SECURITIES PURCHASE AGREEMENT
EXECUTION
COPY
EXHIBIT
10.1
This
Securities Purchase Agreement (this “Agreement”)
is
dated as of May 2, 2006, by and among HydroGen Corporation, a Nevada corporation
(the “Company”),
and
each purchaser identified on the signature pages hereto (each, a “Purchaser”
and
collectively, the “Purchasers”).
RECITALS
A. The
Company and each Purchaser are executing and delivering this agreement in
reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the “Securities
Act”),
and
Rule 506 of Regulation D (“Regulation
D”)
as
promulgated by the United States Securities and Exchange Commission under the
Securities Act.
B. Each
Purchaser, severally and not jointly, wishes to purchase, and the Company wishes
to sell, upon the terms and conditions stated in this Agreement, (i) that
aggregate number of shares of the Common Stock, par value $0.001 per share
(the
“Common
Stock”),
of
the Company set forth below such Purchaser’s name on the signature page of this
Agreement (which aggregate amount for all Purchasers together shall be 4,955,000
shares of Common Stock and shall be collectively referred to herein as the
“Shares”)
and
(ii) warrants, in the form attached hereto as Exhibit
A
(the
“Warrants”),
to
acquire up to that number of additional shares of Common Stock equal to 25.0%
of
the number of Shares purchased by such Purchaser (the shares of Common Stock
issuable upon exercise of or otherwise pursuant to the Warrants, collectively,
the “Warrant
Shares”).
Simultaneously with or prior to the Closing, the Company shall have sold 200,000
shares of Common Stock and Warrants to purchase up to 50,000 shares of Common
Stock to a third party purchaser, who is not acting in concert with the
Purchasers.
C. The
Shares, the Warrants and the Warrant Shares issued pursuant to this Agreement
are collectively referred to herein as the “Securities”.
D. The
Company has engaged Xxxxx Xxxxxxx & Co. as its placement agent (the
“Placement
Agent”)
for
the offering of the Securities on a “best efforts” basis.
E. Contemporaneous
with the sale of the Shares and the Warrants, the parties hereto will enter
into
a Registration Rights Agreement, in the form attached hereto as Exhibit
B
(the
“Registration
Rights Agreement”),
pursuant to which, among other things, the Company will agree to provide certain
registration rights under the Securities Act and applicable state securities
laws.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and the Purchasers hereby agree as
follows:
ARTICLE
I.
DEFINITIONS
1.1 Definitions.
In
addition to the terms defined elsewhere in this Agreement, for all purposes
of
this Agreement, the following terms shall have the meanings indicated in this
Section
1.1:
“Action”
means
any action, suit, inquiry, notice of violation, proceeding (including any
partial proceeding such as a deposition) or investigation pending or threatened
in writing against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental or
administrative agency, regulatory authority (federal, state, county, local
or
foreign), stock market, stock exchange or trading facility.
“Affiliate”
means,
with respect to any Person, any other Person that, directly or indirectly
through one or more intermediaries, Controls, is controlled by or is under
common control with such Person, as such terms are used in and construed under
Rule 144. With respect to a Purchaser, any investment fund or managed account
that is managed on a discretionary basis by the same investment manager as
such
Purchaser will be deemed to be an Affiliate of such Purchaser.
“Business
Day”
means
a
day, other than a Saturday or Sunday, on which banks in New York City are open
for the general transaction of business.
“Buy-In”
has
the
meaning set forth in Section
4.1(e).
“Buy-In
Price”
has
the
meaning set forth in Section
4.1(e).
“Cash
Placement Agent Fee”
means
the cash fee to be paid to the Placement Agent for services rendered to the
Company in connection with the offering of the Securities.
“Commission”
means
the United States Securities and Exchange Commission.
“Common
Stock”
has
the
meaning set forth in the Recitals, and also includes any securities into which
the Common Stock may hereafter be reclassified.
“Common
Stock Equivalents”
means
any securities of the Company or any Subsidiary which would entitle the holder
thereof to acquire at any time Common Stock, including without limitation,
any
debt, preferred stock, rights, options, warrants or other instrument that is
at
any time convertible into or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock or other securities that entitle the holder
to
receive, directly or indirectly, Common Stock.
“Company
Counsel”
means
Xxxxxxxx Xxxxxx.
“Company
Deliverables”
has
the
meaning set forth in Section
2.2(a).
“Company’s
Knowledge”
means
with respect to any statement made to the knowledge of a party, that the
statement is based upon the actual knowledge of the officers of such party
having responsibility for the matter or matters that are the subject of the
statement, after due inquiry and investigation.
2
“Control”
(including the terms “controlling”, “controlled by” or “under common control
with”) means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
“Disclosure
Materials”
has
the
meaning set forth in Section
3.1(h).
“Effective
Date”
means
the date on which the initial Registration Statement required by Section 2(a)
of
the Registration Rights Agreement is first declared effective by the
Commission.
“Effectiveness
Deadline”
means
the date on which the initial Registration Statement is required to be declared
effective by the Commission under the terms of the Registration Rights
Agreement.
“Environmental
Laws”
has
the
meaning set forth in Section
3.1(l).
“Evaluation
Date”
has
the
meaning set forth in Section
3.1(v).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, or any successor statute,
and
the rules and regulations promulgated thereunder.
“GAAP”
means
U.S. generally accepted accounting principles, as applied by the
Company.
“Indemnified
Person”
has
the
meaning set forth in Section
4.7(b).
“Intellectual
Property”
has
the
meaning set forth in Section
3.1(r).
“Lien”
means
any lien, charge, claim, encumbrance, security interest, right of first refusal,
preemptive right or other restrictions of any kind.
“Losses”
has
the
meaning set forth in Section
4.7(a).
“Material
Adverse Effect”
means
any of (i) a material and adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material and adverse effect
on the results of operations, assets, business or financial condition of the
Company and the Subsidiaries, taken as a whole, or (iii) any material adverse
impairment to the Company's ability to perform on a timely basis its obligations
under any Transaction Document.
“Material
Contract”
means
any contract of the Company that was filed as an exhibit to the SEC Filings
pursuant to Item 601(b)(4) or Item 601(b)(10) of Regulation S-B.
“New
York Courts”
means
the state and federal courts sitting in the City of New York, Borough of
Manhattan.
“Outside
Date”
means
May 12, 2006.
3
“Person”
means
an individual, corporation, partnership, limited liability company, trust,
business trust, association, joint stock company, joint venture, sole
proprietorship, unincorporated organization, governmental authority or any
other
form of entity not specifically listed herein.
“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Purchaser
Deliverables”
has
the
meaning set forth in Section
2.2(b).
“Purchaser
Party”
has
the
meaning set forth in Section
4.7(a).
“Registration
Statement”
means
a
registration statement meeting the requirements set forth in the Registration
Rights Agreement and covering the resale by the Purchasers of the Registrable
Securities (as defined in the Registration Rights Agreement).
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“SEC
Reports”
has
the meaning set forth in Section
3.1(h).
“Secretary’s
Certificate”
has
the
meaning set forth in Section
2.2(a)(vi).
“Short
Sales”
include, without limitation, all “short sales” as defined in Rule 200
promulgated under Regulation SHO under the Exchange Act, whether or not against
the box, and all types of direct and indirect stock pledges, forward sale
contracts, options, puts, calls, short sales, swaps, “put equivalent positions”
(as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements
(including on a total return basis), and sales and other transactions through
non-US broker dealers or foreign regulated brokers.
“Subscription
Amount”
means,
with respect to each Purchaser, the Subscription Amount indicated on such
Purchaser’s signature page to this Agreement.
“Subsidiary”
means
any “significant subsidiary” as defined in Rule 1-02(w) of the Regulation S-X
promulgated by the Commission under the Exchange Act.
“Trading
Affiliate”
has
the
meaning set forth in Section
3.2(h).
“Trading
Day”
means
(i) a day on which the Common Stock is listed or quoted and traded on its
primary Trading Market (other than the OTC Bulletin Board), or (ii) if the
Common Stock is not listed on a Trading Market (other than the OTC Bulletin
Board), a day on which the Common Stock is traded in the over-the-counter
market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock
is
not quoted on any Trading Market, a day on which the Common Stock is quoted
in
the over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding to its functions
of reporting prices); provided,
that in
the event that the Common Stock is not listed or quoted as set forth in (i),
(ii) and (iii) hereof, then Trading Day shall mean a Business Day.
4
“Trading
Market”
means
whichever of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ National Market, the NASDAQ Capital Market or OTC Bulletin Board on
which
the Common Stock is listed or quoted for trading on the date in
question.
“Transaction
Documents”
means
this Agreement, the schedules and exhibits attached hereto, the Warrants, the
Registration Rights Agreement, the Transfer Agent Instructions and any other
documents or agreements executed in connection with the transactions
contemplated hereunder.
“Transfer
Agent”
means
Computershare Trust Company, Inc., or any successor transfer agent for the
Company.
“Transfer
Agent Instructions”
means,
with respect to the Company, the Transfer Agent Instructions, in the form of
Exhibit
E,
executed by the Company and delivered to and acknowledged in writing by the
Transfer Agent.
“Warrants”
has
the
meaning set forth in the Preamble to this Agreement. The Placement Agent and/or
its designees are also receiving placement agent warrants as compensation for
services rendered in connection with the transactions set forth herein, which
warrants shall also constitute “Warrants” for all purposes
hereunder.
ARTICLE
II.
