STOCK AND WARRANT PURCHASE AGREEMENT
This
STOCK AND WARRANT PURCHASE AGREEMENT
(this
“Agreement”)
is
made as of the date of the signature of the Company set forth on the signature
pages hereof, by and among NEURO-HITECH,
INC.,
a
Delaware corporation, with its principal offices at Xxx Xxxx Xxxxx, Xxxxx 0000,
Xxx Xxxx, Xxx Xxxx 00000 (including its Subsidiaries as defined below, the
“Company”),
and
each person identified as an Investor on the signature pages hereto (each,
an
"Investor" and collectively, the “Investors”).
WHEREAS,
the
Company desires to sell on a “best efforts-no minimum” basis,
units
(the “Units”),
each
Unit consisting of (i) one (1) share (each a “Share,”
collectively, the “Shares”)
of the
Company’s common stock, par value $0.001 per share (the “Common
Stock”),
and
(ii) 0.5 warrant to acquire one share of the Common Stock, subject to
adjustment, at an exercise price of $7.00 per share unless the warrant is
exercised prior to April 30, 2008, in which case the Warrant Price shall be
$5.00 per share (each, a “Warrant,”
and
collectively, the “Warrants”),
in a
private placement (the “Offering”)
to be
conducted by the Company; and
WHEREAS,
the
Company is offering the Units pursuant to Rule 506 of Regulation D promulgated
under the Securities Act of 1933, as amended (the “Securities
Act”),
to
“accredited investors” only, as such term is defined in Rule 501(a) of said
Regulation D.
NOW,
THEREFORE,
for and
in consideration of the premises and the mutual covenants hereinafter set forth,
the parties hereto do hereby agree as follows:
SECTION
1
PURCHASE
AND SALE OF UNITS
1.1 Agreement
to Purchase and Sell.
Upon
the
terms and subject to the conditions set forth in this Agreement, each Investor,
severally and not jointly, agrees to purchase at the Closing (as defined below),
and the Company agrees to issue and sell to such Investor at the Closing, for
the purchase price set forth opposite such Investor’s name on such Investor’s
signature page that number of Units set forth opposite such Investor’s name
on such Investor’s signature page at a purchase price of $4.00 per Unit. Each
Investor hereby:
(a) tenders
an executed copy of its signature page to this Agreement;
(b) tenders
an executed copy of the Investor Qualification Questionnaire attached hereto
as
Exhibit
A
(the
“Qualification
Questionnaire”)
and an
executed copy of the Registration Rights Agreement (as defined below);
and
(c) tenders
the purchase price set forth opposite such Investor’s name as set forth on such
Investor’s signature page to Wilmington
Trust Company (the
“Escrow
Agent”)
by
wire transfer of immediately available funds to the Escrow Account (as defined
below) designated on the signature pages hereto (the “Proceeds”).
The
Offering is on a “best efforts-no minimum” basis. The Company and the Investors
agree that the Proceeds will be deposited in an escrow account (the
“Escrow
Account”)
maintained by the Escrow Agent, pending a determination to close on such
Proceeds or a termination of the Offering pursuant to Section 5 hereof. There
is
no minimum number of Units that must be sold in order to conduct the Closing.
1.2 Closing;
Escrow of Excess Proceeds.
The
closing of the purchase and sale of the Units pursuant to Section 1.1 (the
“Closing”)
will
take place on the earlier of (A) such date as the Company may determine in
its
discretion, and (B) November 29, 2007 for any amount of Proceeds at the offices
of Arent Fox LLP, 0000 Xxxxxxxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000, or at such
other place or time as may be mutually agreed upon by the Company and the
Investors (the “Closing
Date”).
Upon
the Closing Date, subject to the fulfillment of the conditions set forth in
Section 3 hereof, the Company shall issue and deliver to such Investor
(i) a stock certificate or certificates representing that number of Shares
set forth opposite such Investor’s name as set forth on such Investor’s
signature page, in such denominations and registered in such names as such
Investor may request and (ii) Warrants to purchase that number of shares of
Common Stock set forth opposite such Investor’s name as set forth on such
Investor’s signature page registered in such names as such Investor may request.
1.3 Independent
Nature of Investors’ Obligations and Rights.
The
obligations of each Investor under any Transaction Document (as defined below)
are several and not joint with the obligations of any other Investor, and no
Investor shall be responsible in any way for the performance of the obligations
of any other Investor under any Transaction Document. The decision of each
Investor to purchase Units pursuant to this Agreement has been made by such
Investor independently of any other Investor and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company which may have been made
or
given by any other Investor or by any agent or employee of any other Investor,
and no Investor or any of its agents or employees shall have any liability
to
any other Investor (or any other person) relating to or arising from any such
information, materials, statements or opinions. Nothing contained herein
or in any Transaction Document, and no action taken by any Investor pursuant
thereto, shall be deemed to constitute the Investors as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Investors 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 Investor acknowledges that no other Investor
has acted as agent for such Investor in connection with making its investment
hereunder and that no other Investor will be acting as agent of such Investor
in
connection with monitoring its investment hereunder. Each Investor 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 Investor
to
be joined as an additional party in any proceeding for such
purpose.
SECTION
2
REPRESENTATIONS,
WARRANTIES AND COVENANTS
2.1 Investor
Representations, Warranties and Covenants.
Each
Investor hereby acknowledges, represents, warrants or covenants, as the case
may
be, severally and not jointly to the Company as follows:
(a) The
Investor is, and on each date on which it exercise Warrants will be, an
“accredited investor” as such term is defined in Rule 501 of Regulation D
promulgated under the Securities Act, as indicated by his response set forth
in
the Qualification Questionnaire attached hereto, and is able to bear economic
risk of an investment in the Units.
(b) The
Investor has prior investment experience, including investment in early stage
companies, non-listed and non-registered securities, has the ability to fend
for
himself, can bear the economic risk of his investment, and has such knowledge
and experience in financial, business matters that he is capable of evaluating
the merits and risks of such an investment, and that he recognizes the highly
speculative nature of this investment.
-2-
(c) The
Investor acknowledges receipt and careful review of the documents filed with
respect to the Company with the Securities and Exchange Commission (“SEC”)
since
November 29, 2006 (the “SEC
Documents”)
pursuant to the Securities Act and the Securities Exchange Act of 1934, as
amended (the “Exchange
Act”),
and
hereby represents that he has been furnished by the Company during the course
of
this transaction with all other information regarding the Company which he
had
requested or desired to know, that all documents which could be reasonably
provided have been made available for his inspection and review, that he has
been afforded the opportunity to ask questions of and receive answers from
duly
authorized officers or other representatives of the Company concerning the
terms
and conditions of the Offering and any additional information which he had
requested. Notwithstanding the foregoing, it is understood that Investor is
purchasing the Units without being furnished a prospectus setting forth all
of
the information that would be required to be furnished in a prospectus under
the
Securities Act.
