NOTE PURCHASE AGREEMENT
Exhibit 10.1
This Note Purchase Agreement (this
“Agreement”)
is made as of March 30, 2018 by and between MetaStat, Inc. (the
“Company”),
a Nevada corporation, with offices at 00 Xxxxxxx Xxx.,
0xx
Xxxxx, Xxxxxx XX 00000 and the
purchasers listed on Exhibit A
attached hereto (the
“Purchasers”).
WHEREAS, the Company desires to sell to the Purchasers, and the Purchasers
desire to purchase from the Company through a private
placement (the “Offering”), (i) senior non-convertible promissory bridge
notes in the aggregate principal amount of up to $2,334,027 (the
“Senior
Notes”), (ii) junior
non-convertible promissory bridge notes in the aggregate principal
amount of $1,294,900 (the “Junior
Notes” and, together with
the Senior Notes, the “Notes”),
and (iii) warrants to purchase shares of Common Stock (the
“Note
Warrants”);
and
WHEREAS, the Company and
each of the Purchasers are executing and delivering this Agreement
in accordance with and in reliance upon the exemption from securities
registration afforded by Section 4(a)(2) of the Securities Act and
Rule 506(b) of Regulation D (“Regulation D”) as
promulgated by the United States Securities and Exchange Commission
(the “Commission”) under the
Securities Act of 1933, as amended (the “Securities Act”);
and
WHEREAS, the Offering is being conducted
through Alere Financial Partners, LLC, a division of Cova Capital
Partners, LLC, a non-exclusive registered placement agent (the
“Agent”).
NOW, THEREFORE,
in consideration of the premises and
mutual covenants and obligations hereinafter set forth and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Purchasers,
intending to be legally bound, hereby agree as
follows:
ARTICLE I
Definitions
Section
1.1 Certain Definitions. When used
herein, the following terms shall have the respective meanings
indicated:
“Board of Directors” means
the Company’s board of directors.
“Business Day” means any
day other than a Saturday, a Sunday or a day on which the OTCQB (or
other principal exchange) is closed or on which banks in the City
of New York are required or authorized by law to be
closed.
“Common Stock” means
shares of the Company’s common stock, par value $0.0001 per
share.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended (or any successor act),
and the rules and regulations thereunder (or respective successors
thereto).
“Indebtedness” shall mean
(a) any liabilities for borrowed money or amounts owed (other than
trade accounts payable incurred in the ordinary course of
business), (b) all guaranties, endorsements and other contingent
obligations in respect of Indebtedness of others, whether or not
the same should be reflected in the Company’s consolidated
balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business; and (c)
the present value of any lease payments due under leases required
to be capitalized in accordance with U.S. GAAP, except in each of
the foregoing cases (a) through (c), for Permitted
Indebtedness.
“Intellectual Property
Rights” means all U.S. and foreign patents,
trademarks, domain names (whether or not registered) and any
patentable improvements or copyrightable derivative works thereof,
websites and intellectual property rights relating thereto, service
marks, trade names, copyrights, licenses and authorizations, if
any, and all rights with respect to the foregoing, if any, which
are necessary for the conduct of their respective business as now
conducted without any conflict with the rights of others, except
where the failure to so own or possess would not have a Material
Adverse Effect.
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“Lien” means, with respect
to any Property, any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, tax lien, financing
statement, pledge, charge, or other lien, easement, encumbrance,
preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever on or with respect to
such Property (including, without limitation, any conditional sale
or other title retention agreement having substantially the same
economic effect as any of the foregoing), except in each of the
foregoing cases for Permitted Liens.
“Material Adverse Effect”
means any material adverse effect on the business, operations,
properties, or financial condition of the Company and its
Subsidiaries, taken as a whole, and/or any condition, circumstance,
or situation that would prohibit or otherwise materially interfere
with the ability of the Company to perform any of its obligations
under this Agreement in any material respect.
“Permitted Indebtedness”
means Indebtedness incurred (a) in the ordinary course of business,
which shall include trade payables and accruals in accordance with
the Company’s past practice, and (b) from any participant in
a strategic transaction with the Company that has been approved by
a majority of the disinterested directors of the Company, provided
that (A) any such Indebtedness shall only be incurred from a person
that is, itself or through its Subsidiaries, an operating company
in a business synergistic with the business of the Company and in
which the Company receives benefits in addition to the investment
of funds, and (B) the primary purpose of such Indebtedness is not
to raise capital.
“Permitted Liens” means:
(1) liens in connection with the purchase of equipment secured by
such equipment; (2) liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature, in each case, other than for the
payment of debt incurred in the ordinary course of business; (3)
liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently
concluded; provided that any reserve or other appropriate provision
as is required in conformity with GAAP has been made therefor; (4)
pledges or deposits by a person under worker’s compensation
laws, unemployment insurance laws or similar legislation; (5) liens
imposed by law, such as carriers’, warehousemen’s,
landlord’s and mechanics’ liens, in each case, incurred
in the ordinary course of business; (6) judgment liens not giving
rise to an Event of Default (as defined in the Notes) so long as
such lien is adequately bonded and any appropriate legal
proceedings which may have been duly initiated for the review of
such judgment shall not have been finally terminated or the period
within which such proceedings may be initiated shall not have
expired; (7) liens arising solely by virtue of any statutory or
common law provision relating to banker’s liens, rights of
set-off or similar rights and remedies as to deposit accounts or
other funds maintained with a creditor depository institution; and
(8) liens under licensing agreements entered into by the Company
for use of intellectual property entered into in the ordinary
course of business.
“Promissory Note” means
the 10% convertible promissory note issued by the Company pursuant
to that certain Exchange Agreement dated January 17, 2017, in the
aggregate principal amount of $1,000,000 plus all accrued and
unpaid interest thereon, which is convertible into shares of Common
Stock at $2.00 per share and has a maturity date of September 30,
2017.
“Promissory Note Exchange”
means the exchange of the Promissory Note at the Promissory Note
Exchange Amount into Senior Notes and Note Warrants pursuant
hereto.
“Promissory Note Exchange
Amount” means $834,027.00.
“Property” means property
and/or assets of all kinds, whether real, personal or mixed,
tangible or intangible (including, without limitation, all rights
relating thereto.
“Rule 144” means Rule 144
of the Commission, as amended, promulgated pursuant to the
Securities Act or any successor provision.
“Securities” means the
Notes, the Note Warrants and the Warrant Shares that may be issued
pursuant to Article 2 herein.
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“Series B Preferred” means
the shares of the Company’s Series B Convertible Preferred
Stock with a stated value of $5,500 per share, originally issued by
the Company pursuant that certain Securities Purchase Agreement
dated December 31, 2014, as amended March 27, 2015, plus all
accrued and unpaid dividends thereon, which is convertible into
shares of Common Stock at $0.83 per share.
“Series B Exchange” means
the exchange of the Series B Preferred at the Series B Exchange
Amount into Junior Notes and Note Warrants pursuant hereto.
“Series B Exchange Amount”
means $1,294,900.00.
“Short Sales” means all
“short sales” as defined in Rule 200 of Regulation SHO
under the Securities Exchange Act of 1934 (but shall not be deemed
to include the location and/or reservation of borrowable shares of
Common Stock).
“Subsidiary” means any
corporation or other entity of which at least a majority of the
securities or other ownership interests having ordinary voting
power (absolutely or contingently) for the election of directors or
other persons performing similar functions are at the time owned
directly or indirectly by the Company and/or any of its other
Subsidiaries.
“Trading Day” means a day
on which the OTCQB is open for trading.
“Transaction Documents”
means this Agreement, the Notes, the Note Warrants, the Exchange
Agreement, the Confidential Private Purchaser Questionnaire and all
other, agreements, documents, and other instruments executed and
delivered by or on behalf of the Company in connection with the
Offering.
“U.S. GAAP” means United
States generally accepted accounting principles, applied on a
consistent basis, as set forth in (i) opinions of the Accounting
Principles Board of the American Institute of Certified Public
Accountants, (ii) statements of the Financial Accounting Standards
Board and (iii) interpretations of the Commission and the Staff of
the Commission. Accounting principles are applied on a
“consistent basis” when the accounting principles
applied in a current period are comparable in all material respects
to those accounting principles applied in a preceding period,
except to the extent that new accounting standards have been
adopted by such organizations applicable as of the current
period.
ARTICLE II
Purchase and Sale
of the Securities
Section
2.1 Purchase and Sale of the
Securities. Upon the following terms and conditions, the
Company is offering to each Purchaser and each Purchaser is
purchasing from the Company the number of Securities set forth
opposite such Purchaser’s name on Exhibit A attached
hereto.
Section
2.2 Notes. Subject to the terms and
conditions hereof, the Company agrees to issue and sell to the
Purchasers and the Purchasers agree to purchase from the Company,
at the Closing (as defined below), the Senior Notes and Junior
Notes, as set forth opposite such Purchaser’s name on
Exhibit A attached
hereto. The Junior Notes shall be issued solely pursuant to the
Series B Exchange. The terms of the Senior Notes shall be
substantially as set forth in the form of Senior Note attached
hereto as Exhibit
B-1 and the terms of the Junior Notes shall be substantially
as set forth in the form of Junior Note attached hereto as
Exhibit B-2. This
purchase commitment is made in accordance with and subject to the
terms and conditions described in this Agreement.
