SUBSCRIPTION AGREEMENT
THIS
SUBSCRIPTION AGREEMENT
(this
“Agreement”),
is
effective as of March 4, 2008, by and among Neonode Inc., a Delaware
corporation
(the
“Company”),
and
the subscribers identified on Exhibit A hereto (each a “Subscriber”
and
collectively “Subscribers”).
WHEREAS,
the
Company and the Subscribers are executing and delivering this Agreement in
reliance upon an exemption from securities registration afforded by the
provisions of Section 4(2), Section 4(6) and/or Regulation D (“Regulation
D”)
as
promulgated by the United States Securities and Exchange Commission (the
“Commission”)
under
the Securities Act of 1933, as amended (the “1933
Act”).
WHEREAS,
the
parties desire that, upon the terms and subject to the conditions contained
herein, the Company shall issue and sell to the Subscribers, as provided herein,
and the Subscribers shall purchase from the Company, for up to an aggregate
of
$4,500,000 (the "Purchase
Price"),
up to
1,800,000 shares of the Company’s Common Stock, $0.001 par value (the
“Common
Stock”),
at a
per share purchase price of $2.50 (the “Shares”
or
“Securities”).
The
forgoing transaction is sometimes referred to as the “Offering.”
NOW,
THEREFORE,
in
consideration of the mutual covenants and other agreements contained in this
Agreement the Company and the Subscriber hereby agree as follows:
1. Closing
Date.
The
“Closing
Date”
shall
be the date that the Purchase Price is transmitted by wire transfer from the
Escrow Account (as defined below) or otherwise credited to or for the benefit
of
the Company. There may be multiple Closing Dates. The consummation of the
transactions contemplated herein shall take place at the offices of Xxxx Xxxxx,
LLP II Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx, XX 00000, or remotely
via
the exchange of documents and signatures, upon the satisfaction or waiver of
all
conditions to closing set forth in this Agreement. This subscription is
submitted to you in accordance with and subject to the terms and conditions
described in this Subscription Agreement, and the Confidential Private Placement
Memorandum dated February 26, 2008, as amended or supplemented from time to
time, including all documents incorporated by reference therein and all
attachments, schedules and exhibits thereto (the “Memorandum”),
relating to the Offering. Subject to the satisfaction or waiver of the terms
and
conditions of this Agreement, on the Closing Date, the Subscribers shall
purchase and the Company shall sell to each Subscriber the number of Shares
set
forth beside such Subscriber’s name on Exhibit A at a price per Share of $2.50
for an aggregate cash payment equal to the amount set forth beside such
Subscriber’s name on Exhibit A. Pending the occurrence of the Closing,
Subscriber’s funds shall be deposited into an Escrow account (“Escrow
Account”)
maintained by Signature Bank, a New York State chartered bank, with offices
at
000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000 (“Escrow
Agent”)
pursuant to an Escrow Agreement dated February 26, 2008 between the Company,
the
Broker (as defined in Section 5 hereto) and the Escrow Agent. Proceeds shall
be
released from the Escrow Account on the Closing Date.
2. Subscriber
Representations and Warranties.
Each
Subscriber hereby represents and warrants to and agrees with the Company
that:
(a) Organization
and Standing of the Subscriber.
If
Subscriber is an entity, such Subscriber is a corporation, partnership or other
entity duly incorporated or organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or
organization.
(b) Authorization
and Power.
The
Subscriber has the requisite power and authority to enter into and perform
this
Agreement and to purchase the Shares being sold to it hereunder. The execution,
delivery and performance of this Agreement by the Subscriber and the
consummation by it of the transactions contemplated hereby and thereby have,
if
Subscriber is an entity, been duly authorized by all necessary corporate or
partnership action, and no further consent or authorization of the Subscriber
or
its Board of Directors, stockholders, partners, members, as the case may be,
is
required.
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(c) No
Conflicts.
The
execution, delivery and performance of this Agreement and the consummation
by
the Subscriber of the transactions contemplated hereby and thereby or relating
hereto do not and will not (i) result in a violation of the Subscriber’s charter
documents or bylaws or other organizational documents or (ii) conflict with,
or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of any agreement, indenture or
instrument or obligation to which the Subscriber is a party or by which its
properties or assets are bound, or result in a violation of any law, rule,
or
regulation, or any order, judgment or decree of any court or governmental agency
applicable to the Subscriber or its properties (except for such conflicts,
defaults and violations as would not, individually or in the aggregate, have
a
material adverse effect on the Subscriber). The Subscriber is not required
to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement, or to purchase
the Securities in accordance with the terms hereof, provided that for purposes
of the representation made in this sentence, the Subscriber is assuming and
relying upon the accuracy of the relevant representations and agreements of
the
Company herein.
(d) Information
on Company.
The
Subscriber has been furnished with the Memorandum and has been furnished with
or
has had access at the XXXXX Website of the Commission to the Company's Form
10-K
filed on January 29, 2007 for the fiscal year ended October 31, 2006, and the
financial statements included therein for the year ended October 31, 2006,
together with all subsequent filings made with the Commission available at
the
XXXXX website including the filings relating to the meeting of the Company’s
stockholders held on August 10, 2007 (hereinafter referred to collectively
as
the "Reports").
In
addition, the
Subscriber may have received in writing from the Company such other information
concerning its operations, financial condition and other matters as the
Subscriber has requested in writing, identified thereon as OTHER WRITTEN
INFORMATION (the Memorandum and such other information is collectively, the
"Other
Written Information"),
and
considered all factors the
Subscriber deems material in deciding on the advisability of investing in the
Securities. The Other Written Information is qualified in its entirety by the
information disclosed by the Company in the Reports. The Subscriber has not
relied upon any representation or other information (oral or written) other
than
as stated in the Reports or the Other Written Information or as contained in
documents so furnished to the Subscriber by the Company in writing. The
Subscriber has had the opportunity to obtain any additional information, to
the
extent the Company had such information in their possession or could acquire
it
without unreasonable effort or expense, necessary to verify the accuracy of
the
information contained in the Memorandum and all documents received or reviewed
in connection with the purchase of the Securities and has had the opportunity
to
have representatives of the Company provide him with such additional information
regarding the terms and conditions of this particular investment and the
financial condition, results of operations, business and prospects of the
Company deemed relevant by the Subscriber, and all such requested information,
to the extent the Company had such information in its possession or could
acquire it without unreasonable effort or expense, has been provided by the
Company in writing to the full satisfaction of the Subscriber.
