SECURITIES PURCHASE AND SALE AGREEMENT by and between MILLENNIUM CELL INC. and HORIZON FUEL CELL TECHNOLOGIES PTE. LTD. October 19, 2007
Exhibit
10.1
by
and between
and
HORIZON
FUEL CELL TECHNOLOGIES PTE. LTD.
October
19, 2007
TABLE
OF CONTENTS
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1.
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Definitions.
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1
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1.1 Defined
Terms Used in this Agreement.
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1
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2.
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Purchases
and Sales; Closing.
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3
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2.1 MCEL
Common Stock.
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3
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.
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2.2 Horizon
Note.
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3
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2.3 Closing.
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3
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3.
|
Representations
and Warranties of MCEL.
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4
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3.1 Organization,
Good Standing, Corporate Power and Qualification.
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4
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3.2 Corporate
Power and Authorization.
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4
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3.3 Capitalization.
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4
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3.4 Subsidiaries.
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5
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3.5 Valid
Issuance of MCEL Shares.
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5
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3.6 Purchase
for Own Account; Accredited Investor.
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5
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3.7 Restricted
Securities.
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5
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3.8 Legends.
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6
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3.9 Access
to Information.
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6
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3.10 Filings,
Consents and Approvals; Non-Contravention.
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6
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3.11 Litigation.
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7
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3.12 MCEL
Intellectual Property.
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7
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3.13 Compliance.
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7
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3.14 Voting
Rights.
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7
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3.15 MCEL
Financial Statements.
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7
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3.16 Material
Changes.
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8
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3.17 MCEL
Tax Returns and Payments.
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8
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3.18 MCEL
Insurance.
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8
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3.19 Private
Placement.
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8
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3.20 No
Broker’s or Finder’s Fee.
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8
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3.21 Environmental
Matters.
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8
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3.22 Disclosure.
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9
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4.
|
Representations
and Warranties of Horizon.
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9
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4.1 Organization,
Good Standing, Corporate Power and Qualification.
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9
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4.2 Corporate
Power and Authorization.
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9
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4.3 Capitalization.
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10
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4.4 Subsidiaries.
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10
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4.5 Valid
Issuance of Horizon Shares.
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10
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4.6 Purchase
for Own Account; Accredited Investor.
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10
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4.7 Restricted
Securities.
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11
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4.8 Legends.
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11
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4.9 Access
to Information.
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11
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|
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4.10 Filings,
Consents and Approvals; Non-Contravention.
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11
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4.11 Litigation.
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12
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4.12 Horizon
Intellectual Property.
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12
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4.13 Compliance.
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12
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4.14 Voting
Rights.
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12
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4.15 Horizon
Financial Statements.
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13
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4.16 Material
Changes.
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13
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4.17 Horizon
Tax Returns and Payments.
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13
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4.18 Horizon
Insurance.
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13
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4.19 Private
Placement.
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13
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4.20 No
Broker’s or Finder’s Fee.
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14
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4.21 Environmental
Matters.
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14
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4.22 Disclosure.
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14
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5.
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Covenants
and Agreements.
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14
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5.1 Continued
Access to Information; Confidentiality; Public Announcement
.
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14
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5.2 Further
Assurances.
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15
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5.3 Board
Observers.
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15
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5.4 Lock-Up.
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16
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5.5 Voting
Agreements.
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16.
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5.6 Resale
Registration Statement.
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16
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6.
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Indemnification.
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18
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6.1 Indemnification
of Horizon.
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18
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6.2 Indemnification
of MCEL.
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18
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6.3 Procedures.
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19
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7.
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Miscellaneous.
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20
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7.1 Survival.
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20
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7.2 Transfer;
Successors and Assigns.
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21
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7.3 Governing
Law; Submission to Jurisdiction.
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21
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7.4 Counterparts.
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21
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7.5 Construction
of Certain Terms.
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21
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7.6 Notices.
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21
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7.7 Fees
and Expenses.
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22
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7.8 Amendments
and Waivers.
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22
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7.9 Severability.
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23
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7.10 Delays
or Omissions.
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23
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7.11 Entire
Agreement.
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23
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Exhibit A Form of Joint Collaboration LOI
Exhibit
B Form
of Horizon Note
i
THIS
SECURITIES PURCHASE AND SALE AGREEMENT (this “Agreement”) is
made as of October 19, 2007 by and among Millennium Cell Inc., a corporation
organized under the laws of the State of Delaware (the “MCEL”),
and Horizon Fuel Cell Technologies Pte. Ltd., a company limited by shares
organized under the laws of the Republic of Singapore
(“Horizon”). Each of MCEL and Horizon also may be
referred to herein individually as a “Party” or collectively as
the “Parties.”
Recitals
WHEREAS,
MCEL and Horizon desire to enter into a strategic joint development program
and
collaborate to develop fuel cell products which embody and/or are developed
from
synergistic applications of the combined expertise of the Parties on the terms
set forth in the non-binding letter of intent attached as Exhibit A
hereto (the “Joint Collaboration LOI”);
WHEREAS,
as an inducement to enter into such joint development program, and subject
to
the terms and conditions of this Agreement, MCEL and Horizon have agreed that
at
the Closing (as defined herein) (i) MCEL will issue to Horizon shares of MCEL
Common Stock (as defined herein) with an agreed value of $5,000,000 and (ii)
Horizon will issue to MCEL a promissory note in the aggregate principal amount
of $5,000,000, substantially in the form attached as Exhibit B hereto
(the “Horizon Note”), which, upon receipt of the Horizon
Shareholder Approval (as defined herein), shall automatically convert into
Horizon Ordinary Shares (as defined herein) with an agreed value of
$5,000,000.
NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements contained herein, and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree
as
follows:
1. Definitions.
1.1. Defined
Terms Used in this Agreement.
In
addition to the terms specifically defined throughout this Agreement, the
following terms used in this Agreement shall be construed to have the meanings
set forth or referenced below.
“Affiliate”
means, with respect to any specified Person, any other Person which directly
or
indirectly through one or more intermediaries controls, or is controlled by,
or
is under common control with, such specified Person (for the purposes of this
definition, “control” (including, with correlative meanings, the terms
“controlling,” “controlled by” and “under common control with”), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise); provided, however, that, for the avoidance of doubt
(i) MCEL is not an Affiliate of Horizon and (ii) Horizon is not an Affiliate
of
MCEL.
“Applicable
Law” means, with respect to any Person, any domestic or foreign,
federal, state or local statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, decree or other requirement
of any Governmental Authority applicable to such Person or any of their
respective properties, assets, officers, directors, employees, consultants
or
agents (in connection with such officer’s, director’s, employee’s, consultant’s
or agent’s activities on behalf of such Person).
“Business
Day” means any day except Saturday, Sunday or any day on which banks
are generally not open for business in New York City or Singapore.
“Environmental
Laws” shall mean all laws (i) related to releases or threatened
releases of any Hazardous Materials in soil, surface water, groundwater,
structures, or air; or (ii) governing the use, treatment, storage, disposal,
transport, emissions, or handling of Hazardous Materials. Such
Environmental Laws shall include, but are not limited to, the Clean Air Act,
Resource Conservation and Recovery Act and the Comprehensive Environmental
Response, Compensation and Liability Act, as well as any other foreign, federal,
state, or local laws addressing protection of the environment and human health
and safety.
“Environmental
Permits” means all licenses, permits, approvals, registrations,
authorizations, variances, certificates, clearances, consents, commissions,
franchises, exemptions, orders and qualification filings from or with any
authorities required under applicable Environmental Laws.
“Exchange
Act” means the Securities Exchange Act of 1934, as
amended.
“Governmental
Authority” means any federal, state, local or foreign court or
governmental agency, authority, instrumentality or regulatory body.
“Hazardous
Materials” shall mean any pollutant, toxic substance, contaminant,
hazardous waste, hazardous substance or extremely hazardous material regulated
under any Environmental Laws, including, without limitation, petroleum or any
refined product or fraction thereof, asbestos, or polychlorinated
biphenyls.
“Horizon
Disclosure Schedules” means the Schedules to the representations of
Horizon contained in Article IV of this Agreement, which Schedules are annexed
hereto.
