-----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, JskUJHcPVRQlZu4RNTeI4FF6kS0vF3tK9/KEk26snLIcCq2brUPDHk9q9smsHbPy 2VXAOcfbYJAgeDF+An4XNw== 0000910680-05-000290.txt : 20050413 0000910680-05-000290.hdr.sgml : 20050413 20050413165242 ACCESSION NUMBER: 0000910680-05-000290 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 20 FILED AS OF DATE: 20050413 DATE AS OF CHANGE: 20050413 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RAMP CORP CENTRAL INDEX KEY: 0000890784 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 841123311 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-124046 FILM NUMBER: 05748734 BUSINESS ADDRESS: STREET 1: 33 MAIDEN LANE CITY: NEW YORK STATE: NY ZIP: 10038 BUSINESS PHONE: 212-440-1500 MAIL ADDRESS: STREET 1: 33 MAIDEN LANE CITY: NEW YORK STATE: NY ZIP: 10038 FORMER COMPANY: FORMER CONFORMED NAME: MEDIX RESOURCES INC DATE OF NAME CHANGE: 19980218 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL NURSING SERVICES INC DATE OF NAME CHANGE: 19940719 S-3 1 s3041105.txt APRIL 13, 2005 As filed with the Securities and Exchange Commission on April 13, 2005 Registration No. 333- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------------- RAMP CORPORATION ------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 84-1123311 - ------------------------------- -------------------- (State or other jurisdiction of (I.R.S. Employer Incorporation or organization) Identification No.) 33 Maiden Lane New York, New York 10038 (212) 440-1500 ------------------------------------------------------------- (Address, including zip code, and telephone number, Including area code, of registrant's principal executive offices) Andrew Brown 33 Maiden Lane New York, New York 10038 (212) 440-1500 ------------------------------------------------------------- (Name, address, including zip code, and telephone number, Including area code, of agent for service) Copy to: Martin Eric Weisberg, Esq. Troutman Sanders LLP The Chrysler Building 405 Lexington Avenue New York, New York 10174 (212) 704-6000 ---------------------- Approximate date of commencement of proposed sale to public: As soon as practicable after the effective date of this Registration Statement. If the only securities on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [_] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. |X| If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_]
CALCULATION OF REGISTRATION FEE - ------------------------------------------------------------------------------------------------------------------------------ Proposed Maximum Proposed Maximum Amount of Title of Each Class Amount to be Offering Price Aggregate Registration of Securities to be Registered Registered(1) Per Share Offering Price Fee(9) - ------------------------------------------------------------------------------------------------------------------------------ Common Stock, $.001 par value per share... 6,494,483 (2) $ 1.46 (3) $9,481,945.10 $1,116.02 - ------------------------------------------------------------------------------------------------------------------------------ Common Stock, $.001 par value per share... 8,671,325 (2)(4) $ 1.46 (7) $12,660,134.50 $1,490.10 - ------------------------------------------------------------------------------------------------------------------------------ Common Stock, $.001 par value per share... 9,365,712 (2)(5) $ 1.46 (8) $13,673,939.00 $1,609.42 - ------------------------------------------------------------------------------------------------------------------------------- Common Stock, $.001 par value per share... 1,000,000 (2)(6) $ 1.46 (8) $1,460,000.00 $171.84 - ------------------------------------------------------------------------------------------------------------------------------- Common Stock, $.001 par value per share... 62,500 (2)(6) $ 1.46 (8) $91,250.00 $10.74 - ------------------------------------------------------------------------------------------------------------------------------- Common Stock, $.001 par value per share... 116,667 (2)(6) $ 1.80 (8) $210,000.60 $24.72 - ------------------------------------------------------------------------------------------------------------------------------- Total Registration Fee.................................................................................. $4,422.84 - ------------------------------------------------------------------------------------------------------------------------------
(1) Represents the shares of common stock being registered for resale by the selling stockholders, the number of shares of common stock issuable upon the conversion of convertible debentures, the number of shares of common stock issuable upon the exercise of warrants to purchase shares of our common stock and the number of shares of common stock issuable upon the exercise of additional investment rights by the selling stockholders. (2) Pursuant to Rule 416 of the Securities Act of 1933, as amended (the "Securities Act"), the shares of common stock offered hereby also include such presently indeterminate number of shares of common stock as shall be issued by us to the selling stockholders upon adjustment under anti-dilution provisions covering the additional issuance of shares by Ramp resulting from stock splits, stock dividends or similar transactions. (3) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) of the Securities Act; based on the average of the high ($1.85) and low ($1.06) prices as reported on the American Stock Exchange on April 7, 2005. (4) Represents one hundred and twenty five percent (125%) of the number of shares of our common stock issuable upon the conversion or redemption of convertible debentures. (5) Represents one hundred and twenty five percent (125%) of the number of shares of common stock issuable upon the exercise of warrants to purchase shares of our common stock. (6) Represents one hundred percent (100%) of the number of shares of common stock issuable upon the exercise of warrants to purchase shares of our common stock. (7) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(i) of the Securities Act, based on the offering price of the convertible securities. (8) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g) of the Securities Act, based on the higher of (a) the exercise price of the warrants or (b) the offering price of securities of the same class included in this Registration Statement. (9) Calculated pursuant to Section 6(b) of the Securities Act based upon Proposed Maximum Aggregate Offering Price multiplied by .0001177. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. The information in this prospectus is not complete and may be changed. No dealer, salesman or other person has been authorized to give any information or to make any representation not contained in or incorporated by reference in this prospectus and, if given or made, such information or representation must not be relied upon as having been authorized by us, the selling stockholders or any other person. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby in any jurisdiction to any person to whom it is unlawful to make such an offer in such jurisdiction. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create any implication that the information herein is correct as of any time subsequent to the date hereof or that there has been no change in our affairs since such date. Subject to completion, dated April 13, 2005 PROSPECTUS RAMP CORPORATION 25,710,687 Shares of Common Stock This prospectus relates to the sale by the selling stockholders identified in this prospectus of up to an aggregate of 25,710,687 shares of our common stock, including: o 6,494,483 shares of our common stock; o 8,671,325 shares issuable upon the conversion of our convertible debentures with an initial conversion price of $1.25 per share; o 9,365,712 shares issuable upon the exercise of warrants with an initial exercise price of $1.25 per share; o 1,000,000 shares issuable upon the exercise of warrants with an initial exercise price of $1.14 per share; o 62,500 shares issuable upon the exercise of warrants with an initial exercise price of $1.00 per share; o 116,667 shares issuable upon the exercise of warrants with an initial exercise price of $1.80 per share; The conversion price of our convertible debentures and the exercise price of the warrants are subject to adjustment under certain circumstances. Please see the sections of this prospectus titled "Description of the Transactions", "Plan of Distribution" and "Description of Our Securities" for more information about the terms and conditions of our common stock, convertible debentures and warrants. We will not receive any of the proceeds from the sale of these shares by the selling stockholders. However, we will receive the proceeds from any exercise of warrants to purchase shares to be sold hereunder. See "Use of proceeds". We have agreed to pay the expenses in connection with the registration of these shares. Our common stock is traded on the American Stock Exchange under the symbol "RCO". On April 7, 2005, the closing price of our common stock was reported as $1.43 per share. The information in this prospectus reflects the 1-for-60 reverse stock split of our common stock which became effective on December 1, 2004. Investing in our securities involves a high degree of risk. See "Risk Factors" beginning on page 4 of this prospectus for certain risks that should be considered by prospective purchasers of the securities offered hereby. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is April __, 2005. 2 TABLE OF CONTENTS Page ---- PROSPECTUS SUMMARY.............................................................4 RISK FACTORS...................................................................5 FORWARD-LOOKING STATEMENTS....................................................14 DESCRIPTION OF THE TRANSACTIONS...............................................14 SELLING STOCKHOLDERS..........................................................19 DESCRIPTION OF SECURITIES.....................................................24 PLAN OF DISTRIBUTION..........................................................25 INDEMNIFICATION OF OFFICERS AND DIRECTORS.....................................27 WHERE YOU CAN FIND MORE INFORMATION ABOUT US..................................27 INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.............................28 LEGAL MATTERS/INTERESTS OF COUNSEL............................................28 EXPERTS.......................................................................29 3 PROSPECTUS SUMMARY The following summary highlights aspects of the offering and the information incorporated by reference in this prospectus. This prospectus does not contain all of the information that you should consider before making an investment decision. You should read this entire prospectus carefully, including the "Risk Factors" section and the financial statements, related notes and the other more detailed information appearing elsewhere or incorporated by reference in this prospectus. Unless otherwise indicated, "we", "us", "our" and similar terms, as well as references to the "Company" and "Ramp", refer to Ramp Corporation and its subsidiaries HealthRamp and LifeRamp, and not to the selling security holders. All industry statistics incorporated by reference in this prospectus were obtained from data prepared or provided by recognized industry sources. Ramp Corporation Ramp Corporation (formerly known as Medix Resources, Inc.), through its wholly-owned HealthRamp subsidiary, provides Internet based communication, data integration, and transaction processing designed to provide access to safer and better healthcare. Ramp's products enable communication of high value-added healthcare information among physician offices, skilled nursing facilities, hospitals, health management organizations, and health insurance companies. In 2002, we organized a wholly-owned subsidiary, PS Purchase Corp., in Delaware, and in 2003 changed its name to HealthRamp, Inc. ("HealthRamp") to continue this healthcare technology business. In 2003, we acquired the businesses and assets of Frontline Physicians Exchange and Frontline Communications ("Frontline") used in or necessary for the conduct of its 24-hour telephone answering and messaging services to physicians and other medically-related businesses and virtual office services to non-medical businesses and professionals, and the business and assets of ePhysician, Inc., whose technology has been integrated with those of our previously developed Cymedix suite of technologies, resulting in the CarePoint(TM) Suite (the "CarePoint Suite") that we are currently marketing to physicians and other healthcare professionals. On September 30, 2004, we sold all of the assets of our Frontline division, known as the OnRamp division, to the former owners of Frontline. The sale of OnRamp is part of refocusing our financial resources and management efforts on our core HealthRamp operations. We believe that focusing on HealthRamp's long-term potential and evolving opportunities is in the best interest of our stockholders. In 2003, we formed a wholly-owned subsidiary, LifeRamp Family Financial, Inc. ("LifeRamp"), in Utah that has not yet commenced business operations. LifeRamp's business purpose is the making of non-recourse loans to terminally ill cancer patients secured by their life insurance policies. In July 2004, we decided to delay the commencement of business operations of LifeRamp indefinitely while exploring financing and other possible alternatives. Subsequently in October 2004, we ceased all operations at LifeRamp and began actively pursuing alternatives for its LifeRamp investment. In January 2005, we began exploring options for capitalizing the assets of LifeRamp as a separate business from us including a potential spin off of all or a portion of LifeRamp. In February 2005, LifeRamp received $300,000 in bridge financing from investors in contemplation of such a strategic transaction. LifeRamp is using the proceeds from the bridge financing to pursue a strategic recapitalization. There can be no assurance that we will complete a transaction that will recoup its initial investment or any portion thereof. Furthermore, there can be no assurance that should a transaction be consummated, it would result in a near term improvement in working capital. In August 2004, HealthRamp released the initial version of a new application designed to meet the information technology needs of the long term care industry. This application is called HealthRamp CareGiver(TM). CareGiver v1.0, based upon our core ePrescribing technologies, allows skilled nursing facilities to manage the admissions, discharge and transfer process; to 4 submit secure electronic orders for drugs, treatments and supplies to institutional pharmacies and other vendors; to maintain comprehensive resident medical records, and to easily manage recurring monthly clinical and business process. In October 2004, we acquired all of the tangible and intangible assets of Berdy Medical Systems, Inc., a provider of comprehensive electronic medical record systems for physician practices. The acquisition of the Berdy systems enabled us to expand our practice-centric healthcare technology product line to encompass a spectrum from affordable, high-utility, readily adoptable, wireless ePrescribing solutions to fully-featured electronic medical record systems (EMR), and provided us with clinical and technical expertise germane to our new product development efforts. We have limited revenues from current operations and are funding the development and deployment of our products through the sales of our securities. See "Risk Factors". Because of our significant recurring losses, and the lack of certain sources of capital to fund our operations, our independent registered public accounting firms included a "going concern" uncertainty in their audit reports on our audited financial statements for the years ended December 31, 2004, 2003 and 2002. The "going concern" uncertainty signifies that substantial doubt exists about our ability to continue our business. For a complete description of risks regarding our business and operations, we refer you to the section of this prospectus entitled "Risk Factors". Our principal executive office is located at 33 Maiden Lane, New York, New York 10038, and our telephone number is (212) 440-1500. The Offering - -------------------------------------------------------------------------------- Common stock offered by selling stockholders 25,710,687 Use of Proceeds We will not receive any proceeds from the sale of shares in this offering. We may receive up to $13,119,641 upon exercise of the warrants. American Stock Exchange Symbol RCO - -------------------------------------------------------------------------------- The information in this prospectus reflects our 1-for-60 reverse stock split effective December 1, 2004. RISK FACTORS An investment in our common stock involves a high degree of risk. You should carefully consider the following risk factors and other information in this prospectus before investing in our common stock. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment. We have incurred and reported significant recurring net losses which endangers our viability as a going-concern and caused our independent registered public accounting firms to include a "going concern" explanatory paragraph in their reports in connection with their audits of our financial statements for the years ended December 31, 2004, 2003 and 2002. We have reported net losses applicable to common stockholders of $(50,765,000), $(31,321,000) and $(9,014,000) for the years ended December 31, 2004, 2003 and 2002, respectively. At December 31, 2004, we had an accumulated deficit of $(122,099,000) and a working capital deficit of ($6,306,000). We rely on investments and financings to provide working capital which may not be available to us in the future and may result in increased net losses and accumulated deficit. 5 While we believe that we can continue to sell our securities to raise the cash needed to continue operating until cash flow from operations can support our business, there can be no assurance that this will occur. There can be no assurance that additional investments in our securities or other debt or equity financings will be available to us on favorable terms, or at all, to adequately support the development and deployment of our technology. Moreover, failure to obtain such capital on a timely basis could result in lost business opportunities. In addition, the terms of our debt or equity financings have included, and in the future may include, contingent anti-dilution provisions and the issuance of warrants, the accounting for which have resulted, and for future financings may result, in significant non-cash increases in our net losses and accumulated deficit. Such non-cash expenses totaled $18.4 million and $9.9 million for the years ended December 31, 2004 and 2003, respectively. While we believe that we have the ability to successfully attract new customers, the ultimate deployment of these new customers frequently requires up front capital. There can be no assurance that we will obtain that capital. In recent months we have not obtained sufficient capital to meet our obligations and as a result have not been able to pay our vendors on a timely basis and are significantly in arrears in making such payments. While we have been working with our creditors to make arrangements to satisfy our obligations in cash or through the issuance of our securities, there can be no assurance that we will be able to do so and as a result we may be subject to litigation or disruption in our business operations. Our independent registered public accounting firm has advised our management and our Audit Committee that there were material weaknesses in our internal controls and procedures during fiscal years 2003 and 2004. The Company has taken steps and has a plan to correct the material weaknesses. Progress was made during 2004; however, management believes that until these material weaknesses are corrected, a potential misapplication of generally accepted accounting principles or potential accounting error in our consolidated financial statements could occur. Enhancing our internal controls to correct the material weaknesses has and will result in increased costs to us. While the Company has taken several steps to improve internal controls in 2004, BDO Seidman, LLP has advised our management and our Audit Committee that, in BDO Seidman, LLP's opinion, and the Company concurs, there were reportable conditions during 2004, which constituted material weaknesses in internal control. The identified material weakness stems from the Company's numerous equity transactions involving complex and judgmental accounting issues. While all of these transactions were recorded, BDO Seidman in their audit work noted instances where generally accepted accounting principles were not correctly applied and adjustments to the Company's consolidated financial statements were required. As part of the remedial steps taken in 2004, the Company added the position of Vice President of Finance to oversee technical accounting, financial reporting and internal control issues. The individual hired in August 2004 for this position notified the Company of his intent to leave at the end of the 1st quarter in 2005. The Company is actively searching for a replacement. The Company is also searching for an additional staff accounting resource to assist the controller in accounting and reporting transactions. Additionally, in order to better determine the appropriate accounting for complex equity transactions, the Company intends to engage outside expertise to formulate the proper accounting treatment for such transactions. The success of the development, distribution and deployment of our technology is dependent to a significant degree on our key management and technical personnel. We believe that our success will also depend upon our ability to attract, motivate and retain highly skilled, managerial, sales and marketing, and technical personnel, including software programmers and systems architects skilled in the computer languages in which our technology operates. Competition for such personnel in the software and information services industries is intense. The loss of key personnel, or the inability to hire or retain qualified personnel, could have 6 a material adverse effect on our results of operations, financial condition or business. The loss of key personnel, or the inability to hire or retain qualified personnel, could have a material adverse effect on our results of operations, financial condition or business. We expect to continue to experience significant losses until such time as our technology can be successfully deployed and produce revenues. The continuing development, marketing and deployment of our technology will depend upon our ability to obtain additional financing. Our technology has generated limited recurring revenues to date. We are funding our operations principally through the sale of our securities to third party investors. We may not be able to retain our listing on the American Stock Exchange. On September 13, 2004, we received a written notice (the "Notice") from the American Stock Exchange (the "AMEX") informing us, in relevant part, that we are not in compliance with (i) Section 1003(a)(i) of the AMEX rules as a result of our stockholder's equity less than $2,000,000 and losses from continuing operations and/or net losses in two out of three of its three most recent fiscal years, (ii) Section 1003(a)(ii) of the AMEX rules as a result of our stockholder's equity of less than $4,000,000 and losses from continuing operations and/or net losses in three out of its four most recent fiscal years, (iii) Section 1003(a)(iv) of the AMEX rules whereby, as a result of our substantial sustained losses in relation to our overall operations or our existing financial resources, or our impaired financial condition, it appears questionable, in the opinion of AMEX, as to whether we will be able to continue operations and/or meet our obligations as they mature, and (iv) Section 1003(f)(v) of the AMEX rules as a result of our common stock selling for a substantial period at a low price per share. The Notice is not a notice of delisting from the AMEX or a notice by AMEX to initiate delisting proceedings. Specifically, the Notice provides that, in order to maintain the listing of our common stock, we must submit a plan to the AMEX by October 14, 2004 (extended by the AMEX to October 21, 2004), advising AMEX of the action we have taken, or the action we will take, to bring us into compliance with the continued listing standards of the AMEX within a maximum of eighteen months from the date the Notice was received. On October 20, 2004, we timely submitted our plan to the AMEX. On December 16, 2004 the AMEX notified the Company that it accepted the Company's plan of compliance and granted the Company an extension of time until March 13, 2006 to regain compliance with the AMEX's continued listing standards. The Company will be subject to periodic review by AMEX staff during the extension period. Failure to make progress consistent with the plan or to regain compliance with the continued listing standards by the end of the plan period on March 13, 2006 could result in the AMEX commencing delisting proceedings. Subject to our right of appeal of any AMEX staff determination, AMEX may initiate delisting proceedings if we do not make progress consistent with the plan during the plan period, or we are not in compliance with the continued listing standards at the conclusion of the plan period. Trading in our common stock after a delisting, if any, would likely be conducted in the over-the-counter markets in the so-called "pink sheets" or on the National Association of Securities Dealers' Electronic Bulletin Board. As a consequence of a delisting our shareholders would find it more difficult to dispose of, or to obtain accurate quotations as to the market value of our common stock, and our common stock would become substantially less attractive as collateral for margin and purpose loans, for investment by financial institutions under their internal policies or state investment laws or as consideration in future capital raising transactions. Although we have had operations since 1988, because of our move away from temporary healthcare staffing to provide healthcare connectivity solutions at the point of care, we have a relatively short operating history in the healthcare connectivity solutions business and limited financial data to evaluate our business and prospects. In addition, our business model is likely to continue to evolve as we attempt to develop our product offerings and 7 enter new markets. As a result, our potential for future profitability must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies that are attempting to move into new markets and continuing to innovate with new and unproven technologies. We are still in the process of gaining experience in marketing physician connectivity products, providing support services, evaluating demand for products, financing a technology business and dealing with government regulation of health information technology products. While we are putting together a team of experienced executives, they have come from different backgrounds and may require some time to develop an efficient operating structure and corporate culture for our company. Furthermore, our executive management and Board of Directors have been subject to change as executives and directors have resigned or have been terminated. Such change, including the appointment or election of successors to fill these positions, can cause disruption and distraction to the Company's business operations. Although we have focused our business on healthcare connectivity, we may decide to explore new business opportunities which compliment our core technology business. These new ventures may come in the form of an acquisition, joint venture, start-up or other structure. Any such venture will entail any number of risk factors including (without limitation) general business risk, integration risk, technology risk and market acceptance risk. Additionally, any new venture will require utilization of scarce capital resources which may never create value for the Company or its stockholders. The success of our products and services in generating revenue may be subject to the quality and completeness of the data that is generated and stored by the physician or other healthcare professionals and the data that is entered into our interconnectivity systems, and the failure to input appropriate or accurate information could disrupt our business. Failure of the Company and its vendors to maintain the quality and completeness of the data or unwillingness by the healthcare professional to generate the required information may result in our losing revenue or claims being made against us by our users. As a developer of connectivity technology products, we will be required to anticipate and adapt to evolving industry standards and regulations and new technological developments. The market for our technology is characterized by continued and rapid technological advances in both hardware and software development, requiring ongoing expenditures for research and development, and timely introduction of new products and enhancements to existing products. Our future success, if any, will depend in part upon our ability to enhance existing products, to respond effectively to technology changes and changes in applicable regulations, and to introduce new products and technologies that are functional and meet the evolving needs of our clients and users in the healthcare information systems market. We rely on a combination of internal development, strategic relationships, licensing and acquisitions to develop our products and services. The cost of developing and distributing new healthcare information services and technology solutions is inherently difficult to estimate. Our development of proposed products and services may take longer than originally expected, require more testing than originally anticipated and require the acquisition of additional personnel and other resources. In addition, there can be no assurance that the products or services we develop or license will be able to compete with the alternatives available to our customers. New or newly integrated products and services will not become profitable unless they achieve sufficient levels of market acceptance. There can be no assurance that healthcare providers will accept new products and services from us, or products and services that result from integrating existing and/or acquired products and services, including the products and services we are developing to integrate our services into the physician's office or other medical facility, such as our handheld solution. In addition, there can be no assurance that any pricing strategy that we 8 implement for any such products and services will be economically viable or acceptable to the target markets. Failure to achieve broad penetration in target markets with respect to new or newly integrated products and services could have a material adverse effect on our business prospects. The market for our connectivity products and services in the healthcare information systems may be slow to develop due to the large number of practitioners who are resistant to change, as well as the financial investment and workflow interruptions associated with change, particularly in a period of rising pressure to reduce costs in the marketplace. Achieving market acceptance of new or newly integrated products and services is likely to require significant efforts and expenditures. Achieving market acceptance for new or newly integrated products and services is likely to require substantial marketing efforts and expenditure of significant funds to create awareness and demand by participants in the healthcare industry. In addition, deployment of new or newly integrated products and services may require the use of additional resources for training our existing sales force and customer service personnel and for hiring and training additional salespersons and customer service personnel. There can be no assurance that the revenue opportunities from new or newly integrated products and services will justify amounts spent for their development, marketing and roll-out. We could be subject to breach of warranty claims if our software products, information technology systems or transmission systems contain errors, experience failures or do not meet customer expectations. We could face breach of warranty or other claims or additional development costs if the software and systems we sell or license to customers or use to provide services contain undetected errors, experience failures, do not perform in accordance with their documentation, or do not meet the expectations that our customers have for them. Undetected errors in the software and systems we provide or those we use to provide services could cause serious problems for which our customers may seek compensation from us. We attempt to limit, by contract, our liability for damages arising from negligence, errors or mistakes. However, contractual limitations on liability may not be enforceable in certain circumstances or may otherwise not provide sufficient protection to us from liability for damages. If our systems or the Internet experience security breaches or are otherwise perceived to be insecure, our business could suffer. A security breach could damage our reputation or result in liability. We retain and transmit confidential information, including patient health information. Despite the implementation of security measures, our infrastructure or other systems that we interface with, including the Internet, may be vulnerable to physical break-ins, hackers, improper employee or contractor access, computer viruses, programming errors, attacks by third parties or similar disruptive problems. Any compromise of our security, whether as a result of our own systems or systems that they interface with, could reduce demand for our services. Our products provide applications that relate to patient medication histories and treatment plans and any failure by our products to provide and maintain accurate, secure and timely information could result in product liability claims against us by our clients or their affiliates or patients. We maintain insurance that we believe currently is adequate to protect against claims associated with the use of our products, but there can be no assurance that our insurance coverage would adequately cover any claim asserted against us. A successful claim brought against us in excess of our insurance coverage could have a material adverse effect on our results of operations, financial condition and/or business. Even unsuccessful claims could result in the expenditure of funds in litigation, as well as diversion of management time and resources. Certain of our products are subject to compliance with the Health Insurance Portability And Accountability Act Of 1996 (HIPAA). Failure to comply with HIPAA may have a material adverse effect on our business. 9 Government regulation of healthcare and healthcare information technology is in a period of ongoing change and uncertainty that creates risks and challenges with respect to our compliance efforts and our business strategies. The healthcare industry is highly regulated and is subject to changing political, regulatory and other influences. Federal and state legislatures and agencies periodically consider programs to reform or revise the United States healthcare system. These programs may contain proposals to increase governmental involvement in healthcare or otherwise change the environment in which healthcare industry participants operate. Particularly, compliance with HIPAA and related regulations are causing the healthcare industry to incur substantial costs to change its procedures. Healthcare industry participants may respond by reducing their investments or postponing investment decisions, including investments in our products and services. Although we expect these regulations to have the beneficial effect of spurring adoption of our software products, we cannot predict with any certainty what impact, if any, these and future healthcare reforms might have on our business. Existing laws and regulations also could create liability, cause us to incur additional costs or restrict our operations. The effect of HIPAA on our business is difficult to predict and there can be no assurance that we will adequately address the business risks created by HIPAA. We may incur significant expenses relating to compliance with HIPAA. Furthermore, we are unable to predict what changes to HIPAA, or the regulations issued pursuant to HIPAA, might be made in the future or how those changes could affect our business or the costs of compliance with HIPAA. In addition, changes in Medicare and Medicaid regulations could have an adverse effect on the operations and future prospects of our HealthRamp business operations. Government regulation of the Internet could adversely affect our business. The Internet and its associated technologies are subject to government regulation. Our failure to accurately anticipate the application of applicable laws and regulations, or any other failure to comply, could create liability for us, result in adverse publicity, or negatively affect our business. In addition, new laws and regulations may be adopted with respect to the Internet or other online services covering user privacy, patient confidentiality, consumer protection and other services. We cannot predict whether these laws or regulations will change or how such changes will affect our business. Government regulation of the Internet could limit the effectiveness of the Internet for the methods of healthcare e-commerce that we are providing or developing or even prohibit the sale of particular products and services. Our Internet-based services are dependent on the development and maintenance of the Internet infrastructure and data storage facilities maintained by third parties. Our ability to deliver our Internet-based products and services is dependent on the development and maintenance of the infrastructure of the Internet and the maintenance of data storage facilities by third parties. This includes maintenance of a reliable network backbone and data storage facilities with the necessary speed, data capacity and security, as well as timely development of complementary products such as high-speed modems, for providing reliable Internet access and services. If the Internet continues to experience increased usage, the Internet infrastructure may be unable to support the demands placed on it. In addition, the performance of the Internet may be harmed by increased usage. The Internet has experienced a variety of outages and other delays as a result of damages to portions of its infrastructure, and it could face outages and delays in the future. These outages and delays could reduce the level of Internet usage as well as the availability of the Internet to us for delivery of our Internet-based products and services. Some of our products and services will not be widely adopted until broadband connectivity is more generally available. Some of our products and services and planned services require a continuous broadband connection between the physician's office or other healthcare provider facilities and the Internet. The availability of broadband connectivity varies widely from location to location and even within a single geographic area. The future availability of broadband connections is unpredictable and is not within our control. While we expect that 10 many physicians' offices and other healthcare provider facilities will remain without ready access to broadband connectivity for some period of time, we cannot predict how long that will be. Accordingly, the lack of these broadband connections will continue to place limitations on the number of sites that are able to utilize our Internet-based products and services and the revenue we can expect to generate form those products and services. Compliance with legal and regulatory requirements will be critical to LifeRamp's operations should it commence operations. If we, directly or indirectly through our subsidiaries including LifeRamp, erroneously disclose information that could be confidential and/or protected health information, we could be subject to legal action by the individuals involved, and could possibly be subject to criminal sanctions. In addition, if LifeRamp is launched and fails to comply with applicable insurance and consumer lending laws, states could bring actions to enforce statutory requirements, which could limit its business practices in such states, including, without limitation, limiting or eliminating its ability to charge or collect interest on its loans or related fees, or limit or eliminate its ability to secure its loans with its borrowers' life insurance policies. Any such actions, if commenced, would have a material and adverse impact on LifeRamp's business, operations and financial condition. Further, there can be no assurance that a capitalization of LifeRamp will be achieved or, if achieved, will be successful. We have been granted certain patent rights, trademarks and copyrights relating to our software. However, patent and intellectual property legal issues for software programs, such as our products, are complex and currently evolving. Since patent applications are secret until patents are issued in the United States, or published in other countries, we cannot be sure that we are first to file any patent application. In addition, there can be no assurance that competitors, many of which have far greater resources than we do, will not apply for and obtain patents that will interfere with our ability to develop or market product ideas that we have originated. Furthermore, the laws of certain foreign countries do not provide the protection to intellectual property that is provided in the United States, and may limit our ability to market our products overseas. We cannot give any assurance that the scope of the rights we have are broad enough to fully protect our technology from infringement. Litigation or regulatory proceedings may be necessary to protect our intellectual property rights, such as the scope of our patent. Such litigation and regulatory proceedings are very expensive and could be a significant drain on our resources and divert resources from product development. There is no assurance that we will have the financial resources to defend our patent rights or other intellectual property from infringement or claims of invalidity. We also rely upon unpatented proprietary technology and no assurance can be given that others will not independently develop substantially equivalent proprietary information and techniques or otherwise gain access to or disclose our proprietary technology or that we can meaningfully protect our rights in such unpatented proprietary technology. No assurance can be given that efforts to protect such information and techniques will be successful. The failure to protect our intellectual property could have a material adverse effect on our operating results, financial position and business. As of March 21, 2005, we had 12,959,074 outstanding shares of common stock and 25,125,028 shares of common stock reserved for issuance upon the exercise of options, warrants, and shares of our convertible preferred stock and convertible redeemable debentures outstanding on such date. Most of these shares will be immediately saleable upon exercise or conversion under registration statements we have filed or plan to file with the SEC. The exercise prices of options, warrants or other rights to acquire common stock presently outstanding range from $0.60 cents per share to $298.20 per share. During the respective terms of the outstanding options, warrants, preferred stock, convertible debentures, and other outstanding 11 derivative securities, the holders are given the opportunity to profit from a rise in the market price of our common stock, and the exercise of any options, warrants or other rights may dilute the book value per share of our common stock and put downward pressure on the price of our common stock. The existence of the options, conversion rights, redemption rights or any outstanding warrants may adversely affect the terms on which we may obtain additional equity financing. Moreover, the holders of such securities are likely to exercise their rights to acquire common stock at a time when we would otherwise be able to obtain capital on terms more favorable than could be obtained through the exercise or conversion of such securities. We have raised substantial amounts of capital in private placements from time to time. The securities offered in such private placements were not registered under the Securities Act or any state "blue sky" law in reliance upon exemptions from such registration requirements. Such exemptions are highly technical in nature and if we inadvertently failed to comply with the requirements of any of such exemptive provisions, investors would have the right to rescind their purchase of our securities or sue for damages. If one or more investors were to successfully seek such rescission or prevail in any such suit, we could face severe financial demands that could materially and adversely affect our financial position. Financings that may be available to us under current market conditions frequently involve sales of our common stock at prices below the prices at which our common stock currently trades on the American Stock Exchange, as well as the issuance of warrants or convertible securities at a discount to market price. Investors in our securities may suffer dilution. The issuance of shares of common stock or shares of common stock underlying warrants, options or preferred stock or convertible debentures, particularly those with beneficial conversion features, will dilute the equity interest of existing stockholders and could have a significant adverse effect on the market price of our common stock. The sale of common stock acquired at a discount could have a negative impact on the market price of our common stock and could increase the volatility in the market price of our common stock. In addition, we may seek additional financing which may result in the issuance of additional shares of our common stock and/or rights to acquire additional shares of our common stock. The issuance of our common stock in connection with such financing may result in substantial dilution to the existing holders of our common stock. Those additional issuances of common stock would result in a reduction of the existing stockholders' percentage interest in our company. Historically, our common stock has experienced significant price fluctuations. One or more of the following factors influence these fluctuations: o unfavorable announcements or press releases relating to the technology sector; o regulatory, legislative or other developments affecting us or the healthcare industry generally; o conversion of our preferred stock and convertible debt into common stock at conversion rates based on then current market prices or discounts to market prices of our common stock and exercise of options and warrants at below current market prices; o sales by those financing our company through securities convertible into our common stock of which has been registered with the SEC and may be sold into the public market immediately upon conversion; and 12 o market conditions specific to technology and internet companies, the healthcare industry and general market conditions. In recent years the stock market has experienced significant price and volume fluctuations. These fluctuations, which are often unrelated to the operating performance of specific companies, have had a substantial effect on the market price for many healthcare related technology companies. Factors such as those cited above, as well as other factors that may be unrelated to our operating performance, may adversely affect the price of our common stock. We have not had earnings, but if earnings were available, it is our general policy to retain any earnings for use in our operations. Therefore, we do not anticipate paying any cash dividends on our common stock in the foreseeable future despite the recent reduction of the federal income tax rate on dividends. Any payment of cash dividends on our common stock in the future will be dependent upon our financial condition, results of operations, current and anticipated cash requirements, preferred rights of holders of preferred stock, plans for expansion, as well as other factors that our Board of Directors deems relevant. We anticipate that our future financing agreements may prohibit the payment of common stock dividends without the prior written consent of those investors. We may have to lower prices or spend more money to compete effectively against companies with greater resources than us, which could result in lower revenues. The eventual success of our products in the marketplace will depend on many factors, including product performance, price, ease of use, support of industry standards, competing technologies and customer support and service. Given these factors we cannot assure you that we will be able to compete successfully. For example, if our competitors offer lower prices, we could be forced to lower prices which could result in reduced or negative margins and a decrease in revenues. If we do not lower prices we could lose sales and market share. In either case, if we are unable to compete against our main competitors, which include established companies with significant financial resources, we would not be able to generate sufficient revenues to grow our company or reverse our history of operating losses. In addition, we may have to increase expenses to effectively compete for market share, including funds to expand our infrastructure, which is a capital and time intensive process. Further, if other companies choose to aggressively compete against us, we may have to increase expenses on advertising, promotion, trade shows, product development, marketing and overhead expenses, hiring and retaining personnel, and developing new technologies. These lower prices and higher expenses would adversely affect our operations and cash flows. As with any business, growth in absolute amounts of selling, general and administrative expenses or the occurrence of extraordinary events could cause actual results to vary materially and adversely from the results contemplated by any forward-looking statements included in this report. Budgeting and other management decisions are subjective in many respects and thus susceptible to incorrect decisions and periodic revisions based on actual experience and business developments, the impact of which may cause us to alter our marketing, capital expenditures or other budgets, which may, in turn, affect our results of operations. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe the assumptions underlying any forward-looking statements are reasonable, any of the assumptions could prove inaccurate, and therefore, there can be no assurance that the results contemplated in any forward-looking statements will be realized. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a 13 representation by us or any other person that our objectives or plans for the Company will be achieved. FORWARD-LOOKING STATEMENTS Certain information contained in this prospectus and the documents incorporated by reference into this prospectus include forward-looking statements (as defined in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act), which mean that they relate to events or transactions that have not yet occurred, our expectations or estimates for our future operations, our growth strategies or business plans or other facts that have not yet occurred. Such statements can be identified by the use of forward-looking terminology such as "might," "may," "will," "could," "expect," "anticipate," "estimate," "likely," "believe," or "continue" or the negative thereof or other variations thereon or comparable terminology. The above risk factors contain discussions of important factors that should be considered by prospective investors for their potential impact on forward-looking statements included in this prospectus and in the documents incorporated by reference into this prospectus. These important factors, among others, may cause actual results to differ materially and adversely from the results expressed or implied by the forward-looking statements. USE OF PROCEEDS The selling security holders will receive the net proceeds from the sale of shares. We will not receive any of the proceeds from any sale of the shares by the selling security holders. However, we will receive the proceeds from the cash exercise of warrants to purchase certain of the shares offered hereunder. If all warrants covered hereby are exercised for cash in accordance with their terms, we would receive gross proceeds of $13,119,641. Any such gross proceeds will be used for working capital purposes. DESCRIPTION OF THE TRANSACTIONS On October 29, 2004, we issued to Oakwood Financial Services, LLC, a convertible promissory note in the principal amount of $50,000 bearing interest at the rate of ten percent (10.0%) per annum, due January 25, 2005, convertible at the option of the holder, into shares of our common stock at a conversion price of $1.20 per share. Interest on the note was payable in cash. Additionally, we issued to Oakwood a warrant to purchase 41,667 shares of our common stock at an exercise price of $1.80 per share. Oakwood may exercise the warrant at any time through October 29, 2009. On February 3, 2005, we paid all accrued and outstanding principal and interest on the note in cash. We are obligated to register for resale the shares of common stock issuable upon exercise of the warrant on a registration statement filed with the Securities and Exchange Commission ("SEC"). On November 11, 2004, we issued to Sunstream Corporation, a convertible promissory note in the principal amount of $25,000 bearing interest at the rate of ten percent (10.0%) per annum, due December 15, 2004, convertible at the option of the holder, into shares of our common stock at a conversion price of $1.20 per share. Interest is payable in cash. Additionally, we issued to Sunstream a warrant to purchase 62,500 shares of our common stock at an exercise price of $1.00 per share. Sunstream may exercise the warrant at any time through November 11, 2009. We agreed to use reasonable efforts to register for resale the shares of common stock issuable upon conversion of the note and exercise of the warrant on our next registration statement and use best efforts to cause such registration statement to be declared effective as soon as practicable thereafter. 14 Pursuant to a securities exchange agreement by and between us and each of Blue Valley Ltd., Cherry Blossom Ltd., Forum Managers Ltd., Lakeview Properties Ltd., and Norfolk Ltd., each of the secured note holders agreed to exchange all of their convertible secured promissory notes, in the aggregate principal amount of $4,731,870, plus interest in the aggregate amount of $137,162, due January 14, 2005, into an aggregate number of 4,271,085 restricted shares of our common stock at a price of $1.14 per share, plus the issuance of three-year warrants to purchase an aggregate of 1,000,000 shares of common stock at an exercise price of $1.14 per share. We are obligated to register for resale the shares of common stock and the shares of common stock underlying the warrants issuable to the investors on this registration statement, or within 60 days following the date of the agreements upon a written demand by the note holders requesting the filing of such registration statement. On December 2, 2004, we issued to Platinum Partners Value Arbitrage Fund L.P., Briarwood Investments Ltd. and Design Investments Ltd. convertible promissory notes in the aggregate principal amount of $400,000 bearing interest at the rate of six percent (6.0%) per annum, due March 1, 2005. In connection with the note financing, we issued a convertible promissory note in the principal amount of $52,000 to Harborview Capital Management LLC as an advisory fee on the same terms and conditions as the investors. One hundred and twenty percent (120%) of the outstanding principal amount of the notes are automatically convertible into other securities issued by us in any subsequent transaction with gross proceeds to us of a minimum of $1,000,000. Interest on the notes was payable at our option in cash or securities issued in a subsequent transaction. As an inducement to enter into the transactions, we issued to the investors an aggregate of 480,000 shares of our common stock and the advisor received 48,000 shares of our common stock. As a result of the closing of the January 2005 Transaction (as defined below), previously issued and outstanding notes in the aggregate principal amount of $452,000, plus interest in the amount of $3,614, are automatically convertible into one hundred and twenty percent (120%) of principal amount of debentures, together with warrants, having the same terms and conditions as set forth above. As a result, convertible redeemable debentures in the aggregate principal amount of $546,015, initially convertible at $2.40 per share, and warrants to purchase an aggregate of 201,351 shares of common stock, initially exercisable at $2.40 per share, were issued to the investors. We are obligated to register for resale the securities issuable upon conversion of the notes and the shares of common stock issuable to the investors on our next registration statement filed with the Securities and Exchange Commission. On January 12, 2005, we entered into a securities purchase agreement with DKR Soundshore Oasis Holding Fund Ltd., Harborview Master Fund, L.P. and Platinum Partners Value Arbitrage Fund, L.P., each an institutional investor, pursuant to which we agreed to sell, and the investors agreed to purchase, 8% convertible redeemable debentures in the aggregate amount of up to $4,000,000 and five-year warrants to purchase up to 1,666,667 shares of common stock at an exercise price of $2.40 (the "January 2005 Transaction"). The debentures were convertible into our common stock at an initial conversion price of $2.40. A first closing of $2,000,000 occurred on January 13, 2005 and a second closing of $2,000,000 shall occur upon the completion of certain closing conditions set forth in the securities purchase agreement. We are obligated to redeem one-fifth of the principal and interest amount on the debentures in cash or, at our option, shares of common stock, on the first day of each month, commencing on the earlier of (a) May 12, 2005, and (b) the first date following the 20th day after the effective date of the registration statement registering for resale the securities issuable upon conversion of the debentures, and ending upon the full redemption of the debentures. If we elect to make redemption payments in shares of common stock, the principal amount is convertible based upon a conversion price equal to the lesser of the initial conversion price or 85% of the average of the three lowest closing bid prices for our common stock during the 20 trading days immediately prior to the monthly redemption date. We are also obligated to pay 8% in interest on the outstanding principal on the debentures (i) on the effective date on which the debentures are 15 converted into shares of common stock, (ii) on each monthly redemption date or (iii) on the maturity date, at the interest conversion rate. Assuming the maximum amount of $4,000,000 is purchased, we have agreed to issue to the investors additional investment rights to purchase additional debentures in the aggregate principal amount of up to $1,333,200 together with five year warrants to purchase an aggregate of 550,000 shares of our common stock, on the same terms and conditions as the original debentures and warrants. The debentures and warrants are subject to customary protection against dilution. Upon each closing, the Company's financial advisors J.H. Darbie & Co., Inc. and Harborview Capital Management LLC are entitled to receive a warrant to purchase seven percent (7%) of the shares of common stock issuable upon conversion of the debentures at an exercise price of $2.40. We agreed to register with the SEC 125% of the shares of common stock issuable upon conversion of principal and interest under the debentures and upon exercise of the warrants. In the event that we fail to file a registration statement with the SEC by February 3, 2005, or in the event such registration statement is filed but is not declared effective by the SEC by April 30, 2005, then we will be obligated to pay the holders of the registrable securities liquidated damages equal to 1.5% of their total investment for each 30 day period until the registration statement is filed or declared effective. We agreed to keep the registration statement effective until the earlier of (i) the date upon which all shares covered by the registration statement have been sold, or (ii) the date when all such shares are eligible to be sold without volume restrictions under Rule 144(k) of the Securities Act of 1933. On or about March 11, 2005, we entered into a fee payment agreement with PC Newco, LLC as collection agent for the law firm of Jenkens & Gilchrist Parker Chapin, LLP for legal services, pursuant to which, in lieu of payment in cash for certain obligations in the amount of $377,453 for services previously provided, and for services to be provided by the vendor to us in the future, we agreed to issue to PC Newco, LLC an aggregate of 350,000 shares of common stock on behalf of such vendor. On March 10, 2005, we entered into a letter agreement with Crescent Communications, Inc., a vendor, for investor communication and consulting services to be provided by the vendor to us. The agreement provides that, in lieu of payment in cash for monthly fees equal to $7,000 per month, we, at our option, may issue to the vendor shares of our common stock. The term of the agreement is one year with prior termination by either party without cause on thirty days notice. In addition, we agreed to issue to the vendor warrants to purchase up to 75,000 shares of common stock at an exercise price of $1.80 per share for a five year term, which warrants shall vest with respect to 15,000 warrant shares upon execution of the agreement, and 5,000 warrant shares per month thereafter. On March 8, 2005, we entered into an agreement for payment of account with Design Accessories, a vendor, pursuant to which, in lieu of payment in cash obligations equal to $20,668.66 for equipment to be provided by the vendor to us in the future, we agreed to issue to the vendor an aggregate of 10,994 shares of its common stock to such vendor, at a purchase price of $1.88 per share. On March 7, 2005, we entered into an agreement for payment of account with Mathe, Inc., a vendor, pursuant to which, in lieu of payment in cash for certain equipment and installation services provided and to be provided by the vendor to us in the future, we agreed to issue to the vendor an aggregate of 500,000 shares of our common stock. On March 7, 2005, we entered into an agreement for payment of account with ROI Group Associates, our vendor, pursuant to which, in lieu of payment of cash obligations equal to 16 $250,000 for investor relations and research services provided and to be provided by the vendor to us in the future, we agreed to issue to the vendor an aggregate of 138,889 shares of our common stock to such vendor, at a purchase price of $1.80 per share. On December 1, 2004, we entered into an investor relations agreement with ShazamStocks Inc. for investor communication and consulting services to be provided by the vendor to us. The agreement provides that, in lieu of payment of cash fees equal to $45,000, we shall issue shares of common stock to such vendor based upon a price of $0.985 cents per share, or 45,685 shares of common stock. The term of the agreement was for a period of three months commencing on December 6, 2004. On March 23, 2005, in connection with the settlement of a dispute in mediation, we entered into a settlement agreement in principle with Mr. Lawrence Waldman, as trustee for certain individuals. Under the settlement agreement, in order to satisfy obligations owed by us to the individuals in the aggregate amount of $75,000, we agreed to issue to the trustee an aggregate of 41,667 shares of common stock which shares may be sold following registration of such shares during a 15 business day trading period. In order to secure the obligations, we agreed to deposit the amount of $75,000 due and owing to it from a third party in an escrow account. The escrow account shall be utilized to satisfy any amounts still due and owing to the individuals following the sale of the shares, less an amount of $25,000 payable from the escrow account to a third party. Following all disbursements from the escrow account, the parties will execute mutual releases and file stipulations to dismiss any pending action with prejudice. We agreed to register the shares with the SEC as soon as possible but not later than April 30, 2005. On March 31, 2005, the Company entered into a securities purchase agreement with Alpha Capital AG, Ellis International Ltd. and Double U Master Fund LP, each an institutional investor, pursuant to which the Company agreed to sell, and the investors agreed to purchase, 8% convertible redeemable debentures in the aggregate amount of $2,600,000 and five-year warrants to purchase 840,000 shares of common stock at an exercise price of $1.25. The debentures are convertible into common stock of the Company at an initial conversion price of $1.25. A first tranche of $1,050,000 closed on March 31, 2005 and a second tranche of $250,000 closed on April 11, 2005. A second closing of $1,300,000 shall occur upon the completion of certain closing conditions set forth in the securities purchase agreement. The Company is obligated to redeem one-fifth of the principal and interest amount on the debentures in cash or, at the option of the Company, shares of common stock, on the first day of each month, commencing on the earlier of (a) July 29, 2005, and (b) the first date following the 20th day after the effective date of the registration statement registering for resale the securities issuable upon conversion of the debentures, and ending upon the full redemption of the debentures. If the Company elects to make redemption payments in shares of common stock, the principal amount is convertible based upon a conversion price equal to the lesser of the initial conversion price or 85% of the average of the three lowest closing bid prices for the Company's common stock during the 20 trading days immediately prior to the monthly redemption date. The Company is also obligated to pay 8% in interest on the outstanding principal on the debentures (i) on the effective date on which the debentures are converted into shares of common stock of the Company, (ii) on each monthly redemption date or (iii) on the maturity date, at the interest conversion rate. Assuming the maximum amount of $2,600,000 is purchased, we agreed to issue to the investors additional investment rights to purchase additional debentures in the aggregate principal amount of up to $866,580 along with five year warrants to purchase an aggregate of 693,264 shares of our common stock, on the same terms and conditions as the original debentures and warrants. The debentures and warrants are subject to customary protection against dilution. At the first closing, we paid a cash fee of 3% of the original purchase price for liquidated damages owed to the investors in the January, 2005 Transaction. In addition, upon each closing, our 17 financial advisors, J.H. Darbie & Co., Inc. and Harborview Capital Management LLC, are entitled to receive a warrant to purchase seven percent (7%) of the shares of common stock issuable upon conversion of the debentures at an exercise price of $1.25. In connection with the above transactions and in order to obtain the waiver and consent of the investors in the January 2005 Transaction, the Company entered into an amendment, dated as of March 31, 2005, to the securities purchase agreement, dated as of January 12, 2005, with DKR Soundshore Oasis Holding Fund Ltd., Harborview Master Fund, L.P. and Platinum Partners Value Arbitrage Fund, L.P., each an institutional investor, pursuant to which the initial conversion price for the 8% convertible redeemable debentures in the aggregate amount of up to $4,000,000 ($2,000,000 of which were sold to the investors at the first closing) was reduced from $2.40 to $1.25 and the exercise price of the five-year warrants to purchase up to 1,666,667 shares of common stock was reduced from $2.40 to $1.25. In addition, the additional investment rights to purchase additional debentures in the aggregate principal amount of up to $1,320,000 along with five year warrants to purchase an aggregate of 550,000 shares of the Company's common stock, on the same terms and conditions as the original debentures and warrants, were modified by the amendment to reduce the conversion and exercise price from $2.40 to $1.25. Moreover, the conversion price of convertible redeemable debentures in the aggregate principal amount of $546,015 and the exercise price of warrants to purchase an aggregate of 201,351 shares of common stock was reduced from $2.40 to $1.25. Pursuant to the amendment, as further amended on April 12, 2005, if we do not file a registration statement covering the underlying shares of common stock on or before April 13, 2005, the original investors in the January, 2005 Transaction have the right not to purchase convertible debentures and warrants otherwise required at the second closing. We agreed to register with the SEC 125% of the shares of common stock issuable upon conversion of principal and interest under the debentures and upon exercise of the warrants. In the event that we fail to file a registration statement with the SEC by April 13, 2005, or in the event such registration statement is filed but is not declared effective by the SEC by April 30, 2005, then we will be obligated to pay the holders of the registrable securities liquidated damages equal to 1.5% of their total investment for each 30 day period until the registration statement is filed or declared effective. We agreed to keep the registration statement effective until the earlier of (i) the date upon which all shares covered by the registration statement have been sold, or (ii) the date when all such shares are eligible to be sold without volume restrictions under Rule 144(k) of the Securities Act of 1933. In connection with the closing of the acquisition of Berdy Medical Systems, Inc., we agreed to issue to Mr. Jonathan Rich, our financial advisor, 3,333 shares of common stock. We agreed to include the shares on our next registration statement (of which this prospectus forms a part). On April 8, 2005, we agreed to pay to Bairstow Partners, Idlewyld, LLC, Mr. Gerald Yanowitz and Ms. Catherine Allison, the aggregate amount of $450,000 in settlement of any and all potential claims against us relating to the terms and conditions of their securities purchase agreements with us. In connection with the settlement agreement, we agreed to register the aggregate amount of 500,000 shares of common stock on our next registration statement (of which this prospectus forms a part) in satisfaction of such settlement amount. Reference is made to the exhibits to the Registration Statement (of which this prospectus forms a part) for more complete descriptions of the provisions that are summarized under this caption. 18 SELLING STOCKHOLDERS The following table sets forth the shares beneficially owned, as of April 8, 2005, by the selling stockholders prior to the offering contemplated by this prospectus, the number of shares each selling stockholder is offering by this prospectus and the number of shares which each would own beneficially if all such offered shares are sold. The selling stockholders acquired their beneficial interests in the shares being offered hereby in transactions described under the heading "Description of the Transactions." Except as expressly set forth below, none of the selling stockholders is a registered broker-dealer or an affiliate of a registered broker-dealer. Each of the selling stockholders has acquired his, her or its shares solely for investment and not with a view to or for resale or distribution of such securities. Beneficial ownership is determined in accordance with SEC rules and includes voting of investment power with respect to the securities. However, certain of the selling stockholders is subject to certain limitations on the exercise of their warrants or conversion of their convertible debentures, if any. The most significant of these limitations is that such selling stockholder may not exercise its warrants or convert its convertible debentures, if such exercise or conversion would cause such holder's beneficial ownership of our common stock (excluding shares underlying any of their unexercised warrants or unconverted convertible debentures) to exceed 4.99% of the outstanding shares of common stock. 19
Number of Percentage Shares of of Common Shares of Common Common Stock Stock Owned Stock Owned Prior Shares of Common Owned After after the Names and Addresses to Offering Stock to be Sold the Offering Offering - --------------------------------------------------------------------------------------------------------------- Oakwood Financial Services LLC (1) 41,667 41,667 (2) 0 0 DKR Soundshore Oasis Holding Fund 4,920,933 4,920,933 (4) 0 0 Ltd. (3) Harborview Master Fund LP (5) 3,690,700 3,690,700 (6) 0 0 Platinum Partners Value Arbitrage 2,147,996 2,147,996 (8) 0 0 Fund L.P. (7) Briarwood Investments Ltd. (9) 366,799 366,799 (10) 0 0 Design Investments, Ltd. (11) 183,399 183,399 (12) 0 0 Harborview Capital Management LLC. (13) 412,375 412,375 (14) 0 0 J.H. Darbie & Co. Inc. (15) 26,226 26,226 (16) 0 0 Blue Valley Ltd. (17) 1,114,824 1,114,824 (18) 0 0 Cherry Blossom Ltd. (19) 1,241,850 1,241,850 (20) 0 0 Forum Managers Ltd. (21) 901,761 901,761 (22) 0 0 Lakeview Properties Ltd. (23) 901,761 901,761 (24) 0 0 Norfolk Ltd. (25) 1,110,886 1,110,886 (26) 0 0 ROI Group Associates Inc. (27) 138,889 138,889 (28) 0 0 ShazamStocks Inc. (29) 45,685 45,685 (30) 0 0 Crescent Communications, Inc. (31) 159,000 159,000 (32) 0 0 Jonathan Rich (33) 3,333 3,333 (34) 0 0 Design Accessories (35) 10,994 10,994 (36) 0 0 Mathe, Inc. (37) 500,000 500,000 (38) 0 0 PC Newco LLC(39) 350,000 350,000 (40) 0 0 Sunstream Corporation (41) 83,333 83,333 (42) 0 0 Alpha Capital AG (43) 1,966,330 1,966,330 (44) 0 0 20 Ellis International Ltd. (45) 917,620 917,620 (46) 0 0 Double U Master Fund LP (47) 3,932,659 3,932,659 (48) 0 0 Bairstow Partners (49) 250,000 250,000 (50) 0 0 Idlewyld, LLC (51) 150,000 150,000 (52) 0 0 Gerald Yanowitz (53) 75,000 75,000 (54) 0 0 Catherine Allison (55) 25,000 25,000 (56) 0 0 Lawrence Waldman (57) 41,667 41,667 (58) 0 0 - ---------- Less than 1%
(1) The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock is Mr. James Blake. The address of the selling stockholder is 239 Bloomfield Avenue, Bloomfield, New Jersey 07003. (2) Includes 41,667 shares issuable upon exercise of warrants to purchase shares of common stock. (3) The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock is Mr. Brad Caswell, Director. The address of the selling stockholder is c/o DKR Capital Partners L.P., 1281 East Main Street, Stamford, CT 06902. (4) Includes 2,573,745 shares issuable upon exercise of warrants to purchase shares of common stock and 2,347,188 shares of our common stock issuable upon conversion or redemption of convertible redeemable debentures assuming full exercise of additional investment rights held by the selling stockholder. (5) The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock are Mr. David Stefansky and Mr. Richard Rosenblum. The address of the selling stockholder is Harbor House, Waterfront Drive, P.O. Box 972, Road Town, Tortola, British Virgin Islands. (6) Includes 1,930,309 shares issuable upon exercise of warrants to purchase shares of common stock and 1,760,391 shares of our common stock issuable upon conversion or redemption of convertible redeemable debentures assuming full exercise of additional investment rights held by the selling stockholder. (7) The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock is Mr. Mark Nordlicht. The address of the selling stockholder is 152 West 57th Street, 54th Floor, New York, New York 10019. (8) Includes 888,964 shares issuable upon exercise of warrants to purchase shares of common stock and 959,032 shares of our common stock issuable upon conversion or redemption of convertible redeemable debentures assuming full exercise of additional investment rights held by the selling stockholder. (9) The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock is Ms. Vanessa Andrade. The address of the selling stockholder is 1040 1st Avenue, Suite 190, New York, New York 10022. (10) Includes 120,717 shares issuable upon exercise of warrants to purchase shares of common stock and 126,082 shares of our common stock issuable upon conversion or redemption of convertible redeemable debentures. 21 (11) The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock is Mr. Haim Rolnitsky. The address of the selling stockholder is 9 Tanbark Circuit, Werrington Downs NSW 2747 Australia. (12) Includes 60,358 shares issuable upon exercise of warrants to purchase shares of common stock and 63,041 shares of our common stock issuable upon conversion or redemption of convertible redeemable debentures. (13) The selling stockholder advised us that the natural persons having voting or dispositive power over such shares of common stock are Mr. David Stefansky and Mr. Richard Rosenblum, members of Harborview Advisors, LLC, its manager. The address of the selling stockholder is 850 Third Avenue, New York, New York 10022. (14) Includes 298,813 shares issuable upon exercise of warrants to purchase shares of common stock and 65,562 shares of our common stock issuable upon conversion or redemption of convertible redeemable debentures. (15) The selling stockholder is a registered broker-dealer. The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock is Mr. Robert Rabinowitz. The address of the selling stockholder is 99 Wall Street, New York, New York 10005. (16) The selling stockholder is a registered broker-dealer. Includes 26,226 shares issuable upon exercise of warrants to purchase shares of common stock. (17) The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock is Mr. Chagit Weinstock. The address of the selling stockholder is Burbage House, 83-85 Curtain Road, London EC2A 3BS. (18) Includes 211,372 shares issuable upon exercise of warrants to purchase shares of common stock. (19) The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock is Mr. Irit Cohen. The address of the selling stockholder is 20 McCallum Street, 10-03 Asia Chambers, Singapore 069046. (20) Includes 235,456 shares issuable upon exercise of warrants to purchase shares of common stock. (21) The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock is Mr. Roy Kimchi. The address of the selling stockholder is 7 Globe House, 15 Fitzroy Mews, London, UK (22) Includes 170,900 shares issuable upon exercise of warrants to purchase shares of common stock. (23) The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock is Mr. Heller Eran. The address of the selling stockholder is 21 Leigh Street, London WC1H 9QX. (24) Includes 170,900 shares issuable upon exercise of warrants to purchase shares of common stock. (25) The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock is Mr. Berak Bing. The address of the selling stockholder is 20 McCallum Street, 12-03 Asia Chambers, Singapore 069046. 22 (26) Includes 211,372 shares issuable upon exercise of warrants to purchase shares of common stock. (27) The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock is Mr. Robert Giordano. The address of the selling stockholder is 39 Broadway, Suite 2410 New York, New York 10006. (28) Includes shares of our common stock. (29) The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock is Mr. Kenneth Weiner. The address of the selling stockholder is 14703 Horshoe Bend Court, Granger, IN 46530. (30) Includes shares of our common stock. (31) The selling stockholder advised us that the natural person having voting or dispositive power over such shares is Mr. David Long. The address of the selling stockholder is 2 Florian Court, Westport, CT 06880. (32) Includes 75,000 shares issuable upon exercise of warrants to purchase shares of our common stock. (33) The address of the selling stockholder is c/o vFinance Investments, Inc., 880 Third Avenue, New York, New York 10022. (34) Includes shares of our common stock. (35) The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock is Mr. James M. Dillon. The address of the selling stockholder is 3636 Aerial Way Drive SW, Roanoke, Virginia 24018. (36) Includes shares of our common stock. (37) The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock is Mr. Mark Hicks. The address of the selling stockholder is 1259 Route 46 East Building No. 1, Parsippany, New Jersey 07054. (38) Includes shares of our common stock. (39) The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock is Mr. Mark Abramowitz. The address of the selling stockholder is 405 Lexington Avenue, New York, New York 10174. (40) Includes shares of our common stock. (41) The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock is Mr. Tom Meade. The address of the selling stockholder is 6 Spring Forest Avenue, Binghamton, New York 13905. (42) Includes 62,500 shares issuable upon exercise of warrants to purchase common stock. (43) The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock is Mr. Konrad Ackerman . The address of the selling stockholder is Pradafant 7, Furstentums 9490, Vaduz, Liechtenstein. (44) Includes 999,975 shares issuable upon exercise of warrants to purchase shares of common stock and 966,355 shares of our common stock issuable upon conversion or redemption of convertible redeemable debentures. 23 (45) The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock is Wilhelm Ungar The address of the selling stockholder is 20 East Sunrise Highway, Suite 302, Valley Stream, New York 11581. (46) Includes 466,655 shares issuable upon exercise of warrants to purchase shares of common stock and 450,965 shares of our common stock issuable upon conversion or redemption of convertible redeemable debentures. (47) The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock is Mr. David Sims. The address of the selling stockholder is Harbour House, Waterfront Drive, P.O. Box 972, Road Town, Tortola, BVI. (48) Includes 1,999,950 shares issuable upon exercise of warrants to purchase shares of common stock and 1,932,709 shares of our common stock issuable upon conversion or redemption of convertible redeemable debentures. (49) The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock is Mr. Anthony L.M. Inder Rieden. The address of the selling stockholder is Charlotte House, Charlotte Street, P.O. Box N 9204, Nassau, Bahamas. (50) Includes shares of our common stock. (51) The selling stockholder advised us that the natural person having voting or dispositive power over such shares of common stock is Mr. Jeffrey Smith. The address of the selling stockholder is 505 Idlewyld Drive, Ft. Lauderdale, Florida 33301. (52) Includes shares of our common stock. (53) The address of the selling stockholder is 30 Merril Circle South, Moraga, California 94556. (54) Includes shares of our common. (55) The address of the selling stockholder is 825 Highland Lane #212, Atlanta, Georgia 30306. (56) Includes shares of our common stock. (57) The address of the selling stockholder is 4500 Cooper Rd., Suite 301, Cincinnati, Ohio 45242. (58) Includes shares of our common stock. Relationship Between Ramp and the Selling Stockholders Except as disclosed in this prospectus, none of the selling stockholders are affiliates of us or controlled by our affiliates. Except as disclosed in this prospectus, none of the selling stockholders are now or were at any time in the past an officer or director of ours or of any of our predecessors or affiliates. We have separate contractual obligations to file this registration statement (of which this prospectus forms a part) with each of the selling stockholders. DESCRIPTION OF SECURITIES Our authorized capital consists of 400,000,000 shares of common stock, par value $.001 per share, and 2,500,000 shares of preferred stock, par value $1.00 per share. As of March 21, 2005, we had outstanding 12,959,074 shares of common stock and 1 share of 1996 Preferred Stock. 24 The information in this prospectus reflects our 1-for-60 reverse stock split of our common stock which became effective on December 1, 2004. Common Stock Each share of common stock is entitled to one vote at all meetings of stockholders. Stockholders are not permitted to accumulate votes in the election of directors. Currently, the Board of Directors consists of five directors, who serve for staggered terms of three years, with at least two directors elected at every annual meeting. All shares of common stock are equal to each other with respect to liquidation rights and dividend rights. There are no preemptive rights to purchase any additional shares of common stock. In the event of our liquidation, dissolution or winding up, holders of the common stock will be entitled to receive on a pro rata basis all of our assets remaining after satisfaction of all liabilities and preferences of the outstanding preferred stock. Preferred Stock We are authorized to issue up to 2,500,000 shares of preferred stock. Our preferred stock may be issued in one or more series, the terms of which may be determined at the time of issuance by our Board of Directors, without further action by stockholders and may include voting rights (including the right to vote as a series on particular matters), preferences as to dividends and liquidation, conversion, redemption rights and sinking fund provisions. The issuance of preferred stock could reduce the rights, including voting rights, of the holders of common stock, and, therefore, reduce the value of our common stock. In particular, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with or sell our assets to a third party, thereby preserving control of Ramp Corporation by existing management. Transfer Agent and Registrar We have retained Computershare Trust Company, Inc., 350 Indiana Street, Suite 800, Golden, Colorado 80401, as Transfer Agent and Registrar, for our common stock. Computershare Trust Company's telephone number is (303) 262-0600. PLAN OF DISTRIBUTION The selling security holders and any of their pledgees, donees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock on any stock exchange, market or trading facility on which the shares are traded. These sales may be at fixed or negotiated prices. The selling security holders may use any one or more of the following methods when selling shares: o ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; o block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; o purchases by a broker-dealer as principal and resale by the broker-dealer for its account; o an exchange distribution in accordance with the rules of the applicable exchange; o privately negotiated transactions; o short sales, but, if at all, only after the effectiveness of the Registration Statement and the approval for listing by the American Stock Exchange of the shares of common stock offered hereby; 25 o broker-dealers may agree with the selling security holders to sell a specified number of such shares at a stipulated price per share; o a combination of any such methods of sale; and o any other method permitted pursuant to applicable law. The selling security holders may also sell shares under Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"), if available, rather than under this prospectus. The selling security holders may also engage in short sales against the box, puts and calls and other transactions in our securities or derivatives of our securities and may sell or deliver shares in connection with these trades. The selling security holders may pledge their shares to their brokers under the margin provisions of customer agreements. If a selling stockholder defaults on a margin loan, the broker may, from time to time, offer and sell the pledged shares. We believe that the selling security holders have not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their shares other than ordinary course brokerage arrangements, nor is there an underwriter or coordinating broker acting in connection with the proposed sale of shares by the selling security holders. Broker-dealers engaged by the selling security holders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling security holders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling security holders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved. Selling security holders and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. If the selling security holders are deemed to be underwriters, the selling security holders may be subject to certain statutory and regulatory liabilities, including liabilities imposed pursuant to Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Exchange Act. We are required to pay all fees and expenses incident to the registration of the shares. Otherwise, all discounts, commissions or fees incurred in connection with the sale of the common stock offered hereby will be paid by the selling security holders. Upon our being notified by a selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of shares through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such selling stockholder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such shares were sold, (iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, and (vi) other facts material to the transaction. In order to comply with the securities laws of certain states, if applicable, the shares will be sold in such jurisdictions, if required, only through registered or licensed brokers or dealers. In addition, in certain states the shares may not be sold unless the shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and complied with. 26 We advised the selling security holders that the anti-manipulative provisions of Regulation M promulgated under the Exchange Act may apply to their sales of the shares offered hereby. INDEMNIFICATION OF OFFICERS AND DIRECTORS Section 145 of the General Corporation Law of the State of Delaware (the "DGCL") provides, in general, that a corporation incorporated under the laws of the State of Delaware, such as the registrant, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than a derivative action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. In the case of a derivative action, a Delaware corporation may indemnify any such person against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification will be made in respect of any claim, issue or matter as to which such person will have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware or any other court in which such action was brought determines such person is fairly and reasonably entitled to indemnity for such expenses. Our Certificate of Incorporation and Bylaws provide that we shall indemnify our directors, and officers, employees and agents to the extent and in the manner permitted by the provisions of the laws of the State of Delaware, as amended from time to time, subject to any permissible expansion or limitation of such indemnification, as may be set forth in any stockholders' or directors' resolution or by contract. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling Ramp pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. WHERE YOU CAN FIND MORE INFORMATION ABOUT US We file reports, proxy statements, information statements and other information with the SEC. You may read and copy this information, for a copying fee, at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information on its public reference rooms. Our SEC filings are also available to the public from commercial document retrieval services, from the American Stock Exchange and at the web site maintained by the SEC at http://www.sec.gov. We have filed the Registration Statement under the Securities Act, with respect to the securities offered pursuant to this prospectus. This prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. For further information, reference 27 is made to the Registration Statement and the exhibits filed as a part thereof, which may be found at the locations and website referred to above. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The Securities and Exchange Commission (the "SEC") allows us to "incorporate by reference" into this prospectus the information we file with the SEC, which means that we can disclose important information to you by referring to those documents. The information incorporated by reference is an important part of this prospectus. We incorporate by reference the following documents we filed with the SEC: o Our Annual Report on Form 10-K for the fiscal year ended December 31, 2004, filed on April 6, 2005; o Our Current Report on Form 8-K/A, filed on January 26, 2004; o Our Current Report on Form 8-K, filed on June 9, 2004; o Our Current Report on Form 8-K, filed on January 5, 2005; o Our Current Report on Form 8-K, filed on January 14, 2005; o Our Current Report on Form 8-K, filed on March 11, 2005; o Our Current Report on Form 8-K, filed on March 29, 2005; o Our Current Report on Form 8-K, filed on April 8, 2005; o Our Definitive Proxy Statement to Shareholders on Schedule 14A, filed on October 18, 2004; and o Our Definitive Proxy Statement to Shareholders on Schedule 14A, filed on March 16, 2005. We are also incorporating by reference all additional documents that we may file with the Commission under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act prior to the termination of this offering. We are also incorporating by reference all additional documents that we may file with the Commission under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act after the date of the Registration Statement and prior to effectiveness of the Registration Statement. If you are a stockholder, we may have sent you some of the documents incorporated by reference, but you can obtain any of them through the Commission or us. Documents incorporated by reference are available from us without charge, except exhibits, unless we have specifically incorporated by reference an exhibit into a document that this prospectus incorporates. Stockholders may obtain documents incorporated by reference into this prospectus by requesting them in writing or by telephone from: Ramp Corporation Investor Relations 33 Maiden Lane New York, New York 10038 (212) 440-1500 LEGAL MATTERS/INTERESTS OF COUNSEL The validity of the shares of common stock offered hereby will be passed upon for us by Troutman Sanders LLP, The Chrysler Building, 405 Lexington Avenue, New York, New York 10174. Pursuant to the Fee Payment Agreement, PC Newco, LLC, as collection agent for the law firm of Jenkens & Gilchrist Parker Chapin LLP, was issued 350,000 shares of our common stock 28 as payment for legal services previously rendered and to be rendered to us in connection with representation on our general corporate and securities matters. We agreed to register the shares of common stock on this registration statement. EXPERTS Our consolidated financial statements as of and for the years ended December 31, 2004 and 2003 appearing in our 2004 Form 10-K have been audited by BDO Seidman, LLP, an independent registered public accounting firm, as stated in their report dated March 16, 2005, appearing therein which contained an explanatory paragraph indicating that substantial doubt exists as to our ability to continue as a going concern, and have been incorporated herein by reference in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. Our consolidated financial statements as of and for the year ended December 31, 2002, appearing in our 2004 Form 10-K have been audited by Ehrhardt Keefe Steiner & Hottman PC, an independent registered public accounting firm, as stated in their report appearing therein, and have been incorporated herein by reference in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The financial statements of The Duncan Group, Inc. (d/b/a Frontline Physicians Exchange) as of and for the years ended December 31, 2002 and 2001, appearing in our current report on Form 8-K/A filed on January 26, 2004, and in our current report on Form 8-K, filed on June 9, 2004, were audited by BDO Seidman, LLP, an independent registered public accounting firm, as stated in their report dated September 12, 2003 appearing therein, and have been incorporated herein by reference in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. 29
