SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of January 7,
2017, by and betweeneWELLNESS HEALTHCARE CORPORATION , a Nevada corporation,
with headquarters located at 00000 Xxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxxxx 00000
(the "Company"), and XXX Partners L.P., a Delaware limited partnership, with
its address at 0 Xxxx Xxxx Xxxxx, Xxxxxx XX 00000 (the "Buyer").
WHEREAS:
A. The Company and the Buyer are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(a)(2) of the Securities Act of 1933, as amended (the "1933 Act") and Rule
506(b) promulgated by the United States Securities and Exchange Commission (the
"SEC") under the 1933 Act;
B. Buyer desires to purchase from the Company, and the Company desires to issue
and sell to the Buyer, upon the terms and conditions set forth in this
Agreement, a Senior Convertible Promissory Note of the Company, in the aggregate
principal amount of $55,000.00 (together with any note(s) issued in replacement
thereof or as a dividend thereon or otherwise with respect thereto in accordance
with the terms thereof, in the form attached hereto as Exhibit A , the "Note"),
convertible into shares of common stock, $0.001 par value per share, of the
Company (the "Common Stock"), upon the terms and subject to the limitations and
conditions set forth in such Note;
C. The Buyer wishes to purchase, upon the terms and conditions stated in this
Agreement, such principal amount of the Note as is set forth immediately below
its name on the signature pages hereto;
NOW THEREFORE, in consideration of the foregoing and of the agreements and
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and the
Buyer hereby agree as follows:
1. 1. Purchase and Sale of Note.
a. a. Purchase of Note. On the Closing Date (as defined below), the Company
shall issue and sell to the Buyer, and the Buyer agrees to purchase from the
Company, the Note in the principal amount as is set forth immediately below the
Buyer’s name on the signature pages hereto.
a. b. Form of Payment. On the Closing Date: (i) the Buyer shall pay the purchase
price for the Note to be issued and sold to it at the Closing (as defined below)
(the "Purchase Price") by wire transfer of immediately available funds to the
Company, in accordance with the Company’s written wiring instructions, against
delivery of the Note in an amount equal to the Actual Amount of Purchase Price
of Note as is set forth below the Buyer’s name on the signature pages hereto,
and (ii) the Company shall deliver such duly executed Note on behalf of the
Company, to the Buyer, against delivery of such Purchase Price.
a. c. Closing Date. Subject to the satisfaction (or written waiver) of the
conditions thereto set forth in Section 6 and Section 7 below, the date and time
of the issuance and sale of the Note pursuant to this Agreement (the "Closing
Date") shall be 4:00 PM, Eastern Time on the date first written above, or such
other mutually agreed upon time.
a. d. Closing. The closing of the transactions contemplated by this Agreement
(the "Closing") shall occur on the Closing Date at such location as may be
agreed to by the parties (including via exchange of electronic signatures).
1. 2. Buyer’s Representations and Warranties. The Buyer represents and warrants
to the Company as of the Closing Date that:
a. a. Investment Purpose. As of the Closing Date, the Buyer is purchasing the
Note and the Conversion Shares (the "Securities") for its own account and not
with a present view towards the public sale or distribution thereof, except
pursuant to sales registered or exempted from registration under the 1933 Act;
provided , however , that by making the representations herein, the Buyer does
not agree to hold any of the Securities for any minimum or other specific term
and reserves the right to dispose of the Securities at any time in accordance
with or pursuant to a registration statement or an exemption under the 0000 Xxx.
a. b. Accredited Investor Status. The Buyer is an "accredited investor" as that
term is defined in Rule 501(a) of Regulation D (an "Accredited Investor").
a. c. Reliance on Exemptions. The Buyer understands that the Securities are
being offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Buyer’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Securities.
a. d. Information. The Buyer and its advisors, if any, have been, and for so
long as the Note remains outstanding will continue to be, furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Securities which have been
requested by the Buyer or its advisors. The Buyer and its advisors, if any, have
been, and for so long as the Note remains outstanding will continue to be,
afforded the opportunity to ask questions of the Company regarding its business
and affairs. Notwithstanding the foregoing, the Company has not disclosed to the
Buyer any material nonpublic information regarding the Company or otherwise and
will not disclose such information unless such information is disclosed to the
public prior to or promptly following such disclosure to the Buyer. Neither such
inquiries nor any other due diligence investigation conducted by Buyer or any of
its advisors or representatives shall modify, amend or affect Buyer’s right to
rely on the Company’s representations and warranties contained in Section 3
below.
a. e. Governmental Review. The Buyer understands that no United States federal
or state agency or any other government or governmental agency has passed upon
or made any recommendation or endorsement of the Securities.
a. f. Transfer or Re-sale. The Buyer understands that (i) the sale or resale of
the Securities has not been and is not being registered under the 1933 Act or
any applicable state securities laws, and the Securities may not be transferred
unless (a) the Securities are sold pursuant to an effective registration
statement under the 1933 Act, (b) the Buyer shall have delivered to the Company,
at the cost of the Company, an opinion of counsel (which may be the Legal
Counsel Opinion (as defined below)) that shall be in form, substance and scope
customary for opinions of counsel in comparable transactions to the effect that
the Securities to be sold or transferred may be sold or transferred pursuant to
an exemption from such registration, which opinion shall be accepted by the
Company, (c) the Securities are sold or transferred to an "affiliate" (as
defined in Rule 144 promulgated under the 1933 Act (or a successor rule) ("Rule
144")) of the Buyer who agrees to sell or otherwise transfer the Securities only
in accordance with this Section 2(f) and who is an Accredited Investor, (d) the
Securities are sold pursuant to Rule 144, or (e) the Securities are sold
pursuant to Regulation S under the 1933 Act (or a successor rule) ("Regulation
S"), and the Buyer shall have delivered to the Company, at the cost of the
Company, an opinion of counsel that shall be in form, substance and scope
customary for opinions of counsel in corporate transactions, which opinion shall
be accepted by the Company; (ii) any sale of such Securities made in reliance on
Rule 144 may be made only in accordance with the terms of said Rule and further,
if said Rule is not applicable, any re-sale of such Securities 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 thereunder; and (iii) neither the Company nor any other
person is under any obligation to register such Securities under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder (in each case). Notwithstanding the foregoing or anything
else contained herein to the contrary, the Securities may be pledged in
connection with a bona fide margin account or other lending arrangement
secured by the Securities, and such pledge of Securities shall not be deemed to
be a transfer, sale or assignment of the Securities hereunder, and the Buyer in
effecting such pledge of Securities shall be not required to provide the Company
with any notice thereof or otherwise make any delivery to the Company pursuant
to this Agreement or otherwise.
a. g. Legends. The Buyer understands that until such time as the Issuance
Shares, the Note and, upon conversion of the Note in accordance with its
respective terms, the Conversion Shares, have been registered under the 1933 Act
or may be sold pursuant to Rule 144, Rule 144A under the 1933 Act or Regulation
S without any restriction as to the number of securities as of a particular date
that can then be immediately sold, the Securities may bear a restrictive legend
in substantially the following form (and a stop-transfer order may be placed
against transfer of the certificates for such Securities):
"NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE/EXERCISABLE]
HAVE 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 (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, RULE 144A OR REGULATION S 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."
