defined herein.
 
SECTION 1.              This Warrant; Transfer and Exchange.
 
(a)           This Warrant.  This Series A Preferred Stock Purchase Warrant (this “Warrant”) is issued under and pursuant to the Unit Purchase Agreement, dated as of October 19, 2010, by and between the Holder and the Company (the “Unit Purchase Agreement”).  This Warrant and the rights and privileges of the Holder hereunder may be exercised by the Holder in whole or in part as provided herein, shall survive any termination of the Unit Purchase Agreement and, as more fully set forth in Sections 1(b) and 8 hereof, may be transferred (subjec t to applicable securities laws and regulations) by the Holder to any other Person or Persons at any time or from time to time, in whole or in part, regardless of whether the Holder retains any or all rights under the Unit Purchase Agreement.
 
(b)           Transfer and Exchanges.  The Company shall initially record this Warrant on a register to be maintained by the Company with its other stock books and, subject to Section 8 hereof, from time to time thereafter shall reflect the transfer of this Warrant on such register when surrendered for transfer in accordance with the terms hereof and properly endorsed, accompanied by appropriate instructions, and further accompanied by payment in cash or by check, bank draft or money order payable to the order of the Company, in United States currency, of an amount equal to any stamp or other tax or governmental charge or fee required to be paid in connection with the transfer thereof.  Upon any such transfer, a new warrant or warrants shall be issued to the transferee and the Holder (in the event this Warrant is only partially transferred) and the surrendered warrant shall be canceled.  Each such transferee shall succeed to all of the rights of the Holder with respect to this Warrant being so transferred; provided, however, that, in the event this Warrant is partially transferred, the Holder and such transferee shall hold rights in respect of this Warrant in proportion to their respective interests in this Warrant.  This Warrant may be exchanged at the option of the Holder, when surrendered at the Principal Office, for another warrant or other warrants of like tenor and representing in the aggregate the right to purchase a like number of shares of Series A Preferred Stock.

 
 
 

SECTION 2.              Exercise.
 
(a)           Right to Exercise.  At any time after the Commencement Date and on or before the Expiration Date, the Holder, in accordance with the terms hereof, may exercise this Warrant, in whole at any time or in part from time to time, by delivering this Warrant to the Company during normal business hours on any Business Day at the Principal Office, together with the Election to Purchase, in the form attached hereto as Exhibit A and made a part hereof (the “Election to Purchase”), duly executed, and payment of the Exercise Price per share for the number of shares to b e purchased (the “Exercise Amount”), as specified in the Election to Purchase.  If the Expiration Date is not a Business Day, then this Warrant may be exercised on the next succeeding Business Day.
 
(b)           Payment of Exercise Price.  Payment of the Exercise Price shall be made to the Company by either of the following means (or any combination of such means): (i) in cash or other immediately available funds, payable by certified wire transfer to an account designated by the Company or (ii) as provided in Section 2(c).  The amount of the Exercise Price to be paid shall equal the product of (A) the Exercise Amount multiplied by (B) the Exercise Price per share.
 
(c)           Cashless Exercise.  The Holder shall have the right to pay all or a portion of the Exercise Price by making a “Cashless Exercise” pursuant to this Section 2(c), in which case the portion of the Exercise Price to be so paid shall be paid by reducing the number of shares of Series A Preferred Stock otherwise issuable pursuant to the Election to Purchase (the “Exercise Shares”) by an amount (the “Cashless Exercise Shares”) equal to (i) the Exercise Price multiplied by the Exercise Shares and divided by (ii) the Fair Market Value Per Sha re of the Series A Preferred Stock determined as of the Business Day immediately preceding the date of such exercise of this Warrant.  The number of shares of Series A Preferred Stock to be issued to the Holder as a result of a Cashless Exercise will therefore be equal to the Exercise Shares minus the Cashless Exercise Shares.
 
(d)           Issuance of Shares of Series A Preferred Stock.  Upon receipt by the Company of this Warrant at the Principal Office in proper form for exercise, and accompanied by payment of the Exercise Price as aforesaid, the Company shall immediately cause the shares of Series A Preferred Stock to be registered in the name of the Holder in the Register of Stockholders of the Company and the Holder shall then be deemed to be the holder of record of the shares of Series A Preferred Stock issuable upon such exercise, notwithstanding that certificates representing such shares of Series A Preferred Stock may not then be actually delivered.  Upon such surrender of this Warrant and payment of the Exercise Price as aforesaid, the Company shall issue and cause to be delivered with all reasonable dispatch to, or upon the written order of, the Holder (and in such name or names as the Holder may designate) a certificate or certificates for a number of shares of Series A Preferred Stock equal to the Exercise Amount, subject to any reduction as provided in Section 2(c) for a Cashless Exercise.

 
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(e)           Fractional Shares.  The Company shall not be required to deliver fractions of shares of Series A Preferred Stock upon exercise of this Warrant.  If any fraction of a share of Series A Preferred Stock would be deliverable upon an exercise of this Warrant, the Company may, in lieu of delivering such fraction of a share of Series A Preferred Stock, make a cash payment to the Holder in an amount equal to the same fraction of the Fair Market Value Per Share of the Series A Preferred Stock determined as of the Business Day immediately preceding the date of exercise of this Warrant.
 
(f)           Partial Exercise.  In the event of a partial exercise of this Warrant, the Company shall issue to the Holder a Warrant in like form for the unexercised portion thereof.
 
SECTION 3.              Payment of Taxes.
 
The Company shall pay all stamp taxes attributable to the issuance of shares or other securities issuable upon the exercise of this Warrant or issuable pursuant to Section 6 hereof.
 
SECTION 4.              Replacement Warrant.
 
In case this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue and deliver in exchange and substitution for and upon cancellation of the mutilated Warrant, or in lieu of and in substitution for this Warrant lost, stolen or destroyed, a new Warrant of like tenor and representing an equivalent right or interest, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction of such Warrant and upon receipt of indemnity reasonably satisfactory to the Company (provided, that if the Holder is a financial institution or other institutional investor, its personal undertaking to provide an indemnity is hereby deemed to be reasonably satisfactory to the Company).
 
SECTION 5.              Reservation of Capital Stock and Other Covenants.
 
(a)           Reservation of Authorized Capital Stock.  The Company shall at all times ensure that it has sufficient authorized and unissued capital, free of preemptive rights, to enable the Company at any time to fulfill all of its obligations hereunder upon both the exercise of this Warrant and in respect of the Series A Preferred Stock, or other stock or securities issuable upon conversion of the Series A Preferred Stock or other securities that may be purchased hereunder.
 
(b)           Affirmative Actions to Permit Exercise and Realization of Benefits.  If any shares of Series A Preferred Stock to be issued upon the exercise of this Warrant, or any shares or other securities to be issued pursuant to Section 6 hereof, or any shares of Series A Preferred Stock or other securities to be issued pursuant to the conversion of the Series A Preferred Stock or other securities that may be purchased hereunder require registration with or approval of any Governmental Authority under any federal or state law (other than securities laws) before such shares or other securities may be validly delivered upon exercise of this Warrant or conversion of the Series A Preferred Stock or other securi ties that may be purchased hereunder, then the Company covenants that it will, at its sole expense, secure such registration or approval, as the case may be.
 