“Horizon
Material Adverse Effect” means any change or effect that (a) does
or is reasonably likely to materially adversely affect the ability of Horizon
to
perform its obligations under this Agreement or to consummate the transactions
contemplated hereby, or (b) does or is reasonably likely to materially adversely
affect the business, assets (including intangible assets), liabilities,
prospects, financial condition or results of operations of Horizon.
“Horizon
Ordinary Shares” means the ordinary shares of S$1.00 each in the share
capital of Horizon.
“Horizon
Shareholder Approval” means the approval of a resolution at an
extraordinary general meeting of the shareholders of Horizon granting Horizon’s
board of directors the authority to allot the authorized but unissued share
capital of Horizon and Horizon receiving the Preferred Shareholder Consent
(as
such term is defined in the Horizon Articles) required for the issuance of
the
Horizon Shares and the disapplication of any and all pre-emptive rights afforded
to any of the shareholders of Horizon in connection with such
issuance.
2
“MCEL
Disclosure Schedules” means the Schedules to the representations of
MCEL contained in Article III of this Agreement, which Schedules are annexed
hereto.
“MCEL
Material Adverse Effect” means any change or effect that (a) does
or is reasonably likely to materially adversely affect the ability of MCEL
to
perform its obligations under this Agreement or to consummate the transactions
contemplated hereby, or (b) does or is reasonably likely to materially adversely
affect the business, assets (including intangible assets), liabilities,
prospects, financial condition or results of operations of MCEL.
“MCEL
Common Stock” means the common stock of MCEL, par value $0.001 per
share.
“Person”
means and includes an individual, a limited liability company, a partnership,
a
joint venture, a corporation or trust, an unincorporated organization, a group
or Governmental Authority.
“SEC”
means the Securities and Exchange Commission.
“Securities
Act” means the Securities Act of 1933, as amended.
“Transaction
Agreements” means, collectively, this Agreement, the Joint
Collaboration LOI and the Horizon Note.
2. Purchases
and Sales; Closing.
2.1. MCEL
Common Stock.
On
the Closing Date (as defined in Section 2.3), and subject to the terms
and conditions set forth in this Agreement, MCEL hereby agrees to sell, issue
and deliver to Horizon, and Horizon hereby agrees to purchase and accept from
MCEL, 7,936,508 shares of MCEL Common Stock (the “MCEL
Shares”).
2.2. Horizon
Securities. On the Closing Date and subject to the terms and
conditions set forth in this Agreement, Horizon hereby agrees to sell, issue
and
deliver to MCEL, and MCEL hereby agrees to purchase from Horizon, the Horizon
Note which shall, upon receipt of the Horizon Shareholder Approval, be
automatically converted into 33,740 Horizon Ordinary Shares (the
“Horizon Shares” and, together with the Horizon Note, the
“Horizon Securities”).
2.3. Closing.
The
closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place contemporaneously with the
execution and delivery of this Agreement. The Closing shall take
place at the offices of Xxxxxxxxx Xxxxxxx LLP, 1177 Avenue of the Americas,
New
York, N.Y. 10036 on the date hereof (the “Closing Date”), or at
such other location or time as the Parties may agree. At the Closing,
the following shall occur:
3
(a) MCEL
shall issue to Horizon, in exchange for the Horizon Shares, certificates
representing the MCEL Shares, duly registered in the name of Horizon and
endorsed with the restrictive legends set forth in
Section 4.8;
(b) Horizon
shall issue to MCEL, in exchange for the MCEL Shares, the Horizon Note;
and
(c) MCEL
and
Horizon shall execute and deliver any other documents, certificates and
agreements necessary or desirable to accomplish the foregoing.
3. Representations
and Warranties of MCEL.
MCEL
hereby represents and warrants (and each such representation and warranty shall
be deemed to have been made with respect to MCEL and each subsidiary of MCEL
that is set forth in Schedule 3.4), in each case as if such
representation and warranty were made by such subsidiary) to Horizon
that:
3.1. Organization,
Good Standing, Corporate Power and Qualification.
MCEL
is a
corporation duly organized, validly existing and in good standing under the
laws
of its jurisdiction of organization and has all requisite corporate power and
authority to carry on its business as presently conducted and as proposed to
be
conducted. MCEL is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure to so qualify would have
a
MCEL Material Adverse Effect. MCEL has the requisite corporate power
and authority to own and operate its properties and assets.
3.2. Corporate
Power and Authorization. MCEL
has
all requisite legal and corporate power and authority to enter into this
Agreement and each other Transaction Agreement to which it is a party and to
issue and sell the MCEL Shares hereunder and to carry out and perform its
obligations in accordance with the terms of this Agreement and each other
Transaction Agreement to which it is a party. The execution and
delivery by MCEL of this Agreement and each other Transaction Agreement to
which
MCEL is a party and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of MCEL and no further corporate action is required by
MCEL. This Agreement has been (and each other Transaction Agreement
to which MCEL is a party will be) duly executed and delivered by MCEL and
constitute the valid and binding obligation of MCEL enforceable against MCEL
in
accordance with the terms of this Agreement and such other Transaction
Agreements, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, or other laws of general
application relating to or affecting the enforcement of creditors’ rights
generally and (b) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
3.3. Capitalization.
The
number of shares and type of all authorized, issued and outstanding capital
stock of MCEL (including any treasury shares) and the number of shares of MCEL
Common Stock underlying all outstanding options, warrants and other convertible
securities are set forth in Schedule 3.3. No securities of
MCEL are entitled to preemptive rights, rights of participation, or any similar
right to participate in the transactions contemplated by this
Agreement. Except as disclosed in the reports, schedules, forms,
statements and other filings filed by MCEL with the SEC under the Securities
Act
and the Exchange Act (the “MCEL SEC Reports”), there are no
outstanding options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights
or
obligations convertible into or exchangeable for, or giving any Person any
right
to subscribe for or acquire, any shares of MCEL Common Stock, or any contracts,
commitments, understandings or arrangements by which MCEL is or may become
bound
to issue additional shares of MCEL Common Stock, or securities or rights
convertible or exchangeable into shares of MCEL Common Stock. The
issuance and sale of the MCEL Shares hereunder will not obligate any Person
(other than Horizon) to purchase any securities of MCEL, and will not result
in
a right of any holder of MCEL securities to adjust the exercise, conversion,
exchange or reset price under such securities.
4
3.4. Subsidiaries.
Except
as set forth in Schedule 3.4, MCEL does not currently own or control, and
has never owned or controlled, directly or indirectly, any interest in any
other
corporation, partnership, trust, joint venture, limited liability company,
association, or other business entity. Except as disclosed in
Schedule 3.4 and except as contemplated by the Joint Collaboration LOI,
MCEL is not a participant in any joint venture, teaming, partnership or similar
arrangement.
3.5. Valid
Issuance of MCEL Shares.
The
MCEL Shares, when issued, sold and delivered in accordance with the terms of
this Agreement and in consideration of the Horizon Note, will be validly issued,
fully paid and nonassessable and free of restrictions on transfer other than
restrictions on transfer imposed under the this Agreement, applicable state
and
federal securities laws and liens or encumbrances created by or imposed by
Horizon. Assuming the accuracy of the representations of Horizon in
Section 4.6 of this Agreement, the MCEL Shares will be issued hereunder
in compliance with all applicable federal and state securities
laws.
3.6. Purchase
for Own Account; Accredited Investor. MCEL hereby confirms that
the Horizon Note to be acquired by MCEL hereunder and the Horizon Shares
issuable upon conversion of the Horizon Note (together, the “Horizon
Securities”) will be acquired for investment for MCEL’s own account,
not as a nominee or agent, and not with a view to the resale or distribution
of
any part thereof, and that MCEL has no present intention of selling, granting
any participation in, or otherwise distributing the same. MCEL is an
“accredited investor” as such term is defined in Rule 501(a) of Regulation D
promulgated under the Securities Act.
3.7. Restricted
Securities.