Section
2.3 Note Warrants. Each of the
Purchasers shall be issued Note Warrants on a pro rata basis to
purchase an aggregate of 10,000 shares of Common Stock (each a
“Warrant
Share” and collectively, the “Warrant Shares”) for each
$100,000 principal amount of Notes
issued pursuant hereto. The Note Warrants, in substantially
the form attached hereto as Exhibit C, shall expire five
(5) years following the applicable Closing Date and have an initial
exercise price per Warrant Share of $2.00.
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Section
2.4 Warrant Shares. The Company has
authorized and has reserved and covenants and agrees to continue to
reserve, free of all preemptive rights and other similar
contractual rights of stockholders and/or others, a number of
shares of Common Stock equal to one hundred percent (100%) of the
number of Warrant Shares as shall from time to time be sufficient
to effect exercise of all of the Note Warrants then
outstanding.
Section
2.5 Purchase Price and Closing.
Subject to the terms and conditions hereof, the Company agrees to
issue and sell to the Purchasers and, in consideration of and in
express reliance upon the representations, warranties, covenants,
terms and conditions of this Agreement, the Purchasers, severally
but not jointly, agree to purchase the Securities set forth
opposite their respective names on Exhibit A attached hereto for
an aggregate purchase price of up to $3,628,927 (the
“Purchase
Price”), provided, however, that a portion of the
Purchase Price shall be paid by certain Purchasers in connection
with the Promissory Note Exchange pursuant to Section 2.6 below and
by certain Purchasers in connection with the Series B Exchange
pursuant to Section 2.7 below. The initial closing (the
“Initial
Closing”) of the purchase and sale of the Securities
to be acquired by the Purchasers from the Company under this
Agreement shall take place at such time as Purchasers have executed
this Agreement, and all of the conditions set forth in Article V
hereof and applicable to the Initial Closing shall have been
fulfilled or waived in accordance herewith (the “Initial Closing Date”).
After the Initial Closing, the Company may conduct any number of
additional closings (each, an “Additional Closing” and,
together with the Initial Closing, a “Closing”) so long as the
final Additional Closing occurs on or before April 6, 2018, unless
mutually extended by the Company and the Agent. Subject to all
conditions to Closing have been satisfied or waived, each Closing
shall take place at such time and place as the parties shall agree
(a “Closing
Date”).
Section
2.6 Exchange of Promissory Note.
The parties hereto acknowledge and agree that, at and as a
condition to Purchasers purchasing the Securities at the Initial
Closing, the holder of the Promissory Note shall enter into an
exchange agreement (the “Exchange Agreement”) in
substantially the form attached hereto as Exhibit D, and
accordingly be deemed a Purchaser under this Agreement and parties
to the other Transaction Documents, and in connection with the
Promissory Note Exchange will receive (i) Senior Notes with a
principal amount equal to the Promissory Note Exchange Amount and
(ii) Note Warrants based on the formula set forth in Section 2.3
hereof. The parties agree that the Promissory Note Exchange Amount
shall be deemed to constitute a portion of the Purchase Price for
purposes of this Agreement, including, without limitation, Section
2.5 hereof.
Section
2.7 Exchange of Series B Preferred.
The parties hereto acknowledge and agree that, at and as a
condition to Purchasers purchasing the Securities at the Initial
Closing, the holder of the Series B Preferred shall enter into the
Exchange Agreement, and accordingly be deemed a Purchaser under
this Agreement and parties to the other Transaction Documents, and
in connection with the Series B Exchange will receive (i) Junior
Notes with a principal amount equal to the Series B Exchange Amount
and (ii) Note Warrants based on the formula set forth in Section
2.3 hereof. The parties agree that the Series B Exchange Amount
shall be deemed to constitute a portion of the Purchase Price for
purposes of this Agreement, including, without limitation, Section
2.5 hereof.
Section
2.8 Payment, Escrow Agent, and Obligations
of the Escrow Agent.
(a) Each
Purchaser’s appropriate cash Purchase Price (i.e., a purchase
price equal to the principal amount of Notes to be purchased by
such Purchaser) as set forth on Exhibit A attached hereto,
shall be paid to Signature Bank, as escrow agent for MetaStat, Inc.
(the “Escrow
Agent”), by wire transfer of immediately available
funds in U.S. dollars (or in the form of a personal or
cashier’s check) in accordance with the wire and delivery
instructions attached hereto as Exhibit E. The Purchase Price
shall accompany the delivery of the executed Transaction Documents
by such Purchaser.
(b) The Purchaser
acknowledges and agrees that this Agreement and any other documents
delivered in connection herewith will be held by the Agent on
behalf of the Company, and the Purchase Price will be deposited in
an escrow account (the “Escrow Account”), held by
the Escrow Agent. In the event that this Agreement is not accepted
in whole or in part by the Company for whatever reason, this
Agreement and any other documents delivered in connection herewith
will be returned to the Purchaser by the Agent at the address of
the Purchaser as set forth on the Purchaser’s signature page
hereto, and any Purchase Price deposited in the Escrow Account
shall be returned to the Purchaser by the Escrow Agent in
accordance with the payment information provided by the Agent to
the Escrow Agent.
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(c) The Purchaser
agrees that the Escrow Agent shall have no accountability or
obligations to the Purchaser whatsoever and acknowledges that the
Escrow Agent is accountable only to the Company and the Agent. The
Purchaser agrees that when the Purchase Price is deposited in the
Escrow Account, the Escrow Agent’s only duty shall be to
deliver the Purchase Price to the Company or its designees, all
solely according to payment instructions submitted jointly by the
Company and the Agent (the “Payment Instructions”),
and the Escrow Agent shall require no further instructions from the
Purchaser in delivering the same to the Company or its designees.
The Escrow Agent shall upon notice of a Closing Date jointly from
the Company and the Agent, release to the Company or its designees
the proceeds of the Offering in accordance with the Payment
Instructions. In the event the Company rejects the purchase
pursuant to this Agreement in whole or in part, the Escrow Agent
shall return such Purchaser’s Purchase Price directly to the
Purchaser without interest or deduction there from. The proceeds of
the Escrow Account shall be distributed in accordance with Section
2.5.
ARTICLE III
Representations and Warranties
Section
3.1 Representations and Warranties of the
Company. The Company hereby represents and warrants to the
Purchasers, as of the date hereof (except as set forth on the
Company Disclosure Schedule attached hereto with each numbered
Schedule corresponding to the section number herein) and as of each
Closing Date (except for the representations and warranties that
speak as of a specific date, which shall be made as of such date),
as follows:
(a) Organization, Good Standing and
Power. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State
of Nevada and has the requisite corporate power to own, lease and
operate its properties and assets and to conduct its business as it
is now being conducted. The Company is duly qualified to do
business and is in good standing in every jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary except for any jurisdiction(s) (alone or in
the aggregate) in which the failure to be so qualified will not
have a Material Adverse Effect on the Company’s consolidated
financial condition.
(b) Corporate Power; Authority and
Enforcement. The Company has the requisite corporate power
and authority to enter into and perform this Agreement and the
other Transaction Documents, and to issue and sell the Securities
in accordance with the terms hereof and thereof. The execution,
delivery and performance of this Agreement and the other
Transaction Documents by the Company and the consummation by it of
the transactions contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate action, and no
further consent or authorization of the Company or its Board of
Directors or stockholders is required. Each of the Transaction
Documents constitutes, or shall constitute when executed and
delivered, a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditor’s rights and
remedies or by other equitable principles of general
application.
(c) Capitalization. The authorized
capital stock of the Company and the shares thereof currently
issued and outstanding as of the date hereof is set forth on
Schedule 3.1(c)
hereto. All of the outstanding shares of capital stock of the
Company are duly authorized, validly issued, fully paid and
nonassessable, have been issued in compliance with all applicable
federal and state securities laws, and none of such outstanding
shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities. Except as
contemplated by the Transaction Documents or as set forth on
Schedule 3.1(c)
hereto:
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(i) no shares of Common
Stock are entitled to preemptive, conversion or other rights and
there are no outstanding options, warrants, scrip, rights to
subscribe to, call or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares
of capital stock of the Company;
(ii) there
are no contracts, commitments, understandings, or arrangements by
which the Company is or may become bound to issue additional shares
of capital stock of the Company or options, securities or rights
convertible into shares of capital stock of the
Company;
(iii) the
Company is not a party to any agreement granting registration or
anti-dilution rights to any person with respect to any of its
equity or debt securities; and
(iv) the
Company is not a party to, and it has no knowledge of, any
agreement restricting the voting or transfer of any shares of the
capital stock of the Company.
The
offer and sale of all capital stock, convertible securities,
rights, warrants, or options of the Company issued prior to the
Closing complied in all material respects with all applicable
federal and state securities laws. The Company has furnished or
made available to the Purchasers true and correct copies of the
Company’s Articles of Incorporation, as amended and in effect
on the date hereof (the “Articles”), and the
Company’s Bylaws, as amended and in effect on the date hereof
(the “Bylaws”). Except as
restricted under applicable federal, state, local or foreign laws
and regulations, the Transaction Documents, or as set forth on
Schedule 3.1(c), no
written or oral contract, instrument, agreement, commitment,
obligation, plan or arrangement of the Company shall limit the
payment of dividends on the Common Stock.
