SETTLEMENT AGREEMENT
Exhibit 99.3
EXECUTION COPY
This SETTLEMENT AGREEMENT (the “Agreement”), dated as of May 21, 2010, is by and between Alpha Capital Anstalt (“Investor”) and Hydrogenics Corporation (the “Company”).
RECITALS
A. Pursuant to that certain Securities Purchase Agreement, dated January 11, 2010, by and among the Company and the Buyers (one of whom is Investor) (the “Securities Purchase Agreement”), the Investor purchased (i) 250,000 shares of Common Stock (on a post-consolidation basis), (ii) a Series A Warrant to purchase up to 119,678 Series A Warrant Shares (on a post-consolidation basis) and (iii) a Series B Warrant to purchase up to 130,323 Series B Warrant Shares (on a post-consolidation basis). All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Securities Purchase Agreement.
B. Investor commenced a lawsuit in the Supreme Court of the State of New York, County of New York, index number 600466/10 (the “Lawsuit”) alleging that the Company breached certain representations, warranties and covenants in the Securities Purchase Agreement and Warrants arising out of the share consolidation announced by the Company on February 8, 2010, which was consummated by the Company on March 12, 2010 (the “Share Consolidation”). The Company disputes all such allegations.
C. Investor and the Company desire to settle the Lawsuit and any and all disputes between them related to, based upon, arising out of, or in connection with the matters described above in Recital B in accordance with the terms of this Agreement.
D. Simultaneously with the execution of this Agreement, the Company has entered into a settlement agreement (the “Other Investor’s Agreement”) with the only other Buyer that is a party to the Securities Purchase Agreement (“Other Investor”).
AGREEMENTS
NOW THEREFORE, in consideration of the foregoing and the mutual covenants hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Investor and the Company hereby agree as follows:
1. Issuance and Delivery of Shares. As soon as practicable, but in any event no later than fourteen (14) Business Days after the date hereof, the Company shall issue 100,000 shares of Common Stock (such 100,000 shares of Common Stock are referred to herein as the “Shares”) to Investor and deliver to Investor (c/o LH Financial Services Corp., 000 Xxxxxxx Xxxx Xxxxx, 0xx Xx., Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxx Xxxxxxxxxx) one or more stock certificates, free and clear of all restrictive and other legends (except as expressly provided in
Section 3 below), evidencing the Shares, duly executed on behalf of the Company and registered in the name of Investor or its designee.
2. Registration Rights.
(a) Subject to the timely receipt by the Company of the Investor Information (as defined below) from Investor and Other Investor, the Company shall prepare and, as soon as practicable but in no event later than fourteen (14) days after the date hereof, file with the SEC a registration statement on Form F-3 (the “Registration Statement”) covering the resale on a non-underwritten basis of all of the Shares (collectively, the “Registrable Securities”). The Company shall use its best efforts to have the Registration Statement declared effective by the SEC as soon as practicable, but in no event later than sixty (60) days (or if the SEC elects to review the Registration Statement, ninety (90) days) after the date of this Agreement. In no event shall the Company include any securities other than Registrable Securities and the Other Investor’s Shares (as defined below) in the Registration Statement without the prior written consent of the Investor. The “Investor Information” shall include the information set forth in Exhibit B relating to the “Selling Shareholders” and “Plan of Distribution” sections of the prospectus.
(b) The Company shall keep the Registration Statement effective (and the prospectus contained therein available for use) pursuant to Rule 415 promulgated under the 1933 Act for resales by the Investor on a delayed or continuous basis at then-prevailing market prices (and not fixed prices) at all times until the earlier of (i) the date on which (w) the Investor may sell all of the Registrable Securities required to be covered by the Registration Statement and (x) if the Other Investor’s Shares are included in the Registration Statement, the Other Investor may sell all of the Other Investor’s Shares, in each case, without restriction pursuant to Rule 144 (including, without limitation, volume restrictions) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable), (ii) the date on which (y) the Investor shall have sold all of the Registrable Securities covered by the Registration Statement and (z) if the Other Investor’s Shares are included in the Registration Statement, the Other Investor shall have sold all of the Other Investor’s Shares, or (iii) six (6) months from the date hereof (the “Registration Period”). Thereafter, the Company shall be entitled to withdraw such Registration Statement. Investor shall promptly inform the Company in writing of the date on which Investor may sell all the Registrable Securities required to be covered by the Registration Statement and/or the date the Investor has sold all of the Registrable Securities covered by the Registration Statement.