MCEL
understands that the Horizon Securities have not been, and will not be,
registered under the Securities Act, by reason of a specific exemption from
the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of the investment intent and the accuracy of MCEL’s
representations as expressed herein. MCEL understands that the
Horizon Securities are “restricted securities” under applicable United States
federal and state securities laws and that, pursuant to these laws, MCEL must
hold the Horizon Securities indefinitely unless they are
registered with the SEC and qualified by state authorities, or an exemption
from
such registration and qualification requirements is available. MCEL
acknowledges that Horizon has no obligation to register or qualify the Horizon
Securities for resale and further acknowledges that if an exemption from
registration or qualification is available, it may be conditioned on various
requirements including, but not limited to, the time and manner of sale, the
holding period for the Horizon Securities, and on requirements relating to
Horizon which are outside of MCEL’s control, and which Horizon is under no
obligation and may not be able to satisfy.
5
3.8. Legends.
MCEL
understands that the Horizon Securities and any securities issued in respect
of
or in exchange for the Horizon Securities, will bear one or all of the following
legends:
(a) “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY APPLICABLE STATE
SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT
(A)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND, TO THE EXTENT
REQUIRED, ANY APPLICABLE STATE SECURITIES LAWS OR (B) UPON DELIVERY OF AN
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER THAN AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE.”
(b) Any
legend required by the securities laws of any jurisdiction to the extent such
laws are applicable to the Horizon Securities.
3.9. Access
to Information.
Without
in any way limiting the effect of the representations and warranties of Horizon
set forth in Section 4 hereof, as of the date of this Agreement, MCEL has
had an opportunity to discuss Horizon’s business, management and financial
affairs with Horizon’s officers and management employees and review all
documents and records of Horizon to the extent that MCEL has requested such
discussions, documentation and records.
3.10. Filings,
Consents and Approvals; Non-Contravention
.
MCEL
is not required to obtain any consent, waiver, authorization or order of, give
any notice to, or make any filing or registration with, any court or other
Governmental Authority or other Person in connection with the execution,
delivery and performance by MCEL of this Agreement and each other Transaction
Agreement to which MCEL is a party in accordance with their respective terms,
other than the filing of a Current Report on Form 8-K and a Form D with the
SEC
and filings required by the Nasdaq Stock Market. The execution,
delivery and performance of this Agreement and each other Transaction Agreement
to which MCEL is a party and the consummation of the transactions contemplated
hereby and thereby by MCEL do not and will not (i) contravene or conflict
with the Certificate of Incorporation and Bylaws (and other equivalent
organizational documents) of MCEL, (ii) contravene or conflict with or
constitute a violation of any Applicable Law, (iii) constitute a
breach of or default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of any Person or to
a
loss of any benefit to which MCEL is entitled under any provision of any
material contract binding upon MCEL or by which any of the assets of MCEL or
the
MCEL Shares are or may be bound, or (iv) result in the creation or
imposition of any liens, claims or encumbrances on any asset of MCEL or any
of
the MCEL Shares.
6
3.11. Litigation.
There
is no claim, action, suit, proceeding, arbitration, complaint, charge or
investigation pending or, to MCEL’s knowledge, any threat thereof
(a) against MCEL; or (b) that questions the validity of this Agreement
or any other Transaction Agreement to which MCEL is a party or the right of
MCEL
to enter into such agreements, or to consummate the transactions contemplated
by
such agreements in accordance with their respective terms. There is
no action, suit, proceeding or investigation pending that was initiated by
MCEL
or which MCEL currently intends to initiate.
3.12. MCEL
Intellectual Property.
MCEL
has, or has rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses and
other similar rights (collectively, the “MCEL Intellectual
Property”) that are necessary or material for use in connection with
its business and which the failure to so have, would have, or would reasonably
be expected to result in, an MCEL Material Adverse Effect. MCEL has
not received a written notice that the MCEL Intellectual Property used by MCEL
violates or infringes upon the rights of any Person which, if determined
adversely to MCEL would, individually or in the aggregate, have an MCEL Material
Adverse Effect. All such MCEL Intellectual Property is enforceable
and, to MCEL’s knowledge, there is no existing infringement by another Person of
any of the MCEL Intellectual Property.
3.13. Compliance.
MCEL
is not (i) in default under or in violation of (and no event has occurred that
has not been waived that, with notice or lapse of time or both, would result
in
a default by MCEL under), nor has MCEL received written notice of a claim that
it is in default under or that it is in violation of, in any material respect,
any material indenture, instrument, loan or credit agreement or any other
material agreement to which it is a party or by which it or any of its
properties is bound (whether or not such default or violation has been waived),
(ii) in violation of any order of any court, arbitrator or governmental body
applicable to MCEL, or (iii) in violation of any statute, rule or regulation
of
any Governmental Authority applicable to MCEL, including, without limitation,
all foreign, federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and
employment and labor matters.
3.14. Voting
Rights. E
xcept
as
set forth in Schedule 3.14, to the knowledge of MCEL, no stockholder of
MCEL has entered into any agreements with respect to the voting of capital
stock
of MCEL.
3.15. MCEL
Financial Statements.
The
financial statements of MCEL included in its Annual Report on Form 10-K filed
with the SEC on March 30, 2007 and its Quarterly Report on Form 10-Q filed
with
the SEC on August 14, 2007 fairly present the financial position of MCEL and
its
consolidated subsidiaries as of and for the dates of such financial statements
and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, immaterial, year-end
audit adjustments and the absence of footnotes.
7
3.16. Material
Changes.
Since
the date of the financial statements included the Quarterly Report on Form
10-Q
filed by MCEL with the SEC on August 14, 2007: (i) there has been no
event, occurrence or development that has had or that could reasonably be
expected to result in an MCEL Material Adverse Effect, (ii) MCEL has not
incurred any liabilities (contingent or otherwise) other than: (A) trade
payables and accrued expenses incurred in the ordinary course of business
consistent with past practice, (B) liabilities not required to be reflected
in
MCEL’s financial statements pursuant to United States generally accepted
accounting principles and (C) expenses in connection with the negotiation
and consummation of the transactions contemplated by this Agreement, (iii)
MCEL
has not altered its method of accounting or the identity of its auditors, (iv)
MCEL has not declared or paid any dividend (other than dividends payable on
MCEL’s Series B-1 Convertible Preferred Stock and Convertible Series C2
Preferred Stock) or distributed any cash or other property to its stockholders
or purchased, redeemed or made any agreements to purchase or redeem any shares
of its capital stock and (v) MCEL has not issued any equity securities to any
officer, director or Affiliate, except pursuant to existing MCEL stock option
plans or deferred compensation plans.
3.17. MCEL
Tax Returns and Payments.
There
are no federal, state, county, local or foreign taxes due and payable by MCEL
which have not been timely paid. There are no accrued and unpaid
federal, state, county, local or foreign taxes of MCEL which are due, whether
or
not assessed or disputed. There have been no examinations or audits
of any MCEL tax returns by any applicable Governmental
Authority. MCEL has duly and timely filed all federal, state, county,
local and foreign tax returns required to have been filed by it and there are
in
effect no waivers of applicable statutes of limitations with respect to taxes
owed or payable by MCEL for any year.
3.18. MCEL
Insurance.
MCEL
maintains insurance policies for the business and assets of MCEL against all
risks normally insured against, and in amounts normally carried by, corporations
of similar size engaged in similar lines of business, and all such insurance
policies are in full force and effect and such policies, or policies providing
substantially similar coverage (but in any event not less than the amount of
coverage currently provided) will be maintained by MCEL after giving effect
to
the transactions contemplated by this Agreement.
3.19. Private
Placement.
Assuming
the accuracy of Horizon’s representations and warranties set forth in Section
4.6, no registration under the Securities Act is required for the offer,
issuance and sale of the MCEL Shares by MCEL to Horizon as contemplated
hereby.
3.20. No
Broker’s or Finder’s Fee.
Except
as set forth in Schedule 3.20, no agent, broker, investment banker,
Person or firm acting on behalf of MCEL, or under the authority of MCEL, is
or
will be entitled to any broker’s or finder’s fee or any other commission or
similar fee directly or indirectly from any Party in connection with the
transactions contemplated hereby.