(d) Issuance of Securities, Etc.
The Securities to be issued at the Closing have been duly
authorized by all necessary corporate action and the Notes and Note
Warrants when paid for or issued in accordance with the terms
hereof, will be validly issued and outstanding, fully paid and
nonassessable and, immediately after the Closing, the Purchasers
will be the owners of all of such securities and have good and
valid title to all of such securities, free and clear of all
encumbrances, except as may be imposed under federal and state
securities laws. When any Warrant Shares are issued in accordance
with the exercise of the Warrants, such Warrant Shares will be duly
authorized by all necessary corporate action and validly issued and
outstanding, fully paid and nonassessable, and the holders will be
entitled to all rights accorded to a holder of Common Stock and
will be the record and beneficial owners of all of such securities
and have good and valid title to all of such securities, free and
clear of all encumbrances.
(e) Subsidiaries. Schedule 3.1(e) hereto sets
forth each Subsidiary of the Company, showing the jurisdiction of
its incorporation or organization and showing the percentage of
ownership of each Subsidiary. Each Subsidiary has been duly
incorporated or otherwise organized and is validly existing and in
good standing in each of their respective jurisdictions of
incorporation or organization. Each Subsidiary is duly qualified to
do business and is in good standing in every jurisdiction in which
the nature of the business conducted or property owned by it makes
such qualification necessary except for any jurisdiction(s) (alone
or in the aggregate) in which the failure to be so qualified will
not have a Material Adverse Effect. There are no outstanding
preemptive, conversion or other rights, options, warrants or
agreements granted or issued by or binding upon any Subsidiary for
the purchase or acquisition of any shares of capital stock of any
Subsidiary or any other securities convertible into, exchangeable
for or evidencing the rights to subscribe for any shares of such
capital stock. Neither the Company nor any Subsidiary is subject to
any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of the capital stock of any Subsidiary
or any convertible securities, rights, warrants or options of the
type described in the preceding sentence. Except as filed as
exhibits to the Commission Documents (as defined below), neither
the Company nor any Subsidiary is party to, nor has any knowledge
of, any agreement restricting the voting or transfer of any shares
of the capital stock of any Subsidiary.
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(f) Commission Documents, Financial
Statements. For the two-year period preceding the date
hereof, the Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it with the
Commission pursuant to the reporting requirements of the Exchange
Act, including material filed pursuant to Section 13(a) or 15(d) of
the Exchange Act (all of the foregoing including filings
incorporated by reference therein being referred to herein as the
“Commission
Documents”). The Company has not provided to the
Purchasers any material non-public information or other information
which, according to applicable law, rule or regulation, was
required to have been disclosed publicly by the Company but which
has not been so disclosed, other than (i) with respect to the
transactions contemplated by this Agreement, or (ii) pursuant to a
non-disclosure or confidentiality agreement signed by the
Purchasers. At the time of the respective filings, the Commission
Documents filed during the two-year period preceding the date
hereof complied in all material respects with the requirements of
the Exchange Act and the rules and regulations of the Commission
promulgated thereunder and other federal, state and local laws,
rules and regulations applicable to such documents. None of the
Commission Documents, when filed, contained any untrue statement of
a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. The financial statements of the Company
included in the Commission Documents (the “Financial Statements”)
complied as of their respective filing dates as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the Commission or other
applicable rules and regulations with respect thereto. The
Financial Statements have been prepared in accordance U.S. GAAP
during the periods involved (except (i) as may be otherwise
indicated in the Financial Statements or the notes thereto or (ii)
in the case of unaudited interim statements, to the extent they may
not include footnotes or may be condensed or summary statements),
and fairly present in all material respects the consolidated
financial position of the Company as of the dates thereof and the
results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end
audit adjustments).
(g) No Material Adverse Effect.
Since February 28, 2017, neither the Company nor any Subsidiary has
experienced or suffered any Material Adverse Effect.
(h) No Undisclosed Liabilities.
Other than as disclosed on Schedule 3.1(h) or set forth in
the Commission Documents, neither the Company nor the Subsidiary
has any liabilities, obligations, claims or losses (whether
liquidated or unliquidated, secured or unsecured, absolute,
accrued, contingent or otherwise) other than those incurred in the
ordinary course of the Company’s business since February 28,
2017 and those which, individually or in the aggregate, do not have
a Material Adverse Effect.
(i) No Undisclosed Events or
Circumstances. No event or circumstance has occurred or
exists with respect to the Company or any Subsidiary or their
respective businesses, properties, operations or financial
condition, 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.
(j) Indebtedness. The Financial
Statements set forth all outstanding secured and unsecured
Indebtedness of the Company on a consolidated basis, or for which
the Company or any Subsidiary have commitments as of the date of
Financial Statements or any subsequent period that would require
disclosure. Neither the Company nor any Subsidiary is in default
with respect to any Indebtedness which, individually or in the
aggregate, would have a Material Adverse Effect.
(k) Title to Assets. Each of the
Company and its Subsidiaries has good and marketable title to (i)
all properties and assets purportedly owned or used by them as
reflected in the Financial Statements, (ii) all properties and
assets necessary for the conduct of their business as currently
conducted, and (iii) all of the real and personal property
reflected in the Financial Statements free and clear of any Lien.
All leases are valid and subsisting and in full force and
effect.
(l) Actions Pending. There is no
action, suit, claim, investigation, arbitration, alternate dispute
resolution proceeding or any other proceeding pending or, to the
knowledge of the Company, threatened against or involving the
Company or any Subsidiary (i) which questions the validity of this
Agreement or any of the other Transaction Documents or the
transactions contemplated hereby or thereby or any action taken or
to be taken pursuant hereto or thereto or (ii) involving any of
their respective properties or assets. To the knowledge of the
Company, there are no outstanding orders, judgments, injunctions,
awards or decrees of any court, arbitrator or governmental or
regulatory body against the Company or any Subsidiary or any of
their respective executive officers or directors in their
capacities as such.
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(m) Compliance with Law. The
Company and each Subsidiary have all franchises, permits, licenses,
consents and other governmental or regulatory authorizations and
approvals necessary for the conduct of their respective business as
now being conducted by it unless the failure to possess such
franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals, individually or in the
aggregate, could not reasonably be expected to have a Material
Adverse Effect.
(n) No Violation of Law. The
business of the Company and each Subsidiary is not being conducted
in violation of any federal, state, local or foreign governmental
laws, or rules, regulations and ordinances of any of any
governmental entity, except for possible violations which
singularly or in the aggregate could not reasonably be expected to
have a Material Adverse Effect. The Company is not required under
federal, state, local or foreign law, rule or regulation to obtain
any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it
to execute, deliver or perform any of its obligations under the
Transaction Documents, or issue and sell the Securities in
accordance with the terms hereof or thereof (other than (x) any
consent, authorization or order that has been obtained as of the
date hereof, (y) any filing or registration that has been made as
of the date hereof or (z) any filings which may be required to be
made by the Company with the Commission or state securities
administrators subsequent to the Closing).
(o) No Conflicts. The execution,
delivery and performance of the Transaction Documents by the
Company and the consummation by the Company of the transactions
contemplated herein and therein do not and will not (i) violate any
provision of the Articles or Bylaws, (ii) conflict with, or
constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of,
any agreement, mortgage, deed of trust, indenture, note, bond,
license, lease agreement, instrument or obligation to which the
Company is a party or by which it or its properties or assets are
bound, (iii) create or impose a Lien or (iv) result in a violation
of any federal, state, local or foreign statute, rule, regulation,
order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or any of its
Subsidiaries or by which any Property or asset of the Company or
any of its Subsidiaries are bound or affected, provided, however, that, excluded from
(ii)-(iv) above are such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse
Effect.
(p) Taxes. The Company and each
Subsidiary, to the extent its applicable, has accurately prepared
and filed all federal, state and other tax returns required by law
to be filed by it, has paid or made provisions for the payment of
all taxes shown to be due and all additional assessments, and
adequate provisions have been and are reflected in the consolidated
financial statements of the Company for all current taxes and other
charges to which the Company or any Subsidiary, if any, is subject
and which are not currently due and payable. None of the federal
income tax returns of the Company have been audited by the Internal
Revenue Service. The Company has no knowledge of any additional
assessments, adjustments or contingent tax liability (whether
federal, state or foreign) of any nature whatsoever, whether
pending or threatened against the Company or any Subsidiary for any
period, nor of any basis for any such assessment, adjustment or
contingency.
(q) Certain Fees. Except as set
forth on Schedule
3.1(q) hereto, no brokers fees, finders’ fees or
financial advisory fees or commissions will be payable by the
Company with respect to the transactions contemplated by this
Agreement and the other Transaction Documents.
(r) Intellectual Property. Each of
the Company and its Subsidiaries owns or has the lawful right to
use all Intellectual Property Rights. The Company has not received
a written notice that any of the Intellectual Property Rights used
by the Company violates or infringes upon the rights of any person.
There is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by any person that the
Company’s business as now conducted infringes or otherwise
violates any patent, trademark, copyright, trade secret or other
proprietary rights of another. To the Company’s knowledge,
there is no existing infringement by another person of any of the
Intellectual Property Rights that would have or would reasonably be
expected to have a Material Adverse Effect. The Company has taken
reasonable security measures to protect the secrecy,
confidentiality and value of all of its Intellectual Property
Rights, except where failure to do so could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect.
