STOCK PURCHASE AGREEMENT
This
Stock Purchase Agreement (“Agreement”)
for
the purchase of shares of common stock of Neah Power Systems, Inc., a Nevada
corporation (“Company”),
is
entered into as of April 24, 2008, between Company and Summit Trading Limited
(“Purchaser”).
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 set forth in this Section
1.1:
“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 405 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 the Purchaser will
be
deemed to be an Affiliate of the Purchaser.
“Closing”
means
the closing of the purchase and sale of the Shares pursuant to Section 2.1,
immediately after 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
Company’s obligations to deliver the Shares, have been satisfied or
waived.
“Exchange
Act”
means
the Shares Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“Liens”
means
a
lien, charge, security interest, encumbrance, right of first refusal, preemptive
right or other restriction.
“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.
“Securities
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Shares”
means
10,000,000 shares of common stock of the Company, par value $.001 per share,
deliverable to the Purchaser pursuant to this Agreement.
“Subscription
Amount”
means
$100,000.00, the aggregate amount payable for Shares purchased hereunder at
a
price of $0.01 per Share.
"Transaction
Documents"
means
this Agreement and all other agreements and documents necessary to consummate
the transactions contemplated hereby.
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ARTICLE
II.
PURCHASE
AND SALE
2.1 Purchase
and Sale. Upon the terms and subject to the conditions set forth herein,
concurrent with the execution and delivery of this Agreement by the parties
hereto and receipt by the Company of the Subscription Amount, the Company agrees
to sell, and the Purchaser agrees to purchase, the Shares.
2.2 Payment.
The Subscription Amount shall be payable at Closing, by wire transfer of
immediately available funds.
2.3 Closing.
Upon satisfaction of the covenants and conditions set forth in Sections 2.2
and
2.4, the Closing shall occur immediately.
2.4 Deliveries.
(a) At
or
prior to the Closing, the Purchaser shall deliver or cause to be delivered
to
the Company the following:
(i) this
Agreement duly executed by the Purchaser; and
(ii) the
Subscription Amount by wire transfer to the account as specified in writing
by
the Company.
(b) At
or
prior to the Closing, the Company shall deliver or cause to be delivered to
the
Purchaser the following:
(i) this
Agreement duly executed by the Company; and
(ii) original
share certificates representing the Shares.
2.5 Closing
Conditions.
(a) The
obligations of the Company hereunder in connection with the Closing are subject
to the following conditions being met:
(i) the
accuracy in all material respects as of the Closing of the representations
and
warranties of the Purchaser contained herein;
(ii) all
obligations, covenants and agreements of the Purchaser required to be performed
at or prior to the Closing shall have been performed;
and
(iii) the
delivery by the Purchaser of the items set forth in Section 2.4(a) of this
Agreement.
(b) The
obligations of the Purchaser hereunder in connection with the Closing are
subject to the following conditions being met:
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(i) the
accuracy in all material respects as of the Closing of the representations
and
warranties of the Company contained herein;
(ii) all
obligations, covenants and agreements of the Company
required
to be performed at or prior to the Closing shall have been
performed;
(iii) the
delivery by the Company of the items set forth in Section 2.4(b) of this
Agreement; and
(iv) The
appointment of at least three new independent directors reasonably acceptable
to
Purchaser.
2.6 Anti-Dilution
Protection. If at any time within six (6) months after the Closing
Date, the Company issues, sells, converts, or is deemed to have issued, sold
or
converted, any shares of common stock or any debt or equity securities
convertible into shares of common stock, including without limitation collateral
or fee shares pursuant to existing loan agreement (each, “Additional
Shares”), at a price less than $0.01 per share of common stock, as adjusted
for stock splits, reverse stock splits, conversions, additional issuances,
or
similar events (each, a “Subsequent Issuance”), the Company shall issue
to Purchaser such additional number of shares of common stock, as of the close
of business on the date of such Subsequent Issuance, so that the effective
price
per Share (including such additional number of shares of common stock) paid
by
the Purchaser shall equal the lowest price at which any of the Additional Shares
are issued in such Subsequent Issuance. In the event there are insufficient
shares of Common Stock authorized by the Company to comply with the provisions
of this Section 2.6, the Company shall issue shares of preferred stock
convertible into common stock in compliance with this provision, and use
commercially reasonable best efforts to increase the number of authorized shares
of common stock of the Company as soon as practicable.