PURCHASE
AND SALE
2.1 Closing.
Subject
to the terms and conditions set forth in this Agreement, at the Closing, the
Company shall issue and sell to each Purchaser, and each Purchaser shall,
severally and not jointly, purchase from the Company, such number of shares
of
Common Stock and a Warrant to purchase a number of Warrant Shares, each as
indicated below such Purchaser’s name on the signature page of this Agreement,
for an aggregate purchase price for such Purchaser as indicated below such
Purchaser’s name on the signature page of this Agreement. Upon confirmation that
the other conditions to closing specified herein have been satisfied or duly
waived by the Purchasers, the Company shall deliver to Xxxxxxxxxx Xxxxxxx PC
(“Placement
Agent Counsel”),
in
trust, a certificate or certificates, registered in such name or names as the
Purchasers may designate, representing the Shares and Warrants, with
instructions that such certificates are to be held for release to the Purchasers
only upon payment in full of the Purchase Price to the Company by all the
Purchasers. Upon such receipt by Placement Agent Counsel of the certificates,
each Purchaser shall promptly, but no more than one Business Day thereafter,
cause a wire transfer in same day funds to be sent to the account of the Company
as instructed in writing by the Company, in an amount representing the purchase
price for such Purchaser as indicated below such Purchaser’s name on the
signature page of this Agreement. On the date (the “Closing
Date”)
the
Company receives the Purchase Price, the certificates evidencing the Shares
and
Warrants shall be released to the Purchasers (the “Closing”).
The
Closing of the purchase and sale of the Shares and Warrants shall take place
at
the offices of Xxxxxxxxxx Xxxxxxx PC, 1251 Avenue of the Xxxxxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, or at such other location and on such other date
as
the Company and the Purchasers shall mutually agree.
2.2 Closing
Deliveries.
(a) At
the
Closing, the Company shall issue, deliver or cause to be delivered to each
Purchaser the following (the “Company
Deliverables”):
5
(i) This
Agreement, duly executed by the Company;
(ii) One
or
more stock certificates, free and clear of all restrictive and other legends
(except as expressly provided in Section
4.1(b)
hereof),
evidencing a number of Shares indicated below such Purchaser’s name on the
signature page of this Agreement, registered in the name of such
Purchaser;
(iii) a
Warrant, executed by the Company and registered in the name of such Purchaser,
pursuant to which such Purchaser shall have the right to acquire such number
of
Warrant Shares equal to 25.0% of the number of Shares issuable to such Purchaser
pursuant to Section
2.2(a)(ii)
on the
terms set forth therein;
(iv) a
legal
opinion of Company Counsel, in the form attached hereto as Exhibit
D,
executed by such counsel and addressed to the Purchasers and the Placement
Agent;
(v) the
Registration Rights Agreement, duly executed by the Company;
(vi) duly
executed Transfer Agent Instructions acknowledged in writing by the Transfer
Agent; and
(vii) a
certificate of the Secretary of the Company (the “Secretary’s
Certificate”),
dated
as of the Closing Date, certifying the resolutions adopted by the Board of
Directors of the Company approving the transactions contemplated by this
Agreement and the other Transaction Documents and the issuance of the
Securities, certifying the current versions of the articles of incorporation,
as
amended, and by-laws of the Company and certifying as to the signatures and
authority of persons signing the Transaction Documents and related documents
on
behalf of the Company.
(b) At
the
Closing, each Purchaser shall deliver or cause to be delivered to the Company
the following (the “Purchaser
Deliverables”):
(i) This
Agreement, duly executed by such Purchaser;
(ii) Its
Subscription Amount, in United States dollars and in immediately available
funds, in the amount set forth as the “Purchase Price” indicated below such
Purchaser’s name on the applicable signature page hereto;
(iii) the
Registration Rights Agreement, duly executed by such Purchaser;
(iv) a
fully
completed and duly executed Selling Stockholder Questionnaire in the form
attached as Annex B to the Registration Rights Agreement; and
(v) a
fully
completed and duly executed Accredited Investor Questionnaire and Stock
Certificate Questionnaire in the forms attached hereto as Exhibits
C-1
and
C-2
respectively.
(c) Allocation.
The
portion of the “Subscription Amount” attributable to the Shares is $4.925 per
share and the portion of the “Subscription Amount” attributable to each full
Warrant to purchase Shares of Common Stock is $0.30 per Warrant.
6
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES
3.1 Representations
and Warranties of the Company.
The
Company hereby represents and warrants to the Purchasers and to the Placement
Agent that, except as set forth in the Schedules delivered
herewith:
(a) Subsidiaries.
The
Company has no direct or indirect Subsidiaries other than those listed in
Schedule
3.1(a)
hereto.
Except as disclosed in Schedule
3.1(a),
the
Company owns, directly or indirectly, all of the capital stock or comparable
equity interests of each Subsidiary free and clear of any and all Liens, and
all
the issued and outstanding shares of capital stock or comparable equity interest
of each Subsidiary are validly issued and are fully paid, non-assessable and
free of preemptive and similar rights.
(b) Organization
and Qualification.
The
Company and each Subsidiary is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the
requisite power and authority to own or lease and use its properties and assets
and to carry on its business as currently conducted. Neither the Company nor
any
Subsidiary is in violation of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries is duly qualified
to
conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
reasonably be expected to, individually or in the aggregate, result in a
Material Adverse Effect.
(c) Authorization;
Enforcement.
The
Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by each of the Transaction Documents
to
which it is a party and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of each of the Transaction Documents
to
which it is a party by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including, but not limited to,
the
sale and delivery of the Shares and the Warrants and the subsequent issuance
of
the Warrant Shares upon exercise of the Warrants) have been duly authorized
by
all necessary corporate action on the part of the Company and no further
corporate action is required by the Company, its Board of Directors or its
stockholders. Each of the Transaction Documents to which it is a party has
been
(or upon delivery will have been) duly executed by the Company and is, or when
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws
relating to, or affecting generally the enforcement of, creditors’ rights and
remedies or by other equitable principles of general application. Except as
set
forth on Schedule
3.1(c),
there
are no stockholders agreements, voting agreements, or other similar arrangements
with respect to the Company’s capital stock to which the Company is a party or,
to the Company’s Knowledge, between or among any of the Company’s
stockholders.
(d) No
Conflicts.
The
execution, delivery and performance of the Transaction Documents to which it
is
a party by the Company and the consummation by the Company of the transactions
contemplated hereby or thereby do not and will not (i) conflict with or violate
any provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, (ii)
conflict with, or constitute a default (or an event that with notice or lapse
of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which
any
property or asset of the Company or any Subsidiary is bound, or affected, or
(iii) result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Company or a Subsidiary is subject (including federal and state
securities laws and regulations and the rules and regulations, assuming the
correctness of the representations and warranties made by the Purchasers herein,
of any self-regulatory organization to which the Company or its securities
are
subject, including all applicable Trading Markets), or by which any property
or
asset of the Company or a Subsidiary is bound or affected, except in the case
of
clauses (ii) and (iii) such as would not, individually or in the aggregate,
have
or reasonably be expected to result in a Material Adverse Effect.
7
(e) Filings,
Consents and Approvals.
Neither
the Company nor any Subsidiary is required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents (including
the issuance of the Securities), other than (i) the filing with the Commission
of one or more Registration Statements in accordance with the requirements
of
the Registration Rights Agreement, (ii) filings required by applicable state
securities laws, (iii) the filing of a Notice of Sale of Securities on Form
D
with the Commission under Regulation D of the Securities Act, (iv) the filing
of
any requisite notices and/or application(s) to each applicable Trading Market
for the issuance and sale of the Common Stock and the Warrants and the listing
of the Common Stock for trading or quotation, as the case may be, thereon in
the
time and manner required thereby, (v) the filings required in accordance with
Section
4.6
and (vi)
those that have been made or obtained prior to the date of this
Agreement.
(f) Issuance
of the Securities.
The
Shares and the Warrant Shares have been duly authorized and, when issued and
paid for in accordance with the terms of the Transaction Documents, will be
duly
and validly issued, fully paid and nonassessable, free and clear of all Liens
other than restrictions on transfer provided for in the Transaction Documents
or
imposed by applicable securities laws and shall not be subject to preemptive
or
similar rights of stockholders. Assuming the accuracy of the representations
and
warranties of the Purchasers, the Shares and the Warrant Shares will be issued
in compliance with all applicable federal and state securities laws. The Company
has reserved from its duly authorized capital stock the maximum number of shares
of Common Stock issuable upon exercise of the Warrants.
(g) Capitalization.
The
number of shares and type of all authorized, issued and outstanding capital
stock, options and other securities of the Company (whether or not presently
convertible into or exercisable or exchangeable for shares of capital stock
of
the Company) is set forth in Schedule
3.1(g).
All of
the outstanding shares of capital stock of the Company are duly authorized,
validly issued, fully paid and non-assessable, have been issued in compliance
in
all material respects with all applicable federal and state securities laws,
and
none of such outstanding shares was issued in violation of any preemptive rights
or similar rights to subscribe for or purchase any capital stock of the Company.
Except as specified in Schedule
3.1(g),
there
are no outstanding options, warrants or 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 the Company’s capital stock, or
contracts, commitments, understandings or arrangements by which the Company
or
any Subsidiary is or may become bound to issue additional shares of capital
stock of the Company, or options, securities or rights convertible or
exchangeable into shares of capital stock of the Company. Except for customary
adjustments as a result of stock dividends, stock splits, combination of shares,
reorganizations, recapitalizations, reclassifications or other similar events,
or as disclosed in Schedule
3.1(g)
or any
Schedule 13D or Schedule 13G or Company report on file with the Commission,
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) and the issuance and sale of the Securities will not, immediately
or
with the passage of time, obligate the Company to issue shares of Common Stock
or other securities to any Person (other than the Purchasers) and will not,
result in a right of any holder of securities to adjust the exercise,
conversion, exchange or reset price under such securities.