The legend set forth above shall be removed and the Company shall issue a
certificate for the applicable shares of Common Stock without such legend to the
holder of any Security upon which it is stamped or (as requested by such holder)
issue the applicable shares of Common Stock to such holder by electronic
delivery by crediting the account of such holder's broker with The Depository
Trust Company (" DTC "), if, unless otherwise required by applicable state
securities laws, (a) such Security is registered for sale under an effective
registration statement filed under the 1933 Act or otherwise may be sold
pursuant to Rule 144, Rule 144A or Regulation S without any restriction as to
the number of securities as of a particular date that can then be immediately
sold, or (b) the Company or the Holder provides the Legal Counsel Opinion (as
contemplated by and in accordance with Section 4(m) hereof) to the effect that a
public sale or transfer of such Security may be made without registration under
the 1933 Act, which opinion shall be accepted by the Company so that the sale or
transfer is effected. The Company shall be responsible for the fees of its
transfer agent and all DTC fees associated with any such issuance. The Buyer
agrees to sell all Securities, including those represented by a certificate(s)
from which the legend has been removed, in compliance with applicable
prospectus delivery requirements, if any. In the event that the Company does not
accept the opinion of counsel provided by the Buyer with respect to the transfer
of Securities pursuant to an exemption from registration, such as Rule 144, Rule
144A or Regulation S, at the Deadline (as defined in the Note), it will be
considered an Event of Default pursuant to Section 3.2 of the Note.
a. h. Authorization; Enforcement. This Agreement has been duly and validly
authorized by the Buyer and has been duly executed and delivered on behalf of
the Buyer, and this Agreement constitutes a valid and binding agreement of the
Buyer enforceable in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors’ rights generally and except as may be limited by the
exercise of judicial discretion in applying principles of equity.
a. i. Residency. The Buyer is a resident of the jurisdiction set forth
immediately below the Buyer’s name on the signature pages hereto.
1. 3. Representations and Warranties of the Company. The Company represents and
warrants to the Buyer as of the Closing Date that:
a. a. Organization and Qualification. The Company and each of its Subsidiaries
(as defined below), if any, is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it is
incorporated, with full power and authority (corporate and other) to own, lease,
use and operate its properties and to carry on its business as and where now
owned, leased, used, operated and conducted. Schedule 3(a), if attached hereto,
sets forth a list of all of the Subsidiaries of the Company and the jurisdiction
in which each is incorporated. The Company and each of its Subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which its ownership or use of property or the nature of
the business conducted by it makes such qualification necessary except where the
failure to be so qualified or in good standing would not have a Material Adverse
Effect. "Material Adverse Effect" means any material adverse effect on the
business, operations, assets, financial condition or prospects of the Company or
its Subsidiaries, if any, taken as a whole, or on the transactions contemplated
hereby or by the agreements or instruments to be entered into in connection
herewith. "Subsidiaries" means any corporation or other organization, whether
incorporated or unincorporated, in which the Company owns, directly or
indirectly, any equity or other ownership interest.
a. b. Authorization; Enforcement. (i) The Company has all requisite corporate
power and authority to enter into and perform this Agreement, the Note and the
Warrant and to consummate the transactions contemplated hereby and thereby and
to issue the Securities, in accordance with the terms hereof and thereof, (ii)
the execution and delivery of this Agreement, the Issuance Shares, the Note, the
Warrant and (if applicable) the Conversion Shares and the Warrant Shares by the
Company and the consummation by it of the transactions contemplated hereby and
thereby (including without limitation, the issuance of the Note, the Warrant,
the Issuance Shares, and the issuance and reservation for issuance of the
Conversion Shares and the Warrant Shares issuable upon conversion or exercise of
the Note and the Warrant) have been duly authorized by the Company’s Board of
Directors and no further consent or authorization of the Company, its Board of
Directors, or its shareholders is required, (iii) this Agreement, the Note and
the Warrant (together with any other instruments executed in connection herewith
or therewith) have been duly executed and delivered by the Company by its
authorized representative, and such authorized representative is the true and
official representative with authority to sign this Agreement, the Note and the
Warrant and the other instruments documents executed in connection herewith or
therewith and bind the Company accordingly, and (iv) this Agreement and the Note
each constitute, and upon execution and delivery by the Company of the Note and
the Warrant, each of such instruments will constitute, a legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms.
a. c. Capitalization; Governing Documents. As of December 31, 2016 the
authorized capital stock of the Company consists of 100,000,000 authorized
shares of Common Stock. Company represents that it will increase its authorized
common stock to at least 250,000,000 no later than February 28, 2017. As of the
effective date of this Agreement, other than as publicly announced prior to such
date and reflected in the SEC filings of the Company (i) there are no
outstanding options, warrants, scrip, rights to subscribe for, puts, calls,
rights of first refusal, agreements, understandings, claims or other commitments
or rights of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for any shares of capital stock of the Company
or any of its Subsidiaries, or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries, (ii) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of its or their securities under the 1933 Act and (iii)
there are no anti-dilution or price adjustment provisions contained in any
security issued by the Company (or in any agreement providing rights to security
holders) that will be triggered by the issuance of any of the Securities. The
Company has furnished to the Buyer true and correct copies of the Company’s
Certificate of Incorporation as in effect on the date hereof ("Certificate of
Incorporation"), the Company’s By-laws, as in effect on the date hereof (the
"By-laws"), and the terms of all securities convertible into or exercisable for
Common Stock of the Company and the material rights of the holders thereof in
respect thereto.
a. d. Issuance of Conversion Shares. The Conversion Shares are duly authorized
and reserved for issuance and, upon conversion of the Note in accordance with
their respective terms, will be validly issued, fully paid and non-assessable,
and free from all taxes, liens, claims and encumbrances with respect to the
issue thereof and shall not be subject to preemptive rights or other similar
rights of shareholders of the Company and will not impose personal liability
upon the holder thereof.
a. e. Acknowledgment of Dilution. The Company understands and acknowledges the
potentially dilutive effect to the Common Stock upon the conversion of the Note
and the Conversion Shares.
a. f. Ranking; No Conflicts. The Note is and shall be a senior debt obligation
of the Company, with priority in payment and performance over all existing
indebtedness of the Company with the exception of other Notes issued to XXX
Partners, JOJ Holdings, or JLS Ventures. The execution, delivery and performance
of this Agreement and the Note by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including the
issuance and reservation for issuance of the Conversion Shares) will not (i)
conflict with or result in a violation of any provision of the Certificate of
Incorporation or By-laws, or (ii) violate or conflict with, or result in a
breach of any provision of, or constitute a default (or an event which with
notice or lapse of time or both could become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, note, evidence of indebtedness, indenture, patent, patent license or
instrument to which the Company or any of its Subsidiaries is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and regulations of
any self-regulatory organizations to which the Company or its securities are
subject) applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is bound or affected
(except for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect). Neither the Company nor any of its Subsidiaries
is in violation of its Certificate of Incorporation, By-laws or other
organizational documents and neither the Company nor any of its Subsidiaries is
in default (and no event has occurred which with notice or lapse of time or both
could put the Company or any of its Subsidiaries in default) under, and neither
the Company nor any of its Subsidiaries has taken any action or failed to take
any action that would give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its Subsidiaries is a party or by which any property or
assets of the Company or any of its Subsidiaries is bound or affected, except
for possible defaults as would not, individually or in the aggregate, have a
Material Adverse Effect. The businesses of the Company and its Subsidiaries, if
any, are not being conducted, and shall not be conducted so long as the Buyer
owns any of the Securities, in violation of any law, ordinance or regulation of
any governmental entity. Except as specifically contemplated by this Agreement
and as required under the 1933 Act and any applicable state securities laws, the
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court, governmental agency, regulatory
agency, self-regulatory organization or stock market or any third party in order
for it to execute, deliver or perform any of its obligations under this
Agreement and the Note in accordance with the terms hereof or thereof or to
issue and sell the Note in accordance with the terms hereof and, upon conversion
of the Note, Conversion Shares and. All consents, authorizations, orders,
filings and registrations which the Company is required to obtain pursuant to
the preceding sentence have been obtained or effected on or prior to the date
hereof. If the Company is listed on the Over-the-Counter Bulletin Board, the
OTCQB Market operated by OTC Markets Group, Inc. or any successor to such
markets (collectively, the "OTCBB"), the Company is not in violation of the
listing requirements of the OTCBB and does not reasonably anticipate that the
Common Stock will be delisted by the OTCBB in the foreseeable future. The
Company and its Subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing.
