SECURITIES PURCHASE AGREEMENT
This
SECURITIES PURCHASE
AGREEMENT (the “Agreement”), dated as of June
17, 2021, by and between VISIUM
TECHNOLOGIES, INC., a Florida corporation, with headquarters
located at 0000 Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, XX 00000 (the
“Company”), and LABRYS
FUND, LP, a Delaware limited partnership, with its address
at 00 Xxxxxx Xxxx, Xxxxxxxxx, XX 00000 (the
“Buyer”).
WHEREAS:
A. The Company and the
Buyer are executing and delivering this Agreement in reliance upon
the exemption from securities registration afforded by Section
4(a)(2) of the Securities Act of 1933, as amended (the “1933
Act”) and Rule 506(b) promulgated by the United States
Securities and Exchange Commission (the “SEC”) under
the 1933 Act;
B. Buyer desires to
purchase from the Company, and the Company desires to issue and
sell to the Buyer, upon the terms and conditions set forth in this
Agreement, a promissory note of the Company, in the aggregate
principal amount of $115,000.00 (as the principal amount thereof
may be increased pursuant to the terms thereof, and together with
any note(s) issued in replacement thereof or as a dividend thereon
or otherwise with respect thereto in accordance with the terms
thereof, in the form attached hereto as Exhibit A, the
“Note”), convertible into shares of common stock,
$0.0001 par value per share, of the Company (the “Common
Stock”), upon the terms and subject to the limitations and
conditions set forth in such Note;
C. The Buyer wishes to
purchase, upon the terms and conditions stated in this Agreement,
such principal amount of the Note as is set forth immediately below
its name on the signature pages hereto;
D. The Company wishes
to issue a common stock purchase warrant to purchase 7,467,532
shares of Common Stock (the “Warrant”) to the Buyer as
additional consideration for the purchase of the Note, which shall
be earned in full as of the Closing Date, as further provided
herein.
NOW THEREFORE, in consideration of the
foregoing and of the agreements and covenants herein contained, and
for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the
Buyer hereby agree as follows:
1.
Purchase and Sale of Note.
a. Purchase of Note. On the
Closing Date (as defined below), the Company shall issue and sell
to the Buyer, and the Buyer agrees to purchase from the Company,
the Note, as further provided herein.
b.
Form of Payment. On the Closing
Date: (i) the Buyer shall pay the purchase price of
$109,250.00 (the
“Purchase Price”) for the Note, to be issued and sold
to it at the Closing (as defined below), by wire transfer of
immediately available funds to the Company, in accordance with the
Company’s written wiring instructions, against delivery of
the Note, and (ii) the Company shall deliver such duly executed
Note and Warrant on behalf of the Company, to the Buyer, against
delivery of such Purchase Price. On the Closing, the Buyer shall
withhold a non-accountable sum of $2,500.00 from the Purchase Price
to cover the Buyer’s legal fees in connection with the
transactions contemplated by this Agreement.
c. Closing Date. Subject to the
satisfaction (or written waiver) of the conditions thereto set
forth in Section 6 and Section 7 below, the date and time of the
issuance and sale of the Note pursuant to this Agreement (the
“Closing Date”) shall be 4:00 PM, Eastern Time on the
date first written above, or such other mutually agreed upon
time.
d. Closing. The closing of the
transactions contemplated by this Agreement (the
“Closing”) shall occur on the Closing Date at such
location as may be agreed to by the parties (including via exchange
of electronic signatures).
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1A.
Warrant. On or
before the Closing Date, the Company shall issue the Warrant to the
Buyer pursuant to the terms of contained therein.
2. Buyer’s Representations and
Warranties. The Buyer represents and warrants to the Company
as of the Closing Date that:
a. Investment Purpose. As of the
Closing Date, the Buyer is purchasing the Note, the Warrant, and
the shares of Common Stock issuable upon conversion of or otherwise
pursuant to the Note and such additional shares of Common Stock, if
any, as are issuable on account of interest on the Note pursuant to
this Agreement and/or upon exercise of the Warrant, such shares of
Common Stock being collectively referred to herein as the
“Conversion Shares” and, collectively with the Note and
Warrant, the “Securities”) for its own account and not
with a present view towards the public sale or distribution
thereof, except pursuant to sales registered or exempted from
registration under the 1933 Act; provided, however, that by making the
representations herein, the Buyer does not agree to hold any of the
Securities for any minimum or other specific term and reserves the
right to dispose of the Securities at any time in accordance with
or pursuant to a registration statement or an exemption under the
1933 Act.
b. Accredited Investor Status. The
Buyer is an “accredited investor” as that term is
defined in Rule 501(a) of Regulation D (an “Accredited
Investor”).
c. Reliance on Exemptions. The
Buyer understands that the Securities are being offered and sold to
it in reliance upon specific exemptions from the registration
requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the
Buyer’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Buyer set
forth herein in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the
Securities.
d. Information. The Buyer and its
advisors, if any, have been, and for so long as the Note remains
outstanding will continue to be, furnished with all materials
relating to the business, finances and operations of the Company
and materials relating to the offer and sale of the Securities
which have been requested by the Buyer or its advisors. The Buyer
and its advisors, if any, have been, and for so long as the Note
remains outstanding will continue to be, afforded the opportunity
to ask questions of the Company regarding its business and affairs.
Notwithstanding the foregoing, the Company has not disclosed to the
Buyer any material nonpublic information regarding the Company or
otherwise and will not disclose such information unless such
information is disclosed to the public prior to or promptly
following such disclosure to the Buyer. Neither such inquiries nor
any other due diligence investigation conducted by Buyer or any of
its advisors or representatives shall modify, amend or affect
Buyer’s right to rely on the Company’s representations
and warranties contained in Section 3 below.
e. Governmental Review. The Buyer
understands that no United States federal or state agency or any
other government or governmental agency has passed upon or made any
recommendation or endorsement of the Securities.
f. Transfer or Re-sale. The Buyer
understands that (i) the sale or resale of the Securities has not
been and is not being registered under the 1933 Act or any
applicable state securities laws, and the Securities may not be
transferred unless (a) the Securities are sold pursuant to an
effective registration statement under the 1933 Act,
(b) the
Buyer shall have delivered to the Company, at the cost of the
Company, an opinion of counsel (which may be the Legal Counsel
Opinion (as defined below)) that shall be in form, substance and
scope customary for opinions of counsel in comparable transactions
to the effect that the Securities to be sold or transferred may be
sold or transferred pursuant to an exemption from such
registration, which opinion shall be accepted by the Company, (c)
the Securities are sold or transferred to an
“affiliate” (as defined in Rule 144 promulgated under
the 1933 Act (or a successor rule) (“Rule 144”)) of the
Buyer who agrees to sell or otherwise transfer the Securities only
in accordance with this Section 2(f) and who is an Accredited
Investor, (d) the Securities are sold pursuant to Rule 144 or other
applicable exemption, or (e) the Securities are sold pursuant to
Regulation S under the 1933 Act (or a successor rule)
(“Regulation S”), and the Buyer shall have delivered to
the Company, at the cost of the Company, an opinion of counsel that
shall be in
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form,
substance and scope customary for opinions of counsel in corporate
transactions, which opinion shall be accepted by the Company; (ii)
any sale of such Securities made in reliance on Rule 144 may be
made only in accordance with the terms of said Rule and further, if
said Rule is not applicable, any re-sale of such Securities under
circumstances in which the seller (or the person through whom the
sale is made) may be deemed to be an underwriter (as that term is
defined in the 0000 Xxx) may require compliance with some other
exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person
is under any obligation to register such Securities under the 1933
Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder (in each case).
Notwithstanding the foregoing or anything else contained herein to
the contrary, the Securities may be pledged in connection with a
bona fide margin
account or other lending arrangement secured by the Securities, and
such pledge of Securities shall not be deemed to be a transfer,
sale or assignment of the Securities hereunder, and the Buyer in
effecting such pledge of Securities shall be not required to
provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or
otherwise.
g. Legends. The Buyer understands
that until such time as the Note, Warrant, and, upon conversion of
the Note and/or exercise of the Warrant in accordance with its
respective terms, the Conversion Shares, have been registered under
the 1933 Act or may be sold pursuant to Rule 144, Rule 144A under
the 1933 Act, Regulation S, or other applicable exemption without
any restriction as to the number of securities as of a particular
date that can then be immediately sold, the Securities may bear a
restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the
certificates for such Securities):
“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
[CONVERTIBLE/EXERCISABLE] HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE
SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144, RULE 144A, REGULATION S, OR OTHER APPLICABLE
EXEMPTION UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.”