(d) The
Investor understands and recognizes that the purchase of the Units is highly
speculative and involves a high degree of risk and that only investors who
can
afford the loss of their entire investment should consider investing in the
Company. The Investor has also reviewed the risk factors in the SEC
Documents.
(e) The
Investor acknowledges that the Offering will be conducted on a “best efforts-no
minimum” basis, and that there is no minimum amount of Units which must be
purchased in order to close any purchase. The Investor acknowledges that the
Company may find it necessary to raise additional capital in the
future.
(f) The
Investor represents that the Units are being purchased for his own account,
for
investment and not for distribution or resale to others. The Investor agrees
that he will not sell or otherwise transfer such securities unless they are
registered under the Securities Act or unless an exemption from such
registration is available. The Investor does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to the
Units.
(g) The
Investor understands that he may never be able to liquidate his investment
in
the Company. Although the Company has undertaken to register under the
Securities Act the Common Stock comprising Units and the shares of Common Stock
issuable upon the exercise of the Warrants (the “Warrant
Shares”
and
collectively with the Common Stock included in the Units, the “Securities”)
pursuant to a registration rights agreement of even date herewith (the
“Registration
Rights Agreement”),
there
can be no assurance that such registration will ever be effective or remain
effective, or that there will be any liquidity with respect to the sale of
such
securities, if and when registered. Investor represents that he has sufficient
liquid assets so that the illiquidity associated with this investment will
not
cause any undue financial difficulties or affect the Investor’s ability to
provide for its current needs and possible financial contingencies, and that
the
Investor’s commitment to all high risk investments (including this one if this
purchase is agreed to and accepted by the Company) is reasonable in relation
to
the Investor’s net worth and/or annual income.
(h) The
Investor understands that pending an effective registration under the Securities
Act, if any, the Common Stock, the Warrants and the Warrant Shares will be
restricted securities as such term is defined under Rule 144 (“Rule
144”)
promulgated under the Securities Act and cannot be sold except pursuant to
such
registration or an exemption therefrom. The Investor further understands that
the Company has no obligation to register the Warrants for resale under the
Securities Act.
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(i) The
Investor understands that the Company is relying on the Investor’s
representations herein and the information provided by the Investor in the
Qualification Questionnaire. Any information which the Investor has heretofore
furnished to the Company in the Qualification Questionnaire or otherwise,
including, without limitation, information with respect to its financial
position and business experience is correct and complete as of the date of
this
Agreement, and if there should be any material change in such information prior
to the Closing the Investor will immediately furnish such revised or corrected
information to the Company.
(j) The
Investor understands the tax consequences of this investment and that the
contents of this Agreement does not contain tax advice or information. The
Investor confirms that it is not relying on any statements or representations
of
the Company or any of its agents with respect to the tax and other economic
considerations of an investment in the Units. The Investor has had the
opportunity to consult with the Investor’s own legal, accounting, tax,
investment and other advisors, who are unaffiliated with the Company or any
affiliate or selling agent of the Company, with respect to the tax treatment
of
an investment by the Investor in the Units. The Investor also acknowledges
that
it is solely responsible for any of its own tax liability that may arise as
a
result of this investment or the transactions contemplated by this
Agreement.
(k) If
the
Investor is an entity, it is a corporation, limited liability company, trust
or
partnership or other similar entity duly organized, validly existing and in
good
standing under the laws of its jurisdiction. The Investor has full power and
authority (corporate or otherwise) to execute, deliver and enter into this
Agreement and to purchase the Units. The execution and delivery by the Investor
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate or other action on the
part
of the Investor. If the Investor is an individual, the Investor has the legal
capacity to enter into this Agreement and is a bona fide resident of the state
shown in the address set forth on the signature pages hereto.
(l) The
Investor consents to the placement of a legend on any certificate or other
documents evidencing the Shares, the Warrants and the Warrant Shares
substantially in the following form:
“THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES
FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY BE RESOLD OR OTHERWISE
TRANSFERRED ONLY PURSUANT TO AN EXEMPTION FROM REGISTRATION (IF AVAILABLE)
UNDER
THE SECURITIES ACT, OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES.”
(m) The
address of the Investor furnished by him on the signature pages hereto is the
undersigned’s principal residence if he is an individual or its principal
business address if it is a corporation or other entity.
(n) Except
as
set forth herein, no representations or warranties have been made to the
Investor by the Company or any agent, employee or affiliate of the Company
and
in entering into this transaction, the Investor is not relying on any
information, other than that contained herein and the results of independent
investigation by the Investor.
-4-
(o) Investor
either (i) has a pre-existing personal or business relationship with the Company
or any of its partners, officers, directors or controlling persons, or (ii)
by
reason of such Investor’s business or financial experience or the business or
financial experience of such Investor’s professional advisors (which
professional advisors are unaffiliated with and are not compensated by the
Company, or any affiliate or selling agent of the Company, directly or
indirectly) such Investor could be reasonably assumed to have the capacity
to
protect such Investor’s own interests in connection with the
transaction.
(p) This
Agreement constitutes the legal, valid and binding agreement of the Investor,
enforceable against the Investor 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 by general equitable principles, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief, or other
equitable remedies, and (iii) to the extent any indemnification provisions
contained in this Agreement may be limited by applicable Federal or state
securities laws.
(q) If
the
Investor is not a United States person, it has satisfied itself as to the full
observance of the laws of its jurisdiction in connection with any invitation
to
purchase the Units or any use of this Agreement, including (i) the legal
requirements within its jurisdiction for the purchase of the Securities, (ii)
any foreign exchange restrictions applicable to such purchase, (iii) any
governmental or other consents that may need to be obtained and (iv) the income
tax and other tax consequences, if any, that may be relevant to the purchase,
holding, redemption, sale or transfer of the Securities. Such Investor’s payment
for, and his or her continued beneficial ownership of the Securities, will
not
violate any applicable securities or other laws of the Investor’s
jurisdiction.
(r) The
Investor also understands and agrees that, although the Company will use its
best efforts to keep confidential the information provided herein, the Company
may present the information provided herein to such parties as it deems
advisable (a) if called upon to establish either the availability under any
Federal or state securities laws of an exemption from registration of the
Offering or compliance with any other legal requirement, or (b) if the contents
hereof are relevant to any issue in any action, regulatory request, inspection,
investigation, suit or proceeding to which the Company is a party, is subject,
or by which it is or may be bound. Further, the Investor understands that the
Offering may be reported to the SEC pursuant to the requirements of applicable
Federal law and to various state securities or blue sky commissioners pursuant
to applicable laws.
(s) No
court
or governmental injunction, order or decree affecting the Investor and
prohibiting the execution and delivery by the Investor of this Agreement and
the
consummation of the transactions contemplated hereby is in effect, and the
terms
of this Agreement do not conflict with any provision of the certificate or
articles of incorporation or by-laws (or comparable charter, partnership or
other organizational documents) of the Investor, or conflict with, or result
in
a material breach or violation of, any of the terms or provisions of, or
constitute (with due notice or lapse of time or both) a material default under,
any material lease, loan agreement, mortgage, security agreement, trust
indenture or other agreement or instrument to which the Investor is a
party.