-8-
(s) Books and Records; Internal Accounting
Controls. The books and records of the Company and each
Subsidiary accurately reflect in all material respects the
information relating to the business of the Company and the
Subsidiaries. Except as disclosed on Schedule 3.1(s), the Company
and each Subsidiary maintains a system of “internal control
over financial reporting” (as defined in Rule 13a-15(f)
and 15d-15(f) of the Exchange Act) sufficient 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 U.S. GAAP
and to maintain asset and liability accountability;
(iii) access to assets is permitted only in accordance with
management’s general or specific authorization; and
(iv) the recorded accountability for assets and liabilities is
compared with the existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any
differences.
(t) Material Agreements. Any and
all written or oral contracts, instruments, agreements,
commitments, obligations, plans or arrangements, the Company and
each Subsidiary is a party to, that a copy of which would be
required to be filed with the Commission as an exhibit to a
registration statement on Form S-1 (collectively, the
“Material
Agreements”) if the Company or any Subsidiary were
registering securities under the Securities Act has previously been
publicly filed with the Commission in the Commission Documents.
Each of the Company and the Subsidiaries has in all material
respects performed all the obligations required to be performed by
them to date under the foregoing agreements, have received no
notice of default and are not in default under any Material
Agreement now in effect the result of which would cause a Material
Adverse Effect.
(u) Transactions with Affiliates.
Except as set forth in the Financial Statements or in the
Commission Documents, there are no loans, leases, agreements,
contracts, royalty agreements, management contracts or arrangements
or other continuing transactions between (a) the Company or any
Subsidiary on the one hand, and (b) on the other hand, any officer,
employee, consultant or director of the Company, or any of its
Subsidiaries, or any person owning any capital stock of the Company
or any Subsidiary or any member of the immediate family of such
officer, employee, consultant, director or stockholder or any
corporation or other entity controlled by such officer, employee,
consultant, director or stockholder, or a member of the immediate
family of such officer, employee, consultant, director or
stockholder.
(v) Securities Act of 1933.
Assuming the accuracy of the representations of the Purchasers set
forth in Section 3.2 hereof, the Company has complied with all
applicable federal and state securities laws in connection with the
offer, issuance and sale of the Securities hereunder. Neither the
Company nor anyone acting on its behalf, directly or indirectly,
has or will sell, offer to sell or solicit offers to buy any of the
Securities or similar securities to, or solicit offers with respect
thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any person, or has taken or
will take any action so as to bring the issuance and sale of any of
the Securities in violation of the registration provisions of the
Securities Act and applicable state securities laws, and neither
the Company nor any of its affiliates, nor any person acting on its
or their behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under the
Securities Act) in connection with the offer or sale of any of the
shares of Common Stock.
(w) Governmental Approvals. Except
for the filing of any notice prior or subsequent to the Closing
Date that may be required under applicable state and/or federal
securities laws (which if required, shall be filed on a timely
basis), including the filing of a Form D, no authorization,
consent, approval, license, exemption of, filing or registration
with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is or will
be necessary for, or in connection with, the execution or delivery
of the Securities or for the performance by the Company of its
obligations under the Transaction Documents.
(x) Employees. Except as disclosed
on Schedule 3.1(x),
neither the Company nor any Subsidiary has any collective
bargaining arrangements covering any of its employees. Except as
disclosed in the Commission Documents, Schedule 3.1(x) sets forth a
list of the employment contracts, agreements regarding proprietary
information, non-competition agreements, non-solicitation
agreements, confidentiality agreement, or any other similar
contract or restrictive covenant, relating to the right of any
officer, employee or consultant to be employed or engaged by the
Company. Since February 28, 2017, no officer, consultant or key
employee of the Company or any Subsidiary whose termination, either
individually or in the aggregate, would have a Material Adverse
Effect, has terminated or, to the knowledge of the Company, has any
present intention of terminating his or her employment or
engagement with the Company or any Subsidiary.
-9-
(y) Absence of Certain
Developments. Except as disclosed on Schedule 3.1(y), since February
28, 2017, neither the Company nor the Subsidiaries
have:
(i) issued any stock,
bonds or other corporate securities or any rights, options or
warrants with respect thereto;
(ii) borrowed
any amount or incurred or become subject to any liabilities
(absolute or contingent) except current liabilities incurred in the
ordinary course of business which are comparable in nature and
amount to the current liabilities incurred in the ordinary course
of business during the comparable portion of its prior fiscal year,
as adjusted to reflect the current nature and volume of the
Company’s or such Subsidiary’s business;
(iii) discharged
or satisfied any Lien or paid any obligation or liability (absolute
or contingent), other than current liabilities paid in the ordinary
course of business;
(iv) declared
or made any payment or distribution of cash or other Property to
stockholders with respect to its stock, or purchased or redeemed,
or made any agreements so to purchase or redeem, any shares of its
capital stock;
(v) sold, assigned or
transferred any other tangible assets, or canceled any debts or
claims, except in the ordinary course of business;
(vi) sold,
assigned or transferred any patent rights, trademarks, trade names,
copyrights, trade secrets or other intangible assets or
Intellectual Property Rights, or disclosed any proprietary
confidential information to any person except to customers in the
ordinary course of business or to the Purchasers or their
representatives;
(vii) suffered
any substantial losses or waived any rights of material value,
whether or not in the ordinary course of business, or suffered the
loss of any material amount of prospective business;
(viii) made
any changes in employee compensation except in the ordinary course
of business and consistent with past practices;
(ix) made
capital expenditures or commitments therefor that aggregate in
excess of $100,000;
(x) entered into any
other transaction other than in the ordinary course of business, or
entered into any other material transaction, whether or not in the
ordinary course of business;
(xi) made
charitable contributions or pledges in excess of
$10,000;
(xii) suffered
any material damage, destruction or casualty loss, whether or not
covered by insurance;
(xiii) experienced
any material problems with labor or management in connection with
the terms and conditions of their employment;
(xiv) effected
any two or more events of the foregoing kind which in the aggregate
would be material to the Company or its Subsidiaries;
or
(xv) entered
into an agreement, written or otherwise, to take any of the
foregoing actions.
-10-
(z) Investment Company Act. The
Company is not, and is not an affiliate of, and immediately after
receipt of payment for the Securities, will not be or be an
affiliate of, an “investment company” within the
meaning of the Investment Company Act of 1940, as amended. The
Company shall conduct its business in a manner so that it will not
become an “investment company” subject to registration
under the Investment Company Act of 1940, as amended.
(aa) No
Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has
directly or indirectly made any offers or sales of any security or
solicited any offers to buy any security under circumstances that
would cause the offering and/or sale of the Securities pursuant to
this Agreement to be integrated with prior offerings by the Company
for purposes of the Securities Act which would prevent the Company
from selling the Securities pursuant to Rule 506 under the
Securities Act, nor will the Company or any of its affiliates take
any action or steps that would cause the Offering and/or sale of
the Securities to be integrated with other offerings.
(bb) Xxxxxxxx-Xxxxx
Act. The Company is in compliance in all material respects
with the applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002
(the “Xxxxxxxx-Xxxxx
Act”), and the rules and regulations promulgated
thereunder, that are effective and for which compliance by the
Company is required as of the date hereof. The Company has
established disclosure controls and procedures (as such term is
defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) for
the Company and designed such disclosure controls and procedures to
ensure that information required to be disclosed by the Company in
the reports it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods
specified in the Commission’s rules and forms. The
Company’s certifying officers have evaluated the
effectiveness of the Company’s disclosure controls and
procedures as of the end of the period covered by the
Company’s most recently filed periodic report under the
Exchange Act (such date, the “Evaluation Date”). The
Company presented in its most recently filed periodic report under
the Exchange Act the conclusions of the certifying officers about
the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no changes in the Company’s
internal control over financial reporting (as such term is defined
in the Exchange Act) that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control
over financial reporting.
(cc) Shell
Company Status. The Company is not currently an issuer
identified in Securities Act Rule 144(i)(1).
(dd) Listing
and Maintenance Requirements. The Common Stock is registered
pursuant to Section 12(g) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common
Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such
registration. The Company has not, in the 12 months preceding the
date hereof, received notice from the OTCQB to the effect that the
Company is not in compliance with the listing or maintenance
requirements of the OTCQB. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be,
in compliance with all such listing and maintenance
requirements
(ee) Use
of Proceeds. Except as disclosed on Schedule 3.1(ee), the Company
hereby covenants to use the net proceeds received from the Offering
to (i) repay $300,000 of the Promissory Note concurrent with the
Initial Closing, (ii) research and development activities primarily
related to the Company’s therapeutic and companion diagnostic
technologies, and (iii) for general corporate and working capital
purposes.
Section
3.2 Representations and Warranties of Each
of the Purchasers. Each Purchaser, severally and not jointly
with the other Purchasers, hereby makes the following
representations and warranties to the Company as of the date
hereof, with respect solely to itself and not with respect to any
other Purchaser:
(a) Organization and Good Standing of the
Purchasers. If the Purchaser is an entity, such Purchaser is
a corporation, partnership or limited liability company duly
incorporated or organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or
organization.