The
legend set forth above shall be removed and the Company shall issue
a certificate for the applicable shares of Common Stock without
such legend to the holder of any Security upon which it is stamped
or (as requested by such holder) issue the applicable shares of
Common Stock to such holder by electronic delivery by crediting the
account of such holder’s broker with The Depository Trust
Company (“DTC”),
if, unless otherwise required by applicable state securities laws,
(a) such Security is registered for sale under an effective
registration statement filed under the 1933 Act or otherwise may be
sold pursuant to Rule 144, Rule 144A, Regulation S, or other
applicable exemption without any restriction as to the number of
securities as of a particular date that can then be immediately
sold, or (b) the Company or the Buyer provides the Legal Counsel
Opinion (as contemplated by and in accordance with Section 4(m)
hereof) to the effect that a public sale or transfer of such
Security may be made without registration under the 1933 Act, which
opinion shall be accepted by the Company so that the sale or
transfer is effected. The Company shall be responsible for the fees
of its transfer agent and all DTC fees associated with any such
issuance. The Buyer agrees to sell all Securities, including those
represented by a certificate(s) from which the legend has been
removed, in compliance with applicable prospectus delivery
requirements, if any. In the event that the Company does not accept
the opinion of counsel provided by the Buyer with respect to the
transfer of Securities pursuant to an exemption from registration,
such as Rule 144, Rule 144A, Regulation S, or other applicable
exemption at the Deadline (as defined in the Note), it will be
considered an Event of Default pursuant to Section 3.2 of the
Note.
h. Authorization; Enforcement.
This Agreement has been duly and validly authorized by the Buyer
and has been duly executed and delivered on behalf of the Buyer,
and this Agreement constitutes a valid
and
binding agreement of the Buyer enforceable in accordance with its
terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting creditors’ rights generally and except as may be
limited by the exercise of judicial discretion in applying
principles of equity.
3. Representations and Warranties of the
Company. The Company represents and warrants to the Buyer as
of the Closing Date that:
a. Organization and Qualification.
The Company and each of its Subsidiaries (as defined below), if
any, is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is
incorporated, with full power and authority (corporate and other)
to own, lease, use and operate its properties and to carry on its
business as and where now owned, leased, used, operated and
conducted. Schedule 3(a), if attached hereto, sets forth a list of
all of the Subsidiaries of the Company and the jurisdiction in
which each is incorporated. The Company and each of its
Subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which its
ownership or use of property or the nature of the business
conducted by it makes such qualification necessary except where the
failure to be so qualified or in good standing would not have a
Material Adverse Effect. “Material Adverse Effect”
means any material adverse effect on the business, operations,
assets, financial condition or prospects of the Company or its
Subsidiaries, if any, taken as a whole, or on the transactions
contemplated hereby or by the agreements or instruments to be
entered into in connection herewith. “Subsidiaries”
means any corporation or other organization, whether incorporated
or unincorporated, in which the Company owns, directly or
indirectly, any equity or other ownership interest.
b. Authorization; Enforcement. (i)
The Company has all requisite corporate power and authority to
enter into and perform this Agreement, the Note, and to consummate
the transactions contemplated hereby and thereby and to issue the
Securities, in accordance with the terms hereof and thereof, (ii)
the execution and delivery of this Agreement, the Warrant, the
Note, and the Conversion Shares by the Company and the consummation
by it of the transactions contemplated hereby and thereby
(including without limitation, the issuance of the Note, Warrant,
as well as the issuance and reservation for issuance of the
Conversion Shares issuable upon conversion of the Note and/or
exercise of the Warrant) have been duly authorized by the
Company’s Board of Directors and no further consent or
authorization of the Company, its Board of Directors, its
shareholders, or its debt holders is required, (iii) this Agreement
and the Note (together with any other instruments executed in
connection herewith or therewith) have been duly executed and
delivered by the Company by its authorized representative, and such
authorized representative is the true and official representative
with authority to sign this Agreement, the Note and the other
instruments documents executed in connection herewith or therewith
and bind the Company accordingly, and (iv) this Agreement
constitutes, and upon execution and delivery by the Company of the
Note, each of such instruments will constitute, a legal, valid and
binding obligation of the Company, enforceable against the Company
in accordance with their terms.
c. Capitalization; Governing
Documents. As of June 17, 2021, the authorized capital stock
of the Company consists of: 10,000,000,000 authorized shares of
Common Stock, of which 3,050,598,132 shares were issued and
outstanding, and 100,000,000 authorized shares of preferred stock,
of which 13,992,340 shares of Series A, 1,327,640 shares of Series
B, and 1 share of Series AA were issued and outstanding. All of
such outstanding shares of capital stock of the Company and the
Conversion Shares, are, or upon issuance will be, duly authorized,
validly issued, fully paid and non-assessable. No shares of capital
stock of the Company are subject to preemptive rights or any other
similar rights of the shareholders of the Company or any liens or
encumbrances imposed through the actions or failure to act of the
Company. As of the effective date of this Agreement, other than as
publicly announced prior to such date and reflected in the SEC
filings of the Company (i) there are no outstanding options,
warrants, scrip, rights to subscribe for, puts, calls, rights of
first refusal, agreements, understandings, claims or other
commitments or rights of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for any
shares of capital stock of the Company or any of its Subsidiaries,
or arrangements by which the Company or any of its Subsidiaries is
or may become bound to issue additional shares of capital stock of
the Company or any of its Subsidiaries, (ii) there are no
agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of its or
their securities under the 1933 Act and (iii) there are no
anti-dilution or price adjustment provisions contained in any
security issued by the Company (or in any agreement providing
rights to security holders) that will be triggered by the issuance
of any of the Securities. The Company has furnished to the Buyer
true and correct copies of the Company’s Certificate of
Incorporation as in effect on the date hereof (“Certificate
of Incorporation”), the Company’s By-laws, as in effect
on the date hereof (the “By-laws”), and the terms of
all securities convertible into or exercisable for Common Stock of
the Company and the material rights of the holders thereof in
respect thereto.
d. Issuance of Conversion Shares.
The Conversion Shares are duly authorized and reserved for issuance
and, upon conversion of the Note in accordance with its terms, will
be validly issued, fully paid and non-assessable, and free from all
taxes, liens, claims and encumbrances with respect to the issue
thereof and shall not be subject to preemptive rights or other
similar rights of shareholders of the Company and will not impose
personal liability upon the holder thereof.
e. Issuance of Warrant. The
issuance of the Warrant is duly authorized and will be validly
issued, fully paid and non-assessable, and free from all taxes,
liens, claims and encumbrances with respect to the issue thereof
and shall not be subject to preemptive rights or other similar
rights of shareholders of the Company and will not impose personal
liability upon the holder thereof.
f. Acknowledgment of Dilution. The
Company understands and acknowledges the potentially dilutive
effect of the Conversion Shares to the Common Stock upon the
conversion of the Note. The Company further acknowledges that its
obligation to issue, upon conversion of the Note, the Conversion
Shares, in accordance with this Agreement, and the Note are
absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other
shareholders of the Company.