b. g. SEC Documents; Financial Statements. The Company has timely filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act") (all of the foregoing filed
prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents (other than exhibits to such
documents) incorporated by reference therein, being hereinafter referred to
herein as the "SEC Documents"). As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the 1934 Act and the
rules and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the
SEC, 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 light of the circumstances under which they were made,
not misleading. None of the statements made in any such SEC Documents is, or has
been, required to be amended or updated under applicable law (except for such
statements as have been amended or updated in subsequent filings prior the date
hereof). As of their respective dates, the financial statements of the Company
included in the SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto. Such financial statements have been prepared in
accordance with United States generally accepted accounting principles,
consistently applied, during the periods involved and fairly present in all
material respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments). Except as
set forth in the financial statements of the Company included in the SEC
Documents, the Company has no liabilities, contingent or otherwise, other than
(i) liabilities incurred in the ordinary course of business subsequent to
December 31, 2016, and (ii) obligations under contracts and commitments incurred
in the ordinary course of business and not required under generally accepted
accounting principles to be reflected in such financial statements, which,
individually or in the aggregate, are not material to the financial condition or
operating results of the Company. The Company is subject to the reporting
requirements of the 0000 Xxx.
a. h. Absence of Certain Changes. Since December 31, 2016, there has been no
material adverse change and no material adverse development in the assets,
liabilities, business, properties, operations, financial condition, results of
operations, prospects or 1934 Act reporting status of the Company or any of its
Subsidiaries.
a. i. Absence of Litigation. There is no action, suit, claim, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened against or affecting the Company
or any of its Subsidiaries, or their officers or directors in their capacity as
such, that could have a Material Adverse Effect. The SEC Documents contain a
complete list and summary description of any pending or, to the knowledge of the
Company, threatened proceeding against or affecting the Company or any of its
Subsidiaries, without regard to whether it would have a Material Adverse Effect.
The Company and its Subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing.
a. j. Intellectual Property. The Company and each of its Subsidiaries owns or
possesses the requisite licenses or rights to use all patents, patent
applications, patent rights, inventions, know-how, trade secrets, trademarks,
trademark applications, service marks, service names, trade names and copyrights
("Intellectual Property") necessary to enable it to conduct its business as now
operated (and, as presently contemplated to be operated in the future); there is
no claim or action by any person pertaining to, or proceeding pending, or to the
Company’s knowledge threatened, which challenges the right of the Company or of
a Subsidiary with respect to any Intellectual Property necessary to enable it to
conduct its business as now operated (and, as presently contemplated to be
operated in the future); to the best of the Company’s knowledge, the Company’s
or its Subsidiaries’ current and intended products, services and processes do
not infringe on any Intellectual Property or other rights held by any person;
and the Company is unaware of any facts or circumstances which might give rise
to any of the foregoing. The Company and each of its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of their Intellectual Property.
a. k. No Materially Adverse Contracts, Etc. Neither the Company nor any of its
Subsidiaries is subject to any charter, corporate or other legal restriction, or
any judgment, decree, order, rule or regulation which in the judgment of the
Company’s officers has or is expected in the future to have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries is a party to any
contract or agreement which in the judgment of the Company’s officers has or is
expected to have a Material Adverse Effect.
a. l. Tax Status. The Company and each of its Subsidiaries has made or filed all
federal, state and foreign income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on
such returns, reports and declarations, except those being contested in good
faith and has set aside on its books provisions reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such claim. The Company
has not executed a waiver with respect to the statute of limitations relating to
the assessment or collection of any foreign, federal, state or local tax. None
of the Company’s tax returns is presently being audited by any taxing authority.
a. m. Transactions with Affiliates. Except for arm’s length transactions
pursuant to which the Company or any of its Subsidiaries makes payments in the
ordinary course of business upon terms no less favorable than the Company or any
of its Subsidiaries could obtain from third parties and other than the grant of
stock options described in the SEC Documents, none of the officers, directors,
or employees of the Company is presently a party to any transaction with the
Company or any of its Subsidiaries (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.
a. n. Disclosure. All information relating to or concerning the Company or any
of its Subsidiaries set forth in this Agreement and provided to the Buyer
pursuant to Section 2(d) hereof and otherwise in connection with the
transactions contemplated hereby is true and correct in all material respects
and the Company has not omitted to state any material fact necessary in order to
make the statements made herein or therein, in light of the circumstances under
which they were made, not misleading. No event or circumstance has occurred or
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, prospects, operations or financial conditions, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed (assuming for this purpose that the Company’s reports filed under the
1934 Act are being incorporated into an effective registration statement filed
by the Company under the 1933 Act).
a. o. Acknowledgment Regarding Buyer’s Purchase of Securities. The Company
acknowledges and agrees that the Buyer is acting solely in the capacity of arm’s
length purchaser with respect to this Agreement and the transactions
contemplated hereby. The Company further acknowledges that the Buyer is not
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any statement made by the Buyer or any of its respective
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is not advice or a recommendation and is merely incidental
to the Buyer’s purchase of the Securities. The Company further represents to the
Buyer that the Company’s decision to enter into this Agreement has been based
solely on the independent evaluation of the Company and its representatives.
a. p. 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 in any security or solicited any offers to buy any security
under circumstances that would require registration under the 1933 Act of the
issuance of the Securities to the Buyer. The issuance of the Securities to the
Buyer will not be integrated with any other issuance of the Company’s securities
(past, current or future) for purposes of any shareholder approval provisions
applicable to the Company or its securities.
a. q. No Brokers. The Company has taken no action which would give rise to any
claim by any person for brokerage commissions, transaction fees or similar
payments relating to this Agreement or the transactions contemplated hereby.
a. r. Permits; Compliance. The Company and each of its Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the "Company Permits"), and there is
no action pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits. Neither the Company
nor any of its Subsidiaries is in conflict with, or in default or violation of,
any of the Company Permits, except for any such conflicts, defaults or
violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. Since June 30, 2015, neither the
Company nor any of its Subsidiaries has received any notification with respect
to possible conflicts, defaults or violations of applicable laws, except for
notices relating to possible conflicts, defaults or violations, which conflicts,
defaults or violations would not have a Material Adverse Effect.
a. s. Environmental Matters.