(b) Authorization and Power. Such
Purchaser has the requisite power and authority to enter into and
perform this Agreement and each of the other Transaction Documents
to which such Purchaser is a party and to purchase the Securities,
being sold to it hereunder. The execution, delivery and performance
of this Agreement and each of the other Transaction Documents to
which such Purchaser is a party by such Purchaser and the
consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate,
partnership or limited liability company action, and no further
consent or authorization of such Purchaser or its Board of
Directors, stockholders, partners, members, or managers, as the
case may be, is required. This Agreement and each of the other
Transaction Documents to which such Purchaser is a party has been
duly authorized, executed and delivered by such Purchaser and
constitutes, or shall constitute when executed and delivered, a
valid and binding obligation of such Purchaser enforceable against
such Purchaser in accordance with the terms hereof, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship,
receivership or similar laws relating to, or affecting generally
the enforcement of, creditor’s rights and remedies or by
other equitable principles of general application.
(c) No Conflicts. Such Purchaser is
not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental
agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or any other Transaction Document
to which such Purchaser is a party or to purchase the Securities in
accordance with the terms hereof, provided, that for purposes of
the representation made in this sentence, such Purchaser is
assuming and relying upon the accuracy of the relevant
representations and agreements of the Company herein.
(d) Status of Purchasers. Such
Purchaser is an “accredited investor” as defined in
Regulation D under the Securities Act and as set forth on the
questionnaire (the “Confidential Private Purchaser
Questionnaire”) attached hereto as Exhibit F and made part hereof.
Such Purchaser is not required to be registered as a broker-dealer
under Section 15 of the Exchange Act and such Purchaser is not a
broker-dealer, nor an affiliate of a broker-dealer, unless
indicated on such Confidential Private Purchaser
Questionnaire.
(e) Acquisition for Investment.
Such Purchaser is acquiring the Securities solely for its own
account for the purpose of investment and not with a view to or for
sale in connection with a distribution. Such Purchaser does not
have a present intention to sell the Securities, nor a present
arrangement (whether or not legally binding) or intention to effect
any distribution of the Securities to or through any person or
entity; provided,
however, that by
making the representations herein, such Purchaser does not agree to
hold the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in
accordance with federal and state securities laws applicable to
such disposition. Each Purchaser acknowledges that it is able to
bear the financial risks associated with an investment in the
Securities and that it has been given full access to such records
of the Company and to the officers of the Company and received such
information as it has deemed necessary or appropriate to conduct
its due diligence investigation and has sufficient knowledge and
experience in investing in companies similar to the Company in
terms of the Company’s stage of development so as to be able
to evaluate the risks and merits of its investment in the
Company.
(f) Opportunities for Additional
Information. Such Purchaser acknowledges that such Purchaser
has had the opportunity to ask questions of and receive answers
from, or obtain additional information from, the executive officers
of the Company concerning the financial and other affairs of the
Company. Such Purchaser acknowledges and agrees that neither the
Agent nor any Affiliate of the Agent has provided such Purchaser
with any information or advice with respect to the Securities nor
is such information or advice necessary or desired. Neither the
Agent nor any Affiliate thereof has made or makes any
representation as to the Company or the quality of the Securities
and the Agent and any Affiliate thereof may have acquired
non-public information with respect to the Company which such
Purchaser agrees need not be provided to it. In connection with the
issuance of the Securities to such Purchaser, neither the Agent nor
any of its Affiliates has acted as a financial advisor or fiduciary
to such Purchaser.
-11-
(g) No General Solicitation. Such
Purchaser acknowledges that the Securities were not offered to such
Purchaser by means of any form of general or public solicitation or
general advertising, or publicly disseminated advertisements or
sales literature, including (i) any advertisement, article, notice
or other communication published in any newspaper, magazine, or
similar media, or broadcast over television or radio, or (ii) any
seminar or meeting to which such Purchaser was invited by any of
the foregoing means of communications.
(h) Rule 144. Such Purchaser
understands that the Notes, Note Warrants, and Warrant Shares must
be held indefinitely unless such Notes, Note Warrants, and Warrant
Shares are registered under the Securities Act or an exemption from
registration is available. Such Purchaser acknowledges that such
Purchaser is familiar with Rule 144 and that such person has been
advised that Rule 144 permits resales only under certain
circumstances. Such Purchaser understands that to the extent that
Rule 144 is not available, such Purchaser may be unable to sell any
Notes, Note Warrants, and Warrant Shares without either
registration under the Securities Act or the existence of another
exemption from such registration requirement.
(i) General. Such Purchaser
understands that the Securities are being offered and sold in
reliance on a transactional exemption from the registration
requirements of federal and state securities laws and the Company
is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of such
Purchaser set forth herein in order to determine the applicability
of such exemptions and the suitability of such Purchaser to acquire
the Securities.
(j) Independent Investment. Except
as may be disclosed in any filings with the Commission by the
Purchasers under Section 13 and/or Section 16 of the Exchange Act,
no Purchaser has agreed to act with any other Purchaser for the
purpose of acquiring, holding, voting or disposing of the
Securities purchased hereunder for purposes of Section 13(d) under
the Exchange Act, and each Purchaser is acting independently with
respect to its investment in the Securities.
(k) Certain Fees. Except as set
forth on Schedule
3.1(q) hereto, each Purchaser has no knowledge (without any
investigation or due inquiry) of any brokers fees, finders’
fees or financial advisory fees or commissions payable by the
Company with respect to the transactions contemplated by this
Agreement and the other Transaction Documents.
(l) No Short Sales. The Purchaser
has not directly or indirectly, nor has any Person acting on behalf
of or pursuant to any understanding with such Purchaser, executed
any Short Sales (as defined below), of the securities of the
Company during the period commencing as of the time that such
Purchaser first received a term sheet (written or oral) from the
Company or any Agent representing the Company setting forth the
material terms of the transactions contemplated by this Agreement
and ending immediately following the public dissemination of the
Press Release (as defined below).
(m) Lock-Up. Each Purchaser hereby
agrees with the Company that such Purchaser will not offer, sell,
or contract to sell any of the Company’s securities and/or
shares of Common Stock that it or its affiliates beneficially owns
(currently or acquires in the future) (the “Lock-Up Shares”) on a
national exchange or in the public marketplace for a period
commencing on the Initial Closing Date through December 31, 2018
(the “Lock-Up
Period”). Furthermore, if at the expiration of the
Lock-Up Period, the Company delivers a notice, pursuant to Section
4.3, to the Purchaser on or prior to the expiration of the Lock-Up
Period (the “Extension Notice”),
indicating that the Company is actively negotiating private or
public offering of equity or equity-linked securities (the
“Qualified
Offering”), then the restrictions of this Section
3.2(m) shall automatically be extended to the earlier of (i) ninety
(90) days following the expiration of the Lock-Up Period, or (ii)
the filing of a Form 8-K with the Commission disclosing the closing
of the Qualified Offering (the “Extension Period”).
During the Lock-Up Period and Extension Period (if any), the
Purchaser may offer, sell, or contract to sell, whether in whole or
in part, the Lock-Up Shares in a privately negotiated transaction
with a third party (the “Third-Party Purchaser”),
provided,
however, that the
Third-Party Purchaser enters into a similar lock-up agreement with
the Company.
ARTICLE IV
Covenants
The
Company covenants with each of the Purchasers as follows, which
covenants are for the benefit of the Purchasers and their permitted
assignees (as defined herein).
Section
4.1 Securities Compliance. The
Company shall notify the Commission in accordance with its rules
and regulations, of the transactions contemplated by any of the
Transaction Documents, including filing a Form D with respect to
the Securities as required under Regulation D and applicable
“blue sky” laws, and shall take all other necessary
action and proceedings as may be required and permitted by
applicable law, rule and regulation, for the legal and valid
issuance of the Securities to the Purchasers or subsequent
holders.
Section
4.2 Compliance with Laws. The
Company shall comply, and cause each Subsidiary to comply in all
respects, with all applicable laws, rules, regulations and orders,
except for such non-compliance which singularly or in the aggregate
could not reasonably be expected to have a Material Adverse
Effect.
Section
4.3 Keeping of Records and Books of
Account. The Company shall keep and cause each Subsidiary to
keep adequate records and books of account, in which complete
entries will be made in accordance with U.S. GAAP consistently
applied, reflecting all financial transactions of the Company and
each Subsidiary.
Section
4.4 Reservation of Shares. So long
as any of the Note Warrants remain outstanding, the Company shall
take all action necessary to at all times have authorized, and
reserved for the purpose of issuance, a sufficient number of shares
of Common Stock needed to provide for the issuance of the Warrant
Shares.
Section
4.5 Disclosure of Transaction. The
Company shall issue a press release describing the material terms
of the transactions contemplated hereby (the “Press Release”) as soon
as practicable after the Initial Closing. The Company shall also
file with the Commission, a Current Report on Form 8-K describing
the material terms of the transactions contemplated hereby (and
attaching as exhibits thereto this Agreement and other Transaction
Documents) within four (4) Business Days following the Initial
Closing.