(c)           Validly Issued Shares.  The Company covenants that all shares of Series A Preferred Stock and other securities that may be delivered upon exercise of this Warrant (including those issued pursuant to Section 6 hereof), assuming full payment of the Exercise Price, and all shares of Series A Preferred Stock and other securities that may be delivered upon conversion of such Series A Preferred Stock, shall, upon delivery by the Company, be duly authorized and validly issued, fully paid and nonassessable, free from all stamp taxes, liens and charges with respect to the issue or delivery thereof and otherwise free of all other security interests, encumbrances and claims of any nature whatsoever other than such security interests, encumbrances and claims granted by the Holder.

 
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SECTION 6.              Adjustments.
 
Under certain conditions, the Aggregate Number is subject to adjustment as set forth in this Section 6.  
 
(a)           Adjustments to Aggregate Number.  The Aggregate Number, after taking into consideration any prior adjustments pursuant to this Section 6, shall be subject to adjustment from time to time as follows and, thereafter, as adjusted, shall be deemed to be the Aggregate Number hereunder.
 
(i)           Stock Dividends; Subdivisions, Combinations an Reclassifications.  In case at any time or from time to time the Company shall:
 
(A)           issue to the holders of the Series A Preferred Stock a dividend payable in, or other distribution of, Series A Preferred Stock (a “Stock Dividend”),
 
(B)           subdivide its outstanding shares of Series A Preferred Stock into a larger number of shares of Series A Preferred Stock, including, without limitation, by means of a stock split (a “Stock Subdivision”),
 
(C)           combine its outstanding shares of Series A Preferred Stock into a smaller number of shares of Series A Preferred Stock (a “Stock Combination”), or
 
(D)           issue any shares of its capital stock in a reclassification of the Series A Preferred Stock (a “Stock Reclassification”),
 
then the number of shares of Series A Preferred Stock purchasable upon exercise of this Warrant, if any, immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of shares of Series A Preferred Stock or other securities of the Company which it would have owned or have been entitled to receive had this Warrant, if any, been exercised in advance thereof.
 
(ii)          Miscellaneous.  The following provisions shall be applicable to the making of adjustments of the Aggregate Number provided above in this Section 6(a):
 
(A)           The adjustments required by the preceding paragraphs of this Section 6(a) shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that no adjustment of the Aggregate Number that would otherwise be required shall be made (except in the case of a Stock Subdivision, Stock Combination or Stock Reclassification as provided for in Section 6(a)(i) hereof) unless and until such adjustment either by itself or with other adjustments not previously made adds or subtracts at least one one-hundredth of one share to or from the Aggregate Number immediately prior to the making of such adjustment.  Any adjustment representing a change of less than such minimum amount (except as aforesaid) shall be carried forward and made a s soon as such adjustment, together with other adjustments required by this Section 6(a) and not previously made, would result in a minimum adjustment.  For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence. 

 
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(B)           In computing adjustments under this Section 6(a), fractional interests in Series A Preferred Stock shall be taken into account to the nearest one-thousandth of a share.
 
(C)           If the Company shall take a record of the holders of the Series A Preferred Stock for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution to shareholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled.
 
(b)           Adjustment to Exercise Price.  
 
(i)            Upon any adjustment to the Aggregate Number or of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder pursuant to Section 6(a)(i), the Holder shall thereafter be entitled to purchase such Aggregate Number of shares of Series A Preferred Stock or other securities resulting from such adjustment at an Exercise Price per share of Series A Preferred Stock or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the Aggregate Number prior to such adjustment and dividing by the Aggregate Number immediately following such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the r ecord date, if any, for such event.
 
(ii)           In case at any time or from time to time the Company shall pay a dividend or make a distribution in cash, securities or other assets to the holders of Series A Preferred Stock, other than (x) as described in Sections 6(a)(i)(A) and 6(a)(i)(D) above or (y) regular quarterly or other periodic dividends (any such non-excluded event being referred to as an “Extraordinary Dividend”), then the Exercise Price shall be decreased by the amount of cash and/or the fair market value (as determined by the board of directors of the Company, in good faith) of any securities o r other assets paid on each share of Series A Preferred Stock in respect of such Extraordinary Dividend.  An adjustment made pursuant to this Section 6(b)(ii) shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.   
 
(c)           Changes in Series A Preferred Stock.  In case at any time the Company shall initiate any transaction or be a party to any transaction (including, without limitation, a merger, consolidation, share exchange, sale, lease or other disposition of all or substantially all of the Company’s assets, liquidation, recapitalization or reclassification of the Series A Preferred Stock) in connection with which the previous outstanding Series A Preferred Stock shall be changed into or exchanged for different securities of the Company or Capital Stock or other securities of another corporation or interests in a non-corporate entity or other property (including cash) or any combination of the foregoing (ea ch such transaction being herein called a “Transaction”), then, as a condition of the consummation of the Transaction, lawful, enforceable and adequate provision shall be made so that the Holder shall be entitled to elect, by written notice to the Company, to receive (i) in exchange for the surrender of this Warrant to the Company and the same Exercise Price (rather than the exercise thereof), the securities or other property (including cash) to which such Holder would have been entitled upon consummation of the Transaction if such Holder had exercised this Warrant and (if applicable) converted the shares of Series A Preferred Stock issuable hereunder immediately prior thereto, (ii) a new warrant in form and substance similar to, and in exchange for, this Warrant to purchase all or a portion of such securities or other property to which such Holder would have been entitled upon consummation of the Transaction if such Holder had exer cised this Warrant and (if applicable) converted the shares of Series A Preferred Stock issuable hereunder immediately prior thereto for the same Exercise Price or (iii) upon exercise of this Warrant at any time on or after the consummation of the Transaction but prior to the Expiration Date, in lieu of the Warrant Shares issuable upon such exercise prior to such consummation, the securities or other property (including cash) to which such Holder would have been entitled upon consummation of the Transaction if such Holder had exercised this Warrant and (if applicable) converted the shares of Series A Preferred Stock issuable hereunder immediately prior thereto (subject to adjustments from and after the consummation date as nearly equivalent as possible to the adjustments provided for in this Section 6).  The Company will not effect any Transaction unless prior to the consummation thereof each corporation or other entity (o ther than the Company) which may be required to deliver any new warrant, securities or other property as provided herein shall assume by written instrument the obligation to deliver to such Holder such new warrant, securities or other property as in accordance with the foregoing provisions such Holder may be entitled to receive.  The foregoing provisions of this Section 6(c) shall similarly apply to successive Transactions.

 
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(d)           Other Action Affecting Capital Stock. 
 
(i)           Other Action.  In case at any time or from time to time the Company shall take any action of the type contemplated in Section 6(a) or (c) hereof but not expressly provided for by such provisions, then, unless in the opinion of the Company’s Board of Directors such action will not have a material adverse effect upon the rights of the Holder (taking into consideration, if necessary, any prior actions which the Company’s Board of Directors deemed not to materially adversely affect the rights of the Holder), the Aggregate Number shall be adjusted in such manner and at such time as the Company’s Board of Directors may in good faith determine to be equitable in the circumstances.
 