-5-
(t) No
material consent, approval, license, permit, order or authorization of, or
registration, declaration or filing with, any court, administrative agency
or
commission or other governmental authority or instrumentality, domestic or
foreign, remains to be obtained or is otherwise required to be obtained by
the
Investor in connection with the authorization, execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby,
including, without limitation the purchase and sale of the Units.
(u) [Intentionally
Omitted]
(v) No
finder, broker, agent, financial person or other intermediary has acted on
behalf of the Investor in connection with the Investor’s purchase of the Units,
the consummation of this Agreement or any of the transactions contemplated
hereby. The Investor has not had any direct or indirect contact with any
investment banking firm (or similar firm) with respect to the offer of the
Units
by the Company to the Investor or the Investor’s purchase of the
Units.
(w) The
Investors did not (i) receive or review any advertisement, article, notice
or
other communication published in a newspaper or magazine or similar media or
broadcast over television or radio, whether closed circuit, or generally
available, with respect to the Units or (ii) attend any seminar, meeting or
investor or other conference whose attendees were, to the Investor’s knowledge,
invited by any general solicitation or general advertising with respect to
the
Units.
(x) The
Investor acknowledges that the Offering is confidential and non-public and
agrees that all information about the Offering shall be kept in confidence
by
the Investor until the public announcement of the Offering by the Company.
The
Investor acknowledges that the foregoing restrictions on the Investor’s use and
disclosure of any such confidential, non-public information contained in the
above-described documents restricts the Investor from trading in the Company’s
securities to the extent such trading is on the basis of material, non-public
information of which the Investor is aware and is in violation of applicable
securities laws. Except for the terms of the Transaction Documents and the
fact
that the Company is considering consummating the transactions contemplated
therein, the Company confirms that neither the Company nor, to its knowledge,
any other person acting on its behalf, has provided any of the Investors or
their agents or counsel with any information that constitutes material,
non-public information.
(y) The
Investor agrees that beginning on the date hereof until the Offering is publicly
announced by the Company (which the Company has agreed to undertake in
accordance with the provisions of Section 4.7 hereof), the Investor will not
enter into any Short Sales. For purposes of the foregoing sentence, a “Short
Sale” by an Investor means a sale of Common Stock that is marked as a short sale
and that is executed at a time when such Investor has no equivalent offsetting
long position in the Common Stock, exclusive of the Shares. For purposes of
determining whether an Investor has an equivalent offsetting long position
in
the Common Stock, all Common Stock that would be issuable upon exercise in
full
of all options then held by such Investor (assuming that such options were
then
fully exercisable, notwithstanding any provisions to the contrary, and giving
effect to any exercise price adjustments scheduled to take effect in the future)
shall be deemed to be held long by such Investor.
(z) The
foregoing acknowledgments, representations, warranties and covenants shall
survive the Closing.
-6-
2.2 Representations,
Warranties and Covenants of the Company.
The
Company hereby acknowledges, represents, warrants or covenants, as the case
may
be, to the Investor as follows:
(a) The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company has full corporate power
and authority to own and hold its properties and to conduct its business. The
Company is duly licensed or qualified to do business, and in good standing,
in
each jurisdiction in which the nature of its business requires licensing,
qualification or good standing, except for any failure to be so licensed or
qualified or in good standing that would not have a material adverse effect
on
(i) the Company and each Subsidiary (as defined below) taken as a whole, (ii)
its consolidated results of operations, assets, or financial condition, (iii)
its ability to perform its obligations under this Agreement, the Warrants and
the Registration Rights Agreement or (iv) the Securities (a “Material
Adverse Effect”).
(b) The
Company’s subsidiaries are Q-RNA, LLC, a Delaware limited liability company and
Marco-HiTech JV Ltd., a New York corporation (each a “Subsidiary”
and
collectively, the “Subsidiaries”).
All
of the outstanding shares of capital stock of each of the Subsidiaries are
duly
authorized, validly issued, fully paid and nonassessable and owned by the
Company and are free and clear of all liens, claims, encumbrances, options,
pledges and security interests (collectively, “Liens”)
and
were not issued in violation of, nor subject to, any pre-emptive, subscription
or similar rights. There are no outstanding warrants, options, subscriptions,
calls, rights, agreements, convertible or exchangeable securities or other
commitments or arrangements relating to the issuance, sale, purchase, return
or
redemption, voting or transfer of any shares, whether issued or unissued, of
any
capital stock, equity interest or other securities of any Subsidiary. The
Company and the Subsidiaries do not own any equity interests in any person,
other than the Subsidiaries. Each Subsidiary is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization
and
has all requisite power and authority to own, lease and operate its properties
and to conduct its business.
(c) Schedule
2.2(c)
sets
forth (a) the authorized capital stock of the Company; (b) the number of shares
of capital stock issued and outstanding; (c) the number of shares of capital
stock issuable pursuant to the Company’s stock plans; and (d) the number of
shares of capital stock issuable and reserved for issuance pursuant to
securities exercisable for, or convertible into or exchangeable for any shares
of capital stock of the Company. All of the issued and outstanding shares of
the
Company’s capital stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of pre-emptive rights and were issued in
full
compliance with applicable law and any rights of third parties relative to
the
Company and its subsidiaries. No person is entitled to pre-emptive or similar
statutory or contractual rights with respect to any securities of the Company.
Except as described on Schedule
2.2(c),
there
are no outstanding warrants, options, convertible securities or other rights,
agreements or arrangements of any character under which the Company or any
of
its Subsidiaries is or may be obligated to issue any equity securities of any
kind and except as contemplated by this Agreement, neither the Company nor
any
of its Subsidiaries is currently in negotiations for the issuance of any equity
securities of any kind. Except as described on Schedule
2.2(c),
there
are no voting agreements, buy-sell agreements, option or right of first purchase
agreements or other agreements of any kind among the Company and any of the
securityholders of the Company relating to the securities of the Company held
by
them. Except as described on Schedule
2.2(c)
the
Company has not granted any person the right to require the Company to register
any securities of the Company under the Securities Act, whether on a demand
basis or in connection with the registration of securities of the Company for
its own account or for the account of any other person. Except
as
described on Schedule
2.2(c),
the
Company does not have outstanding stockholder purchase rights or any similar
arrangement in effect giving any person the right to purchase any equity
interest in the Company upon the occurrence of certain events.
-7-
(d) The
Company has full corporate power and authority to execute, deliver and enter
into this Agreement, the Registration Rights Agreement,
the
Warrants and the Escrow Agreement, each (other than the Escrow Agreement) dated
as of the date hereof, by and among the Company and the Escrow Agent
(collectively, the “Transaction
Documents”)
and to
consummate the transactions contemplated hereby and thereby. All action on
the
part of the Company, its directors or stockholders necessary for the
authorization, execution, delivery and performance of this Agreement and the
other Transaction Documents by the Company, the authorization, sale, issuance
and delivery of the Securities and the performance of the Company’s obligations
hereunder and thereunder has been taken.