(c) The Company may suspend the use of any prospectus used in connection with the Registration Statement in the event, and for such period of time as, (i) such suspension is required by the rules and regulations of the SEC or (ii) it is determined in good faith by the Board of Directors of the Company that because of valid business reasons, it is in the best interests of the Company to suspend such use (which may include, for greater certainty, the fact that the continued use of any prospectus in connection with the Registration Statement may interfere with any material financing, acquisition, corporate reorganization or merger or other transaction involving the Company or require the Company to disclose any material non public information which would reasonably be likely to be detrimental to the Company) and prior to suspending such use in accordance with this clause (c), the Company provides Investor with
written notice of such suspension, which notice need not specify the nature of the event giving rise to such suspension. The Company will use reasonable best efforts to cause such suspension to terminate at the earliest possible date.
(d) The Company shall notify the Investor in writing of the happening of any event (but not the substance or details of any such event unless specifically requested by Investor), as promptly as practicable after becoming aware of such event, as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(e) The Company shall notify the Investor of the issuance of any stop order or other suspension of effectiveness of the Registration Statement or the use of any prospectus contained therein.
(f) The Company shall pay all fees and expenses incurred by the Company in connection with satisfying its obligations under this Section 2, which, for greater certainty, shall not include any fees and expenses incurred by the Investor or Other Investor, including any selling commissions and transfer taxes applicable to the sale of Registrable Securities or any fees and disbursements of counsel for the Investor or the Other Investor.
(g) In the event that the Registration Statement has been declared effective by the SEC and, afterwards, Investor’s ability to sell Registrable Securities registered for resale under the Registration Statement is suspended for more than (i) 45 days in any 90 day period or (ii) 90 days in any calendar year, because an event has occurred as a result of which the prospectus (including any supplements thereto) included in the Registration Statement then in effect includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements not misleading in light of the circumstances then existing, then the Company shall take such action as may be necessary to amend or supplement the Registration Statement, such that the Registration Statement or the prospectus, as so amended, shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements not misleading.
(h) Investor agrees that upon receipt of a notice from Company of the occurrence of any event of the kind described in 2(d) or 2(e), and upon notice of any suspension under 2(c), Investor will forthwith discontinue disposition of such Registrable Securities under the Registration Statement until Investor’s receipt of the copies of the supplemented prospectus and/or amendment to the Registration Statement contemplated by this Section 2, or until it is advised in writing by the Company that the use of the applicable prospectus may be resumed, and in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such prospectus or the Registration Statement. The Company may provide appropriate stop orders to enforce the provisions of this paragraph.
3. Legends. Investor understands that the Shares will be issued pursuant to an exemption from registration or qualification under the 1933 Act and applicable state securities
laws and that the Shares are not qualified for sale under the securities laws of any province or territory of Canada, and except as set forth in Section 4 below, the Shares shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the form set forth on Exhibit A attached hereto (and a stop-transfer order may be placed against transfer of such stock certificates).