g. Ranking; No Conflicts. The Note
shall have priority in payment and performance over all future
unsecured indebtedness of the Company. The execution, delivery and
performance of this Agreement and the Note by the Company and the
consummation by the Company of the transactions contemplated hereby
and thereby (including, without limitation, the issuance and
reservation for issuance of the Conversion Shares) will not (i)
conflict with or result in a violation of any provision of the
Certificate of Incorporation or By-laws, or (ii) violate or
conflict with, or result in a breach of any provision of, or
constitute a default (or an event which with notice or lapse of
time or both could become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of,
any agreement, note, evidence of indebtedness, indenture, patent,
patent license or instrument to which the Company or any of its
Subsidiaries is a party, or (iii) result in a violation of any law,
rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and regulations of any
self-regulatory organizations to which the Company or its
securities is subject) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or
any of its Subsidiaries is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect), or (iv) trigger any
anti-dilution and/or ratchet provision contained in any other
contract in which the Company is a party thereto or any security
issued by the Company. Neither the Company nor any of its
Subsidiaries is in violation of its Certificate of Incorporation,
By-laws or other organizational documents and neither the Company
nor any of its Subsidiaries is in default (and no event has
occurred which with notice or lapse of time or both could put the
Company or any of its Subsidiaries in default) under, and neither
the Company nor any of its Subsidiaries has taken any action or
failed to take any action that would give to others any rights of
termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of
its Subsidiaries is a party or by which any property or assets of
the Company or any of its Subsidiaries is bound or affected, except
for possible defaults as would not, individually or in the
aggregate, have a Material Adverse Effect. The businesses of the
Company and its Subsidiaries, if any, are not being conducted, and
shall not be conducted so long as the Buyer owns any of the
Securities, in violation of any law, ordinance or regulation of any
governmental entity. Except as specifically contemplated by this
Agreement and as required under the 1933 Act and any applicable
state securities laws, the Company is not required to obtain any
consent, authorization or order of, or make any filing or
registration with, any court, governmental agency, regulatory
agency, self-regulatory organization or stock market or any third
party in order for it to execute, deliver or perform any of its
obligations under this Agreement and the Note in accordance with
the terms hereof or thereof or to issue and sell the Note in
accordance with the terms hereof and, upon conversion of the Note
and/or exercise of the Warrant, issue Conversion Shares. All
consents, authorizations, orders, filings and registrations which
the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date
hereof. The Company is not in violation of the listing requirements
of the Principal Market (as defined herein) and does
not
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reasonably
anticipate that the Common Stock will be delisted by the Principal
Market in the foreseeable future. The Company and its Subsidiaries
are unaware of any facts or circumstances which might give rise to
any of the foregoing. The Principal Market shall mean any tier of
the OTC Markets, any tier of the NASDAQ Stock Market (including
NASDAQ Capital Market), or the NYSE American, or any successor to
such markets.
h. SEC Documents; Financial
Statements. The Company has timely filed all reports,
schedules, forms, statements and other documents required to be
filed by it with the SEC pursuant to the reporting requirements of
the Securities Exchange Act of 1934, as amended (the “1934
Act”) (all of the foregoing filed prior to the date hereof
and all exhibits included therein and financial statements and
schedules thereto and documents (other than exhibits to such
documents) incorporated by reference therein, being hereinafter
referred to herein as the “SEC Documents”). As of their
respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were
filed with the SEC, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading. None of the statements made in any such SEC Documents
is, or has been, required to be amended or updated under applicable
law (except for such statements as have been amended or updated in
subsequent filings prior the date hereof). As of their respective
dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with United States
generally accepted accounting principles, consistently applied,
during the periods involved and fairly present in all material
respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). Except as set forth in the
financial statements of the Company included in the SEC Documents,
the Company has no liabilities, contingent or otherwise, other than
(i) liabilities incurred in the ordinary course of business
subsequent to March 31, 2021, and (ii) obligations under contracts
and commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be
reflected in such financial statements, which, individually or in
the aggregate, are not material to the financial condition or
operating results of the Company. The Company is subject to the
reporting requirements of the 1934 Act. The Company has never been
a “shell company” as described in Rule
144(i)(1)(i).
i. Absence of Certain Changes.
Since March 31, 2021, there has been no material adverse change and
no material adverse development in the assets, liabilities,
business, properties, operations, financial condition, results of
operations, prospects or 1934 Act reporting status of the Company
or any of its Subsidiaries.
j. Absence of Litigation. There is
no action, suit, claim, proceeding, inquiry or investigation before
or by any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company or
any of its Subsidiaries, threatened against or affecting the
Company or any of its Subsidiaries, or their officers or directors
in their capacity as such, that could have a Material Adverse
Effect. The SEC Documents contain a complete list and summary
description of any pending or, to the knowledge of the Company,
threatened proceeding against or affecting the Company or any of
its Subsidiaries, without regard to whether it would have a
Material Adverse Effect. The Company and its Subsidiaries are
unaware of any facts or circumstances which might give rise to any
of the foregoing.
k. Intellectual Property. The
Company and each of its Subsidiaries owns or possesses the
requisite licenses or rights to use all patents, patent
applications, patent rights, inventions, know-how, trade secrets,
trademarks, trademark applications, service marks, service names,
trade names and copyrights (“Intellectual Property”)
necessary to enable it to conduct its business as now operated
(and, as presently contemplated to be operated in the future);
there is no claim or action by any person pertaining to, or
proceeding pending, or to the Company’s knowledge threatened,
which challenges the right of the Company or of a Subsidiary with
respect to any Intellectual Property necessary to enable it to
conduct its business as now operated (and, as presently
contemplated to be operated in the future); to the best of the
Company’s knowledge, the Company’s or its
Subsidiaries’ current and intended products, services and
processes do not infringe on any Intellectual Property or other
rights held by any person; and the Company is unaware of any facts
or circumstances which might give rise to any of the
foregoing.
The
Company and each of its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of their
Intellectual Property.
l. No Materially Adverse Contracts,
Etc. Neither the Company nor any of its Subsidiaries is
subject to any charter, corporate or other legal restriction, or
any judgment, decree, order, rule or regulation which in the
judgment of the Company’s officers has or is expected in the
future to have a Material Adverse Effect. Neither the Company nor
any of its Subsidiaries is a party to any contract or agreement
which in the judgment of the Company’s officers has or is
expected to have a Material Adverse Effect.
m. Tax Status. The Company and
each of its Subsidiaries has made or filed all federal, state and
foreign income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries
has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes) and has paid all taxes
and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has
set aside on its books provisions reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. There are no unpaid
taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know
of no basis for any such claim. The Company has not executed a
waiver with respect to the statute of limitations relating to the
assessment or collection of any foreign, federal, state or local
tax. None of the Company’s tax returns is presently being
audited by any taxing authority.
n. Transactions with Affiliates.
Except for arm’s length transactions pursuant to which the
Company or any of its Subsidiaries makes payments in the ordinary
course of business upon terms no less favorable than the Company or
any of its Subsidiaries could obtain from third parties and other
than the grant of stock options described in the SEC Documents,
none of the officers, directors, or employees of the Company is
presently a party to any transaction with the Company or any of its
Subsidiaries (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer,
director, trustee or partner.
o. Disclosure. All information
relating to or concerning the Company or any of its Subsidiaries
set forth in this Agreement and provided to the Buyer pursuant to
Section 2(d) hereof and otherwise in connection with the
transactions contemplated hereby is true and correct in all
material respects and the Company has not omitted to state any
material fact necessary in order to make the statements made herein
or therein, in light of the circumstances under which they were
made, not misleading. No event or circumstance has occurred or
exists with respect to the Company or any of its Subsidiaries or
its or their business, properties, prospects, operations or
financial conditions, which, under applicable law, rule or
regulation, requires public disclosure or announcement by the
Company but which has not been so publicly announced or disclosed
(assuming for this purpose that the Company’s reports filed
under the 1934 Act are being incorporated into an effective
registration statement filed by the Company under the 1933
Act).
p. Acknowledgment Regarding Buyer’s
Purchase of Securities. The Company acknowledges and agrees
that the Buyer is acting solely in the capacity of arm’s
length purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges
that the Buyer is not acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to this
Agreement and the transactions contemplated hereby and any
statement made by the Buyer or any of its respective
representatives or agents in connection with this Agreement and the
transactions contemplated hereby is not advice or a recommendation
and is merely incidental to the Buyer’s purchase of the
Securities. The Company further represents to the Buyer that the
Company’s decision to enter into this Agreement has been
based solely on the independent evaluation of the Company and its
representatives.
q. No Integrated Offering. Neither
the Company, nor any of its affiliates, nor any person acting on
its or their behalf, has directly or indirectly made any offers or
sales in any security or solicited any offers to buy any security
under circumstances that would require registration under the 1933
Act of the issuance of the
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Securities to the
Buyer. The issuance of the Securities to the Buyer will not be
integrated with any other issuance of the Company’s
securities (past, current or future) for purposes of any
shareholder approval provisions applicable to the Company or its
securities.
r. No Brokers; No Solicitation.
Except with respect to Xxxxxx Capital LLC, a registered
broker-dealer (CRD#: 297763), the Company has taken no action which
would give rise to any claim by any person for brokerage
commissions, transaction fees or similar payments relating to this
Agreement or the transactions contemplated hereby. The Company
acknowledges and agrees that neither the Buyer nor its employee(s),
member(s), beneficial owner(s), or partner(s) solicited the Company
to enter into this Agreement and consummate the transactions
described in this Agreement.
s. Permits; Compliance. The
Company and each of its Subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements,
variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on
its business as it is now being conducted (collectively, the
“Company Permits”), and there is no action pending or,
to the knowledge of the Company, threatened regarding suspension or
cancellation of any of the Company Permits. Neither the Company nor
any of its Subsidiaries is in conflict with, or in default or
violation of, any of the Company Permits, except for any such
conflicts, defaults or violations which, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect. Since March 31, 2021, neither the Company nor any
of its Subsidiaries has received any notification with respect to
possible conflicts, defaults or violations of applicable laws,
except for notices relating to possible conflicts, defaults or
violations, which conflicts, defaults or violations would not have
a Material Adverse Effect.
t.
