Exhibit 10.6
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is dated as of
the date on the signature page of this Agreement, by and between HEALTH
DISCOVERY CORPORATION, a Texas corporation (the "Company"), and the undersigned
(the "Purchaser").
WHEREAS, the Company and the Purchaser are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by Rule 506 under Regulation D as promulgated by the United States
Securities and Exchange Commission (the "Commission") under Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act"); and
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchaser, and the
Purchaser desires to purchase from the Company, shares of common stock of the
Company, no par value (the "Common Stock"), and a stock purchase warrant (the
"Warrant") to purchase shares of Common Stock.
NOW, THEREFORE, in consideration of the promises and mutual covenants
and agreements herein, the Company and the Purchaser hereby agree as follows:
PURCHASE AND SALE
Purchase and Sale.
Subject to the terms and conditions set forth herein, the Company shall
issue and sell to the Purchaser, and the Purchaser shall purchase from the
Company, _________ shares of Common Stock (the "Shares"), and a Warrant
exercisable into __________ shares of Common Stock. The aggregate purchase price
for the Shares and the Warrant purchased by the Purchaser shall be $__________
(the "Purchase Price").
Closing.
a. The Closing. The closing (the "Closing") of the purchase
and sale of the Shares and the Warrant shall take place on the day (the "Closing
Date") upon which the Company receives (at the Company's address listed on the
signature page of this Agreement) and accepts the following:
two (2) copies of this Agreement, each duly executed
by the Purchaser, and
the Purchase Price by personal check, wire transfer,
bank check or money order.
Delivery of the Securities. Upon Closing, the Company shall
deliver, as soon as reasonably practicable, to the Purchaser (at the Purchaser's
address listed on the signature page of this Agreement):
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one (1) copy of this Agreement, duly executed by the
Company,
a certificate evidencing the Shares, registered
in the books and records of the Company in the name of the Purchaser or the
Purchaser's nominee, and
a Warrant representing the Purchaser's right to
acquire shares of Common Stock, registered in the books and records of the
Company in the name of the Purchaser or the Purchaser's nominee.
Rejection of the Purchase and Sale. The Company reserves the
absolute right to reject this Agreement for any reason, including, but not
limited to, the Company's determination, in its sole discretion, that this
Agreement was not properly executed by the Purchaser or that the Purchase Price
was not properly delivered, or if the Company's acceptance may, in the opinion
of its counsel, be unlawful. If for any reason this Agreement is not accepted by
the Company, the Purchase Price will be returned to the Purchaser's address as
soon as reasonably possible, without any interest thereon. After the Purchaser
executes this Agreement and delivers the Purchase Price to the Company, the
Purchaser may not revoke or rescind acceptance of this Agreement without the
written consent of the Company.
REPRESENTATIONS AND WARRANTIES
Representations and Warranties of the Company. The Company represents and
warrants to the Purchaser that, to its knowledge, the statements contained in
this Section 2.1 are true, correct and complete, in all material respects, as of
the date of this Agreement, and will be true correct and complete, in all
material respects, as of the Closing Date.
Organization and Qualification. The Company is duly
incorporated, validly existing and in good standing under the laws of the State
of Texas, with the requisite corporate power and authority to carry on its
business as currently conducted. The Company is duly qualified as a foreign
corporation to do business and is in good standing as a foreign corporation in
each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, would not, individually or
in the aggregate, (x) adversely affect the legality, validity or enforceability
of this Agreement or any of the transactions contemplated hereby, (y) have or
result in a material adverse effect on the results of operations, assets, or
financial condition of the Company, taken as a whole, or (z) impair the
Company's ability to perform fully on a timely basis its obligations hereunder
(any of (x), (y) or (z), being a "Material Adverse Effect"). The Company has
made available to the Purchaser true and correct copies of the Company's
Articles of Incorporation, as in effect on the date of this Agreement (the
"Articles of Incorporation"), and the Company's Bylaws, as in effect on the date
of this Agreement (the "Bylaws").