(e) Information
on Subscriber.
The
Subscriber is an "accredited
investor",
as
such term is defined in Regulation D promulgated by the Commission under the
1933 Act, is experienced in investments and business matters, has a preexisting
business relationship with the Broker (as defined in Section 5 herein), has
made
investments of a speculative nature and has purchased securities of United
States publicly-owned companies in private placements in the past and, with
its
representatives, has such knowledge and experience in financial, tax and other
business matters as to enable the
Subscriber to utilize the information made available by the Company to evaluate
the merits and risks of and to make an informed investment decision with respect
to the proposed purchase, which represents a speculative investment. The
Subscriber has the authority and is duly and legally qualified to purchase
and
own the Securities. The Subscriber is aware that an investment in the Securities
involves a number of very significant risks and has carefully read and
considered the matters set forth in the Memorandum and, in particular, the
matters under the caption “Risk Factors” therein, and, in particular,
acknowledges that such risks may materially adversely affect the Company’s
results of operations and future prospects. The Subscriber is able to bear
the
risk of such investment for an indefinite period and to afford a complete loss
thereof. The information set forth on the signature page hereto and in the
Investor Questionnaire provided herewith regarding the
Subscriber is accurate.
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(f) Purchase
of Shares.
On the
Closing Date, the
Subscriber will purchase the Shares as principal for its own account for
investment only and not with a view toward, or for resale in connection with,
the public sale or any distribution thereof.
(g) Compliance
with Securities Laws.
The
Subscriber understands and agrees that the Securities have not been registered
under the 1933 Act or any applicable state securities laws, by reason of their
issuance in a transaction that does not require registration under the 1933
Act
(based in part on the accuracy of the representations and warranties of
the
Subscriber contained herein), and that such Securities must be held indefinitely
unless a subsequent disposition is registered under the 1933 Act or any
applicable state securities laws or is exempt from such registration.
The
Subscriber will comply with all applicable rules and regulations in connection
with the sales of the Securities including laws relating to short
sales.
(h) Shares
Legend.
The
Shares shall bear the following or similar legend:
"THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT
BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES."
(i) Communication
of Offer.
The
offer to sell the Securities was directly communicated to the Subscriber by
the
Company or the Broker. At no time was the Subscriber presented with or solicited
by any leaflet, newspaper or magazine article, radio or television
advertisement, or any other form of general advertising or solicited or invited
to attend a promotional meeting otherwise than in connection and concurrently
with such communicated offer.
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(j) Authority;
Enforceability.
This
Agreement and other agreements delivered together with this Agreement or in
connection herewith have been duly authorized, executed and delivered by the
Subscriber and are valid and binding agreements enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to
or affecting creditors’ rights generally and to general principles of equity;
and the Subscriber has full power and authority necessary to enter into this
Agreement and such other agreements and to perform its obligations hereunder
and
under all other agreements entered into by the Subscriber relating
hereto.
(k) Restricted
Securities.
The
Subscriber understands that the Securities have not been registered under the
1933 Act and the Subscriber will not sell, offer to sell, assign, pledge,
hypothecate or otherwise transfer any of the Securities unless pursuant to
an
effective registration statement under the 1933 Act, or unless an exemption
from
registration is available. Notwithstanding anything to the contrary contained
in
this Agreement, the Subscriber may transfer (without restriction and without
the
need for an opinion of counsel) the Securities to its Affiliates (as defined
below) provided that each such Affiliate is an “accredited investor” under
Regulation D and such Affiliate agrees to be bound by the terms and conditions
of this Agreement. For the purposes of this Agreement, an “Affiliate”
of
any
person or entity means any other person or entity directly or indirectly
controlling, controlled by or under direct or indirect common control with
such
person or entity. Affiliate includes each Subsidiary of the Subscriber. For
purposes of this definition, “control”
means
the power to direct the management and policies of such person or firm, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise.
(l) No
Governmental Review.
The
Subscriber understands that no United States federal or state agency or any
other governmental or state agency has passed on or made recommendations or
endorsement of the Securities or the suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of
the
offering of the Securities or
confirmed the accuracy or determined the adequacy of the Memorandum. The
Memorandum has not been reviewed by any Federal, state or other regulatory
authority.
(m) Correctness
of Representations.
The
Subscriber represents as to the Subscriber that the foregoing representations
and warranties are true and correct as of the date hereof and, unless the
Subscriber otherwise notifies the Company prior to the Closing Date shall be
true and correct as of the Closing Date.
(n) Survival.
The
foregoing representations and warranties shall survive the Closing
Date.
3. Company
Representations and Warranties.
The
Company represents and warrants to and agrees with the Subscriber that except
as
set forth or disclosed in any Report or as disclosed in a Schedule attached
hereto:
(a) Due
Incorporation.
The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power to own its properties and to carry on its business
as
presently
conducted. The Company is duly qualified as a foreign corporation to do business
and is in good standing in each jurisdiction where the nature of the business
conducted or property owned by it makes such qualification necessary, other
than
those jurisdictions in which the failure to so qualify would not have a Material
Adverse Effect. For purposes of this Agreement, a “Material
Adverse Effect”
shall
mean a material adverse effect on the financial condition, results of
operations, prospects, properties or business of the Company and its
Subsidiaries taken as a whole. For purposes of this Agreement, “Subsidiary”
means,
with respect to any entity at any date, any corporation, limited or general
partnership, limited liability company, trust, estate, association, joint
venture or other business entity of which more than 50% of (i) the
outstanding capital stock having (in the absence of contingencies) ordinary
voting power to elect a majority of the board of directors or other managing
body of such entity, (ii) in the case of a partnership or limited liability
company, the interest in the capital or profits of such partnership or limited
liability company or (iii) in the case of a trust, estate, association,
joint venture or other entity, the beneficial interest in such trust, estate,
association or other entity business is, at the time of determination, owned
or
controlled directly or indirectly through one or more intermediaries, by such
entity. The Subsidiaries as of the Closing Date are set forth on Schedule
3(a).