(e)           Notices.
 
(i)           Notice of Proposed Actions.  In case the Company shall propose (A) to pay any dividend payable in stock of any class to the holders of the Series A Preferred Stock or to make any other distribution to the holders of the Series A Preferred Stock, (B) to offer to the holders of the Series A Preferred Stock rights to subscribe for or to purchase any Convertible Securities or additional shares of Series A Preferred Stock or shares of stock of any class or any other securities, warrants, rights or options (other than the exercise of pre-emptive rights by a holder), (C) to effect any reclassification of the Series A Preferred Stock, (D) to effect any recapitalization, stock subdivision, stock combinati on or other capital reorganization, (E) to effect any consolidation or merger, share exchange, or sale, lease or other disposition of all or substantially all of its property, assets or business, (F) to effect the liquidation, dissolution or winding up of the Company, (G) effect a Change of Control (provided that notice of a Change of Control shall only be provided upon the Company entering into a definitive agreement with respect to such Change of Control and such information not being material non public information) or (H) to effect any other action which would require an adjustment under this Section 6, then in each such case the Company shall give to the Holder written notice of such proposed action, which shall specify the date on which a record is to be taken for the purposes of such stock dividend, stock subdivision, stock combination, distribution or rights, or the approximate date on which such reclassification, recapitalization, reorganization, consolidation, merger, share exchange, sale, lease, t ransfer, disposition, liquidation, dissolution, winding up or other transaction is expected to take place and the expected date of participation therein by the holders of Series A Preferred Stock (as applicable), if any such date is to be fixed, or the date on which the transfer of Series A Preferred Stock (as applicable) is expected to occur, and
shall also set forth such facts with respect thereto as shall be reasonably necessary to indicate the effect of such action on the Series A Preferred Stock (as applicable) and on the Aggregate Number after giving effect to any adjustment which will be required as a result of such action.  Such notice shall be so given in the case of any action covered by clause (A) or (B) above at least 10 Business Days prior to the record date for determining holders of the Series A Preferred Stock (as applicable) for purposes of such action and, in the case of any other such action, at least 10 Business Days prior to the earlier of the date of the taking of such proposed action or the date of participation therein by the holders of Series A Preferred Stock (as applica ble).

 
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(ii)          Adjustment Notice.  Whenever the Aggregate Number is to be adjusted pursuant to this Section 6, unless otherwise agreed by the Holder, the Company shall promptly (and in any event within 10 Business Days after the event requiring the adjustment) prepare a certificate signed by the Chief Financial Officer of the Company, setting forth, in reasonable detail, the event requiring the adjustment and the method by which such adjustment is to be calculated.  The certificate shall set forth, if applicable, a description of the basis on which the Company's Board of Directors in good faith determined, as applicable, the fair market value of any evidences of indebtedness, shares of stock, other securit ies, warrants, other subscription or purchase rights, or other property or the equitable nature of any adjustment under Section 6(c) or (d) hereof, the new Aggregate Number and, if applicable, any new securities or property to which the Holder is entitled.  The Company shall promptly cause a copy of such certificate to be delivered to the Holder.  Any other determination of fair market value shall first be determined in good faith by the Company's Board of Directors and be based upon an arm’s length sale of such indebtedness, shares of stock, other securities, warrants, other subscription or purchase rights or other property, such sale being between a willing buyer and a willing seller.  In the case of any such determination of fair market value, the Holder may object to the determination in such certificate by giving written notice within 10 Business Days of the receipt of such certificate and, if the Holder and the Company cannot agree to the fair market value within 10 Business Days of the date of the Holder’s objection, the fair market value shall be determined by a national or regional investment bank or a national accounting firm mutually selected by the Holder and the Company, the fees and expenses of which shall be paid 50% by the Company and 50% by the Holders that did not agree with the valuation determined by the Company unless such determination results in a fair market value more than 110% of the fair market value determined by the Company in which case such fees and expenses shall be paid by the Company.  The Company shall keep at the Principal Office copies of all such certificates and cause the same to be available for inspection at said office during normal business hours by the Holder or any prospective purchaser of this Warrant (in whole or in part) if so designated by the Holder.
 
SECTION 7.              No Impairment.
 
The Company will not, by amendment of its organizational documents or through any reorganization, recapitalization, transfer of assets, consolidation, merger, share exchange, dissolution or any other voluntary and deliberate action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, including, without limitation, the adjustments required under Section 6 hereof, and will at all times in good faith assist in the carrying out of all such terms and in taking of all such action as may be necessary or appropriate to protect the rights of the Holder against other impairment.  Without limiting the generality of the foregoing and notwithstanding any other provision of this Warrant to the contrary (including by way of implication), the Company (a) will not increase the par value of any shares of Ser ies A Preferred Stock receivable on the exercise of this Warrant above the amount payable therefor on such exercise and (b) will take all such action as may be necessary or appropriate so that the Company may validly and legally issue fully paid and nonassessable shares of Series A Preferred Stock on the exercise of this Warrant.

 
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SECTION 8.              Transfers of this Warrant.
 
(a)           Generally.  Subject to the restrictions set forth in this Sections 1 and 8 of this Warrant, the Holder may at any time and from time to time freely transfer this Warrant and the Warrant Shares in whole or in part.
 
(b)           Compliance with Securities Laws.  The Holder agrees that this Warrant, the Warrant Shares and all other shares of Capital Stock issued pursuant to this Warrant may not be sold or otherwise disposed of except pursuant to an effective registration statement under the Securities Act and applicable state securities laws or pursuant to an applicable exemption from the registration requirements of the Securities Act and such state securities laws.  In the event that the Holder transfers this Warrant, the Warrant Shares or any other shares of Capital Stock issued pursuant to this Warrant pursuant to an applicable exemption from registration, the Company may request, at the Holder’s expen se, an opinion of counsel that the proposed transfer does not violate the Securities Act and applicable state securities laws. 
 
(c)           Restrictive Securities Legend.  For so long as the Warrant Shares have not been registered under the Securities Act pursuant to the Registration Rights Agreement, the certificate representing the Warrant Shares shall bear the restrictive legend set forth below:
 
“The offer and sale of the shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, or the securities laws of any State and may not be sold or otherwise disposed of except pursuant to an effective registration statement under such Act and applicable State securities laws or pursuant to an applicable exemption from the registration requirements of such Act and such laws.”
 
SECTION 9.              Events of Non-Compliance and Remedies.
 
(a)           Events of Non-Compliance.  If the Company fails to keep and fully and promptly perform and observe in any material respect any of the terms, covenants or representations contained or referenced herein within 30 days from the earlier to occur of (i) written notice from the Holder specifying what failure has occurred, or requesting that a specified failure be remedied or (ii) an executive officer of the Company becoming aware of such failure (an “Event of Non-Compliance”), the Holder shall be entitled to the remedies set forth in subsection (b) hereof.
 