Environmental Matters.
(i) There are, to the
Company’s knowledge, with respect to the Company or any of
its Subsidiaries or any predecessor of the Company, no past or
present violations of Environmental Laws (as defined below),
releases of any material into the environment, actions, activities,
circumstances, conditions, events, incidents, or contractual
obligations which may give rise to any common law environmental
liability or any liability under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 or similar
federal, state, local or foreign laws and neither the Company nor
any of its Subsidiaries has received any notice with respect to any
of the foregoing, nor is any action pending or, to the
Company’s knowledge, threatened in connection with any of the
foregoing. The term ”Environmental Laws” means all
federal, state, local or foreign laws relating to pollution or
protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface
or subsurface strata), including, without limitation, laws relating
to emissions, discharges, releases or threatened releases of
chemicals, pollutants contaminants, or toxic or hazardous
substances or wastes (collectively, “Hazardous
Materials”) into the environment, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as
all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated
or approved thereunder.
(ii) Other
than those that are or were stored, used or disposed of in
compliance with applicable law, no Hazardous Materials are
contained on or about any real property currently owned, leased or
used by the Company or any of its Subsidiaries, and no Hazardous
Materials were released on or about any real property previously
owned, leased or used by the Company or any of its Subsidiaries
during the period the property was owned, leased or used by the
Company or any of its Subsidiaries, except in the normal course of
the Company’s or any of its Subsidiaries’
business.
(iii) There
are no underground storage tanks on or under any real property
owned, leased or used by the Company or any of its Subsidiaries
that are not in compliance with applicable law.
u. Title to Property. The Company
and its Subsidiaries have good and marketable title in fee simple
to all real property and good and marketable title to all personal
property owned by them which is material to the business of the
Company and its Subsidiaries, in each case free and clear of all
liens, encumbrances and defects except such as are described in
Schedule 3(u), if attached hereto, or such as would not have a
Material Adverse Effect. Any real property and facilities held
under lease by the Company and its Subsidiaries are held
by
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them
under valid, subsisting and enforceable leases with such exceptions
as would not have a Material Adverse Effect.
v. Insurance. The Company and each
of its Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in
the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has any reason
to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.
Upon written request the Company will provide to the Buyer true and
correct copies of all policies relating to directors’ and
officers’ liability coverage, errors and omissions coverage,
and commercial general liability coverage.
w. Internal Accounting Controls.
The Company and each of its Subsidiaries maintain a system of
internal accounting controls sufficient, in the judgment of the
Company’s board of directors, to provide reasonable assurance
that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with
management’s general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
x. Foreign Corrupt Practices.
Neither the Company, nor any of its Subsidiaries, nor any director,
officer, agent, employee or other person acting on behalf of the
Company or any Subsidiary has, in the course of his actions for, or
on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; made any direct or
indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices
Act of 1977, as amended, or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee.
y. Solvency. The Company (after
giving effect to the transactions contemplated by this Agreement)
is solvent (i.e.,
its assets have a fair market value in excess of the amount
required to pay its probable liabilities on its existing debts as
they become absolute and matured) and currently the Company has no
information that would lead it to reasonably conclude that the
Company would not, after giving effect to the transaction
contemplated by this Agreement, have the ability to, nor does it
intend to take any action that would impair its ability to, pay its
debts from time to time incurred in connection therewith as such
debts mature. The Company’s financial statements for its most
recent fiscal year end and interim financial statements have been
prepared assuming the Company will continue as a going concern,
which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business.
z. No Investment Company. The
Company is not, and upon the issuance and sale of the Securities as
contemplated by this Agreement will not be an “investment
company” required to be registered under the Investment
Company Act of 1940 (an “Investment Company”). The
Company is not controlled by an Investment Company.
aa.
No Off Balance Sheet
Arrangements. There is no transaction, arrangement, or other
relationship between the Company or any of its Subsidiaries and an
unconsolidated or other off balance sheet entity that is required
to be disclosed by the Company in its 1934 Act filings and is not
so disclosed or that otherwise could be reasonably likely to have a
Material Adverse Effect.
bb.
No Disqualification
Events. None of the Company, any of its predecessors, any
affiliated issuer, any director, executive officer, other officer
of the Company participating in the offering hereunder, any
beneficial owner of 20% or more of the Company’s outstanding
voting equity securities, calculated on the basis of voting power,
nor any promoter (as that term is defined in Rule 405 under the
0000 Xxx) connected with the Company in any capacity at the time of
sale (each, an “Issuer Covered Person”) is subject to
any of the “Bad Actor” disqualifications described in
Rule 506(d)(1)(i) to (viii) under the 1933 Act (a
“Disqualification Event”), except for
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a
Disqualification Event covered by Rule 506(d)(2) or (d)(3). The
Company has exercised reasonable care to determine whether any
Issuer Covered Person is subject to a Disqualification
Event.
cc.
Manipulation of
Price. The Company has not, and to its knowledge no one
acting on its behalf has: (i) taken, directly or indirectly, any
action designed to cause or to result, or that could reasonably be
expected to cause or result, in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale
or resale of any of the Securities, (ii) sold, bid for, purchased,
or paid any compensation for soliciting purchases of, any of the
Securities, or (iii) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other
securities of the Company.
dd.
Bank Holding Company
Act. Neither the Company nor any of its Subsidiaries is
subject to the Bank Holding Company Act of 1956, as amended (the
“BHCA”) and to regulation by the Board of Governors of
the Federal Reserve System (the “Federal Reserve”).
Neither the Company nor any of its Subsidiaries or affiliates owns
or controls, directly or indirectly, five percent (5%) or more of
the outstanding shares of any class of voting securities or
twenty-five percent (25%) or more of the total equity of a bank or
any entity that is subject to the BHCA and to regulation by the
Federal Reserve. Neither the Company nor any of its Subsidiaries or
affiliates exercises a controlling influence over the management or
policies of a bank or any entity that is subject to the BHCA and to
regulation by the Federal Reserve.
ee.
Illegal or Unauthorized
Payments; Political Contributions. Neither the Company nor
any of its Subsidiaries nor, to the Company’s knowledge, any
of the officers, directors, employees, agents or other
representatives of the Company or any of its Subsidiaries or any
other business entity or enterprise with which the Company or any
Subsidiary is or has been affiliated or associated, has, directly
or indirectly, made or authorized any payment, contribution or gift
of money, property, or services, whether or not in contravention of
applicable law, (i) as a kickback or bribe to any person or (ii) to
any political organization, or the holder of or any aspirant to any
elective or appointive public office except for personal political
contributions not involving the direct or indirect use of funds of
the Company or any of its Subsidiaries.
ff.
Breach of Representations
and Warranties by the Company. The Company agrees that if
the Company breaches any of the representations or warranties set
forth in this Section 3 and in addition to any other remedies
available to the Buyer pursuant to this Agreement, it will be
considered an Event of Default under Section 3.4 of the
Note.
4.
ADDITIONAL COVENANTS, AGREEMENTS AND
ACKNOWLEDGEMENTS.
a. Best Efforts. The parties shall
use their best efforts to satisfy timely each of the conditions
described in Section 6 and 7 of this Agreement.
b. Form D; Blue Sky Laws. The
Company agrees to file a Form D with respect to the Securities as
required under Regulation D and to provide a copy thereof to the
Buyer promptly after such filing. The Company shall, on or before
the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for sale to the
Buyer at the applicable closing pursuant to this Agreement under
applicable securities or “blue sky” laws of the states
of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so
taken to the Buyer on or prior to the Closing Date.
c. Use of Proceeds. The Company
shall use the proceeds for business development, and not for the
repayment of any indebtedness owed to officers, directors or
employees of the Company or their affiliates or in violation or
contravention of any applicable law, rule or
regulation.
d.