4. Removal of Legends. Certificates evidencing the Shares shall not be required to contain any legend referred to in Section 3 above or any other legend (i) while a registration statement covering the resale of the Shares is effective under the 1933 Act, (ii) following any sale of the Shares pursuant to Rule 144 (assuming the transferor is not an affiliate of the Company), (iii) if the Shares are eligible to be sold, assigned or transferred under Rule 144(b)(1) (provided that the Investor provides the Company with reasonable assurances that the Shares are eligible for sale, assignment or transfer under Rule 144(b)(1) which shall not include an opinion of counsel), (iv) in connection with a sale, assignment or other transfer (other than under Rule 144), provided that the Investor provides the Company with an opinion of counsel to the Investor, in a generally acceptable form, to the effect that such sale, assignment or transfer of the Shares may be made without registration under the applicable requirements of the 1933 Act and, based on a representation from the transferee, that the Shares will not constitute “restricted securities” (as defined in Rule 144(a)(3)) in the hands of such transferee or (v) if such legend is not required under applicable requirements of the 1933 Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the SEC), provided that (a) the Canadian legend set forth on Exhibit A is required for a period of at least forty (40) days after the date of issuance of Shares to Investor and may not be removed prior to forty one (41) days after the date of the issuance of the Shares to Investor and (b) the TSX legend set forth on Exhibit A is required if the certificate representing the Shares contains the U.S. legend and/or the Canadian legend set forth on Exhibit A and may not be removed if the certificate representing the Shares contains the U.S. legend and/or the Canadian legend set forth on Exhibit A. If the legends are not required pursuant to the foregoing, the Company shall no later than two (2) Trading Days following the delivery by the Investor to the Company or the transfer agent (with notice to the Company) of a legended certificate representing the Shares (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, in each case, if applicable), together with any other deliveries from the Investor as may be required above in this Section 4, as directed by the Investor, either: (A) provided that the Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program, credit the aggregate number of Shares to which the Investor shall be entitled to the Investor’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier to the Investor c/o LH Financial Services Corp., 000 Xxxxxxx Xxxx Xxxxx, 0xx Xx., Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxx Xxxxxxxxxx)) to the Investor, a certificate representing the Shares that is free from all restrictive and other legends, registered in the name of the Investor or its designee.
5. Company Release. The Company, on its own behalf and on behalf of its officers, affiliates, investors and other related Persons, hereby irrevocably, fully and unconditionally releases and forever discharges Investor and each of its present and former directors, officers, shareholders, members, partners, employees, agents, advisors, representatives (and any other
Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) and each Person, if any, who controls Investor within the meaning of the 1933 Act or the 1934 Act and each of the present and former directors, officers, shareholders, members, partners, employees, agents, advisors, representatives (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) of such controlling Persons and each of their direct and indirect related Persons (Investor and all such other Persons are referred to herein collectively as the “Investor Releasees”) from all claims, actions, obligations, causes of action, suits, losses, omissions, damages, contingencies, judgments, fines, penalties, charges, costs (including, without limitation, court costs, reasonable attorneys’ fees and costs of defense and investigation), expenses and liabilities, of every name and nature, whether known or unknown, absolute or contingent, suspected or unsuspected, matured or unmatured, both at law and in equity, which the Company may now own, hold, have or claim to have against any of the Investor Releasees for, upon, or by reason of any nature, cause, action or inaction or thing whatsoever related to, based upon, arising out of, or in connection with the Share Consolidation (collectively, the “Company Claims”). The Company, on behalf of itself and its successors, assigns and other legal representatives, covenants that it will not (and that it will cause all other Persons who may seek to claim by or through or in relation to the Company or the matters released by the Company in this Agreement not to) xxx any of the Investor Releasees on the basis of or related to or in connection with any Company Claim herein released and discharged, as provided in this paragraph. Notwithstanding the foregoing, nothing contained in this paragraph shall release or relieve any obligations of Investor under this Agreement.
6. Investor Release. Investor, on its own behalf and on behalf of its officers, affiliates, investors and other related Persons, hereby irrevocably, fully and unconditionally releases and forever discharges Company and each of its present and former directors, officers, shareholders, members, partners, employees, agents, advisors, representatives (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) and each Person, if any, who controls Company within the meaning of the 1933 Act or the 1934 Act and each of the present and former directors, officers, shareholders, members, partners, employees, agents, advisors, representatives (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) of such controlling Persons and each of their direct and indirect related Persons (Company and all such other Persons are referred to herein collectively as the “Company Releasees”) from all claims, actions, obligations, causes of action, suits, losses, omissions, damages, contingencies, judgments, fines, penalties, charges, costs (including, without limitation, court costs, reasonable attorneys’ fees and costs of defense and investigation), expenses and liabilities, of every name and nature, whether known or unknown, absolute or contingent, suspected or unsuspected, matured or unmatured, both at law and in equity, which Investor may now own, hold, have or claim to have against any of the Company Releasees for, upon, or by reason of any nature, cause, action or inaction or thing whatsoever related to, based upon, arising out of, or in connection with the Share Consolidation, which, for the avoidance of doubt, shall include any claim, action, cause of action, or suit, whether in law or in equity, whether based on contract (including, without limitation, quasi-contract or estoppel), statute, regulation, tort (including, without limitation, intentional torts, fraud, misrepresentation, defamation, breaches of alleged fiduciary duty, recklessness, gross negligence, or negligence) or otherwise, accrued or unaccrued, known or unknown, matured, unmatured, liquidated or
unliquidated, certain or contingent, that the Company breached the Securities Purchase Agreement and/or any representations, warranties or covenants contained therein, based upon, arising out of, or in connection with the Share Consolidation (collectively, the “Investor Claims”). Investor, on behalf of itself and its successors, assigns and other legal representatives, covenants that it will not (and that it will cause all other Persons who may seek to claim by or through or in relation to Investor or the matters released by Investor in this Agreement not to) xxx any of the Company Releasees on the basis of or related to or in connection with any Investor Claim herein released and discharged, as provided in this paragraph.