8
3.21. Environmental
Matters. MCEL is in compliance with and has not received any
notice of any violation of any Environmental Laws except with respect to any
violation which would not reasonably be expected to result in an MCEL Material
Adverse Effect
. MCEL
holds and is in compliance with all Environmental Permits required to be held
by
it under applicable Environmental Laws, except where the failure to hold any
such Environmental Permit or the failure to comply with any such Environmental
Permit would not reasonably be expected to have an MCEL Material Adverse
Effect. There are no Hazardous Materials in, on, under, emanating
from, or migrating onto any portion of any property or structure at any time
owned, leased or occupied by MCEL and MCEL has not generated, handled, treated,
recycled, stored, transported, disposed of, arranged for the disposal of,
released, or placed any Hazardous Materials in, on or under any such property
or
structure. MCEL has not assumed by any means any actual or potential
liability of any other Person under any Environmental Laws.
3.22. Disclosure.
MCEL
understands and confirms that Horizon is relying on the foregoing
representations in acquiring the MCEL Shares hereunder. No
representation or warranty by MCEL contained in this Agreement and no statement
contained in the MCEL Disclosure Schedules contains any untrue statement of
a
material fact or omits to state a material fact necessary in order to make
the
representations and warranties herein or the statements therein not
misleading.
4. Representations
and Warranties of Horizon.
Horizon
hereby represents and warrants (and each such representation and warranty shall
be deemed to have been made with respect to Horizon and each subsidiary of
Horizon that is disclosed in Schedule 4.4, in each case as if such
representation and warranty were made by such subsidiary) to MCEL
that:
4.1. Organization;
Good Standing; Corporate Power and
Qualification. Horizon
is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and has all requisite corporate power
and authority to carry on its business as presently conducted and as proposed
to
be conducted. Horizon is duly qualified to transact business and is
in good standing in each jurisdiction where the failure to so qualify would
have
a Horizon Material Adverse Effect. Horizon has the requisite
corporate power and authority to own and operate its properties and
assets.
4.2. Corporate
Power and Authorization.
Horizon
has all requisite legal and corporate power and authority to enter into this
Agreement and each other Transaction Agreement to which Horizon is a party
and
to issue and sell the Horizon Note hereunder and, upon receipt of the Horizon
Shareholder Approval, to issue the Horizon Shares upon conversion of the Horizon
Note, and to carry out and perform its obligations in accordance with the terms
of this Agreement and each other Transaction Agreement to which Horizon is
a
party. The execution and delivery by Horizon of this Agreement and
each other Transaction Agreement to which Horizon is a party and the
consummation by it of the transactions contemplated hereby and thereby have
been
duly authorized by all necessary corporate action on the part of Horizon (except
for the Horizon Shareholder Approval) and no further corporate action is
required by Horizon (except for the Horizon Shareholder
Approval). This Agreement has been and each other Transaction
Agreement to which Horizon is a party will be duly executed and delivered by
Horizon and constitute the valid and binding obligation of Horizon enforceable
against it in accordance with its respective terms except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, or other laws of general application relating to or affecting the
enforcement of creditors’ rights generally and (b) as limited by laws relating
to the availability of specific performance, injunctive relief, or other
equitable remedies.
9
4.3. Capitalization. Immediately
prior to the Closing, the number of shares and type of all authorized and issued
share capital of Horizon (including any treasury shares) is set forth in
Schedule 4.3. Except as provided in the Articles of
Association of Horizon as in effect as of the date hereof (the “Horizon
Articles”), no securities of Horizon are entitled to preemptive rights,
rights of participation, or any similar right to participate in the transactions
contemplated by this Agreement. Immediately prior to the Closing and
except as disclosed in Schedule 4.3, there are no outstanding options,
warrants, scrip rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into
or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Horizon Ordinary Shares, or any contracts, commitments,
understandings or arrangements by which Horizon is or may become bound to issue
additional Horizon Ordinary Shares, or securities or rights convertible or
exchangeable into shares of Horizon Ordinary Shares. Except as
disclosed in Schedule 4.3, the issuance and sale of the Horizon Note
hereunder and the issuance of the Horizon Shares upon conversion of the Horizon
Note will not obligate any Person (other than MCEL) to purchase any securities
of Horizon, and will not result in a right of any holder of Horizon securities
to adjust the exercise, conversion, exchange or reset price under such
securities.
4.4. Subsidiaries. Except
as disclosed in Schedule 4.4, Horizon does not currently own or control,
and has never owned or controlled, directly or indirectly, any interest in
any
other corporation, partnership, trust, joint venture, limited liability company,
association, or other business entity. Except as disclosed in
Schedule 4.4 and except as contemplated by the Joint Collaboration LOI,
Horizon is not a participant in any joint venture, teaming, partnership or
similar arrangement.
4.5. Valid
Issuance of Horizon Securities. The Horizon Note, when issued,
sold and delivered in accordance with the terms of this Agreement in
consideration of the MCEL Shares, will be duly authorized and validly
issued. The Horizon Shares, when issued upon conversion of the
Horizon Note, will be validly issued, fully paid and nonassessable and free
of
restrictions on transfer other than restrictions on transfer imposed under
this
Agreement, the Horizon Articles, applicable state and federal securities laws
and liens or encumbrances created by or imposed by MCEL. Assuming the
accuracy of the representations of MCEL in Section 3.6 of this Agreement,
the Horizon Securities will be issued hereunder and under the Horizon Note
in
compliance with all applicable federal and state securities laws.
4.6. Purchase
for Own Account; Accredited Investor. Horizon hereby
confirms that the MCEL Shares to be acquired by Horizon hereunder will be
acquired for investment for Horizon’s own account, not as a nominee or agent,
and not with a view to the resale or distribution of any part thereof, and
that
Horizon has no present intention of selling, granting any participation in,
or
otherwise distributing the same. Horizon is an “accredited investor”
as such term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act.
10
4.7. Restricted
Securities.
Horizon
understands that the MCEL Shares have not been, and will not be, registered
under the Securities Act, by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of the investment intent and the accuracy of
Horizon’s representations as expressed herein. Horizon understands
that the MCEL Shares are “restricted securities” under applicable United States
federal and state securities laws and that, pursuant to these laws, Horizon
must
hold the MCEL Shares indefinitely
unless they are registered with the SEC and qualified by state authorities,
or
an exemption from such registration and qualification requirements is
available. Horizon acknowledges that MCEL has no obligation to
register or qualify the Horizon Shares for resale except as set forth in
Section 5.6. Horizon further acknowledges that if an exemption
from registration or qualification is available, it may be conditioned on
various requirements including, but not limited to, the time and manner of
sale,
the holding period for the MCEL Shares, and on requirements relating to MCEL
which are outside of Horizon’s control, and which the MCEL is under no
obligation and may not be able to satisfy.
4.8. Legends.
Horizon
understands that the MCEL Shares and any securities issued in respect of or
in
exchange for the MCEL Shares, will bear one or all of the following
legends:
(a) “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY APPLICABLE STATE
SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT
(A)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND, TO THE EXTENT
REQUIRED, ANY APPLICABLE STATE SECURITIES LAWS OR (B) UPON DELIVERY OF AN
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER THAN AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE.”
(b) Any
legend required by the securities laws of any state to the extent such laws
are
applicable to the MCEL Shares represented by the certificate so
legended.
4.9. Access
to Information.
Without
in any way limiting the effect of the representations and warranties of MCEL
set
forth in Section 3 hereof, as of the date of this Agreement, Horizon has
had an opportunity to discuss MCEL’s business, management and financial affairs
with MCEL’s officers and management employees and review all documents and
records of MCEL to the extent that Horizon has requested such discussions,
documentation and records.