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Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
hereunder. The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action by the Company. This Agreement has
been duly executed by the Company and when delivered in accordance with the
terms hereof will constitute the 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 or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application and except that rights to
indemnification and contribution may be limited by federal or state securities
laws or public policy relating thereto.
Capitalization. As of the date of this Agreement, except for
equity securities issued or to be issued in connection with the Company's
warrant funding activities, the authorized capital stock of the Company consists
of 200,000,000 shares of Common Stock, of which 63,576,127 shares are issued and
outstanding and options to acquire 8,600,000 shares have been granted. All of
such outstanding shares of capital stock have been, or upon issuance will be,
validly authorized and issued, fully paid and nonassessable. No securities of
the Company are entitled to preemptive or similar rights, and no Person (as
hereinafter defined) has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by this Agreement. The issuance and sale of the Shares and the
Warrant will not obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Purchaser) and will not result in a
right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under such securities.
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Authorization and Validity; Issuance of Shares. The Shares and
the shares of Common Stock issuable upon exercise of the Warrant (the "Warrant
Shares") are and will at all times hereafter continue to be duly authorized and
reserved for issuance and, when issued and paid for in accordance with this
Agreement, will be validly issued, fully paid and non-assessable, free and clear
of all liens.
No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby do not and will not (i) conflict with or violate any
provision of the Articles of Incorporation, Bylaws or other organizational
documents of the Company, (ii) subject to obtaining the consents referred to in
Section 2.1(f), conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture, patent, patent license or instrument to which the Company
is a party or by which any property or asset of the Company is bound or
affected, except where such conflict or violation has not resulted or would not
reasonably be expected to result, individually or in the aggregate, in a
Material Adverse Effect, or (iii) result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company is subject or by which any
material property or asset of the Company is bound, except where such conflict
has not resulted or would not reasonably be expected to result, individually or
in the aggregate, in a Material Adverse Effect.
Consents and Approvals. The Company is not required to obtain
any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority, regulatory or self regulatory agency, or other Person in
connection with the execution, delivery and performance by the Company of this
Agreement, other than (i) the application(s) or any letter(s) acceptable to the
Over-the-Counter Bulletin Board ("OTCBB"), and (ii) any filings, notices or
registrations under applicable federal or state securities laws (the "Required
Approvals"), except where failure to do so has not resulted or would not
reasonably result, individually, or in the aggregate, in a Material Adverse
Effect. "Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
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Litigation; Proceedings. Except as specifically set forth on
in the SEC Documents (hereinafter defined) there is no action, suit, notice of
violation, proceeding or investigation pending or threatened against or
affecting the Company or any of its subsidiaries or any of their respective
properties before or by any court, governmental or administrative agency or
regulatory authority (collectively, an "Action") which (i) adversely affects or
challenges the legality, validity or enforceability of any of this Agreement, or
(ii) would reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect. Neither the Company, nor any officer or director
thereof, is or has been, for the last three years, the subject of any Action
involving a claim of violation of or liability under federal or state securities
laws or a claim of breach of fiduciary duty. There has not been, and there is
not pending or contemplated, any investigation by the Commission involving the
Company or any current or former director that was a director of the Company at
any time during the last three years or officer of the Company. The Commission
has not issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any subsidiary under the Exchange
Act of 1934, as amended (the "Exchange Act") or the Securities Act.
No Default or Violation. The Company (i) is not in default
under or in violation of any indenture, loan or other credit agreement or any
other agreement or instrument to which it is a party or by which it or any of
its properties is bound and which is required to be included as an exhibit to
any SEC Document, (ii) is in violation of any order of any court, arbitrator or
governmental body applicable to it, (iii) is in violation of any statute, rule
or regulation of any governmental authority to which it is subject, (iv) is in
default under or in violation of its Articles of Incorporation, Bylaws or other
organizational documents, respectively in the case of (i), (ii) and (iii),
except where such violations have not resulted or would not reasonably result,
individually or in the aggregate, in a Material Adverse Effect.