8
(h) SEC
Reports.
The
Company has filed all reports required to be filed by it under the Exchange
Act,
including pursuant to Section 13(a) or 15(d) thereof since July 8, 2005 (the
foregoing materials being collectively referred to herein as the “SEC
Reports”
and
together with this Agreement and the Schedules to this Agreement (if any),
the
“Disclosure
Materials”)
on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension. As
of
the date hereof, the Company is not aware of any event occurring on or prior
to
the Closing Date (other than the transactions contemplated by the Transaction
Documents) that requires the filing of a Form 8-K after the Closing. As of
their
respective dates, or to the extent corrected by a subsequent restatement, the
SEC Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(i) Financial
Statements. The
financial statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time
of
filing (or to the extent corrected by a subsequent restatement). Such financial
statements have been prepared in accordance with GAAP applied on a consistent
basis during the periods involved, except as may be otherwise specified in
such
financial statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, and fairly present
in
all material respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations
and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, year-end audit adjustments. All material agreements
to
which the Company or any Subsidiary is a party or to which the property or
assets of the Company or any Subsidiary are subject are included as part of
or
specifically identified in the SEC Reports.
9
(j) Tax
Matters.
Each of
the Company and its Subsidiaries (i) has accurately and timely prepared and
filed all foreign, federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject, (ii)
has
paid all material 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, with respect to which
adequate reserves have been set aside on the books of the Company and (iii)
has
set aside on its books provision 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.
(k) Material
Changes.
Since
the date of the latest audited financial statements included within the SEC
Reports, except as specifically disclosed in the SEC Reports or Schedule
3.1(k),
(i)
there have been no events, occurrences or developments that have had or that
could reasonably be expected to result, either individually or in the aggregate,
in a Material Adverse Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables, accrued expenses and
other liabilities incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company's
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting or the manner in which it keeps its accounting books and records,
(iv) the Company has not declared or made any dividend or distribution of cash
or other property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock (other than
in
connection with repurchases of unvested stock issued to employees of the
Company) and (v) the Company has not issued any equity securities to any
officer, director or Affiliate, except Common Stock issued in the ordinary
course as dividends on outstanding preferred stock and pursuant to existing
Company stock option or stock purchase plans or executive and director corporate
arrangements disclosed in the SEC Reports and (vi) there has not been any
material change or amendment to, or any waiver of any material right under,
any
contract under which the Company, any subsidiary thereof, or any of their assets
is bound or subject. The Company does not have pending before the Commission
any
request for confidential treatment of information.
(l) Environmental
Matters.
To the
Company’s Knowledge, neither the Company nor any Subsidiary (i) is in violation
of any statute, rule, regulation, decision or order of any governmental agency
or body or any court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances or relating to the protection or
restoration of the environment or human exposure to hazardous or toxic
substances (collectively, “Environmental
Laws”),
(ii)
owns or operates any real property contaminated with any substance that is
in
violation of any Environmental Laws, (iii) is liable for any off-site disposal
or contamination pursuant to any Environmental Laws, and (iv) is subject to
any
claim relating to any Environmental Laws; which violation, contamination,
liability or claim has had or could reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate; and there is no pending or,
to
the Company’s Knowledge, threatened investigation that might lead to such a
claim.
(m) Litigation.
There
is no Action which (i) adversely affects or challenges the legality, validity
or
enforceability of any of the Transaction Documents or the Securities or (ii)
except as specifically disclosed in the SEC Reports, could, if there were an
unfavorable decision, individually or in the aggregate, have or reasonably
be
expected to result in a Material Adverse Effect. Neither the Company nor any
Subsidiary, nor, to the Company’s Knowledge (based solely on officer and
director questionnaires requested and obtained by the Company in connection
with
this offering), any current director or officer thereof (in his or her capacity
thereof), is or has been during the five-year period prior to the Closing Date
the subject of any Action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary duty. There
has not been and to the Company’s Knowledge, there is not pending or
contemplated, any investigation by the Commission involving the Company or,
to
the Company’s Knowledge (based solely on officer and director questionnaires
requested and obtained by the Company in connection with this offering) any
current or former director or officer of the Company (in his or her capacity
as
such). Since July 8, 2005, the Commission has not issued any stop order or
other
order suspending the effectiveness of any registration statement filed by the
Company or any subsidiary under the Exchange Act or the Securities
Act.
10
(n) Employment
Matters.
The
Company and its Subsidiaries are in compliance with all federal, state, local
and foreign laws and regulations respecting labor, employment and employment
practices and benefits, terms and conditions of employment and wages and hours,
except where the failure to be in compliance would not, either individually
or
in the aggregate, reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries is a party to any collective
bargaining agreement. No executive officer of the Company or any of its
Subsidiaries (as defined in Rule 501(f) of the Securities Act) has notified
the
Company or any such Subsidiary that such officer intends to leave the Company
or
any such Subsidiary or otherwise terminate such officer’s employment with the
Company or any such Subsidiary.
(o) Compliance.
Neither
the Company nor any Subsidiary, except in each case as could not, individually
or in the aggregate, have or reasonably be expected to result in a Material
Adverse Effect, (i) is 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 the Company or any Subsidiary under), nor has
the
Company or any Subsidiary received notice of a claim that it is in default
under
or that it is in violation of, any indenture, loan or credit agreement or any
other agreement or instrument to which it is a party or by which it or any
of
its properties is bound (whether or not such default or violation has been
waived), (ii) is in violation of any order of any court, arbitrator or
governmental body having jurisdiction over the Company or its properties or
assets, or (iii) is or has been in violation of, or, to the Company’s Knowledge,
is in receipt of notice that it is in violation of, any statute, rule or
regulation of any governmental authority applicable to the Company.
(p) Regulatory
Permits.
The
Company and the Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in
the
SEC Reports, except where the failure to possess such permits, individually
or
in the aggregate, has not and could not reasonably be expected to result in
a
Material Adverse Effect, and, to the Company’s Knowledge, neither the Company
nor any Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such permits.
(q) Title
to Assets.
Except
for property that is specifically the subject of, and covered by, other
representations and warranties as to ownership or title contained herein, the
Company and the Subsidiaries have good and marketable title in fee simple to
all
real property owned by them that is material to their respective businesses
and
good and marketable title in all personal property owned by them that is
material to their respective businesses, in each case free and clear of all
Liens, except for Liens that do not, individually or in the aggregate, have
or
result in a Material Adverse Effect. Any real property and facilities held
under
lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases of which the Company and the Subsidiaries
are
in material compliance.
11
(r) Patents
and Trademarks.
The
Company and its Subsidiaries own, possess, license or have other rights to
use
all foreign and domestic patents, patent applications, trade and service marks,
trade and service xxxx registrations, trade names, copyrights, licenses,
inventions, trade secrets, technology, Internet domain names, know-how and
other
intellectual property (collectively, the “Intellectual
Property”)
necessary for and material to the conduct of their respective businesses as
now
conducted. Except as set forth in the SEC Reports and except where such
violations or infringements would not reasonably be expected to result, either
individually or in the aggregate, in a Material Adverse Effect, (a) there
are no rights of third parties to any such Intellectual Property; (b) to the
Company’s Knowledge, there is no infringement by third parties of any such
Intellectual Property; (c) there is no pending or, to the Company’s Knowledge,
threatened action, suit, proceeding or claim by others challenging the Company’s
and its Subsidiaries’ rights in or to any such Intellectual Property, and the
Company is unaware of any facts which would form a reasonable basis for any
such
claim; (d) there is no pending or, to the Company’s Knowledge, threatened
action, suit, proceeding or claim by others challenging the validity or scope
of
any such Intellectual Property; and (e) there is no pending or, to the Company’s
Knowledge, threatened action, suit, proceeding or claim by others that the
Company and/or any of its Subsidiaries infringe or otherwise violate any patent,
trademark, copyright, trade secret or other proprietary rights of others, and
the Company is unaware of any other fact which would form a reasonable basis
for
any such claim.
(s) Insurance.
The
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses and location in which the Company and the
Subsidiaries are engaged. Neither the Company nor any Subsidiary has any
knowledge that it will be unable to renew its existing insurance coverage for
the Company and the Subsidiaries as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business without a significant increase in cost.
(t) Transactions
With Affiliates and Employees.
Except
as set forth in the SEC Reports made on or prior to the date hereof, none of
the
officers or directors of the Company and, to the Company’s Knowledge, none of
the employees of the Company is presently a party to any transaction with the
Company or any Subsidiary or to a presently contemplated transaction (other
than
for services as employees, officers and directors) that would be required to
be
disclosed pursuant to Item 404 of Regulation S-B promulgated under the
Securities Act.
(u) Internal
Accounting Controls.
The
Company and the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with 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.
12
(v) Xxxxxxxx-Xxxxx;
Disclosure Controls.
The
Company is in compliance in all material respects with all of the applicable
provisions of the Xxxxxxxx-Xxxxx Act of 2002. The Company has established
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) for the Company and designed such disclosure controls and
procedures to ensure that material information relating to the Company is made
known to the certifying officers by others within those entities, particularly
during the period in which the Company’s most recently filed periodic report
under the Exchange Act, as the case may be, is being prepared. The Company's
certifying officers have evaluated the effectiveness of the Company's disclosure
controls and procedures as of the end of the most recent periodic reporting
period under the Exchange Act (such date, the “Evaluation
Date”).