Section
4.6 Disclosure of Material
Information. The Company and the Subsidiaries covenant and
agree that neither it nor any other person acting on its or their
behalf has provided or, from and after the filing of the Press
Release, will provide any Purchaser or its agents or counsel with
any information that the Company believes constitutes material
non-public information (other than with respect to the transactions
contemplated by this Agreement), unless prior thereto such
Purchaser shall have executed a specific written agreement
regarding the confidentiality and use of such information. The
Company understands and confirms that each Purchaser shall be
relying on the foregoing covenants in effecting transactions in
securities of the Company. Unless otherwise agreed to by the
applicable parties, at the time of the filing of the Press Release,
no Purchaser shall be in possession of any material, nonpublic
information received from the Company, any of its Subsidiaries or
any of its respective officers, directors, employees or agents,
that is not disclosed in the Press Release. The Company shall not
disclose the identity of any Purchaser in any filing with the
Commission except as required by the rules and regulations of the
Commission thereunder.
Section
4.7 Pledge of Securities. The
Company acknowledges and agrees that the Securities may be pledged
by a Purchaser in connection with a bona fide margin agreement or other
loan or financing arrangement that is secured by the Securities.
The pledge of the Securities shall not be deemed to be a transfer,
sale or assignment of the Securities hereunder, and no Purchaser
effecting a pledge of the Securities shall be required to provide
the Company with any notice thereof or otherwise make any delivery
to the Company pursuant to this Agreement or any other Transaction
Document; provided,
that a Purchaser and its pledgee shall be required to comply with
the provisions of Article VI hereof in order to effect a sale,
transfer or assignment of Securities to such pledgee. At a
Purchaser’s expense, the Company hereby agrees to execute and
deliver such documentation as a pledgee of the Securities may
reasonably request in connection with a pledge of the Securities to
such pledgee by a Purchaser, in accordance with applicable laws
relating to the transfer of the securities.
-12-
Section
4.8 No Integrated Offerings. The
Company shall not make any offers or sales of any security (other
than the Securities being offered or sold hereunder) under
circumstances that would require registration of the Securities
being offered or sold hereunder under the Securities
Act.
Section
4.9 SEC Reports. Until the time
that no Purchaser owns Securities, the Company covenants to
maintain the registration of the Common Stock under Section 12(b)
or 12(g) of the Exchange Act and to timely file (or obtain
extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the
date hereof pursuant to the Exchange Act even if the Company is not
then subject to the reporting requirements of the Exchange
Act.
ARTICLE V
CONDITIONS
Section
5.1 Conditions Precedent to the Obligation
of the Company to Sell the Securities. The obligation
hereunder of the Company to issue and sell the Securities to the
Purchasers is subject to the satisfaction or waiver, at or before
each Closing, of each of the conditions set forth below. These
conditions are for the Company’s sole benefit and may be
waived by the Company at any time in its sole
discretion.
(a) Accuracy of Each Purchaser’s
Representations and Warranties. Each of the representations
and warranties of each Purchaser in this Agreement and the other
Transaction Documents that are qualified by materiality or by
reference to any Material Adverse Effect shall be true and correct
in all respects, and all other representations and warranties 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 are expressly made as of a
particular date, which shall be true and correct in all respects as
of such date.
(b) Performance by the Purchasers.
Each Purchaser shall have performed, satisfied and complied in all
respects with all covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by such
Purchaser at or prior to the Closing.
(c) No Injunction. No statute,
rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated
by this Agreement.
(d) Delivery of Purchase Price. The
Purchase Price for the Securities being paid for in cash shall have
been delivered to the Escrow Account in accordance with the
instructions provided herein.
(e) Delivery of Transaction
Documents. The Transaction Documents to which the Purchasers
are parties shall have been duly executed and delivered by the
Purchasers to the Company.
Section
5.2 Conditions Precedent to the Obligation
of the Purchasers to Purchase the Shares. The obligation
hereunder of each Purchaser to acquire and pay for the Securities
is subject to the satisfaction or waiver, at or before each
Closing, of each of the conditions set forth below. These
conditions are for each Purchaser’s sole benefit and may be
waived by such Purchaser at any time in its sole
discretion.
(a) Accuracy of the Company’s
Representations and Warranties. Each of the representations
and warranties of the Company in this Agreement and the other
Transaction Documents that are qualified by materiality or by
reference to any Material Adverse Effect shall be true and correct
in all respects, and all other representations and warranties 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 are expressly made as of a
particular date, which shall be true and correct in all respects as
of such date.
-13-
(b) Performance by the Company. The
Company shall have performed, satisfied and complied in all
respects with all covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing.
(c) Necessary Consents. The Company
shall have received all necessary consents to perform the
transaction contemplated by this Agreement and the Transaction
Documents.
(d) No Injunction. No statute,
rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated
by this Agreement.
(e) No Proceedings or Litigation.
No action, suit or proceeding before any arbitrator or any
governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been
threatened, against the Company or any Subsidiary, or any of the
officers, directors or affiliates of the Company or any Subsidiary
seeking to restrain, prevent or change the transactions
contemplated by this Agreement, or seeking damages in connection
with such transactions.
(f) Certificates. Promptly
following each Closing, the Company shall deliver to the Purchasers
the certificates for the Notes and the Note Warrants being acquired
by such Purchaser at the Closing to such address set forth next to
each Purchaser’s name on Exhibit A attached hereto with
respect to such Closing.
(g) Resolutions. The Board of
Directors of the Company shall have adopted resolutions consistent
with Section 3.1(b) hereof in a form reasonably acceptable to such
Purchaser.
(h) No Suspensions of Trading in Common
Stock. The Common Stock shall not have been suspended, as of
the Closing Date, by the Commission or the OTCQB from trading on
the OTCQB nor shall suspension by the Commission or the OTCQB have
been threatened, as of the Closing Date, either (A) in writing by
the Commission or the OTCQB or (B) by falling below the minimum
listing maintenance requirements of the OTCQB.
(i) Officer’s Certificate.
The Company shall have delivered to the Purchasers a certificate of
an executive officer of the Company, dated as of each Closing Date,
confirming the accuracy of the Company’s representations,
warranties and covenants as of each Closing Date and confirming the
compliance by the Company with the conditions precedent set forth
in this Section 5.2 as of each Closing Date.
(j) Delivery of Transaction
Documents. The Transaction Documents to which the Company is
a party shall have been duly executed and delivered by the Company
to the Purchasers.
(k) Legal Opinions. The Purchasers
shall have received opinions, each dated as of Closing Date, from
Loeb & Loeb, LLP and Xxxxxxx & Xxxxxx LLC, in form and
substance satisfactory to the Purchasers.
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ARTICLE VI
Stock Certificate Legend
Section
6.1 Legend.
(a) The Securities may
only be disposed of in compliance with state and federal securities
laws. In connection with any transfer of Securities other than
pursuant to an effective registration statement or Rule 144, to the
Company or to an affiliate of a Purchaser or in connection with a
pledge as contemplated in Section 4.7, the Company may require the
transferor thereof to provide to the Company an opinion of counsel
selected by the transferor and reasonably acceptable to the
Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred
Securities under the Securities Act. As a condition of transfer,
any such transferee shall agree in writing to be bound by the terms
of this Agreement and shall have the rights and obligations of a
Purchaser under this Agreement.
(b) Each certificate
representing the Securities shall be stamped or otherwise imprinted
with a legend substantially in the following form (in addition to
any legend required by applicable state securities or “blue
sky” laws):
“THIS
SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A
REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION
THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE
501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH
SECURITIES.”
(c) The Company
acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the
Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act
and who agrees to be bound by the provisions of this Agreement and,
if required under the terms of such arrangement, such Purchaser may
transfer pledged or secured Securities to the pledgees or secured
parties. Such a pledge or transfer would not be subject to approval
of the Company and no legal opinion of legal counsel of the
pledgee, secured party or pledgor shall be required in connection
therewith. Further, no notice shall be required of such pledge. At
the appropriate Purchaser’s expense, the Company will execute
and deliver such reasonable documentation as a pledgee or secured
party of Securities may reasonably request in connection with a
pledge or transfer of the Securities, including, if the Securities
are subject to registration, the preparation and filing of any
required prospectus supplement under Rule 424(b)(3) under the
Securities Act or other applicable provision of the Securities Act
to appropriately amend the list of selling stockholders
thereunder.