7. Upon written notice from the Company that the Registration Statement is filed, Investor shall within one (1) Business Day of such notice, discontinue the Lawsuit as to all defendants named therein, with prejudice and on the merits, each party to bear its own costs
8. Investor Representations and Warranties.
(a) No Public Sale or Distribution. Investor is acquiring the Shares for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in violation of applicable securities laws, except pursuant to sales registered or exempted under the 1933 Act; provided, however, by making the representations herein, Investor does not agree, or make any representation or warranty, to hold any of the Shares for any minimum or other specific term (except as set forth herein) and reserves the right to dispose of the Shares at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act and applicable Canadian securities laws. Investor does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Shares in violation of applicable securities laws. The Investor acknowledges that the Shares are not qualified for sale under the securities laws of any province or territory of Canada. The Investor represents, warrants and covenants to the Company that (a) the Investor is not a Canadian resident nor acting for the account or benefit of a Canadian resident; (b) the Shares were not offered to the Investor in Canada, and the Investor, was the time of agreeing to receive the Shares, and is, outside Canada; and (c) the Investor will not resell the Shares to any Canadian resident or in Canada (i) for a period ending 40 days after the date of issuance of the Shares to the Investor and (ii) after 40 days unless the conditions in subsection 2.6(3) of National Instrument 45-102 are satisfied or such trade is otherwise permitted under applicable Canadian securities laws.
(b) Accredited Investor Status. Investor is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.
(c) Reliance on Exemptions. Investor understands that the Shares are being offered and issued to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and are not qualified for sale under the securities laws of any province or territory of Canada, and that the Company is relying in part upon the truth and accuracy of, and Investor’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Investor set forth herein in order to determine the availability of such exemptions and the eligibility of the Investor to acquire the Shares.
(d) Transfer or Resale. Investor understands that except as provided herein: (i) the Shares have not been and are not being registered under the 1933 Act or any state securities laws and are not qualified for sale under the securities laws of any province or territory or Canada, and may not be offered for sale, sold, assigned or transferred to (a) a Canadian resident or in Canada for a period ending forty (40) days after the date of issuance of the Shares to the Investor or thereafter except in accordance with applicable Canadian securities laws or (b) a non-Canadian resident or outside Canada unless (A) subsequently registered thereunder, (B) Investor shall have delivered to the Company (if requested by the Company) an opinion of counsel to Investor, in a form reasonably acceptable to the Company, to the effect that such Shares to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from registration under the 1933 Act or any state securities laws, or (C) Investor provides the Company with reasonable assurance that the Shares can be sold, assigned or transferred pursuant to Rule 144(b)(1); (ii) any sale of the Shares made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and applicable Canadian securities laws, and further, if Rule 144 is not applicable, any resale of the Shares under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 0000 Xxx) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder or applicable Canadian securities laws; and (iii) neither the Company nor any other Person is under any obligation to register the Shares under the 1933 Act or any state securities laws or to qualify the Shares for distribution in Canada or to comply with the terms and conditions of any exemption thereunder.
(e) Ownership of Securities. Investor is the registered and beneficial owner of, and exercises control or direction over, (a) a Series A Warrant currently exercisable to purchase up to 119,678 Series A Warrant Shares, (b) a Series B Warrant exercisable on or after July 15, 2010 to purchase up to 130,323 Series B Warrant Shares and (c) 177,948 shares of Common Stock and such securities constitute all of the securities of the Company owned or controlled, directly or indirectly, by Investor. Investor is not acting jointly or in concert or in combination with any other person.