[Intentionally Omitted].
e. Usury. To the extent it may
lawfully do so, the Company hereby agrees not to insist upon or
plead or in any manner whatsoever claim, and will resist any and
all efforts to be compelled to take the benefit or advantage of,
usury laws wherever enacted, now or at any time hereafter in force,
in connection with any action or proceeding that may be brought by
the Buyer in order to enforce any right or remedy under this
Agreement, the Note and any document, agreement or instrument
contemplated thereby. Notwithstanding any
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provision to the
contrary contained in this Agreement, the Note and any document,
agreement or instrument contemplated thereby, it is expressly
agreed and provided that the total liability of the Company under
this Agreement, the Note or any document, agreement or instrument
contemplated thereby for payments which under applicable law are in
the nature of interest shall not exceed the maximum lawful rate
authorized under applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event shall any rate of
interest or default interest, or both of them, when aggregated with
any other sums which under applicable law in the nature of interest
that the Company may be obligated to pay under this Agreement, the
Note and any document, agreement or instrument contemplated thereby
exceed such Maximum Rate. It is agreed that if the maximum contract
rate of interest allowed by law applicable to this Agreement, the
Note and any document, agreement or instrument contemplated thereby
is increased or decreased by statute or any official governmental
action subsequent to the date hereof, the new maximum contract rate
of interest allowed by law will be the Maximum Rate applicable to
this Agreement, the Note and any document, agreement or instrument
contemplated thereby from the effective date thereof forward,
unless such application is precluded by applicable law. If under
any circumstances whatsoever, interest in excess of the Maximum
Rate is paid by the Company to the Buyer with respect to
indebtedness evidenced by this Agreement, the Note and any
document, agreement or instrument contemplated thereby, such excess
shall be applied by the Buyer to the unpaid principal balance of
any such indebtedness or be refunded to the Company, the manner of
handling such excess to be at the Buyer’s
election.
f. Restriction on Activities.
Commencing as of the date first above written, and until the
earlier of payment of the Note in full or full conversion of the
Note, the Company shall not, directly or indirectly, without the
Buyer’s prior written consent, which consent shall not be
unreasonably withheld: (a) change the nature of its business; (b)
sell, divest, acquire, change the structure of any material assets
other than in the ordinary course of business; or (c) consummate
any Variable Rate Transaction (as defined herein).
g. Listing. The Company will, so
long as the Buyer owns any of the Securities, maintain the listing
and trading of its Common Stock on the Principal Market or any
equivalent replacement exchange or electronic quotation system
(including but not limited to the Pink Sheets electronic quotation
system) and will comply in all respects with the Company’s
reporting, filing and other obligations under the bylaws or rules
of the Financial Industry Regulatory Authority
(“FINRA”) and such exchanges, as applicable. The
Company shall promptly provide to the Buyer copies of any notices
it receives from the Principal Market and any other exchanges or
electronic quotation systems on which the Common Stock is then
traded regarding the continued eligibility of the Common Stock for
listing on such exchanges and quotation systems.
h. Corporate Existence. The
Company will, so long as the Buyer beneficially owns any of the
Securities, maintain its corporate existence and shall not sell all
or substantially all of the Company’s assets, except in the
event of a merger or consolidation or sale of all or substantially
all of the Company’s assets, where the surviving or successor
entity in such transaction (i) assumes the Company’s
obligations hereunder and under the agreements and instruments
entered into in connection herewith and (ii) is a publicly traded
corporation whose Common Stock is listed for trading or quotation
on the Principal Market, any tier of the NASDAQ Stock Market, the
New York Stock Exchange or the NYSE MKT.
i. No Integration. The Company
shall not make any offers or sales of any security (other than the
Securities) under circumstances that would require registration of
the Securities being offered or sold hereunder under the 1933 Act
or cause the offering of the Securities to be integrated with any
other offering of securities by the Company for the purpose of any
stockholder approval provision applicable to the Company or its
securities.
j. Breach of Covenants. The
Company acknowledges and agrees that if the Company breaches any of
the covenants set forth in this Section 4, in addition to any other
remedies available to the Buyer pursuant to this Agreement, it will
be considered an Event of Default under Section 3.4 of the
Note.
k. Compliance with 1934 Act; Public
Information Failures. For so long as the Buyer beneficially
owns the Note, Warrant, or any Conversion Shares, the Company shall
comply with the reporting requirements of the 1934 Act; and the
Company shall continue to be subject to the reporting requirements
of the 1934 Act. During the period that the Buyer beneficially owns
the Note, if the Company shall (i) fail for any reason to satisfy
the requirements of Rule 144(c)(1), including, without limitation,
the failure to satisfy the current public
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information
requirements under Rule 144(c) or (ii) if the Company has ever been
an issuer described in Rule 144(i)(1)(i) or becomes such an issuer
in the future, and the Company shall fail to satisfy any condition
set forth in Rule 144(i)(2) (each, a “Public Information
Failure”) then, as partial relief for the damages to the
Buyer by reason of any such delay in or reduction of its ability to
sell the Securities (which remedy shall not be exclusive of any
other remedies available pursuant to this Agreement, the Note, or
at law or in equity), the Company shall pay to the Buyer an amount
in cash equal to three percent (3%) of the Purchase Price on each
of the day of a Public Information Failure and on every thirtieth
day (pro rated for periods totaling less than thirty days)
thereafter until the date such Public Information Failure is cured.
The payments to which a holder shall be entitled pursuant to this
Section 4(k) are referred to herein as “Public Information
Failure Payments.” Public Information Failure Payments shall
be paid on the earlier of (i) the last day of the calendar month
during which such Public Information Failure Payments are incurred
and (iii) the third business day after the event or failure giving
rise to the Public Information Failure Payments is cured. In the
event the Company fails to make Public Information Failure Payments
in a timely manner, such Public Information Failure Payments shall
bear interest at the rate of 5% per month (prorated for partial
months) until paid in full.
l. Acknowledgement Regarding
Buyer’s Trading Activity. Until the Note is fully
repaid or fully converted, the Buyer shall not effect any
“short sale” (as such term is defined in Rule 200 of
Regulation SHO of the 0000 Xxx) of the Common Stock which
establishes a net short position with respect to the Common
Stock.
m. Disclosure of Transactions and Other
Material Information. By 9:00 a.m., New York time, following
the date this Agreement has been fully executed, the Company shall
file a Current Report on Form 8-K describing the terms of the
transactions contemplated by this Agreement in the form required by
the 1934 Act and attaching this Agreement, the form of Note (the
“8-K Filing”). From and after the filing of the 8-K
Filing with the SEC, the Buyer shall not be in possession of any
material, nonpublic information received from the Company, any of
its Subsidiaries or any of their respective officers, directors,
employees or agents that is not disclosed in the 8-K Filing. In
addition, effective upon the filing of the 8-K Filing, the Company
acknowledges and agrees that any and all confidentiality or similar
obligations under any agreement, whether written or oral, between
the Company, any of its Subsidiaries or any of their respective
officers, directors, affiliates, employees or agents, on the one
hand, and the Buyer or any of its affiliates, on the other hand,
shall terminate.
n. Legal Counsel Opinions. Upon
the request of the Buyer from to time to time, the Company shall be
responsible (at its cost) for promptly supplying to the
Company’s transfer agent and the Buyer a customary legal
opinion letter of its counsel (the “Legal Counsel
Opinion”) to the effect that the resale of the Conversion
Shares by the Buyer or its affiliates, successors and assigns is
exempt from the registration requirements of the 1933 Act pursuant
to Rule 144 (provided the requirements of Rule 144 are satisfied
and provided the Conversion Shares are not then registered under
the 1933 Act for resale pursuant to an effective registration
statement) or other applicable exemption (provided the requirements
of such other applicable exemption are satisfied). Should the
Company’s legal counsel fail for any reason to issue the
Legal Counsel Opinion, the Buyer may (at the Company’s cost)
secure another legal counsel to issue the Legal Counsel Opinion,
and the Company will instruct its transfer agent to accept such
opinion. The Company hereby agrees that it may never take the
position that it is a “shell company” in connection
with its obligations under this Agreement or
otherwise.
o. Piggyback Registration Rights.
The Company hereby grants to the Buyer the registration rights set
forth on Exhibit B
hereto.
p. Most Favored Nation. While the
Note or any principal amount, interest or fees or expenses due
thereunder remain outstanding and unpaid, the Company shall not
enter into any public or private offering of its securities
(including securities convertible into shares of Common Stock) with
any individual or entity (an “Other Investor”) that has
the effect of establishing rights or otherwise benefiting such
Other Investor in a manner more favorable in any material respect
to such Other Investor than the rights and benefits established in
favor of the Buyer by this Agreement or the Note unless, in any
such case, the Buyer has been provided with such rights and
benefits pursuant to a definitive written agreement or agreements
between the Company and the Buyer.