4
(b) Outstanding
Stock.
All
issued and outstanding shares of capital stock of the Company and Subsidiary
have been duly authorized and validly issued and are fully paid and
non-assessable.
(c) Authority;
Enforceability.
The
Memorandum, this Agreement and any other agreements delivered together with
this
Agreement or in connection herewith (collectively “Transaction
Documents”)
have
been duly authorized, executed and delivered by the Company and are valid and
binding agreements of the Company enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity. The Company
has
full corporate power and authority necessary to enter into and deliver the
Transaction Documents and to perform its obligations thereunder.
(d) Capitalization
and Additional Issuances.
The
authorized and outstanding capital stock of the Company and Subsidiaries as
of
the date of this Agreement and the Closing Date (not including the Securities)
are set forth on Schedule
3(d).
There
are
no outstanding agreements or preemptive or similar rights affecting the
Company's Common Stock or equity and no outstanding rights, warrants or options
to acquire, or instruments convertible into or exchangeable for, or agreements
or understandings with respect to the sale or issuance of any shares of Common
Stock or equity of the Company or Subsidiaries or other equity interest in
the
Company except as described on Schedule
3(d) or
as
disclosed in the Reports.
(e) Consents.
No
consent, approval, authorization or order of any court, governmental agency
or
body or arbitrator having jurisdiction over the Company, or any of its
Affiliates, the Nasdaq Capital Market (the “NCM”)
or the
Company's shareholders is required for the execution by the Company of the
Transaction Documents and compliance and performance by the Company of its
obligations under the Transaction Documents, including, without limitation,
the
issuance and sale of the Securities. The Transaction Documents and the Company’s
performance of its obligations thereunder have been unanimously approved by
the
Company’s Board of Directors.
(f) No
Violation or Conflict.
Assuming the representations and warranties of the Subscriber in Section 2
are
true and correct, neither the issuance and sale of the Securities nor the
performance of the Company’s obligations under the Transaction Documents by the
Company will:
(i) violate,
conflict with, result in a breach of, or constitute a default (or an event
which
with the giving of notice or the lapse of time or both would be reasonably
likely to constitute a default) under (A) the articles or certificate of
incorporation, charter or bylaws of the Company, (B) to the Company's knowledge,
any decree, judgment, order, law, treaty, rule, regulation or determination
applicable to the Company of any court, governmental agency or body, or
arbitrator having jurisdiction over the Company or over the properties or assets
of the Company or any of its Affiliates, (C) the terms of any bond, debenture,
note or any other evidence of indebtedness, or any agreement, stock option
or
other similar plan, indenture, lease, mortgage, deed of trust or other
instrument to which the Company or any of its Affiliates is a party, by which
the Company or any of its Affiliates is bound, or to which any of the properties
of the Company or any of its Affiliates is subject, or (D) the terms of any
"lock-up" or similar provision of any underwriting or similar agreement to
which
the Company, or any of its Affiliates is a party;
or
5
(ii) result
in
the creation or imposition of any lien, charge or encumbrance upon the
Securities or any of the assets of the Company or any of its Affiliates except
as described herein; or
(iii) except
as
described in Schedule
3(d),
result
in the activation of any anti-dilution rights or a reset or repricing of any
debt or security instrument of any other creditor or equity holder of the
Company, nor result in the acceleration of the due date of any obligation of
the
Company.
(g) The
Securities.
The
Securities upon issuance:
(i) are,
or
will be, free and clear of any security interests, liens, claims or other
encumbrances, subject to restrictions upon transfer under the 1933 Act and
any
applicable state securities laws;
(ii) have
been, or will be, duly and validly authorized and on the date of issuance of
the
Shares, such Shares will be duly and validly issued, fully paid and
non-assessable;
(iii) will
not
have been issued or sold in violation of any preemptive or other similar rights
of the holders of any securities of the Company;
(iv) will
not
subject the holders thereof to personal liability by reason of being such
holders; and
(v) assuming
the representations and warranties of the Subscribers as set forth in Section
2
hereof are true and correct, will not result in a violation of Section 5 under
the 1933 Act.
(h) Litigation.
There
is no pending or, to the best knowledge of the Company, threatened action,
suit,
proceeding or investigation before any court, governmental agency or body,
or
arbitrator having jurisdiction over the Company, or any of its Affiliates that
would affect the execution by the Company or the performance by the Company
of
its obligations under the Transaction Documents. Except as disclosed in the
Reports, there is no pending or, to the best knowledge of the Company, basis
for
or threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over the Company,
or any of its Affiliates which litigation if adversely determined would have
a
Material Adverse Effect.
(i) No
Market Manipulation.
The
Company and its Affiliates have not taken, and will not take, directly or
indirectly, any action designed to, or that might reasonably be expected to,
cause or result in stabilization or manipulation of the price of the Common
Stock to
facilitate the sale or resale of the Securities or affect the price at which
the
Securities may be issued or resold.
(j) Information
Concerning Company.
The
Reports including the exhibits and financial statements included therewith,
and
Other Written Information contain all material information relating to the
Company and its operations and financial condition as of their respective dates
which information is required to be disclosed therein. Since the dates of the
most recent financial statements included in the Reports, and except as modified
in the Other Written Information or in the Schedules hereto, there has been
no
Material Adverse Event relating to the Company's business, financial condition
or affairs not disclosed in the Reports. The Reports including the exhibits
and
financial statements included therewith, and Other Written Information do not
contain any untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements therein,
taken
as a whole, not misleading in light of the circumstances when made.
6
(k) Stop
Transfer.
The
Company will not issue any stop transfer order or other order impeding the
sale,
resale or delivery of any of the Securities, except as may be required by any
applicable federal or state securities laws and unless contemporaneous notice
of
such instruction is given to the Subscriber.
(l) Defaults.