============================================================ ============================================================ We have not authorized any dealer, salesperson or any other person to give any information or to represent anything other than those contained in this prospectus in connection with the offer contained herein, and, if given or made, you should not rely upon such information or representations as having been authorized by Ramp Corporation. This prospectus does not constitute an offer of any securities other than those to which it relates or 25,710,687 an offer to sell, or a solicitation of an offer to buy, SHARES OF COMMON STOCK those to which it relates in any state to any person to whom it is not lawful to make such offer in such state. The delivery of this prospectus at any time does not imply that the information herein is correct as of any time after the date of this prospectus. RAMP CORPORATION TABLE OF CONTENTS Page PROSPECTUS SUMMARY......................................4 RISK FACTORS............................................5 FORWARD-LOOKING STATEMENTS..............................14 DESCRIPTION OF THE TRANSACTIONS.........................14 SELLING STOCKHOLDERS....................................19 DESCRIPTION OF SECURITIES...............................24 PLAN OF DISTRIBUTION....................................25 INDEMNIFICATION OF OFFICERS ____________ AND DIRECTORS....................................27 WHERE YOU CAN FIND MORE PROSPECTUS INFORMATION ABOUT US.............................27 ____________ INCORPORATION OF CERTAIN INFORMATION BY REFERENCE........................28 LEGAL MATTERS/INTERESTS OF COUNSEL......................................28 EXPERTS.................................................29 April __ , 2005 ============================================================ ============================================================
PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution. The following is a list of the estimated expenses to be incurred by the Registrant in connection with the issuance and distribution of the shares being registered hereby. Securities and Exchange Commission registration fee. $4,422.84 Printing and engraving expenses. 1,000.00 Legal fees and expenses. 20,000.00 Accounting fees and expenses. 10,000.00 Transfer Agent and Trustee fees and expenses. 1,000.00 Miscellaneous. 20,000.00 Total. $56,422.84 Item 15. Indemnification of Directors and Officers. Section 145 of the General Corporation Law of the State of Delaware (the "DGCL") provides, in general, that a corporation incorporated under the laws of the State of Delaware, such as the registrant, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than a derivative action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. In the case of a derivative action, a Delaware corporation may indemnify any such person against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification will be made in respect of any claim, issue or matter as to which such person will have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware or any other court in which such action was brought determines such person is fairly and reasonably entitled to indemnity for such expenses. Our Certificate of Incorporation and Bylaws provide that we shall indemnify our directors, and officers, employees and agents to the extent and in the manner permitted by the provisions of the laws of the State of Delaware, as amended from time to time, subject to any permissible expansion or limitation of such indemnification, as may be set forth in any stockholders' or directors' resolution or by contract. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling Ramp pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission, II-1 such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. Item 16. Exhibits. Exhibit Number Description - ------ ----------- 5.1 Opinion of Troutman Sanders LLP.* 10.1 Securities Purchase Agreement, dated as of January 12, 2005, among Ramp Corporation and each of DKR Soundshore Oasis Holding Fund Ltd., Harborview Master Fund, L.P. and Platinum Partners Value Arbitrage Fund, L.P., together with schedules attached thereto.(1) 10.2 8% Convertible Debenture, dated January 12, 2005, issued to each of DKR Soundshore Oasis Holding Fund Ltd., Harborview Master Fund, L.P. and Platinum Partners Value Arbitrage Fund, L.P. (1) 10.3 Common Stock Purchase Warrant, dated January 12, 2005, issued to each of DKR Soundshore Oasis Holding Fund Ltd., Harborview Master Fund, L.P. and Platinum Partners Value Arbitrage Fund, L.P. (1) 10.4 Additional Investment Right, dated January 12, 2005, issued to each of DKR Soundshore Oasis Holding Fund Ltd., Harborview Master Fund, L.P. and Platinum Partners Value Arbitrage Fund, L.P. (1) 10.5 Registration Rights Agreement, dated as of January 12, 2005, among Ramp Corporation and each of DKR Soundshore Oasis Holding Fund Ltd., Harborview Master Fund, L.P. and Platinum Partners Value Arbitrage Fund, L.P. (1) 10.6 Convertible Promissory Note, dated October 29, 2004, by and between the Company and Oakwood Financial Services, LLC. (2) 10.7 Warrant, dated October 29, 2004, issued by the Company to Oakwood Financial Services, LLC. (2) 10.8 Note Purchase Agreement, dated as of November 22, 2004, by and among the Company, Platinum Partners Value Arbitrage Fund L.P., Briarwood Investments and Design Investments, Ltd. (3) 10.9 Convertible Promissory Note dated November 22, 2004 in the principal amount of $250,000 issued by the Company in favor of Platinum Partners Value Arbitrage Fund L.P. (3) 10.10 Convertible Promissory Note dated December 1, 2004 in the principal amount of $52,000 issued by the Company in favor of Harborview Capital Management LLC. (3) 10.11 Convertible Promissory Note dated December 1, 2004 in the principal amount of $100,000 issued by the Company in favor of Briarwood Investments. (3) 10.12 Convertible Promissory Note dated December 1, 2004 in the principal amount of $50,000 issued by the Company in favor of Design Investments Ltd. (3) 10.13 Promissory Note dated as of December 1, 2004 in the principal amount of $1,147,288.76 issued by the Company in favor of Cherryblossom Ltd. (3) II-2 10.14 Promissory Note dated as of December 1, 2004 in the principal amount of $1,029,935.81 issued by the Company in favor of Blue Valley Ltd. (3) 10.15 Promissory Note dated as of December 1, 2004 in the principal amount of $1,025,445.44 issued by the Company in favor of Norfolk Ltd. (3) 10.16 Promissory Note dated as of December 1, 2004 in the principal amount of $833,180.99 issued by the Company in favor of Forum Managers Ltd. (3) 10.17 Promissory Note dated as of December 1, 2004 in the principal amount of $833,180.99 issued by the Company in favor of Lakeview Properties Ltd. (3) 10.18 Securities Exchange Agreement by and between Ramp Corporation and Cherryblossom Ltd. (3) 10.19 Securities Exchange Agreement by and between Ramp Corporation and Blue Valley Ltd. (3) 10.20 Securities Exchange Agreement by and between Ramp Corporation and Norfolk Ltd. (3) 10.21 Securities Exchange Agreement, by and between Ramp Corporation and Forum Managers Ltd. (3) 10.22 Securities Exchange Agreement, by and between Ramp Corporation and Lakeview Properties Ltd. (3) 10.23 Warrant, dated December 3, 2004, issued by the Company to Cherryblossom Ltd. (3) 10.24 Warrant, dated December 3, 2004, issued by the Company to Blue Valley Ltd. (3) 10.25 Warrant, dated December 3, 2004, issued by the Company to Norfolk Ltd. (3) 10.26 Warrant, dated December 3, 2004, issued by the Company to Forum Managers Ltd. (3) 10.27 Warrant, dated December 3, 2004, issued by the Company to Lakeview Properties Ltd. (3) 10.28 8% Convertible Debenture, dated January 12, 2005, issued to each of Platinum Partners Value Arbitrage Fund, L.P., Briarwood Investments Ltd., Design Investments, Ltd. and Harborview Capital Management LLC. (1) 10.29 Common Stock Purchase Warrant, dated January 12, 2005, issued to each of Platinum Partners Value Arbitrage Fund, L.P., Briarwood Investments Ltd., Design Investments, Ltd., Harborview Capital Management LLC and J.H. Darbie & Co., Inc. (1) 10.30 Securities Purchase Agreement, dated as of March 31, 2005, among Ramp Corporation and each of Double U Master Fund LP, Alpha Capital AG and Ellis International Ltd.* 10.31 8% Convertible Debenture, dated March 31, 2005, issued to each of Double U Master Fund LP, Alpha Capital AG and Ellis International Ltd.* 10.32 Common Stock Purchase Warrant, dated January 12, 2005, issued to each of Double U Master Fund LP, Alpha Capital AG and Ellis International Ltd.* II-3 10.33 Additional Investment Right, dated January 12, 2005, issued to each of Double U Master Fund LP, Alpha Capital AG and Ellis International Ltd.* 10.34 Registration Rights Agreement, dated as of January 12, 2005, among Ramp Corporation and each of Double U Master Fund LP, Alpha Capital AG and Ellis International Ltd.* 10.35 Amendment No. 1 to the Securities Purchase Agreement dated as of January 12, 2005 among Ramp Corporation, DKR Soundshore Oasis Holding Fund Ltd., Harborview Master Fund, L.P., and Platinum Partners Value Arbitrage Fund, L.P.* 10.36 Fee Payment Agreement, dated as of March 11, 2005, by and between Ramp Corporation and PC Newco, LLC, as collection agent for Jenkens & Gilchrist Parker Chapin LLP.* 10.37 Agreement for Payment of Account dated as of March 7, 2005 by and between Ramp Corporation and Mathe, Inc.* 10.38 Agreement for Payment of Account dated as of March 7, 2005 by and between Ramp Corporation and ROI Group Associates.* 10.39 Agreement for Payment of Account dated as of March 8, 2005 by and between Ramp Corporation and Design Accessories.* 10.40 Letter Agreement dated March 10, 2005 by and between Ramp Corporation and Crescent Communications, Inc.* 10.41 Investor Relations Agreement dated as of December 1, 2004 by and between Ramp Corporation and Shazam Stocks Inc.* 10.42 Settlement Agreement in Principle dated March 23, 2005 by and between Ramp Corporation and Lawrence Waldman, individually and as trustee.* 10.43 Convertible Promissory Note dated November 11, 2004 in the principal amount of $25,000 issued by Ramp Corporation in favor of Sunstream Corporation.* 10.44 Common Stock Purchase Warrant, dated November 11, 2004 issued to Sunstream Corporation.* 10.45 Amendment No. 2 to the Securities Purchase Agreement dated as of January 12, 2005 among Ramp Corporation, DKR Soundshore Oasis Holding Fund Ltd., Harborview Master Fund, L.P., and Platinum Partners Value Arbitrage Fund, L.P.* 23.1 Consent of Ehrhardt Keefe Steiner & Hottman PC.* 23.2 Consent of BDO Seidman, LLP.* 23.3 Consent of Troutman Sanders LLP (included in Exhibit 5.1). 24.1 Power of Attorney (included on signature page). II-4 - ---------- (1) Previously filed with the Securities and Exchange Commission as an exhibit to the Current report on Form 8-K for the event dated January 12, 2005 filed with the SEC on January 14, 2005. (2) Previously filed with the Securities and Exchange Commission as an exhibit to the Current Report on Form 8-K for the event dated October 29, 2005 filed with the SEC on November 4, 2004. (3) Previously filed with the Securities and Exchange Commission as an exhibit to the Form 10-K for the fiscal year ended December 31, 2004 filed with the SEC on April 6, 2005. * Filed herewith. II-5 Item 17. Undertakings. The undersigned Registrant hereby undertakes: 1. To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: 1. To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; 2. To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; 3. To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that clauses (a) and (b) do not apply if the information required to be included in a post-effective amendment by such clauses is contained in periodic reports filed with or furnished to the Securities and Exchange Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the Registration Statement. 2. That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 3. To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. 4. That, for purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the II-6 securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described under Item 15 above, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities, other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding, is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The undersigned Registrant hereby undertakes that: 1. For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. 2. For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 3. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to section 13(a) or section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Exchange Act) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-7 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on April 13, 2005. RAMP CORPORATION By: /s/ Andrew Brown ----------------------------- Andrew Brown Chief Executive Officer KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below in so signing also makes, constitutes and appoints Andrew Brown his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to sign and file Registration Statement(s) and any and all pre- or post-effective amendments to such Registration Statement(s), with all exhibits thereto and hereto, and other documents with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
Signature Title Date - ---------- ------ ---- /s/ Andrew Brown - -------------------- Chairman, Chief Executive Officer, President and Director April 13, 2005 Andrew Brown (Principal Executive Officer) /s/ Ron Munkittrick - -------------------- Chief Financial Officer, Executive Vice President and April 13, 2005 Ron Munkittrick Secretary (Principal Financial and Accounting Officer) /s/ Steven C. Berger - -------------------- Director April 13, 2005 Steven C. Berger /s/ Steve Shorr - -------------------- Director April 13, 2005 Steve Shorr /s/ Tony Soich - -------------------- Director April 13, 2005 Tony Soich /s/ Jeffrey A. Stahl - -------------------- Director April 13, 2005 Jeffrey A. Stahl
II-8
EX-5 2 ex5_1s3041105.txt EX-5.1 TROUTMAN SANDERS LLP ATTORNEYS AT LAW A LIMITED LIABILITY PARTNERSHIP THE CHRYSLER BUILDING 405 LEXINGTON AVENUE NEW YORK, NEW YORK 10174 www.troutmansanders.com TELEPHONE: 212-704-6000 FACSIMILE: 212-704-6288 April 13, 2005 Ramp Corporation 33 Maiden Lane New York, New York 10038 Re: Ramp Corporation Ladies and Gentlemen: We have acted as counsel to Ramp Corporation, a Delaware corporation (the "Company"), in connection with the Registration Statement on Form S-3 (the "Registration Statement") being filed with the Securities and Exchange Commission under the Securities Act of 1933 (the "Act"), for the registration for resale by the selling stockholders listed therein (the "Selling Stockholders") of: (i) up to 6,494,483 shares of the Company's common stock ("Common Shares"), par value $.001 per share ("Common Stock"), (ii) an aggregate of 8,671,325 shares of Common Stock ("Convertible Debenture Shares") issuable upon the conversion of convertible debentures issued or to be issued pursuant to additional investment rights ("Additional Investment Rights") to certain entities and individuals ("Convertible Debentures") with an initial conversion price of $1.25 per share, and (iii) an aggregate of 10,544,879 shares of Common Stock ("Warrant Shares") issuable upon the exercise of warrants issued or to be issued pursuant to Additional Investment Rights to certain entities and individuals ("Warrants") with an exercise price of $1.25 cents per share with respect to 9,365,712 Warrant Shares, $1.14 cents per share with respect to 1,000,000 Warrant Shares, $1.00 per share with respect to 62,500 Warrant Shares, and $1.80 cents per share with respect to 116,667 Warrant Shares (the "Warrant Shares", and together with the Common Shares and the Convertible Debenture Shares, the "Shares"). In connection with the foregoing, we have examined originals or copies, satisfactory to us, of the Company's (i) Restated Certificate of Incorporation, as amended to date (ii) Bylaws and (iii) resolutions adopted by the Company's Board of Directors authorizing the issuance of the Common Shares, Warrants, Convertible Debentures, Additional Investment Rights, and the Shares. We have also reviewed such other matters of law and examined and relied upon all such corporate records, agreements, certificates and other documents as we have deemed relevant and necessary as a basis for the opinion hereinafter expressed. In such examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity with the original documents of all documents submitted to us as copies or facsimiles. As to any facts material to such opinion, we have, to the extent that relevant facts were not independently established by us, relied on certificates of public officials and certificates of officers or other representatives of the Company. Based upon and subject to the foregoing, we are of the opinion that (a) the Common Shares have been validly issued and are fully paid and non-assessable, (b) the Convertible Debenture Shares, upon TROUTMAN SANDERS LLP ATTORNEYS AT LAW A LIMITED LIABILITY PARTNERSHIP Ramp Corporation April 13, 2005 Page 2 issuance and payment of the conversion price to the Company in accordance with the terms of the Convertible Debenture, or upon issuance and payment of the purchase price to the Company in accordance with the terms of the Additional Investment Rights, will be validly issued, fully paid and non-assessable and (c) the Warrant Shares, upon issuance and payment of the exercise price to the Company in accordance with the terms of the Warrants, or upon issuance and payment of the purchase price to the Company in accordance with the terms of the Additional Investment Rights, will be validly issued, fully paid and non-assessable. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference made to us under the caption "Legal Matters" in the prospectus constituting part of the Registration Statement. In giving this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Act, the rules and regulations of the Securities and Exchange Commission promulgated thereunder or Item 509 of Regulation S-K promulgated under the Act. Very truly yours, TROUTMAN SANDERS LLP EX-10 3 securities-agreement.txt EX-10.30; SECURITIES PURCHASE AGREEMENT EXHIBIT 10.30 SECURITIES PURCHASE AGREEMENT This Securities Purchase Agreement (this "Agreement") is dated as of March 31, 2005 among Ramp Corporation, a Delaware corporation (the "Company"), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a "Purchaser" and collectively the "Purchasers"). WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act") and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement. NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows: ARTICLE I. DEFINITIONS 1.1 Definitions. In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Debentures (as defined herein), and (b) the following terms have the meanings indicated in this Section 1.1: "Action" shall have the meaning ascribed to such term in Section 3.1(j). "Additional Investment Rights" or "AIRs" means the Additional Investment Rights as described in Section 2.2(a)(iv), in the form of Exhibit E attached hereto. "Additional Investment Right Securities" or "AIR Securities" means the Debentures and Warrants issuable upon exercise of the Additional Investment Right. "Additional Investment Right Conversion Shares" or "AIR Conversion Shares" means the shares of Common Stock issuable upon conversion and exercise, as applicable, of the Additional Investment Right Securities. "Affiliate" means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control, with a Person, as such terms are used in and construed under Rule 144 under the Securities Act. With respect to a Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Purchaser will be deemed to be an Affiliate of such Purchaser. "AMEX" means the American Stock Exchange. "AMEX Approval" shall mean the approval of the American Stock Exchange to the transactions contemplated by this Agreement; provided, however approval of the listing of the Securities for trading on AMEX shall not be required to satisfy the foregoing. "Closing Dates" means, collectively, the dates of the First Closing and Second Closing. "Closings" means collectively, the closings of the purchase and sale of the Securities pursuant to Section 2.1, and any reference to "Closing" or "Closings" shall be construed to include the First Closing and the Second Closing unless a specific Closing is expressly referred to. "Closing Price" means on any particular date (a) the last reported closing bid price per share of Common Stock on such date on the Trading Market (as reported by Bloomberg L.P. at 4:15 PM (New York time), or (b) if there is no such price on such date, then the closing bid price on the Trading Market on the date nearest preceding such date (as reported by Bloomberg L.P. at 4:15 PM (New York time) for the closing bid price for regular session trading on such day), or (c) if the Common Stock is not then listed or quoted on a Trading Market and if prices for the Common Stock are then quoted on the OTC Bulletin Board, the closing bid price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board (as reported by Bloomberg L.P. at 4:15 PM (New York time), (d) if the Common Stock is not then listed or quoted on the Trading Market and if prices for the Common Stock are then reported in the "pink sheets" published by the Pink Sheets LLC (formerly the National Quotation Bureau Incorporated (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (e) if the shares of Common Stock are not then publicly traded the fair market value of a share of Common Stock as determined by a qualified independent appraiser selected in good faith by the Company, with the consent of the Purchasers of a majority in interest of the Shares then outstanding, which consent shall not be unreasonably withheld. "Commission" means the Securities and Exchange Commission. "Common Stock" means the common stock of the Company, par value $0.001 per share, and any securities into which such common stock shall be reclassified or exchanged into. "Common Stock Equivalents" means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire Common Stock, including without limitation, any debt, preferred stock, rights, options, warrants or other instrument that convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock. -2- "Company Counsel" means Jenkens & Gilchrist Parker Chapin, LLP with offices at 405 Lexington Avenue, New York, New York 10174. "Conversion Price" shall have the meaning ascribed to such term in the Debentures. "Debentures" means, the 8% Senior Convertible Debentures issued by the Company to the Purchasers hereunder, in the form of Exhibit A. "December Transactions" means (i) the transactions contemplated in connection with that certain Note Purchase Agreement dated November 22, 2004 by and among the Company and the purchasers of notes party thereto, and (ii) the transactions contemplated in connection with those certain Securities Exchange Agreements dated as of December 6, 2004, by and between the Company and each of the investor parties thereto. "Definitive Proxy Statement" means the definitive proxy statement of the Company to obtain Shareholder Approval as filed with the Commission on EDGAR. "Disclosure Schedules" shall have the meaning ascribed to such term in Section 3.1. "Effective Date" means the date that the initial Registration Statement filed by the Company pursuant to the Registration Rights Agreement is first declared effective by the Commission. "Evaluation Date" shall have the meaning ascribed to such term in Section 3.1(r). "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exempt Issuance" means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted by a majority of the non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose, or a majority of the stockholders of the Company present in person or by proxy at a meeting of stockholders, (b) securities upon the exercise of or conversion of (i) any securities issued hereunder, (ii) convertible securities, convertible notes or debentures, options or warrants issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise or conversion price of any such securities, (c) securities to vendors, consultants, attorneys or accountants of the Company in connection with settlements of the Company's outstanding commitments and obligations or to be performed or in connection with services to be performed, (d) securities issued pursuant to a merger, acquisition, consolidation or strategic transactions, provided that, solely with respect to acquisitions, any such issuance shall only be to a Person which is, itself or through its subsidiaries, an operating company but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary -3- business is investing in securities, (e) securities issued pursuant to a bona fide firm underwritten public offering of the Company's securities with an aggregate initial public offering price of at least $5,000,000 with a nationally recognized underwriter for a per share purchase price not less than the then exercise price of the Warrants, (f) securities issued in connection with strategic license agreements or other partnering arrangements so long as such issuances are not for the purpose of raising capital, (g) any securities issued to the Company's placement agent for the transactions contemplated by this Agreement, (h) any securities issued upon the conversion or exercise of any other securities issued in a Subsequent Financing (provided no subsequent adjustment has occurred to the exercise or conversion price thereof), (i) securities issued or to be issued in connection with the December Transactions, (j) shares of Common Stock to be issued in connection with the Company's acquisition of substantially all of the assets of Berdy Medical Systems, Inc., (k) securities issued as consideration for marketing agreements for the Caregiver products, (l) shares of Common Stock to be issued to the purchasers in connection with the conversion or redemption of the Company's convertible debentures, exercise of warrants, or exercise of additional investment rights pursuant to that certain Securities Purchase Agreement, dated as of January 12, 2005, by and among the Company and the purchasers which are a party thereto, (m) shares of Common Stock issued in connection with an "equity line" of credit financing arrangement by the Company in an amount of up to $25 million with a sale price of Common Stock equal to up to eighty percent (80%) of the average of the closing prices for a certain period immediately prior to or following the put date under such credit financing arrangement, as determined by the Company in its sole discretion. "First Closing" shall have the meaning ascribed to such term in Section 2.1 hereof. "First Closing Date" means the date of the First Closing. "GAAP" shall have the meaning ascribed to such term in Section 3.1(h). "Intellectual Property Rights" shall have the meaning ascribed to such term in Section 3.1(o). "Legend Removal Date" shall have the meaning ascribed to such term in Section 4.1(c). "Liens" means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction. "Material Adverse Effect" shall have the meaning assigned to such term in Section 3.1(b). "Material Permits" shall have the meaning ascribed to such term in Section 3.1(m). "Maximum Rate" shall have the meaning ascribed to such term in Section 5.17. -4- "Participation Maximum" shall have the meaning ascribed to such term in Section 4.13. "Person" means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. "Pre-Notice" shall have the meaning ascribed to such term in Section 4.13. "Proceeding" means an action, claim, suit or proceeding, whether commenced or threatened in writing. "Purchaser Party" shall have the meaning ascribed to such term in Section 4.9. "Registration Rights Agreement" means the Registration Rights Agreement, dated the date hereof, among the Company and the Purchasers, in the form of Exhibit B attached hereto. "Registration Statement" means a registration statement meeting the requirements set forth in the Registration Rights Agreement. "Required Approvals" shall have the meaning ascribed to such term in Section 3.1(e). "Required Minimum" means, as of any date, one hundred and ten percent 110% the maximum aggregate number of shares of Common Stock then issued or potentially issuable in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise or conversion in full of all Warrants and Debentures (including Underlying Shares issuable as payment of interest), ignoring any conversion or exercise limits set forth therein, and assuming that the Conversion Price is at all times on and after the date of determination 85% of the average of the 22 Closing Prices immediately prior to the date of determination. "Rule 144" means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time. "SEC Reports" shall have the meaning ascribed to such term in Section 3.1(h). "Second Closing" shall have the meaning ascribed to such term in Section 2.1 hereof. "Second Closing Date" means the date of the Second Closing. "Securities" means the Debentures, the Warrants, the Warrant Shares, the Underlying Shares the Additional Investment Rights, the Additional Investment Right Securities and the Additional Investment Right Conversion Shares. -5- "Securities Act" means the Securities Act of 1933, as amended. "Shareholder Approval" means such approval as may be required by the applicable rules and regulations of the Trading Market (or any successor entity) from the stockholders of the Company with respect to the transactions contemplated by the Transaction Documents, including the issuance of all of the Underlying Shares and shares of Common Stock issuable upon exercise of the Warrants in excess of 19.99% of the issued and outstanding Common Stock on the First Closing Date. "Short Sales" shall include, without limitation, all "short sales" as defined in Rule 3b-3 of the Exchange Act. "Subscription Amount" means, as to each Purchaser, the amounts set forth below such Purchaser's signature block on the signature pages hereto and next to the headings "First Closing Subscription Amount" and "Second Closing Subscription Amount", in United States Dollars and in immediately available funds. "Subsequent Financing" shall have the meaning ascribed to such term in Section 4.13. "Subsequent Financing Notice" shall have the meaning ascribed to such term in Section 4.13. "Subsidiary" means any subsidiary of the Company as set forth on Schedule 3.1(a). "Trading Day" means a day on which the Common Stock is traded on a Trading Market "Trading Market" means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date any determination is made under this Agreement: the Nasdaq SmallCap Market, the American Stock Exchange, the New York Stock Exchange or the Nasdaq National Market. "Transaction Documents" means this Agreement, the Debentures, the Warrants, the Additional Investment Rights, the Registration Rights Agreement and any other documents or agreements executed in connection with the transactions contemplated hereunder. "Underlying Shares" means the shares of Common Stock issuable upon conversion of the Debentures, upon exercise of the Warrants, issued and issuable in lieu of the cash payment of interest on the Debentures and the Additional Investment Right Conversion Shares. "Warrants" means collectively the Common Stock purchase warrants to purchase Common Stock, in the form of Exhibit C delivered to the Purchasers at the First Closing -6- in accordance with Section 2.2(a) hereof, which Warrants shall be exercisable immediately and have a term of exercise equal to 5 years. "Warrant Shares" means the shares of Common Stock issuable upon exercise of the Warrants. ARTICLE II. PURCHASE AND SALE 2.1 Closings. The Company agrees to sell, and each Purchaser agrees to purchase in the aggregate, severally and not jointly, up to $6,000,000 of principal amount of Debentures and Warrants. The Closings shall take place in two tranches as set forth below (respectively, the "First Closing", and the "Second Closing"). Upon satisfaction of the conditions set forth in Section 2.2, each Closing shall occur at the offices of Company Counsel, or such other location as the parties shall mutually agree. (a) First Closing. The First Closing shall be for an aggregate Subscription Amount of up to $3,000,000, and shall occur simultaneously upon the execution of this Agreement. (b) Second Closing. The Second Closing shall be for an aggregate Subscription Amount of up to $3,000,000, and shall occur within 5 Trading Days following the Effective Date. 2.2 Deliveries. ----------- a) At or prior to each Closing, unless otherwise indicated below, the Company shall deliver or cause to be delivered to each Purchaser the following: (i) as to the First Closing only, this Agreement duly executed by the Company; (ii) a Debenture with a principal amount equal to such Purchaser's Subscription Amount, for the applicable Closing, registered in the name of such Purchaser; (iii) a Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 100% of such Purchaser's Subscription Amounts divided by $1.25, with an exercise price equal to $1.25, subject to adjustment as set forth therein; (iv) as to the First Closing only, an Additional Investment Right, registered in the name of such Purchaser, pursuant to which such Purchaser shall have the right to purchase up to a principal amount of debentures equal to 33.33% of all of such Purchaser's -7- Subscription Amounts along with additional warrants to purchase up to a number of shares of Common Stock equal to 33.33% of the Warrant Shares issuable to such Purchaser under the Warrants, otherwise on the same terms, prices and conditions of the Debenture and Warrants issued hereunder; (v) as to the First Closing only, the Registration Rights Agreement duly executed by the Company; and (vi) as to the First Closing only, a legal opinion of Company Counsel, in the form of Exhibit D attached hereto. b) At or prior to each Closing, unless otherwise indicated below, each Purchaser shall deliver or cause to be delivered to the Company the following: (i) as to the First Closing only, this Agreement duly executed by such Purchaser; (ii) such Purchaser's Subscription Amount, for the applicable Closing, by wire transfer to the account as specified in writing by the Company; and (iii) as to the First Closing only, the Registration Rights Agreement duly executed by such Purchaser. 2.3 Closing Conditions. ------------------- a) The obligations of the Company hereunder in connection with each Closing are subject to the following conditions being met: (i) the accuracy in all material respects when made and on each Closing Date of the representations and warranties of the Purchasers contained herein; (ii) all obligations, covenants and agreements of the Purchasers required to be performed at or prior to each Closing Date shall have been performed; and (iii) the delivery by the Purchasers of the items set forth in Section 2.2(b) of this Agreement. b) The respective obligations of the Purchasers hereunder in connection with each Closing are subject to the following conditions being met: (i) the accuracy in all material respects on each Closing Date of the representations and warranties of the Company contained herein; -8- (ii) all obligations, covenants and agreements of the Company required to be performed at or prior to each Closing Date shall have been performed; (iii) the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement; (iv) there shall have been no Material Adverse Effect with respect to the Company since the date hereof; and (v) From the date hereof to each Closing Date, trading in the Common Stock shall not have been suspended by the Commission (except for any suspension of trading of limited duration, which suspension shall be terminated prior to each Closing), and, at any time prior to each Closing Date, trading in securities generally as reported by Bloomberg Financial Markets shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities. c) As to the Second Closing only, the Company shall have filed with the Commission the Registration Statement registering all of the Underlying Shares and, on or before the six month anniversary of the date hereof, such Registration Statement shall have been declared effective by the Commission as to all such securities and been maintained effective since such date and no Event of Default shall have occurred since the date hereof. ARTICLE III. REPRESENTATIONS AND WARRANTIES 3.1 Representations and Warranties of the Company. Except as set forth under the corresponding section of the disclosure schedules delivered to the Purchasers concurrently herewith (the "Disclosure Schedules") which Disclosure Schedules shall be deemed a part hereof, the Company hereby makes the representations and warranties set forth below to each Purchaser. (a) Subsidiaries. All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a). The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. -9- (b) Organization and Qualification. Each of the Company and the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in (i) a material adverse effect on the legality, validity or enforceability of any Transaction Documents, (ii) a material adverse effect on the results of operations, assets, business or financial condition of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company's ability to perform in any material respect its obligations under any Transaction Documents (any of (i), (ii) or (iii), a "Material Adverse Effect") and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification. (c) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations thereunder. The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company in connection therewith other than in connection with the Required Approvals. Each Transaction Documents has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies. (d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the other transactions contemplated thereby do not and will not: (i) conflict with or violate any provision of the Company's or any Subsidiary's certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a -10- party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect. (e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than (i) filings required pursuant to Section 4.6, (ii) the filing with the Commission of the Registration Statement, (iii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Debentures, the Warrants, the Additional Investment Rights, the Additional Investment Right Securities and the listing of the Underlying Shares for trading thereon in the time and manner required thereby, (iv) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws and (vi) Shareholder Approval (collectively, the "Required Approvals"). (f) Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The Underlying Shares, when issued in accordance with the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Company has reserved from its duly authorized capital stock a number of shares of Common Stock for issuance of the Underlying Shares at least equal to the Required Minimum on the date hereof. (g) Capitalization. The capitalization of the Company is as described in the Company's most recent periodic report filed with the Commission. The Company has not issued any capital stock since such filing other than pursuant to the issuance of Common Stock and the exercise of employee stock options under the Company's stock option and stock incentive plans, the issuance of shares of Common Stock to employees pursuant to the Company's employee stock purchase plan and pursuant to the conversion or exercise of outstanding Common Stock Equivalents. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase and sale of the Securities, there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary -11- is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. Except for Required Approvals, no further approval or authorization of any stockholder, the Board of Directors of the Company or others is required for the issuance and sale of the Securities. There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company's capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company's stockholders. (h) SEC Reports; Financial Statements. The Company has filed all reports required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law to file such reports) (the foregoing reports, including the exhibits thereto, being collectively referred to herein as the "SEC Reports") on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved ("GAAP"), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments. (i) Material Changes. Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in the SEC Reports, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities -12- not required to be reflected in the Company's financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option or stock incentive plans or as otherwise disclosed on the SEC Reports. The Company does not have pending before the Commission any request for confidential treatment of information. (j) Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened in writing against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an "Action") which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty, which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act. (k) Labor Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company which could reasonably be expected to result in a Material Adverse Effect. (l) Compliance. Neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business except in each case as could not have a Material Adverse Effect. (m) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as -13- described in the SEC Reports, except where the failure to possess such permits could not have or reasonably be expected to result in a Material Adverse Effect ("Material Permits"), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit. (n) Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them that is material to the business of the Company and the Subsidiaries and good and marketable title in all personal property owned by them, subject to ordinary wear and tear, that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases of which the Company and the Subsidiaries are in compliance. (o) Patents and Trademarks. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that are necessary or material for use in connection with their respective businesses as described in the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the "Intellectual Property Rights"). Neither the Company nor any Subsidiary has received a written notice that the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights of others. (p) Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage at least equal to the aggregate Subscription Amount. To the best of Company's knowledge, such insurance contracts and policies are accurate and complete. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost. (q) Transactions With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing -14- for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $60,000 other than (i) for payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) for other employee benefits, including stock option agreements under any stock option plan of the Company. (r) Sarbanes-Oxley. The Company is in material compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of each Closing Date. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company, including its Subsidiaries, is made known to the certifying officers by others within those entities. The Company's certifying officers have evaluated the effectiveness of the Company's controls and procedures as of the date prior to the filing date of the most recently filed periodic report under the Exchange Act (such date, the "Evaluation Date"). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Except as set forth in the SEC Reports, since the Evaluation Date, there have been no significant changes in the Company's internal controls (as such term is defined in Item 307(b) of Regulation S-K under the Exchange Act) or, to the Company's knowledge, in other factors that could significantly affect the Company's internal controls. (s) Certain Fees. No brokerage or finder's fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement. (t) Private Placement. Assuming the accuracy of the Purchasers representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated hereby. Subject to obtaining Requisite Approvals, the issuance and sale of the Securities hereunder, when issued by the Company, will not contravene the rules and regulations of the Trading Market. (u) Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an "investment company" within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act. -15- (v) Registration Rights. No Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company. (w) Listing and Maintenance Requirements. The Company's Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements. (x) Application of Takeover Protections. The Company and its Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company's Certificate of Incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company's issuance of the Securities and the Purchasers' ownership of the Securities. (y) Disclosure. The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that constitutes material, nonpublic information. The Company understands that the Purchasers will rely on the foregoing representations and covenants in effecting transactions in securities of the Company. All disclosure provided to the Purchasers regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, furnished by or on behalf of the Company with respect to the representations and warranties made herein are true and correct with respect to such representations and warranties 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 light of the circumstances under which they were made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof. (z) No Integrated Offering. Assuming the accuracy of the Purchasers' representations and warranties set forth in Section 3.2, neither the Company, nor any of its affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of the Securities Act or any applicable -16- shareholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated. (aa) Solvency. The Company does not intend to incur debts beyond its ability to pay such debts, in cash or, if permitted by the applicable debt instrument, in shares of Common Stock, as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from each Closing Date. The SEC Reports set forth as of the dates thereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, "Indebtedness" shall mean (a) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of Indebtedness of others, whether or not the same are or should be reflected in the Company's balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness. (bb) Form S-3 Eligibility. The Company is eligible to register the resale of the Underlying Shares for resale by the Purchaser on Form S-3 promulgated under the Securities Act. (cc) Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which has been asserted or threatened against the Company or any Subsidiary. (dd) No General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchasers and certain other "accredited investors" within the meaning of Rule 501 under the Securities Act. (ee) Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, used any corrupt funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to -17- disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended (ff) Accountants. The Company's accountants are set forth on Schedule 3.1(ff) of the Disclosure Schedule. To the Company's knowledge, such accountants, who the Company expects will express their opinion with respect to the financial statements to be included in the Company's Annual Report on Form 10-K for the year ending December 31, 2004 are a registered public accounting firm as required by the Securities Act. (gg) Seniority. As of each Closing Date, no indebtedness or other equity of the Company is senior to the Debentures in right of payment, whether with respect to interest or upon liquidation or dissolution, or otherwise, other than indebtedness secured by purchase money security interests (which is senior only as to underlying assets covered thereby) and capital lease obligations (which is senior only as to the property covered thereby). (hh) No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the accountants and lawyers formerly or presently employed by the Company and the Company is current with respect to any fees owed to its accountants and lawyers. (ii) Acknowledgment Regarding Purchasers' Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm's length purchaser with respect to the Transaction Documents and the transactions contemplated hereby. The Company further represents to each Purchaser that the Company's decision to enter into this Agreement has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives. 3.2 Representations and Warranties of the Purchasers. Each Purchaser hereby, for itself and for no other Purchaser, represents and warrants as of the date hereof and as of each Closing Date to the Company as follows: (a) Organization; Authority. Such Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations thereunder. The execution, delivery and performance by such Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate or similar action on the part of such Purchaser. Each Transaction Documents to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will -18- constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law. (b) No Conflict. The execution, delivery and performance of the Transaction Documents by such Purchaser and the consummation by such Purchaser of the transactions contemplated thereby and hereby do not and will not (i) violate any provision of such Purchaser's charter or organizational documents, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment , acceleration, or cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which such Purchaser is a party or by which such Purchaser's respective properties or assets are bound, or (iii) result in a violation of any federal, state, local or foreign statute, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to such Purchaser or by which any property or asset of such Purchaser are bound or affected, except, in all cases, other than violations pursuant to clauses (i) or (iii) (with respect to federal and state securities laws) above, for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, materially and adversely affect such Purchaser's ability to perform its obligations under the Transaction Documents. (c) Acquisition for Own Account. Such Purchaser is purchasing the Securities and will purchase any Shares solely for its own account and not with a view to or for sale in connection with distribution. Such Purchaser does not have a present intention to sell any of the Securities, nor a present arrangement (whether or not legally binding) or intention to effect any distribution of any of the Securities to or through any person or entity; provided, however, that by making the representations herein, such Purchaser does not agree to hold the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with Federal and state securities laws applicable to such disposition. Such Purchaser acknowledges that it (i) has such knowledge and experience in financial and business matters that such Purchaser is capable of evaluating the merits and risks of Purchaser's investment in the Company, (ii) is able to bear the financial risks associated with an investment in the Securities and (iii) has been given full access to such records of the Company and the Subsidiaries and to the officers of the Company and the Subsidiaries as it has deemed necessary or appropriate to conduct its due diligence investigation. (d) Rule 144. Such Purchaser understands that the Securities must be held indefinitely unless such Securities are registered under the Securities Act or an exemption from registration is available. Such Purchaser acknowledges that such person is familiar with Rule 144 of the rules and regulations of the Commission, as amended, promulgated -19- pursuant to the Securities Act ("Rule 144"), and that such Purchaser has been advised that Rule 144 permits resales only under certain circumstances. Such Purchaser understands that to the extent that Rule 144 is not available, such Purchaser will be unable to sell any Securities without either registration under the Securities Act or the existence of another exemption from such registration requirement. (e) General. Such Purchaser understands that the Securities are being offered and sold in reliance on a transactional exemption from the registration requirements of federal and state securities laws and the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of such Purchaser set forth herein in order to determine the applicability of such exemptions and the suitability of such Purchaser to acquire the Securities. Such Purchaser understands that no United States federal or state agency or any government or governmental agency has passed upon or made any recommendation or endorsement of the Securities. (f) No General Solicitation. Such Purchaser acknowledges that the Securities were not offered to such Purchaser by means of any form of general or public solicitation or general advertising, or publicly disseminated advertisements or sales literature, including (i) any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media, or broadcast over television or radio, or (ii) any seminar or meeting to which such Purchaser was invited by any of the foregoing means of communications. Such Purchaser, in making the decision to purchase the Securities, has relied upon independent investigation made by it and has not relied on any information or representations made by third parties. (g) Accredited Investor. Such Purchaser is either: (i) an "accredited investor" (as defined in Rule 501 of Regulation D), or (ii) a "qualified institutional buyer" as defined in Rule 144A(a) under the Securities Act and such Purchaser has such experience in business and financial matters that it is capable of evaluating the merits and risks of an investment in the Securities. Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act and such Purchaser is not a broker-dealer. Such Purchaser acknowledges that an investment in the Securities is speculative and involves a high degree of risk. Such Purchaser has completed or caused to be completed the Investor Questionnaire Certification attached hereto as Exhibit G certifying as to its status as an "accredited investor," if applicable, and understands that the Company is relying upon the truth and accuracy of such information set forth therein to determine the suitability of such Purchaser to acquire the Securities. (h) Certain Fees. The Purchasers have not employed any broker or finder or incurred any liability for any brokerage or investment banking fees, commissions, finders' structuring fees, financial advisory fees or other similar fees in connection with the Transaction Documents. (i) Independent Investment. No Purchaser has agreed to act with any other Purchaser for the purpose of acquiring, holding, voting or disposing of the Securities -20- purchased hereunder for purposes of Section 13(d) under the Exchange Act, and each Purchaser is acting independently with respect to its investment in the Securities. The Company acknowledges that for reasons of administrative convenience only, the Transaction Documents have been prepared by counsel for one of the Purchasers and such counsel does not represent all of the Purchasers but only such Purchaser and the other Purchasers have retained their own individual counsel with respect to the transactions contemplated hereby. The Company acknowledges that it has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by the Purchasers. (j) Short Sales. Such Purchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, executed any Short Sales in the securities of the Company (including, without limitations, any Short Sales involving the Company's securities) since 9 P.M. (New York Time) on March 17, 2005 which was the time that such Purchaser was first contacted regarding an investment in the Company until the date hereof ("Discussion Time"). (k) Patriot Act. Such Purchaser certifies that, to the best of its knowledge, it has not been designated, and is not owned or controlled, by a "suspected terrorist" as defined in Executive Order 13224. Purchaser hereby acknowledges that the Company seeks to comply with all applicable laws concerning money laundering and related activities. In furtherance of those efforts, the Purchaser hereby represents, warrants and covenants that: (i) none of the cash or property that the Purchaser will pay to the Company has been or shall be derived from, or related to, any activity that is deemed criminal under United States law; and (ii) no payment by the Purchaser to the Company, to the extent that they are within the Purchaser's control shall cause the Company to be in violation of the United States Bank Secrecy Act, the United States International Money Laundering Control Act of 1986 or the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001. Purchaser shall promptly notify the Company if any of these representations ceases to be true and accurate. (l) Substantial Dilution. Such Purchaser acknowledges and understands that, simultaneously with the transactions contemplated under this Agreement, the Company entered into an Amendment No. 1 to the Securities Purchase Agreement (the "Amendment"), dated as of January 12, 2005, with each of the purchasers a party thereto, which Amendment has been reviewed by such Purchaser. Such Purchaser acknowledges and understands that the Amendment provides, among other things, for the reduction of the initial conversion price of the convertible debentures, warrant, and additional investment rights granted to the purchasers in the January 2005 Transaction from $2.40 to $1.25. -21- The Company acknowledges and agrees that each Purchaser does not make or has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 3.2. ARTICLE IV. OTHER AGREEMENTS OF THE PARTIES 4.1 Transfer Restrictions. ---------------------- (a) 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 a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), 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 Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of a Purchaser under this Agreement and the Registration Rights Agreement. (b) The Purchasers agree to the imprinting, so long as is required by this Section 4.1(b), of a legend on any of the Securities in the following form: [NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [EXERCISABLE] [CONVERTIBLE]] HAVE 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. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES. The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an "accredited investor" as defined in Rule 501(a) under the Securities Act and who agrees -22- to be bound by the provisions of this Agreement and the Registration Rights Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such pledge. At the appropriate Purchaser's expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities, including, if the Securities are subject to registration pursuant to the Registration Rights Agreement, the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of Selling Stockholders thereunder. (c) Certificates evidencing the Underlying Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) while a registration statement (including the Registration Statement) covering the resale of such security is effective under the Securities Act, or (ii) following any sale of such Underlying Shares pursuant to Rule 144, or (iii) if such Underlying Shares are eligible for sale under Rule 144(k), or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). The Company shall cause its counsel to issue a legal opinion to the Company's transfer agent promptly after the Effective Date if required by the Company's transfer agent to effect the removal of the legend hereunder. If all or any portion of a Debenture, the Warrant or Additional Investment Rights Securities are converted or exercised (as applicable) at a time when there is an effective registration statement to cover the resale of the Underlying Shares, or if such Underlying Shares may be sold under Rule 144(k) or if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations thereof) then such Underlying Shares shall be issued free of all legends. The Company agrees that following the Effective Date or at such time as such legend is no longer required under this Section 4.1(c), it will, no later than three Trading Days following the delivery by a Purchaser to the Company or the Company's transfer agent of a certificate representing Underlying Shares, as applicable, issued with a restrictive legend (such third Trading Day, the "Legend Removal Date"), deliver or cause to be delivered to such Purchaser a certificate representing such shares that is free from all restrictive and other legends. Certificates for Securities subject to legend removal hereunder shall be transmitted by the transfer agent of the Company to the Purchasers by crediting the account of the Purchaser's prime broker with the Depository Trust Company System. (d) In addition to such Purchaser's other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, for each $1,000 of Underlying Shares (based on the VWAP of the Common Stock on the date such Securities are submitted to the Company's transfer agent) delivered for removal of the restrictive legend and subject to Section 4.1(c) above, $5 per Trading Day (increasing to $10 per Trading Day 10 Trading Days after such damages have begun to -23- accrue) for each Trading Day after the Legend Removal Date until such certificate is delivered without a legend. Nothing herein shall limit such Purchaser's right to pursue actual damages for the Company's failure to deliver certificates representing any Securities as required by the Transaction Documents, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. (e) Each Purchaser, severally and not jointly with the other Purchasers, agrees that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company's reliance that the Purchaser will sell any Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom. (f) Until the date that the Purchasers collectively hold less than 50% of the Debentures in the aggregate purchased hereunder by such Purchaser, the Company shall not undertake a reverse stock split of the Common Stock without the prior written consent of the Purchasers holding a majority in principal amount outstanding of the Debentures. 4.2 [Intentionally Deleted]. 4.3 Furnishing of Information. As long as any Purchaser owns Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. As long as any Purchaser owns Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144(c) such information as is required for the Purchasers to sell the Securities under Rule 144. The Company further covenants that it will take such further action as any holder of Securities may reasonably request, all to the extent required from time to time to enable such Person to sell such Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144. 4.4 Integration. Subject to Requisite Approvals, the Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Purchasers or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market. 4.5 Conversion and Exercise Procedures. The form of Notice of Exercise included in the Warrants, the form of Notice of Conversion included in the Debentures and the form of Notice of Exercise or Conversion set forth in the Additional Investment Rights and Additional Investment Right Securities set forth the totality of the procedures required of the Purchasers in order to exercise the Warrants, convert the Debentures or convert or exercise the Additional Investment Rights and Additional Investment Right Securities. No additional legal opinion or -24- other information or instructions shall be required of the Purchasers to exercise the Warrants, convert the Debentures or convert or exercise the Additional Investment Rights and Additional Investment Right Securities. The Company shall honor exercises of the Warrants and the Additional Investment Rights and conversions of the Debentures and Additional Investment Right Securities and shall deliver the Additional Investment Securities and the Underlying Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents. 4.6 Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m. Eastern time on the Trading Day following the date hereof, issue a press release reasonably acceptable to each Purchaser disclosing the material terms of the transactions contemplated hereby and within 2 Trading Days of the date hereof, a Current Report on Form 8-K, which shall have attached thereto the Transaction Documents. The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release or otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except (i) as required by federal securities law in connection with the registration statement contemplated by the Registration Rights Agreement and (ii) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under subclause (i) or (ii). 4.7 Shareholder Rights Plan. No claim will be made or enforced by the Company or, to the knowledge of the Company, any other Person that any Purchaser is an "Acquiring Person" under any shareholder rights plan or similar plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers. The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act. 4.8 Non-Public Information. The Company covenants and agrees that neither it nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms that each Purchaser shall be relying on the foregoing representations in effecting transactions in securities of the Company. 4.9 Use of Proceeds. Except as set forth on Schedule 4.9 attached hereto, the Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes and not for the satisfaction of any portion of the Company's debt (other than payment -25- of trade payables in the ordinary course of the Company's business and prior practices), to redeem any Common Stock or Common Stock Equivalents or to settle any outstanding litigation. 4.10 [INTENTIONALLY DELETED]. 4.11 Indemnification of Purchasers. Subject to the provisions of this Section 4.11, the Company will indemnify and hold the Purchasers and their directors, officers, shareholders, partners, employees and agents (each, a "Purchaser Party") harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys' fees and costs of investigation collectively, (collectively, "Loss") that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against a Purchaser, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of such Purchaser's representation, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser may have with any such stockholder or any violations by the Purchaser of state or federal securities laws or any conduct by such Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party. The Company will not be liable to any Purchaser Party under this Agreement (i) for any settlement by a Purchaser Party effected without the Company's prior written consent, which shall not be unreasonably withheld or delayed; or (ii) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party's breach of any of the representations, warranties, covenants or agreements made by the Purchasers in this Agreement or in the other Transaction Documents. 4.12 Reservation and Listing of Securities. (a) The Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents in such amount as may be required to fulfill its obligations in full under the Transaction Documents. (b) If, on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than the Required Minimum on such date, then the Board of Directors of the Company shall use commercially reasonable efforts to -26- amend the Company's certificate of incorporation to increase the number of authorized but unissued shares of Common Stock to at least the Required Minimum at such time, as soon as possible and in any event not later than the 75th day after such date. (c) The Company shall, if applicable: (i) in the time and manner required by the Trading Market, prepare and file with such Trading Market an additional shares listing application covering a number of shares of Common Stock at least equal to the Required Minimum on the date of such application, (ii) take all steps necessary to cause such shares of Common Stock to be approved for listing on the Trading Market as soon as possible thereafter, (iii) provide to the Purchasers evidence of such listing, and (iv) maintain the listing of such Common Stock on any date at least equal to the Required Minimum on such date on such Trading Market or another Trading Market. In addition, the Company shall hold a special meeting of shareholders (which may also be at the annual meeting of shareholders) at the earliest practical date after the date the number of shares of Common Stock issuable pursuant to this Agreement exceeds 15% of the issued and outstanding shares of Common Stock on each Closing Date for the purpose of obtaining Shareholder Approval, with the recommendation of the Company's Board of Directors that such proposal be approved, and the Company shall solicit proxies from its shareholders in connection therewith in the same manner as all other management proposals in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor of such proposal. 4.13 Participation in Future Financing. From the date hereof until the 24 month anniversary of the First Closing Date, upon any financing by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents (a "Subsequent Financing"), each Purchaser shall have the right to participate in up to 100% of the Subsequent Financing (the "Participation Maximum"). At least 5 Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to each Purchaser a written notice of its intention to effect a Subsequent Financing ("Pre-Notice"), which Pre-Notice shall ask such Purchaser if it wants to review the details of such financing (such additional notice, a "Subsequent Financing Notice"). Upon the request of a Purchaser, and only upon a request by such Purchaser, for a Subsequent Financing Notice, the Company shall promptly, but no later than 1 Trading Day after such request, deliver a Subsequent Financing Notice to such Purchaser. The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised thereunder, the Person with whom such Subsequent Financing is proposed to be effected, and attached to which shall be a term sheet or similar document relating thereto. If by 5:30 p.m. (New York City time) on the 5th Trading Day after all of the Purchasers have received the Pre-Notice, notifications by the Purchasers of their willingness to participate in the Subsequent Financing (or to cause their designees to participate) is, in the aggregate, less than the total amount of the Subsequent Financing, then the Company may effect the remaining portion of such Subsequent Financing on the terms and to the Persons set forth in the Subsequent Financing Notice. If the Company receives no notice from a Purchaser as of such 5th Trading Day, such Purchaser shall be deemed to have notified the Company that it does not elect to participate. Notwithstanding anything herein to the contrary, in the event the Purchasers do not elect to participate in a Subsequent Financing for at least, in the aggregate among the Purchasers, 25% of such Subsequent Financing and such Subsequent -27- Financing is consummated, the Purchasers shall no longer have a right to participate in future Subsequent Financings. The Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will again have the right of participation set forth above in this Section 4.13, if the Subsequent Financing subject to the initial Subsequent Financing Notice is not consummated for any reason on the terms set forth in such Subsequent Financing Notice within 60 Trading Days after the date of the initial Subsequent Financing Notice. In the event the Company receives responses to Subsequent Financing Notices from Purchasers seeking to purchase more than the aggregate amount of the Subsequent Financing, each such Purchaser shall have the right to purchase their Pro Rata Portion (as defined below) of the Participation Maximum. "Pro Rata Portion" is the ratio of (x) the Subscription Amount of Securities purchased by a participating Purchaser and (y) the sum of the aggregate Subscription Amount of all participating Purchasers. Notwithstanding the foregoing, this Section 4.13 shall not apply in respect of an Exempt Issuance other than clause (k) therein, except that no Variable Rate Transaction or MFN Transaction shall be an Exempt Issuance. 4.14 Subsequent Equity Sales. ------------------------ (a) From the date hereof until 65 days after the Effective Date, neither the Company nor any Subsidiary shall issue shares of Common Stock or Common Stock Equivalents; provided, however, the 65 day period set forth in this Section 4.14(a) shall be extended for the number of Trading Days during such period in which (y) trading in the Common Stock is suspended by any Trading Market, or (z) following the Effective Date, the Registration Statement is not effective or the prospectus included in the Registration Statement may not be used by the Purchasers for the resale of the Underlying Shares. (b) From the date hereof until such time as no Purchaser holds any of the Debentures, the Company shall be prohibited from effecting or entering into an agreement to effect any Subsequent Financing involving a "Variable Rate Transaction" or an "MFN Transaction" (each as defined below). The term "Variable Rate Transaction" shall mean a transaction in which the Company issues or sells (i) any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock. The term "MFN Transaction" shall mean a transaction in which the Company issues or sells any securities in a capital raising transaction or series of related transactions which grants to an investor the right to receive additional shares based upon future transactions of the Company on terms more favorable than those granted to such investor in such offering. (c) Unless Shareholder Approval has been obtained and deemed effective by -28- AMEX, the Company shall not make any issuance whatsoever of Common Stock or Common Stock Equivalents which would cause any adjustment of the Conversion Price to the extent the holders of Debentures would not be permitted, pursuant to Section 4(c)(i) of the Debentures, to convert their respective outstanding Debentures and exercise their respective Warrants in full, ignoring for such purposes any other conversion or exercise limitations therein. Any Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages. (d) Notwithstanding anything in this Section 4.14 to the contrary, this Section 4.14 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction or MFN Transaction shall be an Exempt Issuance. 4.15 Equal Treatment of Purchasers. No consideration shall be offered or paid to any person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents. Further, the Company shall not make any payment of principal or interest on the Debentures in amounts which are disproportionate to the respective principal amounts outstanding on the Debentures at any applicable time. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended to treat for the Company the Debenture holders as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise. 4.16 Short Sales. Each Purchaser covenants that neither it nor any affiliates acting on its behalf or pursuant to any understanding with it will execute any Short Sales during the period from the Discussion Time until prior to the time that the transactions contemplated by this Agreement are first publicly announced as described in Section 4.6. Notwithstanding the foregoing, no Purchaser makes any representation, warranty or covenant hereby that it will not engage in Short Sales in the securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced as described in Section 4.6. Additionally, each Purchaser understands and acknowledges, severally and not jointly with any other Purchaser, that the SEC currently takes the position that coverage of short sales of shares of the Common Stock "against the box" prior to the Effective Date of the Registration Statement with the Underlying Shares issuable hereunder is a violation of Section 5 of the Securities Act, as set forth in Item 65, Section 5 under Section A, of the Manual of Publicly Available Telephone Interpretations, dated July 1997, compiled by the Office of Chief Counsel, Division of Corporation Finance. ARTICLE V. MISCELLANEOUS 5.1 Termination. This Agreement may be terminated by any Purchaser, by written notice to the other parties, if the First Closing has not been consummated on or before April 15, 2005; provided that no such termination will affect the right of any party to sue for any breach by the other party (or parties). -29- 5.2 Fees and Expenses. The Company shall deliver, prior to the First Closing, a completed and executed copy of the Closing Statement, attached hereto as Annex A. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities. 5.3 Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. 5.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto. 5.5 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and each Purchaser or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right. 5.6 Headings The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. 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. 5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of Purchasers holding at least 66% of the Securities (measured on a fully converted and exercised basis ignoring for such purposes any conversion or exercise limitations therein) then outstanding. Notwithstanding anything herein to the contrary, any assignment of this Agreement or any of the -30- other Transaction Documents must either be pursuant to an effective registration statement under the Securities Act or pursuant to an available exemption therefrom, 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 assignor to such effect, the substance of which shall be reasonably acceptable to the Company. Notwithstanding anything herein to the contrary, other than a transfer, assignment or succession to an Affiliate of a Purchaser, Sections 4.13, 4.14(a) and 4.14(b) shall not inure to the benefit of a Purchaser's permitted assigns. 5.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.11. 5.9 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City 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 (including with respect to the enforcement of any of the Transaction Documents), 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 improper or inconvenient venue for such proceeding. 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 via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. The parties hereby waive all rights to a trial by jury. If either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys' fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. 5.10 Survival. The representations and warranties contained herein shall survive each Closing and the delivery, exercise and/or conversion of the Securities, as applicable for the applicable statue of limitations. 5.11 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become -31- effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof. 5.12 Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement. 5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Documents and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights; provided, however, in the case of a rescission of a conversion of a Debenture, exercise of a Warrant or conversion and/or exercise of an Additional Investment Right Securities, the Purchaser shall be required to return any shares of Common Stock subject to any such rescinded conversion or exercise notice. 5.14 Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Securities. 5.15 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate. 5.16 Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Documents or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any -32- law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. 5.17 Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any claim, action or proceeding that may be brought by any Purchaser in order to enforce any right or remedy under any Transaction Documents. Notwithstanding any provision to the contrary contained in any Transaction Documents, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the "Maximum Rate"), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at such Purchaser's election. 5.18 Independent Nature of Purchasers' Obligations and Rights. The obligations of each Purchaser under any Transaction Documents are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under any Transaction Documents. Nothing contained herein or in any Transaction Documents, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in their review and negotiation of the Transaction Documents. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by the Purchasers. 5.19 Liquidated Damages. The Company's obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of -33- the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled. 5.20 Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto. (Signature Pages Follow) -34- IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. RAMP CORPORATION Address for Notice: By:_______________________________________ Name: Title: With a copy to (which shall not constitute notice): [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGE FOR PURCHASER FOLLOWS] -35- [PURCHASER SIGNATURE PAGES TO RCO SECURITIES PURCHASE AGREEMENT] IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. Name of Purchaser: _____________________________________________________________ Signature of Authorized Signatory of Purchaser: ________________________________ Name of Authorized Signatory: __________________________________________________ Title of Authorized Signatory: _________________________________________________ Email Address of Purchaser:________________________________________________ Address for Notice of Purchaser: Address for Delivery of Securities for Purchaser (if not same as above): First Closing Subscription Amount: Second Closing Subscription Amount: Warrant Shares: AIR Debenture: AIR Warrant Shares: EIN Number: [PROVIDE THIS UNDER SEPARATE COVER] [SIGNATURE PAGES CONTINUE] -36- Annex A CLOSING STATEMENT FOR FIRST CLOSING Pursuant to the attached Securities Purchase Agreement, dated as of the date hereto, the purchasers shall purchase up to $6,000,000 of Debentures, Warrants and Additional Investment Rights from Ramp Corporation, a Delaware corporation (the "Company"), up to $3,000,000 of which shall be purchased at the First Closing. All funds will be wired into a trust account maintained by Jenkens & Gilchrist Parker Chapin, LLP, counsel to the Company, whose wiring instructions are as follows: Attorney Trust Account JP Morgan Chase 1211 Avenue of the Americas New York, New York 10036 Account Name: Jenkens & Gilchrist Parker Chapin LLP 405 Lexington Avenue New York, New York 10174 Account Number: 323231195 ABA # 021000021 Remark: Ramp Corporation/[FUND NAME] All funds will be disbursed in accordance with this Closing Statement. Disbursement Date: March 31, 2005 ________________________________________________________________________________ I. PURCHASE PRICE -------------- Gross Proceeds to be Received in Trust $3,000,000 II. DISBURSEMENTS ------------- [COMPANY WIRE INSTRUCTIONS] -37- EX-10 4 exhibit-a.txt EX-10.31; 8% CONVERTIBLE DEBENTURE EXHIBIT 10.31 NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE 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. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES. Original Issue Date: March 31, 2005 Original Conversion Price (subject to adjustment herein): $1.25 $_______________ 8% CONVERTIBLE DEBENTURE THIS DEBENTURE is one of a series of duly authorized and issued 8% Convertible Debentures of Ramp Corporation, a Delaware corporation, having a principal place of business at 33 Maiden Lane, 5th Floor, New York, New York 10038 (the "Company"), designated as its 8% Convertible Debenture (the "Debenture(s)"). FOR VALUE RECEIVED, the Company promises to pay to ________________________ or its registered assigns (the "Holder"), the principal sum of $_______________ or such dates as the Debentures are required or permitted to be repaid as provided hereunder, but in no event later than February 1, 2006 (the "Maturity Date"), and to pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Debenture in accordance with the provisions hereof. This Debenture is subject to the following additional provisions: Section 1. Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Debenture: (a) capitalized terms not otherwise defined herein have the meanings given to such terms in the Purchase Agreement, and (b) the following terms shall have the following meanings: "Alternate Consideration" shall have the meaning set forth in Section 5(d). "Base Conversion Price" shall have the meaning set forth in Section 5(b). "Business Day" means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close. "Buy-In" shall have the meaning set forth in Section 4(d)(v). "Change of Control Transaction" means the occurrence after the date hereof of any of (i) an acquisition after the date hereof by an individual or legal entity or "group" (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of 40% of the voting securities of the Company, or (ii) a replacement at one time or within a two year period of more than one-half of the members of the Company's board of directors which is not approved by a majority of those individuals who are members of the board of directors on the date hereof (or by those individuals who are serving as members of the board of directors on any date whose nomination to the board of directors was approved by a majority of the members of the board of directors who are members on the date hereof), or (iii) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth above in (i) or (ii). "Closing Price" means on any particular date (a) the last reported closing bid price per share of Common Stock on such date on the Trading Market (as reported by Bloomberg L.P. at 4:15 PM (New York time), or (b) if there is no such price on such date, then the closing bid price on the Trading Market on the date nearest preceding such date (as reported by Bloomberg L.P. at 4:15 PM (New York time) for the closing bid price for regular session trading on such day), or (c) if the Common Stock is not then listed or quoted on a Trading Market and if prices for the Common Stock are then quoted on the OTC Bulletin Board, the closing bid price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board (as reported by Bloomberg L.P. at 4:15 PM (New York time), (d) if the Common Stock is not then listed or quoted on the Trading Market and if prices for the Common Stock are then reported in the "pink sheets" published by the Pink Sheets LLC (formerly the National Quotation Bureau Incorporated (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (e) if the shares of Common Stock are not then publicly traded the fair market value of a share of Common Stock as determined by a qualified independent appraiser selected in good faith by the Company, with the consent of the Purchasers of a majority in interest of the Shares then outstanding, which consent shall not be unreasonably withheld. "Common Stock" means the common stock, par value $0.001 per share, of the Company and stock of any other class into which such shares may hereafter have been reclassified or changed. -2- "Conversion Date" shall have the meaning set forth in Section 4(a). "Conversion Price" shall have the meaning set forth in Section 4(b). "Conversion Shares" means the shares of Common Stock issuable upon conversion of Debentures or as payment of interest in accordance with the terms. "Debenture Register" shall have the meaning set forth in Section 2(c). "Effectiveness Period" shall have the meaning given to such term in the Registration Rights Agreement. "Equity Conditions" shall mean, during the period in question, (i) the Company shall have duly honored all conversions and redemptions scheduled to occur or occurring by virtue of one or more Notice of Conversions, if any, (ii) all liquidated damages and other amounts owing in respect of the Debentures shall have been paid; (iii) there is an effective Registration Statement pursuant to which the Holder is permitted to utilize the prospectus thereunder to resell all of the shares issuable pursuant to the Transaction Documents (and the Company reasonably believes, in good faith, that such effectiveness will continue uninterrupted for the foreseeable future), (iv) the Common Stock is trading on the Trading Market or the OTC Bulletin Board and all of the shares issuable pursuant to the Transaction Documents are listed for trading on a Trading Market or the OTC Bulletin Board (and the Company reasonably believes, in good faith, that trading of the Common Stock on a Trading Market or OTC Bulletin Board will continue uninterrupted for the foreseeable future), (v) there is a sufficient number of authorized but unissued and otherwise unreserved shares of Common Stock for the issuance of all of the shares issuable pursuant to the Transaction Documents, (vi) there is then existing no Event of Default or event which, with the passage of time or the giving of notice, would constitute an Event of Default, (vii) all of the shares issued or issuable pursuant to the transaction proposed would not violate the limitations set forth in Sections 4(c)(i) and 4(c)(ii) and (viii) no public announcement of a pending or proposed Fundamental Transaction, Change of Control Transaction or acquisition transaction has occurred that has not been consummated. "Event of Default" shall have the meaning set forth in Section 8. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Fundamental Transaction" shall have the meaning set forth in Section 5(d). "Interest Conversion Rate" means the lesser of (a) the Conversion Price and (b) 90% of the lesser of (i) the average of the 10 Closing Prices immediately prior to the applicable Interest Payment Date or (ii) the average of the 10 Closing Prices immediately prior to the date the applicable interest payment shares are issued and delivered if after the Interest Payment Date. -3- "Interest Payment Date" shall have the meaning set forth in Section 2(a). "Late Fees" shall have the meaning set forth in Section 2(d). "Mandatory Prepayment Amount" for any Debentures shall equal the greater of: (A) 110% of the principal amount of Debentures to be prepaid, plus all accrued and unpaid interest thereon, or (B) the principal amount of Debentures to be prepaid, plus all other accrued and unpaid interest hereon, divided by the Conversion Price on (x) the date the Mandatory Prepayment Amount is demanded or otherwise due or (y) the date the Mandatory Prepayment Amount is paid in full, whichever is less, multiplied by the Closing Price on (x) the date the Mandatory Prepayment Amount is demanded or otherwise due or (y) the date the Mandatory Prepayment Amount is paid in full, whichever is greater. "Monthly Conversion Price" shall have the meaning set forth in Section 6(a) hereof. "Monthly Redemption" shall mean the redemption of the Debenture pursuant to Section 6(a) hereof. "Monthly Redemption Amount" shall mean, as to a Monthly Redemption, $___________.(1) "Monthly Redemption Date" means the 1st of each month, commencing on the earlier of (a) the first such date following the 120th day after the date of the Purchase Agreement and (b) the first such date following the 20th day after the Effective Date and ending upon the full redemption of this Debenture. "New York Courts" shall have the meaning set forth in Section 9(d). "Notice of Conversion" shall have the meaning set forth in Section 4(a). "Original Issue Date" shall mean the date of the first issuance of the Debentures regardless of the number of transfers of any Debenture and regardless of the number of instruments which may be issued to evidence such Debenture. "Person" means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency. "Purchase Agreement" means the Securities Purchase Agreement, dated as of March __, 2005, to which the Company and the original Holder are parties, as amended, modified or supplemented from time to time in accordance with its terms. - ---------- 1 One-fifth of the original principal amount of this Debenture. -4- "Registration Rights Agreement" means the Registration Rights Agreement, dated as of the date of the Purchase Agreement, to which the Company and the original Holder are parties, as amended, modified or supplemented from time to time in accordance with its terms. "Registration Statement" means a registration statement meeting the requirements set forth in the Registration Rights Agreement, covering among other things the resale of the Conversion Shares and naming the Holder as a "selling stockholder" thereunder. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Shareholder Approval" shall have the meaning given to such term in the Purchase Agreement. "Subsidiary" shall have the meaning given to such term in the Purchase Agreement. "Threshold Period" shall have the meaning given to such term in Section 6(d). "Trading Day" means a day on which the Common Stock is traded on a Trading Market. "Trading Market" means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date of determination: the Nasdaq SmallCap Market, the American Stock Exchange, the New York Stock Exchange or the Nasdaq National Market. "Transaction Documents" shall have the meaning set forth in the Purchase Agreement. Section 2. Interest. ---------- -------- a) Payment of Interest in Cash or Kind. The Company shall pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Debenture at the rate of eight percent (8%) per annum, payable on each Conversion Date (as to that principal amount then being converted) and on the Maturity Date (except that, if any such date is not a Business Day, then such payment shall be due on the next succeeding Business Day) and on each Monthly Redemption Date (as to that principal amount then being redeemed) (each such date, an "Interest Payment Date"), at the Company's option, in cash or shares of Common Stock at the Interest Conversion Rate, or a combination thereof; provided, however, payment in shares of Common Stock may only occur if during the 10 Trading Days immediately prior to the applicable Interest Payment Date all of the Equity Conditions have been met and the Company shall have given the Holder notice in accordance with the notice requirements set forth below. -5- b) Company's Election to Pay Interest in Kind. Subject to the terms and conditions herein, the decision whether to pay interest hereunder in shares of Common Stock or cash shall be at the discretion of the Company. Not less than 10 Trading Days prior to each Interest Payment Date, the Company shall provide the Holder with written notice of its election to pay interest hereunder either in cash or shares of Common Stock (the Company may indicate in such notice that the election contained in such notice shall continue for later periods until revised). Within 10 Trading Days prior to an Interest Payment Date, the Company's election (whether specific to an Interest Payment Date or continuous) shall be irrevocable as to such Interest Payment Date. Subject to the aforementioned conditions, failure to timely provide such written notice shall be deemed an election by the Company to pay the interest on such Interest Payment Date in cash. c) Interest Calculations. Interest shall be calculated on the basis of a 360-day year and shall accrue daily commencing on the Original Issue Date until payment in full of the principal sum, together with all accrued and unpaid interest and other amounts which may become due hereunder, has been made. Payment of interest in shares of Common Stock shall otherwise occur pursuant to Section 4(d)(ii) and only for purposes of the payment of interest in shares, the Interest Payment Date shall be deemed the Conversion Date. Interest shall cease to accrue with respect to any principal amount converted, provided that the Company in fact delivers the Conversion Shares within the time period required by Section 4(d)(ii). Interest hereunder will be paid to the Person in whose name this Debenture is registered on the records of the Company regarding registration and transfers of Debentures (the "Debenture Register"). Except as otherwise provided herein, if at any time the Company pays interest partially in cash and partially in shares of Common Stock, then such payment shall be distributed ratably among the Holders based upon the principal amount of Debentures held by each Holder. d) Late Fee. All overdue accrued and unpaid interest to be paid hereunder shall entail a late fee at the rate of 18% per annum (or such lower maximum amount of interest permitted to be charged under applicable law) ("Late Fees") which will accrue daily, from the date such interest is due hereunder through and including the date of payment. Notwithstanding anything to the contrary contained herein, if on any Interest Payment Date the Company has elected to pay interest in Common Stock and is not able to pay accrued interest in the form of Common Stock because it does not then satisfy the conditions for payment in the form of Common Stock set forth above, then, at the option of the Holder, the Company, in lieu of delivering either shares of Common Stock pursuant to this Section 2 or paying the regularly scheduled cash interest payment, shall deliver, within three Trading Days of each applicable Interest Payment Date, an amount in cash equal to the product of the number of shares of Common Stock otherwise deliverable to the Holder in connection with the payment of interest due on such Interest Payment Date and the average of the Closing Prices during the period commencing on the Interest Payment Date and ending on the Trading Day prior to the date such payment is made. -6- e) Prepayment. Except as otherwise set forth in this Debenture, the Company may not prepay any portion of the principal amount of this Debenture without the prior written consent of the Holder. Section 3. Registration of Transfers and Exchanges. ---------- --------------------------------------- a) Different Denominations. This Debenture is exchangeable for an equal aggregate principal amount of Debentures of different authorized denominations, of not less than $50,000, as requested by the Holder surrendering the same. No service charge will be made for such registration of transfer or exchange. b) Investment Representations. This Debenture has been issued subject to certain investment representations of the original Holder set forth in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal and state securities laws and regulations. c) Reliance on Debenture Register. Prior to due presentment to the Company for transfer of this Debenture, the Company and any agent of the Company may treat the Person in whose name this Debenture is duly registered on the Debenture Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary. Section 4. Conversion. ---------- ----------- a) Voluntary Conversion. At any time after the Original Issue Date until this Debenture is no longer outstanding, this Debenture shall be convertible into shares of Common Stock at the option of the Holder, in whole or in part at any time and from time to time (subject to the limitations on conversion set forth in Section 4(c) hereof). The Holder shall effect conversions by delivering to the Company the form of Notice of Conversion attached hereto as Annex A (a "Notice of Conversion"), specifying therein the principal amount of Debentures to be converted and the date on which such conversion is to be effected (a "Conversion Date"). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is provided hereunder. To effect conversions hereunder, the Holder shall not be required to physically surrender Debentures to the Company unless the entire principal amount of this Debenture plus all accrued and unpaid interest thereon has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Debenture in an amount equal to the applicable conversion. The Holder and the Company shall maintain detailed and accurate records showing the principal amount converted and the date of such conversions. The Company shall deliver any objection to any Notice of Conversion within 2 Business Days of receipt of such notice. In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The Holder and any assignee, by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Debenture, the -7- unpaid and unconverted principal amount of this Debenture may be less than the amount stated on the face hereof. b) Conversion Price. The conversion price in effect on any Conversion Date shall be equal to $1.25 (subject to adjustment herein)(the "Conversion Price"). c) Conversion Limitations. ---------------------- i. Trading Market Limitations. Notwithstanding anything herein to the contrary, if the Company has not obtained Shareholder Approval (as defined below), if required by the applicable rules and regulations of the Trading Market (or any successor entity), then the Company may not issue upon conversion of the Debentures in excess of 19.999% of the number of shares of Common Stock outstanding on the Trading Day immediately preceding the Original Issue Date, less the number of shares issued prior to such Conversion Date pursuant to any Debentures and less the number of shares issued prior to such Conversion Date pursuant to any Warrants (such number of shares, the "Issuable Maximum"). Each Holder shall be entitled to a portion of the Issuable Maximum equal to the quotient obtained by dividing (x) the aggregate principal amount of the Debenture(s) issued and sold to such Holder on the Original Issue Date by (y) the aggregate principal amount of all Debentures issued and sold by the Company on the Original Issue Date. If any Holder shall no longer hold the Debenture(s), then such Holder's remaining portion of the Issuable Maximum shall be allocated pro-rata among the remaining Holders. If on any Conversion Date: (1) the applicable Conversion Price then in effect is such that the shares of Common Stock issuable under this Debenture on any Conversion Date together with the aggregate number of shares of Common Stock that would then be issuable upon conversion in full of all then outstanding Debentures would exceed the Issuable Maximum, and (2) the Company's shareholders shall not have previously approved the transactions contemplated by the Transaction Documents, as may be required by the applicable rules and regulations of the Trading Market (or any successor entity), if any (the "Shareholder Approval"), then the Company shall issue to the Holder requesting a conversion a number of shares of Common Stock equal to such Holder's pro-rata portion (which shall be calculated pursuant to the terms hereof) of the Issuable Maximum and, with respect to the remainder of the aggregate principal amount of the Debentures (including any accrued interest) then held by such Holder for which a conversion in accordance with the applicable conversion price would result in an issuance of shares of Common Stock in excess of such Holder's pro-rata portion (which shall be calculated pursuant to the terms hereof) of the Issuable Maximum (the "Excess Principal"), the Company shall be prohibited from converting such Excess Principal, and shall notify the Holder of the reason therefor. This Debenture shall thereafter be unconvertible to such extent until and unless Shareholder Approval is subsequently obtained or is otherwise not required, but this Debenture shall otherwise remain in full force and effect. -8- ii. Holder's Restriction on Conversion. The Company shall not effect any conversion of this Debenture, and the Holder shall not have the right to convert any portion of this Debenture, pursuant to Section 4(a) or otherwise, to the extent that after giving effect to such conversion, the Holder (together with the Holder's affiliates), as set forth on the applicable Notice of Conversion, would beneficially own in excess of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to such conversion. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon conversion of this Debenture with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) conversion of the remaining, nonconverted portion of this Debenture beneficially owned by the Holder or any of its affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Debentures or the Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates. Except as set forth in the preceding sentence, for purposes of this Section 4(c)(ii), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. To the extent that the limitation contained in this section applies, the determination of whether this Debenture is convertible (in relation to other securities owned by the Holder) and of which a portion of this Debenture is convertible shall be in the sole discretion of such Holder. To ensure compliance with this restriction, the Holder will be deemed to represent to the Company each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Company shall have no obligation to verify or confirm the accuracy of such determination. For purposes of this Section 4(c)(ii), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company's most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company's Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written request of the Holder, the Company shall within two Trading Days confirm in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Debenture, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The provisions of this Section 4(c)(ii) may be waived by the Holder upon, at the election of the Holder, not less than 61 days' prior notice to the Company, and the provisions of this Section 4(c)(ii) shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). -9- d) Mechanics of Conversion ----------------------- i. Conversion Shares Issuable Upon Conversion of Principal Amount. The number of shares of Common Stock issuable upon a conversion hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Debenture to be converted by (y) the Conversion Price. ii. Delivery of Certificate Upon Conversion. Not later than three Trading Days after any Conversion Date, assuming Holder's compliance with Section 4(c) hereof, the Company will deliver to the Holder (A) a certificate or certificates representing the Conversion Shares which, if not otherwise required to have a legend pursuant to Section 4.1(c) of the Purchase Agreement, shall be free of restrictive legends and trading restrictions, representing the number of shares of Common Stock being acquired upon the conversion of Debentures (including, if so timely elected by the Company, shares of Common Stock representing the payment of accrued interest) and (B) a bank check in the amount of accrued and unpaid interest (if the Company is required to pay accrued interest in cash). The Company shall, if available and if allowed under applicable securities laws, use its best efforts to deliver any certificate or certificates required to be delivered by the Company under this Section electronically through the Depository Trust Corporation or another established clearing corporation performing similar functions. iii. Failure to Deliver Certificates. If in the case of any Notice of Conversion such certificate or certificates are not delivered to or as directed by the applicable Holder by the third Trading Day after a Conversion Date, the Holder shall be entitled by written notice to the Company at any time on or before its receipt of such certificate or certificates thereafter, to rescind such conversion, in which event the Company shall immediately return the certificates representing the principal amount of Debentures tendered for conversion. iv. Obligation Absolute; Partial Liquidated Damages. If the Company fails for any reason to deliver to the Holder such certificate or certificates pursuant to Section 4(d)(ii) by the third Trading Day after the Conversion Date, the Company shall pay to such Holder, in cash, as liquidated damages and not as a penalty, for each $1000 of principal amount being converted, $5 per Trading Day (increasing to $10 per Trading Day after 5 Trading Days after such damages begin to accrue) for each Trading Day after such third Trading Day until such certificates are delivered. The Company's obligations to issue and deliver the Conversion Shares upon conversion of this Debenture in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the -10- Holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of such Conversion Shares; provided, however, such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder. In the event a Holder of this Debenture shall elect to convert any or all of the outstanding principal amount hereof, the Company may not refuse conversion based on any claim that the Holder or any one associated or affiliated with the Holder of has been engaged in any violation of law, agreement or for any other reason, unless, an injunction from a court, on notice, restraining and or enjoining conversion of all or part of this Debenture shall have been sought and obtained and the Company posts a surety bond for the benefit of the Holder in the amount of 150% of the principal amount of this Debenture outstanding, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the dispute and the proceeds of which shall be payable to such Holder to the extent it obtains judgment. In the absence of an injunction precluding the same, the Company shall issue Conversion Shares or, if applicable, cash, upon a properly noticed conversion. Nothing herein shall limit a Holder's right to pursue actual damages or declare an Event of Default pursuant to Section 8 herein for the Company's failure to deliver Conversion Shares within the period specified herein and such Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holders from seeking to enforce damages pursuant to any other Section hereof or under applicable law. v. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available to the Holder, if the Company fails for any reason to deliver to the Holder such certificate or certificates pursuant to Section 4(d)(ii) by the third Trading Day after the Conversion Date, and if after such third Trading Day the Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by such Holder of the Conversion Shares which the Holder anticipated receiving upon such conversion (a "Buy-In"), then the Company shall (A) pay in cash to the Holder (in addition to any remedies available to or elected by the Holder) the amount by which (x) the Holder's total purchase price (including brokerage commissions, if any) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that such Holder anticipated receiving from the conversion at issue multiplied by (2) the actual sale price of the Common Stock at the time of the sale (including brokerage commissions, if any) giving rise to such purchase obligation and (B) at the option of the Holder, either reissue Debentures in principal amount equal to the principal amount of the attempted conversion or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its delivery requirements under Section 4(d)(ii). For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an -11- attempted conversion of Debentures with respect to which the actual sale price of the Conversion Shares at the time of the sale (including brokerage commissions, if any) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000; provided, however, that the Company shall have no obligation to pay Holder the Buy-In Adjustment Amount if: (i) Holder shall not have delivered any and all documentation required to be delivered to the Company's transfer agent or its counsel in order to issue the Warrant Shares as required under the Transaction Documents, (ii) if the Buy-In, in the opinion of counsel to the Company, would result in a violation of the federal securities laws, or (iii) if the Buy-In is a result of the Holder's gross negligence or willful misconduct. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In. Notwithstanding anything contained herein to the contrary, if a Holder requires the Company to make payment in respect of a Buy-In for the failure to timely deliver certificates hereunder and the Company timely pays in full such payment, the Company shall not be required to pay such Holder liquidated damages under Section 4(d)(iv) in respect of the certificates resulting in such Buy-In. vi. Reservation of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock solely for the purpose of issuance upon conversion of the Debentures and payment of interest on the Debenture, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holders, not less than such number of shares of the Common Stock as shall (subject to any additional requirements of the Company as to reservation of such shares set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 5) upon the conversion of the outstanding principal amount of the Debentures and payment of interest hereunder. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly and validly authorized, issued and fully paid, nonassessable and, if the Registration Statement is then effective under the Securities Act, registered for public sale in accordance with such Registration Statement. vii. Fractional Shares. Upon a conversion hereunder the Company shall not be required to issue stock certificates representing fractions of shares of the Common Stock, but may if otherwise permitted, make a cash payment in respect of any final fraction of a share based on the Closing Price at such time. If the Company elects not, or is unable, to make such a cash payment, the Holder shall be entitled to receive, in lieu of the final fraction of a share, one whole share of Common Stock. viii. Transfer Taxes. The issuance of certificates for shares of the Common Stock on conversion of the Debentures shall be made without charge to the Holders thereof for any documentary stamp or similar taxes that may be -12- payable in respect of the issue or delivery of such certificate, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of such Debentures so converted and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. Section 5. Certain Adjustments. ---------- -------------------- a) Stock Dividends and Stock Splits. If the Company, at any time while the Debentures are outstanding: (A) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company pursuant to this Debenture, including as interest thereon), (B) subdivide outstanding shares of Common Stock into a larger number of shares, (C) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issue by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. b) [INTENTIONALLY DELETED] c) Pro Rata Distributions. If the Company, at any time while Debentures are outstanding, shall distribute to all holders of Common Stock (and not to Holders) evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase any security, then in each such case the Conversion Price shall be determined by multiplying such Conversion Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the Closing Price determined as of the record date mentioned above, and of which the numerator shall be such Closing Price on such record date less the then fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holders of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above. -13- d) Fundamental Transaction. If, at any time while this Debenture is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another Person, (B) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a "Fundamental Transaction"), then upon any subsequent conversion of this Debenture, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion absent such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of one share of Common Stock (the "Alternate Consideration"). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Debenture following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new debenture consistent with the foregoing provisions and evidencing the Holder's right to convert such debenture into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this paragraph (c) and insuring that this Debenture (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. e) Calculations. All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. The number of shares of Common Stock outstanding at any given time shall not includes shares of Common Stock owned or held by or for the account of the Company, and the description of any such shares of Common Stock shall be considered on issue or sale of Common Stock. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding. f) Exempt Issuance. Notwithstanding the foregoing, no adjustment will be made under this Section 5 in respect of an Exempt Issuance. -14- g) Notice to Holders. ----------------- i. Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any of this Section 5, the Company shall promptly mail to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. ii. Notice to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of the Debentures, and shall cause to be mailed to the Holders at their last addresses as they shall appear upon the stock books of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. Holders are entitled to convert Debentures during the 20-day period commencing the date of such notice to the effective date of the event triggering such notice. Section 6. Monthly Redemption ---------- ------------------ a) Monthly Redemption. On each Monthly Redemption Date, the Company shall redeem the Monthly Redemption Amount plus accrued but unpaid interest, the sum of all liquidated damages and any other amounts then owing to such Holder in respect of the Debenture. The Monthly Redemption Amount due on each Monthly Redemption -15- Date shall be paid in cash; provided, however, as to any Monthly Redemption and upon 20 Trading Days' prior written irrevocable notice, in lieu of a cash redemption payment the Company may elect to pay all or part of a Monthly Redemption in Conversion Shares based on a conversion price equal to the lesser of (a) the then Conversion Price and (b) 85% of the average of the 3 lowest Closing Prices during the 20 consecutive Trading Days immediately prior to the applicable Monthly Redemption Date (subject to adjustment for any stock dividend, stock split, stock combination or other similar event affecting the Common Stock during such 20 Trading Day period) (the "Monthly Conversion Price"); provided, however, that the Company may not pay the Monthly Redemption Amount in Conversion Shares unless, on the Monthly Redemption Date and during the 20 Trading Day period immediately prior to the Monthly Redemption Date, the Equity Conditions have been satisfied; except that, with respect to the first Monthly Redemption Date, the Equity Conditions need only be met for the 10 Trading Days prior to such first Monthly Redemption Date. The Holders may convert, pursuant to Section 4(a), any principal amount of the Debenture subject to a Monthly Redemption at any time prior to the date that the Monthly Redemption Amount and all amounts owing thereon are due and paid in full. Unless otherwise indicated by the Holder in the applicable Notice of Conversion, any principal amount of Debenture converted during any 20 day period until the date the Monthly Redemption Amount is paid shall be first applied to the principal amount subject to the Monthly Redemption and such Holder's cash payment of the Monthly Redemption Amount on such Monthly Redemption Date shall be reduced accordingly, and any remaining principal amount so converted shall be applied against the last principal scheduled to be repaid, in reverse time order. The Company covenants and agrees that it will honor all Notice of Conversions tendered up until such amounts are paid in full. The Company's determination to pay a Monthly Redemption in cash or shares of Common Stock shall be applied ratably to all Holders based on their initial purchases of Debentures pursuant to the Purchase Agreement. b) Redemption Procedure. The payment of cash and/or issuance of Common Stock, as the case may be, pursuant to a Monthly Redemption shall be made on the Monthly Redemption Date. If any portion of the cash payment for a Monthly Redemption shall not be paid by the Company by the respective due date, interest shall accrue thereon at the rate of eighteen percent (18%) per annum (or the maximum rate permitted by applicable law, whichever is less) until the payment of the Monthly Redemption Amount, plus all amounts owing thereon is paid in full. Section 7. Negative Covenants. So long as any portion of this Debenture is outstanding, the Company will not and will not permit any of its Subsidiaries to directly or indirectly: a) enter into, create, incur, assume or suffer to exist any indebtedness or liens of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom that is senior to, or pari passu with (for purposes of clarification, any security interest of any kind shall be deemed a lien that is senior to this Debenture and therefore prohibited), in any respect, the Company's obligations under the Debentures; -16- b) amend its certificate of incorporation, bylaws or to her charter documents so as to adversely affect any rights of the Holder; c) repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common Stock or other equity securities other than as to the Conversion Shares to the extent permitted or required under the Transaction Documents or as otherwise permitted by the Transaction Documents; or d) enter into any agreement with respect to any of the foregoing. Section 8. Events of Default. ---------- ------------------ a) "Event of Default", wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body): i. any default in the payment of (A) the principal amount of any Debenture, or (B) interest (including Late Fees) on, or liquidated damages in respect of, any Debenture, in each case free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) which default is not cured, within 10 Trading Days following written notice of such default; ii. the Company shall fail to materially observe or perform any other covenant or agreement contained in this Debenture (other than a breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion which breach is addressed in clause (xii) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) 5 Trading Days after notice of such default sent by the Holder or by any other Holder and (B)10 Trading Days after the Company shall become or should have become aware of such failure; iii. a default or event of default (subject to any grace or cure period provided for in the applicable agreement, document or instrument) shall occur under (A) any of the Transaction Documents other than the Debentures, or (B) any other material agreement, lease, document or instrument included as an exhibit to the SEC Reports to which the Company or any Subsidiary is bound provided such default or event of default would result in a Material Adverse Effect on the Company; iv. any representation or warranty made herein, in any other Transaction Documents, in any written statement pursuant hereto or thereto, or in any other report, financial statement or certificate made or delivered to the Holder or any other holder of Debentures shall be untrue or incorrect in any material respect as of the date when made or deemed made; -17- v. (i) the Company or any of its Subsidiaries shall commence, or there shall be commenced against the Company or any such Subsidiary, a case under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company or any Subsidiary commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company or any Subsidiary thereof or (ii) there is commenced against the Company or any Subsidiary thereof any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of 90 days; or (iii) the Company or any Subsidiary thereof is adjudicated by a court of competent jurisdiction insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or (iv) the Company or any Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of 90 days; or (v) the Company or any Subsidiary thereof makes a general assignment for the benefit of creditors; or (vi) the Company shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or (vii) any corporate or other action is taken by the Company or any Subsidiary thereof for the purpose of effecting any of the foregoing; vi. the Company or any Subsidiary shall default in any of its obligations under any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement of the Company in an amount exceeding $250,000, whether such indebtedness now exists or shall hereafter be created and such default shall result in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable; vii. the Common Stock shall not be eligible for quotation on or quoted for trading on a Trading Market or the OTC Bulletin Board and shall not again be eligible for and quoted or listed for trading thereon within ten Trading Days; viii. the Company shall be a party to any Change of Control Transaction or Fundamental Transaction, shall agree to sell or dispose of all or in excess of 40% of its assets in one or more transactions (whether or not such sale would constitute a Change of Control Transaction) or shall redeem or repurchase more than a de minimis number of its outstanding shares of Common Stock or other equity securities of the Company (other than redemptions of Conversion Shares and repurchases of shares of Common Stock or other equity securities of departing officers and directors of the Company; provided such repurchases shall not exceed $100,000, in the aggregate, for all officers and directors during the term of this Debenture); -18- ix. a Registration Statement shall not have been declared effective by the Commission on or prior to the 180th calendar day after the Closing Date; x. if, during the Effectiveness Period (as defined in the Registration Rights Agreement), the effectiveness of the Registration Statement lapses for any reason or the Holder shall not be permitted to resell Registrable Securities (as defined in the Registration Rights Agreement) under the Registration Statement, in either case, for more than 30 consecutive Trading Days or 90 non-consecutive Trading Days during any 12 month period; provided, however, that in the event that the Company is negotiating a merger, consolidation, acquisition or sale of all or substantially all of its assets or a similar transaction and in the written opinion of counsel to the Company, the Registration Statement, would be required to be amended to include information concerning such transactions or the parties thereto that is not available or may not be publicly disclosed at the time, the Company shall be permitted an additional 10 consecutive Trading during any 12 month period relating to such an event; xi. the Company shall fail for any reason to deliver certificates to a Holder prior to the seventh Trading Day after a Conversion Date pursuant to and in accordance with Section 4(d) or the Company shall provide notice to the Holder, including by way of public announcement, at any time, of its intention not to comply with requests for conversions of any Debentures in accordance with the terms hereof; xii. any Person shall breach the agreements delivered to the initial Holders pursuant to Section 2.2(a)(iv) of the Purchase Agreement and the Company does not obtain Shareholder Approval. b) Remedies Upon Event of Default. If any Event of Default occurs, the full principal amount of this Debenture, together with interest and other amounts owing in respect thereof, to the date of acceleration shall become, at the Holder's election, immediately due and payable in cash. The aggregate amount payable upon an Event of Default shall be equal to the Mandatory Prepayment Amount plus all other amounts, costs, expenses and liquidated damages due in respect of such Debentures. Commencing 5 days after the occurrence of any Event of Default that results in the eventual acceleration of this Debenture, the interest rate on this Debenture shall accrue at the rate of eighteen percent (18%) per annum, or such lower maximum amount of interest permitted to be charged under applicable law. All Debentures for which the full Mandatory Prepayment Amount hereunder shall have been paid in accordance herewith shall promptly be surrendered to or as directed by the Company. The Holder need not provide and the Company hereby waives any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a -19- Debenture holder until such time, if any, as the full payment under this Section shall have been received by it. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon. Section 9. Miscellaneous. ---------- -------------- a) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, facsimile number 212-480-4962, Attn: Chief Executive Officer or such other address or facsimile number as the Company may specify for such purposes by notice to the Holders delivered in accordance with this Section. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile telephone number or address of such Holder appearing on the books of the Company, or if no such facsimile telephone number or address appears, at the principal place of business of the Holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 5:30 p.m. (New York City time), (ii) the date after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section later than 5:30 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York City time) on such date, (iii) the second Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. b) Absolute Obligation. Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, interest and liquidated damages (if any) on, this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct debt obligation of the Company. This Debenture ranks pari passu with all other Debentures now or hereafter issued under the terms set forth herein. c) Lost or Mutilated Debenture. If this Debenture shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution for a lost, stolen or destroyed Debenture, a new Debenture for the principal amount of this Debenture so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the ownership hereof, and indemnity, if requested, all reasonably satisfactory to the Company. d) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Debenture shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to -20- the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the "New York Courts"). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), 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, or such New York Courts are improper or inconvenient venue for such proceeding. 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 via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Debenture 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 hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Debenture or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Debenture, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. e) Waiver. Any waiver by the Company or the Holder of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The failure of the Company or the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture. Any waiver must be in writing. f) Severability. If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of -21- or interest on this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted. g) Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day. h) Headings. The headings contained herein are for convenience only, do not constitute a part of this Debenture and shall not be deemed to limit or affect any of the provisions hereof. ********************* -22- IN WITNESS WHEREOF, the Company has caused this Debenture to be duly executed by a duly authorized officer as of the date first above indicated. RAMP CORPORATION By:___________________________________ Name: Title: -23- ANNEX A NOTICE OF CONVERSION The undersigned hereby elects to convert principal under the 8% Convertible Debenture of Ramp Corporation, a Delaware corporation (the "Company"), into shares of common stock, par value $0.001 per share (the "Common Stock"), of the Company according to the conditions hereof, as of the date written below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any. By the delivery of this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common Stock does not exceed the amounts determined in accordance with Section 13(d) of the Exchange Act, specified under Section 4 of this Debenture. The undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid shares of Common Stock. Conversion calculations: Date to Effect Conversion: Principal Amount of Debentures to be Converted: Payment of Interest in Common Stock __ yes __ no If yes, $_____ of Interest Accrued on Account of Conversion at Issue. Number of shares of Common Stock to be issued: Signature: Name: Address: -24- Schedule 1 CONVERSION SCHEDULE The 8% Convertible Debentures, in the aggregate principal amount of $____________ issued by Ramp Corporation, a Delaware corporation. This Conversion Schedule reflects conversions made under Section 4 of the above referenced Debenture. Dated: Aggregate Principal Amount Remaining Subsequent to Date of Conversion Conversion (or for first entry, Amount of (or original Original Issue Date) Conversion Principal Amount) Company Attest - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- -25- EX-10 5 exhibit-c.txt EX-10.32; COMMON STOCK PURCHASE WARRANT EXHIBIT 10.32 NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE 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. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES. COMMON STOCK PURCHASE WARRANT To Purchase __________ Shares of Common Stock of Ramp Corporation THIS COMMON STOCK PURCHASE WARRANT (the "Warrant") certifies that, for value received, _____________ (the "Holder"), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the "Initial Exercise Date") and on or prior to the close of business on the five year anniversary of the Initial Exercise Date (the "Termination Date") but not thereafter, to subscribe for and purchase from Ramp Corporation, a Delaware corporation (the "Company"), up to ___________ shares (the "Warrant Shares") of Common Stock, par value $0.001 per share, of the Company (the "Common Stock"). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b). Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the "Purchase Agreement"), dated March 31, 2005, among the Company and the purchasers signatory thereto. Section 2. Exercise. ---------- --------- a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company); provided, however, within 5 Trading Days of the date said Notice of Exercise is delivered to the Company, the Holder shall have surrendered this Warrant to the Company and the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier's check drawn on a United States bank. b) Exercise Price. The exercise price of the Common Stock under this Warrant shall be $1.25, subject to adjustment hereunder (the "Exercise Price"). c) Cashless Exercise. If at any time after one year from the date of issuance of this Warrant there is no effective Registration Statement registering the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised at such time by means of a "cashless exercise" in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where: (A) = the average Closing Price for the ten Trading Days immediately preceding the date of such election; (B) = the Exercise Price of this Warrant, as adjusted; and (X) = the number of Warrant Shares issuable upon exercise of this Warrant in accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise. d) Exercise Limitations. --------------------- i. Holder's Restrictions. The Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2(c) or otherwise, to the extent that after giving effect to such issuance after exercise, the Holder (together with the Holder's affiliates), as set forth on the applicable Notice of Exercise, would beneficially own in excess of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to such issuance. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Debentures or Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates. Except as set forth in the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act, it being acknowledged by Holder -2- that the Company is not representing to Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(d) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder) and of which a portion of this Warrant is exercisable shall be in the sole discretion of such Holder, and the submission of a Notice of Exercise shall be deemed to be such Holder's determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder) and of which portion of this Warrant is exercisable, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. For purposes of this Section 2(d), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company's most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company setting forth the number of shares of Common Stock outstanding. Upon the written request of the Holder, the Company shall within two Trading Days confirm in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The provisions of this Section 2(d) may be waived by the Holder upon, at the election of the Holder, not less than 61 days' prior notice to the Company, and the provisions of this Section 2(d) shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). ii. Trading Market Restrictions. If the Company has not obtained Shareholder Approval (as defined below) if required, then the Company may not issue upon exercise of this Warrant in the aggregate, in excess of 19.999% of the number of shares of Common Stock outstanding on the Trading Day immediately preceding the Closing Date, less any shares of Common Stock issued upon conversion of or as payment of interest on the Debentures or upon prior exercise of this or any other Warrant issued pursuant to the Purchase Agreement (such number of shares, the "Issuable Maximum"). If on any attempted exercise of this Warrant, the issuance of Warrant Shares would exceed the Issuable Maximum and the Company shall not have previously obtained the vote of shareholders (the "Shareholder Approval"), if any, as may be required by the applicable rules and regulations of the Trading Market (or any successor entity) to approve the issuance of shares of Common Stock in excess of the Issuable Maximum pursuant to the terms hereof, then the Company shall issue to the Holder requesting a Warrant exercise such number of Warrant Shares -3- as may be issued below the Issuable Maximum and, with respect to the remainder of the aggregate number of Warrant Shares, this Warrant shall not be exercisable until and unless Shareholder Approval has been obtained. e) Mechanics of Exercise. --------------------- i. Authorization of Warrant Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). ii. Delivery of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by the transfer agent of the Company to the Holder by crediting the account of the Holder's prime broker with the Depository Trust Company through its Deposit Withdrawal Agent Commission ("DWAC") system if the Company is a participant in such system and if no legend is required on such certificates pursuant to Section 4.1(c) of the Purchase Agreement, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise within 3 Trading Days from the delivery to the Company of the Notice of Exercise Form, surrender of this Warrant and payment of the aggregate Exercise Price as set forth above ("Warrant Share Delivery Date"). This Warrant shall be deemed to have been exercised on the date the Exercise Price is received by the Company. The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 2(e)(vii) prior to the issuance of such shares, have been paid. iii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant. iv. Rescission Rights. If the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 2(e)(iv) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise. -4- v. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a "Buy-In"), then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder's total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder (the "Buy-In Adjustment Amount"). For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000; provided, however, that the Company shall have no obligation to pay Holder the Buy-In Adjustment Amount if: (i) Holder shall not have delivered any and all documentation required to be delivered to the Company's transfer agent or its counsel in order to issue the Warrant Shares as required under the Transaction Documents, (ii) if the Buy-In, in the opinion of counsel to the Company, would result in a violation of the federal securities laws, or (iii) if the Buy-In is a result of the Holder's gross negligence or willful misconduct. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder's right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof. vi. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be -5- entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price. vii. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or, subject to Holder's right to assign the Warrant Shares and federal securities laws in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. viii. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof. Section 3. Certain Adjustments. ---------- -------------------- a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (A) pays a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company pursuant to this Warrant or under the Purchase Agreement), (B) subdivides outstanding shares of Common Stock into a larger number of shares, (C) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. b) Subsequent Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall offer, sell, grant any option to purchase or offer, sell or grant any right to reprice its securities, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other -6- disposition) any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock, at an effective price per share less than the then Exercise Price (such lower price, the "Base Share Price" and such issuances collectively, a "Dilutive Issuance"), as adjusted hereunder (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which is issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share which is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price), then, the Exercise Price shall be reduced by multiplying the Exercise Price by a fraction, the numerator of which is the number of shares of Common Stock issued and outstanding immediately prior to the Dilutive Issuance plus the number of shares of Common Stock which the offering price for such Dilutive Issuance would purchase at the then Exercise Price, and the denominator of which shall be the sum of the number of shares of Common Stock issued and outstanding immediately prior to the Dilutive Issuance plus the number of shares of Common Stock so issued or issuable in connection with the Dilutive Issuance. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this section, indicating therein the applicable issuance price, or of applicable reset price, exchange price, conversion price and other pricing terms (such notice the "Dilutive Issuance Notice"). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, after the date of such Dilutive Issuance the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise. c) Pro Rata Distributions. If the Company, at any time prior to the Termination Date, shall distribute to all holders of Common Stock (and not to Holders of the Warrants) evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section 3(b)), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the Closing Price determined as of the record date mentioned above, and of which the numerator shall be such Closing Price on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors of the Company in good faith. In either case the adjustments shall be described in a statement provided to the Holders of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above. -7- d) Fundamental Transaction. If, at any time while this Warrant is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another Person, (B) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a "Fundamental Transaction"), then, upon any subsequent conversion of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise absent such Fundamental Transaction, upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and cash (the "Alternate Consideration") receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder's right to exercise such warrant into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 3(d) and insuring that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. e) Exempt Issuance. Notwithstanding anything to the contrary set forth in this Section 3, no adjustments, Alternate Consideration nor notices shall be made, paid or issued under this Section 3 in respect of an Exempt Issuance. f) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. The number of shares of Common Stock outstanding at any given time shall not includes shares of Common Stock owned or held by or for the account of the Company, and the description of any such shares of Common Stock shall be considered on issue or sale of Common Stock. For purposes of this Section 3, the number of shares of Common Stock deemed to be -8- issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding. g) Notice to Holders. ------------------ i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to this Section 3, the Company shall promptly mail to each Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. If the Company issues a variable rate security, despite the prohibition thereon in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such securities may be converted or exercised in the case of a Variable Rate Transaction (as defined in the Purchase Agreement), or the lowest possible adjustment price in the case of an MFN Transaction (as defined in the Purchase Agreement. ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be mailed to the Holder at its last addresses as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the -9- validity of the corporate action required to be specified in such notice. The Holder is entitled to exercise this Warrant during the 20-day period commencing on the date of such notice to the effective date of the event triggering such notice. Section 4. Transfer of Warrant. ---------- -------------------- a) Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Sections 5(a) and 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued. b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the "Warrant Register"), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary. d) Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an "accredited investor" as -10- defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the Securities Act or a qualified institutional buyer as defined in Rule 144A(a) under the Securities Act. Section 5. Miscellaneous. ---------- -------------- a) Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws and Section 4 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company. b) No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price (or by means of a cashless exercise), the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment. c) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate. d) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday. e) Authorized Shares. ------------------ The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or -11- of any requirements of the Trading Market upon which the Common Stock may be listed. Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant. Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof. f) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement. g) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws. h) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder's rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. i) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement. j) Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of -12- Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. k) Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. l) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares. m) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder. n) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant. o) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant. ******************** -13- IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized. Dated: March 31, 2005 RAMP CORPORATION By:________________________________ Name: Title: -14- NOTICE OF EXERCISE TO: RAMP CORPORATION (1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any. (2) Payment shall take the form of (check applicable box): [ ] in lawful money of the United States; or [ ] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c). (3) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below: ________________________________________________ The Warrant Shares shall be delivered to the following: ________________________________________________ ________________________________________________ ________________________________________________ (4) Accredited Investor. The undersigned is an "accredited investor" as defined in Regulation D promulgated under the Securities Act of 1933, as amended. [SIGNATURE OF HOLDER] Name of Investing Entity:_______________________________________________________ Signature of Authorized Signatory of Investing Entity:__________________________ Name of Authorized Signatory:___________________________________________________ Title of Authorized Signatory:__________________________________________________ Date:___________________________________________________________________________ ASSIGNMENT FORM (To assign the foregoing warrant, execute this form and supply required information. Do not use this form to exercise the warrant.) FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to ________________________________________________________________________________ whose address is ______________________________________________________________. ________________________________________________________________________________ Dated: ______________, _______ Holder's Signature:___________________________ Holder's Address:_____________________________ _____________________________ Signature Guaranteed: ___________________________________________ NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant. EX-10 6 exhibit-e.txt EX-10.33; ADDITIONAL INVESTMENT RIGHT EXHIBIT 10.33 NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE 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. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES ADDITIONAL INVESTMENT RIGHT To Purchase $________ principal amount of Convertible Debentures and Warrants of Ramp Corporation THIS ADDITIONAL INVESTMENT RIGHT (the "AIR") certifies that, for value received, _____________ (the "Holder"), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the "Initial Exercise Date") and on or prior to the close of business on the earlier of (a) the six month anniversary of the Effective Date and (b) the two year anniversary of the Initial Exercise Date (the "Termination Date") but not thereafter, to subscribe for and purchase from Ramp Corporation, a Delaware corporation (the "Company"), up to $_____________ principal amount of convertible debentures (the "AIR Debenture") and warrants to purchase shares of Common Stock, par value $0.001 per share, of the Company (the "Common Stock") as described herein at an exercise price of $1.25, per share (the "AIR Warrant Exercise Price") (subject to adjustment hereunder and thereunder) (the "AIR Warrant"). Upon the purchase hereunder of an AIR Debenture, the Holder shall receive a warrant to purchase a number of shares of Common Stock equal to 100% of the shares of Common Stock issuable upon conversion of such AIR Debenture based upon the Conversion Price as of the date hereof. The initial conversion price of the AIR Debenture shall be equal to $1.25, as described in the Debenture, subject to adjustment thereunder and hereunder ("AIR Debenture Conversion Price"). The AIR Debenture and AIR Warrant shall be in the form of the Debenture and Warrants (with the same rights, privileges and preferences set forth in the Transaction Documents, including without limitation, the Debenture) issued pursuant to the Purchase Agreement, mutatis mutandis. The AIR Debenture and the AIR Warrant shall be collectively referred to as the "AIR Securities." The AIR Warrant Exercise Price and the AIR Debenture Conversion Price shall be collectively referred to herein as the "AIR Conversion Price." Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the "Purchase Agreement"), dated March 31, 2005, among the Company and the purchasers signatory thereto. Section 2. Exercise. ---------- --------- a) Exercise of AIR. Exercise of the purchase rights represented by this AIR may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company) and the payment of the aggregate principal amount of the AIR Debentures thereby purchased by wire transfer or cashier's check drawn on a United States bank. Upon exercise of the AIR, the Company shall issue an AIR Debenture with a principal amount equal to the amount paid by the Holder and the AIR Warrant to purchase a number of shares of Common Stock equal to 100% of the shares of Common Stock issuable upon conversion of such AIR Debenture based upon the Conversion Price as of the date hereof. b) Mechanics of Exercise. ---------------------- i. Authorization of AIR Securities. The Company covenants that during the period the AIR is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of all of the shares of Common Stock underlying the AIR Securities (the collectively, "AIR Conversion Shares"). The Company further covenants that its issuance of this AIR shall constitute full authority to its officers who are charged with the duty of executing certificates to execute and issue the necessary certificates for the AIR Securities upon the exercise of the purchase rights under this AIR and certificates upon conversion and exercise of the AIR Securities. The Company covenants that the AIR Securities which may be issued upon the exercise of the purchase rights represented by this AIR and the AIR Conversion Shares issuable thereunder will, upon exercise of the purchase rights represented by this AIR, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). The Company will take all such reasonable action as may be necessary to assure that the AIR Securities and AIR Conversion Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. ii. Delivery of Certificates Upon Exercise. Certificates for the AIR Securities purchased hereunder shall be delivered to the Holder within 3 Trading Days from the delivery to the Company of the Notice of -2- Exercise Form, surrender of this AIR and payment of the principal amount as set forth above ("AIR Security Delivery Date"). This AIR shall be deemed to have been exercised on the date the payment of the principal amount is received by the Company. The AIR Securities shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such security for all purposes, as of the date the AIR has been exercised by payment to the Company of the principal amount and all taxes required to be paid by the Holder, if any, pursuant to Section 2(b)(v) prior to the issuance of such security, have been paid. iii. Delivery of New AIRs Upon Exercise. If this AIR shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing the AIR Securities, deliver to Holder a new AIR evidencing the rights of Holder to purchase the unpurchased AIR Securities called for by this AIR, which new AIR shall in all other respects be identical with this AIR. iv. Rescission Rights. If the Company fails to deliver to the Holder a certificate or certificates representing the AIR Securities pursuant to this Section 2(e)(iv) by the AIR Security Delivery Date, then the Holder will have the right to rescind such exercise. v. Charges, Taxes and Expenses. Issuance of certificates for AIR Securities shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or, subject to Holder's right to assign the Warrant Shares and the federal securities laws, in such name or names as may be directed by the Holder; provided, however, that in the event certificates for AIR Securities are to be issued in a name other than the name of the Holder, this AIR when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. vi. Closing of Books. The Company will not close its records in any manner which prevents the timely exercise of this AIR, pursuant to the terms hereof or the conversion or exercise of the AIR Securities pursuant to the terms hereof. Section 3. Certain Adjustments. ---------- -------------------- a) Stock Dividends and Splits. If the Company, at any time while this AIR is outstanding: (A) pays a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable -3- in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company pursuant to the AIR Securities or under the Purchase Agreement), (B) subdivides outstanding shares of Common Stock into a larger number of shares, (C) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the AIR Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. b) Subsequent Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this AIR is outstanding, shall offer, sell, grant any option to purchase or offer, sell or grant any right to reprice its securities, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock, at an effective price per share less than the then AIR Warrant Exercise Price (such lower price, the "Base Share Price" and such issuances collectively, a "Dilutive Issuance"), as adjusted hereunder (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which is issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share which is less than the AIR Warrant Exercise Price, such issuance shall be deemed to have occurred for less than the AIR Warrant Exercise Price), then, the AIR Warrant Exercise Price shall be reduced by multiplying the AIR Warrant Exercise Price by a fraction, the numerator of which is the number of shares of Common Stock issued and outstanding immediately prior to the Dilutive Issuance plus the number of shares of Common Stock which the offering price for such Dilutive Issuance would purchase at the then AIR Warrant Exercise Price, and the denominator of which shall be the sum of the number of shares of Common Stock issued and outstanding immediately prior to the Dilutive Issuance plus the number of shares of Common Stock so issued or issuable in connection with the Dilutive Issuance. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this section, indicating therein the applicable issuance price, or of applicable reset price, exchange price, conversion price and other pricing terms (such notice the "Dilutive Issuance Notice"). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, after the date of such Dilutive Issuance the Holder is entitled to receive a number of securities based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise. -4- c) Pro Rata Distributions. If the Company, at any time while this AIR is outstanding, distributes to all holders of Common Stock (and not to Holders) evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section 3(b), then in each such case the AIR Conversion Price shall be determined by multiplying such AIR Conversion Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the Closing Price determined as of the record date mentioned above, and of which the numerator shall be such Closing Price on such record date less the then fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors of the Company in good faith. In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above. d) Fundamental Transaction. If, at any time while this AIR is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another Person, (B) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a "Fundamental Transaction"), then, upon any subsequent exercise of this AIR the Holder shall have the right to receive upon conversion or exercise of the AIR Securities, as applicable, for each AIR Conversion Share that would have been issuable upon such exercise and then subsequent conversion absent such Fundamental Transaction, upon conversion or exercise of the AIR Securities, shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and cash (the "Alternate Consideration") receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which the underlying AIR Securities are convertible immediately prior to such event. For purposes of any such deemed conversion, the determination of the AIR Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the AIR Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion or exercise of the AIR Securities underlying this AIR following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall -5- issue to the Holder a new additional investment right consistent with the foregoing provisions and evidencing the Holder's right to exercise such additional investment right ultimately into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 3(d) and insuring that this AIR (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. e) Exempt Issuance. Notwithstanding anything to the contrary set forth in this Section 3, no adjustments, Alternate Consideration nor notices shall be made, paid or issued under this Section 3 in respect of an Exempt Issuance. f) Calculations. All calculations and adjustments to the AIR Conversion Price under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. The number of shares of Common Stock outstanding at any given time shall not includes shares of Common Stock owned or held by or for the account of the Company, and the description of any such shares of Common Stock shall be considered on issue or sale of Common Stock. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding. g) Notice to Holders. ------------------ i. Adjustment to AIR Conversion Price. Whenever the AIR Conversion Price is adjusted pursuant to this Section 3, the Company shall promptly mail to each Holder a notice setting forth the AIR Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be mailed to the Holder at its last addresses as it shall appear upon the AIR Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date -6- on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder is entitled to exercise this AIR during the 20-day period commencing on the date of such notice to the effective date of the event triggering such notice. Section 4. Transfer of AIR. ---------- ---------------- a) Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Sections 5(a) and 4(e) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this AIR and all rights hereunder are transferable, in whole or in part, upon surrender of this AIR at the principal office of the Company, together with a written assignment of this AIR substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new AIR or AIRs in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new AIR evidencing the portion of this AIR not so assigned, and this AIR shall promptly be cancelled. An AIR, if properly assigned, may be exercised by a new holder for the purchase of AIR Securities without having a new AIR issued. b) New AIRs. This AIR may be divided or combined with other AIRs upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new AIRs are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new AIR or AIRs in exchange for the AIR or AIRs to be divided or combined in accordance with such notice. c) AIR Register. The Company shall register this AIR, upon records to be maintained by the Company for that purpose (the "AIR Register"), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this AIR as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary -7- d) Transfer Restrictions. If, at the time of the surrender of this AIR in connection with any transfer of this AIR, the transfer of this AIR shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this AIR, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an "accredited investor" as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the Securities Act or a qualified institutional buyer as defined in Rule 144A(a) under the Securities Act. Section 5. Miscellaneous. ---------- -------------- a) Title to the Additional Investment Right. Prior to the Termination Date and subject to compliance with applicable laws and Section 4 of this AIR, this AIR and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this AIR together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company. b) No Rights as Shareholder Until Exercise. This AIR does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this AIR and the payment of the aggregate principal, the AIR Securities so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment. c) Loss, Theft, Destruction or Mutilation of AIR. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this AIR or any certificate relating to the AIR Securities, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the AIR, shall not include the posting of any bond), and upon surrender and cancellation of such AIR or certificate, if mutilated, the Company will make and deliver a new AIR or certificate of like tenor and dated as of such cancellation, in lieu of such AIR or certificate. d) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday. -8- e) Authorized Shares. ----------------- Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this AIR or the AIR Securities, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this AIR and the AIR Securities against impairment. Without limiting the generality of the foregoing, the Company will (a) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable AIR Securities upon the exercise of this AIR and AIR Conversion Shares upon conversion and exercise of the AIR Securities, and (b) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this AIR and the AIR Securities. Before taking any action which would result in an adjustment in the AIR Securities for which this AIR is exercisable or in the AIR Conversion Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof. f) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this AIR shall be determined in accordance with the provisions of the Purchase Agreement. g) Restrictions. The Holder acknowledges that the AIR Securities acquired upon the exercise of this AIR, if not registered, will have restrictions upon resale imposed by state and federal securities laws. h) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder's rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. i) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement. j) Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this AIR or purchase AIR Securities, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. -9- k) Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this AIR. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this AIR and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. l) Successors and Permitted Assigns. Subject to applicable securities laws, this AIR and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this AIR are intended to be for the benefit of all Holders from time to time of this AIR and shall be enforceable by any such Holder or holder of AIR Securities. m) Amendment. This AIR may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder. n) Severability. Wherever possible, each provision of this AIR shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this AIR shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this AIR. o) Headings. The headings used in this AIR are for the convenience of reference only and shall not, for any purpose, be deemed a part of this AIR. ******************** -10- IN WITNESS WHEREOF, the Company has caused this AIR to be executed by its officer thereunto duly authorized. Dated: March 31, 2005 RAMP CORPORATION By:_____________________________________ Name: Title: -11- NOTICE OF EXERCISE TO: RAMP CORPORATION (1) The undersigned hereby elects to purchase $________ principal amount of AIR Debentures of the Company and Warrants to purchase _____ shares of Common Stock of the Company pursuant to the terms of the attached AIR and tenders herewith payment of the principal in full, together with all applicable transfer taxes, if any. (2) Payment shall take the form of (check applicable box) in lawful money of the United States; or (3) Please issue a certificate or certificates representing said AIR Securities in the name of the undersigned or in such other name as is specified below: ________________________________________ The AIR Securities shall be delivered to the following: ________________________________________ ________________________________________ ________________________________________ (4) Accredited Investor. The undersigned is an "accredited investor" as defined in Regulation D promulgated under the Securities Act of 1933, as amended. [SIGNATURE OF HOLDER] Name of Investing Entity:_______________________________________________________ Signature of Authorized Signatory of Investing Entity:__________________________ Name of Authorized Signatory:___________________________________________________ Title of Authorized Signatory:__________________________________________________ Date:___________________________________________________________________________ ASSIGNMENT FORM (To assign the foregoing AIR, execute this form and supply required information. Do not use this form to exercise the AIR.) FOR VALUE RECEIVED, the foregoing AIR and all rights evidenced thereby are hereby assigned to _______________________________________________________________ whose address is _______________________________________________________________________________. _______________________________________________________________ Dated:______________, _______ Holder's Signature: _____________________________ Holder's Address:________________________________ ________________________________ Signature Guaranteed: ___________________________________________ NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the AIR, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing AIR. EX-10 7 exhibit-b.txt EX-10.34; REGISTRATION RIGHTS AGREEMENT EXHIBIT 10.34 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (this "Agreement") is made and entered into as of March 31, 2005, among Ramp Corporation, a Delaware corporation (the "Company"), and the purchasers signatory hereto (each such purchaser is a "Purchaser" and collectively, the "Purchasers"). This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof among the Company and the Purchasers (the "Purchase Agreement"). The Company and the Purchasers hereby agree as follows: 1. Definitions ----------- Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings: "Advice" shall have the meaning set forth in Section 6(d). "Effectiveness Date" means, with respect to the initial Registration Statement required to be filed hereunder, April 30, 2005 and, with respect to any additional Registration Statements which may be required pursuant to Section 3(c), the 90th calendar day following the date on which the Company first knows that such additional Registration Statement is required hereunder; provided, however, in the event the Company is notified by the Commission that one of the above Registration Statements will not be reviewed or is no longer subject to further review and comments, the Effectiveness Date as to such Registration Statement shall be the fifth Trading Day following the date on which the Company is so notified if such date precedes the dates required above. "Effectiveness Period" shall have the meaning set forth in Section 2(a). "Event" shall have the meaning set forth in Section 2(b). "Event Date" shall have the meaning set forth in Section 2(b). "Filing Date" means, with respect to the initial Registration Statement required hereunder, April 5, 2005 and, with respect to any additional Registration Statements which may be required pursuant to Section 3(c), the 30th day following the date on which the Company first knows that such additional Registration Statement is required hereunder. "Holder" or "Holders" means the holder or holders, as the case may be, from time to time of Registrable Securities. "Indemnified Party" shall have the meaning set forth in Section 5(c). "Indemnifying Party" shall have the meaning set forth in Section 5(c). "Losses" shall have the meaning set forth in Section 5(a). "Plan of Distribution" shall have the meaning set forth in Section 2(a). "Proceeding" means an action, claim, suit, investigation or proceeding whether commenced or threatened in writing. "Prospectus" means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus. "Registrable Securities" means (i) all of the shares of Common Stock issuable upon conversion in full of the Debentures issued at all of the Closings, (ii) all shares issuable as interest on the Debentures assuming all permissible interest payments are made in shares of Common Stock and the Debentures are held until maturity, (iii) all Warrant Shares, (iv) all of the Additional Investment Right Shares, (v) any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing and (vi) any additional shares issuable in connection with any anti-dilution provisions in the Debentures or the Warrants. "Registration Statement" means the registration statements required to be filed hereunder and any additional registration statements contemplated by Section 3(c), including (in each case) the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. "Rule 415" means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule. "Rule 424" means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or -2- regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule. "Selling Shareholder Questionnaire" shall have the meaning set forth in Section 3(a). 2. Shelf Registration ------------------ (a) On or prior to each Filing Date, the Company shall prepare and file with the Commission a "Shelf" Registration Statement covering the resale of 125% of the Registrable Securities on such Filing Date for an offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith) and shall contain (unless otherwise directed by the Holders) substantially the "Plan of Distribution" attached hereto as Annex A. Subject to the terms of this Agreement, the Company shall use its commercially reasonable efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event prior to the applicable Effectiveness Date, and shall use its commercially reasonable efforts to keep such Registration Statement continuously effective under the Securities Act until all Registrable Securities covered by such Registration Statement have been sold or may be sold without volume restrictions pursuant to Rule 144(k) as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Company's transfer agent and the affected Holders (the "Effectiveness Period"). The Company shall promptly notify the Holders via facsimile of the effectiveness of the Registration Statement within 1 Trading Day of the Company receiving notification of the effectiveness from the Commission; provided, however, that the Company shall provide all Holder's with notice at the same time and in no event will it notify any other selling shareholders included on the Registration Statement prior to such time as the Holders are so notified. Failure to so notify the Holder within 1 Trading Day of such notification shall be deemed an Event under Section 2(b). (b) If: (i) a Registration Statement is not filed on or prior to its Filing Date, or (ii) the Company fails to file with the Commission a request for acceleration in accordance with Rule 461 promulgated under the Securities Act, within five Trading Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the Commission that a Registration Statement will not be "reviewed," or not subject to further review, or (iii) prior to its Effectiveness Date, the Company fails to file a pre-effective amendment and otherwise respond in writing to comments made by the Commission in respect of such Registration Statement, to the extent practicable, within 10 calendar days after the receipt of comments by or notice from the Commission that such amendment is required in order for a Registration Statement to be declared effective, but in no event later than 20 calendar days following the receipt of comments or notice; provided, however, if the Commission requires that the amendment to be filed include the Company's audited financials for the fiscal year-ended 2004 such period shall be extended to the earlier of the date that the Company files its Annual Report on Form 10-K for the year-ended 2004, or March 31, 2005 or (iv) a Registration Statement filed or required to be filed hereunder is not declared effective by the Commission by its Effectiveness Date, or (v) after the -3- Effectiveness Date, a Registration Statement ceases for any reason to remain continuously effective as to all Registrable Securities for which it is required to be effective, or the Holders are not permitted to utilize the Prospectus therein to resell such Registrable Securities for 10 consecutive calendar days but no more than an aggregate of 15 calendar days during any 12-month period (which need not be consecutive Trading Days) (any such failure or breach being referred to as an "Event", and for purposes of clause (i) or (iv) the date on which such Event occurs, or for purposes of clause (ii) the date on which such five Trading Day period is exceeded, or for purposes of clause (iii) the date which such 10 or 20 calendar day period (unless extended by clause (iii)), as applicable, is exceeded, or for purposes of clause (v) the date on which such 10 or 15 calendar day period, as applicable, is exceeded being referred to as "Event Date"), then in addition to any other rights the Holders may have hereunder or under applicable law, from each such Event Date through each monthly anniversary (or portion thereof) of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to each Holder an amount in cash, or shares of Common Stock, at the Company's option, as partial liquidated damages and not as a penalty, equal to one and one-half percent (1.5%) of the aggregate purchase price paid by such Holder pursuant to the Purchase Agreement for any Registrable Securities then held by such Holder. If the Company fails to pay any partial liquidated damages pursuant to this Section in full within ten (10) days after the date payable, the Company will pay interest thereon at a rate of eighteen percent (18%) per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro-rata basis for any portion of a month prior to the cure of an Event. Additionally, the rate at which liquidated damages accrues during a period shall remain the same notwithstanding any additional Events that may occur during such period. 3. Registration Procedures ----------------------- In connection with the Company's registration obligations hereunder, the Company shall: (a) Not less than five Trading Days prior to the filing of each Registration Statement or any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated or deemed to be incorporated therein by reference), the Company shall, (i) furnish to each Holder copies of all such documents proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the reasonable review of such Holders, and (ii) cause its officers and directors, counsel and independent certified public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to conduct a reasonable investigation within the meaning of the Securities Act. The Company shall not file the Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Holders of seventy-five percent of the Registrable Securities shall reasonably object in good faith, provided that, the Company is notified of such objection in writing no later than three (3) Trading Days after the Holders have been so furnished copies of such documents. Each Holder agrees to furnish to the Company a completed Questionnaire in the form attached to this Agreement as Annex B (a "Selling Shareholder Questionnaire") not less than two Trading Days prior to the Filing Date or -4- by the end of the fourth Trading Day following the date on which such Holder receives draft materials in accordance with this Section. (b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the Prospectus used in connection therewith as may be necessary to keep a Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and as so supplemented or amended to be filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to a Registration Statement or any amendment thereto and as promptly as reasonably possible provide the Holders true and complete copies of all correspondence from and to the Commission relating to a Registration Statement; and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holders thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented. (c) If during the Effectiveness Period, the number of Registrable Securities at any time exceeds 95% of the number of shares of Common Stock then registered in a Registration Statement, then the Company shall file as soon as reasonably practicable but in any case prior to the applicable Filing Date, an additional Registration Statement covering the resale by the Holders of not less than 125% of the number of such Registrable Securities. (d) Notify the Holders of Registrable Securities to be sold (which notice shall, pursuant to clauses (ii) through (vi) hereof, be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible (and, in the case of (i)(A) below, not less than five Trading Days prior to such filing) [and (if requested by any such Person) confirm such notice in writing no later than one Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement has been filed]; (B) when the Commission notifies the Company whether there will be a "review" of such Registration Statement and whenever the Commission comments in writing on such Registration Statement (the Company shall provide true and complete copies thereof and all written responses thereto to each of the Holders); and (C) with respect to a Registration Statement or any post-effective amendment, when the same has been declared effective; (ii) of any request by the Commission or any other Federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information; (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening (in writing) of any -5- Proceeding for such purpose; (v) of the occurrence of any event or passage of time that makes any statement made in a Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case of a Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any 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 (vi) the occurrence or existence of any pending corporate development with respect to the Company that the Company believes may be material and that, in the determination of the Company, makes it not in the best interest of the Company to allow continued availability of the Registration Statement or Prospectus; provided that any and all of such information shall remain confidential to each Holder until such information otherwise becomes public, unless disclosure by a Holder is required by law; provided, further, notwithstanding each Holder's agreement to keep such information confidential, the Holders make no acknowledgement that any such information is material, non-public information. (e) Use its commercially reasonable efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment. (f) Furnish to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including financial statements and schedules, promptly after the filing of such documents with the Commission. (g) Promptly deliver to each Holder, without charge, as many copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request in connection with resales by the Holder of Registrable Securities. (h) Prior to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from the Registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by each Registration Statement; provided, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction. (i) If requested by the Holders, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable -6- Securities to be in such denominations and registered in such names as any such Holders may request as permitted under the Purchase Agreement. (j) Upon the occurrence of any event contemplated by this Section 3, as promptly as reasonably possible under the circumstances taking into account the Company's good faith assessment of any adverse consequences to the Company and its stockholders of the premature disclosure of such event, prepare a supplement or amendment, including a post-effective amendment, to a Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will contain an 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. If the Company notifies the Holders in accordance with clauses (ii) through (v) of Section 3(d) above to suspend the use of any Prospectus until the requisite changes to such Prospectus have been made, then the Holders shall suspend use of such Prospectus. The Company will use its commercially reasonable efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company shall be entitled to exercise its right under this Section 3(j) to suspend the availability of a Registration Statement and Prospectus, subject to the payment of partial liquidated damages pursuant to Section 2(b), for a period not to exceed 60 days (which need not be consecutive days) in any 12 month period. (k) Comply with all applicable rules and regulations of the Commission. (l) The Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock beneficially owned by such Holder and, if required by the Commission, the natural person thereof that has voting and dispositive control over the Shares. During any periods that the Company is unable to meet its obligations hereunder with respect to the registration of the Registrable Securities solely because any Holder fails to furnish such information within three Trading Days of the Company's request, any liquidated damages that are accruing at such time as to such Holder only shall be tolled and any Event that may otherwise occur solely because of such delay shall be suspended as to such Holder only, until such information is delivered to the Company. 4. Registration Expenses. All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to the Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with the Trading Market on which the Common Stock is then listed for trading, (B) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities and determination of the eligibility of the Registrable Securities for investment under the laws of such jurisdictions as requested by the Holders) and (C) with respect to any filing that may be required to be made by any broker through which a Holder intends to make sales of Registrable -7- Securities with NASD Regulation, Inc. pursuant to the NASD Rule 2710, so long as the broker is receiving no more than a customary brokerage commission in connection with such sale, (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing prospectuses if the printing of prospectuses is reasonably requested by the holders of a majority of the Registrable Securities included in a Registration Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or similar commissions or, except to the extent provided for in the Transaction Documents, any legal fees or other costs of the Holders. 5. Indemnification --------------- (a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (i) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder's proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or (ii) in the case of an occurrence of an event of the type specified in Section 3(d)(ii)-(vi), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(d). The Company shall notify the Holders promptly of the institution, -8- threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware. (b) Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, to the extent arising out of or based solely upon: (x) such Holder's failure to comply with the prospectus delivery requirements of the Securities Act, including without limitation, any sale made at a time when a Registration Statement is not effective provided that the Company is not negligent in its obligations to deliver notice to the Holders or (y) any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company specifically for inclusion in such Registration Statement or such Prospectus or (ii) to the extent that (1) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder's proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in the Registration Statement (it being understood that the Holder has approved Annex A hereto for this purpose), such Prospectus or such form of Prospectus or in any amendment or supplement thereto or (2) in the case of an occurrence of an event of the type specified in Section 3(d)(ii)-(vi), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(d). In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. (c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an "Indemnified Party"), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the "Indemnifying Party") in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have prejudiced the Indemnifying Party. -9- An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of one separate counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding. Subject to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying Party; provided, that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is not entitled to indemnification hereunder, determined based upon the relative faults of the parties. (d) Contribution. If a claim for indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys' or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms. -10- The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, except in the case of fraud by such Holder. The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties. 6. Miscellaneous ------------- (a) Remedies. In the event of a breach by the Company or by a Holder, of any of their obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate. (b) No Piggyback on Registrations. Except as set forth on Schedule 3.1(v) attached to the Purchase Agreement, neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in the Registration Statement other than the Registrable Securities. The Company shall not file any other registration statements until 60 days after the date that the initial Registration Statement required hereunder is declared effective by the Commission, provided that this Section 6(b) shall not prohibit the Company from (i) filing amendments to registration statements already filed, (ii) after the initial Registration Statement is filed, filing one registration statement on Form S-8 or (iii) after the date that the initial Registration Statement required hereunder is declared effective by the Commission, filing a registration statement registering for resale shares issuable pursuant to the equity line of credit arrangement referenced under the definition of Exempt Issuances. (c) Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement. (d) Discontinued Disposition. Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(d), such Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until such Holder's receipt of the -11- copies of the supplemented Prospectus and/or amended Registration Statement, or until it is advised in writing (the "Advice") by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement. The Company will use its commercially reasonable efforts to ensure that the use of the Prospectus may be resumed as promptly as it practicable. The Company agrees and acknowledges that any periods during which the Holder is required to discontinue the disposition of the Registrable Securities hereunder shall be subject to the provisions of Section 2(b). (e) Piggy-Back Registrations. If at any time during the Effectiveness Period there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities 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 the stock option or other employee benefit plans, then the Company shall send to each Holder a written notice of such determination and, if within ten days after the date of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such holder requests to be registered, subject to customary underwriter cutbacks applicable to all holders of registration rights; provided, that, the Company shall not be required to register any Registrable Securities pursuant to this Section 6(e) that are eligible for resale pursuant to Rule 144(k) promulgated under the Securities Act or that are the subject of a then effective Registration Statement. (f) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and each Holder of the then outstanding Registrable Securities. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders and that does not directly or indirectly affect the rights of other Holders may be given by Holders of at least all of the Registrable Securities to which such waiver or consent relates; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the immediately preceding sentence. (g) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as set forth in the Purchase Agreement. (h) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. The Company may not assign its rights or obligations hereunder without the prior written consent of all of the Holders of the then-outstanding Registrable Securities. Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under the Purchase Agreement. Subject to Section 5.7 of the Purchase Agreement and so long as any Holder is assigning Securities acquired for at least $50,000 of the Purchase Price, -12- any Holder may assign any or all of its rights under this Agreement to any Person to whom such Holder assigns or transfers any Securities, provided such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions hereof that apply to the "Holder". (i) No Inconsistent Agreements. Neither the Company nor any of its subsidiaries has entered, as of the date hereof, nor shall the Company or any of its subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Except as set forth on Schedule 6(i), or as disclosed in the Purchase Agreement, neither the Company nor any of its subsidiaries has previously entered into any agreement granting any registration rights with respect to any of its securities to any Person that have not been satisfied in full. (j) Execution and Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof. (k) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined with the provisions of the Purchase Agreement. (l) Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. (m) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. (n) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (o) Independent Nature of Holders' Obligations and Rights. The obligations of each Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be -13- deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holders are in any way acting in concert with respect to such obligations or the transactions contemplated by this Agreement. Each Holder shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding for such purpose. ******************** -14- IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above. RAMP CORPORATION By:__________________________________________ Name: Title: [SIGNATURE PAGE OF HOLDERS FOLLOWS] -15- [SIGNATURE PAGE OF HOLDERS TO RCO RRA] Name of Holder: __________________________ Signature of Authorized Signatory of Holder: __________________________ Name of Authorized Signatory: _________________________ Title of Authorized Signatory: __________________________ [SIGNATURE PAGES CONTINUE] -16- Plan of Distribution -------------------- Each Selling Stockholder (the "Selling Stockholders") of the common stock ("Common Stock") of Ramp Corporation, a Delaware corporation (the "Company") and any of their pledgees, permitted assignees and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on the Trading Market or any other stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Stockholder may use any one or more of the following methods when selling shares: o ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; o block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; o purchases by a broker-dealer as principal and resale by the broker-dealer for its account; o an exchange distribution in accordance with the rules of the applicable exchange; o privately negotiated transactions; o settlement of short sales entered into after the date of this prospectus; o broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share; o a combination of any such methods of sale; o through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; or o any other method permitted pursuant to applicable law. The Selling Stockholders may also sell shares under Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"), if available, rather than under this prospectus. Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. Each Selling Stockholder does not expect these commissions and discounts relating to its sales of shares to exceed what is customary in the types of transactions involved. In connection with the sale of the Common Stock or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial -17- institutions, which may in turn engage in short sales of the Common Stock in the course of hedging the positions they assume. The Selling Stockholders may also sell shares of the Common Stock short and deliver these securities to close out their short positions, or loan or pledge the Common Stock to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). The Selling Stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any agreement or understanding, directly or indirectly, with any person to distribute the Common Stock. The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the shares. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act. Because Selling Stockholders may be deemed to be "underwriters" within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. Each Selling Stockholder has advised us that they have not entered into any agreements, understandings or arrangements with any underwriter or broker-dealer regarding the sale of the resale shares. There is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares by the Selling Stockholders. We agreed to keep this prospectus effective until the earlier of (i) the date on which the shares may be resold by the Selling Stockholders without registration and without regard to any volume limitations by reason of Rule 144(e) under the Securities Act or any other rule of similar effect or (ii) all of the shares have been sold pursuant to the prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with. Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to the Common Stock for a period of two business days prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, -18- which may limit the timing of purchases and sales of shares of the Common Stock by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale. -19- Annex B Ramp Corporation Selling Securityholder Notice and Questionnaire The undersigned beneficial owner of common stock, par value $0.001 per share (the "Common Stock"), of Ramp Corporation, a Delaware corporation (the "Company"), (the "Registrable Securities") understands that the Company has filed or intends to file with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (the "Registration Statement") for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the "Securities Act"), of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement, dated as of March 31, 2005 (the "Registration Rights Agreement"), among the Company and the Purchasers named therein. A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement. Certain legal consequences arise from being named as a selling securityholder in the Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling securityholder in the Registration Statement and the related prospectus. NOTICE The undersigned beneficial owner (the "Selling Securityholder") of Registrable Securities hereby elects to include the Registrable Securities owned by it and listed below in Item 3 (unless otherwise specified under such Item 3) in the Registration Statement. -20- The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate: QUESTIONNAIRE 1. Name. (a) Full Legal Name of Selling Securityholder ______________________________________________________________ (b) Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities Listed in Item 3 below are held: ______________________________________________________________ (c) Full Legal Name of Natural Control Person (which means a natural person who directly you indirectly alone or with others has power to vote or dispose of the securities covered by the questionnaire): ______________________________________________________________ 2. Address for Notices to Selling Securityholder: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ Telephone:______________________________________________________________________ Fax:____________________________________________________________________________ Contact Person:_________________________________________________________________ 3. Beneficial Ownership of Registrable Securities: (a) Type and Principal Amount of Registrable Securities beneficially owned: _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ -21- 4. Broker-Dealer Status: (a) Are you a broker-dealer? Yes [ ] No [ ] Note: If yes, the Commission's staff has indicated that you should be identified as an underwriter in the Registration Statement. (b) Are you an affiliate of a broker-dealer? Yes [ ] No [ ] (c) If you are an affiliate of a broker-dealer, do you certify that you bought the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities? Yes [ ] No [ ] Note: If no, the Commission's staff has indicated that you should be identified as an underwriter in the Registration Statement. 5. Beneficial Ownership of Other Securities of the Company Owned by the Selling Securityholder. Except as set forth below in this Item 5, the undersigned is not the beneficial or registered owner of any securities of the Company other than the Registrable Securities listed above in Item 3. (a) Type and Amount of Other Securities beneficially owned by the Selling Securityholder: _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ -22- 6. Relationships with the Company: Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years. State any exceptions here: _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Registration Statement remains effective. By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 6 and the inclusion of such information in the Registration Statement and the related prospectus. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus. IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent. Dated:________________ Beneficial Owner:___________________________ By:_________________________________________ Name: Title: PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO: -23- EX-10 8 ex-s3finagrment.txt EX-10.35; AMENDMENT NO. 1 TO THE SEC. PUR. AGMNT EXHIBIT 10.35 AMENDMENT NO. 1 TO THE SECURITIES PURCHASE AGREEMENT TRANSACTION DOCUMENTS BETWEEN RAMP CORPORATION, DKR SOUNDSHORE OASIS HOLDING FUND LTD., HARBORVIEW MASTER FUND LP AND PLATINUM PARTNERS VALUE ARBITRAGE FUND FOR THE PURCHASE OF THE CONVERTIBLE DEBENTURES, DUE DECEMBER 1, 2005, COMMON STOCK PURCHASE WARRANTS AND ADDITIONAL INVESTMENT RIGHTS This Amendment No. 1 ("Amendment") is made to that certain Securities Purchase Agreement ("Purchase Agreement") dated as of January 12, 2005 among Ramp Corporation (the "Company"), DKR Soundshore Oasis Holding Fund Ltd. ("DKR"), Harborview Master Fund LP ("Harborview") and Platinum Partners Value Arbitrage Fund ("Platinum", and collectively, DKR, Harborview and Platinum shall be referred to herein as, a "Purchaser" and collectively as, the "Purchasers") for the purchase of the 8% Convertible Debentures, due December 1, 2005 issued to the Purchasers (the "Debentures"), the Common Stock Purchase Warrants issued to the Purchasers (the "Warrants") and Additional Investment Rights (the "AIR") granted to the Purchasers. Capitalized terms used but not defined herein shall have the meanings given to such terms in the Purchase Agreement. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. Exercise Price of the Warrants. Section 2.2(a)(iii) of the Purchase Agreement shall be amended and restated as follows: "(iii) a Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 100% of such Purchaser's Subscription Amounts divided by $2.40, with an exercise price equal to $1.25, subject to adjustment as set forth therein;" Section 2(b) of the Warrants shall be amended and restated as follows: "(b) The exercise price of the Common Stock under this Warrant shall be $1.25, subject to adjustment hereunder (the "Exercise Price")." 2. Conversion Price of the Debentures. Section 4(b) of the Debentures shall be amended and restated as follows: "(b) Conversion Price. The conversion price in effect on any Conversion Date shall be equal to $1.25 (subject to adjustment herein)(the "Conversion Price")." 3. Additional Investment Right. The first paragraph of the AIR shall be amended and restated as follows: "THIS ADDITIONAL INVESTMENT RIGHT (the "AIR") certifies that, for value received, _____________ (the "Holder"), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the "Initial Exercise Date") and on or prior to the close of business on the earlier of (a) the six month anniversary of the Effective Date and (b) the two year anniversary of the Initial Exercise Date (the "Termination Date") but not thereafter, to subscribe for and purchase from Ramp Corporation, a Delaware corporation (the "Company"), up to $_____________ principal amount of convertible debentures (the "AIR Debenture") and warrants to purchase shares of Common Stock, par value $0.001 per share, of the Company (the "Common Stock") as described herein at an exercise price of $1.25, per share (the "AIR Warrant Exercise Price") (subject to adjustment hereunder and thereunder) (the "AIR Warrant"). Upon the purchase hereunder of an AIR Debenture, the Holder shall receive a warrant to purchase a number of shares of Common Stock equal to 100% of the shares of Common Stock issuable upon conversion of such AIR Debenture based upon the Conversion Price as of the date hereof. The initial conversion price of the AIR Debenture shall be equal to $1.25, as described in the Debenture, subject to adjustment thereunder and hereunder ("AIR Debenture Conversion Price"). The AIR Debenture and AIR Warrant shall be in the form of the Debenture and Warrants (with the same rights, privileges and preferences set forth in the Transaction Documents, including without limitation, the Debenture) issued pursuant to the Purchase Agreement, mutatis mutandis. The AIR Debenture and the AIR Warrant shall be collectively referred to as the "AIR Securities." The AIR Warrant Exercise Price and the AIR Debenture Conversion Price shall be collectively referred to herein as the "AIR Conversion Price."" 4. Waivers and Consents. Each Purchaser, independently of any other Purchaser: (a) acknowledges and consents to the issuance, on or before April 5, 2005, by the Company of up to an additional $6,000,000 of 8% convertible debentures, warrants and additional investment rights under that certain Securities Purchase Agreement, dated as of March 31, 2005, by and among the Company and the purchasers which are a party thereto on the same terms and conditions as the issuance of the Debentures, Warrants and AIR to the Purchasers under the Purchase Agreement, as amended (such additional issuance, "Additional Issuance"); (b) consents and agrees that the shares of Common Stock underlying the Additional Issuance (as required under the registration rights agreement, dated as of March 31, 2005, by and among the Company and the purchasers which are a -2- party thereto entered into in connection with the Additional Issuance) may be included for registration on the initial registration statement to be filed by the Company under the Registration Rights Agreement; (c) waives any of its rights under Section 4.13 of the Purchase Agreement with respect to the Additional Issuance; and (d) waives any anti-dilution rights under the Warrant, AIR Debenture and AIR Warrant with respect to the Additional Issuance. Notwithstanding anything herein to the contrary, the each party hereto acknowledges and agrees that each Purchaser's right of participation in Subsequent Financings is not terminated as a result of the Purchaser's failure to participate in at least 25% of the Additional Issuance. The Company agrees to use best efforts to cause the meeting for Shareholder Approval to be obtained and deemed effective on or before April 15, 2005. 5. Disposition of Liquidated Damages. The Company hereby acknowledges and agrees that, pursuant to Section 2(a) of the Registration Rights Agreement, as of April 1, 2005, the Company shall owe each Purchaser liquidated damages equal to 3% of such Purchaser's original Subscription Amount, which amounts shall be paid to such Purchaser directly out of the closing of the Additional Issuance per the wire instructions set forth on the signature page hereto. The Company shall file the Registration Statement by, and liquidated damages that otherwise accrue to the Purchasers after April 1, 2005 shall be tolled until, April 8, 2005. If the Company fails to file the Registration Statement on or before April 8, 2005, each Purchaser shall have the right, severally and not jointly with the other Purchasers, within 5 Trading Days of written notice to the Company and without prejudice to any of such Purchasers other rights and the Company's obligations under the Transaction Documents, not to purchase the Securities otherwise required to be purchased by such Purchaser on the Second Closing Date. 6. Filing of Form 8-K. Within 2 Trading Days of the date hereof, the Company shall file a Current Report on Form 8-K disclosing the material terms of this Amendment and attaching this Amendment as an exhibit thereto. 7. Effect on Purchase Agreement. Except as expressly set forth above, all of the terms and conditions of the Purchase Agreement, the Debentures, the Warrants and the AIR shall continue in full force and effect after the execution of this Amendment, and shall not be in any way changed, modified or superseded by the terms set forth herein. Furthermore, and without limitation, the parties acknowledge and agree that the purchasers in the Additional Issuance are not "Purchasers" or "Holders" for purposes of the Transaction Documents and accordingly the Purchasers do not share any of their rights, including the pro-rata distribution of rights to convert pursuant to Section 4(c)(i) of the Debentures, with such purchasers. 8. Definitions. Capitalized terms not otherwise defined herein have the meanings given to such terms in the Purchase Agreement, the Debentures, the Warrants and the AIR. ********************* -3- Executed as of March 31, 2005 by the undersigned duly authorized representatives of the Company and Purchasers: RAMP CORPORATION DKR SOUNDSHORE OASIS HOLDING FUND LTD. By: ____________________________ By: ____________________________ Name: Name: Title: Title: HARBORVIEW MASTER FUND LP PLATINUM PARTNERS VALUE ARBITRAGE FUND By: ____________________________ By: ____________________________ Name: Name: Title: Title: DKR Wire Instructions: Harborview Wire Instructions: Platinum Wire Instructions: -4- EX-10 9 feepaymentagreement.txt EX-10.36; FEE PAYMENT AGREEMENT EXHIBIT 10.36 FEE PAYMENT AGREEMENT THIS FEE PAYMENT AGREEMENT, dated as of March 11, 2005 (this "Agreement"), is by and between Ramp Corporation, a Delaware corporation ("Company"), having an address at 33 Maiden Lane, New York, New York 10038 and PC Newco, LLC, a New York limited liability company (the "Agent"), having an address at The Chrysler Building, 405 Lexington Avenue, New York, New York 10174, as a collection agent for Jenkens & Gilchrist Parker Chapin LLP, a New York limited liability partnership (the "Firm"), having an address at The Chrysler Building, 405 Lexington Avenue, New York, New York 10174. WITNESSETH: WHEREAS, the Firm has represented the Company and its subsidiaries in various general corporate and securities matters and the Firm has rendered invoices for the period ended March 11, 2005 (together, the "Outstanding Invoice") in connection with such matters in the amount of $377,453.19. WHEREAS, the Company desires to make payment of the Outstanding Invoice to the Firm for such representation and to provide for payment of future invoices by the Firm for such matters; and WHEREAS, the Company has offered to pay the Outstanding Invoice in shares of common stock, par value $.001, of the Company, and the Agent, for the benefit of the Firm, is willing to accept such shares as partial payment of the Outstanding Invoice, on the terms set forth in this Agreement. NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Agent hereby agree as follows: 1. Payment in Stock. The Company shall issue an aggregate of 350,000 shares of common stock, par value $.001 per share (the "Shares"), to the Agent, as a collection agent for Jenkens & Gilchrist Parker Chapin LLP, in partial payment of services rendered by the Firm in connection with the representation of the Company and for services to be rendered thereafter with regards to general corporate and securities matters for the period ending through March 11, 2005 (the "Transaction Matters"). The Shares shall be "restricted securities", as such term is defined under Rule 144 of the Securities Act. The Agent agrees to use its best efforts to sell the Shares in the open market within ninety (90) days after the effective date of the registration statement which includes the Shares for registration with the Securities and Exchange Commission; provided, however, that the number of Shares sold by the Agent on any trade day shall not exceed ten percent (10%) of the average daily volume for the preceding five days as reported by AMEX. The Company agrees that if the sale of the Shares by the Agent results in net cash proceeds to the Firm that is less than the Outstanding Invoice owed or any future balances owed to the Firm in connection with the Transaction Matters, the Company shall pay the Firm an amount of cash so that the net cash proceeds from the sale of such Shares, together with such cash payment, shall equal the Outstanding Invoice owed or any future balance owed to the Firm in connection with the Transaction Matters. The issuance of the Shares and the effectiveness of this Agreement is conditioned upon the effectiveness of a registration statement on Form S-3 covering the Shares which registration statement shall be filed by the Company with the Securities and Exchange Commission. The Company covenants and agrees to include the Shares on its next Registration Statement on Form S-3 to be filed by the Company with the Securities and Exchange Commission. 2. Miscellaneous. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. All the terms of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective assigns of the parties hereto, whether so expressed or not. This Agreement embodies the entire agreement and understanding among the parties hereto relating to the subject matter of this Agreement. All notices from any party to this Agreement shall be mailed or delivered to the other party to the address set forth in the preamble to this Agreement. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. RAMP CORPORATION By:_______________________________ Name: Andrew Brown Title: Chief Executive Officer PC NEWCO LLC By:_________________________________ Name: Title: EX-10 10 ex-s3mathe.txt EX-10.37; AGREEMENT FOR PAYMENT OF ACCOUNT EXHIBIT 10.37 AGREEMENT FOR PAYMENT OF ACCOUNT AGREEMENT FOR PAYMENT OF ACCOUNT dated as of March 3, 2005 (this "Agreement"), by and between RAMP CORPORATION, a Delaware corporation ("Ramp"), and Mathe, Inc., a New Jersey corporation ("Mathe"). WHEREAS, Ramp anticipates purchasing significant amounts of equipment and installations services relating to its HealthRamp subsidiary from Mathe in 2005; and WHEREAS, Ramp wishes to reach an agreement to make payment to Mathe on account in Ramp common stock, par value $0.01 per share (the "Common Stock"); and WHEREAS, Ramp and Mathe have reached agreement on the terms for such an agreement; NOW, THEREFORE, for good and valuable consideration, the receipt and legal sufficiency of which is hereby acknowledged, the parties agree as follows: 1. Payment of Account. Mathe hereby agrees to accept and receive as payment on account, a stock payment (a "Stock Payment") in the amount of up to 500,000 shares to be paid by Ramp in timing and increments determined by Ramp. Ramp and Mathe will accept as payment on account the issuance of shares of common stock. Mathe will apply all proceeds from the sale of common stock to the account of Ramp. 2. Mathe Representations. Mathe represents and warrants to Ramp that (a) it is an "accredited investor", which is defined under Rule 501(a)(3) of the Securities Act of 1933, as amended (the "Act"), as a corporation with total assets in excess of $5,000,000; (b) it is acquiring the shares of Common Stock issued in respect of the Stock Grant for its own account and for investment purposes only; (c) it has no present intention to distribute any of such shares publicly and has no present agreement, understanding or arrangement to subdivide, sell, assign, transfer or otherwise dispose of all or any part of such shares subscribed for to any other person or entity. Notwithstanding the above, it is acknowledged that Mathe may publicly sell the shares in the open market without restriction through its broker if a registration statement covering the shares is declared effective (and remains effective at the time of sale) by the Commission. Mathe acknowledges that Ramp will be relying on the representations and warranties of Mathe set forth in this Section 2 in issuing the Common Stock to Mathe under an exemption from registration under the Act. 3. Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the law of the State of New York, without regard to New York's conflicts of law principles. This Agreement shall not be interpreted or construed with any presumption against the party that caused this Agreement to be drafted. Mathe and Ramp hereby consent to the jurisdiction of the Federal District Court of the Southern District of New York with respect to any action, suit or other proceeding arising out of or relating to this Agreement. 4. Miscellaneous. (a) This Agreement may not be amended, modified or waived, except by an instrument in writing signed by each of the parties hereto. This Agreement constitutes the entire understanding and agreement of the parties with respect to the subject matter hereof. (b) Should there be any conflict between the terms and provisions of the Master Agreement and this Agreement, the terms and provisions of this Agreement shall govern and be controlling. (c) This Agreement may not be assigned by either party without the prior written consent of Mathe hereto. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and permitted assigns. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their authorized officers as of the date first written above. RAMP CORPORATION Mathe, Inc. By: ___________________________ By: ___________________________ Name:__________________________ Name: _________________________ Title: ________________________ Title: ________________________ EX-10 11 ex-s3pament.txt EX-10.38; AGREEMENT FOR PAYMENT OF ACCOUNT EXHIBIT 10.38 AGREEMENT FOR PAYMENT OF ACCOUNT AGREEMENT FOR PAYMENT OF ACCOUNT dated as of March 7, 2005 by and between RAMP CORPORATION, a Delaware corporation ("Ramp"), and ROI Group Associates, a New York corporation ("ROI"). WHEREAS, ROI has issued to Ramp ROI Invoice #603 dated January 10, 2005 attached to this agreement as Exhibit A (the "Invoice") for investor relations and research services to be performed in 2005; and WHEREAS, Ramp wishes to reach an agreement on a payment plan to ROI for the payment of the Invoice; and WHEREAS, Ramp and ROI have reached agreement on the terms for the satisfaction of such balances owing to ROI. NOW, THEREFORE, for good and valuable consideration, the receipt and legal sufficiency of which is hereby acknowledged, the parties agree as follows: 1. Payment of Account. The total unpaid balance of the Invoice equals $250,000.00 (the "Invoice Amount"). ROI hereby agrees to accept and receive as payment for the Invoice Amount a stock payment (a "Stock Payment") to be paid by Ramp on or before April 15, 2005. Ramp and ROI will accept as payment in full the issuance of shares of Ramp common stock, par value $0.01 per share (the "Common Stock") priced at $1.80 per share as provided for herein (the "Stock Grants"). 2. ROI Representations. ROI represents and warrants to Ramp that (a) it is an "accredited investor", which is defined under Rule 501(a)(3) of the Securities Act of 1933, as amended (the "Act"), as a corporation with total assets in excess of $5,000,000; (b) it is acquiring the shares of Common Stock issued in respect of the Stock Grant for its own account and for investment purposes only; (c) it has no present intention to distribute any of such shares publicly and has no present agreement, understanding or arrangement to subdivide, sell, assign, transfer or otherwise dispose of all or any part of such shares subscribed for to any other person or entity. Notwithstanding the above, it is acknowledged that ROI may publicly sell the shares in the open market without restriction through its broker if a registration statement covering the shares is declared effective (and remains effective at the time of sale) by the Commission. ROI acknowledges that Ramp will be relying on the representations and warranties of ROI set forth in this Section 2 in issuing the Common Stock to ROI under an exemption from registration under the Act. 3. ROI Release. Provided Ramp is not in breach under the terms of this Agreement, ROI shall forebear and suspend any legal, equitable or other action against Ramp for collection of the Invoice Amount. Upon execution of this Agreement ROI will release Ramp, its subsidiaries, officers, directors, employees, agents, successors and assigns from any and all claims, damages, liabilities, actions or causes of action for money owed by Ramp to ROI, its subsidiaries, officers, directors, employees, agents, successors and assigns for services rendered through the date of this Agreement and thereafter in any regard relating to the Invoice Amount. 4. Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the law of the State of New York, without regard to New York's conflicts of law principles. This Agreement shall not be interpreted or construed with any presumption against the party that caused this Agreement to be drafted. ROI and Ramp hereby consent to the jurisdiction of the Federal District Court of the Southern District of New York with respect to any action, suit or other proceeding arising out of or relating to this Agreement. 5. Miscellaneous. (a) This Agreement may not be amended, modified or waived, except by an instrument in writing signed by each of the parties hereto. This Agreement constitutes the entire understanding and agreement of the parties with respect to the subject matter hereof. (b) Should there be any conflict between the terms and provisions of the Master Agreement and this Agreement, the terms and provisions of this Agreement shall govern and be controlling. (c) This Agreement may not be assigned by either party without the prior written consent of ROI hereto. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and permitted assigns. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their authorized officers as of the date first written above. RAMP CORPORATION ROI Group Associates By: ___________________________ By: ___________________________ Name: ___________________________ Name: ___________________________ Title: ___________________________ Title: ___________________________ EX-10 12 ex-s3design.txt EX-10.39; AGREEMENT FOR PAYMENT OF ACCOUNT EXHIBIT 10.39 [Letterhead of RAMP Corporation] AGREEMENT FOR PAYMENT OF ACCOUNT AGREEMENT FOR PAYMENT OF ACCOUNT dated as of March 8, 2005 by and between RAMP CORPORATION, a Delaware corporation ("Ramp"), and Design Accessories, a Virginia corporation ("Design"). WHEREAS, Ramp wishes to reach an agreement on a payment plan to compensate Design Accessories for the balance owed to Design Accessories of $20,668.66 as of March 3, 2005; and WHEREAS, Ramp and Design Accessories have reached agreement on the terms for the satisfaction of such balances owing to Design Accessories. NOW, THEREFORE, for good and valuable consideration, the receipt and legal sufficiency of which is hereby acknowledged, the parties agree as follows: 1) Ramp agrees to pay the debt due to Design totaling $20,668.66 (the "Past Due Balance"). 2) Design Accessories hereby agrees to accept and receive as payment for the Past Due Balance a stock payment (a "Stock Payment") to be paid by Ramp on or before April 15, 2005. Ramp and Design Accessories will accept as payment in full the issuance of shares of Ramp common stock, par value $0.01 per share (the "Common Stock") priced at the average of the 5 closing prices prior to March 8, 2005 as provided for herein (the "Stock Grants"). 3) Design Release. Provided Ramp is not in breach under the terms of this Agreement, Design shall forebear and suspend any legal, equitable or other action against Ramp for collection of the Past Due Balance. Upon execution of this Agreement Design will release Ramp, its subsidiaries, officers, directors, employees, agents, successors and assigns from any and all claims, damages, liabilities, actions or causes of action for money owed by Ramp to Design, its subsidiaries, officers, directors, employees, agents, successors and assigns for services rendered through the date of this Agreement and thereafter in any regard relating to the Past Due Balance. 4) This agreement may not be modified or altered except with the written consent of all parties hereto. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their authorized officers as of the date first written above. RAMP CORPORATION Design Accessories By: ___________________________ By: ___________________________ Name:___________________________ Name: ___________________________ Title: ___________________________ Title: ___________________________ EX-10 13 ex-s3crescent.txt EX-10.40; LETTER AGREEMENT EXHIBIT 10.40 CRESCENT COMMUNICATIONS 2 Florian Court Westport, Connecticut 06880 March 10, 2005 Mr. Andrew Brown Ramp Corporation, Inc. 33 Maiden Lane, 5th Fl New York, NY 10038 Dear Andrew: Re: Terms of Engagement The purpose of this letter agreement (the "Letter Agreement") is to set out the terms and conditions of the engagement of Crescent Communications, Inc. ("Crescent") by Ramp Corporation, Inc. ("Ramp") to provide certain investor communication and consulting services as set forth in Section 1 below. 1. Nature of the Engagement - Crescent will be engaged for the purpose of providing Ramp investor communications services. The services to be provided by Crescent will include: (a) Work with Ramp to obtain an understanding of Ramp's business and financial affairs; (b) Assist Ramp in preparing presentations and materials specifically targeting the investment community. (c) Identify and arrange meetings for Ramp in the appropriate investment markets (i.e. Securities firms, institutions, retail analysts, fund managers) and other investment groups active in the Medical services and Pharmaceutical Industry. (d) Solicit feedback relating to Ramp and presentations given by representatives of Ramp. Arrange follow-up meetings and communications with the groups described above. (e) Work to increase the exposure of Ramp to the retail and institutional investment community. (f) Implement a phone, e-mail and road show campaign to address the above stated target audience and provide the above-stated services. 2. Term of the Engagement - Crescent's engagement hereunder shall be for a minimum six month period; provided, however, Ramp may terminate this Letter Agreement and Crescent's employment hereunder at any time upon Crescent's material breach of this Letter Agreement or failure to perform. Furthermore, either party may terminate this agreement without cause on 30 days notice to the other party. This agreement will continue on a month-to-month basis, past the initial minimum three month period, but under no such circumstances will the term of this engagement exceed 12 months in the aggregate. 3. Remuneration - As compensation for the services to be provided hereunder, Ramp agrees to pay to Crescent the following: (a) Ramp agrees to pay to Crescent a monthly fee for services rendered of $7,000 per month (the "Monthly Fee"). The Monthly Fee is payable upon receipt and billing is on a monthly basis At Ramp's option, the Monthly Fee may be paid in Ramp Corporation common stock values at the average closing price for the last five trading days of the applicable month. . (b) Ramp shall reimburse Crescent for all reasonable, actual and documented in- house monthly expenses (i.e. telephone, mailing, and travel) incurred by Crescent pursuant to its engagement hereunder, with such expenses, in the aggregate, limited to $400 per month, Unless Crescent has received the prior written consent of Ramp. No significant out-of-pocket expense may be incurred by Crescent without the prior written consent of Ramp. (c) Upon execution of this Letter Agreement, Ramp will issue to Crescent warrants entitling Crescent to purchase up to 75,000 shares of its common stock, at an exercise price of $1.80 per share, with an expiration date set 5 years from the date of this Letter Agreement. Shares underlying the warrants will be registered as soon as practicable after the issuance of the warrants, but under no circumstances more than 3 months thereafter. Crescent's warrants shall vest 15,000 at signing, and 5,000 per month thereafter. If terminated before the completion of 12 month's service, Crescent's unvested warrants will be cancelled. 4. Obligations - in performing services under this engagement, Crescent hereby represents, warrants, covenants to Ramp as follows: (a) Crescent has all requisite power and authority to execute, deliver and perform its obligations under this Letter Agreement. All action necessary for the authorization, execution, delivery and performance of this Letter Agreement by Crescent has been taken. This Letter Agreement constitutes a valid, binding and enforceable obligation of Crescent. (b) Crescent shall comply at all times and in all respects with the rules and regulations of the Securities Act of 1933, as amended (the "Securities Act"), the Securities Act of 1934, as amended (the "Exchange Act"), the National Association of Securities Dealers, Inc., the American Stock Exchange and all other applicable Federal or state laws, rules or regulations and all other applicable stock exchange rules. (c) Crescent agrees that it will not at any time during or after this engagement hereunder reveal, divulge or make known to any person, firm or corporation any secret, confidential or non-public information concerning Ramp's business, operations, financial condition or affairs, including, but not limited to, its financing strategies and the existence and terms of this engagement or any advice rendered in connection therewith. Crescent further agrees to return all copies of documents or other information, including, but not limited to, tapes, discs or other storage devices in its possession relating to Ramp. This Section 4(c) shall survive the termination or expiration of this Letter Agreement and this engagement. (d) Crescent shall not represent itself as an agent of Ramp and shall not make any representations or commitments on behalf of Ramp except as expressly confirmed and agreed to in writing by Ramp. (e) Crescent agrees to work closely with Andrew Brown, and other Ramp personnel as designated by Mr. Brown, to further the corporate interest of Ramp. (f) The services to be provided Ramp by Crescent will be provided by David Long or John Long. (g) Crescent shall obtain Ramp's prior approval and consent with respect to the substance of all written or oral communications with the investment community. 5. Communications with Investment Community - Ramp will coordinate its communications with Crescent so that the communications prior to and following presentations are effective and directed. Following introductions and presentations to the members of the investment community, and after Crescent's follow-up communications, Ramp will have the liberty to communicate directly with such parties. A list of all contacts, with all relevant contact information, will be provided to Ramp approximately every 2 weeks during the engagement. 6. Independent Contractors - Crescent and its personnel are independent contractors in relation to Ramp with respect to all matters arising under this Letter Agreement. Nothing herein shall be deemed to establish a partnership, joint venture, or employment relationship between the parties. Crescent shall remain solely responsible for the payment of, and shall indemnify and hold harmless Ramp from and against, any and all taxes and levies, including but not limited to the withholding and payment of all Federal, state and local personal income, wage, earning, occupation, social security, unemployment, sickness and disability insurance, and payroll taxes or levies. Crescent acknowledges and understands that as an independent contractor Crescent and its personnel shall not be eligible for any employee benefits (under ERISA, state law or otherwise) now existing or hereafter adopted and attributable to employment with Ramp. 7. Governing Law. This Letter Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without regard to principles of conflicts of laws. 8. Entire Agreement. This Letter Agreement and the other writings referred to herein or delivered pursuant hereto contain the entire understanding of the parties with respect to its subject matter. This Letter Agreement and such other writing referred to herein supersede all prior agreements, term sheets, memoranda or correspondence between the parties with respect to the subject matter. This Letter Agreement may be amended only by a written instrument duly executed by the parties hereto. 9. Parties in Interest; Assignment. This Letter Agreement has been and is made solely for the benefit of Ramp and Crescent and their respective agents, employees, officers, directors, stockholders and controlling persons and their respective successors and assigns and heirs, and no person shall acquire or have any right under or by virtue of this Letter Agreement. This Letter Agreement may not be assigned by Crescent. 10. Counterparts. This Letter Agreement may be executed in counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. If the above terms and conditions are acceptable to you, please confirm your agreement to Crescent by signing, dating and returning two copies to our office via overnight mail. Upon receipt, Crescent will send an executed copy to Ramp. Yours very truly, CRESCENT COMMUNICATIONS -------------------------------- David Long, President The above terms and conditions are accepted this __ day of _________, 2005. Ramp Corporation -------------------------------- Andrew Brown President & CEO EX-10 14 ex-s3shazaminv.txt EX-10.41; INVESTOR RELATIONS AGREEMENT EXHIBIT 10.41 INVESTOR RELATIONS AGREEMENT This Agreement, dated as of Wednesday, December 1, 2004, by and between Ramp Corporation (the "Company") with its offices at 33 Maiden Lane, 5th Floor, New York, N.Y. 10038 and ShazamStocks Inc. with offices located at 14703 Horseshoe Bend Court, Granger, IN 46530 (the Company and ShazamStocks Inc. hereinafter are collectively referred to as the "parties'). WHEREAS, ShazamStocks Inc. maintains a network to disseminate information; WHEREAS, the Company is a publicly traded corporation having shares of its common stock, par value $.00l per share ("Common Stock") listed on the American Stock Exchange; WHEREAS, the Company desires to gain further exposure and create awareness among the investment community relating to the Company's business for the benefit of the Company's stockholders; WHEREAS, in furtherance of its goals, the Company desires to hire ShazamStocks Inc. for services using the investor awareness network; NOW THEREFORE, in consideration of the mutual promises and consideration set forth herein, the parties agree as follows: 1. Term: This agreement is for a term of three (3) months commencing on Monday December 6, 2004 (the `term"). 2. ShazamStocks Inc. Responsibilities: .ShazamStocks Inc. agrees to display and disseminate via its network information regarding the Company. This displaying will include a front page, center display on the website Shazamstocks.com starting on the first day of the campaign and continuing for a 5-day period. After this initial period, the Company's logo shall be moved to the right site of the site, and maintained there throughout the Term of this agreement. ShazamStocks Inc. shall not provide securities related advice to the Company, offer or sell the Company's Common Stock or any other securities in private or public transactions, effect securities transactions on behalf of the Company, or receive any commissions or transaction-based compensation. ShazamStocks Inc. solely shall be responsible for the costs and expenses associated with distributing, creating, and marketing the investor awareness materials. ShazamStocks Inc. will perform its services to the best of its abilities to convey an accurate description of the Company's business based on the information it receives from the Company. 