SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this Agreement) is dated as of March 8, 2004, among Validian Corporation, a Nevada corporation (the Company), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a Purchaser and collectively the Purchasers); and

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act (as defined below), 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 in the aggregate, up to $6,000,000 of shares of Common Stock and Warrants on the Closing Date.

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 agrees as follows:

ARTICLE I.

DEFINITIONS

1.1   Definitions.  In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, 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).

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.  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.

Closing means the closing of the purchase and sale of the Common Stock and the Warrants pursuant to Section 2.1.

Closing Date means the Trading Day when all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers obligations to pay the Subscription Amount and (ii) the Companys obligations to deliver the Securities have been satisfied or waived.

 Commission means the Securities and Exchange Commission.

Common Stock means the common stock of the Company, $0.001 par value per share, and any securities into which such common stock may hereafter be reclassified.

Common Stock Equivalents means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

Company Counsel means Haynes and Boone, LLP.

Disclosure Schedules means the Disclosure Schedules of the Company delivered concurrently herewith.

Effective Date means the date that the Registration Statement is first declared effective by the Commission.

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, (b) shares issued to key consultants in an amount not to exceed, in the aggregate, 1% of the Companys current issued and outstanding Common Stock, (c) securities upon the exercise of or conversion of any convertible securities, options or warrants issued and outstanding on the date of this Agreement as otherwise described on Schedule 1.1 hereto, provided that such securities have not been amended since the date of this Agreement, and (d) with respect to Sections 4.13 and 4.14 herein, shares issued pursuant to the penalty provision in the Registration Rights Agreement dated as of January 30, 2004 among the Company and the investors named therein.

FW means Feldman Weinstein LLP with offices located at 420 Lexington Avenue, Suite 2620, New York, New York 10170-0002.

Intellectual Property Rights shall have the meaning ascribed to such term in Section 3.1(o).

Liens means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

Material Adverse Effect shall have the meaning ascribed to such term in Section 3.1(b).

Material Permits shall have the meaning ascribed to such term in Section 3.1(m).

Per Share Purchase Price equals $0.90, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement and prior to the Closing Date.

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.

Principal Market means initially the OTC Bulletin Board and shall also include the American Stock Exchange, New York Stock Exchange, the NASDAQ Small-Cap Market or the NASDAQ National Market, whichever is at the time the principal trading exchange or market for the Common Stock, based upon share volume.

 Proceeding means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

Registration Rights Agreement means the Registration Rights Agreement, dated as of the date of this Agreement, among the Company and each Purchaser, in the form of Exhibit A hereto.

Registration Statement means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale by the Purchasers of the Shares and the Warrant Shares.

 Required Approvals shall have the meaning ascribed to such term in Section 3.1(e).

Rule 144 means Rule 144 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 effect as such Rule.

SEC Reports shall have the meaning ascribed to such term in Section 3.1(h).

Securities means the Shares, the Warrants and the Warrant Shares.

Securities Act means the Securities Act of 1933, as amended.

Shares means the shares of Common Stock issued or issuable to each Purchaser pursuant to this Agreement.

Subscription Amount means, as to each Purchaser, the amounts set forth below such Purchasers signature block on the signature page hereto, in United States dollars and in immediately available funds.

Subsidiary shall mean the subsidiaries of the Company, if any, set forth on Schedule 3.1(a).

Trading Day means a day on which the Common Stock is traded on a Principal Market.

Transaction Documents means this Agreement, the Warrants and the Registration Rights Agreement.

VWAP means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Principal Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the primary Principal Market on which the Common Stock is then listed or quoted as reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. ET to 4:02 p.m. Eastern Time) using the VAP function; (b) if the Common Stock is not then listed or quoted on an Principal Market and if prices for the Common  Stock  are  then   quoted   on   the   OTC   Bulletin   Board,   volume   weighted

average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c)  if the Common Stock is not then listed or quoted on a Principal Market and if prices for the Common Stock are then reported in the Pink Sheets published by 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 (d) in all other cases, the fair market value of a share of Common Stock as determined by a nationally recognized-independent appraiser selected in good faith by Purchasers holding a majority of the principal amount of Shares then outstanding.

 Warrants means the Common Stock Purchase Warrants, in the form of Exhibit B, issuable to the Purchasers at the Closing, which warrants shall have an exercise price equal to $0.90 per share and be exercisable for a period of 5 years.

Warrant Shares means the shares of Common Stock issuable upon exercise of the Warrants.

ARTICLE II

PURCHASE AND SALE

2.1  Closing.  On the Closing Date, each Purchaser shall purchase from the Company, severally and not jointly with the other Purchasers, and the Company shall issue and sell to each Purchaser, (a) the number of Shares equal to such Purchasers Subscription Amount divided by the Per Share Purchase Price and (b) the Warrants as determined pursuant to Section 2.2(a)(iii).  The aggregate Subscription Amounts for Shares sold hereunder shall be up to $6,000,000. Upon satisfaction of the conditions set forth in Section 2.2, the Closing shall occur at the offices of FW or such other location as the parties shall mutually agree.

2.2  Closing Conditions; Deliveries

(a)  On the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:

(i)

this Agreement duly executed by the Company;

(ii)

a copy of the irrevocable instructions to the Companys transfer agent instructing the transfer agent to deliver, on an expedited basis, a certificate evidencing the number of Shares equal to such Purchasers Subscription Amount divided by the Per Share Purchase Price, registered in the name of such Purchaser;

Home        Intelligence        Services        Subscriptions        News        About Us

Contact Us       Terms of Use       Resend Documents       Shopping Cart

Copyright © 2008 The Consus Group LLC