Except
as set forth in Schedule
3(l),
the
Company is not in violation of its articles of incorporation or bylaws. The
Company is (i) not in default under or in violation of any other material
agreement or instrument to which it is a party or by which it or any of its
properties are bound or affected, which default or violation would have a
Material Adverse Effect,
(ii)
not in default with respect to any order of any court, arbitrator or
governmental body or subject to or party to any order of any court or
governmental authority arising out of any action, suit or proceeding under
any
statute or other law respecting antitrust, monopoly, restraint of trade, unfair
competition or similar matters, or (iii) not in violation of any statute, rule
or regulation of any governmental authority which violation would have a
Material Adverse Effect.
(m) No
Integrated Offering.
Neither
the Company, nor any of its Affiliates, nor any person acting on its or their
behalf, has directly or indirectly made any offers or sales of any security
or
solicited any offers to buy any security under circumstances that would cause
the offer of the Securities pursuant to this Agreement to be integrated with
prior offerings by the Company for purposes of the 1933 Act or any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of the NCM which would impair the exemptions relied upon in
this
Offering or the Company’s ability to timely comply with its obligations
hereunder. Neither the Company nor any of its Affiliates will take any action
or
steps that would cause the offer or issuance of the Securities to be integrated
with other offerings which would impair the exemptions relied upon in this
Offering or the Company’s ability to timely comply with its obligations
hereunder. The Company will not conduct any offering other than the transactions
contemplated hereby that will be integrated with the offer or issuance of the
Securities that would impair the exemptions relied upon in this Offering or
the
Company’s ability to timely comply with its obligations hereunder.
(n) No
General Solicitation.
Neither
the Company, nor any of its Affiliates, nor to its knowledge, any person acting
on its or their behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under the 0000 Xxx)
in
connection with the offer or sale of the Securities.
(o) No
Undisclosed Liabilities.
The
Company has no liabilities or obligations which are material, individually
or in
the aggregate, other than those incurred in the ordinary course of the Company
businesses since the date of the most recent audited financial statements of
the
Company contained in the Reports, and which, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect,
except
as disclosed in the Reports or on Schedule
3(o).
(p) No
Undisclosed Events or Circumstances.
Since
the date of the most recent audited financial statements of the Company
contained in the Reports, no event has occurred with respect to the Company
or
its businesses, properties, operations or financial condition, that, under
applicable law, rule or regulation, requires public disclosure prior to the
date
hereof by the Company but which has not been so publicly disclosed.
(q) Investment
Company.
Neither
the Company nor any Affiliate of the Company is an “investment company” within
the meaning of the Investment Company Act of 1940, as amended.
(r) Foreign
Corrupt Practices.
Neither
the Company, nor to the knowledge of the Company, any agent or other person
acting on behalf of the Company, has (i) directly or indirectly, used any funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to any
foreign or domestic political parties or campaigns from corporate funds, (iii)
failed to disclose fully any contribution made by the Company (or made by any
person acting on its behalf of which the Company is aware) which is in violation
of law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.
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(s) Reporting
Company.
The
Company is a publicly-held company subject to reporting obligations pursuant
to
Section 13 of the Securities Exchange Act of 1934, as amended (the "1934
Act")
and
has a class of Common Stock registered pursuant to Section 12(g) of the 1934
Act. Pursuant to the provisions of the 1934 Act, the Company has timely filed
all reports and other materials required to be filed thereunder with the
Commission (the “SEC
Reports”)
during
the preceding twelve months except where the failure to so timely file has
not
had a continuing Material Adverse Effect on the Company as of the Closing Date.
As of their respective dates, the SEC Reports complied in all material respects
with the requirements of the 1933 Act and the 1934 Act, as applicable, and
none
of the SEC Reports, when filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing.
Such
financial statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis during
the periods involved (“GAAP”), except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, and fairly present
in
all material respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations
and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.
(t) Listing.
The
Company's Common Stock is quoted on the NCM under the symbol NEON. Except as
disclosed on a current report on Form 8-K filed with the Commission on March
23,
2007, the Company has not received any oral or written notice that its Common
Stock is not eligible nor will become ineligible for listing on the NCM nor
that
its Common Stock does not meet all requirements for the continuation of such
listing. The Company satisfies all the requirements for the continued listing
of
its Common Stock on the NCM.
(u) DTC
Status.
The
Company’s transfer agent is a participant in, and the Common Stock is eligible
for transfer pursuant to, the Depository Trust Company Automated Securities
Transfer Program. The name, address, telephone number, fax number, contact
person and email address of the Company transfer agent is set forth on
Schedule
3(u)
hereto.
(v) Intellectual
Property.
To the
Company’s knowledge, the Company and its Subsidiaries own, or possess adequate
rights or licenses to use, all registered trademarks, trade names, service
marks, service xxxx registrations, service names, patents, patent applications,
patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and other intellectual property rights
(“Intellectual Property Rights”) necessary to conduct their respective
businesses
now
conducted. None of the Company’s Intellectual Property Rights have expired, or
are expected to expire, within six months from the date of this Agreement.
The
Company does not have any knowledge of any infringement by the Company or its
Subsidiaries of Intellectual Property Rights of others. There is no pending,
or
to the best knowledge of the Company, threatened action,
suit, proceeding or any investigation, before any court, governmental agency,
or
body or arbitrator having jurisdiction over the Company, or any of its
affiliates
regarding its Intellectual Property Rights. The
Company and its Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their intellectual properties,
except where failure to do so could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
8
(w) Company
Predecessor and Subsidiaries.
The
Company makes each of the representations contained in Sections 3(a), (b),
(c),
(d), (e), (f), (h), (j), (l), (o), (p), (q), and (v) of this Agreement, as
same
relate to each Subsidiary of the Company. All representations made by or
relating to the Company of a historical or prospective nature and all
undertakings described in Sections 6(d) through 6(g) shall relate, apply and
refer to the Company and its predecessors. The Company represents that it owns
100% of the outstanding equity of the Subsidiaries and rights to receive equity
of the Subsidiaries free and clear of all liens, encumbrances and claims. No
person or entity other than the Company has the right to own and receive any
equity interest in the Subsidiaries.
(x) Correctness
of Representations.