Private Offering. The Company and all Persons acting on its
behalf have not made and will not make, directly or indirectly, offers or sales
of any securities or solicit any offers to buy any security under circumstances
that would require registration of the Common Stock or the Warrant or the
issuance of such securities under the Securities Act. Subject to the accuracy
and completeness of the representations and warranties of the Purchaser
contained in Section 2.2, the offer, sale and issuance by the Company to the
Purchaser of the Shares and the Warrant and the issuance of the Warrant Shares
is exempt from the registration requirements of the Securities Act.
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SEC Documents; Financial Statements. Since November 2001, the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it, with the Commission, pursuant to Section 13, 14 or
15(d) of the Exchange Act (collectively referred to herein as the "SEC
Documents"). As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the Commission promulgated thereunder, and
none of the SEC 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 light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing. Such
financial statements fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.
Material Changes. Since the date of the latest audited
financial statements included within the SEC Documents, except as specifically
disclosed in the SEC Documents or in the Private Placement Memorandum, (i) there
has been no event, occurrence or development that has had or that could result
in a Material Adverse Effect, (ii) the Company has not incurred any liabilities
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice, and (B) liabilities not
required to be reflected in the Company's financial statements pursuant to GAAP
or required to be disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting or the identity of its
auditors, and (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its shareholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock.
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Listing and Maintenance Requirements. The Company has not, in
the two years preceding the date of this Agreement, received notice from the
OTCBB or any other exchange or market on which the Common Stock is or has been
listed or quoted to the effect that the Company is not in compliance with the
listing or maintenance requirements of such exchange or market. 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 of the
OTCBB. The issuance and sale of the Shares and Warrant hereunder does not
contravene the rules and regulations of the OTCBB and approval of the
shareholders of the Company is not required for the Company to issue and deliver
to the Purchaser the number of Shares and Warrant Shares contemplated by this
Agreement.
Registration Rights. The Company has not granted or agreed to
grant to any Person any rights (including "piggy-back" registration rights) to
have any securities of the Company registered with the Commission or any other
governmental authority that have not been satisfied.
Broker's Fees. The Purchaser shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section 2.1(n) that may be due
in connection with the transactions contemplated by this Agreement.
Disclosure. All disclosure provided to the Purchaser regarding
the Company, its business, and the transactions contemplated hereby, contained
in this Agreement or in the Private Placement Memorandum, are true and correct
and do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Company as follows:
Organization; Authority. The Purchaser is either an individual
residing in the state as set forth on the signature page of this Agreement, or a
corporation, limited liability company or limited partnership duly formed,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or formation with the requisite power and authority, corporate or
otherwise, to enter into and to consummate the transactions contemplated by this
Agreement and to carry out the obligations hereunder. The purchase by the
Purchaser of the Shares and the Warrant hereunder has been duly authorized by
all necessary action on the part of the Purchaser. This Agreement has been duly
executed and delivered by the Purchaser and constitutes the valid and legally
binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general principles
of equity and except that rights to indemnification and contribution may be
limited by federal or state securities laws or public policy relating thereto.
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Investment Intent. The Purchaser is acquiring the Shares and
the Warrant for its own account and not with a present view to or for
distributing or reselling the Shares, the Warrant or the Warrant Shares or any
part thereof or interest therein in violation of the Securities Act. The
Purchaser is acquiring the Shares or Warrant or Warrant Shares hereunder in the
ordinary course of its business. The Purchaser does not have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the
Shares. The Company will not have any obligation to recognize the ownership,
beneficial or otherwise, of the Shares, Warrant or Warrant Shares by anyone by
the Purchaser.
Purchaser Status. At the time the Purchaser was offered the
Shares and the Warrant, and at the Closing Date and date the Purchaser exercises
the Warrant:
the Purchaser (1) has an individual net worth, or
joint net worth with that person's spouse, in the excess of $1,000,000, (2) had
an individual income in excess of $200,000 in each of the two most recent years
or joint income with that person's spouse in excess of $300,000 in each of those
years, and has a reasonable expectation of reaching the same income level in
this year, (3) is a trust with total assets in excess of $5,000,000 not formed
for the specific purpose of acquiring the Shares, Warrant or Warrant Shares and
the purchase is directed by an individual who has such knowledge and experience
in financial and business matters that he or she is capable of evaluating the
merits and risks of an investment in the Shares, Warrant or Warrant Shares, or
(4) is an entity in which all equity owners satisfy one of the requirements set
forth in subsection (1) through (3);
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the Purchaser, either alone or together with its
representatives, had and will have such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits
and risks of the prospective investment in the Shares, the Warrant and the
Warrant Shares; and
the Purchaser is not a registered broker-dealer under
Section 15 of the Exchange Act.