i. (i) There are, to the Company’s knowledge, with respect to the Company or any
of its Subsidiaries or any predecessor of the Company, no past or present
violations of Environmental Laws (as defined below), releases of any material
into the environment, actions, activities, circumstances, conditions, events,
incidents, or contractual obligations which may give rise to any common law
environmental liability or any liability under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 or similar federal, state,
local or foreign laws and neither the Company nor any of its Subsidiaries has
received any notice with respect to any of the foregoing, nor is any action
pending or, to the Company’s knowledge, threatened in connection with any of the
foregoing. The term "Environmental Laws" means all federal, state, local or
foreign laws relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants contaminants, or toxic or hazardous substances or wastes
(collectively, "Hazardous Materials") into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.
i. (ii) Other than those that are or were stored, used or disposed of in
compliance with applicable law, no Hazardous Materials are contained on or about
any real property currently owned, leased or used by the Company or any of its
Subsidiaries, and no Hazardous Materials were released on or about any real
property previously owned, leased or used by the Company or any of its
Subsidiaries during the period the property was owned, leased or used by the
Company or any of its Subsidiaries, except in the normal course of the Company’s
or any of its Subsidiaries’ business.
i. (iii) There are no underground storage tanks on or under any real property
owned, leased or used by the Company or any of its Subsidiaries that are not in
compliance with applicable law.
a. t. Title to Property. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 3(u), if
attached hereto, or such as would not have a Material Adverse Effect. Any real
property and facilities held under lease by the Company and its Subsidiaries are
held by them under valid, subsisting and enforceable leases with such exceptions
as would not have a Material Adverse Effect.
a. u. Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a Material
Adverse Effect. Upon written request the Company will provide to the Buyer true
and correct copies of all policies relating to directors’ and officers’
liability coverage, errors and omissions coverage, and commercial general
liability coverage.
a. v. Internal Accounting Controls. The Company and each of its Subsidiaries
maintain a system of internal accounting controls sufficient, in the judgment of
the Company’s board of directors, to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
a. w. Foreign Corrupt Practices. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any Subsidiary has, in the course of his actions
for, or on behalf of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
as amended, or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any foreign or domestic government official or
employee.
a. x. No Investment Company. The Company is not, and upon the issuance and sale
of the Securities as contemplated by this Agreement will not be an "investment
company" required to be registered under the Investment Company Act of 1940 (an
"Investment Company"). The Company is not controlled by an Investment Company.
a. y. No Off Balance Sheet Arrangements. There is no transaction, arrangement,
or other relationship between the Company or any of its Subsidiaries and an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its 1934 Act filings and is not so disclosed or that
otherwise could be reasonably likely to have a Material Adverse Effect.
a. z. No Disqualification Events. None of the Company, any of its predecessors,
any affiliated issuer, any director, executive officer, other officer of the
Company participating in the offering hereunder, any beneficial owner of 20% or
more of the Company’s outstanding voting equity securities, calculated on the
basis of voting power, nor any promoter (as that term is defined in Rule 405
under the 0000 Xxx) connected with the Company in any capacity at the time of
sale (each, an "Issuer Covered Person") is subject to any of the "Bad Actor"
disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a
"Disqualification Event"), except for a Disqualification Event covered by Rule
506(d)(2) or (d)(3). The Company has exercised reasonable care to determine
whether any Issuer Covered Person is subject to a Disqualification Event.
a. aa. Manipulation of Price. The Company has not, and to its knowledge no one
acting on its behalf has: (i) taken, directly or indirectly, any action designed
to cause or to result, or that could reasonably be expected to cause or result,
in the stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of any of the Securities, (ii) sold, bid for,
purchased, or paid any compensation for soliciting purchases of, any of the
Securities, or (iii) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
a. bb. Breach of Representations and Warranties by the Company. The Company
agrees that if the Company breaches any of the representations or warranties set
forth in this Section 3 and in addition to any other remedies available to the
Buyer pursuant to this Agreement, it will be considered an Event of Default
under Section 3.4 of the Note.
1. 4. ADDITIONAL COVENANTS, AGREEMENTS AND ACKNOWLEDGEMENTS.
a. a. Best Efforts. The parties shall use their best efforts to satisfy timely
each of the conditions described in Section 6 and 7 of this Agreement.
a. b. Form D; Blue Sky Laws. The Company agrees to file a Form D with respect to
the Securities as required under Regulation D and to provide a copy thereof to
the Buyer promptly after such filing. The Company shall, on or before the
Closing Date, take such action as the Company shall reasonably determine is
necessary to qualify the Securities for sale to the Buyer at the applicable
closing pursuant to this Agreement under applicable securities or "blue sky"
laws of the states of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so taken to the
Buyer on or prior to the Closing Date.
a. c. Use of Proceeds. The Company shall use the proceeds for general working
capital purposes and not for the repayment of any indebtedness owed to officers,
directors or employees of the Company or their affiliates or in violation or
contravention of any applicable law, rule or regulation.
a. d. Right of Participation in Subsequent Offerings.
i. i. From the date first written above until the earlier to occur of (A)
Maturity Date and (B) that date that the Note (including all principal,
interest, fees and expenses related thereto) is earlier fully repaid or
converted, the Company will not, (i) directly or indirectly, offer, sell, grant
any option to purchase, or otherwise dispose of (or announce any offer, sale,
grant or any option to purchase or other disposition of) any of its or its
Subsidiaries’ debt, equity or equity equivalent securities, including without
limitation any debt, preferred shares or other instrument or security that is,
at any time during its life and under any circumstances, convertible into or
exchangeable or exercisable for Common Stock (any such offer, sale, grant,
disposition or announcement being referred to as a "Subsequent Placement") or
(ii) enter into any definitive agreement with regard to the foregoing, in each
case unless the Company shall have first complied with this Section 4(d). It is
agreed that in order for a Subsequent Placement to qualify as such for purposes
of this Section 4(d), the gross proceeds received or to be received by the
Company must be $1.0 million or greater.
i. ii. The Company shall deliver to the Buyer an irrevocable written notice (the
"Offer Notice") of any proposed or intended issuance or sale or exchange (the "Offer") of the securities being offered (the
"Offered Securities") in a
Subsequent Placement, which Offer Notice shall (w) identify and describe the
Offered Securities, (x) describe the price and other terms upon which they are
to be issued, sold or exchanged, and the number or amount of the Offered
Securities to be issued, sold or exchanged, (y) identify the persons or entities
(if known) to which or with which the Offered Securities are to be offered,
issued, sold or exchanged and (z) offer to issue and sell to or exchange with
the Buyer at least fifty percent (50%) of the Offered Securities (the "Subscription Amount").
i. iii. To accept an Offer, in whole or in part, the Buyer must deliver a
written notice to the Company prior to the end of the tenth (10th ) Business Day
after the Buyer’s receipt of the Offer Notice (the "Offer Period"), setting
forth the portion of the Subscription Amount that the Buyer elects to purchase
(the "Notice of Acceptance"). The Company shall have ten (10) business days from
the expiration of the Offer Period to complete the Subsequent Placement and in
connection therewith to issue and sell the Subscription Amount to the Buyer but
only upon terms and conditions (including, without limitation, unit prices and
interest rates) that are not more favorable to the Buyer or less favorable to
the Company than those set forth in the Offer Notice. Following such ten (10)
business day period, the Company shall publicly announce either (A) the
consummation of the Subsequent Placement or (B) the termination of the
Subsequent Placement.