(b)           Remedies.  On the occurrence of an Event of Non-Compliance, in addition to any remedies the Holder may have under applicable law the Holder may bring any action for injunctive relief or specific performance of any term or covenant contained herein, the Company hereby acknowledging that an action for money damages may not be adequate to protect the interests of the Holder hereunder.

 
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SECTION 10.            Definitions.
 
As used herein, in addition to the terms defined elsewhere herein, the following terms shall have the following meanings.  
 
“Aggregate Number” has the meaning set forth in the Preamble.
 
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in the State of New York are authorized or required by law or executive order to close.
 
“Capital Stock” means (a) with respect to any Person that is a corporation, any and all shares, interests or equivalents in capital stock (whether voting or nonvoting, and whether common or preferred) of such corporation, and (b) with respect to any Person that is not a corporation, any and all partnership, membership, limited liability company or other equity interests of such Person that confer on a Person the right to receive a share of the profits and losses of, or the distribution of assets of, the issuing Person; and in each case, any and all warrants, rights or options to purchase any of the foregoing.
 
“Cashless Exercise Shares” has the meaning set forth in Section 2(c).
 
“Change of Control” shall mean (i) a sale, transfer, lease, exclusive license or other disposition of all or substantially all of the Company’s assets or business, (ii) any merger, consolidation, reorganization or other business combination transaction of the Company with or into another entity, other than a transaction in which the holders of at least a majority of the shares of voting capital stock of the Company outstanding immediately prior to such transaction continue to hold (either by such shares remaining outstanding or by their being converted into shares of voting capital stock of the surviving entity) a majority of the total voting power represented by the shares of voting capital stock or other voting equity of the Company or the surviving enti ty outstanding immediately after such transaction, or (iii) the direct or indirect acquisition (including by way of new issuance by the Company (other than issuances of shares in respect of options or warrants existing as of the date hereof, but solely to the extent that the issuance triggered a Change of Control without factoring in any additional purchases made by such Person subsequent to the date hereof (other than purchases pursuant to the foregoing options and warrants), re-sales of stock by existing shareholders, or a tender or exchange offer), in a single transaction or series of related transactions, by any person or entity, or persons or entities acting as a group, of beneficial ownership or a right to acquire beneficial ownership of shares of the Company’s capital stock representing at least a majority of the voting power of the then outstanding shares of capital stock of the Company.
 
“Commencement Date” has the meaning set forth in the Preamble. 
 
“Common Stock” means the Company’s Common Stock, par value $0.0001 per share.
 
“Company” has the meaning set forth in the Preamble.
 
“Convertible Securities” means (i) evidences of indebtedness, shares of stock or other securities (including, without limitation, options and warrants) that are directly or indirectly convertible, exercisable or exchangeable, with or without payment of additional consideration in cash or property, for shares of Series A Preferred Stock (as applicable), either immediately or upon the onset of a specified date or the happening of a specified event or (ii) stock appreciation rights, phantom stock rights or other rights with equity features.

 
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“Current Market Price” with respect to a Warrant Share on any date shall be determined as follows: (i) if the Company’s Common Stock (or successor equity interests) is not registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Fair Market Value Per Share (as defined below) of the Warrant Share or (ii) if the Company’s Common Stock (or successor equity interests) is registered under the Exchange Act, the product of (A) the average of the Quoted Prices of the shares of Common Stock (or successor equity interests) for 30 consecutive trading days commencing 45 trading days before the date in question, multiplied by (B) 100 (subject to appropri ate adjustment in the event of any stock split, stock dividend, combination or other similar recapitalization with respect to the Series A Preferred where there is not a corresponding change to the Common Stock).  The “Quoted Price” of a share of Common Stock (or successor equity interest) is the last reported sales price of a share of Common Stock (or successor equity interest) as reported by Nasdaq National Market, or if the shares of Common Stock (or successor equity interests) are listed on a national securities exchange, the last reported sales price of a share of Common Stock (or successor equity interest) on such exchange (which shall be for consolidated trading if applicable to such exchange), or if neither so reported nor listed, the last reported bid price of a share of Common Stock (or successor equity interests).  In the absence of one or more such quotations for shares of Common Stock, the Current Ma rket Price of the Shares (or successor equity interests) shall be determined as if the Shares (or successor equity interests) were not registered under the Exchange Act.
 
“Election to Purchase” has the meaning set forth in Section 2(a).
 
“Event of Non-Compliance” has the meaning set forth in Section 9(a).
 
“Exercise Amount” has the meaning set forth in Section 2(a).
 
“Exercise Price” has the meaning set forth in the Preamble.
 
“Exercise Shares” has the meaning set forth in Section 2(c).
 
“Expiration Date” has the meaning set forth in the Preamble.
 
“Extraordinary Dividend” has the meaning set forth in Section 6(b)(ii).
 
“Fair Market Value Per Share” means the value obtainable upon a sale in an arm’s length transaction to a third party under usual and normal circumstances, with neither the buyer nor the seller under any compulsion to act, with equity to both, as determined by the Board of Directors of the Company (the “Board”) in good faith; provided, however, that the Fair Market Value Per Share shall be calculated as if 100% of the Company were sold as a going concern and without regard to any discount for the lack of liquidity or on the basis that the relevant Warran t Shares (or successor equity interests) do not constitute a majority or controlling interest in the Company and assuming, if applicable, the exercise or conversion of all in-the-money warrants, convertible securities, options or other rights to subscribe for or purchase any additional Warrant Shares or other equity interests of the Company or securities convertible or exchangeable into such Warrant Shares or other equity interests; and provided, further, that if the Holder shall dispute the Fair Market Value Per Share as determined by the Board, the Company shall retain an Independent Expert.  The determination of Fair Market Value Per Share by the Independent Expert shall be final, binding and conclusive on the Company and the Holder.  All costs and expenses of the Independent Expert shall be borne by the Company unless the determination of Fair Market Value Per Share by the Independent Expert is less than 10% more favorable to the Holder than the Fair Market Value Per Share determined by the Board, in which event the cost of the Independent Expert shall be shared equally by the Holder and the Company, or less than 5% more favorable to the Holder than the Fair Market Value Per Share determined by the Board, in which event the cost of the Independent Expert shall be borne solely by the Holder.
 
 
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“Governmental Authority” means the government of any nation, state, city, locality or other political subdivision of any thereof, any entity or person exercising executive, legislative, judicial, arbitral, regulatory or administrative functions of or pertaining to government, regulation or compliance.
 
“Independent Expert” means an investment banking firm reasonably agreeable to both the Company and the Holder who does not (and whose affiliates do not) have a financial interest in the Company or any of its affiliates.
 
“Holder” or “Holders” means any holder of an interest in this Warrant or the outstanding Warrant Shares.
 
“Person” means any individual, firm, corporation, partnership, limited liability company, joint venture, incorporated or unincorporated association, joint stock company, Governmental Authority, or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity.
 
“Principal Office” means the Company’s principal office as set forth in Section 15 hereof or such other principal office of the Company in the United States of America the address of which first shall have been set forth in a notice to the Holder.
 
“Registration Rights Agreement” means the Registration Rights Agreement dated as of the date hereof among the Company and UBS Americas Inc., as amended or supplemented from time to time.
 