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(d) So long as the
Company has received written representations from such Purchaser as
reasonably requested by the Company in connection with such legend
removal (which shall not include representations with respect to
the sale of any securities), certificates evidencing the Notes and
Warrant Shares shall not contain any legend (including the legend
set forth in Section 6.1(b) hereof), (i) while a registration
statement covering the resale of such security is effective under
the Securities Act, (ii) following any sale of such Notes and
Warrant Shares pursuant to Rule 144, (iii) if such Notes and
Warrant Shares are eligible for sale under Rule 144, or (iv) if
such legend is not required under applicable requirements of the
Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission). The Company
shall cause its counsel to issue a legal opinion to its transfer
agent promptly after the effective date of any registration
statement filed in connection with this Agreement if required by
its transfer agent to effect the removal of the legend hereunder,
subject to the Company receiving written representations from such
Purchaser as reasonably requested by the Company in connection with
such legend removal (which shall not include representations with
respect to the sale of any securities). If such Notes and Warrant
Shares may be sold under Rule 144 and the Company is then in
compliance with the current public information required under Rule
144, or if the Notes and Warrant Shares may be sold under Rule 144
without the requirement for the Company to be in compliance with
the current public information required under Rule 144 as to such
Notes and Warrant Shares or if such legend is not otherwise
required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by
the staff of the Commission) then such Notes and Warrant Shares
shall be issued free of all legends, subject to the Company
receiving written representations from such Purchaser as reasonably
requested by the Company in connection with such legend removal
(which shall not include representations with respect to the sale
of any securities). The Company agrees that following the effective
date of any registration statement filed in connection with this
Agreement or at such time as such legend is no longer required
under this Section 6.1(d), it will, no later than three Trading
Days following the delivery by a Purchaser to the Company or its
transfer agent of a certificate representing Notes and Warrant
Shares, as the case may be, issued with a restrictive legend (such
third Trading Day, the “Legend Removal Date”),
deliver or cause to be delivered to such Purchaser a certificate
representing such shares that is free from all restrictive and
other legends, subject to the Company receiving written
representations from such Purchaser as reasonably requested by the
Company in connection with such legend removal (which shall not
include representations with respect to the sale of any
securities). The Company may not make any notation on its records
or give instructions to the transfer agent that enlarge the
restrictions on transfer set forth in this Section 6.1(d).
Certificates for Securities subject to legend removal hereunder
shall be transmitted by the transfer agent to the Purchaser by
crediting the account of the Purchaser’s prime broker with
the Depository Trust Company System as directed by such
Purchaser.
(e) In addition to such
Purchaser’s other available remedies, subject to the Company
receiving written representations from such Purchaser as reasonably
requested by the Company in connection with such legend removal
(which shall not include representations with respect to the sale
of any securities), the Company shall pay to a Purchaser, in cash,
if the Company fails to (i) issue and deliver (or cause to be
delivered) to a Purchaser by the Legend Removal Date a certificate
representing the Securities so delivered to the Company by such
Purchaser that is free from all restrictive and other legends or
(ii) if after the Legend Removal Date such Purchaser purchases (in
an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by such Purchaser of all or any
portion of the number of shares of Common Stock, or a sale of a
number of shares of Common Stock equal to all or any portion of the
number of shares of Common Stock that such Purchaser anticipated
receiving from the Company without any restrictive legend, then, an
amount equal to the excess of such Purchaser’s total purchase
price (including brokerage commissions and other out-of-pocket
expenses, if any) for the shares of Common Stock so purchased
(including brokerage commissions and other out-of-pocket expenses,
if any) (the “Buy-In
Price”) over the product of (A) such number of
Underlying Shares that the Company was required to deliver to such
Purchaser by the Legend Removal Date multiplied by (B) the lowest
closing sale price of the Common Stock on any Trading Day during
the period commencing on the date of the delivery by such Purchaser
to the Company of the applicable Securities (as the case may be)
and ending on the date of such delivery and payment under this
clause (ii).
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(f) Each Purchaser,
severally and not jointly with the other Purchasers, agrees with
the Company that such Purchaser will sell any Securities pursuant
to either the registration requirements of the Securities Act,
including any applicable prospectus delivery requirements, or an
exemption therefrom, and that if Securities are sold pursuant to a
registration statement, they will be sold in compliance with the
plan of distribution set forth therein, and acknowledges that the
removal of the restrictive legend from certificates representing
Securities as set forth in this Section 6.1(f) is predicated upon
the Company’s reliance upon this understanding and is subject
to the Company receiving written representations from such
Purchaser as reasonably requested by the Company in connection with
such legend removal (which shall not include representations with
respect to the sale of any securities).
(g) At any time during
the period commencing from the six (6) month anniversary of the
date of this Agreement, if the Company shall fail for any reason to
satisfy the current public information requirements under Rule
144(c) (a “Public
Information Failure”), then, in addition to each
Purchaser’s other available remedies, the Company shall pay
to each Purchaser, in cash, as partial liquidated damages and not
as a penalty, by reason of any such delay in or reduction of its
ability to sell the Securities, an amount in cash equal to one
quarter of one percent (0.25%) of the aggregate Purchase Price of
each such Purchaser’s Securities on the day of a Public
Information Failure and such amount on each day thereafter until
the date such Public Information Failure is cured. The payments to
which a Purchaser shall be entitled pursuant to this Section 6.1(g)
are referred to herein as “Public Information Failure
Payments.” For purposes hereof, a “Public
Information Failure” shall not be deemed to have occurred or
be continuing during any Rule 12b-25 extension period for any
annual, quarterly or other report required to be filed by the
Company with the Commission unless a Purchaser is not permitted to
sell Common Stock pursuant to Rule 144, counsel for the Company
will not provide any required Rule 144 legal opinions, or an
effective registration statement is not available during such
extension period. 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
(ii) the third (3rd) 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 one half of one percent (0.50%) per
month (prorated for partial months) until paid in full. Nothing
herein shall limit such Purchaser’s right to pursue actual
damages for the Public Information Failure, and such Purchaser
shall have the right to pursue all remedies available to it at law
or in equity including, without limitation, a decree of specific
performance and/or injunctive relief.
ARTICLE VII
Indemnification
Section
7.1 General Indemnity. The Company
agrees to indemnify and hold harmless the Purchasers (and their
respective directors, officers, managers, partners, members,
shareholders, affiliates, agents, successors and assigns) from and
against any and all losses, liabilities, deficiencies, costs,
damages and expenses (including, without limitation, reasonable
attorneys’ fees, charges and disbursements) incurred by the
Purchasers as a result of any breach of the representations,
warranties or covenants made by the Company herein. In no event
shall any Indemnified Party (as defined below) be entitled to
recover consequential or punitive damages resulting from a breach
or violation of this Agreement.
-17-
Section
7.2 Indemnification Procedure. Any
party entitled to indemnification under this Article VII (an
“Indemnified
Party”) will give written notice to the indemnifying
party of any matters giving rise to a claim for indemnification;
provided, that the
failure of any party entitled to indemnification hereunder to give
notice as provided herein shall not relieve the indemnifying party
of its obligations under this Article VII except to the extent that
the indemnifying party is actually prejudiced by such failure to
give notice. In case any action, proceeding or claim is brought
against an Indemnified Party in respect of which indemnification is
sought hereunder, the indemnifying party shall be entitled to
participate in and, unless in the reasonable judgment of the
Indemnified Party a conflict of interest between it and the
indemnifying party may exist with respect of such action,
proceeding or claim, to assume the defense thereof with counsel
reasonably satisfactory to the Indemnified Party. In the event that
the indemnifying party advises an Indemnified Party that it will
contest such a claim for indemnification hereunder, or fails,
within thirty (30) days of receipt of any indemnification notice to
notify, in writing, such person of its election to defend, settle
or compromise, at its sole cost and expense, any action, proceeding
or claim (or discontinues its defense at any time after it
commences such defense), then the Indemnified Party may, at its
option, defend, settle or otherwise compromise or pay such action
or claim. In any event, unless and until the indemnifying party
elects in writing to assume and does so assume the defense of any
such claim, proceeding or action, the Indemnified Party’s
costs and expenses arising out of the defense, settlement or
compromise of any such action, claim or proceeding shall be losses
subject to indemnification hereunder. The Indemnified Party shall
cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Indemnified Party, which
relates to such action or claim. The indemnifying party shall keep
the Indemnified Party fully apprised at all times as to the status
of the defense or any settlement negotiations with respect thereto.
If the indemnifying party elects to defend any such action or
claim, then the Indemnified Party shall be entitled to participate
in such defense with counsel of its choice at its sole cost and
expense. The indemnifying party shall not be liable for any
settlement of any action, claim or proceeding effected without its
prior written consent, provided, however, that the indemnifying
party shall be liable for any settlement if the indemnifying party
is advised of the settlement but fails to respond to the settlement
within thirty (30) days of receipt of such notification.
Notwithstanding anything in this Article VII to the contrary, the
indemnifying party shall not, without the Indemnified Party’s
prior written consent, settle or compromise any claim or consent to
entry of any judgment in respect thereof which imposes any future
obligation on the Indemnified Party or which does not include, as
an unconditional term thereof, the giving by the claimant or the
plaintiff to the Indemnified Party of a release from all liability
in respect of such claim. The indemnity agreements contained herein
shall be in addition to (a) any cause of action or similar rights
of the Indemnified Party against the indemnifying party or others,
and (b) any liabilities the indemnifying party may be subject to
pursuant to the law.
ARTICLE VIII
Miscellaneous
Section
8.1 Fees and Expenses. Except as
otherwise set forth in this Agreement and the other Transaction
Documents, each party shall pay the fees and expenses of its
advisors, counsel, accountants and other experts, if any, and all
other expenses, incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this
Agreement.
Section
8.2 Specific Enforcement; Consent to
Jurisdiction.
(a) The Company and the
Purchasers acknowledge and agree that irreparable damage may occur
in the event that any of the provisions of this Agreement or the
other Transaction Documents were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly
agreed that the parties may be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this
Agreement or the other Transaction Documents and to enforce
specifically the terms and provisions hereof or thereof, this being
in addition to any other remedy to which any of them may be
entitled by law or equity.