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q. Subsequent Variable Rate
Transactions. From the date hereof until such time as the
Note is fully converted or fully repaid, the Company shall be
prohibited from effecting or entering into an agreement involving a
Variable Rate Transaction. “Variable Rate Transaction”
means a transaction in which the Company (i) issues or sells any
debt or equity securities that are convertible into, exchangeable
or exercisable for, or include the right to receive, additional
shares of Common Stock either (A) at a conversion price, exercise
price or exchange rate or other price that is based upon, and/or
varies with, the trading prices of or quotations for the shares of
Common Stock at any time after the initial issuance of such debt or
equity securities or (B) with a conversion, exercise or exchange
price that is subject to being reset at some future date after the
initial issuance of such debt or equity security or upon the
occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common
Stock or (ii) enters into any agreement, including, but not limited
to, an equity line of credit, whereby the Company may issue
securities at a future determined price. The Buyer shall be
entitled to obtain injunctive relief against the Company to
preclude any such issuance, which remedy shall be in addition to
any right to collect damages.
r.
[Intentionally
Omitted].
s. Non-Public Information. The
Company covenants and agrees that neither it, nor any other person
acting on its behalf will provide the Buyer or its agents or
counsel with any information that constitutes, or the Company
reasonably believes constitutes, material non-public information,
unless prior thereto the Buyer shall have consented to the receipt
of such information and agreed with the Company to keep such
information confidential. The Company understands and confirms that
the Buyer shall be relying on the foregoing covenant in effecting
transactions in securities of the Company. To the extent that the
Company delivers any material, non-public information to the Buyer
without such Buyer’s consent, the Company hereby covenants
and agrees that such Buyer shall not have any duty of
confidentiality to the Company, any of its Subsidiaries, or any of
their respective officers, directors, agents, employees or
affiliates, not to trade on the basis of, such material, non-
public information, provided that the Buyer shall remain subject to
applicable law. To the extent that any notice provided, information
provided, or any other communications made by the Company, to the
Buyer, constitutes or contains material non-public information
regarding the Company or any Subsidiaries, the Company shall
simultaneously file such notice or other material information with
the SEC pursuant to a Current Report on Form 8-
K. In
addition to any other remedies provided by this Agreement or the
related transaction documents, if the Company provides any material
non-public information to the Buyer without their prior written
consent, and it fails to immediately (no later than that business
day) file a Form 8-K disclosing this material non-public
information, it shall pay the Buyer as partial liquidated damages
and not as a penalty a sum equal to $3,000 per day beginning with
the day the information is disclosed to the Buyer and ending and
including the day the Form 8-K disclosing this information is
filed.
t. D&O Insurance. Within 60
calendar days of the Closing, the Company shall purchase director
and officer insurance on behalf of the Company's (including its
subsidiary) officers and directors for a period of 18 months after
the Closing with respect to any losses, claims, damages,
liabilities, costs and expense in connection with any actual or
threatened claim or proceeding that is based on, or arises out of
their status as a director or officer of the Company. The insurance
policy shall provide for two years of tail coverage.
5. Transfer Agent Instructions.
The Company shall issue irrevocable instructions to the
Company’s transfer agent to issue certificates, registered in
the name of the Buyer or its nominee, upon conversion of the Note
and/or exercise of the Warrant, the Conversion Shares, in such
amounts as specified from time to time by the Buyer to the Company
in accordance with the terms thereof (the “Irrevocable
Transfer Agent Instructions”). In the event that the Company
proposes to replace its transfer agent, the Company shall provide,
prior to the effective date of such replacement, a fully executed
Irrevocable Transfer Agent Instructions in a form as initially
delivered pursuant to this Agreement (including but not limited to
the provision to irrevocably reserved shares of Common Stock in the
Reserved Amount (as defined in the Note)) signed by the successor
transfer agent to the Company and the Company. Prior to
registration of the Conversion Shares under the 1933 Act or the
date on which the Conversion Shares may be sold pursuant to Rule
144, Rule 144A, Regulation S, or other applicable exemption without
any restriction as to the number of Securities as of a particular
date that can then be immediately sold, all such certificates shall
bear the restrictive legend specified in Section 2(g) of this
Agreement. The Company warrants that: (i) no instruction other than
the Irrevocable Transfer Agent Instructions referred to in this
Section 5 will be given by the Company to its transfer agent and
that the Securities shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in
this Agreement and the Note; (ii) it will not direct its transfer
agent not to transfer or delay, impair, and/or hinder its transfer
agent in transferring (or issuing)(electronically or in
certificated form) any certificate for Securities to be issued to
the Buyer upon conversion of or otherwise pursuant to the Note as
and when required by the Note and this Agreement; (iii) it will not
fail to remove (or directs its transfer agent not to remove or
impairs, delays, and/or hinders its transfer agent from removing)
any restrictive legend (or to withdraw any stop transfer
instructions in respect thereof) on any certificate for any
Securities issued to the Buyer upon conversion of or otherwise
pursuant to the Note as and when required by the Note and this
Agreement and (iv) it will provide any required corporate
resolutions and issuance approvals to its transfer agent within 6
hours of each conversion of the Note. Nothing in this Section shall
affect in any way the Buyer’s obligations and agreement set
forth in Section 2(g) hereof to comply with all applicable
prospectus delivery requirements, if any, upon re-sale of the
Securities. If the Buyer provides the Company, at the cost of the
Company, with (i) an opinion of counsel in form, substance and
scope customary for opinions in comparable transactions, to the
effect that a public sale or transfer of such Securities may be
made without registration under the 1933 Act and such sale or
transfer is effected or (ii) the Buyer provides reasonable
assurances that the Securities can be sold pursuant to 144, Rule
144A, Regulation S, or other applicable exemption, the Company
shall permit the transfer, and, in the case of the Securities,
promptly instruct its transfer agent to issue one or more
certificates, free from restrictive legend, in such name and in
such denominations as specified by the Buyer. The Company
acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Buyer, by vitiating the intent and
purpose of the transactions contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its
obligations under this Section 5 may be inadequate and agrees, in
the event of a breach or threatened breach by the Company of the
provisions of this Section, that the Buyer shall be entitled, in
addition to all other available remedies, to an injunction
restraining any breach and requiring immediate transfer, without
the necessity of showing economic loss and without any bond or
other security being required.
6. Conditions to the Company’s
Obligation to Sell. The obligation of the Company hereunder
to issue and sell the Note to the Buyer at the Closing is subject
to the satisfaction, at or before the Closing Date, of each of the
following conditions thereto, provided that these conditions are
for the Company’s sole benefit and may be waived by the
Company at any time in its sole discretion:
a.
The Buyer shall
have executed this Agreement and delivered the same to the
Company.
b.
The Buyer shall
have delivered the Purchase Price in accordance with Section
1(b)
above.
c. The representations
and warranties of the Buyer shall be true and correct in all
material respects as of the date when made and as of the Closing
Date, as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyer shall
have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Buyer
at or prior to the Closing Date.
d. No litigation,
statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority
over the matters contemplated hereby which prohibits the
consummation of any of the transactions contemplated by this
Agreement.
7. Conditions to The Buyer’s
Obligation to Purchase. The obligation of the Buyer
hereunder to purchase the Note, on the Closing Date, is subject to
the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the
Buyer’s sole benefit and may be waived by the Buyer at any
time in its sole discretion:
a.
The Company shall
have executed this Agreement and delivered the same to the
Buyer.
b. The Company shall
have delivered to the Buyer the duly executed Note in such
denominations as the Buyer shall request and in accordance with
Section 1(b) above.
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c.