4.10. Filings,
Consents and Approvals; Non-Contravention. Except for the Horizon
Shareholder Approval,
Horizon
is not required to obtain any consent, waiver, authorization or order of, give
any notice to, or make any filing or registration with, any court or other
Governmental Authority or other Person in connection with the execution,
delivery and performance by Horizon of this Agreement and each other Transaction
Agreement to which Horizon is a party in accordance with their respective terms,
other than required by blue sky filings. The execution, delivery and
performance of this Agreement and each other Transaction Agreement to which
Horizon is a party and the consummation of the transactions contemplated hereby
and thereby by Horizon does not and will not (i) contravene or conflict with
the
Memorandum of Association of Horizon or the Horizon Articles (or other
equivalent organizational documents of Horizon), (ii) contravene or conflict
with or constitute a violation of any Applicable Law, (iii) constitute a breach
of or default under or give rise to any right of termination, cancellation
or
acceleration of any right or obligation of any Person or to a loss of any
benefit to which Horizon is entitled under any provision of any material
contract binding upon Horizon or by which any of the assets of Horizon or the
Horizon Shares are or may be bound, or (iv) result in the creation or imposition
of any liens, claims or encumbrances on any asset of Horizon or any of the
Horizon Securities.
11
4.11. Litigation. There
is no claim, action, suit, proceeding, arbitration, complaint, charge or
investigation pending or, to Horizon’s knowledge, any threat thereof (a) against
Horizon; or (b) that questions the validity of this Agreement or the right
of
Horizon to enter into this Agreement or any other Transaction Agreement to
which
Horizon is a party, or to consummate the transactions contemplated hereby and
thereby in accordance with their respective terms. There is no
action, suit, proceeding or investigation pending that was initiated by Horizon
or which Horizon currently intends to initiate.
4.12. Horizon
Intellectual Property. Horizon has, or has rights to use, all
patents, patent applications, trademarks, trademark applications, service marks,
trade names, copyrights, licenses and other similar rights (collectively, the
“Horizon Intellectual Property”) that are necessary or material
for use in connection with its business and which the failure to so have, would
have, or would reasonably be expected to result in, a Horizon Material Adverse
Effect. Horizon has not received a written notice that the Horizon
Intellectual Property used by Horizon violates or infringes upon the rights
of
any Person which if determined adversely to Horizon would, individually or
in
the aggregate, have a Horizon Material Adverse Effect. All such
Horizon Intellectual Property is enforceable and, to Horizon’s knowledge, there
is no existing infringement by another Person of any of the Horizon Intellectual
Property.
4.13. Compliance. Horizon
is not (i) in default under or in violation of (and no event has occurred that
has not been waived that, with notice or lapse of time or both, would result
in
a default by Horizon under), nor has Horizon received written notice of a claim
that it is in default under or that it is in violation of, in any material
respect, any material indenture, instrument, loan or credit agreement or any
other material agreement to which it is a party or by which any of its
properties is bound (whether or not such default or violation has been waived),
(ii) in violation of any order of any court, arbitrator or governmental body
applicable to Horizon, or (iii) in violation of any statute, rule or regulation
of any Governmental Authority applicable to Horizon, including without
limitation all foreign, federal, state and local laws relating to taxes,
environmental protection, occupational health and safety, product quality and
safety and employment and labor matters.
4.14. Voting
Rights. Except as disclosed in Schedule 4.14 and except
for agreements whereby shareholders of Horizon have agreed to vote in favor
of
the approvals needed to complete the transactions contemplated by this Agreement
and the Horizon Note, to the knowledge of Horizon, no shareholder of Horizon
has
entered into any agreements with respect to the voting of the share capital
of
Horizon.
12
4.15. Horizon
Financial Statements. The most recently prepared financial
statements of Horizon and its consolidated subsidiaries are attached hereto
as
Schedule 4.15 (the “Horizon Financial
Statements”). The Horizon Financial Statements fairly
present the financial position of Horizon and its consolidated subsidiaries
as
of and for the dates thereof and the results of operations and cash flows for
the periods then ended.
4.16. Material
Changes. Since the date of the most recently prepared Horizon
Financial Statements: (i) there has been no event, occurrence or development
that has had or that would reasonably be expected to result in a Horizon
Material Adverse Effect, (ii) Horizon has not incurred any liabilities
(contingent or otherwise) other than: (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice,
(B)
liabilities not required to be reflected in Horizon’s financial statements
pursuant to applicable accounting rules and regulations and (C) expenses in
connection with the negotiation and consummation of the transactions
contemplated by this Agreement, (iii) Horizon has not altered its method of
accounting or the identity of its auditors, if any, (iv) Horizon has not
declared or paid any dividend or distributed any cash or other property to
its
shareholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its share capital and (v) Horizon has not issued any equity
securities to any officer, director or Affiliate, except pursuant to existing
Horizon stock option plans or deferred compensation plans.
4.17. Horizon
Tax Returns and Payments. There are no federal, state, county,
local or foreign taxes due and payable by Horizon which have not been timely
paid. There are no accrued and unpaid federal, state, county, local
or foreign taxes of Horizon which are due, whether or not assessed or
disputed. There have been no examinations or audits of any Horizon
tax returns by any applicable Governmental Authority. Horizon has
duly and timely filed all federal, state, local and foreign tax returns required
to have been filed by it and there are in effect no waivers of applicable
statutes of limitations with respect to taxes owed or payable by Horizon for
any
year.
4.18. Horizon
Insurance. Horizon maintains insurance policies for the business
and assets of Horizon against all risks normally insured against, and in amounts
normally carried, by corporations of similar size engaged in similar lines
of
business and all such insurance policies are in full force and effect and such
policies, or policies providing substantially similar coverage (but in any
event
not less than the amount of coverage currently provided) will be maintained
by
Horizon after giving effect to the transactions contemplated by this
Agreement.
4.19. Private
Placement. Assuming the accuracy of MCEL’s representations and
warranties set forth in Section 3.6, no registration under the Securities
Act is required for the offer, issuance and sale of the Horizon Securities
by
Horizon to MCEL as contemplated hereby.
13
4.20. No
Broker’s or Finder’s Fee. Except as set forth in Schedule
4.20, no agent, broker, investment banker, Person or firm acting on behalf
of Horizon, or under the authority of Horizon, is or will be entitled to any
broker’s or finder’s fee or any other commission or similar fee directly or
indirectly from any Party in connection with the transactions contemplated
hereby.
4.21. Environmental
Matters. Horizon is in compliance with and has not received any
notice of any violation of any Environmental Laws except with respect to any
violation which would not reasonably be expected to result in a Horizon Material
Adverse Effect
. Horizon
holds and is in compliance with all Environmental Permits required to be held
by
it under applicable Environmental Laws, except where the failure to hold any
such Environmental Permit or the failure to comply with any such Environmental
Permit would not reasonably be expected to have a Horizon Material Adverse
Effect. There are no Hazardous Materials in, on, under, emanating
from, or migrating onto any portion of any property or structure at any time
owned, leased or occupied by Horizon and Horizon has not generated, handled,
treated, recycled, stored, transported, disposed of, arranged for the disposal
of, released, or placed any Hazardous Materials in, on or under any such
property or structure. Horizon has not assumed by any means any
actual or potential liability of any other Person under any Environmental
Laws.
4.22. Disclosure. Horizon
understands and confirms that MCEL is relying on the foregoing representations
in acquiring the MCEL Shares hereunder. No representation or warranty
by Horizon contained in this Agreement, and no statement contained in the
Horizon Disclosure Schedules contains any untrue statement of a material fact
or
omits to state a material fact necessary in order to make the representations
and warranties herein or the statements therein not misleading.
5. Covenants
and Agreements.
5.1. Continued
Access to Information; Confidentiality; Public Announcement.