2.7 Registration
Rights. Purchaser shall have standard piggyback registration rights, pari
passu with each purchaser in any Subsequent Issuance.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES
Except
as expressly set forth in this Article III, neither the Company nor the
Purchaser make any representations or warranties whatsoever regarding the
Company, the Shares or any other matter.
3.1 Representations
and Warranties of the Company.
The
Company hereby makes the following representations and warranties to the
Purchaser:
(a) Organization;
Authority.
The
Company is a corporation duly organized and validly existing under the laws
of
the State of Nevada, with full right, power and authority to enter into and
to
consummate the transactions contemplated by this Agreement and otherwise to
carry out Company’s obligations hereunder. The execution and delivery of this
Agreement and performance by the Company of the transactions contemplated by
this Agreement have been duly authorized by all necessary action on the part
of
the Company. Each Transaction Document to which Company is a party has been
duly
executed by the Company, and when delivered by the Company in accordance with
the terms hereof, will constitute the valid and legally binding obligation
of
the Company, enforceable against Company 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.
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(b) Ownership
of the Shares.
The
Shares are duly authorized, validly issued, non-assessable, and free and clear
of all Liens, encumbrances, restrictions and claims of every kind, other than
restrictions on transfer as provided in Section 3.2(c), and, upon delivery
of
and payment for such Shares as herein provided, the Purchaser will acquire
good
and valid title thereto, free and clear of all Liens, encumbrances, restrictions
and claims of every kind, except for such restrictions on transfer.
3.2 Representations
and Warranties of the Purchaser. The Purchaser hereby represents and
warrants to the Company:
(a) Organization;
Authority.
The
Purchaser is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with full right, power
and authority to enter into and to consummate the transactions contemplated
by
this Agreement and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement and performance by
the
Purchaser of the transactions contemplated by this Agreement have been duly
authorized by all necessary action on the part of the Purchaser. Each
Transaction Document to which it is a party has been duly executed by the
Purchaser, and when delivered by the Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of the
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) Own
Account.
The
Purchaser is acquiring the Shares as principal for its own account and not
with
a view to or for distributing or reselling such Shares or any part thereof
in
violation of the Securities Act or any applicable state securities law, has
no
intention of distributing any of such Shares in violation of the Securities
Act
or any applicable state Shares law and has no direct or indirect arrangement
or
understandings with any other persons to distribute or regarding the
distribution of such Shares in violation of the Securities Act or any applicable
state Shares law. The Purchaser is acquiring the Shares hereunder in the
ordinary course of its business.
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(c) Restricted
Shares.
The
Purchaser understands and acknowledges that: (i) the Shares it is purchasing
may
be characterized as “restricted securities” under state and federal securities
laws inasmuch as they are being acquired from the Company and that under such
laws and applicable regulations such Shares may be resold without registration
under the Securities Act only in certain limited circumstances, (iii) the Shares
may be subject to restrictions on transfer under the Securities Act and the
rules and regulations promulgated thereunder, applicable state securities laws
and regulations, and the rules of any self regulatory organization to which
the
Company or its securities may be subject, and (iv) the Purchaser may be required
to hold the Shares indefinitely.
(d) Purchaser
Status.
At the
time the Purchaser was offered the Shares, it was, and at the date hereof it
is
either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2),
(a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified
institutional buyer” as defined in Rule 144A(a) under the Securities Act.
(e) Experience
of The Purchaser.
The
Purchaser alone or together with its representatives, has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective investment in
the
Shares, and has so evaluated the merits and risks of such investment. The
Purchaser is able to bear the economic risk of an investment in the Shares
and,
at the present time, is able to afford a complete loss of such
investment.
(f) Access
to Information.
Purchaser is currently a significant shareholder in the Company and acknowledges
that it is fully familiar with the Company, has reviewed its public reports
filed with the Securities and Exchange Commission and has been afforded:
(i) the opportunity to ask such questions as it has deemed necessary of,
and to receive answers from, representatives of the Company concerning the
terms
and conditions of Shares and the merits and risks of investing in the Shares;
(ii) access to information about the Company and its subsidiaries and their
respective financial condition, results of operations, business, properties,
management and prospects sufficient to enable it to evaluate its investment;
and
(iii) the opportunity to obtain such additional information that the
Company possesses or can acquire without unreasonable effort or expense that
is
necessary to make an informed investment decision with respect to an investment
in the Shares. The Purchaser is aware that the Company is still a development
stage entity, is not operating profitably and will not do so in the near term
and will require significant additional capital in order to continue its
operations as currently in effect.