The
Company presented in its most recently filed periodic report under the Exchange
Act the conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, except with respect to the
remediation of the material weakness in internal control over financial
reporting and the ineffectiveness of disclosure controls and procedures as
described in the SEC Filings, there have been no significant changes in the
Company's internal controls over financial reporting (as such term is defined
in
Exchange Act Rules 13a-15(f) and 15d-15(f)) or, to the Company's Knowledge,
in
other factors that could significantly affect the Company's internal controls
over financial reporting.
(w) Certain
Fees.
No
person
or entity will have, as a result of the transactions contemplated by this
Agreement, any valid right, interest or claim against or upon the Company or
a
Purchaser for any commission, fee or other compensation pursuant to any
agreement, arrangement or understanding entered into by or on behalf of the
Company, other than Xxxxx Xxxxxxx & Co. as placement agent with respect to
the offer and sale of the Securities (which placement agent fees are being
paid
by the Company).
(x) Private
Placement.
Assuming the accuracy of the Purchasers’ representations and warranties set
forth in Section
3.2(b)-(e),
no
registration under the Securities Act is required for the offer and sale of
the
Securities by the Company to the Purchasers under the Transaction Documents.
The
Company is eligible to register the Shares and the Warrant Shares for resale
by
the Purchasers using Form SB-2 promulgated under the Securities Act. Except
as
specified in Schedule
3.1(x),
the
Company has not granted or agreed to grant to any Person any rights (including
“piggy-back” registration rights) to have any securities of the Company
registered with the Commission or any other governmental authority that have
not
been satisfied or waived.
(y) No
Directed Selling Efforts or General Solicitation.
Neither
the Company, nor any of its Affiliates, nor any Person acting on its or their
behalf has conducted any “general solicitation” or “general advertising” (as
those terms are used in Regulation D) in connection with the offer or sale
of
any of the Securities.
(z) No
Integrated Offering.
Neither
the Company nor any of its Affiliates, nor any Person acting on its or their
behalf has, directly or indirectly, at any time within the past six months
made
any offers or sales of any Company security or solicited any offers to buy
any
security, under circumstances that would (i) eliminate the availability of
the
exemption from registration under Regulation D under the Securities Act in
connection with the offer and sale by the Company of the Securities as
contemplated hereby or (ii) cause the offering of the Securities pursuant to
the
Transaction Documents to be integrated with prior offerings by the Company
for
purposes of any applicable law, regulation or stockholder approval provisions,
including, without limitation, under the rules and regulations of any Trading
Market.
13
(aa) Listing
and Maintenance Requirements.
The
Company’s Common Stock is registered pursuant to Section 12(g) of the Exchange
Act, and the Company has taken no action designed to terminate the registration
of the Common Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such registration.
Except as specified in the SEC Reports, the Company has not, since July 8,
2005,
received written notice from any Trading Market on which the Common Stock has
been listed or quoted to the effect that the Company is not in compliance with
the listing or maintenance requirements of such Trading Market. To the Company’s
Knowledge, the Company is in compliance in all material respects with the
requirements for continued trading of the Common Stock on the Trading Market
on
which the Common Stock is currently quoted.
(bb) Investment
Company.
Neither
the Company nor any of its Subsidiaries is required to be registered as, and
is
not an Affiliate of, and immediately following the Closing will not be required
to register as, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.
(cc) Questionable
Payments. Neither
the Company nor any of its Subsidiaries, nor, to the Company’s Knowledge, any
directors, officers, employees, agents or other Persons acting on behalf of
the
Company or any of its Subsidiaries has, in the course of its actions for, or
on
behalf of, the Company: (a) used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to foreign or domestic
political activity; (b) made any direct or indirect unlawful payments to any
foreign or domestic governmental officials or employees from corporate funds;
(c) violated in any material respect any provision of the Foreign Corrupt
Practices Act of 1977, as amended or (d) made any other unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign
or
domestic government official or employee.
(dd) Application
of Takeover Protections.
There
is no control share acquisition, business combination, poison pill (including
any distribution under a rights agreement) or other similar anti-takeover
provision under the Company's charter documents or the laws of its state of
incorporation that is or could reasonably be expected to become applicable
to
any of the Purchasers as a result of the Purchasers and the Company fulfilling
their obligations or exercising their rights under the Transaction Documents,
including without limitation the Company's issuance of the Securities and the
Purchasers' ownership of the Securities.
(ee) Disclosure.
The
Company confirms that it and its officers and directors have not provided,
and
it has not authorized the Placement Agent to provide, any Purchaser with any
information that constitutes or might constitute material, non-public
information except insofar as the existence, provisions and terms of the
Transaction Documents and the proposed transactions hereunder may constitute
such information. The Company understands and confirms that the Purchasers
will
rely on the foregoing representations in effecting transactions in securities
of
the Company. All disclosure provided to the Purchasers regarding the Company,
its business and the transactions contemplated hereby, furnished by the Company
or authorized by the Company and furnished by the Placement Agent on behalf
of
the Company (including the Company’s representations and warranties set forth in
this Agreement) are true and correct in all material respects and do not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. No event or
circumstance has occurred or information exists with respect to the Company
nor
any of its Subsidiaries or its or their business, properties, 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, except for the announcement of this Agreement
and related transactions.
14
(ff) Off
Balance Sheet Arrangements.
There
is no transaction, arrangement, or other relationship between the Company and
an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its Exchange Act filings and is not so
disclosed.
(gg) Consultation
with Auditors.
The
Company has consulted its independent auditors concerning the accounting
treatment of the transactions contemplated by the Transaction Documents, and
in
connection therewith has furnished such auditors complete copies of the
Transaction Documents. The Company intends to account for the gross proceeds
raised from the financing which is the subject of this Agreement as equity
in
its financial statements.
3.2 Representations
and Warranties of the Purchasers.
Each
Purchaser hereby, for itself and for no other Purchaser, represents and warrants
to the Company and the Placement Agent as follows:
(a) Organization;
Authority.
Such
Purchaser is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with the requisite
corporate or partnership power and authority to enter into and to consummate
the
transactions contemplated by the applicable Transaction Documents and otherwise
to carry out its obligations hereunder and thereunder. The execution, delivery
and performance by such Purchaser of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate or, if such
Purchaser is not a corporation, such partnership, limited liability company
or
other applicable like action, on the part of such Purchaser. Each of this
Agreement and the Registration Rights Agreement has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with terms hereof,
will constitute the valid and legally binding obligation of such Purchaser,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.
(b) Investment
Intent.
Such
Purchaser understands that the Securities are “restricted securities” and have
not been registered under the Securities Act or any applicable state securities
law and is acquiring the Securities and, upon exercise of the Warrants will
acquire the Warrant Shares issuable upon exercise thereof, as principal for
its
own account for investment purposes only and not with a view to or for
distributing or reselling such Securities or any part thereof, without
prejudice, however, to such Purchaser's right, subject to the provisions of
this
Agreement and the Registration Rights Agreement, at all times to sell or
otherwise dispose of all or any part of such Securities or Warrant Shares
pursuant to an effective registration statement under the Securities Act or
under an exemption from such registration and in compliance with applicable
federal and state securities laws. Subject to the immediately preceding
sentence, nothing contained herein shall be deemed a representation or warranty
by such Purchaser to hold the Securities for any period of time. Such Purchaser
is acquiring the Securities hereunder in the ordinary course of its business.
Such Purchaser does not have any agreement, plan or understanding, directly
or
indirectly, with any Person to distribute any of the Securities.
15
(c) Purchaser
Status.
At the
time such Purchaser was offered the Securities, it was, and at the date hereof
it is, and on each date on which it exercises the Warrants it will be, an
“accredited investor” as defined in Rule 501(a) under the Securities Act. Such
Purchaser is not a registered broker-dealer under Section 15 of the Exchange
Act.
(d) General
Solicitation. Such
Purchaser is not purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities published in
any
newspaper, magazine or similar media or broadcast over television or radio
or
presented at any seminar or any other general solicitation or general
advertisement.
(e) Experience
of Such Purchaser.
Such
Purchaser, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters
so as
to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment.
Such Purchaser is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of such
investment.
(f) Access
to Information.
Such
Purchaser acknowledges that it reviewed the Disclosure Materials and has been
afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning
the
terms and conditions of the offering of the Securities and the merits and risks
of investing in the Securities; (ii) access to information (other than material
non-public information) about the Company and the Subsidiaries and their
respective financial condition, results of operations, business, properties,
management and prospects sufficient to enable it to evaluate its investment;
and
(iii) the opportunity to obtain such additional information that the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted by
or
on behalf of such Purchaser or its representatives or counsel shall modify,
amend or affect such Purchaser's right to rely on the truth, accuracy and
completeness of the Disclosure Materials and the Company's representations
and
warranties contained in the Transaction Documents.
(g) Residency.
Such
Purchaser has, if an entity, its principal place of business or, if an
individual, its primary residence in the jurisdiction set forth immediately
below such Purchaser’s name on the signature pages hereto.
(h) Certain
Trading Activities.