3. ShazamStocks Inc. Representations. In order to induce the Company to enter into this Agreement, ShazamStocks Inc. hereby represents and warrants to the Company as follows: (a) ShazamStocks Inc. will comply with all federal and state laws, rules and regulations including, without limitations, those relating to the disclosure to the compensation received by ShazamStocks Inc. ShazamStocks Inc. shall include an appropriate legend on all distributed material describing the compensation received and receivable by ShazamStocks Inc. from Company. ShazamStocks Inc. will fully disclose on all distributable material any interest it has in Company. ShazamStocks Inc. will not violate any federal or state laws relating to delivery of unsolicited information by any means including, but not limited to fax, email, mail or telephonically, and (b) ShazamStocks Inc. is neither a registered broker-dealer nor an affiliate of a registered broker-dealer. 4. Company Responsibilities. In consideration of the performance of services by ShazamStocks Inc., the Company shall pay to ShazamStocks Inc. a fee of $45,000 of restricted common stock of the Company. The restricted stock shall be included on the next S3 registration statement filed by the Company, and the number of shares shall be determined based on the average of the closing prices for the 2 days immediately post- reverse split. 5. Independent Contractor: No Title to any Security. At all times during the term hereof, ShazamStocks Inc. shall be an independent contractor in providing the Services hereunder, with the sole right to supervise, manage, operate, control and direct its performance incident to such ShazamStocks Inc. services. Nothing contained in this Agreement shall be deemed or construed to create a partnership or joint venture, to create the relationships of principal/agent or otherwise create any fiduciary duty or any liability whatsoever of either party with respect to the indebtedness, liabilities, obligations or actions of the other party or any of their employees or agents, or any other person or entity. ShazamStocks Inc. has no right to legally bind or obligate Company in any manner without the prior written consent of Company. ShazamStocks Inc. shall be legally responsible for its own employees and all employee matters in the performance of its services hereunder. 6. Return of Property. Upon a termination of this agreement for any reason whatsoever, ShazamStocks Inc. shall promptly deliver to Company all property belonging to, or administered by, the Company, including, without limitation, all materials relating to any Confidential Information (as defined below). ShazamStocks Inc. further agrees that it shall not make or retain any copy or extract from such materials. 7. Protection of Confidential Information. ShazamStocks Inc. shall maintain all Confidential information in strict confidence and shall not disclose any Confidential Information to any other person, except as necessary in connection with the performance of ShazamStocks Inc.'s duties and obligations under this Agreement. ShazamStocks Inc. shall not use any Confidential Information for any purpose whatsoever except in connection with the performance of ShazamStocks Inc.'s duties and obligations under this Agreement. "Confidential Information" shall mean any and all information pertaining to the Company, its respective business, and its ownership or other activities with respect to its securities, whether such information is in written form or communicated orally, visually or otherwise, that is proprietary, non-public or relates to any trade secret, including, but not limited to, materials relating to any security or company, strategies for business plans, financial information, ideas, concepts, techniques, models, data, documentation, research, and "know-how." Notwithstanding the foregoing, "Confidential information" shall not include information that (i) is or becomes generally available to, or known by, the public (either prior to or after the furnishings of such documents or information) through no fault of ShazamStocks Inc.; (ii) was known by ShazamStocks Inc. prior to its receipt thereof; (iii) becomes available to ShazamStocks Inc. on a non-confidential basis from any source (other than the disclosing person or its representatives) that is not prohibited from disclosing such information by any contractual, legal, or fiduciary obligation, or (iv) is independently acquired or developed by ShazamStocks Inc. without violating any of his obligations under this Agreement. 8. Arbitration. All controversies, which may arise hereunder concerning the construction, performance or breach of this Agreement, shall be determined by arbitration. Any arbitration under this Agreement shall be conducted in New York, New York. 9. Applicable Law: The terms of this Agreement shall be governed by the laws of the State of New York. 10. Severability: If any one or more of the provisions or part of a provision contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect in any jurisdiction, such invalidity, illegality or unenforceability shall not affect the validity or unenforceability of this Agreement, but this Agreement shall be reformed and construed in such jurisdiction as if such invalid or illegal or unenforceable provision or part of a provision had never been contained herein and such provision or part reformed so that it would be valid, legal and enforceable in such jurisdiction to the maximum extent possible. 11. Successors: This Agreement shall not be assigned by ShazamStocks Inc.. 12. Entire Agreement: This Agreement contains the entire understanding among the parties with respect to the subject matter hereof, inducements of conditions, express or implied, oral or written except as herein contained. This Agreement may not be modified or amended, other than by an agreement in writing signed by the parties. - ------------------------- ------------------------- Andrew Brown Date Ken Weiner Date President & CEO Ramp Corporation EX-10 15 ex-s3stlmntagmt.txt EX-10.42; SETTLEMENT AGREEMENT IN PRINCIPLE EXHIBIT 10.42 SETTLEMENT AGREEMENT IN PRINCIPLE The Parties, Ramp Corporation and Medix Resources, Inc. and Darryl R. Cohen ("Defendants"), and Lawrence Waldman, individually and as trustee of the named Plaintiffs In Case No. A0306937 in the Hamilton County Court of Common Pleas ("Plaintiffs") have participated in mediation and reached a settlement agreement on the following terms: 1. The Defendants shall issue and provide to the Plaintiffs 2.5 million shares of Ramp Corporation stock by the end of a defined time period (the "Trading Period"). If the total receipts from sales are less than $75,000, then the Escrow Agents shall disburse from the escrow account the difference between the amounts received for those sales (net of commissions up to $1,000) and $75,000. 2. Joint Escrow Agents will be William M. Gustavson ("Gustavson") and Patrick F. Fischer ("Fischer"). The Escrow Agents shall set up a joint escrow account with both signatures required for any disbursements. 3. The escrow account shall total $75,000. The $75,000 will be derived from a check issued by Pocketscript LLC to Patrick Fischer and William Gustavson as Escrow Agents, after voiding Check No. 179 on Pocketscript's account dated February 5, 2004, through McDonald Investments (copy attached). These funds will be deposited as soon as reasonably possible. 4. Defendant Ramp Corporation shall notify Pocketscript LLC to void Check No, 179 and reissue $75,000 to Gustavson and Fischer as Escrow Agents. The escrow amount will be held as security for Defendants' obligation under paragraph I above during the Trading Period. 5. At the completion of the Trading Period, Gustavson and Fischer shall issue a check to Angel Ventures LLC for the benefit and consideration of all Plaintiffs in the amount of $25,000. All remaining funds shall then be disbursed to Ramp Corporation (less any amounts disbursed under paragraph 1 above). 6. The Trading Period shall not exceed 15 trading days (business days). It shall commence on the next business day after Plaintiffs receive the shares or the Company [Defendant] authorizes in writing Plaintiffs to begin selling. It shall end on the earlier of 15 trading days after commencement or whenever the 2.5 million shares have been sold. The Plaintiffs will sell no more than 750,000 shares on any single day. 7. The Parties and Angel Ventures LLC will execute mutual releases and file stipulations of dismissal with prejudice within ten (10) days of complete disbursal of the escrow account. 8. The Defendants will file the necessary registration statement for issuance of shares with the SEC as soon as possible, but not later than April 30, 2005. (a) To calculate the value of any unsold shares at the end of the Trading Period, for the purposes of determining the amount due to Plaintiffs as the guaranty under paragraph 1, the average of the coverage closing price of the last 5 days shall be used. 9. If the SEC determines not to review the registration, the Defendant Ramp Corporation will immediately request expedited issuance. 10. Lawrence Waldman represents that he has the authority to settle and enter into these agreements on behalf of all Plaintiffs and of Angel Ventures LLC. 11. Louis Hyman represents that he has authority to settle and enter into these agreements on behalf of Ramp Corporation and its predecessor, Medix Resources, Inc. and Darryl R. Cohen. 12. The Parties intend this agreement to be legally binding and governed by Ohio Law. Each party is to bear its own costs (including a half share of the mediation fee). Dated :___________________ ______________________ Lawrence Waldman Individually and on behalf of Plaintiffs Angel Ventures LLC Dated:____________________ ______________________ Louis Hyman On behalf of Ramp Corporation as successor to Medix Resources, Inc. and Darryl R. Cohen EX-10 16 convpromnote.txt EX-10.43; CONVERTIBLE PROMISSORY NOTE EXHIBIT 10.43 THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF, UNLESS REGISTERED PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS. CONVERTIBLE PROMISSORY NOTE $25,000 November __ , 2004 For value received, the undersigned, RAMP CORPORATION, , a Delaware corporation (the "Maker"), promises to pay to __________________ , a _____________ corporation (the "Holder"), at the office of the Maker, or at such other place as the Holder may designate, the aggregate principal amount of Twenty-Five Thousand Dollars ($25,000) (the "Principal Amount"), together with interest on such Principal Amount, computed quarterly on the basis of a 365 day year, at the rate of ten percent (10%) per annum. The entire outstanding and unpaid Principal Amount and accrued and unpaid interest under this Convertible Promissory Note (this "Note") may, at the option of the Holder, be converted into shares of the Maker's common stock, par value $.001 per share ("Common Stock") in accordance with Section 2 and Section 3 below. 1. Interest. Interest on the principal amount outstanding at any time under this Note shall accrue and be paid quarterly, in arrears, computed on the basis of a 365 day year, at the rate of ten percent (10%) per annum. Accrual of interest shall commence on the date hereof and continue until payment in full of the unpaid principal and accrued and unpaid interest on this Note on or before the Maturity Date (as defined in Section 2 hereof). Upon the occurrence of an Event of Default (as defined in Section 7 hereof), then to the extent permitted by law, the Maker will pay interest to the Holder on the outstanding principal amount of the Note on a monthly basis, from the date of the Event of Default until payment in full, at the rate of eighteen percent (18%) per annum. 2. Maturity Date and Payment. (a) Subject to the rights of the Holder to convert the Note into shares of Common Stock as set forth in this Section and Section 3 hereof, the outstanding principal amount of this Note, plus all accrued and unpaid interest, shall be due and payable by Maker in cash on the Maturity Date. For purposes of this Agreement, the term "Maturity Date" shall mean the earliest to occur of any of the following events: (i) December 15, 2004; (ii) immediately upon the occurrence of a Change in Control (as defined below); and (iii) the date on which this Note becomes immediately due and payable pursuant to Section 8 hereof. (b) The Maker may prepay all or a portion of the outstanding principal amount of this Note, at any time and from time to time, prior to the Maturity Date without premium or penalty; provided, however, that the Maker's right to make any such prepayment shall be subject to the Holder's right of conversion pursuant to Section 3 hereof. Each prepayment shall be applied first to the payment of all interest accrued hereunder on the date of any prepayment, and the balance of any such prepayment shall be applied to the principal amount hereof. (c) Change in Control. As used herein the term "Change in Control" shall be deemed to have occurred if: (a) any "person" or "group" (as such terms are used in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Act")), becomes a "beneficial owner" (as such term is used in Rule 13d-3 promulgated under the Act), after the date hereof, directly or indirectly, of securities of the Maker representing more than 50% of the combined voting power of the Maker's then outstanding securities; (b) a change in "control" of the Maker (as the term "control" is defined in Rule 12b-2 or any successor rule promulgated under the Act) shall have occurred; (c) the Maker shall consummate the sale or disposition of all or substantially all of the Maker's assets; or (d) the Maker shall consummate a merger, consolidation, recapitalization or other similar transaction, other than a merger or consolidation which would result in the combined voting power of the Maker's voting securities outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) 50% or more of the combined voting power of the voting securities of the Maker or such surviving entity outstanding immediately after such merger or consolidation. 3. Conversion Rights. (a) So long as this Note is outstanding, the Maker shall provide at least five (5) business days prior written notice, or in the case of Section 3(a), as soon as practicable, to the Holder in writing of: (i) December 15, 2005; (ii) a Change of Control; or (iii) a prepayment under Section 2(b) hereof (any of the events (i) through (iii) above, a "Conversion Event"). After receipt of a notice of a Conversion Event, at the Holder's option, the Holder may elect to convert the unpaid principal amount of this Note, together with all accrued and unpaid interest thereon through the date of such conversion, in whole or in part, into shares of Common Stock at the Conversion Price (as defined below). For purposes of this Note, the "Conversion Price" shall be $.02 cents per share. If the Maker shall at any time or from time to time after the date hereof, effect a stock split of the outstanding Common Stock, the applicable Conversion Price in effect immediately prior to the stock split shall be proportionately decreased. If the Company shall at any time or from time to time after the date hereof, combine the outstanding shares of Common Stock, including in connection with a reverse stock split, the applicable Conversion Price in effect immediately prior to the combination shall be proportionately increased. Any adjustments under this Section 3(a) shall be effective at the close of business on the date the stock split or combination occurs. (b) In order for the Holder to exercise the conversion rights above, the Holder shall, within five (5) business days after receipt of such notice of a Conversion Event from Maker, surrender this Note to Maker at Maker's principal office address, 33 Maiden Lane, New York, New York 10038 (or such other address as Maker shall have specified in its written notice to the Holder), accompanied by a -2- written notice (the "Conversion Notice") to Maker stating that the Holder elects to convert this Note. As soon as practicable after receipt of any such Conversion Notice, and in any event within ten (10) business days thereafter, Maker will cause to be issued in the name of and delivered to the Holder a certificate or certificates, dated the date of the Conversion Notice, for the number of fully paid and nonassessable whole shares of Common Stock to which the Holder shall be entitled on such conversion, plus cash equal to the amount of any fractional shares (determined based on the per share price of the shares of Common Stock). The Holder shall also execute such other agreements and documents as Maker may reasonably require in connection with the conversion of all or any portion of this Note into shares of Common Stock of Maker. If within such five (5) business days the Holder fails to surrender this Note for conversion, and if the principal amount, plus accrued interest is paid by the Maker in full on or before the Maturity Date, the right to convert this Note, in whole or in part, into such shares of Common Stock will terminate. Upon the conversion of this Note by the Holder, the Holder shall be entitled to the same rights and privileges (including, without limitation, registration rights) as the Maker grants to the holders of its Common Stock. 4. Charges, Taxes and Expenses. Issuance of a certificate for shares of Common Stock upon the conversion of this Note shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by Maker, and such certificate shall be issued in the name of the Holder. 5. No Rights as Stockholder; "Piggy-Back" Registration Rights of Holder. This Note does not entitle the Holder hereof to any voting rights or other rights as a stockholder of the Maker prior to the conversion hereof. The Maker covenants and agrees to use its reasonable efforts to include the shares of Common Stock issuable upon conversion of the Note on its next registration statement on Form S-3 (or other appropriate form) to be filed with the Securities and Exchange Commission, and use its best efforts to cause such registration statement to be declared effective as soon as practicable thereafter. 6. "Accredited Investor" Representations. The Holder understands that the shares of Common Stock to be issued upon conversion of this Note will be subject to restrictions upon its resale imposed by the Securities Act of 1933, as amended (the "Securities Act") and applicable state securities laws. As of the date of conversion, the Holder shall make the following representations and warranties to the Maker: (a) The Holder is an "accredited investor" as defined under Rule 501 of Regulation D promulgated under the Securities Act; (b) Upon conversion of the Note, the Holder (i) is and will be acquiring the securities for the Holder's own account, and not with a view to any resale or distribution of the securities in whole or in part, in violation of the Securities Act or any applicable securities laws and (ii) has not offered to sell any of the securities and has no present intention or agreement to divide any of the securities with others for purposes of selling, offering, distributing or otherwise disposing of any of the securities; (c) The securities when issued, are intended to be exempt from registration under the Securities Act, by virtue of Section 4(2). The Holder understands that the securities to be issued upon conversion will not be, and may never be, registered under the Securities Act; that none of the securities can be sold, transferred, assigned, pledged or subjected to any lien or security interest unless they are first registered under the Securities Act and such state and other securities laws as may be applicable or in the opinion of counsel for the Maker an exemption from registration under the Securities Act is available (and then the securities may be sold, transferred, assigned, pledged or subjected to a lien or security interest only in compliance with such exemption and all applicable state and other securities laws). -3- 7. Events of Default. The occurrence at any time of any one or more of the following events shall constitute an "Event of Default" under this Note: (a) the Maker's failure to pay any principal, interest or other amount if and when due under this Note and such breach shall continue uncured for ten (10) business days after notice from the Holder of such breach; (b) failure of the Maker to perform its agreements and obligations, or a breach of any of the Maker's representations and warranties or other obligations under this Note; (c) a breach of any of the Maker's covenants under this Note and such breach shall continue uncured for a period of twenty (20) business days after notice from Holder of such breach; (d) the dissolution, liquidation or termination of legal existence of the Maker; (e) the appointment of a receiver, trustee or similar judicial officer or agent to take charge of or liquidate any property of assets of the Maker, or action by any court to take jurisdiction of all or substantially all of the property or assets of the Maker; and (f) the commencement of any proceeding under any provision of the Bankruptcy Code of the United States, as now in existence or hereafter amended, or of any other proceeding under any federal or state law, now existing or hereafter in effect, relating to bankruptcy, reorganization, insolvency, liquidation or otherwise, for the relief of debtors or readjustment of indebtedness, by or against the Maker. 8. Remedies. Upon the occurrence of an Event of Default, subject to any notice and cure periods as provided herein, the Holder shall have the immediate right, at its sole discretion, and without further notice, demand, presentment, notice of nonpayment or nonperformance, protest, notice of protest, notice of intent to accelerate, notice of acceleration or any other notice, all of which are hereby irrevocably and unconditionally waived by the Maker to declare the entire unpaid principal balance, and all accrued but unpaid interest and costs at once immediately due and payable (and upon such declaration, the same shall be at once immediately due and payable) and may be collected forthwith, whether or not there has been a prior demand for payment and regardless of the stipulated Maturity Date. 9. Maximum Interest Rate. It is the intention of the Holder that the interest on the Note that may be charged to, collected from or received from the Maker shall not exceed the maximum rate permissible under applicable law. Accordingly, anything in this Note to the contrary notwithstanding, in the event any interest is charged to, collected from or received from the Maker by the Holder pursuant hereto or thereto in excess of such maximum lawful rate, then the excess of such payment over that maximum shall be applied to the reduction of the outstanding principal balance of the Note (without any prepayment premium or penalty), and any portion of such excess payment remaining after payment and satisfaction in full of the Note shall be returned by the Holder to the Maker. 10. Miscellaneous. (a) Governing Law; Jurisdiction. This Note shall be governed by and construed and interpreted in accordance with, the laws of the State of New York without regard to its principles of conflicts of laws or choice of laws. The Maker and the Holder unconditionally and irrevocably consent to the jurisdiction of the federal and state courts located in the State of New York, County of New York with respect to any suit, action or proceeding arising out of or relating to this Note, and, by execution and delivery of this Note, the Maker and the Holder hereby accept for respectively for themselves, and in respect of their property, generally and unconditionally the personal jurisdiction of the aforesaid courts. The Maker and the Holder hereby unconditionally and irrevocably waive any objection including, without limitation, any objection to the laying of venue or based on the grounds of forum non conveniens which they may now or hereafter have to the bringing of any such action or proceeding in such courts. The Maker and the Holder hereby irrevocably consent to the service of process on an agent of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid. Nothing herein shall affect the right of the Maker or the Holder to serve process in any manner permitted by law or to commence legal proceedings or otherwise proceed against the other party in any other jurisdiction. -4- THE MAKER AND THE HOLDER HEREBY WAIVE ANY AND ALL RIGHTS THAT IT MAY NOW OR HEREAFTER HAVE UNDER THE LAWS OF THE UNITED STATES OF AMERICA, ANY STATE OR TERRITORY, TO A TRIAL BY JURY OF ANY AND ALL ISSUES ARISING EITHER DIRECTLY OR INDIRECTLY IN ANY ACTION OR PROCEEDING BETWEEN THE MAKER AND THE HOLDER OR THEIR SUCCESSORS AND PERMITTED ASSIGNS, OUT OF OR IN ANY WAY CONNECTED WITH THIS NOTE. (b) Waiver of Presentment and Notice. Subject to the terms and conditions of this Note, the Maker hereby waives presentment for payment, demand, notice of non-payment, nonperformance or dishonor, protest, notice of protest, notice of intent to accelerate, and notice of acceleration of this Note, and all other notices in connection with the delivery, acceptance, performance, default, or enforcement of the terms of this Note and the Maker hereby agrees that its liability under this Note shall be irrevocable and unconditional and shall not be affected in any manner by any indulgence, extension of time, renewal, waiver or modification granted or consented to by the Holder. The Maker hereby consents to any and all extensions of time, renewals, waivers or modifications that may be granted by the Holder in writing with respect to the payment or other provisions of this Note. Failure by the Holder to insist upon the strict performance by the Maker of any terms and provisions herein shall not be deemed to be a waiver of any terms and provisions herein, and the Holder shall retain the right thereafter to insist upon strict performance by the Maker of any and all terms and provisions of this Note or any document securing the repayment of this Note. (c) Replacement. Upon receipt of a duly executed, notarized and unsecured written statement from the Holder with respect to the loss, theft or destruction of this Note (or any replacement hereof), and without requiring an indemnity bond or other security, or, in the case of a mutilation of this Note, upon surrender and cancellation of such Note, the Maker shall issue a new Note, of like tenor and amount, in lieu of such lost, stolen, destroyed or mutilated Note. (d) Enforcement Expenses. The Maker agrees to pay all out-of-pocket costs and expenses incurred by the Holder in connection with the enforcement of this Note, including, without limitation, all reasonable attorneys' fees and expenses. (e) Assignment. Neither this Note nor any of the rights, interests or obligations hereunder may be assigned, by operation of law or otherwise, in whole or in part by the Maker to any person or entity, except with the consent of the Holder. (f) Notices. All notices and other communications required or permitted to be given pursuant to this Note shall be in writing signed by the sender, and shall be deemed duly given (i) on the date delivered if personally delivered, (ii) on the date sent by telecopier with automatic confirmation by the transmitting machine, (iii) on the business day after being sent by Federal Express or another recognized overnight mail service for next day or next business day delivery, or (iv) five business days after mailing, if mailed by United States postage-prepaid certified or registered mail, return receipt requested, in each case addressed to the Maker or the Holder at the following respective addresses: if to the Maker to: Ramp Corporation 33 Maiden Lane New York, New York 10038 Attention: Mr. Andrew Brown Facsimile: (509) 757-4801 -5- with a copy to: Jenkens & Gilchrist Parker Chapin LLP The Chrysler Building 405 Lexington Avenue New York, New York 10174 Facsimile: (212) 704-6288 Attention: Martin Eric Weisberg, Esq. if to the Holder to: Attention: Facsimile: or, as to each party, at such other address as shall be designated by such party in a written notice to the other party complying as to delivery with the terms of this paragraph. (g) Severability. If any provision of this Note is found by a court of competent jurisdiction to be invalid or unenforceable as written, then the parties intend and desire that such provision be enforceable to the full extent permitted by law, and that the invalidity or unenforceability of such provision shall not affect the validity or enforceability of the remainder of this Note. (h) Headings. Article and section headings in this Note are included herein for purposes of convenience of reference only and shall not constitute a part of this Note for any other purpose. RAMP CORPORATION By:______________________________________ Name: Title: -6- EX-10 17 comstockpurwarnt.txt EX-10.44; COMMON STOCK PURCHASE WARRANT EXHIBIT 10.44 THE SECURITIES REPRESENTED HEREBY (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED. COMMON STOCK PURCHASE WARRANT RAMP CORPORATION EXPIRES NOVEMBER __ , 2009 No.: N-04-A- Number of Shares: [62,500] Date of Issuance: November __ , 2004 1. Issuance. For good and valuable consideration, the receipt of which is hereby acknowledged by Ramp Corporation, a Delaware corporation (the "Company"), _______________________ , or its registered assigns (the "Holder") is hereby granted the right to purchase at any time until 5:00 P.M., New York City time, on November __ , 2009 (the "Expiration Date"), Sixty Two Thousand Five Hundred (62,500) shares of the Company's common stock, par value $.001 per share (the "Common Stock") at an exercise price (the "Exercise Price") equal to $1.00 dollar per share. The Exercise Price shall be subject to further adjustment as set forth in Section 6 hereof. 2. Exercise of Warrants. This Warrant is exercisable in whole or in part at the Exercise Price per share of Common Stock payable hereunder, payable, at the option of the Holder, in cash, by certified or official bank check or by a reduction of the principal amount of that certain Promissory Note dated the date hereof executed by the Company and issued in favor of the Holder. Upon surrender of this Warrant Certificate with the annexed Notice of Exercise Form duly executed, together with payment of the Exercise Price for the shares of Common Stock purchased, the Holder shall be entitled to receive a certificate or certificates for the shares of Common Stock so purchased. 3. Reservation of Shares. Subject to stockholders approval of the Company's contemplated sixty (60) for one (1) reverse stock split and following the effective date of such reverse stock split, the Company hereby agrees that at all times during the term of this Warrant there shall be reserved for issuance upon exercise of this Warrant such number of 1 shares of its Common Stock as shall be required for issuance upon exercise of this Warrant (the "Warrant Shares"). 4. Mutilation or Loss of Warrant. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) receipt of reasonably satisfactory indemnification, and (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will execute and deliver a new Warrant of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant shall thereupon become void. 5. Rights of the Holder. The Holder shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in this Warrant and are not enforceable against the Company except to the extent set forth herein. 6. Protection Against Dilution. (a) Adjustment Mechanism. If an adjustment of the Exercise Price is required pursuant to this Section 6, the Holder shall be entitled to purchase such number of additional shares of Common Stock as will cause (i) the total number of shares of Common Stock Holder is entitled to purchase pursuant to this Warrant, multiplied by (ii) the adjusted purchase price per share, to equal (iii) the dollar amount of the total number of shares of Common Stock that Holder is entitled to purchase before adjustment multiplied by the total purchase price before adjustment. (b) Capital Adjustments. In case of any stock split or reverse stock split, stock dividend, reclassification of the Common Stock, merger or consolidation, or like capital adjustment affecting the Common Stock of the Company which, except in the case of a stock split, reverse stock split or stock dividend, results in the exchange of shares of Common Stock (each, a "Capital Adjustment Event"), the provisions of this Section 6 shall be applied as if the effective date of such Capital Adjustment Event had occurred immediately prior to the date of this Warrant and the original purchase price had been fairly allocated to the stock resulting from such Capital Adjustment Event; and in other respects the provisions of this Section 6 shall be applied in a fair, equitable and reasonable manner so as to give effect, as nearly as may be, to the purposes hereof. A rights offering to stockholders of the Company shall be deemed a stock dividend to the extent such rights are exercised by the stockholders. (c) Adjustment for Spin Off. If, for any reason, prior to the exercise of this Warrant in full, the Company spins off or otherwise divests itself of a part of its business or operations or disposes all or a part of its assets in a transaction (the "Spin Off") in which the Company does not receive compensation for such business, operations or assets, but causes securities of another entity (the "Spin Off Securities") to be issued to security holders of the Company, then the Company shall cause (a) to be reserved Spin Off Securities equal to the number thereof which would have been issued to the Holder in the event all of the Holder's unexercised Warrants outstanding on the record date (the "Record Date") for determining the number of Spin Off Securities to be issued to security holders of the Company (the "Outstanding 2 Warrants") been exercised as of the close of business on the trading day immediately prior to the Record Date (the "Reserved Spin Off Shares"), and (b) to be issued to the Holder on the exercise of all or any of the Outstanding Warrants, such amount of the Reserved Spin Off Shares equal to (x) the Reserved Spin Off Shares multiplied by (y) a fraction, of which (I) the numerator is the amount of the Outstanding Warrants then being exercised, and (II) the denominator is the amount of the Outstanding Warrants. 7. Warrant Call. At any time or from time to time following the forty-fifth (45th) day after the Registration Statement (as defined in Section 9(b) hereof) has been declared effective and only if such Registration Statement remains effective at all times during the Call Exercise Period (as defined below), the Company, at its option, may, upon written notice to the Holder (the "Call Notice"), call up to one hundred percent (100%) of the Warrant Shares if the Common Stock trades at a price equal to or greater than $0.10 cents per share for five (5) consecutive trading days prior to the date the Company calls the Warrant. To be effective, the Call Notice must be given within ten (10) business days after the aforementioned five (5) day period. The rights and privileges granted pursuant to this Warrant with respect to such Warrant Shares subject to the Call Notice shall terminate if this Warrant is not exercised by the Holder in accordance with the Call Notice with respect to such Warrant Shares by the Holder within ten (10) business days after the Call Notice is received by the Holder (the "Call Exercise Period"). In the event that this Warrant is not exercised by the Holder with respect to the Warrant Shares subject to the Call Notice within the Call Exercise Period, this Warrant shall automatically expire at 5:00 p.m. eastern time on the last day of the Call Exercise Period and the Company will remit to the Holder $0.001 per Warrant Share and a new Warrant certificate representing the number of Warrant Shares, if any, with respect to which this Warrant has not been exercised or subject to a Call Notice upon such Holder tendering to the Company the expired Warrant certificate. 8. Limitation on Exercise. Notwithstanding anything to the contrary set forth in this Warrant or the Note of even date herewith (the "Note"), (i) the Holder shall not be entitled to exercise this Warrant and the Company shall have no obligation to issue shares of Common Stock upon such exercise of all or any portion of this Warrant, and (ii) the Company shall not be entitled to issue a Call Notice under Section 7 hereof, to the extent that, following the exercise by the Holder, the Beneficial Ownership Number (as defined below) is equal to or greater than 4.99% of the outstanding shares of Common Stock (including the shares to be issued to the Holder upon such exercise). Notwithstanding the foregoing, this Section 8 shall have no further force and effect if there is an outstanding tender offer for any or all of the shares of the Company's Common Stock, or the Holder, at its option, provides at least sixty-five (65) days' advance written notice from the Holder that this Section 8 shall have no further force and effect. For purposes of this Section, "Beneficial Ownership Number" shall equal the sum of (i) the number of shares of Common Stock owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unexercised portion of this Warrant or other rights to purchase Common Stock or through the ownership of convertible securities), and (ii) the number of shares of Common Stock issuable upon the exercise of this Warrant. For purposes of this Section, "beneficial ownership" shall be defined in accordance with Rule 13(d)-3 of the Securities Exchange Act of 1934, as amended. The Holder, by its acceptance of this Warrant, further agrees that if the Holder transfers or 3 assigns any of the Warrants to any party, such assignment shall be made subject to the transferee's or assignee's specific agreement to be bound by the provisions of this Section 8 as if such transferee or assignee were the original Holder hereof. 9. Transfer to Comply with the Securities Act; Registration Rights. (a) This Warrant has not been registered under the Securities Act of 1933, as amended (the "Act"), or any applicable state securities laws, and has been issued to the Holder for investment and not with a view to the distribution of either the Warrant or the Warrant Shares. Neither this Warrant nor any of the Warrant Shares or any other security issued or issuable upon exercise of this Warrant may be sold, transferred, pledged or hypothecated in the absence of an effective registration statement under the Act relating to such security or an opinion of counsel satisfactory to the Company that registration is not required under the Act. Each certificate for the Warrant, the Warrant Shares and any other security issued or issuable upon exercise of this Warrant shall contain a legend on the face thereof, in form and substance satisfactory to counsel for the Company, setting forth the restrictions on transfer contained in this Section. (b) The Company agrees to use its reasonable efforts to include the Warrant Shares on a registration statement on Form S-3 or another available form, pursuant to the registration rights provisions contained in the Note dated the date hereof by and between the Holder and the Company. 10. Notices. Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, registered or express mail, postage pre-paid. Any such notice shall be deemed given when so delivered personally, telegraphed, telexed or sent by facsimile transmission, or, if mailed, two (2) days after the date of deposit in the United States mails, as follows: (i) if to the Company, to: Ramp Corporation 33 Maiden Lane New York, New York 10038 Attn: Chief Executive Officer Telephone No.: (212) 440-1500 Facsimile No.: (212) 480-4962 with a copy to: Jenkens & Gilchrist Parker Chapin LLP The Chrysler Building 405 Lexington Avenue New York, New York 10174 4 Attn: Martin Eric Weisberg, Esq. Telephone No.: (212) 704-6000 Facsimile No.: (212) 704-6288 (ii) if to the Holder, to: Attn: Telephone No.: Facsimile No.: Any party may be notice given in accordance with this Section to the other parties designate another address or person for receipt of notices hereunder. 11. Supplements and Amendments; Whole Agreement. This Warrant may be amended or supplemented only by an instrument in writing signed by the parties hereto. This Warrant and the Note, of even date herewith, by and between the Company and the Holder contain the full understanding of the parties hereto with respect to the subject matter hereof and thereof and there are no representations, warranties, agreements or understandings other than expressly contained herein and therein. 12. Governing Law. This Warrant shall be deemed to be a contract made under the laws of the State of New York and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State. 13. Counterparts. This Warrant may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. 14. Descriptive Headings. Descriptive headings of the several Sections of this Warrant are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. [Remainder of Page Intentionally Left Blank] 5 IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of this ___ day of ______________ , 2004. RAMP CORPORATION By:_______________________________________ Name: Title: 6 NOTICE OF EXERCISE OF WARRANT The undersigned hereby irrevocably elects to exercise the right, represented by the Warrant Certificate No. N-04-A- , dated as of November __, 2004, to purchase ______________ shares of the Common Stock, par value $.001 per share, of Ramp Corporation and tenders herewith payment in accordance with Section 1 of said Common Stock Purchase Warrant. Please deliver the stock certificate to: ---------------------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- Dated: _____ day of __________, 200_ ----------------------------------------- By: ______________________________________ Name: Title: 7 EX-10 18 ex10_46-s3.txt EX-10.45; AMNDMNT NO. 2 TO THE SEC PURCHASE AGMNT Exhibit 10.45 ------------- AMENDMENT NO. 2 TO THE SECURITIES PURCHASE AGREEMENT TRANSACTION DOCUMENTS BETWEEN RAMP CORPORATION, DKR SOUNDSHORE OASIS HOLDING FUND LTD., HARBORVIEW MASTER FUND LP AND PLATINUM PARTNERS VALUE ARBITRAGE FUND FOR THE PURCHASE OF THE CONVERTIBLE DEBENTURES, DUE DECEMBER 1, 2005, COMMON STOCK PURCHASE WARRANTS AND ADDITIONAL INVESTMENT RIGHTS This Amendment No. 2 ("Amendment"), dated as of April 12, 2005, is made to that certain Securities Purchase Agreement (as amended, the "Purchase Agreement") dated as of March 31, 2005 among Ramp Corporation (the "Company"), DKR Soundshore Oasis Holding Fund Ltd. ("DKR"), Harborview Master Fund LP ("Harborview") and Platinum Partners Value Arbitrage Fund ("Platinum", and collectively, DKR, Harborview and Platinum shall be referred to herein as, a "Purchaser" and collectively as, the "Purchasers"), as amended by that certain Amendment No. 1 to the Purchase Agreement, dated as of March 31, 2005 for the purchase of the 8% Convertible Debentures, due December 1, 2005 issued to the Purchasers (the "Debentures"), the Common Stock Purchase Warrants issued to the Purchasers (the "Warrants") and Additional Investment Rights (the "AIR") granted to the Purchasers. Capitalized terms used but not defined herein shall have the meanings given to such terms in the Purchase Agreement. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. Waivers and Consents. The Company agrees to use best efforts to cause the meeting for Shareholder Approval to be obtained and deemed effective on or before Monday, May 2, 2005. 2. Disposition of Liquidated Damages. The Company shall file the Registration Statement by, and liquidated damages that otherwise accrue to the Purchasers after April 1, 2005 shall be tolled until Wednesday, April 13, 2005. If the Company fails to file the Registration Statement on or before Wednesday, April 13, 2005, each Purchaser shall have the right, severally and not jointly with the other Purchasers, within 5 Trading Days of written notice to the Company and without prejudice to any of such Purchasers other rights and the Company's obligations under the Transaction Documents, not to purchase the Securities otherwise required to be purchased by such Purchaser on the Second Closing Date. 3. Filing of Form 8-K. Within 3 Trading Days of the date hereof, the Company shall file a Current Report on Form 8-K disclosing the material terms of this Amendment and attaching this Amendment as an exhibit thereto. 4. Effect on Purchase Agreement. Except as expressly set forth above, all of the terms and conditions of the Purchase Agreement, the Debentures, the Warrants and the AIR shall continue in full force and effect after the execution of this Amendment, and shall not be in any way changed, modified or superseded by the terms set forth herein. 5. Definitions. Capitalized terms not otherwise defined herein have the meanings given to such terms in the Purchase Agreement, the Debentures, the Warrants and the AIR. ********************* -2- Executed as of April 12, 2005 by the undersigned duly authorized representatives of the Company and Purchasers: RAMP CORPORATION DKR SOUNDSHORE OASIS HOLDING FUND LTD. By: ____________________________ By: ____________________________ Name: Name: Title: Title: HARBORVIEW MASTER FUND LP PLATINUM PARTNERS VALUE ARBITRAGE FUND By: ____________________________ By: ____________________________ Name: Name: Title: Title: -3- EX-23 19 ex23_1s3.txt EX-23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Prospectus constituting a part of this Registration Statement of Ramp Corporation on Form S-3 of our report dated February 14, 2003, on the December 31, 2002 consolidated financial statements of Medix Resources, Inc. appearing in the Annual Report on Form 10-K of Ramp Corporation (formerly Medix Resources, Inc.) for the year ended December 31, 2004 and to the reference to us under the heading "Experts" in the Prospectus. /s/Ehrhardt Keefe Steiner & Hottman PC -------------------------------------- Ehrhardt Keefe Steiner & Hottman PC April 12, 2005 Denver, Colorado EX-23 20 ex23_2s3.txt 23.2 - BDO SEIDMAN, LLP Exhibit 23.2 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ramp Corporation New York, New York We hereby consent to the incorporation by reference in the Prospectus constituting a part of this Registration Statement on Form S-3 filed on April 13, 2005 ("the Registration Statement"), of our report dated March 16, 2005, which contained an explanatory paragraph indicating that substantial doubt exists as to the Company's ability to continue as a going concern, relating to the consolidated financial statements as of and for the years ended December 31, 2004 and 2003, of Ramp Corporation, formerly Medix Resources, Inc., ("the Company") appearing in the Company's Annual Report on Form 10-K for the year ended December 31, 2004. We also consent to the incorporation by reference in the Registration Statement of our report dated September 12, 2003 relating to the financial statements as of and for the years ended December 31, 2002 and 2001 of The Duncan Group, Inc. d/b/a Frontline Physicians Exchange appearing in the Company's Current Report on Form 8-K/A filed on June 9, 2004. We also consent to the references to us under the caption "Experts" in the Prospectus. /s/BDO Seidman, LLP New York, New York April 13, 2005
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