Residence. The Purchaser is a resident of the state shown on
the signature page of this Agreement.
Risk. The Purchaser has carefully reviewed and understands the
risks of, and other considerations relating to, the purchase of the Shares and
Warrant, and an investment in the Company. The Purchaser has adequate means of
providing for its current needs and possible future contingencies, and the
Purchaser has no need, and anticipates no need in the foreseeable future, to
sell or otherwise transfer the Shares and Warrant Shares. The Purchaser is able
to bear the economic risks of this investment and, consequently, without
limiting the generality of the foregoing, the Purchaser is able to hold the
Shares and Warrant Shares for an indefinite period of time and has sufficient
net worth to sustain a loss of its entire investment in the Company if such loss
should occur. The Purchaser understands that each of the Stock, Warrant and the
Warrant Shares is a highly speculative investment, which involves a high degree
of risk of loss of the Purchaser's entire investment therein.
Reliance. The Purchaser understands and acknowledges that (i)
the Shares, the Warrant and the Warrant Shares are being offered and sold to the
Purchaser without registration under the Securities Act in a private placement
that is exempt from the registration provisions of the Securities Act under
Section 4(2) of the Securities Act or Regulation D promulgated thereunder, and
(ii) the availability of such exemption depends in part on, and the Company will
rely upon the accuracy and truthfulness of, the representations set forth in
this Section 2.2, including, without limitation, the accredited investor status
and the investment intent of the Purchaser, and the Purchaser hereby consents to
such reliance.
Information. The Purchaser and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Shares and
the Warrant which have been requested by the Purchaser or its advisors. The
Purchaser and its advisors, if any, have been afforded the opportunity to ask
questions of the Company and receive answers concerning the terms and conditions
of the offering and obtain any additional information, which the Company
possesses or can acquire without unreasonable effort or expense, that is
necessary to verify the accuracy of any representations or information set forth
in any such material. Neither such inquiries nor any other investigation
conducted by or on behalf of the Purchaser or its representatives or counsel
shall modify, amend or affect the Purchaser's right to rely on the truth,
accuracy and completeness of the Company's representations and warranties
contained in this Agreement. Representatives of the Company have adequately
answered all inquiries that the Purchaser has made of them concerning the
Company or any other matters relating to the operation of the Company and sale
of the Shares and Warrant.
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Taxes. The Purchaser is aware that the Company and its
representatives assume no responsibility for the tax consequences to the
Purchaser of any investment in the Company.
No Representation or Promise. No one has ever represented or
promised expressly or by implication, any of the following: (i) the approximate
or exact length of time that Purchaser will be required to remain as owner of
the Shares or Warrant Shares, (ii) the amount or type of profit, or loss
(including tax write-offs and/or tax benefits) to be realized, if any, as a
result of the Purchaser's investment, or (iii) that the past performance or
experience of the officers or directors of the Company or any affiliate, their
associates, agents, or employees or of any other person gives any assurance that
the Company will be a success.
Offering Literature; No Advertisement. The Purchaser has not
been furnished any offering literature other than, and has relied only on the
information contained in, (i) the Private Placement Memorandum, (ii) the
Company's public SEC Documents, and (iii) this Stock Purchase Agreement. The
Purchaser is not purchasing the Shares and Warrant as a result of, or subsequent
to, any advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio or
presented at any seminar or meeting in which representatives of the Company were
in attendance.
Governmental Review. The Purchaser understands that no United
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Common Stock or
the Warrant.