(a) Upon
reasonable prior notice from the other Party, each of MCEL and Horizon will
(i)
give the requesting Party (the “Requesting Party”), its
counsel, financial advisors, auditors and other authorized representatives
full
access to the offices, employees, properties, and books and records of MCEL
or
Horizon (as applicable) and provide the Requesting Party access to its employees
during normal business hours, (ii) furnish to the Requesting Party, its
counsel, financial advisors, auditors and other authorized representatives
such
financial and operating data relating to the business of MCEL or Horizon (as
applicable) (including, without limitation, all tax returns and tax workpapers,
audit work papers, and financial and operational budgets and forecasts) as
such
Persons may reasonably request, provided that the accounting firm of
each Party shall have no obligation to furnish work papers or related materials
in contravention of such firm’s reasonable internal policies and provided
further that no Party shall be obligated hereunder to provide the
Requesting Party with any information that it reasonably believes to be a trade
secret or otherwise proprietary to such Party, and (iii) instruct the
employees, counsel and financial advisors of MCEL or Horizon (as applicable)
to
cooperate with the Requesting Party with respect to the
foregoing. The information and inspection rights of MCEL under this
Section 5.1(a) shall terminate if either (x) the Horizon Note is not
converted into the Horizon Shares and all amounts payable under the Horizon
Note
are paid in full to MCEL in accordance with the Horizon Note or (y) MCEL ceases
to own at least 50% of the Horizon Shares issued upon conversion of the Horizon
Note (as ratably adjusted for any share split, stock dividend, reverse share
split, subdivision, combination, capital reorganization or reclassification,
or
any other similar change in the capitalization of Horizon). The
information and inspection rights of Horizon under this Section 5.1(a)
shall terminate if Horizon ceases to own at least 50% of the MCEL Shares
acquired by Horizon under this Agreement (as ratably adjusted for any stock
split, stock dividend, reverse stock split, subdivision, combination, capital
reorganization or reclassification, or any other similar change in the
capitalization of MCEL).
14
(b) Each
of MCEL and Horizon agrees that it will hold in strict confidence and will
not
use or disclose to anyone other than its authorized representatives who have
a
need to know such information, and will use its reasonable best efforts to
cause
such authorized representatives to hold in strict confidence and to not disclose
to others, the confidential documents and information concerning MCEL or Horizon
(as applicable). Each of MCEL and Horizon will be responsible for any
breaches of this Section 5.1(b) by its authorized
representatives. For the avoidance of doubt, the termination of the
rights afforded by Section 5.1(a) above shall not terminate the Parties’
obligations under this Section 5.1(b).
(c) MCEL
and Horizon will issue a joint press release announcing the transactions
contemplated by this Agreement and MCEL will file a Current Report on Form
8-K
reporting the execution and delivery of this Agreement, each other Transaction
Agreement and the Closing, in each case as soon as practicable after the
Closing. MCEL and Horizon will consult with each other before issuing
the joint press release and will not issue any such release or make any other
public statement without the prior approval of the other, except as may be
required by Applicable Law (including the regulations promulgated under the
Exchange Act).
5.2. Further
Assurances.
Subject
to the terms and conditions of this Agreement, each other Transaction Agreement
and Applicable Law, upon the reasonable request of the other Party, each Party
shall execute and deliver such further documents or instruments and take, or
cause to be taken, all actions and to do, or cause to be done, all things
reasonably necessary or advisable to consummate the transactions contemplated
by
this Agreement and each other Transaction Agreement, and to refrain from taking
any action that would prevent or delay the consummation of transactions
contemplated by this Agreement. Without limiting the generality of
the foregoing, each of MCEL and Horizon hereby agrees that it will use its
commercially reasonable efforts to cause the execution and delivery of a
definitive agreement on the terms set forth in the Joint Collaboration LOI
as
soon as practicable after the date of this Agreement.
5.3. Board
Observers. MCEL agrees that Horizon shall have the right to
designate one (1) non-voting observer to MCEL’s board of directors (the
“Horizon Observer”) and Horizon agrees that MCEL shall have the
right to designate one (1) non-voting observer to Horizon’s board of directors
(the “MCEL Observer”). The Horizon Observer and the
MCEL Observer shall each be entitled to receive notice of board meetings and
shall have the right to attend and participate in such meetings, but shall
not
be entitled to cast any vote at any such meeting or consent in writing to any
matter in lieu of any such meeting. Notwithstanding the foregoing,
(A) neither the Horizon Observer nor the MCEL Observer shall have any right
to
notice of or the right to participate in any board meeting at which MCEL or
Horizon (as applicable) considers, discusses or approves the transactions
contemplated by the Joint Collaboration LOI or any matters related thereto,
(B)
either Party may condition the right of the Horizon Observer or the MCEL
Observer (as applicable) to (i) attend meetings of its board of directors,
(ii)
receive notice of such meetings and (iii) receive board materials relating
to
such meetings upon the execution and delivery of a confidentiality agreement
reasonably acceptable to such Party, (C) either Party may prohibit the Horizon
Observer or the MCEL Observer (as applicable) from (x) attending meetings of
its
board of directors (or any portion of any such meeting) or (y) receiving
information relating to any such meeting, in either case if and to the extent
that such Party reasonably believes that such prohibition is necessary to (1)
ensure preservation of the attorney-client privilege or (2) protect a trade
secret or other proprietary information of such Party.
15
5.4. Lock-Up.
MCEL
hereby agrees that (i) it will not sell, assign, transfer or otherwise dispose
of any of the Horizon Shares during the period commencing on the date of this
Agreement and ending on the first anniversary of the date of this Agreement
(the
“Lock-Up Period”) and (ii) any sale, assignment, transfer or
disposition of the Horizon Shares by MCEL after the expiration of the Lock-Up
Period will be made in compliance with Applicable Law (including, without
limitation, the Securities Act (including the rules and regulations promulgated
thereunder) and any applicable state securities laws) and the Horizon
Articles. Horizon hereby agrees that (i) it will not sell, assign,
transfer or otherwise dispose of any of the MCEL Shares during the Lock-Up
Period and (ii) any sale, assignment, transfer or disposition of the MCEL Shares
by Horizon after the expiration of the Lock-Up Period will be made in compliance
with Applicable Law (including, without limitation, the Securities Act
(including the rules and regulations promulgated thereunder) and any applicable
state securities laws).
5.5. Voting
Agreements.
5.6. MCEL
hereby agrees that with respect to all matters submitted for approval of the
shareholders of Horizon during the Lock-Up Period, MCEL will vote all of the
Horizon Shares in accordance with the recommendation of the board of directors
of Horizon. Horizon hereby agrees that with respect to all matters
submitted for approval of the stockholders of MCEL during the Lock-Up Period,
Horizon will vote all of the MCEL Shares in accordance with the recommendation
of the board of directors of MCEL.
5.6 Resale
Registration Statement. Subject to MCEL obtaining any necessary
waivers and approvals with respect to existing registration rights, MCEL shall,
unless MCEL reasonably concludes that the MCEL Shares held by Horizon will
be
freely transferable in the absence of registration without volume limitations
upon the expiration of the Lock-Up Period (i) not later than 90 days
prior to the expiration of the Lock-Up Period, file with the SEC a registration
statement on Form S-3 (or another appropriate form) (the “Registration
Statement”) registering under the Securities Act the resale of the MCEL
Shares by Horizon and (ii) use its reasonable best efforts to have the
Registration Statement declared effective by the SEC on or prior to the
expiration of the Lock-Up Period. MCEL agrees that it shall use its
reasonable best efforts to obtain any waivers and approvals necessary to effect
the registration contemplated by this Section 5.6. Horizon
agrees that it shall be a condition precedent to MCEL’s registration obligations
under this Section 5.6 that Horizon (i) furnish to MCEL such information
regarding Horizon, its Affiliates and the intended method of disposition of
the
MCEL Shares as shall be reasonably requested by MCEL to effect the effectiveness
of the registration contemplated by this Section 5.6 and (ii) execute and
deliver such documents in connection with such registration as MCEL may
reasonably request. All registration fees, printing fees, accounting
fees and fees and disbursements of counsel for MCEL in connection with the
registration contemplated by this Section 5.6 shall be paid by MCEL and
any underwriting fees, discounts and commissions and all fees and disbursements
of counsel for Horizon in connection with the registration contemplated by
this
Section 5.6 shall be paid by Horizon. In connection with the
filing of the Registration Statement, MCEL shall, as promptly as
practicable:
16
(a) prepare
and file with the SEC any amendments and supplements to the Registration
Statement and the prospectus included in the Registration Statement (the
“Prospectus”) as may be necessary to comply with the provisions
of the Securities Act (including the anti-fraud provisions thereof) and to
keep
the Registration Statement effective for six months from the effective date
or
such lesser period until all of the MCEL Shares registered thereunder (the
“Registrable Shares”) are sold;
(b) furnish
to Horizon such reasonable number of copies of the Prospectus, including any
preliminary Prospectus, in conformity with the requirements of the Securities
Act, and such other documents as Horizon may reasonably request in order to
facilitate the public sale or other disposition of the Registrable
Shares;
(c) use
its reasonable best efforts to register or qualify the Registrable Shares under
the securities or blue sky laws of such states as Horizon shall reasonably
request, and do any and all other acts and things that may be necessary to
enable Horizon to consummate the public sale or other disposition of the
Registrable Shares in such states; provided, however, that MCEL
shall not be required, as a result of this Section 5.6(c), to qualify as
a foreign corporation or to execute a general consent to service of process
in
any jurisdiction or to amend its organizational documents in a manner that
the
MCEL board of directors determines is inadvisable;
(d) cause
all of the Registrable Shares to be listed on each securities exchange or
automated quotation system on which the MCEL Common Stock is then
listed;
(e) make
available for inspection by Horizon, any managing underwriter participating
in
any disposition pursuant to the Registration Statement, and any attorney or
accountant or other agent retained by any such underwriter or retained by
Horizon, all financial and other records, pertinent corporate documents and
properties of MCEL and cause its officers, directors, employees and independent
accountants to supply all information reasonably requested by any such
underwriter, attorney, accountant or agent in connection with the Registration
Statement;
17
(f) notify
Horizon after it shall receive notice of the time when the Registration
Statement has become effective or a supplement to any Prospectus forming a
part
of the Registration Statement has been filed; and
(g) notify
Horizon of any request by the SEC for any amendment or supplement of the
Registration Statement or the Prospectus.