Other
than with respect to the transactions contemplated herein, since the earlier
to
occur of (1) the time that such Purchaser was first contacted by the Company,
the Placement Agent or any other Person regarding an investment in the Company
and (2) the tenth (10th)
day
prior to the date of this Agreement, neither the Purchaser nor any Affiliate
of
such Purchaser which (x) had knowledge of the transactions contemplated hereby,
(y) has or shares discretion relating to such Purchaser’s investments or trading
or information concerning such Purchaser’s investments, including in respect of
the Securities, or (z) is subject to such Purchaser’s review or input concerning
such Affiliate’s investments or trading (collectively, “Trading
Affiliates”)
has
directly or indirectly, nor has any Person acting on behalf of or pursuant
to
any understanding with such Purchaser or Trading Affiliate, effected or agreed
to effect any transactions in the securities of the Company (including, without
limitation, any Short Sales involving the Company’s securities). Such
Purchaser shall
not, and shall cause its Trading Affiliates not to, engage, directly or
indirectly, in any transactions in the securities of the Company (including,
without limitation, any Short Sales involving the Company’s securities) during
the period from the date hereof until such time as (i) the transactions
contemplated by this Agreement are first publicly announced as described in
Section 4.6 or (ii) this Agreement is terminated in full pursuant to Section
6.18. Each Purchaser understands and acknowledges, severally and not jointly
with any other Purchaser, that the Commission currently takes the position
that
covering a short position established prior to effectiveness of a resale
registration statement with shares included in such registration statement
would
be a violation of Section 5 of the Securities Act, as set forth in Item 65,
Section 5 under Section A, of the Manual of Publicly Available Telephone
Interpretations, dated July 1997, compiled by the Office of Chief Counsel,
Division of Corporation Finance. Except in compliance with the Securities Act
and the rules and regulations promulgated thereunder and applicable state
securities laws, the Purchaser will not engage in any Short Sales that result
in
the disposition of the Securities (including the Warrant Shares) acquired
hereunder by the Purchaser.
16
(i) Brokers
and Finders.
No
Person will have, as a result of the transactions contemplated by this
Agreement, any valid right, interest or claim against or upon the Company,
or
any Purchaser for any commission, fee or other compensation pursuant to any
agreement, arrangement or understanding entered into by or on behalf of the
Purchaser.
(j) Independent
Investment Decision.
Such
Purchaser has independently evaluated the merits of its decision to purchase
Securities pursuant to the Transaction Documents, and such Purchaser confirms
that it has not relied on the advice of any other Purchaser’s business and/or
legal counsel in making such decision. Such Purchaser understands that nothing
in this Agreement or any other materials presented by or on behalf of the
Company to the Purchaser in connection with the purchase of the Securities
constitutes legal, tax or investment advice. Such Purchaser has consulted such
legal, tax and investment advisors as it, in its sole discretion, has deemed
necessary or appropriate in connection with its purchase of the Securities.
Such
Purchaser understands that the Placement Agent has acted solely as the agent
of
the Company in this placement of the Securities and such Purchaser has not
relied on the business or legal advice of the Placement Agent or any of its
agents, counsel or Affiliates in making its investment decision hereunder,
and
confirms that none of such Persons has made any representations or warranties
to
such Purchaser in connection with the transactions contemplated by the
Transaction Documents.
The
Company acknowledges and agrees that no Purchaser has made or makes any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section
3.2.
17
ARTICLE
IV.
OTHER
AGREEMENTS OF THE PARTIES
4.1
(a) Compliance
with Laws.
Notwithstanding any other provision of this Article
IV,
each
Purchaser covenants that the securities may only be disposed of pursuant to
an
effective registration statement under, and in compliance with the requirements
of, the Securities Act, or pursuant to an available exemption from, or in a
transaction not subject to, the registration requirements of the Securities
Act,
and in compliance with any applicable state and federal securities laws. In
connection with any transfer of the Securities other than pursuant to an
effective registration statement, pursuant to Rule 144(k) or in connection
with
a pledge as contemplated in Section
4.1(b),
except
as otherwise provided herein, the transferor will provide to the Company, at
its
request, an opinion of counsel selected by the transferor, which counsel and
the
form and substance of which opinion shall be reasonably satisfactory to the
Company and its legal counsel, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act.
Notwithstanding the foregoing, the Company hereby consents to and agrees to
register on the books of the Company and with its transfer agent, without any
such legal opinion, except to the extent that the transfer agent requests such
legal opinion, any transfer of Securities by a Purchaser to an Affiliate of
such
Purchaser, provided that the transferee agrees to the terms and conditions
of
the Securities, certifies to the Company that it is an “accredited investor” as
defined in Rule 501(a) under the Securities Act and provided that such Affiliate
does not request any removal of any existing legends on any certificate
evidencing the Securities.
(b) Legends.
Certificates evidencing the Securities will contain the following legend, until
such time as they are not required under Section
4.1(c):
[NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
HAVE BEEN REGISTERED] [THESE SECURITIES HAVE NOT BEEN REGISTERED] WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.
The
Company acknowledges and agrees that a Purchaser may from time to time pledge,
and/or grant a security interest in some or all of the legended Securities,
in
connection with applicable securities laws, pursuant to a bona fide margin
agreement in compliance with a bona fide margin loan. Such a pledge would not
be
subject to approval or consent of the Company and no legal opinion of legal
counsel to the pledgee, secured party or pledgor shall be required in connection
with the pledge, but such legal opinion shall be required in connection with
a
subsequent transfer or foreclosure following default by the Purchaser transferee
of the pledge. No notice shall be required of such pledge but Purchaser’s
transferee shall promptly notify the Company of the pledge. Each Purchaser
acknowledges that the Company shall not be responsible for any pledges relating
to, or the grant of any security interest in, any of the Securities or for
any
agreement, understanding or arrangement between any Purchaser and its pledgee
or
secured party. The Company’s indemnification obligations pursuant to this
Agreement shall not extend to any Proceeding or Losses arising out of or related
to this Section
4.1(b).
18
(c) Removal
of Legends.
Certificates evidencing Securities shall not be required to contain such legend
or any other legend (i) while a registration statement (including the
Registration Statement) covering the resale of such Securities is effective
under the Securities Act, (ii) following any sale of such Securities pursuant
to
Rule 144 (assuming the transferor is not an affiliate of the Company), (iii)
if
such Securities are eligible for sale under Rule 144(k) (to the extent that
the
applicable Purchaser provides a certification or legal opinion to the Company
to
that effect), or (iv) if such legend is not required under applicable
requirements of the Securities Act (including controlling judicial
interpretations and pronouncements issued by the Commission). The Company shall
cause its counsel to issue the legal opinion referred to in the Transfer Agent
Instructions to the Company’s transfer agent on the Effective Date. Any fees
(with respect to the Transfer Agent, counsel to the Company or otherwise)
associated with the issuance of such opinion or the removal of such legend
shall
be borne by the Company. If any portion of the Warrant is exercised at a time
when there is an effective registration statement to cover the resale of the
Warrant Shares, or if such Warrant Shares may be sold under Rule 144(k), then
such Warrant Shares shall be issued free of all legends. Following the Effective
Date or at such earlier time as a legend is no longer required for certain
Securities, the Company will no later than three (3) Trading Days following
the
delivery by a Purchaser to the Company or the Transfer Agent (with notice to
the
Company) of (i) a legended certificate representing such Shares or Warrant
Shares (endorsed or with stock powers attached, signatures guaranteed, and
otherwise in form necessary to affect the reissuance and/or transfer) or (ii)
an
Exercise Notice in the manner stated in the Warrants to affect the exercise
of
such Warrant in accordance with its terms and an opinion of counsel to the
extent required by Section
4.1(a),
deliver
or cause to be delivered to such Purchaser a certificate representing such
Securities that is free from all restrictive and other legends. The Company
may
not make any notation on its records or give instructions to the Transfer Agent
that enlarge the restrictions on transfer set forth in this Section.
(d) Acknowledgement.
Each
Purchaser hereunder acknowledges its primary responsibilities under the
Securities Act and accordingly will not sell the Shares, the Warrant Shares
or
any interest therein without complying with the requirements of the Securities
Act. While the above-referenced registration statement remains effective, each
Purchaser hereunder may sell the shares in accordance with the plan of
distribution contained in the registration statement and if it does so it will
comply therewith and with the related prospectus delivery requirements. To
provide further assurance in connection with de-legending, each Purchaser
hereunder commits that it will continue to hold the shares in its own name,
and
not in the name of a nominee, until such time as the shares are duly and
properly sold in compliance with all relevant securities laws. Both the Company
and its transfer agent, and their respective directors, officers, employees
and
agents, may rely on this subsection (d) and each Purchaser hereunder will
indemnify and hold harmless each of such persons from any breaches or violations
of this paragraph.
(e) Buy-In.
If
within three (3) Trading Days after the Company’s receipt of a legended
certificate representing such Securities (the “Delivery
Date”),
the
Company shall fail to issue and deliver to such Purchaser a certificate
representing such Securities that is free from all restrictive and other
legends, and if on or after such Delivery Date the Purchaser purchases (in
an
open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Purchaser of shares of Common Stock that the
Purchaser anticipated receiving from the Company without any restrictive legend
(a “Buy-In”),
then
the Company shall, within three (3) Trading Days after the Purchaser’s request
and in the Purchaser’s sole discretion, either (i) pay cash to the Purchaser in
an amount equal to the Purchaser’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased (the
“Buy-In
Price”),
at
which point the Company’s obligation to deliver such certificate shall terminate
and such shares shall be cancelled, or (ii) promptly honor its obligation to
deliver to the Purchaser a certificate or certificates representing such number
of shares of Common Stock that would have been issued if the Company timely
complied with its obligations hereunder and pay cash to the Purchaser in an
amount equal to the excess (if any) of the Buy-In Price over the product of
(a)
such number of shares of Common Stock that the Company was required to deliver
to the Purchaser on the Delivery Date, times (b) the closing bid price of the
Common Stock on the Delivery Date.