-18-
(b) Each of the Company
and the Purchasers (i) hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court sitting in the
Southern District of New York and the courts of the State of New
York located in New York county for the purposes of any suit,
action or proceeding arising out of or relating to this Agreement
or any of the other Transaction Documents or the transactions
contemplated hereby or thereby and (ii) hereby waives, and agrees
not to assert in any such suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of such
court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or
proceeding is improper. Each of the Company and the Purchasers
consents to process being served in any such suit, action or
proceeding 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 in this
Section 8.2 shall affect or limit any right to serve process in any
other manner permitted by law. Each party hereby irrevocably waives
personal service of process and consents to process being served in
any such suit, action or proceeding by mailing a copy thereof to
such party at the address for such notices to it under this
Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.
Section
8.3 Entire Agreement; Amendment.
This Agreement and the other Transaction Documents contains the
entire understanding and agreement of the parties with respect to
the matters covered hereby and, except as specifically set forth
herein or in the Transaction Documents, neither the Company nor any
of the Purchasers makes any representations, warranty, covenant or
undertaking with respect to such matters and they supersede all
prior understandings and agreements with respect to said subject
matter, all of which are merged herein. No provision of this
Agreement may be waived or amended other than by a written
instrument signed by the Company and the holders of over fifty
percent (50%) of the Notes then outstanding (the
“Majority
Holders”), and no provision hereof may be waived other
than by a written instrument signed by the party against whom
enforcement of any such waiver is sought. No such amendment shall
be effective to the extent that it applies to less than all of the
holders of the Shares then outstanding. No consideration shall be
offered or paid to any person to amend or consent to a waiver or
modification of any provision of any of this Agreement unless the
same consideration is also offered to all of the parties to this
Agreement.
Section
8.4 Notices. Any and all notices or
other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given
and effective on the earliest of: (a) the date of transmission, if
such notice or communication is delivered via electronic mail
(“Email”) at the Email
address set forth on the signature pages attached hereto at or
prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the
next Trading Day after the date of transmission, if such notice or
communication is delivered via Email at the Email address set forth
on the signature pages attached hereto on a day that is not a
Trading Day or later than 5:30 p.m. (New York City time) on any
Trading Day, (c) the second (2nd) Trading Day
following the date of mailing, if sent by U.S. nationally
recognized overnight courier service or (d) upon actual receipt by
the party to whom such notice is required to be given. The address
for such notices and communications shall be as set forth on the
signature pages attached hereto.
Section
8.5 Waivers. No waiver by any party
of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any other provisions, condition
or requirement hereof, nor shall any delay or omission of any party
to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
Section
8.6 Headings. The section headings
contained in this Agreement (including, without limitation, section
headings and headings in the exhibits and schedules) are inserted
for reference purposes only and shall not affect in any way the
meaning, construction or interpretation of this Agreement. Any
reference to the masculine, feminine, or neuter gender shall be a
reference to such other gender as is appropriate. References to the
singular shall include the plural and vice versa.
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Section
8.7 Successors and Assigns. This
Agreement may not be assigned by a party hereto without the prior
written consent of the Company or the Purchasers, as applicable,
provided,
however, that,
subject to federal and state securities laws and as otherwise
provided in the Transaction Documents, a Purchaser may assign its
rights and delegate its duties hereunder in whole or in part (i) to
a third party acquiring all or substantially all of its Securities
in a private transaction or (ii) to an affiliate, in each case,
without the prior written consent of the Company or the other
Purchasers, after notice duly given by such Purchaser to the
Company provided,
that no such assignment or obligation shall affect the obligations
of such Purchaser hereunder and that such assignee agrees in
writing to be bound, with respect to the transferred securities, by
the provisions hereof that apply to the Purchasers. The provisions
of this Agreement shall inure to the benefit of and be binding upon
the respective permitted successors and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations
or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
Section
8.8 No Third Party Beneficiaries.
The Agent shall be the third party beneficiary of the
representations and warranties of the Company in Section 3.1 and
the representations and warranties of the Purchasers in Section
3.2. This Agreement is intended for the benefit of the parties
hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Article VII
and this Section 8.8.
Section
8.9 Governing Law. This Agreement
shall be governed by and construed in accordance with the internal
laws of the State of New York, without giving effect to any of the
conflicts of law principles which would result in the application
of the substantive law of another jurisdiction. This Agreement
shall not be interpreted or construed with any presumption against
the party causing this Agreement to be drafted.
Section
8.10 Survival. The representations
and warranties of the Company and the Purchasers shall survive the
execution and delivery hereof and the Closing hereunder for a
period of eighteen (18) month following the Closing
Date.
Section
8.11 Counterparts. This Agreement
may be executed in any number of counterparts, each of which when
so executed shall be deemed to be an original and, all of which
taken together shall constitute one and the same Agreement and
shall become effective when counterparts have been signed by each
party and delivered to the other parties hereto, it being
understood that all parties need not sign the same counterpart. In
the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as
if such facsimile signature were the original thereof.
Section
8.12 Publicity. The Company agrees
that it will not disclose, and will not include in any public
announcement, the name of the Purchasers without the consent of the
Purchasers unless and until such disclosure is required by law or
applicable regulation, and then only to the extent of such
requirement.
Section
8.13 Severability. If any term,
provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.
-20-
Section
8.14 Further Assurances. From and
after the date of this Agreement, upon the request of any Purchaser
or the Company, each of the Company and the Purchasers shall
execute and deliver such instrument, documents and other writings
as may be reasonably necessary or desirable to confirm and carry
out and to effectuate fully the intent and purposes of this
Agreement, the Notes, the Note Warrants, the Warrant Shares, and
the other Transaction Documents.
Section
8.15 Independent Nature of
Purchasers’ Obligations and Rights. The obligations of
each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser
shall be responsible in any way for the performance or
non-performance of the obligations of any other Purchaser under any
Transaction Document. Nothing contained herein or in any other
Transaction Document, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as
a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Purchasers are in any way
acting in concert or as a group with respect to such obligations or
the transactions contemplated by the Transaction Documents. Each
Purchaser shall be entitled to independently protect and enforce
its rights including, without limitation, the rights arising out of
this Agreement or out of the other Transaction Documents, and it
shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding or action for such purpose. Each
Purchaser has been represented by its own separate legal counsel in
its review and negotiation of the Transaction Documents. For
reasons of administrative convenience only, certain Purchasers and
their respective counsel have chosen to communicate with the
Company through the legal counsel of the Agent. The legal counsel
of the Agent does not represent any of the Purchasers and only
represents the Agent, which is its client. The Company has elected
to provide all Purchasers with the same terms and Transaction
Documents for the convenience of the Company and not because it was
required or requested to do so by any of the Purchasers. It is
expressly understood and agreed that each provision contained in
this Agreement and in each other Transaction Document is between
the Company and a Purchaser, solely, and not between the Company
and the Purchasers collectively and not between and among the
Purchasers.
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IN
WITNESS WHEREOF, the parties hereto have caused this Note Purchase
Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
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Address
for Notice:
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By:__________________________________________
Name:
Title:
With a
copy to (which shall not constitute notice):
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00 Xxxxxxx Xxx., 0xx
Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, CEO
Telephone No.: (000) 000-0000
Facsimile No. (000) 000-0000
Email: xxxxxxxxx@xxxxxxxx.xxx
With an
Email copy to: xxxxxxxxxxxxx@xxxxxxxx.xxx
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Loeb & Loeb LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telephone
No.: 000-000-0000
Facsimile
No.: 000-000-0000
Email:
xxxxxxx@xxxx.xxx
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SIGNATURE
PAGE FOR PURCHASERS FOLLOWS]
IN
WITNESS WHEREOF, the undersigned have caused this Note Purchase
Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
Name of
Purchaser: ________________________
Signature of Authorized Signatory of
Purchaser: ________________________
Name of
Authorized Signatory: ________________________
Title
of Authorized Signatory: ________________________
Purchaser’s
Tax I.D. or Social Security Number:
________________________
Email
Address of Authorized Signatory:
________________________
Phone
Number of Authorized Signatory:
________________________
Address
for Notice to Purchaser:
________________________
________________________
________________________
Address
for Delivery of Securities to Purchaser (if not same as address for
notice):
________________________
________________________
________________________
Purchase Price:
$_______________________
Note
Warrants: _______________________
EXHIBIT A
TO THE NOTE PURCHASE AGREEMENT
LIST OF PURCHASERS
Close and Closing Date:
|
Name and Address
of Purchasers
|
Purchase Price
|
Number of Securities Purchased
|
|
[_____]
|
$[_____]
|
Senior
Notes: $[_____]
# Note
Warrants: [_____]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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X-0
XXXXXXX X-0
TO THE NOTE PURCHASE AGREEMENT
FORM OF SENIOR NOTE
B-1
EXHIBIT B-2
TO THE NOTE PURCHASE AGREEMENT
FORM OF JUNIOR NOTE
B-2
EXHIBIT C
TO THE NOTE PURCHASE AGREEMENT
FORM OF NOTE WARRANT
C-1
EXHIBIT D
TO THE NOTE PURCHASE AGREEMENT
FORM OF EXCHANGE AGREEMENT
D-1
EXHIBIT E
TO THE NOTE PURCHASE AGREEMENT
ESCROW WIRE INSTRUCTIONS
E-1
EXHIBIT F
TO THE NOTE PURCHASE AGREEMENT
CONFIDENTIAL PRIVATE PURCHASER QUESTIONNAIRE
F-1