The Company shall
have delivered to the Buyer the Warrant.
d. The Irrevocable
Transfer Agent Instructions, in form and substance satisfactory to
the Buyer, shall have been delivered to and acknowledged in writing
by the Company’s Transfer Agent.
e. The representations
and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of Closing Date,
as though made at such time (except for representations and
warranties that speak as of a specific date) and the Company shall
have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Date.
f. No litigation,
statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority
over the matters contemplated hereby which prohibits the
consummation of any of the transactions contemplated by this
Agreement.
g. No event shall have
occurred which could reasonably be expected to have a Material
Adverse Effect on the Company including but not limited to a change
in the 1934 Act reporting status of the Company or the failure of
the Company to be timely in its 1934 Act reporting
obligations.
h. Trading in the
Common Stock on the Principal Market shall not have been suspended
by the SEC, FINRA or the Principal Market.
i. The Company shall
have delivered to the Buyer (i) a certificate evidencing the
formation and good standing of the Company and each of its
Subsidiaries in such entity’s jurisdiction of formation
issued by the Secretary of State (or comparable office) of such
jurisdiction, as of a date within ten (10) days of the Closing Date
and (ii) resolutions adopted by the Company’s Board of
Directors at a duly called meeting or by unanimous written consent
authorizing this Agreement and all other documents, instruments and
transactions contemplated hereby.
8.
Governing Law; Miscellaneous.
a. Governing Law; Venue. This
Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware without regard to principles of
conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Agreement,
the Note, or any other agreement, certificate, instrument or
document contemplated hereby shall be brought only in the state
courts located in Commonwealth of Massachusetts or in the federal
courts located in Commonwealth of Massachusetts. The parties to
this Agreement hereby irrevocably waive any objection to
jurisdiction and venue of any action instituted hereunder and shall
not assert any defense based on lack of jurisdiction or venue or
based upon forum non
conveniens. EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTIONS CONTEMPLATED HEREBY. The prevailing party shall
be entitled to recover from the other party its reasonable
attorney’s fees and costs. Each party hereby irrevocably
waives personal service of process and consents to process being
served in any suit, action or proceeding in connection with this
Agreement, the Note, or any other agreement, certificate,
instrument or document contemplated hereby or thereby by mailing a
copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect
for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by
law.
b. Counterparts. This Agreement
may be executed in one or more counterparts, each of which shall be
deemed an original but all of which shall constitute one and the
same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party. A
facsimile or .pdf signature shall be considered due execution and
shall be binding upon the signatory thereto with the same force
and
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effect
as if the signature were an original, not a facsimile or .pdf
signature. Delivery of a counterpart signature hereto by facsimile
or email/.pdf transmission shall be deemed validly delivery
thereof.
c. Construction; Headings. This
Agreement shall be deemed to be jointly drafted by the Company and
the Buyer and shall not be construed against any person as the
drafter hereof. The headings of this Agreement are for convenience
of reference only and shall not form part of, or affect the
interpretation of, this Agreement.
d. Severability. In the event that
any provision of this Agreement, the Note, or any other agreement
or instrument delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it
may conflict therewith and shall be deemed modified to conform with
such statute or rule of law. Any such provision which may prove
invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision of this
Agreement, the Note, or any other agreement, certificate,
instrument or document contemplated hereby or thereby.
e. Entire Agreement; Amendments.
This Agreement, the Note, and the instruments referenced herein
contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set
forth herein or therein, neither the Company nor the Buyer makes
any representation, warranty, covenant or undertaking with respect
to such matters. No provision of this Agreement or any agreement or
instrument contemplated hereby may be waived or amended other than
by an instrument in writing signed by the Buyer.
f. Notices. All notices, demands,
requests, consents, approvals, and other communications required or
permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be
(i)
personally served, (ii) deposited in the mail, registered or
certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or
(iv) transmitted by hand delivery, telegram, e-mail or facsimile,
addressed as set forth below or to such other address as such party
shall have specified most recently by written notice. Any notice or
other communication required or permitted to be given hereunder
shall be deemed effective (a) upon hand delivery or delivery by
e-mail or facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated
below (if delivered on a business day during normal business hours
where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day
during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by
express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first
occur. The addresses for such communications shall be:
If to
the Company, to:
0000
Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX
00000
Attention: Xxxx
Lucky
e-mail:
xxxx@xxxxxxxxxxxxxxxxxx.xxx
If to
the Buyer:
LABRYS
FUND, LP
00
Xxxxxx Xxxx
Xxxxxxxxx, XX
00000
e-mail:
xxxxx@xxxxxxxxxxxx.xxx
g. Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
parties and their successors and assigns. Neither the Company nor
the Buyer shall assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other.
Notwithstanding the foregoing, subject to Section 2(f), the Buyer
may assign its rights hereunder to any person that purchases
Securities in a private
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transaction from
the Buyer or to any of its “affiliates,” as that term
is defined under the 1934 Act, without the consent of the
Company.
h. Third Party Beneficiaries. This
Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns, and is not for
the benefit of, nor may any provision hereof be enforced by, any
other person.
i. Survival. The representations
and warranties of the Company and the agreements and covenants set
forth in this Agreement shall survive the closing hereunder
notwithstanding any due diligence investigation conducted by or on
behalf of the Buyer. The Company agrees to indemnify and hold
harmless the Buyer and all their officers, directors, employees and
agents for loss or damage arising as a result of or related to any
breach or alleged breach by the Company of any of its
representations, warranties and covenants set forth in this
Agreement or any of its covenants and obligations under this
Agreement, including advancement of expenses as they are
incurred.
j. Publicity. The Company, and the
Buyer shall have the right to review a reasonable period of time
before issuance of any press releases, SEC, Principal Market or
FINRA filings, or any other public statements with respect to the
transactions contemplated hereby; provided, however, that the Company shall
be entitled, without the prior approval of the Buyer, to make any
press release or SEC, Principal Market (or other applicable trading
market) or FINRA filings with respect to such transactions as is
required by applicable law and regulations (although the Buyer
shall be consulted by the Company in connection with any such press
release prior to its release and shall be provided with a copy
thereof and be given an opportunity to comment
thereon).
k. 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.
l. No Strict Construction. The
language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules
of strict construction will be applied against any
party.
m. Indemnification. In
consideration of the Buyer’s execution and delivery of this
Agreement and acquiring the Securities hereunder, and in addition
to all of the Company’s other obligations under this
Agreement or the Note, the Company shall defend, protect, indemnify
and hold harmless the Buyer and its stockholders, partners,
members, officers, directors, employees and direct or indirect
investors and any of the foregoing persons’ agents or other
representatives (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement)
(collectively, the “Indemnitees”) from and against any
and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee
is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys’ fees and
disbursements (the “Indemnified Liabilities”), incurred
by any Indemnitee as a result of, or arising out of, or relating to
(a) any misrepresentation or breach of any representation or
warranty made by the Company in this Agreement, the Note or any
other agreement, certificate, instrument or document contemplated
hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Company contained in this Agreement, the Note or
any other agreement, certificate, instrument or document
contemplated hereby or thereby or (c) any cause of action, suit or
claim brought or made against such Indemnitee by a third party
(including for these purposes a derivative action brought on behalf
of the Company) and arising out of or resulting from (i) the
execution, delivery, performance or enforcement of this Agreement,
the Note or any other agreement, certificate, instrument or
document contemplated hereby or thereby, (ii) any transaction
financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, or
(iii) the status of the Buyer or holder of the Securities as an
investor in the Company pursuant to the transactions contemplated
by this Agreement. To the extent that the foregoing undertaking by
the Company may be unenforceable for any reason, the Company shall
make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities that is permissible under
applicable law.
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n. Remedies. The Company
acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Buyer by vitiating the intent and
purpose of the transaction contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its
obligations under this Agreement or the Note will be inadequate and
agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Agreement or the Note, that the
Buyer shall be entitled, in addition to all other available
remedies at law or in equity, and in addition to the penalties
assessable herein, to an injunction or injunctions restraining,
preventing or curing any breach of this Agreement or the Note and
to enforce specifically the terms and provisions hereof, without
the necessity of showing economic loss and without any bond or
other security being required.
o. Payment Set Aside. To the
extent that the Company makes a payment or payments to the Buyer
hereunder or pursuant to the Note, or the Buyer enforces or
exercises its rights hereunder or thereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any
part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by
or are required to be refunded, repaid or otherwise restored to the
Company, a trustee, receiver or any other person or entity under
any law (including, without limitation, any bankruptcy law,
foreign, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation
or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment
had not been made or such enforcement or setoff had not
occurred.
p. Failure or Indulgence Not
Waiver. No failure or delay on the part of the Buyer in the
exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privileges. All
rights and remedies of the Buyer existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise
available.
[Signature Page
Follows]
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IN
WITNESS WHEREOF, the undersigned Buyer and the Company have caused
this Agreement to be duly executed as of the date first above
written.