ARTICLE
IV.
MISCELLANEOUS
4.1 Fees
and Expenses. 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 Purchaser shall pay all Transfer Agent fees,
stamp taxes and other taxes and duties levied in connection with the delivery
of
any Shares to the Purchaser.
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4.2 Separate
Counsel. Each party understands and agrees that Xxxxxx Xxxxx Xxxxx Xxxxxx
Xxxxx Xxxxxx LLP (“Company Counsel”) has not represented Purchaser or provided
any legal advice in connection with the preparation or negotiation of this
Agreement, or the purchase and sale of the Shares. Each party acknowledges
that
Purchaser has not relied on any information or advice furnished by or on behalf
of Company Counsel, and represent that Purchaser has consulted with its own
legal counsel and such tax and investment advisors as the party, in the party’s
sole discretion, has deemed necessary or appropriate in connection with this
Agreement.
4.3 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
the
Purchaser, or, in the case of a waiver, by the party against whom enforcement
of
any such waived provision 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 any party to exercise any right hereunder in any manner
impair the exercise of any such right.
4.4 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.
4.5 Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit
of the parties and their successors and permitted assigns.
4.6 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 4.14.
4.7 Governing
Law; Jurisdiction. 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
Nevada, without regard to the principles of conflicts of law thereof. Any claim,
dispute, or controversy (any or all of which shall hereinafter be referred
to as
the "Dispute" or the "Disputes") shall arise between the parties
hereto with respect to the making, construction, terms, or interpretation of
this Agreement or any breach thereof, or the rights or obligations of any party
hereto or thereto, the Dispute shall, in lieu of court action, be submitted
to
mandatory, binding arbitration upon written demand of either party (the
"Notice of Arbitration") before a single arbitrator in Santa Monica,
California. The arbitration shall be conducted by a retired judge arbitrator
selected by JAMS and shall be held in accordance with the JAMS rules. If either
party shall commence an action or proceeding to enforce any provisions of this
Agreement, then the arbitrator shall allocate all of the costs and expenses
of
such Dispute including but not limited to the fees and expenses of the
arbitrator, all attorneys’ fees and expenses and all other costs and expenses
incurred with the investigation, preparation and prosecution of such arbitration
between the parties based upon the arbitrator's judgment as to the merits or
the
respective positions of the parties in the Dispute.
4.8 Survival.
The representations and warranties contained herein shall survive the Closing
and the delivery of the Shares.
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4.9 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
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 or by e-mail delivery of a “.pdf” format data file, such electronic
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 or “.pdf” signature page were an original thereof.
4.10 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.
4.11 Remedies.
In addition to being entitled to exercise all rights provided herein or granted
by law, including recovery of damages, the Purchaser and the Company will be
entitled to specific performance under this Agreement. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations contained in this Agreement and hereby
agrees to waive and not to assert in any action for specific performance of
any
such obligation the defense that a remedy at law would be adequate. In no event
shall either party’s monetary damages arising from any breach of this Agreement
exceed the Subscription Amount.
4.12 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 not be a Business Day, then such action
may be taken or such right may be exercised on the next succeeding Business
Day.
4.13 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.
4.14 Release.
Each party hereby fully and completely releases and discharges the other party,
Xxxxxxx Xxxxxx, Xxxxxxx Xxxxxxx and Company Counsel from any and all claims,
causes of action, rights and actions of any kind or nature whatsoever, either
at
law or in equity, including without limitation all claims of negligence, breach
of contract, or breach of fiduciary duty, and all claims in any way arising
out
of or relating to the Company; provided, however, that neither party waives
any
right to seek contribution from any party in the event that any person brings
any claim or action against such party.
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4.15 Non-Disparagement.
During the term of this Agreement, and at all times thereafter, the parties
agree that they will not disparage each other, Xxxxxxx Xxxxxx, Xxxxxxx Xxxxxxx
or Company Counsel in any fashion.
4.16 Entire
Agreement. This Agreement, 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.
IN
WITNESS WHEREOF, the parties hereto have caused this Shares Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.
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Company:
NEAH
POWER SYSTEMS. INC.
By:
Xxxxx
X’Xxxxx
President
& CEO
By:
Director
|
|
|
Purchaser:
SUMMIT
TRADING LIMITED
By:
Name:
Title:
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