The
Company represents that the foregoing representations and warranties are true
and correct as of the date hereof in all material respects, and, unless the
Company otherwise notifies the Subscriber prior to the Closing Date, shall
be
true and correct in all material respects as of the Closing Date; provided,
that, if such representation or warranty is made as of a different date, in
which case such representation or warranty shall be true as of such
date.
(y) Survival.
The
foregoing representations and warranties shall survive the Closing
Date.
4. Regulation
D Offering,
The
offer and issuance of the Securities to the Subscriber is being made pursuant
to
the exemption from the registration provisions of the 1933 Act afforded by
Section 4(2) or Section 4(6) of the 1933 Act and/or Rule 506 of Regulation
D
promulgated thereunder.
5. Broker
Fees; Indemnification,
The
Company on the one hand, and the Subscriber on the other hand, agrees to
indemnify the other against and hold the other harmless from any and all
liabilities to any persons claiming brokerage commissions or similar fees other
than Empire Asset Management, Inc. (the “Broker”)
on
account of services purported to have been rendered on behalf of the
indemnifying party in connection with this Agreement or the transactions
contemplated hereby and arising out of such party’s actions. The Subscriber
acknowledges that the Company will (i) pay the Broker an aggregate cash fee
up
to 10% of the Purchase Price on the Closing Date, which shall be allocated
as
follows: selling commissions of 5%, a placement fee of 2.5% and a management
fee
of 2.5%, (ii) pay the Broker $25,000.00 to apply towards reimbursement of
offering expenses, and pay additional offering expenses in excess of $25,000
submitted to the Company for reimbursement by the Broker, and (iii) issue to
the
Broker one share of Common Stock for every 15 shares of Common Stock sold in
this Offering (120,000 shares if the maximum is sold). The Company represents
that there are no other parties entitled to receive fees, commissions, or
similar payments in connection with the offering described in this Agreement
except the Broker.
6. Covenants
of the Company.
The
Company covenants and agrees with the Subscriber as follows:
(a) Filing
Requirements.
For as
long as the Company is a reporting issuer with the Commission, the
Company shall file all reports and other materials required to be filed under
the 1934 Act with the Commission.
(b) Listing/Quotation.
The
Company shall promptly secure the quotation or listing of the Shares upon each
national securities exchange, or automated quotation system upon which they
are
or become eligible for quotation or listing (subject to official notice of
issuance).
9
(c) Market
Regulations.
The
Company shall notify the Commission, the NCM and applicable state authorities,
in accordance with their requirements, of the transactions contemplated by
this
Agreement, and shall take all other necessary action and proceedings as may
be
required and permitted by applicable law, rule and regulation, for the legal
and
valid issuance of the Securities to the Subscriber.
(d) Books
and Records.
From the
date of this Agreement until the date twelve months following the Closing Date
(the “End
Date”),
the
Company will keep true records and books of account in which full, true and
correct entries will be made of all dealings or transactions in relation to
its
business and affairs in accordance with generally accepted accounting principles
applied on a consistent basis.
(e) Governmental
Authorities.
From the
date of this Agreement and until the End Date, the Company shall duly observe
and conform in all material respects to all valid requirements of governmental
authorities relating to the conduct of its business or to its properties or
assets.
(f) Non-Public
Information.
The
Company covenants and agrees that except for the Reports, Other Written
Information and schedules and exhibits to this Agreement, which information
the
Company undertakes to publicly disclose not later than the sooner of the
required or actual filing date of a Form 8-K, neither it nor any other person
acting on its behalf will at any time provide the Subscriber or its agents
or
counsel with any information that the Company believes constitutes material
non-public information, unless (i) such disclosure is required under the terms
of this Agreement or (ii) prior thereto the Subscriber shall have agreed in
writing to keep such information in confidence. The Company understands and
confirms that the Subscriber shall be relying on the foregoing representations
in effecting transactions in securities of the Company.
(g) Notices.
Until
the End Date, the Company will maintain a United States address and United
States fax number for notices purposes under the Transaction
Documents.
(h) Use
of
Proceeds.
Except
as set forth on Schedule 6(h) attached hereto, the Company shall use the net
proceeds from the sale of the Securities hereunder for working capital purposes
and shall not use such proceeds for (a) the satisfaction of any portion of
the
Company’s debt (other than payment of trade payables in the ordinary course of
the Company’s business and prior practices), (b) the redemption of any Common
Stock or Common Stock equivalents or (c) the settlement of any outstanding
litigation.
7. Piggy-Back
Registration Rights and Indemnification.
(a)
Piggy-Back
Rights.
As used
in this Section 7(a):
“Effective
Date”
shall
mean the date the Registration Statement is declared effective by the
Commission.
“Prospectus”
shall
mean the prospectus included in the Registration Statement (including a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule
430A
promulgated under the 1933 Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Securities covered by the Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
10
“Registrable
Securities”
shall
mean any Shares together with any securities issued or issuable upon any stock
split, dividend or other distribution, adjustment, recapitalization or similar
event with respect to the foregoing.
“Registration
Statement”
shall
mean a registration statement, including the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.
(i)
If,
at any time during the period beginning on the Closing Date and ending on the
sooner of (A) the day falling 24 months after the Closing Date and (B) when
the
Registrable Securities may be sold without restriction and without volume
limitations pursuant to Rule 144 of the 1933 Act, the Company shall determine
to
prepare and file with the Commission a Registration Statement relating to an
offering for its own account or the account of others under the 1933 Act of
any
of its equity securities, other than on Form S-4 or Form S-8 (each as
promulgated under the 0000 Xxx) or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity
or business or equity securities issuable in connection with stock option or
other employee benefit plans (a “Registration”),
then
the Company shall promptly send to the Subscriber a written notice of such
determination and if, within 15 days after receipt of such notice, the
Subscriber shall so request in writing, the Company shall include in such
Registration Statement all or any part of such Registrable Securities the
Subscriber requests to be registered provided, however, that (A)
if such
registration involves an underwritten public offering, the Subscriber requesting
such registration must sell its Registrable Securities to the underwriters
on
the same terms (to the extent applicable) as apply to the Company and (B) if,
at
any time after giving such written notice of its intention to register its
equity securities and prior to the Effective Date of the Registration Statement
filed in connection with such registration, the Company shall, for any reason,
terminate its attempt to register such equity securities, the Company shall
give
written notice to the Subscriber and, thereupon, the Company shall be relieved
of its obligation to register any Registrable Securities in connection with
such
registration.