i. iv. Notwithstanding anything to the contrary contained herein, if the Company
desires to modify or amend the terms and conditions of the Offer prior to the
expiration of the Offer Period, the Company shall deliver to the Buyer a new
Offer Notice and the Offer Period shall expire on the tenth (10th) Business Day
after the Buyer’s receipt of such new Offer Notice.
i. v. If by the fifteenth (15th) Business Day following delivery of the Offer
Notice no public disclosure regarding a transaction with respect to the Offered
Securities has been made, and no notice regarding the abandonment of such
transaction has been received by the Buyer, such transaction shall be deemed to
have been abandoned and the Buyer shall not be deemed to be in possession of any
material, non-public information with respect to the Company.
a. e. Usury. To the extent it may lawfully do so, the Company hereby agrees not
to insist upon or plead or in any manner whatsoever claim, and will resist any
and all efforts to be compelled to take the benefit or advantage of, usury laws
wherever enacted, now or at any time hereafter in force, in connection with any
action or proceeding that may be brought by the Buyer in order to enforce any
right or remedy under this Agreement, the Note and any document, agreement or
instrument contemplated thereby. Notwithstanding any provision to the contrary
contained in this Agreement, the Note and any document, agreement or instrument
contemplated thereby, it is expressly agreed and provided that the total
liability of the Company under this Agreement, the Note or any document,
agreement or instrument contemplated thereby for payments which under Puerto
Rico law are in the nature of interest shall not exceed the maximum lawful rate
authorized under applicable law (the "Maximum Rate"), and, without limiting the
foregoing, in no event shall any rate of interest or default interest, or both
of them, when aggregated with any other sums which under Puerto Rico law in the
nature of interest that the Company may be obligated to pay under this
Agreement, the Note and any document, agreement or instrument contemplated
thereby exceed such Maximum Rate. It is agreed that if the maximum contract rate
of interest allowed by Puerto Rico law and applicable to this Agreement, the
Note and any document, agreement or instrument contemplated thereby is increased
or decreased by statute or any official governmental action subsequent to the
date hereof, the new maximum contract rate of interest allowed by law will be
the Maximum Rate applicable to this Agreement, the Note and any document,
agreement or instrument contemplated thereby from the effective date thereof
forward, unless such application is precluded by applicable law. If under any
circumstances whatsoever, interest in excess of the Maximum Rate is paid by the
Company to the Buyer with respect to indebtedness evidenced by this Agreement,
the Note and any document, agreement or instrument contemplated thereby, such
excess shall be applied by the Buyer to the unpaid principal balance of any such
indebtedness or be refunded to the Company, the manner of handling such excess
to be at the Buyer’s election.
a. f. Restriction on Activities. Commencing as of the date first above written,
and until the sooner of the six month anniversary of the date first written
above or payment of the Note in full, or full conversion of the Note, the
Company shall not, directly or indirectly, without the Buyer’s prior written
consent, which consent shall not be unreasonably withheld: (a) change the nature
of its business; (b) sell, divest, acquire, change the structure of any material
assets other than in the ordinary course of business; or (c) solicit any offers
for, respond to any unsolicited offers for, or conduct any negotiations with any
other person or entity in respect of any "floorless" variable rate debt
transactions (i.e., transactions were the conversion or exercise price of the
security issued by the Company varies based on the market price of the Common
Stock), whether a transaction similar to the one contemplated hereby or any
other investment.
a. g. Listing. The Company will, so long as the Buyer owns any of the
Securities, maintain the listing and trading of its Common Stock on the OTCBB or
any equivalent replacement exchange or electronic quotation system (including
but not limited to the Pink Sheets electronic quotation system) and will comply
in all respects with the Company's reporting, filing and other obligations under
the bylaws or rules of the Financial Industry Regulatory Authority ("FINRA") and
such exchanges, as applicable. The Company shall promptly provide to the Buyer
copies of any notices it receives from the OTCBB and any other exchanges or
electronic quotation systems on which the Common Stock is then traded regarding
the continued eligibility of the Common Stock for listing on such exchanges and
quotation systems.
a. h. Corporate Existence. The Company will, so long as the Buyer beneficially
owns any of the Securities, maintain its corporate existence and shall not sell
all or substantially all of the Company’s assets, except in the event of a
merger or consolidation or sale of all or substantially all of the Company’s
assets, where the surviving or successor entity in such transaction (i) assumes
the Company’s obligations hereunder and under the agreements and instruments
entered into in connection herewith and (ii) is a publicly traded corporation
whose Common Stock is listed for trading or quotation on the OTCBB, any tier of
the NASDAQ Stock Market, the Puerto Rico Stock Exchange or the NYSE MKT.
a. i. No Integration. The Company shall not make any offers or sales of any
security (other than the Securities) under circumstances that would require
registration of the Securities being offered or sold hereunder under the 1933
Act or cause the offering of the Securities to be integrated with any other
offering of securities by the Company for the purpose of any stockholder
approval provision applicable to the Company or its securities.
a. j. Breach of Covenants. The Company acknowledges and agrees that if the
Company breaches any of the covenants set forth in this Section 4, in addition
to any other remedies available to the Buyer pursuant to this Agreement, it will
be considered an Event of Default under Section 3.4 of the Note.
a. k. Compliance with 1934 Act; Public Information Failures. For so long as the
Buyer beneficially owns the Note, the Company shall comply with the reporting
requirements of the 1934 Act; and the Company shall continue to be subject to
the reporting requirements of the 1934 Act. During the period that the Buyer
beneficially owns the Note or the Warrant, if the Company shall (i) fail for any
reason to satisfy the requirements of Rule 144(c)(1), including, without
limitation, the failure to satisfy the current public information requirements
under Rule 144(c) or (ii) if the Company has ever been an issuer described in
Rule 144(i)(1)(i) or becomes such an issuer in the future, and the Company shall
fail to satisfy any condition set forth in Rule 144(i)(2) (each, a "Public
Information Failure") then, as partial relief for the damages to the Buyer by
reason of any such delay in or reduction of its ability to sell the Securities
(which remedy shall not be exclusive of any other remedies available pursuant to
this Agreement, the Note, the Warrant, or at law or in equity), the Company
shall pay to the Buyer an amount in cash equal to two percent (2%) of the
Purchase Price on each of the day of a Public Information Failure and on every
thirtieth day (pro rated for periods totaling less than thirty days) thereafter
until the date such Public Information Failure is cured. The payments to which a
holder shall be entitled pursuant to this Section 4(k) are referred to herein as
"Public Information Failure Payments." Public Information Failure Payments shall
be paid on the earlier of (i) the last day of the calendar month during which
such Public Information Failure Payments are incurred and (iii) the third
business day after the event or failure giving rise to the Public Information
Failure Payments is cured. In the event the Company fails to make Public
Information Failure Payments in a timely manner, such Public Information Failure
Payments shall bear interest at the rate of 1% per month (prorated for partial
months) until paid in full.
a. l. No Shorting. The Buyer agrees that so long as this Note remains
outstanding, the Buyer will not enter into or effect "short sales" of the Common
Stock or hedging transactions which establish a net short position with respect
to the Common Stock. The Company acknowledges and agrees that upon delivery of a
conversion notice by the Buyer, the Buyer immediately owns the shares of Common
Stock set forth in such notice and any sale of the shares of Common Stock
issuable thereunder shall not be prohibited hereunder.