The
Securities have been duly authorized and, when issued and paid for in accordance
with this Agreement, will be validly issued, fully paid and non-assessable
and
will be free and clear of all Liens imposed by or through the Company other
than
restrictions imposed by this Agreement and applicable securities laws. This
Agreement and the other Transaction Documents have been duly executed and
delivered by the Company, and each such agreement constitutes a legal, valid
and
binding obligation of the Company, enforceable against the Company in accordance
with its terms.
(e)
(i)
Included in the Company’s Form 10-KSB/A for the fiscal year ended December 31,
2006 (the “Form
10-KSB”),
are
true and complete copies of the audited consolidated balance sheets (the
“Balance
Sheets”)
of the
Company and its Subsidiaries at December 31, 2006, and the related audited
consolidated statements of operation, changes in shareholders’ equity and cash
flows for the years ended December 31, 2006 and 2005 (the “Financial
Statements”),
accompanied by the report of Xxxxx Xxxxxxxx P.C., Certified Public Accountants,
A Professional Corporation. The Financial Statements have been prepared in
accordance with United States generally accepted accounting principles
(“GAAP”),
applied consistently with the past practices of the Company (except as may
be
indicated in the notes thereto), and as of their respective dates, fairly
present the consolidated financial position of the Company and the results
of
its operations and cash flows for the periods indicated therein. The Financial
Statements have been prepared and are in accordance in all material respects
with the accounting books and records of the Company. The books and records
of
the Company are kept in accordance with the provisions of the Exchange
Act.
(ii) Each
SEC
Document is available via the SEC’s XXXXX System. All reports or other documents
required to be filed by the Company under the Securities Act or the Exchange
Act
since November 29, 2006 have been filed. As of their respective filing dates,
each SEC Document complied in all material respects with the requirements of
the
Securities Act or the Exchange Act, as applicable, and the rules and regulations
of the SEC thereunder applicable to the SEC Documents, and no SEC Document
contained any untrue statement of a material fact or omitted 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. As of their respective filing dates, the financial statements of
the
Company included in the SEC Documents complied as to form in all material
respects with then applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto.
(iii) All
written disclosures provided to the Investors regarding the Company, its
business and the transactions contemplated hereby, furnished by or on behalf
of
the Company (including the Company’s representations and warranties set forth in
this Agreement and the schedules to this Agreement) are true and correct in
all
material respects 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. No event or circumstance has occurred or information exists with
respect to the Company or any of its Subsidiaries or its or their business,
properties, prospects, operations or financial conditions, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company but which has not been so publicly announced or
disclosed.
-8-
(iv) Since
December 31, 2006, neither the Company nor any of its Subsidiaries has incurred
any material liabilities or obligations of any nature, whether or not accrued,
absolute, contingent or otherwise, other than liabilities (A) disclosed in
the
SEC Documents filed prior to the date of this Agreement, (B) adequately provided
for in the Balance Sheets or disclosed in any related notes thereto, (C) not
required under GAAP to be reflected in the Balance Sheets, or disclosed in
any
related notes thereto, (D) incurred in connection with this Agreement or (E)
incurred in the ordinary course of business and under contracts entered into
in
the ordinary course of business and in excess of $250,000.
(v) Since
December 31, 2006, there has not been any material adverse change in the
business, financial condition or operating results of the Company and its
Subsidiaries.
(vi) No
written order or injunction has been issued to the Company, and to the best
of
its knowledge, there are no injunctions (which have not been reduced to writing)
that either (i) asserts that any of the transactions contemplated by the
Transaction documents is subject to the registration requirements of the
Securities Act or (ii) purports to prevent or suspend the issuance or sale
of
any of the Securities in any jurisdiction.
(f) Except
as
contemplated by this Agreement or disclosed in the SEC Documents, since December
31, 2006 through the date immediately preceding the Closing Date, neither the
Company nor any of its Subsidiaries has (i) issued any stock, options, bonds
or
other securities, (ii) borrowed any material amount or incurred or became
subject to any material liabilities (absolute, accrued or contingent), other
than current liabilities incurred in the ordinary course of business and
liabilities under contracts entered into in the ordinary course of business,
(iii) discharged or satisfied any material lien or material adverse claim or
paid any material obligation or material liability (absolute, accrued or
contingent), other than current liabilities shown on the Balance Sheets and
current liabilities incurred in the ordinary course of business, (iv) declared
or made any payment or distribution of cash or other property to the
stockholders of the Company or purchased or redeemed any securities of the
Company, (v) mortgaged, pledged or subjected to any material lien or material
adverse claim any of its properties or assets, except for liens for taxes not
yet due and payable or otherwise in the ordinary course of business, (vi) sold,
assigned or transferred any of its assets, tangible or intangible, except in
the
ordinary course of business or in an amount less than $250,000, (vii) suffered
any extraordinary losses or waived any rights of material value other than
in
the ordinary course of business, (viii) made any capital expenditures or
commitments therefor other than in the ordinary course of business or in an
amount less than $250,000, (ix) entered into any other transaction other than
in
the ordinary course of business in an amount less than $250,000 or entered
into
any material transaction, whether or not in the ordinary course of business,
(x)
made any charitable contributions or pledges, (xi) suffered any damages,
destruction or casualty loss, whether or not covered by insurance, affecting
any
of the properties or assets of the Company or any other properties or assets
of
the Company which could, individually or in the aggregate, have or result in
a
Material Adverse Effect, (xii) made any material change in the nature or
operations of the business of the Company or (xiii) entered into any agreement
or commitment to do any of the foregoing or that could reasonably be expected
to
result in any of the foregoing.
-9-
(g) (i)
The
execution and delivery by the Company of this Agreement and the other
Transaction Documents and the consummation of the transactions contemplated
hereby will not (A) result in the violation of any provision of the Certificate
of Incorporation or By-laws of the Company, (B) result in any violation of
any
law, statute, rule, regulation, order, writ, injunction, judgment or decree
of
any court or governmental authority to or by which the Company or any of its
Subsidiaries is bound or (C) conflict with, or result in a breach or violation
of, any of the terms or provisions of, or constitute (with due notice or lapse
of time or both) a default under, any lease, loan agreement, mortgage, security
agreement, trust indenture or other agreement to which the Company or any of
its
Subsidiaries is a party or by which it is bound or to which any of its
properties or assets is subject, nor result in the creation or imposition of
any
Lien upon any of the properties or assets of the Company or any of its
Subsidiaries, in the cases of clauses (B) and (C) above, only to the extent
such
conflict, breach, violation, default or Lien reasonably could, individually
or
in the aggregate, have or result in a Material Adverse Effect.