9. Entire Agreement. This Agreement contains the entire agreement and understanding between the parties solely as to the settlement and compromise of all Company Claims and Investor Claims between the parties and supersedes and replaces all prior settlement negotiations and proposed agreements, written or oral. The parties hereto acknowledge that no other party, or agent, representative or attorney of any other party, has made any promise, representation, or warranty whatsoever, express or implied, not contained in this Agreement concerning the subject matter hereof, to induce this Agreement or otherwise, and the parties acknowledge that they have not executed this Agreement in reliance upon such promise, representation, or warranty not contained herein. Neither party hereto has granted any waiver or release except as, and to the extent, expressly set forth in this Agreement and the Other Investor’s Agreement.
10. Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
11. Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.
12. Headings; Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.
13. Severability; Construction. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. For clarification purposes, the recitals are part of this Agreement. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.
14. Successors and Assigns; No Third Party Beneficiaries; Amendments and Waivers. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. Neither party may assign this Agreement or any rights or obligations hereunder without the prior written consent of the other party. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for
the benefit of, nor may any provision hereof be enforced by, any other Person, other than the Company Releasees and the Investor Releasees. No provision of this Agreement may be amended other than by an instrument in writing signed by the parties hereto. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.
15. Excluded Securities. The Investor and the Company agree that (i) the Shares and (ii) the 100,000 shares of Common Stock being issued pursuant to the Other Investor’s Agreement (such 100,000 shares are referred to herein as the “Other Investor’s Shares”), in each case, constitute Excluded Securities.
16. Waiver and Acknowledgement. Investor acknowledges that the execution, delivery and performance by the Company of this Agreement and the Other Investor’s Agreement and the transactions contemplated hereby and thereby will not and do not (i) result in a violation of the Transaction Documents or the transactions contemplated thereunder, (ii) constitute nor result in any breach of any representation, warrant, covenant or obligation by the Company under the Transaction Documents or the transactions contemplated thereunder, (iii) conflict with, or constitute a default (or any event which with notice or lapse of time or both would become a default) under, or give Investor or others any rights under the Transaction Documents or the transactions contemplated thereunder. For greater certainty, the Investor agrees that (i) sections 4(n), 4(p) and 8(k) of the Securities Purchase Agreement and (ii) sections 2(b) and 2(d) of the Warrants, in each case, shall not apply to this Agreement (including, without limitation, the issuance of Shares hereunder), the Other Investor’s Agreement (including, without limitation, the issuance of the Other Investor’s Shares thereunder) and the transactions contemplated hereby and thereby.
17. Resale of Shares. The Investor will not resell the Shares to any Canadian resident or in Canada (i) for a period ending 40 days after the date of issuance of the Shares to the Investor and (ii) after 40 days unless the conditions in subsection 2.6(3) of National Instrument 45-102 are satisfied or such trade is otherwise permitted under applicable Canadian Securities Laws.
18. Notice. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:
If to the Company:
Hydrogenics Corporation
0000 XxXxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx X0X 0X0 Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Chief Financial Officer
If to the Investor:
Alpha Capital Anstalt
c/o LH Financial Services Corp.
000 Xxxxxxx Xxxx Xxxxx, 0xx Xx.
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxxxxxxx
(with a copy to)
Law Offices of Xxxxxxx X. Xxxxxx, Esq.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, XX 00000
Telephone: 000.000.0000
Facsimile: 212.679.8998
Attention: Xxxxxxx X Xxxxxx, Esq.
19. Attorneys’ Fees. In the event that any litigation shall arise between any of the parties hereto based, in whole or in part, upon this Agreement or any or all of the provisions contained herein, the prevailing party in any such litigation shall be entitled to recover attorneys’ fees, costs and expenses from the non-prevailing party.
20. Termination. If the Company has not complied with its obligations under Section 1 within fourteen (14) Business Days after the date hereof, this Agreement shall be terminated and be null and void ab initio.
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date first above written.