“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations thereunder as the same shall be in effect at the time.
 
“Series A Preferred Stock” has the meaning set forth in the Preamble.
 
“Stock Combination” has the meaning set forth in Section 6(a)(i)(C).
 
“Stock Dividend” has the meaning set forth in Section 6(a)(i)(A).
 
“Stock Reclassification” has the meaning set forth in Section 6(a)(i)(D).
 
“Stock Subdivision” has the meaning set forth in Section 6(a)(i)(B). 
 
“Transaction” has the meaning set forth in Section 6(c).

 
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“Transaction Documents” means this Warrant, the Unit Purchase Agreement and the Registration Rights Agreement, and any other agreements or documents delivered in connection herewith or therewith.
 
“Unit Purchase Agreement” has the meaning set forth in Section 1(a).
 
“Warrant” has the meaning set forth in Section 1(a).
 
“Warrant Shares” means the shares of Series A Preferred Stock issued or issuable upon exercise of this Warrant in accordance with its terms.
 
SECTION 11.            Survival of Provisions.
 
Notwithstanding the full exercise by the Holder of its rights to purchase Series A Preferred Stock hereunder, the provisions of Sections 9 through 21 of this Warrant shall survive such exercise and the Expiration Date.
 
SECTION 12.            Delays, Omissions and Waivers.
 
It is agreed that no delay or omission to exercise any right, power or remedy accruing to the Holder upon any breach or default of the Company under this Warrant shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  It is further agreed that any waiver, permit, consent or approval of any kind or character on the Holder’s part of any breach or default under this Warrant, or any waiver on the Holder’s part of any provisions or conditions of this Warrant must be in writing and that all remedies, either under this Warrant, or b y law or otherwise afforded to the Holder, shall be cumulative and not alternative.
 
SECTION 13.            Rights of Transferees.
 
Subject to Section 8, the rights granted to the Holder hereunder of this Warrant shall pass to and inure to the benefit of all subsequent transferees of all or any portion of this Warrant (provided that the Holder and any transferee shall hold such rights in proportion to their respective ownership of this Warrant and Warrant Shares) until extinguished pursuant to the terms hereof.
 
SECTION 14.            Captions.
 
The titles and captions of the Sections and other provisions of this Warrant are for convenience of reference only and are not to be considered in construing this Warrant.
 
SECTION 15.            Notices.
 
All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first-class mail, return receipt requested, telecopy, overnight courier service or personal delivery:
 
If to the Company:
Bonds.com Group, Inc.
529 5th Avenue, 8th Floor
New York, New York 10017
Attention:  Chief Executive Officer
Fax No:  (212) 946-3999
   
With a copy to:
Hill Ward Henderson
3700 Bank of America Plaza
101 East Kennedy Boulevard
Tampa, Florida 33602
Attention:   Mark A. Danzi, Esq.
Fax No.:  (813) 221-2900
   
If to the Holder:
UBS Americas Inc.
677 Washington Boulevard
Stamford, Connecticut 06901
Attention:  Head of Traded Products - Legal
Fax No.:  (203) 719-5627
   
With a copy to:
Bingham McCutchen LLP
399 Third Avenue
New York, New York 10022
Attention:  Kenneth A. Kopelman, Esq.
Fax No.:  (212) 702-3645

All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial overnight courier service; five Business Days after being deposited in the mail, postage prepaid, if mailed; and when receipt is acknowledged, if telecopied.
 
SECTION 16.            Successors and Assigns.
 
This Warrant shall be binding upon and inure to the benefit of the parties hereto and their respective successors or heirs and personal representatives and permitted assigns; provided, that the Company shall have no right to assign its rights, or to delegate its obligations, hereunder without the prior written consent of the Holder except as otherwise expressly provided herein. 
 
SECTION 17.            Governing Law, Jurisdiction, Jury Trial.
 
All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action o r proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 
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SECTION 18.            Severability.
 
If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof.  The parties hereto further agree to replace such invalid, illegal or unenforceable provision of this Agreement with a valid, legal and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid, illegal or unenforceable provision.
 
SECTION 19.            Entire Agreement.
 
This Warrant, together with the other Transaction Documents, contains the entire agreement among the parties with respect to the subject matter hereof and thereby supercedes all prior and contemporaneous agreements or understandings with respect thereto.
 
SECTION 20.            Headings. 
 
The headings in this Warrant are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
 
SECTION 21.            No Strict Construction.
 
The Company and the Holder each acknowledge that they have been represented by counsel in connection with this Warrant, the other Transaction Documents and the transactions contemplated hereby and thereby.  The Company and the Holder have participated jointly in the negotiation and drafting of this Warrant and the other Transaction Documents.  In the event an ambiguity or question of intent or interpretation arises under any provision of this Warrant or any Transaction Document, this Warrant or such other Transaction Documents shall be construed as if drafted jointly by the parties thereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Warrant or any other Transaction Document.
 
SECTION 22.            Representations, Warranties and Covenants.
 
The Company hereby represents, warrants and covenants to the Holder that so long as the Holder holds this Warrant or any Warrant Shares, the Company will not, directly or indirectly, create or otherwise cause or suffer to exist or become effective any restriction or encumbrance on the ability of the Company to perform and comply with its obligations under this Warrant.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.  SIGNATURE PAGE FOLLOWS.]
 

 
 

 
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IN WITNESS WHEREOF, the Company has caused this Warrant to be issued and executed in its corporate name by its duly authorized officers and its corporate seal to be affixed hereto as of the date below written.
 

DATED:  October 19, 2010 
  
BONDS.COM GROUP, INC.
     
   
By:
  /s/ Michael O. Sanderson 
   
Name:
Michael Sanderson
   
Title:
Chief Executive Officer
 
 
 
 

EXHIBIT A
NOTICE OF EXERCISE; ELECTION TO PURCHASE
 
To:
   
  
 
           
  
 
           
  
 
1.           The undersigned, pursuant to the provisions of the attached Warrant, hereby elects to exercise this Warrant with respect to ________ shares of Series A Preferred Stock (the “Exercise Amount”).  Capitalized terms used but not otherwise defined herein have the meanings ascribed thereto in the attached Warrant.
 
2.           The undersigned herewith tenders payment for such shares in the following manner (please check type, or types, of payment and indicate the portion of the Exercise Price to be paid by each type of payment): 
 
_______  Exercise for Cash
_______  Cashless Exercise
 
3.           Please issue a certificate or certificates representing the shares issuable in respect hereof under the terms of the attached Warrant, as follows:
 
 
              
 
(Name of Record Holder/Transferee)
 
and deliver such certificate or certificates to the following address:
 
 
              
 
(Address of Record Holder/Transferee)
 
4.           The undersigned represents that the aforesaid shares are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares.
 