(ii)
No
consent, approval, license, permit, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission
or
other governmental authority remains to be obtained or is otherwise required
to
be obtained by the Company in connection with the authorization, execution
and
delivery of this Agreement or the consummation of the transactions contemplated
hereby, including, without limitation the issue and sale of the Units, except
filings as may be required to be made by the Company after the Closing with
(A)
the SEC and (B) state “blue sky” or other securities regulatory
authorities.
(h) The
Company and its Subsidiaries have all licenses, permits and other governmental
authorizations currently required for the conduct of its current business and
the ownership of its properties and is in all respects complying therewith,
except where the failure to have such licenses, permits and other governmental
authorizations would not have a Material Adverse Effect.
(i) The
Company is subject to and in compliance with the reporting requirements of
Section 13 or 15(d) of the Exchange Act and files reports with the SEC on the
XXXXX System. The Common Stock is registered pursuant to Section 12(b) of the
Exchange Act and the outstanding shares of Common Stock are listed for quotation
on the NASDAQ Capital Market, and the Company has taken no action designed
to,
or likely to have the effect of, terminating the registration of the Common
Stock under the Exchange Act or de-listing the Common Stock from the NASDAQ
Capital Market, nor has the Company received any written notification or, to
its
knowledge, oral notification, that the SEC or the NASDAQ Capital Market is
contemplating terminating such registration or listing or that the Company
is
not in compliance with the continuing listing or maintenance requirements of
the
NASDAQ Capital Market.
(j) The
certificates for the shares of Common Stock conform to the requirements of
the
NASDAQ Capital Market and the General Corporation Law of the State of
Delaware.
(k) The
Company has complied in all material respects with and established such
committees and policies as required by the Xxxxxxxx-Xxxxx Act of 2002 and the
rules and regulations of the SEC
promulgated thereunder. The Company is subject to and is in compliance in all
material respects with the requirements of the NASDAQ Capital
Market.
(l) Except
as
disclosed in the SEC Documents, there are no material claims, actions, suits,
investigations or proceedings pending or, to the Company’s knowledge, threatened
against the Company and its Subsidiaries or their respective assets, or any
director or officer of the Company or any of its Subsidiaries, in such person’s
capacity as an officer or director of the Company or any of its Subsidiaries,
at
law or in equity, by or before any governmental authority, or by or on behalf
of
any third party.
-10-
(m) The
Company is not, and following the Closing of the Offering will not be, an
“investment company” within the meaning of that term under the Investment
Company Act of 1940, as amended, and the rules and regulations of the SEC
thereunder.
(n) Neither
the Company nor any of its Subsidiaries is (i) in default under or in violation
of any indenture, loan or credit agreement or any other agreement or instrument
to which it is a party of by which it or any of its properties is bound or
(ii)
in violation of any order, decree or judgment of any court, arbitrator or
governmental body, the default under or violation of which could, individually
or in the aggregate, have or result in a Material Adverse Effect.
(o) The
Company and its Subsidiaries, as the case may be, own all right, title and
interest, or possesses adequate rights, in and to all patents, trademarks,
registered copyrights, service marks or trade names, permits, grants and
licenses and all other intangible assets of the Company necessary to conduct
the
business of the Company as presently conducted (the “Intellectual
Property”)
and to
the knowledge of the Company the Intellectual Property does not infringe on
or
conflict with the rights or intellectual property of third parties, and, neither
the Company, nor any of its Subsidiaries has received any written notice
contesting its right to use any such Intellectual Property. The Intellectual
Property has not been and are not the subject of any pending or threatened
litigation or claim of infringement, and the transactions contemplated hereby
and by the other Transaction Documents will not adversely affect the right,
title and interest of the Company in and to the Intellectual
Property.1
(p) The
Company and its Subsidiaries have obtained all permits, licenses and other
authorizations which are required under United States federal, state and local
laws relating to pollution or protection of the environment, including laws
related to emissions, discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic material or wastes into ambient air, surface
water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling or pollutants, contaminants or hazardous or toxic materials or wastes
(“Environmental
Laws”),
except where the failure to obtain such permits, license or authorizations
would
not, individually or in the aggregate, have or result in a Material Adverse
Effect. The Company and its Subsidiaries are in compliance with all terms and
conditions of such permits, licenses and authorizations and are also in full
compliance with all other limitations, restrictions, conditions and requirements
contained in the Environmental Laws, except where the failure to so comply
would
not have a Material Adverse Effect. The Company is not aware of, nor has the
Company received notice of, any events, conditions, circumstances, actions
or
plans which may interfere with or prevent continued compliance or which would
give rise to any material liability under any Environmental Laws.
(q) All
material agreements to which the Company or any of its Subsidiaries is a party
or by which any of them is bound and which are required to be filed by the
Company pursuant to the Securities Act, the Exchange Act and the rules and
regulations thereunder have been filed by the Company with the SEC. As of the
date hereof, except as disclosed in the SEC Documents, and except for those
agreements that by their terms are no longer in effect, each such agreement
is
in full force and effect and is binding on the Company and, to the Company’s
knowledge, is binding upon such other parties, in each case in accordance with
its terms, and neither the Company nor, to the Company’s knowledge, any other
party thereto is in material breach of or material default under any such
agreement. Except as disclosed in the SEC Documents, the Company has not
received any written notice regarding the termination of any such
agreements.
1
Revisions subject to review.
-11-
(r) The
Company has good title to all the properties and assets reflected as owned
by it
in the Financial Statements, subject to no Lien except (i) those, if any,
reflected in such Financial Statements or (ii) those which are not material
in
amount and do not adversely affect the use made and intended to be made of
such
property by the Company. The Company holds its leased properties under valid
and
binding leases. Except as disclosed in the SEC Documents, the Company owns
or
leases all such properties as are necessary to its operations as now
conducted.
(s) The
Company and its Subsidiaries maintain insurance of the types, against such
losses and in the amounts and with such insurers as are customary in the
Company’s industry for similarly situated companies, and otherwise reasonably
prudent, including, but not limited to, insurance covering all real and personal
property owned or leased by the Company against theft, damage, destruction,
acts
of vandalism and all other risks customarily insured against by similarly
situated companies, all of which insurance is in full force and
effect.
(t) The
Company and its Subsidiaries are in compliance in all material respects with
all
applicable laws and all orders of, and agreements with, any governmental
authority applicable to the Company, any Subsidiary or any of their respective
assets. The Company and the Subsidiaries have all permits, certificates,
licenses, approvals and other authorizations required under applicable laws
or
necessary in connection with the conduct of their businesses, except where
the
failure to have such permits, certificates, licenses, approvals and other
authorizations would not have a Material Adverse Effect.