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HYDROGENICS CORPORATION |
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/s/ Xxxxxxxx Xxxxx |
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Chief Financial Officer |
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ALPHA CAPITAL ANSTALT |
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/s/ Xxxxxx Xxxxxxxx |
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Director |
Exhibit A
Form of Legend
U.S. Legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR 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 TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144(b)(1) 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.
TSX Legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK EXCHANGE (“TSX”); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE FACILITIES OF TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON TSX.
Canadian Legend:
THE HOLDER HEREOF, BY ACQUIRING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT FOR A PERIOD OF 40 DAYS AFTER THE DATE OF ISSUANCE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE, THE HOLDER WILL NOT RESELL THOSE SECURITIES TO ANY CANADIAN RESIDENT OR IN CANADA.
Exhibit B
Investor Information
Investor Information - “Selling Shareholders” section of Prospectus
The Selling Shareholders may from time to time offer and sell up to 200,000 common shares of the Company pursuant to this prospectus. When we refer to “Selling Shareholders” in this prospectus, we mean those persons listed in the table below, and the pledgees, donees, permitted transferees, assignees, successors and others who later come to hold any of the Selling Shareholders’ interest in our common shares other than through a public sale. The common shares being offered by the Selling Shareholders were acquired from us on May ·, 2010 in a private placement. We have agreed to file the Registration Statement to enable resales of the common shares received by the Selling Shareholders pursuant to separate Settlement Agreements between the Company and each of the Selling Shareholders.
We had previously issued common shares and warrants to the Selling Shareholders in a registered direct offering in January 2010. See our Annual Report on Form 20-F for the year ended December 31, 2009 for information regarding the January 2010 offering, which is incorporated by reference herein. Except for the ownership of the common shares and warrants issued to the Selling Shareholders in 2010, the Selling Shareholders have not had any material relationship with us or any of our predecessors or affiliates within the past three years.
The following table sets forth certain information as of May ·, 2010 with respect to the beneficial ownership of the common shares by the Selling Shareholders and is based on the information provided to us by the Selling Shareholders around the time of the initial filing of the Registration Statement. Except as set forth in the footnotes to the table, all of these common shares are owned with sole voting and investment power. The Selling Shareholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”
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Common Shares |
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Number of Common Shares Offered |
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Common Shares Owned after |
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Name of Selling Shareholder |
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Number |
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Percent (1) |
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Hereby |
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Number |
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Percent (1) |
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Alpha Capital Anstalt (3) |
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277,948 |
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6.31 |
% |
100,000 |
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177,948 |
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4.04 |
% |
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Iroquois Master Fund Ltd. (4) (5) |
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· |
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· |
% |
100,000 |
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· |
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· |
% |
Notes:
(1) Applicable percentage of ownership is based on 4,401,976 common shares outstanding as of May ·, 2010.
(2) Unless otherwise indicated, assumes that each Selling Shareholder will resell all of the common shares offered pursuant to this prospectus.
(3) Alpha Capital Anstalt also owns 119,678 series A warrants and 130,323 series B warrants. See our Annual Report on Form 20-F for the year ended December 31, 2009, which is incorporated by reference herein, for information regarding these warrants.
(4) [TO BE PROVIDED BY IROQUOIS] See our Annual Report on Form 20-F for the year ended December 31, 2009, which is incorporated by reference herein, for information regarding these warrants.
(5) Iroquois Capital Management L.L.C. (“Iroquois Capital”) is the investment manager of Iroquois Master Fund Ltd. (“IMF”). Consequently, Iroquois Capital has voting control and investment discretion over securities held by IMF. As Xxxxxx Xxxxxxxxx and Xxxxxxx Xxxx make voting and investment decisions on behalf of Iroquois Capital in its capacity as investment manager to IMF, they may be deemed to have voting control and investment discretion over securities held by IMF. As a result of the foregoing, each of Iroquois Capital, Xx. Xxxxxxxxx and Mr. Xxxx xxx be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the securities held by IMF.
Investor Information - “Plan of Distribution” section of Prospectus
We are registering the common shares issued to the Selling Shareholders in connection with a settlement of alleged claims arising out of the Share Consolidation to permit the resale of these common shares by the holders thereof from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the Selling Shareholders of the common shares. We will bear all fees and expenses incurred by us in connection with our obligation to register the common shares other than any fees and expenses incurred by the Selling Shareholders, including selling commissions and transfer taxes applicable to the sale of common shares or any fees and disbursements of counsel for the Selling Shareholders.