19
4.2 Reservation
of Common Stock.
The
Company shall maintain a reserve from its duly authorized shares of Common
Stock
for issuance pursuant to the Transaction Documents in such amount as may be
required to fulfill its obligations in full under the Transaction Documents.
In
the event that at any time the then authorized shares of Common Stock are
insufficient for the Company to satisfy its obligations in full under the
Transaction Documents, the Company shall promptly take such actions as may
be
required to increase the number of authorized shares.
4.3 Furnishing
of Information.
As long
as any Purchaser owns the Securities, the Company covenants to timely file
(or
obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act. As long as any Purchaser owns Securities, if
the
Company is not required to file reports pursuant to such laws, it will prepare
and furnish to the Purchasers and make publicly available in accordance with
Rule 144(c) such information as is required for the Purchasers to sell the
Shares and Warrant Shares under Rule 144. The Company further covenants that
it
will take such further action as any holder of Securities may reasonably
request, all to the extent required from time to time to enable such Person
to
sell the Shares and Warrant Shares without registration under the Securities
Act
within the limitation of the exemptions provided by Rule 144.
4.4 No
Integration.
The
Company shall not, and shall use its best efforts to ensure that no Affiliate
of
the Company shall, sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that will be integrated with the offer or sale of the Securities in a
manner that would require the registration under the Securities Act of the
sale
of the Securities to the Purchasers, or that will be integrated with the offer
or sale of the Securities for purposes of the rules and regulations of any
Trading Market.
4.5 Subsequent
Registrations.
Other
than pursuant to the Registration Statement and those certain Registration
Rights Agreements between the Company and certain investors party thereto,
dated
July 8, 2005, the Company shall not file any registration statement (other
than
on Form S-8) with the Commission with respect to any securities of the
Company.
4.6 Securities
Laws Disclosure; Publicity.
By 9:00
a.m. (New York City time) on the Trading Day immediately following the execution
of this Agreement and by 9:00 a.m. (New York City time) on the Trading Day
following the Closing Date, the Company shall issue press releases disclosing
the transactions contemplated hereby and the Closing. On the Trading Day
following the execution of this Agreement, the Company will file a Current
Report on Form 8-K with the Commission describing the material terms of the
Transaction Documents (and including as exhibits to such Current Report on
Form
8-K the Transaction Documents), and on the Trading Day following the Closing
Date, the Company will file an additional Current Report on Form 8-K to disclose
the Closing. Thereafter, the Company shall timely file any filings and notices
required by the Commission and the Trading Market on which the Common Stock
is
listed. Notwithstanding the foregoing, the Company shall not publicly disclose
the name of any Purchaser, or include the name of any Purchaser in any press
release or filing with the Commission (other than the Registration Statement)
or
any regulatory agency or Trading Market, without the prior written consent
of
such Purchaser, except to the extent such disclosure is required by law, request
of the Staff of the Commission or Trading Market regulations.
20
4.7 Indemnification.
(a) Indemnification
of Purchasers.
In
addition to the indemnity provided in the Registration Rights Agreement, the
Company will indemnify and hold the Purchasers and their directors, officers,
shareholders, partners, members, managers, employees and agents (each, a
“Purchaser
Party”)
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys' fees and costs of
investigation (collectively, “Losses”)
that
any such Purchaser Party may suffer or incur as a result of or relating to
any
misrepresentation, breach or inaccuracy of any representation, warranty,
covenant or agreement made by the Company in any Transaction Document. In
addition to the indemnity contained herein, the Company will reimburse each
Purchaser Party for its reasonable legal and other expenses (including the
cost
of any investigation, preparation and travel in connection therewith) incurred
in connection therewith, as such expenses are incurred. If and to the extent
that such indemnification is unenforceable for any reason, the Company shall
make the maximum contribution to the payment and satisfaction of such losses
permissible under applicable law.
(b) Conduct
of Indemnification Proceedings.
Promptly
after receipt by any Person (the “Indemnified
Person”)
of
notice of any demand, claim or circumstances which would or might give rise
to a
claim or the commencement of any action, proceeding or investigation in respect
of which indemnity may be sought pursuant to Section
4.7(a),
such
Indemnified Person shall promptly notify the Company in writing and the Company
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Person, and shall assume the payment of all
fees and expenses; provided,
however, that
the
failure of any Indemnified Person so to notify the Company shall not relieve
the
Company of its obligations hereunder except to the extent that the Company
is
actually and materially prejudiced by such failure to notify. In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense
of
such Indemnified Person unless: (i) the Company and the Indemnified Person
shall
have mutually agreed to the retention of such counsel, or (ii) in the reasonable
judgment of counsel to such Indemnified Person representation of both parties
by
the same counsel would be inappropriate due to actual or potential differing
interests between them. The Company shall not be liable for any settlement
of
any proceeding effected without its written consent, which consent shall not
be
unreasonably withheld, delayed or conditions, but if settled without such
consent, or if there be a final judgment for the plaintiff, the Company shall
indemnify and hold harmless such Indemnified Person from and against any Losses
by reason of such settlement or judgment. Without the prior written consent
of
the Indemnified Person, the Company shall not effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person
is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Party, unless such settlement includes an unconditional release
of such Indemnified Person from all liability arising out of such
proceeding.
21
4.8 Non-Public
Information.
The
Company covenants and agrees that it and its officers and directors have not
provided, and it has not authorized the Placement Agent to provide any Purchaser
with any information that the Company believes constitutes material non-public
information (other than the contemplated Transaction Documents and the
transactions contemplated thereby), unless prior thereto such Purchaser shall
have executed a written agreement regarding the confidentiality and use of
such
information. Notwithstanding the foregoing, if the Company provides
(inadvertently or otherwise) material non-public information to a Purchaser,
other than in accordance with the immediately preceding sentence, the Company
shall promptly take corrective action by disclosing such material non-public
information in a Current Report on Form 8-K. The Company understands and
confirms that each Purchaser shall be relying on the foregoing representations
in effecting transactions in securities of the Company.
4.9 Listing
of Securities.
If the
Company applies to have its Common Stock or other securities listed on any
Trading Market, it shall include in such application the Shares, the Warrant
Shares and the shares of Common Stock issuable upon exercise of the Placement
Agent Warrants and will take such other action as is necessary to cause the
Shares and the Warrant Shares (including the shares of Common Stock issuable
upon exercise of the warrants issued to the Placement Agent) to be listed on
such Trading Market as promptly as practicable. The Company will use
commercially reasonable efforts to continue the listing and trading of its
Common Stock on a Trading Market and, in accordance, therewith, will use
commercially reasonable efforts to comply in all respects with the Company’s
reporting, filing and other obligations applicable to issuers whose securities
are listed on such Trading Market.
4.10 Use
of
Proceeds.
The
Company intends to use the net proceeds from the sale of the Securities
hereunder for working capital and general corporate purposes and not for the
satisfaction of any portion of the Company’s debt (other than payment of trade
payables and accrued expenses in the ordinary course of the Company’s business
and consistent with prior practices), or to redeem any Common Stock or Common
Stock Equivalents or to settle any outstanding Action.
ARTICLE
V.
CONDITIONS
PRECEDENT TO CLOSING
5.1 Conditions
Precedent to the Obligations of the Purchasers to Purchase
Securities.
The
obligation of each Purchaser to acquire Securities at the Closing is subject
to
the fulfillment to such Purchase’s satisfaction, on or prior to the Closing
Date, of each of the following conditions, any of which may be waived by such
Purchaser (as to itself only):
(a) Representations
and Warranties.
The
representations and warranties of the Company contained herein shall be true
and
correct in all material respects (except to the extent that any such
representation or warranty is already qualified by materiality, in which case
it
shall be true and correct in all respects) as of the date when made and as
of
the Closing Date, as though made on and as of such date;
22
(b) Performance.
The
Company and each other Purchaser shall have performed, satisfied and complied
in
all material respects with all covenants, agreements and conditions required
by
the Transaction Documents to be performed, satisfied or complied with by it
at
or prior to the Closing;
(c) No
Injunction.
No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any
of
the transactions contemplated by the Transaction Documents;
(d) Consents. The
Company shall have obtained in a timely fashion any and all consents, permits,
approvals, registrations and waivers necessary or appropriate for consummation
of the purchase and sale of the Securities, all of which shall be and remain
so
long as necessary in full force and effect;
(e) Adverse
Changes.
Since
the date of execution of this Agreement, no event or series of events shall
have
occurred that reasonably could have or result in a Material Adverse Effect;
(f) No
Suspensions of Trading in Common Stock; Listing.
Trading
in the Common Stock shall not have been suspended by the Commission or any
Trading Market (except for any suspensions of trading of not more than one
Trading Day solely to permit dissemination of material information regarding
the
Company) at any time since the date of execution of this Agreement, and the
Common Stock shall have been at all times since such date listed for trading
on
a Trading Market;
(g) Company
Deliverables.
The
Company shall have delivered the Company Deliverables in accordance with
Section
2.2(a);
(h) Compliance
Certificate.