5.           If the Exercise Amount is less than all of the shares of Series A Preferred Stock purchasable hereunder, please issue a new warrant representing the remaining balance of such shares, as follows:
 
 
              
 
(Name of Record Holder/Transferee)
 
and deliver such warrant to the following address:
 
  
              
 
(Address of Record Holder/Transferee)

 
              
 
(Signature)

   
  
              
(Date)
    
EX-10.13 16 ex-10_13.htm TERMINATION AND RELEASE Unassociated Document
Exhibit 10.13
 
TERMINATION AND RELEASE
 
This TERMINATION AND RELEASE (this “Agreement”), dated as of October 19, 2010, is entered into between Bonds.com Group, Inc., a Delaware corporation (the “Company”), Mark G. Hollo (“Hollo”), The Fund LLC (the “Fund”) and Black-II Trust (“Black-II” and, collectively with Hollo and t he Fund, the “Hollo Parties”).
 
Background
 
The Company and the Fund are parties to a letter agreement dated December 28, 2009 entitled Financial Advisory Agreement (the “Financial Advisory Agreement”).
 
A.           The Company and Radnor Research and Trading Company LLC (“Radnor”) are parties to a Restated Revenue Sharing Agreement, dated November 13, 2009, pursuant to which, among other things, the Company has agreed to pay certain amounts to Radnor (the “Revenue Sharing Agreement”).  Hollo and Radnor are parties to a Independent Contractor Agreement, dated January 28, 2010, pursuant to which, among other things, Radnor has agreed t o pay a portion of the amounts it receives under the Revenue Sharing Agreement to Hollo subject to certain conditions (the “Independent Contractor Agreement”).  Additionally, the Independent Contractor Agreement provides that Radnor shall not terminate, amend or otherwise modify the Radnor Revenue Sharing Agreement or the GO Agreement (as defined in the Independent Contractor Agreement) without Hollo’s prior written consent.
 
B.           Hollo is attorney-in-fact and a beneficiary of Black-II, and he is the Chairman, CEO and a stockholder of the Fund.
 
Operative Terms
 
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
 
1.           Payments to the Fund and Grant of Warrant to Black-II.  In consideration of the agreements, terminations, releases and waivers provided by Hollo, the Fund and Black-II hereunder, the Company hereby agrees that (a) it hereby issues to Black-II a warrant to purchase ten million (10,000,000) shares of the Company’s common stock for a purchase price of $0.24 per share for the period beginning on the date hereof and ending on October 18, 2015 pursuant to the terms and conditions of the Warrant attached hereto as Exhibit A (the “Warrant Agreement”); and (b) subject to the Company raising at least $5,000,000 of gross proceeds (including the conversion of outstanding indebtedness) from the sale of equity securities or debt financing in one or more related closings on and after the date hereof (a “Qualified Financing”), the Company shall pay Black-II $250,000 in four equal monthly installments of $62,500, such payments to be made as follows, (x) the first payment shall be made on the closing date on which the gross proceeds of the Qualified Financing exceed $5,000,000 (including the conversion of outstanding indebtedness) or, if not reasonably possible to make the payment on such closing date, the first business day following such closing, and (y) the three remaining payments to be made on the thirtieth (30th), sixtieth (60th) and ninetieth (90th) days following such closing date (provided, however, that if any such date is not a business day, then payment shall be made on the first business day following such date).  The foregoing payments shall be made by wire transfer of immediately available funds to an account specified in writing by Black-II.

2.           Termination of the Financial Advisory Agreement.  The Financial Advisory Agreement is hereby terminated in all respects and shall be null and void and of no further force or effect, and no provision thereof shall survive this termination.

 
 
 

3.           Consents.  Hollo hereby consents in all respects to (a) the termination of the Revenue Sharing Agreement by the Company and Radnor; and (b) the amendment, modification or termination of the GO Agreement (including, without limitation, to eliminate any amounts payable thereunder to Radnor).  Additionally, Hollo hereby waives, relinquishes and releases Radnor from any and all claims, causes of action and other rights with respect to any revenue sharing payments to be made pursuant to the Revenue Sharing Agreement as amended by the Agreement.  Radnor is an intended third-party beneficiary of the provisions of this Sectio n 3.

4.           Resignation and Termination of Advisory Role.  Hollo hereby resigns from his position as a non-voting advisor to the Company’s Board of Directors and agrees that any rights he may have to be designated as a non-voting advisor, to otherwise serve in that role or to receive any remuneration or consideration in respect thereof (including any right he may have to receive the same compensation paid to all or any other members of the Company’s Board of Directors) are hereby terminated, waived, relinquished and released.

5.           Amendment and Restatement of Stock Option.  Simultaneously herewith, the Company and Hollo are amending and restating the Stock Option Agreement, dated August 28, 2009, by and among Hollo and the Company (the “Terminated Option”) by executed and delivering the Amended and Restated Option Agreement attached hereto as Exhibit B (the “Amended and Restated Option”).

6.           Release by the Hollo Parties.  Hollo, the Fund and Black-II for himself or itself and each of their respective heirs, successors, affiliates, managers, members, officers, directors, trustees, beneficiaries and assigns, and anyone claiming by or through them (collectively, the “Releasing Parties”), irrevocably and unconditionally releases, waives, and forever discharges the Company, Bonds.com Holdings, Inc., Bonds.com Inc., each of their respective parents, subsidiaries and affiliates, and each of their and their respective parents’, subsidiaries’ and affiliates’ directors, officers, agents, attorneys, present and former employees, partners, investors, shareholders, insurers, predecessors, successors, assigns, and representatives, from any and all actual or potential, direct, indirect or derivative claims, complaints, liabilities, obligations, promises, actions, causes of action, liabilities, agreements, damages, costs, debts, and expenses of any kind, whether known or unknown, that the Releasing Parties have ever had or now have from the beginning of time through the date the undersigned executes this Agreement (collectively, the “Released Claims”); provided that this release shall not release any covenants or obligations contained in (a) this Agreement or the Warrant Agreement, (b) Black-II’s Ordinary Purchase Rights, Special Purchase Rights or Additional P urchase Rights, (c) the Amended and Restated Option, or (d) any shares of Common Stock owned by any of the Hollo Parties.  Without limitation, the Released Claims include all claims arising out of, related to or connected with any law, rule or regulation of the State of Florida, the State of New York, the State of Delaware; any other law, rule or regulation of any other state; any local ordinance; and any other federal, state or local statute, rule, regulation or ordinance; any obligations under, arising out of, or related to any actual or quasi-contracts; common law claims, including but not limited to defamation, breach of a covenant of good faith and fair dealing, breach of fiduciary duty, fraud, misrepresentation, breach of express or implied contract, promissory estoppel; any claims for or to past or future unpaid amounts under the Financial Advisory Agreement, Revenue Sharing Agreement or GO Agreement or in his capacity as an advisor to the Company’s Board of Directors, incentive paymen ts, expense reimbursements, and any other income or benefits the Releasing Parties received or claim they should receive; and all other claims of any kind, including but not limited to any claims for attorneys’ fees.