a. m. Disclosure of Transactions and Other Material Information. By 9:00 a.m.,
Puerto Rico time, following the date this Agreement has been fully executed, the
Company shall file a Current Report on Form 8-K describing the terms of the
transactions contemplated by this Agreement in the form required by the 1934 Act
and attaching this Agreement and the form of Note (the "8-K Filing"). From and
after the filing of the 8-K Filing with the SEC, the Buyer shall not be in
possession of any material, nonpublic information received from the Company, any
of its Subsidiaries or any of their respective officers, directors, employees or
agents that is not disclosed in the 8-K Filing. In addition, effective upon the
filing of the 8-K Filing, the Company acknowledges and agrees that any and all
confidentiality or similar obligations under any agreement, whether written or
oral, between the Company, any of its Subsidiaries or any of their respective
officers, directors, affiliates, employees or agents, on the one hand, and the
Buyer or any of its affiliates, on the other hand, shall terminate.
a. n. Legal Counsel Opinions. Upon the request of the Buyer from to time to
time, the Company shall be responsible (at its cost) for promptly supplying to
the Company’s transfer agent and the Buyer a customary legal opinion letter of
its counsel (the "Legal Counsel Opinion") to the effect that the resale of the
Issuance Shares, the Warrant Shares and the Conversion Shares by the Buyer or
its affiliates, successors and assigns is exempt from the registration
requirements of the 1933 Act pursuant to Rule 144 (provided the requirements of
Rule 144 are satisfied and provided the Issuance Shares, the Warrant Shares and
the Conversion Shares are not then registered under the 1933 Act for resale
pursuant to an effective registration statement). Should the Company’s legal
counsel fail for any reason to issue the Legal Counsel Opinion, the Buyer may
(at the Company’s cost) secure another legal counsel to issue the Legal Counsel
Opinion, and the Company will instruct its transfer agent to accept such
opinion.
a. o. Piggyback Registration Rights. The Company hereby grants to the Buyer the
registration rights set forth on Exhibit A hereto.
a. p. Most Favored Nation. While the Note or any principal amount, interest or
fees or expenses due thereunder remain outstanding and unpaid, the Company shall
not enter into any public or private offering of its securities (including
securities convertible into shares of Common Stock) with any individual or
entity (an "Other Investor") that has the effect of establishing rights or
otherwise benefiting such Other Investor in a manner more favorable in any
material respect to such Other Investor than the rights and benefits established
in favor of the Buyer by this Agreement, the Note or the Warrant unless, in any
such case, the Buyer has been provided with such rights and benefits pursuant to
a definitive written agreement or agreements between the Company and the Buyer.
a. q. Change in Transfer Agent. The Company agrees that it will continue to use
VStock Transfer LLC as the transfer agent for the Common Stock and shall
maintain such appointment for so long as all or any portion of the Note remain
outstanding. The Company shall provide VStock Transfer LLC with Irrevocable
Transfer Agent Instructions (as defined below) in a form agreed to by the Buyer.
Failure to adhere to this covenant shall automatically be deemed a material
breach of this agreement and an Event of Default under the Note.
1. 5. Transfer Agent Instructions. The Company shall issue
irrevocable instructions to its transfer agent to issue certificates, registered
in the name of the Buyer or its nominee upon conversion of the Note, the
Conversion Shares in such amounts as specified from time to time by the Buyer to
the Company in accordance with the terms thereof (the "Irrevocable Transfer
Agent Instructions"). In the event that the Company proposes to replace its
transfer agent, the Company shall provide, prior to the effective date of such
replacement, a fully executed Irrevocable Transfer Agent Instructions in a form
as initially delivered pursuant to this Agreement (including but not limited to
the provision to irrevocably reserved shares of Common Stock in the Reserved
Amount (as defined in the Note)) signed by the successor transfer agent to the
Company and the Company. The Company warrants that: (i) no instruction other
than the Irrevocable Transfer Agent Instructions referred to in this Section 5
will be given by the Company to its transfer agent and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement and the Note; (ii) it will not direct
its transfer agent not to transfer or delay, impair, and/or hinder its transfer
agent in transferring (or issuing)(electronically or in certificated form) any
certificate for Securities to be issued to the Buyer upon conversion of or
otherwise pursuant to the Note and when required by the Note and this Agreement;
(iii) it will not fail to remove (or directs its transfer agent not to remove or
impairs, delays, and/or hinders its transfer agent from removing) any
restrictive legend (or to withdraw any stop transfer instructions in respect
thereof) on any certificate for any Securities issued to the Buyer upon
conversion of or otherwise pursuant to the Note as and when required by the Note
and (iv) it will provide any required corporate resolutions and issuance
approvals to its transfer agent within 6 hours of each conversion of the Note.
Nothing in this Section shall affect in any way the Buyer’s obligations and
agreement set forth in Section 2(g) hereof to comply with all applicable
prospectus delivery requirements, if any, upon re-sale of the Securities. If the
Buyer provides the Company, at the cost of the Company, with (i) an opinion of
counsel in form, substance and scope customary for opinions in comparable
transactions, to the effect that a public sale or transfer of such Securities
may be made without registration under the 1933 Act and such sale or transfer is
effected or (ii) the Buyer provides reasonable assurances that the Securities
can be sold pursuant to Rule 144, the Company shall permit the transfer, and, in
the case of the Securities, promptly instruct its transfer agent to issue one or
more certificates, free from restrictive legend, in such name and in such
denominations as specified by the Buyer. The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the Buyer, by
vitiating the intent and purpose of the transactions contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section 5 may be inadequate and agrees, in the event of a
breach or threatened breach by the Company of the provisions of this Section,
that the Buyer shall be entitled, in addition to all other available remedies,
to an injunction restraining any breach and requiring immediate transfer,
without the necessity of showing economic loss and without any bond or other
security being required.
1. 6. Conditions to the Company’s Obligation to Sell. The obligation of the
Company hereunder to issue and sell the Note to the Buyer at the Closing is
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions thereto, provided that these conditions are for the
Company’s sole benefit and may be waived by the Company at any time in its sole
discretion:
a. a. The Buyer shall have executed this Agreement and delivered the same to the
Company.
a. b. The Buyer shall have delivered the Purchase Price in accordance with
Section 1(b) above.
a. c. The representations and warranties of the Buyer shall be true and correct
in all material respects as of the date when made and as of the Closing Date, as
though made at that time (except for representations and warranties that speak
as of a specific date), and the Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Buyer at or prior to the Closing Date.
a. d. No litigation, statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.