The
Company shall have delivered to each Purchaser a certificate, dated as of the
Closing Date and signed by its Chief Executive Officer or its Chief Financial
Officer, dated as of the Closing Date, certifying to the fulfillment of the
conditions specified in Sections
5.1(a),
(b),
(c),
(d)
and
(f);
and
(i) Termination. This
Agreement shall not have been terminated as to such Purchaser in accordance
with
Section
6.18
herein.
5.2 Conditions
Precedent to the Obligations of the Company to sell Securities.
The
Company's obligation to sell and issue the Securities at the Closing is subject
to the fulfillment to the satisfaction of the Company on or prior to the Closing
Date of the following conditions, any of which may be waived by the
Company:
(a) Representations
and Warranties.
The
representations and warranties made by the Purchasers in Section
3.2
hereof
shall be true and correct in all material respects as of the date when made,
and
as of the Closing Date as though made on and as of such date;
23
(b) Performance.
The
Purchasers shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Purchasers at
or
prior to the Closing;
(c) No
Injunction.
No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any
of
the transactions contemplated by the Transaction Documents;
(d) Purchasers
Deliverables.
Each
Purchaser shall have delivered its Purchaser Deliverables in accordance with
Section
2.2(b);
and
(e) Termination. This
Agreement shall not have been terminated as to such Purchaser in accordance
with
Section
6.18
herein.
ARTICLE
VI.
MISCELLANEOUS
6.1 Fees
and Expenses.
At
Closing, the Company shall reimburse the Placement Agent for the reasonable
fees
and expenses in connection with the transactions contemplated by this Agreement,
which the Company agrees shall include the reasonable fees and expenses of
the
Placement Agent Counsel (which fees shall include, without limitation, the
fees
and expenses associated with the negotiation, preparation and execution and
delivery of this Agreement and the other Transaction Documents and any
amendments, modifications or waivers thereto), subject to the consent of the
Company for fees and expenses in excess of Fifty Thousand Dollars ($50,000),
which consent shall not be unreasonably withheld. Except as set forth above,
the
Company and the Purchasers shall each pay the fees and expenses of their
respective advisers, counsel, accountants and other experts, if any and all
other expenses incurred by such party in connection with the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied
in connection with the sale and issuance of the Securities. Each party
acknowledges that Xxxxxxxxxx Xxxxxxx PC has rendered legal advice to the
Placement Agent, and not to such party in connection with the transactions
contemplated hereby, and that such party has relied for such matters on the
advice of its own respective counsel.
6.2 Entire
Agreement.
The
Transaction Documents, together with the Exhibits and Schedules thereto, contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements, understandings, discussions and
representations, oral or written, with respect to such matters, which the
parties acknowledge have been merged into such documents, exhibits and
schedules. At or after the Closing, and without further consideration, the
Company and the Purchasers will execute and deliver to the other such further
documents as may be reasonably requested in order to give practical effect
to
the intention of the parties under the Transaction Documents.
6.3 Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile (provided the sender receives a machine-generated
confirmation of successful transmission) at the facsimile number specified
in
this Section prior to 5:00 p.m. (New York City time) on a Trading Day, (b)
the
next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified in this Section
on
a day that is not a Trading Day or later than 5:00 p.m. (New York City time)
on
any Trading Day, (c) the Trading Day following the date of mailing, if sent
by
U.S. nationally recognized overnight courier service, or (d) upon actual receipt
by the party to whom such notice is required to be given. The address for such
notices and communications shall be as follows:
24
|
If
to the Company:
|
HydroGen
Corporation
|
|
|
00
Xxxx 00xx
Xxxxxx
|
||
|
Xxxx
0000
|
||
|
Xxx
Xxxx, Xxx Xxxx 00000
|
||
|
Telephone
No.: (000) 000-0000
|
||
|
Facsimile
No.: (000) 000-0000
|
||
|
Attention:
Chief Executive Officer
|
||
|
With
a copy to:
|
Xxxxxxxx
Xxxxxx
|
|
|
The
Chrysler Building
|
||
|
000
Xxxxxxxxx Xxxxxx
|
||
|
00xx
Xxxxx
|
||
|
Xxx
Xxxx, Xxx Xxxx 00000-0000
|
||
|
Telephone
No.: 000-000-0000
|
||
|
Facsimile
No.: (000) 000-0000
|
||
|
Attention:
Xxxxxx Xxxxxxx, Esq.
|
||
|
If
to a Purchaser:
|
To
the address set forth under such Purchaser’s name on the signature page
hereof;
|
or
such
other address as may be designated in writing hereafter, in the same manner,
by
such Person.
6.4 Amendments;
Waivers; No Additional Consideration.
No
provision of this Agreement may be waived or amended except in a written
instrument signed, in the case of an amendment, by the Company and each of
the
Purchasers or, in the case of a waiver, by the party against whom enforcement
of
any such waiver is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be
a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right. No consideration shall be offered or
paid
to any Purchaser to amend or consent to a waiver or modification of any
provision of any Transaction Document unless the same consideration is also
offered to all Purchasers who then hold Securities.
6.5 Construction.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. 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. 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 or any of the Transaction
Documents.
25
6.6 Successors
and Assigns.
The
provisions of this Agreement shall inure to the benefit of and be binding upon
the parties and their successors and permitted assigns. This Agreement, or
any
rights or obligations hereunder, may not be assigned by the Company without
the
prior written consent of the Purchasers. Any Purchaser may assign its rights
hereunder in whole or in part to any Person to whom such Purchaser assigns
or
transfers any Securities in compliance with this agreement and applicable law,
provided such transferee shall agree in writing to be bound, with respect to
the
transferred Securities, by the terms and conditions of this Agreement that
apply
to the “Purchasers”.
6.7 No
Third-Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except (i) each Purchaser
Party is an intended third party beneficiary of Section
4.7,
and
(ii) Placement Agent is an intended third party beneficiary of Article III
hereof, and each Purchaser Party or the Placement Agent, as the case may be,
may
enforce the provisions of such Sections directly against the parties with
obligations thereunder
6.8 Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all Proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether
brought against a party hereto or its respective Affiliates, employees or
agents) shall be commenced exclusively in the New York Courts. Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the New York Courts
for the adjudication of any dispute hereunder or in connection herewith or
with
any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of the any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any Proceeding, any claim that
it is not personally subject to the jurisdiction of any such New York Court,
or
that such Proceeding has been commenced in an improper or inconvenient forum.
Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any such Proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence
of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Each party hereto hereby irrevocably waives, to the fullest extent permitted
by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby. If either party shall commence a Proceeding to enforce any provisions
of
a Transaction Document, then the prevailing party in such Proceeding shall
be
reimbursed by the other party for its reasonable attorney’s fees and other costs
and expenses incurred with the investigation, preparation and prosecution of
such Proceeding.
26
6.9 Survival.
Subject
to applicable statute of limitations, the representations, warranties,
agreements and covenants contained herein shall survive the Closing and the
delivery of the Securities.
6.10 Execution.
This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to
the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of
the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original
thereof.
6.11 Severability.
If any
provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and
the
parties will attempt to agree upon a valid and enforceable provision that is
a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
6.12 Rescission
and Withdrawal Right. Notwithstanding
anything to the contrary contained in (and without limiting any similar
provisions of) the Transaction Documents, whenever any Purchaser exercises
a
right, election, demand or option under a Transaction Document and the Company
does not timely perform its related obligations within the periods therein
provided, then such Purchaser may rescind or withdraw, in its sole discretion
from time to time upon written notice to the Company, any relevant notice,
demand or election in whole or in part without prejudice to its future actions
and rights
6.13 Replacement
of Securities.
If any
certificate or instrument evidencing any Securities is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
the execution by the holder thereof of a customary lost certificate affidavit
of
that fact and an agreement to indemnify and hold harmless the Company for any
losses in connection therewith. The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement Securities. If a
replacement certificate or instrument evidencing any Securities is requested
due
to a mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.
6.14 Remedies.
In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, each of the Purchasers and the Company
will
be entitled to specific performance under the Transaction Documents. The parties
agree that monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance
of
any such obligation (other than in connection with any action for a temporary
restraining order) the defense that a remedy at law would be
adequate.
27
6.15 Payment
Set Aside.
To the
extent that the Company makes a payment or payments to any Purchaser pursuant
to
any Transaction Document or a Purchaser enforces or exercises its rights
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 under any law (including, without limitation,
any
bankruptcy law, 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.
6.16 Adjustments
in Share Numbers and Prices.
In the
event of any stock split, subdivision, dividend or distribution payable in
shares of Common Stock (or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly shares of Common
Stock), combination or other similar recapitalization or event occurring after
the date hereof, each reference in any Transaction Document to a number of
shares or a price per share shall be amended to appropriately account for such
event.
6.17 Independent
Nature of Purchasers' Obligations and Rights.
The
obligations of each Purchaser under any Transaction Document are several and
not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. The decision of each Purchaser to
purchase Securities pursuant to the Transaction Documents has been made by
such
Purchaser independently of any other Purchaser and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or any Subsidiary which
may
have been made or given by any other Purchaser or by any agent or employee
of
any other Purchaser, and no Purchaser and any of its agents or employees shall
have any liability to any other Purchaser (or any other Person) relating to
or
arising from any such information, materials, statement or opinions. Nothing
contained herein or in any Transaction Document, and no action taken by any
Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as
a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or
as
a group with respect to such obligations or the transactions contemplated by
the
Transaction Documents. Each Purchaser acknowledges that no other Purchaser
has
acted as agent for such Purchaser in connection with making its investment
hereunder and that no Purchaser will be acting as agent of such Purchaser in
connection with monitoring its investment in the Securities or enforcing its
rights under the Transaction Documents. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation
the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose. The Company acknowledges
that each of the Purchasers has been provided with the same Transaction
Documents for the purpose of closing a transaction with multiple Purchasers
and
not because it was required or requested to do so by any Purchaser. The
Company’s obligations to each Purchaser under this Agreement are identical to
its obligations to each other Purchaser other than such differences resulting
solely from the number of Securities purchased by such Purchaser, but regardless
of whether such obligations are memorialized herein or in another agreement
between the Company and a Purchaser.