 
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7.           Release by the Company.  The Company, for itself and each its successors, subsidiaries, affiliates and assigns, and anyone claiming by or through them (collectively, the “Company Releasing Parties”), irrevocably and unconditionally releases, waives, and forever discharges the Hollo Parties and each of their respective heirs, successors, affiliates, managers, members, officers, directors, trustees, beneficiaries and assigns, from any and all actual or potential, direct, indirect or derivative claims, complaints, liabil ities, obligations, promises, actions, causes of action, liabilities, agreements, damages, costs, debts, and expenses of any kind, whether known or unknown, that the Company Releasing Parties have ever had or now have from the beginning of time through the date the undersigned executes this Agreement (collectively, the “Company Released Claims”); provided that this release shall not release any covenants or obligations contained in (a) this Agreement or the Warrant Agreement, (b) Black-II’s Ordinary Purchase Rights, Special Purchase Rights or Additional Purchase Rights, or (c) the Amended and Restated Option.  Without limitation, the Company Released Claims include all claims arising out of, related to or connected with any law, rule or regulation of the State of Florida , the State of New York, the State of Delaware; any other law, rule or regulation of any other state; any local ordinance; and any other federal, state or local statute, rule, regulation or ordinance; any obligations under, arising out of, or related to any actual or quasi-contracts; common law claims, including but not limited to defamation, breach of a covenant of good faith and fair dealing, breach of fiduciary duty, fraud, misrepresentation, breach of express or implied contract, promissory estoppel; any claims for or to past or future unpaid amounts and all other claims of any kind, including but not limited to any claims for attorneys’ fees.

8.           Representations and Warranties by the Hollo Parties.  Each of the Hollo Parties jointly and severally represent and warrant to the Company that they have not assigned, sold or transferred to any person or entity any Released Claims or any rights with respect thereto.  The Hollo Parties jointly and severally represent and warrant to the Company that this Agreement constitutes a valid, binding and enforceable obligation of each of them.

9.           Representations and Warranties by the Company.  The Company represents and warrants to the Hollo Parties that this Agreement constitutes a valid, binding and enforceable obligation of the Company.

10.         Governing Law; Jurisdiction; Jury Trial.  All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction co ntemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

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

 
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12.         Entire Agreement; Amendments.  This Agreement, the Warrant Agreement and the Amended and Restated Option supersede all other prior oral or written agreements between the Company, Hollo, the Fund and/or Black-II with respect to the matters discussed herein, and this Agreement, the Warrant Agreement and the Amended and Restated Option contain the entire understanding of the parties with respect to the matters covered herein and therein.  No provision of this Agreement may be amended other than by an instrument in writing signed by the Company, Hollo, the Fund and Black-II.  No provision hereof may be waiv ed other than by an instrument in writing signed by the party against whom enforcement is sought.

13.         Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.

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

15.         Counterparts.  This Agreement may be executed in two or more counterparts and by facsimile signature or otherwise, and each of such counterparts shall be deemed an original and all of such counterparts together shall constitute one and the same agreement.

[Signature pages follow]

 
4
 

IN WITNESS WHEREOF, this Termination and Release is executed as of the date first set forth above.
 
 
   
BONDS.COM GROUP, INC.
     
   
By:
  /s/ Michael O. Sanderson
   
Name:
 Michael O. Sanderson 
   
Title:
 CEO 
 
 
 
   
 /s/ Mark G. Hollo
   
MARK G. HOLLO
   
 
  
 
   
THE FUND LLC
     
   
By:
  /s/ Mark G. Hollo 
   
Name:
 Mark G. Hollo
   
Title:
 Chairman and CEO
 
 
   
BLACK-II TRUST
     
   
By:
  /s/ Mark G. Hollo 
   
Name:
 Mark G. Hollo
   
Title:
 Attorney-in-Fact 
 
 
5
 EX-10.14 17 ex-10_14.htm UBS EXCHANGE AGREEMENT Unassociated Document
 
Exhibit 10.14
 
EXCHANGE AGREEMENT
 
This EXCHANGE AGREEMENT (the “Agreement”), dated as of October 19, 2010, is entered into by and between Bonds.com Group, Inc., a Delaware corporation (the “Company”) and UBS Americas Inc., a Delaware corporation (“Holder”).
 
WHEREAS:
 
A.           The Company has previously issued to Holder an Ordinary Purchase Rights Certificate, dated January 11, 2010, evidencing Holder’s right to purchase 137,280 shares of the Company’s Series A Participating Preferred Stock, par value $0.0001 per share (the “Series A Preferred”) at a purchase price per share of $37.50, subject to adjustment (the “Purchase Rights”).
 
B.           Holder wishes to terminate and cancel the Purchase Rights in exchange for 38,896 newly issued shares of the Company’s Series A Preferred.
 
NOW, THEREFORE, the Company and Holder hereby agree as follows:
 
1.           EXCHANGE OF PURCHASE RIGHTS
 
(a)           Exchange.  Holder hereby agrees that the Purchase Rights and all rights and privileges evidenced thereby or reflected therein (along with all such rights referenced, evidenced or reflected in the Unit Purchase Agreement, dated January 11, 2010, by and among the Company and Holder) are immediately cancelled, terminated and of no further force or effect, and the Company shall issue to Holder in exchange therefore 38,896 shares of Series A Preferred (the “Shares”).
 
(b)           Issuance of Certificates.  The Company shall deliver certificates evidencing the Shares to Holder within five (5) Business Days of the date hereof.
 
2.           REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  The Company represents and warrants to Holder that:
 
(a)           Organization and Qualification.  Each of the Company and its “Subsidiaries” (which for purposes of this Agreement means any entity in which the Company, directly or indirectly, owns at least a majority of the capital stock or other equity or similar interest) are entities duly organized and validly existing in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authorization to own their properties and to carry on their business as now being conducted.  Each of the Company and each of its Subsidiaries is duly qualified as a foreign entity to do business and is i n good standing (or, with respect to the State of Florida, active status) in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect.  As used in this Agreement, “Material Adverse Effect” means any material adverse effect on the business, properties, assets, operations, results of operations, condition (financial or otherwise) or prospects of the Company and its Subsidiaries, individually or taken as a whole.

 
 
 

(b)           Authorization; Enforcement; Validity.  The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and to issue the Shares in accordance with the terms hereof.  The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby, including, without limitation, the issuance of the Shares have been duly authorized by the Company’s Board of Directors and no further consent or authorization is required by the Company, its Board of Directors or its stockholders.  This Agreement has been duly executed and delivered by the Company, and constitute s the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
 
(c)           Issuance of Shares.  The Shares are duly authorized and, upon issuance in accordance with the terms hereof, shall be validly issued and free from all liens with respect to the issue thereof.  Assuming the accuracy and completeness of Holder’s representations in Section 3, the offer and issuance by the Company of the Shares is exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”).
 
(d)           No Conflicts.  The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby will not (i) result in a violation of the Company’s Certificate of Incorporation, as amended and as in effect on the date hereof (the “Certificate of Incorporation”), or the Company’s Bylaws, as amended and as in effect on the date hereof (the “Bylaws”), any memorandum of association, certificate of incorporation, articles of association, bylaws, certificate of formation, any certificate of designation or other constituent documents of the Company or any of its Subsidiaries, or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and the rules and regulations of any Self-Regulatory Organization (as defined below)) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected.  For purposes of this Agreement, “Self-Regulatory Organization” means the Financial Industry Regulatory Authority, Inc. (together with any successor entity, “FINRA”) and any other commission, board, agency or body that is charged with the supervision or regulation of the brokers and dealers that are its members.
 