Subject to the restrictions set out in “Canadian Transfer Restrictions”, (a) the Selling Shareholders may sell all or a portion of the common shares held by them and offered hereby from time to time on any stock exchange, market or trading facility on which the common shares are traded or in private transactions, (b) the common shares may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale or at negotiated prices, and (c) these sales may be effected in transactions, which may involve crosses or block transactions, pursuant to one or more of the following methods:
· on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;
· in the over-the-counter market;
· in transactions otherwise than on these exchanges or systems or in the over-the-counter market;
· through the writing or settlement of options, whether such options are listed on an options exchange or otherwise;
· ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
· block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
· purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
· an exchange distribution in accordance with the rules of the applicable exchange;
· privately negotiated transactions;
· short sales made after the date the registration statement is declared effective by the SEC;
· broker-dealers may agree with a Selling Shareholder to sell a specified number of such shares at a stipulated price per share;
· a combination of any such methods of sale; and
· any other method permitted pursuant to applicable law.
The Selling Shareholders may also sell common shares under Rule 144 promulgated under the Securities Act, if available, or otherwise rather than under this prospectus. In connection with sales of the common shares or otherwise, the Selling Shareholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the common shares in the course of hedging in positions they assume. The Selling Shareholders may also sell common shares short and deliver common shares covered by this prospectus to close out short positions and to return borrowed common shares in connection with such short sales. The Selling Shareholders may also loan or pledge common shares to broker-dealers that in turn may sell such common shares.
The Selling Shareholders may pledge or grant a security interest in some or all of the common shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the common shares from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending, if necessary, the list of selling shareholders to include the pledgee, transferee or other successors in interest as selling shareholders under this prospectus. The Selling Shareholders also may transfer and donate the common shares in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
To the extent required by the Securities Act and the rules and regulations thereunder, the Selling Shareholders and any broker-dealer participating in the distribution of the common shares may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the common shares is made, a prospectus supplement, if required, will be distributed, which will set forth the aggregate amount of common shares being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the Selling Shareholders and any discounts, commissions or concessions allowed or re-allowed or paid to broker-dealers.
Under the securities laws of some states, the common shares may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the common shares may not be sold unless such common shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.
There can be no assurance that any Selling Shareholder will sell any or all of the common shares registered pursuant to the registration statement, of which this prospectus forms a part.
The Selling Shareholders and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations thereunder, including, without limitation, to the extent applicable, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the common shares by the Selling Shareholders and any other participating person. To the extent applicable, Regulation M may also restrict the ability of any person engaged in the distribution of the common shares to engage in market-making activities with respect to the common shares. All of the foregoing may affect the marketability of the common shares and the ability of any person or entity to engage in market-making activities with respect to the common shares.
We will pay all fees and expenses of the registration of the common shares pursuant to the Settlement Agreements, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, a Selling Shareholder will pay all underwriting discounts and selling commissions, transfer taxes applicable to the sale of common shares, if any and all fees and disbursements of counsel for the Selling Shareholders. We will indemnify Iroquois against liabilities, including some liabilities under the Securities Act in accordance with the Settlement Agreement with Iroquois or Iroquois will be entitled to contribution. We may be indemnified by Iroquois against civil liabilities, including liabilities under the Securities Act that may arise from any written information furnished to us by Iroquois in accordance with the Settlement Agreement with Iroquois or we may be entitled to contribution.
Once sold under the registration statement, of which this prospectus forms a part, the common shares will be freely tradable in the hands of persons other than our affiliates, subject to the restrictions set forth under “Canadian Transfer Restrictions”.
The securities offered hereby have not been and will not be qualified for sale by way of a prospectus under the securities laws of Canada or any province or territory of Canada. The securities are not being offered for sale and may not be offered or sold, directly or indirectly, in Canada, or to any resident thereof. This prospectus has not been filed in respect of, and will not qualify, any distribution of shares in any province or territory of Canada. Prior to a specified date, any certificate evidencing the common shares will bear a legend to the effect that such holders will not resell the shares to any Canadian resident or in Canada. See “Canadian Transfer Restrictions”.