(ii)
If a
Registration involves an underwritten public offering and the managing
underwriter thereof advises the Company that, in its view, the number of shares
of Common Stock proposed to be included in such Registration exceeds the largest
number of shares of Common Stock that can be sold without having an adverse
effect on such public offering (the “Maximum
Offering Size”),
the
Company will include in such Registration only that number of shares of Common
Stock which does not cause the Maximum Offering Size to be exceeded, in the
following order of priorities: (A) first, all securities the Company proposes
to
sell for its own account, (B) second, up to the full number of securities
proposed to be registered for the account of the holders of securities entitled
to inclusion of their securities in the registration statement by reason of
registration rights existing on or prior to the date hereof, (C) third, the
securities requested to be registered by the Subscriber and (D) fourth, the
securities requested to be registered by other holders of securities entitled
to
participate in the Registration. If as a result of the provisions of this
Section 7(a)(ii), the Subscriber is not entitled to include all such Registrable
Securities in such registration, the Subscriber may elect to withdraw its
request to include any Registrable Securities in such registration.
(iii)
If
the Company undertakes a Registration, the Company shall:
(A)
Notify the Subscriber as promptly as reasonably possible of any of the following
events: (I) if the Commission issues any stop order suspending the effectiveness
of the Registration Statement or initiates any action, claim, suit,
investigation or proceeding for that purpose; (II) the Company receives notice
of any suspension of the qualification or exemption from qualification of any
Registrable Securities for sale in any jurisdiction, or the initiation or threat
of any action, claim, suit, investigation or proceeding for such purpose; or
(III) the financial statements included in the Registration Statement become
ineligible for inclusion therein or any statement made in the Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference is untrue in any material respect or any
revision to the Registration Statement, Prospectus or other document is required
so that it will not contain any untrue statement of a material fact or omit
to
state any material fact required to be stated therein or necessary to make
the
statements therein, in light of the circumstances under which they were made,
not misleading. If the Company notifies the Subscriber in accordance with this
paragraph, then the Subscriber shall suspend the use of the Prospectus until
the
Company (i) provides copies of a supplemented or amended Prospectus, or (ii)
advises in writing that the use of the Prospectus may be resumed and has
received copies of any additional or supplemental filings that are incorporated
by reference in the Prospectus. Notwithstanding the foregoing, the Company
shall
not be required to amend or supplement the Registration Statement, any related
Prospectus or any document incorporated by reference therein for a period not
to
exceed 60 consecutive days (or 120 days in the aggregate in any calendar year)
if there occurs or exists any pending corporate development the disclosure
of
which would, in the good faith judgment of the Board of Directors of the
Company, be harmful to the business, operations, prospects, or condition
(financial or otherwise) of the Company and its subsidiaries, taken as a
whole;
11
(B)
Deliver to the Subscriber, which delivery may be made electronically, by the
fifth business day after a Subscriber request, without charge, such reasonable
number of copies of the Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as the Subscriber may
reasonably request;
(C)
To
the extent required by law, prior to registration hereunder, use its reasonable
efforts to register or qualify or cooperate with the Subscriber in connection
with the registration or qualification (or exemption from such registration
or
qualification) of such Registrable Securities for offer and sale under the
securities or “blue sky” laws of such jurisdictions within the United States as
the Subscriber requests in writing and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by a Registration Statement; provided, however,
that the Company shall not be required for any such purpose to (I) qualify
generally to do business as a foreign corporation in any jurisdiction wherein
it
would not be otherwise required to qualify but for the requirements of this
Section 7(a), or (II) subject itself to taxation; and
(D)
Comply in all material respects with all applicable rules and regulations of
the
Commission and the principal stock exchange or market on which the Common Stock
is then listed or eligible for trading.
(iv)
The
Subscriber shall have the right to select one legal counsel to review and
oversee any Registration (“Subscriber
Counsel”)
at the
Subscriber’s expense. Broker shall have the right to select its own legal
counsel to review and oversee any Registration (“Broker’s Counsel,” and together
with Subscriber’s Counsel “Legal Counsel”) at the Company’s expense, subject to
a $5,000 cap on legal expenses. The Company and Legal Counsel shall reasonably
cooperate with each other in performing the Company’s obligations under this
Agreement.
(v)
The
Company shall pay all reasonable fees and expenses incident to a Registration
by
the Company, including (A) all registration and filing fees and expenses
(including those related to filings with the Commission, in connection with
applicable state securities or “blue sky” laws and to Nasdaq), (B) printing
expenses (including expenses of printing certificates for Registrable Securities
and of printing copies of Prospectuses reasonably requested by the Subscriber),
(C) messenger, telephone and delivery expenses, (D) fees and disbursements
of
counsel for the Company, and (E) fees and expenses of all other Persons retained
by the Company in connection with the Registration. Notwithstanding
the foregoing or anything in this Agreement to the contrary, each holder of
the
Registrable Securities being registered shall pay all commissions and
underwriting discounts with respect to any Registrable Securities sold by it
and
the fees and disbursements of any counsel or other advisors or experts retained
by such holders (severally or jointly).
12
(vi)
In
connection with the preparation of a registration statement including the
Registrable Securities pursuant to this Section 7, Subscriber agrees to furnish
to the Company a completed questionnaire in a form acceptable to the Company
upon request. Subscriber agrees further to supplement the questionnaire as
necessary to enable the Company to respond to comments, if any, received by
the
Commission. The Company shall not be required to include any Subscriber that
does not complete, date and execute a selling stockholder
questionnaire.
(b) Indemnification.
(i) Indemnification
by the Company.