If
MCEL
has delivered a Prospectus to Horizon and, after having done so, the Prospectus
is amended to comply with the requirements of the Securities Act, MCEL shall
promptly notify Horizon and, if requested, Horizon shall immediately cease
making offers and sales of Registrable Shares thereunder and return all
Prospectuses to MCEL. MCEL shall promptly provide Horizon with
revised Prospectuses and, following receipt of the revised Prospectuses, Horizon
may resume making offers and sales of the Registrable Shares pursuant thereto.
6. Indemnification.
6.1. Indemnification
of Horizon.
MCEL
hereby agrees to indemnify Horizon and its Affiliates, directors, officers,
employees and agents (and, with respect to the matters described in clauses
(iv), (v) and (vi) below, any underwriter of the Registrable Shares and each
other Person, if any, who controls Horizon within the meaning of the Securities
Act or the Exchange Act) against, and agrees to hold each of them harmless
from,
any and all claims, demands, costs, expenses, obligations, liabilities, damages,
recoveries and deficiencies, including, without limitation, interest, penalties,
court costs, costs and expenses (including reasonable fees and expenses of
external counsel and the costs and expenses of investigating and defending
such
claims) (“Damages”) incurred or suffered by any of them arising
out of or based upon (i) any breach of any representation or warranty made
by
MCEL in this Agreement, (ii) any breach of any covenant or agreement to be
performed by MCEL pursuant to this Agreement, (iii) violations by MCEL of
Applicable Law with respect to the Horizon Securities, (iv) any untrue statement
or alleged untrue statement of any material fact contained in the Registration
Statement or the Prospectus, (v) the omission or alleged omission of a material
fact required to be stated in the Registration Statement or the Prospectus
or
necessary to make the statements therein, under the circumstances in which
they
were made, not misleading or (vi) any violation or alleged violation by MCEL
of
the Securities Act, the Exchange Act, any state securities law or any rule
or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law in connection with the Registration Statement or the offering
contemplated thereby; provided, however, that with respect to the
matters described in clauses (iv), (v) and (vi) above, MCEL will not be liable
in any such case to the extent that any such Damages arise out of or are based
upon any untrue statement or omission made in the Registration Statement or
the
Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with information furnished in writing to MCEL by or on behalf of
Horizon or the underwriter in such offering specifically for use in the
preparation thereof.
6.2. Indemnification
of MCEL. Horizon
hereby
agrees to indemnify MCEL and its Affiliates, directors, officers, employees
and
agents (and, with respect to the matters described in clauses (iv), (v) and
(vi)
below, each Person who controls MCEL within the meaning of the Securities Act
or
the Exchange Act) against, and agrees to hold each of them harmless from, any
and all Damages incurred or suffered by any of them arising out of or based
upon
(i) any breach of any representation or warranty made by Horizon in this
Agreement or in the Horizon Note, (ii) any breach of any covenant or agreement
to be performed by Horizon pursuant to this Agreement or in the Horizon Note,
(iii) violations by Horizon of Applicable Law with respect to the MCEL Shares,
(iv) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement or the Prospectus, (v) the omission
or
alleged omission of a material fact required to be stated in the Registration
Statement or the Prospectus or necessary to make the statements therein, under
the circumstances in which they were made, not misleading or (vi) any violation
or alleged violation by Horizon of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law in connection with the
Registration Statement or the offering contemplated thereby; provided,
however, that with respect to the matters described in clauses (iv),
(v)
and (vi) above, (1) Horizon will only be liable in any such case to the extent
that any such Damages arise out of or are based upon any untrue statement or
omission made in the Registration Statement or the Prospectus, or any amendment
or supplement thereto, in reliance upon and in conformity with information
furnished in writing to MCEL by or on behalf of Horizon specifically for use
in
the preparation thereof, and (2) Horizon’s liability shall not exceed the amount
of net proceeds received by Horizon as a result of its sale of the Registrable
Shares pursuant to the Registration Statement.
18
6.3. Procedures.
(a) If
Horizon or any of its Affiliates or any of their respective directors, officers,
employees and agents, seek indemnification pursuant to Section 6.1, or
MCEL or any of its Affiliates or any of their directors, officers, employees
and
agents, seek indemnification pursuant to Section 6.2, the Person seeking
indemnification (the “Indemnified Party”) shall give written
notice to the Party from whom such indemnification is sought (the
“Indemnifying Party”) promptly (and in any event within 30
days) after the Indemnified Party becomes aware of the facts giving rise to
such
claim for indemnification (an “Indemnified Claim”) specifying
in reasonable detail the factual basis of the Indemnified Claim, stating the
amount of the Damages, if known, the method of computation thereof, containing
a
reference to the provision of this Agreement in respect of which such
Indemnified Claim arises and demanding indemnification therefor. The
failure of an Indemnified Party to provide notice in accordance with this
Section 6.3 shall not constitute a waiver of that party’s claims to
indemnification pursuant to Section 6.1 or Section 6.2, as
applicable, except to the extent that any such failure or delay in giving notice
causes the amounts paid by the Indemnifying Party to be greater than they
otherwise would have been or otherwise materially prejudices the Indemnifying
Party. If the Indemnified Claim arises from the assertion of any
claim, or the commencement of any suit, action or proceeding brought by a Person
that is not a party hereto (a “Third Party Claim”), any such
notice to the Indemnifying Party shall be accompanied by a copy of any papers
served on or delivered to the Indemnified Party in connection with such Third
Party Claim.
(b) Upon
receipt of notice of a Third Party Claim from an Indemnified Party pursuant
to
Section 6.3(a), the Indemnifying Party will be entitled to assume the
defense and control of such Third Party Claim subject to the provisions of
this
Section 6.3. After written notice by the Indemnifying Party to
the Indemnified Party of its election to assume the defense and control of
a
Third Party Claim, the Indemnifying Party shall not be liable to such
Indemnified Party for any legal fees or expenses subsequently incurred by such
Indemnified Party in connection therewith. Notwithstanding anything
in this Section 6.3 to the contrary, if the Indemnifying Party does not
assume defense and control of a Third Party Claim as provided in this Section
6.3, the Indemnified Party shall have the right to defend such Third Party
Claim, subject to the limitations set forth in this Section 6.3, in such
manner as it may deem appropriate. Whether the Indemnifying Party or
the Indemnified Party is defending and controlling any such Third Party Claim,
they shall select counsel, contractors, experts and consultants of recognized
standing and competence, shall take all steps necessary in the investigation,
defense or settlement thereof, and shall at all times diligently and promptly
pursue the resolution thereof. The Party conducting the defense
thereof shall at all times act as if all Damages relating to the Third Party
Claim were for its own account and shall act in good faith and with reasonable
prudence to minimize Damages therefrom. The Indemnified Party shall,
and shall cause each of its Affiliates, directors, officers, employees, and
agents to, cooperate fully with the Indemnifying Party in connection with any
Third Party Claim.