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Accuracy of Representations. All of the representations and
information provided in this Agreement and any additional information that the
Purchaser has furnished to the Company with respect to the Purchaser's financial
position are accurate and complete as of the date of the Agreement, and the
Company may rely on such information in determining the suitability of the
Purchaser to purchase the Shares and the Warrant. If there should be any
material adverse change in any such representations or information prior to the
issuance of the Shares and Warrant to the Purchaser, the Purchaser will
immediately furnish accurate and complete information concerning any such
material change to the Company. The Company may rely on the representations and
warranties of the Purchaser now and after the Purchaser has received the Shares
and the Warrant.
OTHER AGREEMENTS
Transfer Restrictions.
a. Disposal. If the Purchaser should decide to dispose of the
Shares, the Warrant, or the Warrant Shares held by it, the Purchaser understands
and agrees that it may do so (1) only pursuant to an effective registration
statement under the Securities Act, (2) pursuant to an available exemption from
the registration requirements of the Securities Act, including Rule 144
promulgated under the Securities Act ("Rule 144"), or (3) to an affiliate of the
Purchaser. In connection with any transfer of any Common Stock, the Warrant or
Warrant Shares other than pursuant to an effective registration statement, Rule
144, to the Company or to an affiliate of the Purchaser, the Company may require
the transferor thereof to provide to the Company a written opinion of counsel
experienced in the area of United States securities laws selected by the
transferor, the form and substance of which opinion shall be customary for
opinions of counsel in comparable transactions and reasonably acceptable to the
Company, to the effect that such transfer does not require registration of such
transferred securities under the Securities Act; provided, however, that if the
Shares, the Warrant, or Warrant Shares may be sold pursuant to Rule 144(k), no
written opinion of counsel shall be required from the Purchaser if the Purchaser
provides reasonable assurances that such security can be sold pursuant to Rule
144(k). Notwithstanding the foregoing, the Company hereby consents to and agrees
to register any transfer by the Purchaser to an affiliate of the Purchaser,
provided that the transferee certifies to the Company that it is an "accredited
investor" as defined in Rule 501(a) under the Securities Act. Any such
transferee shall agree in writing to be bound by the terms of this Agreement and
shall have the rights of the Purchaser under this Agreement. The Company shall
not require an opinion of counsel in connection with the transfer of the Shares,
the Warrant or the Warrant Shares to an affiliate of the Purchaser.
b. Legend. The Purchaser agrees to the imprinting, so long as
is required by this Section 3.1(b), of the following legend on the Shares, the
Warrant and the Warrant Shares:
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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
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 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
AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
Neither the Shares, the Warrant, nor the Warrant Shares shall contain the legend
set forth above (i) if, in the written opinion of counsel to the Company
experienced in the area of United States securities laws, such legend is not
required under applicable requirements of the Securities Act, or (iii) if the
Shares, the Warrant or the Warrant Shares may be sold pursuant to Rule 144(k).
The Company agrees that it will provide the Purchaser, upon request, with a
certificate or certificates representing the Shares, the Warrant or the Warrant
Shares, free from such legend at such time as such legend is no longer required
hereunder. If such certificate or certificates had previously been issued with
such a legend, the Company shall, upon request and upon the delivery of the
legended certificate(s), reissue such certificate or certificates free of such
legend.
Reservation of Warrant Shares. The Company shall reserve a sufficient
number of shares of its authorized but unissued Common Stock to provide for the
full conversion of the Warrant. If at any time the number of shares of Common
Stock authorized and reserved for issuance is insufficient to cover the number
of Warrant Shares issuable upon exercise of the Warrant (based on the Exercise
Price (as defined in the Warrant) of the Warrant in effect from time to time)
without regard to any limitation on exercises, the Company will promptly take
all corporate action necessary to authorize and reserve such number of shares,
including calling a special meeting of shareholders to authorize additional
shares, if necessary, and using its best efforts to obtain stockholder approval
of an increase in the number of authorized shares.
3.4 Furnishing of Information. As long as the Purchaser owns the
Shares, the Warrant or the Warrant Shares, the Company covenants 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 of this
Agreement pursuant to the Exchange Act. As long as the Purchaser owns the
Shares, the Warrant or the Warrant Shares, if the Company is not required to
file reports pursuant to such laws, it will prepare and furnish to the
Purchaser, and make publicly available in accordance with Rule 144(c), such
information as is required for the Purchaser to sell the Shares under Rule 144.