The
Company agrees to indemnify and hold harmless the Subscriber and all of its
members, officers and employees (and each person, if any, who controls the
Subscriber within the meaning of Section 15 of the 1933 Act or Section 20 of
the
1934 Act) (collectively, the “Indemnitees”),
from
and against any losses, claims, damages or liabilities (collectively,
“Losses”)
to
which they may become subject (under the 1933 Act or otherwise) insofar as
such
Losses (or actions or proceedings in respect thereof) arise out of, or are
based
upon, any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any omission or alleged omission
to
state therein a material fact required to be stated therein or necessary to
make
the statements therein, in light of the circumstances under which they were
made, not misleading or arise out of any failure by the Company to fulfill
any
undertaking included in the Registration Statement and the Company will, as
incurred, reimburse the Indemnitees for any legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim; provided, however, that the Company shall not be liable
in
any such case to the extent that such Loss arises out of, or is based upon,
an
untrue statement or omission or alleged untrue statement or omission made in
such Registration Statement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Indemnitees
specifically for use in preparation of the Registration Statement; provided,
further, however, that the foregoing indemnification shall not inure to the
benefit of any Indemnitee who failed to deliver a final Prospectus or an
amendment or supplement thereto (provided by the Company to such Indemnitee
in
the requisite quantity and on a timely basis to permit proper delivery on or
prior to the relevant transaction date) to the person asserting any losses,
claims, damages and liabilities and judgments caused by any untrue statement
of
a material fact contained in any Prospectus, or caused by any omission to state
therein a material fact required to be stated therein or necessary to make
the
statements therein, in light of the circumstances under which they were made,
not misleading, if such material misstatement or omission was cured in such
final Prospectus or amendment or supplement thereto.
(ii) Indemnification
by the Subscriber.
The
Subscriber agrees to indemnify and hold harmless the Company (and
each
person, if any, who controls the Company within the meaning of Section 15 of
the
1933 Act or Section 20 of the 1934 Act, each
officer of the Company who signs the Registration Statement and each director
of
the Company), from and against any losses, claims, damages or liabilities to
which the Company (or any such officer, director or controlling person) may
become subject (under the 1933 Act or otherwise), insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of, or are based upon, any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading in each case, on the
effective date thereof, if, and to the extent, such untrue statement or omission
or alleged untrue statement or omission was made in reliance upon and in
conformity with written information furnished by or on behalf of the Subscriber
specifically for use in preparation of the Registration Statement, and such
Subscriber will reimburse the Company (and each of its officers, directors
or
controlling persons) for any legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding
or
claim; provided, however, that in no event shall any indemnity under this
Section 7(b)(ii) be greater in amount than the net proceeds to the Subscriber
as
a result of the sale of Registrable Securities pursuant to such Registration
Statement.
13
(iii) Conduct
of Indemnification Proceedings.
If any
action, claim, suit, investigation or proceeding (a “Proceeding”)
shall
be brought or asserted against any person entitled to indemnity hereunder (an
“Indemnified
Party”),
such
Indemnified Party shall promptly notify the person from whom indemnity is sought
(the “Indemnifying
Party”)
in
writing, and the Indemnifying Party shall be entitled to participate therein,
and to the extent that it shall wish to assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party
and
the payment of all fees and expenses incurred in connection with defense
thereof. After notice from the Indemnifying Party to such Indemnified Party
of
its election to assume the defense thereof, such Indemnifying Party shall not
be
liable to such Indemnified Party for any legal expenses subsequently incurred
by
Indemnified Party in connection with the defense thereof. An Indemnified Party
shall have the right to employ separate counsel in any such Proceeding and
to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party or Parties. If there exists
or
shall exist a conflict of interest that would make it inappropriate in the
reasonable judgment of the Indemnified Party for the same counsel to represent
both the Indemnified Party and such Indemnifying Party or any affiliate or
associate thereof, the Indemnified Party shall be entitled to retain its own
counsel at the expense of such Indemnifying Party; provided, further, that
no
Indemnifying Party shall be responsible for the fees and expense of more than
one separate counsel for all Indemnified Parties. The Indemnifying Party shall
not settle an action without the consent of the Indemnified Party, which consent
shall not be unreasonably withheld, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding. All reasonable fees and expenses
of the Indemnified Party (including reasonable fees and expenses to the extent
incurred in connection with investigating or preparing to defend such Proceeding
in a manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten trading days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined that
an
Indemnified Party is not entitled to indemnification hereunder; provided, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such reasonable fees and expenses to the extent it is finally
judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).
(iv) Contribution.
If a
claim for indemnification under Section 7(b)(i) or (ii) is unavailable to an
Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material
fact,
has been taken or made by, or related to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 7(b)(iii), any reasonable attorneys’ or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section 7(b)(iv) was available to such
party in accordance with its terms.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 7(b)(iv) were determined by pro rata allocation or
by
any other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 7(b)(iv), the Subscriber shall
not be required to contribute, in the aggregate, any amount which exceeds the
net proceeds actually received by the Subscriber from the sale of the
Registrable Securities subject to the Proceeding. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) shall
be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
14
8. Miscellaneous.
(a) Termination.
This
Agreement may be terminated by any Subscriber, as to such Subscriber’s
obligations hereunder only and without any effect whatsoever on the obligations
between the Company and the other Subscribers, by written notice to the other
parties, if the Closing has not been consummated on or before March 31, 2008,
subject to a 15 day extension; provided, however, that no such termination
will
affect the right of any party to xxx for any breach by the other party (or
parties).
(b) Independent
Nature of Subscribers’ Obligations and Rights.
The
obligations of each Subscriber under this Agreement is several and not joint
with the obligations of any other Subscriber, and no Subscriber shall be
responsible in any way for the performance or non-performance of the obligations
of any other Subscriber under this Agreement or any other document relating
to
this Agreement. Nothing contained herein and no action taken by any Subscriber
pursuant thereto, shall be deemed to constitute the Subscribers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Subscribers 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 Subscriber shall be entitled to independently
protect and enforce its rights, including without limitation, the rights arising
out of this Agreement or any other document relating to this Agreement, and
it
shall not be necessary for any other Subscriber to be joined as an additional
party in any proceeding for such purpose. Each Subscriber has been represented
by its own separate legal counsel in their review and negotiation of this
Agreement.
(c) 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 Sections 2, 3, 7(b) and any other specific provision hereof. Notwithstanding
the foregoing, the Broker shall be a third party beneficiary to the
representations and warranties made by the Company in section 3 of this
Agreement.