1. 7. Conditions to The Buyer’s Obligation to Purchase. The obligation of the
Buyer hereunder to purchase the Note, on the Closing Date, is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Buyer’s sole benefit and
may be waived by the Buyer at any time in its sole discretion:
a. a. The Company shall have executed this Agreement and delivered the same to
the Buyer.
a. b. The Company shall have delivered to the Buyer the duly executed Note in
such denominations as the Buyer shall request and in accordance with Section
1(b) above.
a. c. The Irrevocable Transfer Agent Instructions, in form and substance
satisfactory to the Buyer, shall have been delivered to and acknowledged in
writing by the Company’s Transfer Agent.
a. d. The representations and warranties of the Company shall be true and
correct in all material respects as of the date when made and as of Closing
Date, as though made at such time (except for representations and warranties
that speak as of a specific date) and the Company shall have performed,
satisfied and complied in all material respects with the covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing Date.
a. e. No litigation, statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.
a. f. No event shall have occurred which could reasonably be expected to have a
Material Adverse Effect on the Company including but not limited to a change in
the 1934 Act reporting status of the Company or the failure of the Company to be
timely in its 1934 Act reporting obligations.
a. g. Trading in the Common Stock on the OTCBB shall not have been suspended by
the SEC, FINRA or the OTCBB.
a. h. The Company shall have delivered to the Buyer a certificate evidencing the
formation and good standing of the Company and each of its Subsidiaries in such
entity’s jurisdiction of formation issued by the Secretary of State (or
comparable office) of such jurisdiction, as of a date within ten (10) days of
the Closing Date.
1. 8. Governing Law; Miscellaneous.
a. a. Governing Law; Venue. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Puerto Rico without regard to
principles of conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Agreement or the Note or
any other agreement, certificate, instrument or document contemplated hereby
shall be brought only in the courts of Puerto Rico or in the federal courts
located in the commonwealth of Puerto Rico. The parties to this Agreement hereby
irrevocably waive any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non conveniens. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, 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 TRANSACTIONS CONTEMPLATED HEREBY. 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 this Agreement,
the Note, or any other agreement, certificate, instrument or document
contemplated hereby or thereby. 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, the Note or any other agreement,
certificate, instrument or document contemplated hereby or thereby 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.
a. b. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party. A facsimile or .pdf
signature shall be considered due execution and shall be binding upon the
signatory thereto with the same force and effect as if the signature were an
original, not a facsimile or .pdf signature. Delivery of a counterpart signature
hereto by facsimile or email/.pdf transmission shall be deemed validly delivery
thereof.
a. c. Construction; Headings. This Agreement shall be deemed to be jointly
drafted by the Company and the Buyer and shall not be construed against any
person as the drafter hereof. The headings of this Agreement are for convenience
of reference only and shall not form part of, or affect the interpretation of,
this Agreement.
a. d. Severability. In the event that any provision of this Agreement 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 provision hereof which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision hereof.
a. e. Entire Agreement; Amendments. This Agreement, the Note and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor the Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement or any agreement or instrument contemplated hereby may be waived
or amended other than by an instrument in writing signed by the Buyer.
a. f. 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, e-mail 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 e-mail or 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:
If to the Company, to:
EWELLNESS HEALTHCARE CORPORATION
00000 Xxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxx
e-mail: xxxxxx@xxxxxxxxx-xx.xxx
With a copy by e-mail only to (which copy shall not constitute notice):
XXXXXX XXXXXXX XXXXXX, LLC
0000 Xxxxxxxx, 00xx Xxxxx
Xxxxxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
E-Mail: xxxxxxxx@xxxxxxxxxx.xxx
If to the Buyer:
XXX Partners, L.P.
0 Xxxx Xxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
e-mail: xxxxxxx@xxxxxx.xxx
a. g. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and assigns. Neither the Company
nor the Buyer shall assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other. Notwithstanding the foregoing,
subject to Section 2(f), the Buyer may assign its rights hereunder to any person
that purchases Securities in a private transaction from the Buyer or to any of
its "affiliates," as that term is defined under the 1934 Act, without the
consent of the Company.
a. h. Third Party Beneficiaries. 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.
a. i. Survival. The representations and warranties of the Company and the
agreements and covenants set forth in this Agreement shall survive the closing
hereunder notwithstanding any due diligence investigation conducted by or on
behalf of the Buyer. The Company agrees to indemnify and hold harmless the Buyer
and all their officers, directors, employees and agents for loss or damage
arising as a result of or related to any breach or alleged breach by the Company
of any of its representations, warranties and covenants set forth in this
Agreement or any of its covenants and obligations under this Agreement,
including advancement of expenses as they are incurred.
a. j. Publicity. The Company, and the Buyer shall have the right to review a
reasonable period of time before issuance of any press releases, SEC, OTCBB or
FINRA filings, or any other public statements with respect to the transactions
contemplated hereby; provided , however , that the Company shall be entitled,
without the prior approval of the Buyer, to make any press release or SEC, OTCBB
(or other applicable trading market) or FINRA filings with respect to such
transactions as is required by applicable law and regulations (although the
Buyer shall be consulted by the Company in connection with any such press
release prior to its release and shall be provided with a copy thereof and be
given an opportunity to comment thereon).
a. k. No Strict Construction. 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.
a. l. Indemnification. In consideration of the Buyer's execution and delivery of
this Agreement and acquiring the Securities hereunder, and in addition to all of
the Company's other obligations under this Agreement and the Note, the Company
shall defend, protect, indemnify and hold harmless the Buyer and its
stockholders, partners, members, officers, directors, employees and direct or
indirect investors and any of the foregoing persons' agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the "Indemnitees")
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and disbursements (the "Indemnified Liabilities"), incurred by
any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company in this Agreement, the Note or the Warrant or any other agreement,
certificate, instrument or document contemplated hereby or thereby, (b) any
breach of any covenant, agreement or obligation of the Company contained in this
Agreement, the Note or the Warrant or any other agreement, certificate,
instrument or document contemplated hereby or thereby or (c) any cause of
action, suit or claim brought or made against such Indemnitee by a third party
(including for these purposes a derivative action brought on behalf of the
Company) and arising out of or resulting from (i) the execution, delivery,
performance or enforcement of this Agreement, the Note, or any other agreement,
certificate, instrument or document contemplated hereby or thereby, (ii) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, or (iii) the
status of the Buyer or holder of the Securities as an investor in the Company
pursuant to the transactions contemplated by this Agreement. To the extent that
the foregoing undertaking by the Company may be unenforceable for any reason,
the Company shall make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities that is permissible under applicable law.
a. m. Remedies. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Buyer by vitiating the intent and
purpose of the transaction contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Agreement and the Note will be inadequate and agrees, in the event of a breach
or threatened breach by the Company of the provisions of this Agreement or the
Note, that the Buyer shall be entitled, in addition to all other available
remedies at law or in equity, and in addition to the penalties assessable
herein, to an injunction or injunctions restraining, preventing or curing any
breach of this Agreement, or the Note and to enforce specifically the terms and
provisions hereof, without the necessity of showing economic loss and without
any bond or other security being required.
a. n. Payment Set Aside. To the extent that the Company makes a payment or
payments to the Buyer hereunder or pursuant to the Note, or the Buyer enforces
or exercises its rights hereunder or thereunder, and such payment or payments or
the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company, a trustee, receiver or any other person or entity under
any law (including, without limitation, any bankruptcy law, foreign, state or
federal law, common law or equitable cause of action), then to the extent of any
such restoration the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
a. o. Failure or Indulgence Not Waiver. No failure or delay on the part of the
Buyer in the exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other
right, power or privileges. All rights and remedies of the Buyer existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused this
Agreement to be duly executed as of the date first above written.
eWELLNESS HEALTHCARE CORPORATION
By:
Name: XXXXXX XXXX
Title: CHIEF EXECUTIVE OFFICER
XXX Partners, L.P.