3.5 Integration. The Company shall not and shall use its best efforts
to ensure that no affiliate of the Company shall sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the shares of Common Stock hereunder in a manner that would require the
registration under the Securities Act of the sale of the shares Common Stock to
the Purchaser.
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3.6 Non-Public Information. Except for information regarding the
transaction contemplated by this Agreement and the terms and conditions hereof,
the Company covenants and agrees that neither it nor any other Person acting on
its behalf will provide the Purchaser or its agents or counsel with any
information that the Company believes constitutes material non-public
information, unless prior thereto the Purchaser shall have executed a written
agreement regarding the confidentiality and use of such information. The Company
understands and confirms that the Purchaser shall be relying on the foregoing
representations in effecting transactions in securities of the Company.
Notwithstanding anything to the contrary herein, the Purchaser shall not engage
in any trading activity in the Company's securities in violation of Regulation M
of the Exchange Act.
3.7 Use of Proceeds. The Company shall use the net proceeds from the sale
of the Shares for working capital purposes.
3.8 Best Efforts. Both of the parties hereto shall use its best efforts to
satisfy each of the conditions to be satisfied by it as provided in Article IV
of this Agreement.
CONDITIONS
Closing.
Conditions Precedent to the Obligation of the Company to Sell
the Shares and the Warrant. The obligation of the Company to sell the Shares and
the Warrant is subject to the satisfaction or waiver by the Company, at or
before the Closing Date, of each of the following conditions:
the representations and warranties of the Purchaser
in this Agreement shall be true and correct in all material respects as of the
date when made and as of the Closing Date;
the Purchaser shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Purchaser at or before the Closing Date; and
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.
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Conditions Precedent to the Obligation of the Purchaser to
Purchase the Shares and Warrant at the Closing. The obligation of the Purchaser
hereunder to acquire and pay for the Shares and the Warrant at the Closing is
subject to the satisfaction or waiver by the Purchaser, at or before the Closing
Date, of each of the following conditions:
(i) the representations and warranties of the
Company set forth in this Agreement shall be true and correct in all respects as
of the date when made and as of the Closing Date;
(ii) 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 before the Closing Date;
(iii) 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;
(iv) all Required Approvals shall have been
obtained; and
(v) the Company shall have duly reserved the number
of shares of Common Stock and the number or Warrant Shares issuable upon the
exercise of the Warrant acquired by the Purchaser on the Closing Date.
INDEMNIFICATION
Indemnification.
By the Company. The Company will indemnify and hold the
Purchaser harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys' fees and costs of
investigation that the Purchaser may suffer or incur as a result of or relating
to any misrepresentation, breach or inaccuracy, or any allegation by a third
party that, if true, would constitute a breach or inaccuracy, of any of the
representations, warranties, covenants or agreements made by the Company in this
Agreement; provided, however, that any and all payments, in the aggregate, made
or due by the Company as a result of the obligations of this Section 5.1 shall
be limited to, and in no case shall exceed, the Purchase Price paid by the
Purchaser, as stated in Section 1.1 herein.
By the Purchaser. The Purchaser will indemnify and hold the
Company harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys' fees and costs of
investigation that the Company may suffer or incur as a result of or relating to
any misrepresentation, breach or inaccuracy, or any allegation by a third party
that, if true, would constitute a breach or inaccuracy, of any of the
representations, warranties, covenants or agreements made by the Purchaser in
this Agreement.
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MISCELLANEOUS
Entire Agreement. This Agreement, together with the Exhibit hereto,
contain the entire understanding of the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings, oral or
written, with respect to such matters.
Notices. Whenever it is provided herein that any notice, demand,
request, consent, approval, declaration or other communication shall or may be
given to any of the parties by another, or whenever any of the parties desires
to give another any such communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing, and shall be delivered in person with receipt acknowledged
or by registered or certified mail, return receipt requested, postage prepaid,
or by telecopy and confirmed by telecopy answerback addressed as follows:
If to the Company: With a Copy to:
Health Discovery Corporation Powell, Goldstein, Xxxxxx & Xxxxxx LLP
0000 Xxxxx Xxx Xxxxxx Xxxx 000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000 Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx XX Attn: Xxxx Xxxx, Esq.