(u) The
Company and its Subsidiaries have filed or obtained extensions of all material
United States federal, state, local and foreign income, excise, franchise,
real
estate, sales and use and other tax returns which it or they are required to
file. All material federal, state, county, local, foreign or other income taxes
which have become due or payable by the Company or any of its Subsidiaries
(collectively, “Taxes”),
have
been paid in full or are adequately provided for in accordance with GAAP on
the
financial statements of the applicable person. No Liens arising from or in
connection with Taxes have been filed and are currently in effect against the
Company or any of its Subsidiaries, except for Liens for Taxes which are not
yet
due or which would not have a Material Adverse Effect. No audits or
investigations are pending or, to the knowledge of the Company, threatened
with
respect to any tax returns or Taxes of the Company or any of its
Subsidiaries.
(v) The
Company is in compliance in all material respects with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
(“ERISA”);
no
“reportable event” (as defined in ERISA) has occurred with respect to any
“pension plan” (as defined in ERISA) for which the Company would have any
material liability; the Company has not incurred and does not expect to incur
any material liability under (i) Title IV of ERISA with respect to termination
of, or withdrawal from, any “pension plan” or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the “Code”);
and
each “pension plan” for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in
all
material respects and nothing has occurred, whether by action or by failure
to
act, which would cause the loss of such qualification.
(w) The
Company is not involved in any material labor dispute with its employees nor
is
any such dispute, to the Company’s knowledge, threatened or
imminent.
-12-
(x) Assuming
the truth of the Investor’s representations and acknowledgments contained in
Section 2.1 hereof, neither the Company nor any person acting on its behalf
has
offered or sold the Securities by means of any general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act. The
Company has not sold the Securities to anyone other than the Investors
designated on the signature pages hereto. Each Share, Warrant and Warrant Share
certificate shall bear substantially the same legend set forth in Section 2.1(l)
hereof for at least so long as required by the Securities Act.
(y) Neither
the Company nor any of its Subsidiaries, nor, to the knowledge of the Company,
any director, officer, agent, employee or other person associated with or acting
on behalf of the Company or any of its Subsidiaries, has (i) used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; (ii) made any direct or indirect
unlawful payment to any foreign or domestic government official or employee
from
corporate funds; (iii) violated or is in violation of any provision of the
U.S.
Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(z) [Intentionally
Omitted]
(aa) The
Company intends to account for the gross proceeds raised from the financing
which is the subject of this Agreement as equity in its financial statements.
(bb) The
proceeds to the Company from the offering of the Securities will not be used
to
purchase or carry any security in violation of Regulation T, U and X of the
Board of Governors of the Federal Reserve System.
(cc) The
Company maintains a system of internal accounting and other controls sufficient
to provide reasonable assurances that (i) transactions are executed in
accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management’s general
or specific authorization, and (iv) the recorded accounting for assets is
compared with existing assets at reasonable intervals and appropriate action
is
taken with respect to any differences.
(dd) Except
as
disclosed in the SEC Documents, no relationship, direct or indirect, exists
between or among the Company or any affiliate of the Company, on the one hand,
and any director, officer, stockholder, customer or supplier of the Company
or
any affiliate of the Company, on the other hand, which is required by the
Exchange Act to be described in the Form 10-KSB for the year ended December
31,
2006, which is not so described in such reports.
The
Company acknowledges that the Investors and, for purposes of the opinions to
be
delivered to the Investors pursuant to Section 3 hereof, counsel to the Company
and counsel to the Investors will rely upon the accuracy and truth of the
foregoing representations and hereby consents to such reliance.
-13-
SECTION
3
CONDITIONS
FOR CLOSING
3.1 Conditions
of Investor’s Obligations at Closing.
The
obligations of each Investor under this Agreement are subject to the Company’s
fulfillment on or before Closing of each of the following
conditions:
(a) Representations
and Warranties.
Each of
the representations and warranties of the Company contained in this Agreement
which are qualified as to materiality must be true and correct in all respects
and each of the representations and warranties of the Company contained in
this
Agreement which are not qualified as to materiality must be true and correct
in
all material respects as of the Closing Date, in each case, as if made on such
date.
(b) Performance.
The
Company shall have performed and complied in all material respects with all
agreements, covenants and conditions required to be performed and complied
with
by it under the Transaction Documents at or before the Closing.
(c) No
Suspension.
No
order suspending the use of the Transaction Documents or the SEC Documents
or
enjoining the offering or sale of the Securities shall have been issued, and
no
proceedings for that purpose or a similar purpose shall have been initiated
or
pending, or, to the best of the Company’s knowledge, are contemplated or
threatened nor has any order been issued halting the trading of the Company’s
Common Stock on the NASDAQ Capital Market.
(d) Capitalization.
Immediately prior to the consummation of the Closing, the Company will have
an
authorized capitalization as set forth on Schedule
2.2(c).
(e) Officers’
Certificate.
The
Investors shall have received certificates of the Chief Executive Officer and
Chief Financial Officer of the Company, dated as of the Closing Date, certifying
in their capacity as officers of the Company, as to the fulfillment of the
conditions set forth in subparagraphs (a), (b), (c) and (d) above.
(f) No
Material Adverse Change.
At
Closing, the Chief Executive Officer and the Chief Financial Officer of the
Company shall have provided a certificate to the Investors confirming that
there
have been no material adverse changes in the condition (financial or otherwise)
or prospects of the Company from the date of the latest financial statements
included in the Transaction Documents or the SEC Documents other than as set
forth or contemplated in the Transaction Documents and the Purchase
Agreement.
(g) Opinion
of Counsel to the Company.
The
Company shall have delivered to the Investor an opinion dated as of the Closing
Date and addressed to the Investors from Arent Fox LLP, counsel for the Company,
in substantially the form attached hereto as Exhibit
B.
(h) [Intentionally
Omitted]
(i) Registration
Rights Agreement.
The
Company shall have executed and delivered to the Investor the Registration
Rights Agreement, in substantially the form attached as Exhibit
C.
(j) Warrants.
The
Company shall have executed and delivered to the Investor Warrants to purchase
that number of shares of Common Stock equal to the number of Units purchased
by
such Investor multiplied by 0.5, pursuant to a Warrant dated the Closing Date,
in substantially the form attached as Exhibit D
(the
“Warrant”),
executed by the Company.
-14-
(k) Stock
Certificates.
The
Company shall have delivered to the Investor certificates representing that
number of Shares equal to the number of Units purchased by such
Investor.
(l) No
Injunctions; etc.
No
court or governmental injunction, order or decree prohibiting the purchase
and
sale of the Units will be in effect. There will not be in effect any law, rule
or regulation prohibiting or restricting the sale or requiring any consent
or
approval of any person that has not been obtained to issue and sell the Units
to
the Investor.
(m) Waivers
and Consents.
The
Company shall have obtained all consents and waivers necessary to execute and
deliver this Agreement and the other Transaction Documents and to issue and
deliver the Shares, the Warrants, and the Warrant Shares issuable thereon,
and
all consents and waivers shall be in full force and effect.
3.2 Conditions
of the Company’s Obligations at Closing.
The
obligations of the Company with respect to each Investor under this Agreement
are subject to such Investor’s fulfillment on or before the Closing of each of
the following conditions by the Investor:
(a) Representations
and Warranties.