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By: /s/ Xxxx
Lucky
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Name:
XXXX LUCKY
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Title:
CHIEF EXECUTIVE OFFICER
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LABRYS
FUND, LP
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By:
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Name:
XXXXXX XXXXXXXXX
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Title:
MANAGING MEMBER
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SUBSCRIPTION
AMOUNT:
|
Principal
Amount of Note: $115,000.00
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Actual
Amount of Purchase Price of Note: $109,250.00
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EXHIBIT
A FORM OF NOTE
[attached
hereto]
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EXHIBIT
B REGISTRATION RIGHTS
All of
the Conversion Shares and shares into which the Warrant is
exercisable into will be deemed “Registrable
Securities” subject to the provisions of this Exhibit B. All
capitalized terms used but not defined in this Exhibit B shall have
the meanings ascribed to such terms in the Securities Purchase
Agreement to which this Exhibit is attached.
1.
Piggy-Back
Registration.
1.1 Piggy-Back Rights. If at any
time on or after the date of the Closing the Company proposes to
file any Registration Statement under the 1933 Act (a
“Registration Statement”) with respect to any offering
of equity securities, or securities or other obligations
exercisable or exchangeable for, or convertible into, equity
securities, by the Company for its own account or for shareholders
of the Company for their account (or by the Company and by
shareholders of the Company), other than a Registration Statement
(i) filed in connection with any employee stock option or other
benefit plan on Form S-8, (ii) for a dividend reinvestment plan or
(iii) in connection with a merger or acquisition, then the Company
shall (x) give written notice of such proposed filing to the
holders of Registrable Securities appearing on the books and
records of the Company as such a holder as soon as practicable but
in no event less than ten (10) days before the anticipated filing
date of the Registration Statement, which notice shall describe the
amount and type of securities to be included in such Registration
Statement, the intended method(s) of distribution, and the name of
the proposed managing underwriter or underwriters, if any, of the
offering, and (y) offer to the holders of Registrable Securities in
such notice the opportunity to register the sale of such number of
Registrable Securities as such holders may request in writing
within three (3) days following receipt of such notice (a
“Piggy-Back Registration”). The Company shall cause
such Registrable Securities to be included in such registration and
shall cause the managing underwriter or underwriters of a proposed
underwritten offering to permit the Registrable Securities
requested to be included in a Piggy-Back Registration on the same
terms and conditions as any similar securities of the Company and
to permit the sale or other disposition of such Registrable
Securities in accordance with the intended method(s) of
distribution thereof. All holders of Registrable Securities
proposing to distribute their securities through a Piggy-Back
Registration that involves an underwriter or underwriters shall
enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such Piggy-Back
Registration.
1.2 Withdrawal. Any holder of
Registrable Securities may elect to withdraw such holder’s
request for inclusion of Registrable Securities in any Piggy-Back
Registration by giving written notice to the Company of such
request to withdraw prior to the effectiveness of the Registration
Statement. The Company (whether on its own determination or as the
result of a withdrawal by persons making a demand pursuant to
written contractual obligations) may withdraw a Registration
Statement at any time prior to the effectiveness of such
Registration Statement. Notwithstanding any such withdrawal, the
Company shall pay all expenses incurred by the holders of
Registrable Securities in connection with such Piggy-Back
Registration as provided in Section 1.5 below.
1.3 The Company shall
notify the holders of Registrable Securities at any time when a
prospectus relating to such holder’s Registrable Securities
is required to be delivered under the 1933 Act, upon discovery
that, or upon the happening of any event as a result of which, the
prospectus included in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the
circumstances then existing. At the request of such holder, the
Company shall also prepare, file and furnish to such holder a
reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of the Registrable Securities, such
prospectus shall not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances then existing. The holders of Registrable
Securities shall not to offer or sell any Registrable Securities
covered by the Registration Statement after receipt of such
notification until the receipt of such supplement or
amendment.
1.4 The Company may
request a holder of Registrable Securities to furnish the Company
such information with respect to such holder and such
holder’s proposed distribution of the Registrable
Securities
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pursuant to the
Registration Statement as the Company may from time to time
reasonably request in writing or as shall be required by law or by
the SEC in connection therewith, and such holders shall furnish the
Company with such information.
1.5 All fees and
expenses incident to the performance of or compliance with this
Exhibit B by the Company shall be borne by the Company whether or
not any Registrable Securities are sold pursuant to a Registration
Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation,
(i) all
registration and filing fees (including, without limitation, fees
and expenses of the Company’s counsel and independent
registered public accountants) (A) with respect to filings made
with the SEC, (B) with respect to filings required to be made with
any trading market on which the Common Stock is then listed for
trading, (C) in compliance with applicable state securities or Blue
Sky laws reasonably agreed to by the Company in writing (including,
without limitation, fees and disbursements of counsel for the
Company in connection with Blue Sky qualifications or exemptions of
the Registrable Securities) and (D) with respect to any filing that
may be required to be made by any broker through which a holder of
Registrable Securities intends to make sales of Registrable
Securities with the FINRA, (ii) printing expenses, (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) 1933 Act liability insurance, if the
Company so desires such insurance, (vi) fees and expenses of all
other persons or entities retained by the Company in connection
with the consummation of the transactions contemplated by this
Exhibit B and (vii) reasonable fees and disbursements of a single
special counsel for the holders of Registrable Securities (selected
by holders of the majority of the Registrable Securities requesting
such registration). In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement
(including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the
expense of any annual audit and the fees and expenses incurred in
connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the
Company be responsible for any broker or similar commissions of any
holder of Registrable Securities.
1.6 The Company and its
successors and assigns shall indemnify and hold harmless the Buyer,
each holder of Registrable Securities, the officers, directors,
members, partners, agents and employees (and any other individuals
or entities with a functionally equivalent role of a person holding
such titles, notwithstanding a lack of such title or any other
title) of each of them, each individual or entity who controls the
Buyer or any such holder of Registrable Securities (within the
meaning of Section 15 of the 1933 Act or Section 20 of the 0000
Xxx) and the officers, directors, members, stockholders, partners,
agents and employees (and any other individuals or entities with a
functionally equivalent role of a person holding such titles,
notwithstanding a lack of such title or any other title) of each
such controlling individual or entity (each, an “Indemnified
Party”), to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities,
costs (including, without limitation, reasonable attorneys’
fees) and expenses (collectively, “Losses”), as incurred,
arising out of or relating to (1) any untrue or alleged untrue
statement of a material fact contained in a Registration Statement,
any related prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus,
or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to
make the statements therein (in the case of any such prospectus or
supplement thereto, in light of the circumstances under which they
were made) not misleading or (2) any violation or alleged violation
by the Company of the 1933 Act, the 1934 Act or any state
securities law, or any rule or regulation thereunder, in connection
with the performance of its obligations under this Exhibit B,
except to the extent, but only to the extent, that (i) such untrue
statements or omissions are based upon information regarding the
Buyer or such holder of Registrable Securities furnished to the
Company by such party for use therein. The Company shall notify the
Buyer and each holder of Registrable Securities promptly of the
institution, threat or assertion of any proceeding arising from or
in connection with the transactions contemplated by this Exhibit B
of which the Company is aware.
1.7 If the
indemnification under Section 1.6 is unavailable to an Indemnified
Party or insufficient to hold an Indemnified Party harmless for any
Losses, then the Company shall contribute to the amount paid or
payable by such Indemnified Party, in such proportion as is
appropriate to reflect the relative fault of the Company and
Indemnified Party in connection with the actions, statements or
omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of the
Company and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by,
or relates to information supplied by, the Company or the
Indemnified Party, and the parties’ relative
intent,
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knowledge, access
to information and opportunity to correct or prevent such action,
statement or omission. The amount paid or payable by a party as a
result of any Losses shall be deemed to include any reasonable
attorneys’ or other fees or expenses incurred by such party
in connection with any proceeding to the extent such party would
have been indemnified for such fees or expenses if the
indemnification provided for in Section 1.6 was available to such
party in accordance with its terms. It is agreed that it would not
be just and equitable if contribution pursuant to this Section 1.7
were determined by pro rata allocation or by any other method of
allocation that does not take into account the equitable
considerations referred to in the immediately preceding sentence.
Notwithstanding the provisions of this Section 1.7, neither the
Buyer nor any holder of Registrable Securities shall be required to
contribute, in the aggregate, any amount in excess of the amount by
which the net proceeds actually received by such party from the
sale of all of their Registrable Securities pursuant to such
Registration Statement or related prospectus exceeds the amount of
any damages that such party has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or
alleged omission.
[End
of Exhibit B]