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
If to the Purchaser:
To the address listed on the signature
page of this Agreement
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile prior
to 6:30 p.m. (New York City time) on a business day, (b) the next business day
after the date of transmission, if such notice or communication is delivered via
facsimile on a day that is not a business day or later than 6:30 p.m. (New York
City time) on any business day, (c) the business day following the date of
mailing, if sent by a U.S. nationally recognized overnight courier service, or
(d) upon actual receipt by the party to whom such notice is required to be
given. As used herein, a "business day" means any day except Saturday, Sunday or
a day which is a federal legal holiday or a day on which banking institutions in
the State of New York are authorized or required by law or other governmental
action to close.
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Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
both the Company and the Purchaser or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver 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
provision, condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement, and shall not be deemed to limit or affect
any of the provisions hereof.
Successors and Assigns; Assignability; No Third-Party Beneficiaries.
Neither this Agreement nor any right, remedy, obligation or liability arising
hereunder, or by reason hereof, shall be assignable by the Purchaser without the
prior written consent of the Company. In the event that this Agreement is
assigned, all covenants contained herein shall bind and inure to the benefit of
the parties hereto and their respective successors and assigns. This Agreement
is intended for the benefit of the parties hereto and their respective permitted
successors and assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other Person.
Governing Law; Waiver of Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by and construed and enforced in accordance with the internal laws
of the State of Georgia, without regard to the principles of conflicts of law
thereof. Each party agrees that all proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) (each a "Proceeding") shall be
commenced exclusively in the state and federal courts sitting in the Atlanta,
Georgia. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the Atlanta, Georgia for
the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such Proceeding
is improper. Each party hereto hereby irrevocably waives personal service of
process and consents to process being served in any such 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 contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby. If either party shall commence a Proceeding to enforce any
provisions of this Agreement, then the prevailing party in such Proceeding shall
be reimbursed by the other party for its attorneys fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
Proceeding.
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6.9 Survival. The representations, warranties, agreements and covenants
contained herein shall survive following the Closing.
6.10 Counterparts; Execution. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument. In the
event that any signature is delivered by facsimile transmission, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile signature page were an original thereof.
6.11 Publicity. The Purchaser shall not issue any press release or make
any public disclosure regarding the transactions contemplated hereby unless such
press release or public disclosure is approved by the Company in advance.
Notwithstanding the foregoing, each of the parties hereto may, in documents
required to be filed by it with the SEC or other regulatory bodies, make such
statements with respect to the transactions contemplated hereby as each may be
advised by counsel is legally necessary or advisable, and may make such
disclosure as it is advised by its counsel is required by law.
6.12 Severability. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision which shall be a reasonable substitute
thereof, and upon so agreeing, shall incorporate such substitute provision in
this Agreement.
6.13 Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
6.14 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the Purchaser
and the Company will be entitled to specific performance under this Agreement.
The parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance of
any such obligation the defense that a remedy at law would be adequate.
6.15 Fees and Expenses. Except as provided herein, each Party shall pay
the fees and expenses of its own advisers, accountants and other experts.
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IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized persons as
of the day and year below.
HEALTH DISCOVERY CORPORATION
By:
--------------------------------------
Xxxxxx X. Xxxxxxxx XX
Chief Administrative Officer, Secretary
and Treasurer
Date: ______________________, 2004
IN MAKING AN INVESTMENT DECISION, THE PURCHASER MUST RELY ON ITS OWN EXAMINATION
OF THE COMPANY AND THE TERMS OF THE SALE OF THE SHARES AND WARRANT, INCLUDING
THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY
FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE
FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY
OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PURCHASER
___________________________________
Name:______________________________
Date: _________________________, 2004
Address:
___________________________________
___________________________________
___________________________________
Resident of the State of __________
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