(d) Notices.
All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted
to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery
by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be: (i) if to the Company, to: Neonode Inc., 0000 Xxxxxxxxx
Xxxxxxx, Xxxxx 000, Xxx Xxxxx, XX 00000, Attn: CFO, telecopier:
(000) 000-0000, and Xxxxxxxxxxxxxxx 00, X000 00 Xxxxxxxxx, Xxxxxx, Attn:
President, telecopier: 01146 8678 1851, with a copy only by hand delivery to:
Xxxx Xxxxx, LLP, II Xxxxxxxxxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxxxxxxx, XX 00000 Attn: Xxx Xxxxxx (ii) if to the Subscribers, to: the
address and telecopier number indicated on the signature pages hereto with
a
copy to the Broker: Empire Asset Management Company, 0 Xxxxxx Xxxxxx,
00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxxx Xxxxx, President, telecopier (000)
000-0000.
15
(e) Entire
Agreement; Assignment/Amendment.
This
Agreement and other documents delivered in connection herewith represent the
entire agreement between the parties hereto with respect to the subject matter
hereof and may be amended only by a writing executed by the Company and the
Subscriber. Neither the Company nor the Subscriber have relied on any
representations not contained or referred to in this Agreement and the documents
delivered herewith. No right or obligation of the Company shall be assigned
without prior notice to and the written consent of the Subscriber. Any provision
under this Agreement or any Transaction Document may be amended, waived,
terminated, suspended, cancelled or otherwise modified if in writing signed
by
both the Company and Subscribers holding more than 67% of the Shares.
(f) Counterparts/Execution.
This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but
one
and the same instrument. This Agreement may be executed by (i) facsimile
signature and delivered by facsimile transmission or (ii) “.pdf” format
signature page and delivery by email.
(g) Law
Governing this Agreement.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of California without regard to principles of conflicts of laws. Any
action brought by either party against the other concerning the transactions
contemplated by this Agreement shall be brought only in the state courts of
California or in the federal courts located in the state of California. The
parties to this Agreement hereby irrevocably waive any objection to such
jurisdiction and venue of any action instituted hereunder and shall not assert
any defense based on lack of such jurisdiction or venue or based upon
forum
non conveniens.
The
parties executing this Agreement and other agreements referred to herein or
delivered in connection herewith on behalf of the Company agree to submit to
the
in personam jurisdiction of such courts and hereby irrevocably waive trial
by
jury. The
prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any provision of this
Agreement or any other agreement delivered in connection herewith is invalid
or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any agreement.
Each party hereby irrevocably waives personal service of process and consents
to
process being served in any suit, action or proceeding in connection with this
Agreement or any other Transaction Document by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit
in
any way any right to serve process in any other manner permitted by
law.
(h) Specific
Enforcement, Consent to Jurisdiction.
The
Company and Subscriber acknowledge and agree that irreparable damage would
occur
in the event that any of the provisions of this Agreement were not performed
in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to seek an injunction
or
injunctions to prevent or cure breaches of the provisions of this Agreement
and
to enforce specifically the terms and provisions hereof, this being in addition
to any other remedy to which any of them may be entitled by law or
equity.
16
(i) Calendar
Days.
All
references to “days” in the Transaction Documents shall mean calendar days
unless otherwise stated. The terms “business days” and “trading days” shall mean
days that the New York Stock Exchange is open for trading for three or more
hours. Time periods shall be determined as if the relevant action, calculation
or time period were occurring in San Francisco. Any deadline that falls on
a
non-business day in any of the Transaction Documents shall be automatically
extended to the next business day and interest, if any, shall be calculated
and
payable through such extended period.
(j) Captions:
Certain Definitions.
The
captions of the various sections and paragraphs of this Agreement have been
inserted only for the purposes of convenience; such captions are not a part
of
this Agreement and shall not be deemed in any manner to modify, explain, enlarge
or restrict any of the provisions of this Agreement. As used in this Agreement
the term “person”
shall
mean and include an individual, a partnership, a joint venture, a corporation,
a
limited liability company, a trust, an unincorporated organization and a
government or any department or agency thereof.
(k) Severability.
In the
event that any term or provision of this Agreement shall be finally determined
to be superseded, invalid, illegal or otherwise unenforceable pursuant to
applicable law by an authority having jurisdiction and venue, that determination
shall not impair or otherwise affect the validity, legality or enforceability:
(i) by or before that authority of the remaining terms and provisions of this
Agreement, which shall be enforced as if the unenforceable term or provision
were deleted, or (ii) by or before any other authority of any of the terms and
provisions of this Agreement.
[THIS
SPACE INTENTIONALLY LEFT BLANK]
17
SIGNATURE
PAGE TO SUBSCRIPTION AGREEMENT
Please
acknowledge your acceptance of the foregoing Subscription Agreement by signing
and returning a copy to the undersigned whereupon it shall become a binding
agreement between us.
|
NEONODE
INC.
a
Delaware corporation
|
|||
|
By:_________________________________
Name:
Title:
Dated:_____________,
2008
|
|
SUBSCRIBER
|
AGGREGATE
PURCHASE PRICE (CASH)
|
SHARES
|
|
Name
of Subscriber:
______________________________________
Address:
______________________________________
______________________________________
Fax
No.: ______________________________
Email
address (not to - notice):
_________________________
Taxpayer
ID# :
____________________________
Jurisdiction
of organization (for entities): __________________________
______________________________________
(Signature)
Name:
________________________________
Title:
_________________________________
______________________________________
(Signature)
Name:
________________________________
Title:
_________________________________
|
18
LIST
OF EXHIBITS AND SCHEDULES
|
Exhibit
A
|
Subscribers
|
|
Schedule
3(a)
|
Subsidiaries
|
|
Schedule
3(d)
|
Capitalization/Anti-Dilution
Rights
|
|
Schedule
3(l)
|
Defaults
|
|
Schedule
3(o)
|
Undisclosed
Liabilities
|
|
Schedule
3(u)
|
Transfer
Agent
|
|
Schedule
6(h)
|
Use
of Proceeds
|
19