The
representations and warranties of the Investor contained in Section 2.1 shall
be
true on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the Closing
Date.
(b) Payment
of Purchase Price.
The
Investor shall have delivered the purchase price and other documents required
pursuant hereto.
(c) Registration
Rights Agreement.
The
Company shall have received from the Investor the Registration Rights Agreement,
executed by the Investor.
(d) Investor
Qualification Questionnaire.
The
Company shall have received from the Investor a completed Qualification
Questionnaire, executed by the Investor.
(e) No
Injunctions; Etc.
No
court or governmental injunction, order or decree prohibiting the purchase
and
sale of the Units shall be in effect. There shall not be in effect any law,
rule
or regulation prohibiting or restricting the sale or requiring any consent
or
approval of any person that has not been obtained to issue and sell the Units
to
the Investor.
SECTION
4
AFFIRMATIVE
COVENANTS OF THE COMPANY
4.1 The
Company hereby covenants and agrees with the Investors as follows:
(a) Conduct
of the Company.
Between
the date hereof and the Closing Date, the Company shall, and shall cause each
Subsidiary to:
(i) preserve
and maintain in full force and effect its existence and good standing under
the
laws of its jurisdiction of formation or organization;
(ii) preserve
and maintain in full force and effect all material rights, privileges,
qualifications, applications, licenses and franchises necessary for the Company
and the Subsidiaries to operate in the normal conduct of their respective
businesses as presently and as proposed to be conducted;
-15-
(iii) use
its
best efforts to preserve intact its business organization;
(iv) conduct
its business in the ordinary course in accordance with sound business practices,
and keep its properties in good working order and condition (normal wear and
tear excepted);
(v) take
all
reasonable actions to protect and maintain the Company’s Intellectual Property,
including, without limitation, prosecuting all pending applications for patents
or for the registration of trademarks and copyrights and maintaining, to the
extent permitted by law, each patent or registration owned by the Company or
any
Subsidiary;
(vi) (A)
comply in all material respects with all applicable laws, rules and regulations
and with the directions of any governmental authority, and (B) not take any
action designed to or that might reasonably be expected to cause or result
in
unlawful manipulation of the price of the Common Stock to facilitate the sale
or
resale of the Shares, the Warrants or the Warrant Shares in violation of
applicable law;
(vii) file
or
cause to be filed in a timely manner all reports, applications, estimates and
licenses that shall be required by a governmental authority;
(viii) conduct
its business in a manner such that the representations and warranties of the
Company contained in Section 2.2 shall continue to be true and correct in
all material respects on and as of the Closing;
(ix) use
its
reasonable efforts to cause the conditions contained in Section 3.1 to be
satisfied on or before the Closing Date; and
(x) not
issue, deliver, sell or authorize, or propose the issuance, delivery, sale
or
purchase of, any additional shares of capital stock, stock equivalents or any
other security of the Company or any Subsidiary, other than (A) the
issuance of Common Stock pursuant to the exercise of any warrants or options
or
other outstanding convertible securities outstanding as of the date hereof
and
(B) the issuance of securities pursuant to the Company’s equity incentive
plans.
4.2 Disclosure.
The
Company covenants and agrees that neither it nor any other person acting on
its
behalf will provide any Investor or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto such Investor shall have executed a written agreement regarding
the confidentiality and use of such information. The Company understands and
confirms that each Investor shall be relying on the foregoing covenant in
effecting transactions in securities of the Company subsequent to Closing or
Termination of the Offering. In the event of a breach of the foregoing covenant
by the Company or any person acting on its or their behalf, the Company shall,
upon written notice of such breach, make public disclosure of such material
non-public information.
4.3 Reservation
of Common Stock.
The
Company shall at all times reserve and keep available out of its authorized
shares of Common Stock the maximum number of Shares and Warrant Shares that
may
be issuable or deliverable hereunder and under all the Warrants.
4.4 Securities
Law Filings.
For so
long as the Investors and their respective Affiliates in the aggregate hold
any
of the Shares, the Warrants or the Warrant Shares, the Company agrees to file
with the SEC in a timely manner all reports and other documents required to
be
filed by the Company under the Securities Act and the Exchange Act.
-16-
4.5 Legends.
The
Company agrees that at such time as the legend specified in Section 2.2(l)
is no
longer required to be printed on certificates evidencing the Shares, the
Warrants or the Warrant Shares (or any securities issued in exchange therefor
in
connection with any merger, recapitalization, reclassification or other similar
transaction), the Company shall cause its counsel to promptly issue a legal
opinion addressed to the Company’s transfer agent if required by such transfer
agent to effect the removal of such legend as and when any Investor so requests,
subject to the Investor providing any documentation reasonably requested by
the
Company or its counsel. The Company further agrees that at such time, it will,
promptly following, and in any event within ten (10) business days of, the
delivery by a Investor to the Company or the Company’s transfer agent of a
certificate representing Shares or Warrant Shares issued with a restrictive
legend, deliver or cause to be delivered to such Investor a certificate or
multiple certificates, if requested, representing such Shares or Warrant Shares
that is free from all restrictive and other legends.
4.6 Use
of
Proceeds.
The
Company shall use the net proceeds from the sale of the Units for general
corporate purposes, including: preparation
for Phase III clinical trials for Huperzine A in Alzheimer’s disease, including
funding a bioequivalence / bioavailability study for fully-synthetic (-)
Huperzine A; funding a Phase I clinical trial for transdermal delivery of
Huperzine A; and funding its ongoing pre-clinical development programs and
selecting lead compounds in epilepsy and Alzheimer’s disease
indications.
4.7 Securities
Laws Disclosure; Publicity.
By 8:30
a.m.. Eastern time, the day following the Closing Date, the Company will issue
a
press release disclosing the material terms of the transactions contemplated
hereby in accordance with the applicable SEC rules and regulations.
4.8 [Intentionally
Omitted]
SECTION
5
TERMINATION
5.1 Termination.
This
Agreement may be terminated prior to the Closing as follows:
(a) with
respect to any individual Investor, in whole or in part, at any time on or
prior
to the Closing Date, by written notice given by the Company to Investor and
to
all other Investors prior to Closing, provided that the Company returns to
such
Investor, without interest or deduction, all Proceeds paid by such Investor
(for
such terminated portion of Proceeds thereof);
(b) at
the
election of the Company or the Investor by written notice to the other parties
hereto after 5:00 p.m., New York time, on November 30, 2007, if the Closing
shall not have occurred on or prior to such date, unless such date is extended
by the mutual written consent of the Company and the Investor; provided,
however,
that
the right to terminate this Agreement under this Section 5.1(b) shall not be
available (A) to any party whose breach of any representation, warranty,
covenant or agreement under this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before such date or (B) if
the Closing has not occurred solely because any party hereto has not yet
obtained a necessary approval from any governmental authority; or
(c) by
either
the Company or the Investor by written notice to the other parties hereto if
any
governmental authority shall have issued any injunction or other order
prohibiting the consummation of the Closing and such injunction or order shall
not be subject to appeal or shall have become final and
nonappeable.