19
(c) The
Indemnifying Party shall be authorized to consent to a settlement of, or the
entry of any judgment arising from, any Third Party Claims, and the Indemnified
Party shall consent to a settlement of, or the entry of any judgment arising
from, such Third Party Claims; provided, however, that the
Indemnifying Party shall (1) pay or cause to be paid all amounts arising out
of
such settlement or judgment concurrently with the effectiveness thereof; (2)
shall not encumber any of the assets of any Indemnified Party or agree to any
restriction or condition that would apply to such Indemnified Party or to the
conduct of that party’s business; and (3) shall obtain, as a condition of any
settlement or other resolution, a complete and irrevocable release of each
Indemnified Party and such settlement or judgment (x) shall not require any
admission of liability, fault or wrongdoing by any Indemnified Party or impose
any non-monetary obligation on an Indemnified Party (such as, by way of example,
and not in limitation, injunctive relief) and (y) shall not require any
admission or statement that could reasonably be expected to materially impair,
disparage or otherwise adversely affect, the business reputation of the
Indemnified Party. Except to the extent of the foregoing, no
settlement or entry of judgment in respect of any Third Party Claim shall be
consented to by any Indemnifying Party or Indemnified Party without the express
written consent of the other Party.
(d) If
an
Indemnifying Party makes any payment on an Indemnified Claim, the Indemnifying
Party shall be subrogated, to the extent of such payment, to all rights and
remedies of the Indemnified Party to any insurance benefits or other claims
or
benefits of the Indemnified Party with respect to such claim.
7. Miscellaneous.
7.1. Survival.
The
representations and warranties of MCEL and Horizon contained in or made pursuant
to this Agreement shall survive the execution and delivery of this Agreement
and
shall continue in full force and effect until the second anniversary of the
termination of this Agreement, except that:
20
(a) the
representations and warranties in Sections 3.1, 3.2, 3.3,
3.4, 3.5, 3.6, 4.1, 4.2, 4.3,
4.4,
4.5
and 4.6 shall survive indefinitely;
(b) the
representations and warranties in Sections3.17, 3.21,
4.17 and 4.21 shall survive until 30 days after
the expiration of
the applicable statute of limitations; and
(c) those
covenants and agreements set forth in this Agreement and the Horizon Note that,
by their terms, are to have effect after the Closing (including, without
limitation, Section 5.1 hereof) shall survive for the period contemplated
by such covenants and agreements, or, if no period is expressly set forth,
until
the expiration of the statute of limitations applicable to any claim relating
thereto.
7.2. Transfer;
Successors and Assigns.
No
Party shall assign any rights or obligations under this Agreement without the
prior written consent of the other Party. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the Parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the Parties
or their respective successors and assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
7.3. Governing
Law; Submission to Jurisdiction.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York without regard to its principles of conflicts of
laws. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
MAY BE BROUGHT IN XXX XXXXXX XX XXX XXXXX XX XXX XXXX AND THE UNITED STATES
OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AND, BY EXECUTION AND DELIVERY
OF
THIS AGREEMENT, THE PARTIES ACCEPT, FOR THEMSELVES AND IN RESPECT OF THEIR
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF AFORESAID
COURTS. EACH PARTY HERETO IRREVOCABLY AND EXPRESSLY WAIVES ANY
OBJECTION TO VENUE LAID THEREIN. Each Party hereto irrevocably
consents to the service of process of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to it at its address as set forth
herein.
7.4. Counterparts.
This
Agreement may be executed in two (2) or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument. This Agreement may be executed and delivered by
facsimile signature.
7.5. Construction
of Certain Terms.
The
titles of the articles, sections, and subsections of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement. Wherever the words “including,” “include” or “includes”
are used in this Agreement, they shall be deemed followed by the words “without
limitation.” References to any gender shall be deemed to mean any
gender. The Parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties, and no presumption or burden
of
proof shall arise favoring or disfavoring any Party by virtue of the authorship
of any provisions of this Agreement.
21
7.6. Notices.
All
notices and other communications given or made pursuant to this Agreement shall
be in writing and shall be deemed effectively given: (a) upon
personal delivery to the Party to be notified, (b) when sent by confirmed
electronic mail or facsimile if sent during normal business hours of the
recipient, and if not so confirmed, then on the next Business Day, (c) five
(5)
days after having been sent by certified mail, return receipt requested, postage
prepaid, or (d) one (1) day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of
receipt. All communications shall be sent to the address or facsimile
number set forth below or to such other address or facsimile number as delivered
by notice to the other Party in accordance with this
Section 7.6:
If
to
MCEL:
Xxx
Xxxxxxxxxx Xxx Xxxx
Xxxxxxxxx,
XX 00000
Attention: Xxxx
Xxxxxx,
President
Facsimile: (000)
000-0000
With
a
copy to:
Xxxxxxxxx,
Xxxxxxx LLP
0000
Xxxxxx xx xxx
Xxxxxxxx
Xxx
Xxxx, XX 00000
Attention: Xxxxxxx
X. Xxxx,
Esq.
Facsimile: (000)
000-0000
If
to
Horizon:
Horizon
Fuel Cell Technologies Pte. Ltd.
0xx
Xxxxx, Xxxxx 00, #0000 Xxxxxxxxxxx Xxxx
200333,
Shanghai, X.X. Xxxx
Attention: Xxxxxx
Xx
Facsimile: (x00)
00 0000 0000
With
a
copy to:
Xxxxxx
Xxxxxx Xxxx and Xxxx LLP
Xxxxx Castle
00
Xxxxx
Xxxxxx
Xxxxxx
XX0X 0XX
Attention: Xxxxxx X. Xxxxxxx,
Esq.
Facsimile: x00
(0)00 0000 0000
22
7.7. Fees
and Expenses.
MCEL
and
Horizon shall each pay their own costs and expenses in connection with the
negotiation and documentation of this Agreement and the transactions
contemplated hereby.
7.8. Amendments
and Waivers.
Neither
this Agreement nor any term of this Agreement may be amended, terminated or
waived without the prior written consent of MCEL and Horizon. Any
amendment or waiver effected in accordance with this Section 7.8
shall be binding upon MCEL, Horizon, each transferee of the MCEL Shares and
Horizon Securities issued hereunder and each future holder of all such
securities.
7.9. Severability.
The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
7.10. Delays
or Omissions.
No
delay or omission to exercise any right, power or remedy accruing to any Party
under this Agreement, upon any breach or default of any other Party under this
Agreement, shall impair any such right, power or remedy of such non-breaching
or
non-defaulting Party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any
kind or character on the part of any Party of any breach or default under this
Agreement, or any waiver on the part of any Party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only
to
the extent specifically set forth in such writing. All remedies,
either under this Agreement or by law or otherwise afforded to any Party, shall
be cumulative and not alternative.
7.11. Entire
Agreement.
This
Agreement (including the Exhibits and Schedules hereto), the Joint Collaboration
LOI and the Horizon Note constitute the full and entire understanding and
agreement between the Parties with respect to the subject matter hereof, and
supersede any other written or oral agreement relating to the subject matter
hereof and thereof.
[Remainder
of Page Intentionally Left Blank]
23
IN
WITNESS WHEREOF, MCEL and Horizon have executed this Securities Purchase and
Sale Agreement as of the date first written above.
By: /s/Xxxx
X.
Xxxxxx
Name:
Xxxx X. Xxxxxx
Title: Chief
Financial Officer
HORIZON
FUEL CELL TECHNOLOGIES
PTE
LTD.
By: Xxxxx
Xxxxxxxxx
Director
By: Xxxxxx
Xx
Director,
Chief Executive Officer
24
EXHIBIT
A
FORM
OF JOINT COLLABORATION LOI
25
EXHIBIT
B
FORM
OF HORIZON NOTE
26