By:
Name: XXXXX XXXXXX
Title: MANAGING PARTNER
SUBSCRIPTION AMOUNT:
Principal Amount of Note: $55,000.00
Actual Amount of Purchase Price of Note: $50,000.00
EXHIBIT A
REGISTRATION RIGHTS
All of the Conversion Shares will be deemed "Registrable Securities" subject to
the provisions of this Exhibit A. All capitalized terms used but not defined in
this Exhibit A shall have the meanings ascribed to such terms in the Securities
Purchase Agreement to which this Exhibit is attached.
1. Piggy-Back Registration.
1.1 Piggy-Back Rights. If at any time on or after the date of the Closing the
Company proposes to file any Registration Statement under the 1933 Act (a
"Registration Statement") with respect to any offering of equity securities, or
securities or other obligations exercisable or exchangeable for, or convertible
into, equity securities, by the Company for its own account or for shareholders
of the Company for their account (or by the Company and by shareholders of the
Company), other than a Registration Statement (i) filed in connection with any
employee stock option or other benefit plan on Form S-8, (ii) for a dividend
reinvestment plan or (iii) in connection with a merger or acquisition, then the
Company shall (x) give written notice of such proposed filing to the holders of Registrable Securities appearing on the books and records of the Company as such
a holder as soon as practicable but in no event less than ten (10) days before
the anticipated filing date of the Registration Statement, which notice shall
describe the amount and type of securities to be included in such Registration
Statement, the intended method(s) of distribution, and the name of the proposed
managing underwriter or underwriters, if any, of the offering, and (y) offer to
the holders of Registrable Securities in such notice the opportunity to register
the sale of such number of Registrable Securities as such holders may request in
writing within five (5) days following receipt of such notice (a "Piggy-Back
Registration"). The Company shall cause such Registrable Securities to be
included in such registration and shall cause the managing underwriter or
underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggy-Back Registration on the same
terms and conditions as any similar securities of the Company and to permit the
sale or other disposition of such Registrable Securities in accordance with the
intended method(s) of distribution thereof. All holders of Registrable
Securities proposing to distribute their securities through a Piggy-Back
Registration that involves an underwriter or underwriters shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such Piggy-Back Registration.
1.2 Withdrawal. Any holder of Registrable Securities may elect to withdraw such
holder’s request for inclusion of Registrable Securities in any Piggy-Back
Registration by giving written notice to the Company of such request to withdraw
prior to the effectiveness of the Registration Statement. The Company (whether
on its own determination or as the result of a withdrawal by persons making a
demand pursuant to written contractual obligations) may withdraw a Registration
Statement at any time prior to the effectiveness of such Registration Statement.
Notwithstanding any such withdrawal, the Company shall pay all expenses incurred
by the holders of Registrable Securities in connection with such Piggy-Back
Registration as provided in Section 1.5 below.
1.3 The Company shall notify the holders of Registrable Securities at any time
when a prospectus relating to such holder’s Registrable Securities is required
to be delivered under the 1933 Act, upon discovery that, or upon the happening
of any event as a result of which, the prospectus included in such Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing. At the request of such holder, the Company shall also prepare, file
and furnish to such holder a reasonable number of copies of a supplement to or
an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of the Registrable Securities, such prospectus shall
not include 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 therein
not misleading in light of the circumstances then existing. The holders of
Registrable Securities shall not to offer or sell any Registrable Securities
covered by the Registration Statement after receipt of such notification until
the receipt of such supplement or amendment.
1.4 The Company may request a holder of Registrable Securities to furnish the
Company such information with respect to such holder and such holder’s proposed
distribution of the Registrable Securities pursuant to the Registration
Statement as the Company may from time to time reasonably request in writing or
as shall be required by law or by the SEC in connection therewith, and such
holders shall furnish the Company with such information.
1.5 All fees and expenses incident to the performance of or compliance with this
Exhibit A by the Company shall be borne by the Company whether or not any
Registrable Securities are sold pursuant to a Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses of the Company’s counsel and independent registered public
accountants) (A) with respect to filings made with the SEC, (B) with respect to
filings required to be made with any trading market on which the Common Stock is
then listed for trading, (C) in compliance with applicable state securities or
Blue Sky laws reasonably agreed to by the Company in writing (including, without
limitation, fees and disbursements of counsel for the Company in connection with
Blue Sky qualifications or exemptions of the Registrable Securities) and (D)
with respect to any filing that may be required to be made by any broker through
which a holder of Registrable Securities intends to make sales of Registrable
Securities with the FINRA, (ii) printing expenses, (iii) messenger, telephone
and delivery expenses, (iv) fees and disbursements of counsel for the Company,
(v) 1933 Act liability insurance, if the Company so desires such insurance, (vi)
fees and expenses of all other persons or entities retained by the Company in
connection with the consummation of the transactions contemplated by this
Exhibit A and (vii) reasonable fees and disbursements of a single special
counsel for the holders of Registrable Securities (selected by holders of the
majority of the Registrable Securities requesting such registration), up to
$10,000 for each registration. In addition, the Company shall be responsible for
all of its internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any broker or similar commissions of any holder of Registrable
Securities.
1.6 The Company and its successors and assigns shall indemnify and hold harmless
the Buyer, each holder of Registrable Securities, the officers, directors,
members, partners, agents and employees (and any other individuals or entities
with a functionally equivalent role of a person holding such titles,
notwithstanding a lack of such title or any other title) of each of them, each
individual or entity who controls the Buyer or any such holder of Registrable
Securities (within the meaning of Section 15 of the 1933 Act or Section 20 of
the 0000 Xxx) and the officers, directors, members, stockholders, partners,
agents and employees (and any other individuals or entities with a functionally
equivalent role of a person holding such titles, notwithstanding a lack of such
title or any other title) of each such controlling individual or entity (each,
an "Indemnified Party"), to the fullest extent permitted by applicable law, from
and against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable attorneys’ fees) and expenses (collectively,
"
Losses "), as incurred, arising out of or relating to (1) any untrue or alleged
untrue statement of a material fact contained in a Registration Statement, any
related prospectus or any form of prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or relating to any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any such prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading or (2) any violation or alleged violation by the Company of the
1933 Act, the 1934 Act or any state securities law, or any rule or regulation
thereunder, in connection with the performance of its obligations under this
Exhibit A, except to the extent, but only to the extent, that (i) such untrue
statements or omissions are based upon information regarding the Buyer or such
holder of Registrable Securities furnished to the Company by such party for use
therein. The Company shall notify the Buyer and each holder of Registrable
Securities promptly of the institution, threat or assertion of any proceeding
arising from or in connection with the transactions contemplated by this Exhibit
A of which the Company is aware.
1.7 If the indemnification under Section 1.6 is unavailable to an Indemnified
Party or insufficient to hold an Indemnified Party harmless for any Losses, then
the Company shall contribute to the amount paid or payable by such Indemnified
Party, in such proportion as is appropriate to reflect the relative fault of the
Company 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 the Company 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 relates to
information supplied by, the Company or the 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 any reasonable
attorneys’ or other 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 Section 1.6 was
available to such party in accordance with its terms. It is agreed that it would
not be just and equitable if contribution pursuant to this Section 1.7 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 sentence. Notwithstanding the provisions of this Section
1.7, neither the Buyer nor any holder of Registrable Securities shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the net proceeds actually received by such party from the sale of all of
their Registrable Securities pursuant to such Registration Statement or related
prospectus exceeds the amount of any damages that such party has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.
[End of Exhibit A]