-17-
5.2 Effect
of Termination.
If this
Agreement is terminated pursuant to Section 5.1, this Agreement shall
become void and of no further force and effect and none of the parties hereto
shall have any liability in respect of such termination; provided,
however,
that
such termination shall not relieve the Company or any Investor of any liability
for any breach or non-performance of, or non-compliance with, this
Agreement.
SECTION
6
SURVIVAL
OF REPRESENTATIONS, WARRANTIES AND COVENANTS
6.1 Survival
of Representations, Warranties and Covenants.
All of
the representations and warranties made herein shall survive the execution
and
delivery of this Agreement until twenty-four (24) months following the Closing
Date, except for (a) Sections 2.2(a), 2.2(b), 2.2(c) and 2.2(d) which
representations and warranties shall survive the execution and delivery of
this
Agreement and the Closing hereunder for the period of any applicable statute
of
limitations or indefinitely if no statute of limitation applies, (b) 2.2(e),
2.2(v) and 2.2(x), which representations and warranties shall survive until
the
third anniversary of the Closing Date, and (c) Section 2.2(u), which shall
survive until the later to occur of (i) the lapse of the statute of limitations
with respect to the assessment of any tax to which such representation and
warranty relates (including any extensions or waivers thereof) and (ii) sixty
(60) days after the final administrative or judicial determination of the taxes
to which such representation and warranty relates, and no claim with respect
to
Section 2.2(u) may be asserted thereafter with the exception of claims arising
out of any fact, circumstance, action or proceeding to which the party asserting
such claim shall have given notice to the other parties to this Agreement prior
to the termination of such period of reasonable belief that a tax liability
will
subsequently arise therefrom. Except as otherwise provided in this Agreement,
all such representations, warranties, covenants and agreements shall inure
to
the benefit of the parties and their respective successors and
assigns.
SECTION
7
MISCELLANEOUS
7.1 Modification.
Neither
this Agreement nor any provisions hereof should be modified, discharged or
terminated except by an instrument in writing signed by the party against whom
any waiver, change, discharge or termination is sought.
7.2 Notices.
All
notices and other communications required or permitted hereunder must be in
writing and, except as otherwise noted herein, must be addressed as
follows:
if
to the
Company, to:
Xxx
Xxxx
Xxxxx
Xxxxx
0000
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxx Xxxxxxx
Facsimile:
(000) 000-0000
with
a
copy to:
Arent
Fox
LLP
0000
Xxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx,
XX 00000
Attn:
Xxxxxxx X. Xxxxxx, Esq.
Facsimile:
(000) 000-0000
-18-
if
to any
Investor, to the address shown on such Investor’s signature page, marked for
attention as there indicated,
or
to
such other address as the party to whom notice is to be given may have furnished
to the other parties in writing in accordance with the provisions of this
Section 7.2. Any such notice or communication will be deemed to have been
received: (A) in the case of facsimile or personal delivery, on the date of
such
delivery; and (B) in the case of nationally-recognized overnight courier, on
the
next business day after the date sent.
7.3 Execution.
By the
execution of the signature page attached hereto, the parties hereby agree to
be
bound by all of the terms and conditions of this Agreement. Any signature
delivered by facsimile transmission shall create a valid and binding obligation
of the so party executing with the same force and effect as if such facsimile
signature page were an original thereof.
7.4 Counterparts.
This
Agreement may by executed through the use of separate signature pages or in
any
number of counterparts, and each of such counterparts shall, for all purposes,
constitute one agreement binding on all the parties, notwithstanding that all
parties are not signatories to the same counterpart.
7.5 Binding Effect.
Except
as otherwise provided herein, this Agreement shall be binding upon and inure
to
the benefit of the parties and their heirs executors, administrators,
successors, legal representatives and assigns. The obligation of the Investors
shall be several and not joint and the agreements, representations, warranties
and acknowledgments herein contained shall be deemed to be made by and be
binding upon each such person and his heirs, executors, administrators and
successors.
7.6 Entire
Agreement.
This
instrument, together with the schedules and exhibits hereto, contains the entire
agreement of the parties, and there are no representations, covenants or other
agreements except as stated or referred to herein.
7.7 Assignability.
This
Agreement is not transferable or assignable by the Investor.
7.8 Applicable
Law; Jurisdiction.
This
Agreement shall be governed by and construed under the internal laws of the
State of New York without regard to conflict of law rules. The parties hereby
submit to the exclusive jurisdiction of the courts of the State of New York
located in New York County and the Federal courts located in the Southern
District of New York, with respect to any action or legal proceeding commenced
by either party with respect to this Agreement or the Units. Each party
irrevocably waives any objection it now has or hereafter may have respecting
the
venue of any such action or proceeding or the inconvenience of such forum,
and
each party consents to the service of process in any such action or proceeding
in the manner set forth for the delivery of notices herein.
7.9 Waiver
of Jury Trial.
The
parties hereby waive their rights to a trial by jury in any action or proceeding
involving any matter arising out of or relating to this Agreement or to the
Units.
7.10 Remedies.
In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, each of Investor 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 or obligations described in the foregoing
sentence and hereby agree to waive in any action for specific performance of
any
such obligation the defense that a remedy at law would be adequate.
-19-
7.11 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
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 therefore, and upon so agreeing, shall incorporate such substitute
provision into this Agreement.
7.12 Equal
Treatment of Investors.
The
Company shall not pay or offer to pay, whether in the form of cash, rights,
benefits or other consideration, any Investor to amend or consent to a waiver
or
modification of any provision of the Transaction Documents unless the same
consideration, rights or benefit is paid to all Investors. For avoidance of
doubt, this provision constitutes a separate right granted to each Investor
and
shall not in any way be construed as action in concert or action as a group
by
such Investor with any other Investor with respect to the purchase, disposition
or voting of the Shares, Warrants or Warrant Shares.
[Signatures
on Following Pages]
-20-
IN
WITNESS WHEREOF,
the
parties have executed this Agreement as of this 29th
day of
November, 2007:
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By:
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Name:
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Title:
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[Additional
Signatures on Following Pages]
-21-
STOCK
AND
WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
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Signature
of Investor
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Signature
of Co-Investor
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Name
of Investor
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Name
of Co-Investor
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Address
of Investor
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Address
of Co-Investor
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Social
Security or Taxpayer
|
Social
Security or Taxpayer Identification
|
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Identification
Number of Investor
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Number
of Co-Investor
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Number
of Units Purchased
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at
$4.00 per Unit
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Total
Purchase Price Amount
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Exhibit
A
Investor
Qualification Questionnaire
Exhibit
B
Opinion
of Arent Fox LLP
Exhibit
C
Registration
Rights Agreement
Exhibit
D
Form
of Warrant