3.           HOLDER’S REPRESENTATIONS AND WARRANTIES.
 
(a)           Validity; Enforcement.  This Agreement has been duly and validly authorized, executed and delivered on behalf of Holder and constitutes the legal, valid and binding obligations of Holder enforceable against Holder in accordance with its terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

 
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(b)           No Public Sale or Distribution.  Holder is acquiring the Shares for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the 1933 Act and Holder does not have a present arrangement to effect any distribution of the Shares to or through any person or entity; provided, however, that by making the representations herein, Holder does not agree to hold any of the Shares for any minimum or other specific term and reserves the right to dispose of the Sha res at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act.  Holder is acquiring the Shares hereunder in the ordinary course of its business.  Holder does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any Shares.
 
(c)           Accredited Investor Status.  Holder is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.
 
(d)           Reliance on Exemptions.  Holder understands that the Shares are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and Holder’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of Holder set forth herein in order to determine the availability of such exemptions and the eligibility of Holder to acquire the Shares.
 
(e)           Information.  Holder and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Shares which have been requested by Holder.  Holder and its advisors have been afforded the opportunity to ask questions of the Company.  Neither such inquiries nor any other due diligence investigations conducted by Holder or its advisors, if any, or its representatives shall modify, amend or affect Holder’s right to rely on the Company’s representations and warranties contained herein.  Holder understands that its investment in the Shares involves a h igh degree of risk and is able to afford a complete loss of such investment.  Holder has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Shares.
 
(f)           Transfer or Resale.  Holder understands that: (i) the Shares have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) Holder shall have delivered to the Company an opinion of counsel, in a form reasonably satisfactory to the Company, to the effect that such Shares to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) Holder provides the Company with reasonable assurance that such Shares can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended, (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the Shares made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Shares under circumstances in which the seller (or the Person through whom the sale is made), may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.  Notwithstanding the foregoing, the Shares may be pledged in connection with a bona fide marg in account or other loan or financing arrangement secured by the Shares and such pledge of Shares shall not be deemed to be a transfer, sale or assignment of the Shares hereunder, and if Holder effects a pledge of Shares it shall not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement.
 
 
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(g)           General Solicitation.  Holder is not acquiring the Shares as a result of any advertisement, article, notice or other communication regarding the Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or, to Holder’s knowledge, any other general solicitation or general advertisement.
 
4.           COVENANTS.
 
(a)           Transfer Restrictions.
 
(i)           The Shares may only be disposed of in compliance with state and federal securities laws.  In connection with any transfer of Shares other than pursuant to an effective registration statement or Rule 144, to the Company or to an affiliate of Holder, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the 1933 Act.  As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement.
 
(ii)          Holder agrees to the imprinting, so long as is required by this Section 4(a), of a legend on the Shares in the following form:
 
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 
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(b)           Removal of Legend. Certificates evidencing the Shares shall not require the foregoing legend: (i) while a registration statement covering the resale of such Shares is effective under the 1933 Act, or (ii) if such Shares are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Shares and without volume or manner-of-sale restrictions, or (iii) if such legend is not required under applicable requirements of the 1933 Act (including judicial interpretations and pronouncements issued by the staff of the SEC).  The Company agrees that at such time as such legend is no longer required under this Section 4(b), it will, no later than three trading days following the delivery by Holder to the Company or the Company’s transfer agent of a certificate representing the Shares, as applicable, issued with a restrictive legend along with an acceptable legal opinion and broker representation letter, deliver or cause to be delivered to Holder a certificate representing such shares that is free from all restrictive and other legends.  The Company may not make any notation on its records or give instructions to the Company’s transfer agent that enlarge the restrictions on transfer set forth in this Section.
 
(c)           Compliance with 1933 Act.  Holder agrees that Holder will sell any Shares pursuant to either the registration requirements of the 1933 Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Shares are sold pursuant to a registration statement, they will be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates representing Shares as set forth in Section 4(b) is predicated upon the Company's reliance upon this understanding.
 
5.           MISCELLANEOUS.
 
(a)           Governing Law; Jurisdiction; Jury Trial.  All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of a ny dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 
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(b)           Counterparts.  This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature.
 
(c)           Headings.  The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.
 
(d)           Severability.  If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision( s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.  The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
 
(e)           Entire Agreement; Amendments.  This Agreement supersedes all other prior oral or written agreements between Holder, the Company, their affiliates and Persons acting on their behalf with respect to the matters discussed herein, and this Agreement contains the entire understanding of the parties with respect to the matters covered herein and, except as specifically set forth herein or therein, neither the Company nor Holder makes any representation, warranty, covenant or undertaking with respect to such matters.  No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and Holder and any of their respective successors or assigns. & #160;No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought.
 
 
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(f)           Notices.  Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with an overnight courier service prior to such courier’s deadline for next Business Day delivery to the recipient (all delivery fees and charges prepaid), in each cas e properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:
 
If to the Company:
 
Bonds.com Group, Inc.
529 5th Avenue, 8th Floor
New York, New York 10017
Attention:  Chief Executive Officer
Fax No:  (212) 946-3999
 
If to Holder:
 
UBS Americas Inc.
677 Washington Boulevard
Stamford, CT 06901
Telephone: (203) 719-5427
Facsimile: (203) 719-5627
Attention:  Head of Traded Products - Legal
 
with a copy (for informational purposes only) to:
 
Bingham McCutchen LLP
399 Third Avenue
New York, New York  10022
Telephone:  (212) 705-7278
Facsimile:  (212) 702-3645
Attention:  Kenneth A. Kopelman, Esq.
 
or to such other address, facsimile number and/or email address and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change.  Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

 
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(g)           Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.
 
(h)           No Third Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
 
(i)           Survival of Representations and Warranties and Covenants.  The representations and warranties, covenants and agreements of the Company and Holder contained in this Agreement shall survive the Closing.
 
(j)           Further Assurances.  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
 
(k)           No Strict Construction; Definition of Business Day.  The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.  As used herein, the term “Business Day” shall mean any day other than (a) a Saturday or Sunday and (b) any day on which banks are required or permitted to be closed in New York, New York.
 
(l)           Definition of Knowledge.  “Knowledge,” including the phrase “to the Company’s knowledge,” shall mean the knowledge after reasonable investigation of the officers and senior employees of the Company.
 
[Signature Page Follows]
 
 
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IN WITNESS WHEREOF, Holder and the Company have caused this Exchange Agreement to be duly executed as of the date first written above.


   
COMPANY:
     
   
BONDS.COM GROUP, INC.
     
   
By:
  /s/ Michael O. Sanderson 
   
Name:
 Michael O. Sanderson 
   
Title:
 CEO 


   
HOLDER:
     
   
UBS AMERICAS INC.
     
   
By:
  /s/ Per Dyrvik 
   
Name:
 Per Dyrvik 
   
Title:
 Managing Director 


   
By:
  /s/ Joan Lavis 
   
Name:
 Joan Lavis 
   
Title:
 Managing Director 
 
 
 
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