28
6.18 Termination.
This
Agreement may be terminated and the sale and purchase of the Shares and the
Warrants abandoned at any time prior to the Closing by either the Company or
any
Purchaser (with respect to itself only) upon written notice to the other, if
the
Closing has not been consummated on or prior to 5:00 p.m. (New York City time)
on the Outside Date; provided,
however,
that
the right to terminate this Agreement under this Section
6.18
shall
not be available to any Person whose failure to comply with its obligations
under this Agreement has been the cause of or resulted in the failure of the
Closing to occur on or before such time. Nothing in this Section
6.18
shall be
deemed to release any party from any liability for any breach by such party
of
the terms and provisions of this Agreement or the other Transaction Documents
or
to impair the right of any party to compel specific performance by any other
party of its obligations under this Agreement or the other Transaction
Documents. In the event of a termination pursuant to this Section, the Company
shall promptly notify all non-terminating Purchasers. Upon a termination in
accordance with this Section, the Company and the terminating Purchaser(s)
shall
not have any further obligation or liability (including arising from such
termination) to the other and no Purchaser will have any liability to any other
Purchaser under the Transaction Documents as a result
therefrom.
29
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
|
HYDROGEN
CORPORATION
|
|
|
By:_______________________________________
Name:
Title:
|
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE
PAGES FOR PURCHASERS FOLLOW]
|
NAME
OF PURCHASER: ____________________________
|
|
|
By:________________________________
Name:
|
|
|
Title:
|
|
|
Purchase
Price (Subscription Amount): $____________
Number
of Shares to be acquired: _________________
Underlying
Shares subject to Warrant: _____________
(25.0%
of the number of Shares to be acquired)
Tax
ID No.: ____________________
|
|
|
Address
for Notice:
|
|
|
__________________________________
__________________________________
__________________________________
Telephone
No.: _______________________
Facsimile
No.: ________________________
Attention:
_______________________
|
Delivery
Instructions:
(if
different than above)
c/o
_______________________________
Street:
____________________________
City/State/Zip:
______________________
Attention:
__________________________
Telephone
No.: ____________________________
EXHIBITS:
| A: |
Form
of Warrant
|
| B: |
Form
of Registration Rights Agreement
|
| C-1: |
Accredited
Investor Questionnaire
|
| C-2: |
Stock
Certificate Questionnaire
|
| D: |
Form
of Opinion of Company Counsel
|
| E: |
Transfer
Agent Instructions
|
| F: |
Wire
Instructions
|
SCHEDULES:
3.1(a)
Subsidiaries
3.1(c)
Authorization; Enforcement
3.1(g)
Capitalization
3.1(k)
Material Changes
3.1(q)
Title to Assets
3.1(x)
Registration Rights
EXHIBIT
A
Form
of
Warrant
EXHIBIT
B
Form
of
Registration Rights Agreement
Instruction
Sheet for Exhibits C thru F
(to
be
read in conjunction with the entire Securities Purchase Agreement and
Registration Rights Agreement)
| A. |
Complete
the following items in the Securities Purchase Agreement and/or
Registration Rights
Agreement:
|
| 1. |
Provide
the information regarding the Purchaser requested on the signature
page.
The
Securities Purchase Agreement must be executed by an individual authorized
to
bind the Purchaser.
|
| 2. |
Exhibit
C-1
-
Accredited Investor Questionnaire:
|
Provide
the information requested by Exhibit
C-1-1
(the
Certificate for Corporations, Partnerships, Trusts, Foundations, Joint
Purchasers (other than married couples) and Other Entities) or Exhibit
C-1-2
(the
Certificate for Individuals (including married couples)), as
applicable.
| 3. |
Exhibit
C-2
-
Stock Certificate Questionnaire:
|
Provide
the information requested by the Stock Certificate Questionnaire.
| 4. |
Annex
B
to
the Registration Rights Agreement-Selling
Securityholder Notice and
Questionnaire
|
Provide
the information requested by the Selling Securityholder Notice and
Questionnaire.
| 5. |
Return
the signed Securities Purchase Agreement and Registration Rights
Agreement
to:
|
Xxxx
X.
Xxxxx
Xxxxx
Xxxxxxx & Co.
The
Chrysler Building
000
Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Tel:
(000) 000-0000
Fax:
(000) 000-0000
Email:
xxxx.x.xxxxx@xxx.xxx
|
B.
|
Instructions
regarding the transfer of funds for the purchase of Securities is
set
forth on Exhibit
F
to
the Securities Purchase Agreement.
|
|
C.
|
Upon
the resale of the Registrable Shares by the Purchaser after the
Registration Statement covering the Registrable Shares is effective,
as
described in the Securities Purchase Agreement, the Purchaser:
|
|
1.
|
must
confirm that a current prospectus is deemed to be delivered to such
buyer
in accordance with Rule 172; and
|
| 2. |
must
send a letter to the Company so that the Registrable Shares may be
properly transferred.
|
EXHIBIT
C-1
Accredited
Investor Questionnaire
Note
to Purchasers:
For
Corporations, Partnerships, Trusts, Foundations, Joint Purchasers (other than
married couples) and Other Entities, please provide the information requested
by
Exhibit
C-1-1.
For
Individuals (including married couples), please provide the information
requested by Exhibit
C-1-2.
EXHIBIT
C-1-1
Corporations,
Partnerships, Trusts, Foundations,
Joint
Purchasers (other than married couples) and Other Entities
If
the
Purchaser is a corporation, partnership, trust, pension plan, foundation, joint
purchaser (other than a married couple) or other entity, an authorized officer,
partner, or trustee must complete, date and sign this Certificate.
CERTIFICATE
The
undersigned certifies that the representations and responses below are true
and
accurate:
(a)
The
Purchaser has been duly formed and is validly existing and has full power and
authority to invest in the Company. The person signing on behalf of the
undersigned has the authority to execute and deliver the Securities Purchase
Agreement on behalf of the Purchaser and to take other actions with respect
thereto.
(b) Indicate
the form of entity of the undersigned:
__
Limited
Partnership
__
General
Partnership
__
Corporation
|
__
|
Revocable
Trust (identify each grantor and indicate under what circumstances
the
trust is revocable by the grantor:
|
(Continue
on a separate piece of paper, if necessary.)
|
__
|
Other
Type of Trust (indicate type of trust and, for trusts other than
pension
trusts, name the grantors and beneficiaries:
|
(Continue
on a separate piece of paper, if necessary.)
__
Other
form of organization (indicate form of organization
( )).
(c)
Indicate
the approximate date the undersigned entity was formed:
(d)
In
order
for the Company to offer and sell the Securities in conformance with state
and
federal securities laws, the following information must be obtained regarding
your investor status. Please initial
each category applicable
to you as a Purchaser of Securities of the Company.
|
__
(1)
|
A
bank as defined in Section 3(a)(2) of the Securities Act, or any
savings
and loan association or other institution as defined in Section 3(a)(5)(A)
of the Securities Act whether acting in its individual or fiduciary
capacity;
|
|
__
(2)
|
A
broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934;
|
|
__
(3)
|
An
insurance company as defined in Section 2(13) of the Securities Act;
|
|
__
(4)
|
An
investment company registered under the Investment Company Act of
1940 or
a business development company as defined in Section 2(a)(48) of
that Act;
|
|
__
(5)
|
A
Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958;
|
|
__
(6)
|
A
plan established and maintained by a state, its political subdivisions,
or
any agency or instrumentality of a state or its political subdivisions,
for the benefit of its employees, if such plan has total assets in
excess
of $5,000,000;
|
|
__
(7)
|
An
employee benefit plan within the meaning of the Employee Retirement
Income
Security Act of 1974, if the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of such act, which is either
a
bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets
in
excess of $5,000,000 or, if a self-directed plan, with investment
decisions made solely by persons that are accredited investors;
|
|
__
(8)
|
A
private business development company as defined in Section 202(a)(22)
of
the Investment Advisers Act of
1940;
|
|
__
(9)
|
An
organization described in Section 501(c)(3) of the Internal Revenue
Code,
a corporation, Massachusetts or similar business trust, or partnership,
not formed for the specific purpose of acquiring the Securities,
with
total assets in excess of $5,000,000;
|
| __ (10) |
A
trust, with total assets in excess of $5,000,000, not formed for
the
specific purpose of acquiring the Securities, whose purchase is directed
by a sophisticated person who has such knowledge and experience in
financial and business matters that such person is capable of evaluating
the merits and risks of investing in the
Company;
|
| __ (11) |
An
entity in which all of the equity owners qualify under any of the
above
subparagraphs. If the undersigned belongs to this investor category
only,
list the equity owners of the undersigned, and the investor category
which
each such equity owner satisfies.
|
(Continue
on a separate piece of paper, if necessary.)
Dated:
,
2006
Name
of
Purchaser
Signature
and title of authorized officer, partner or trustee
EXHIBIT
C-1-2
Individuals
(including married couples)
If
the
Purchaser is an Individual (or married couple) the Purchaser must complete,
date
and sign this Certificate.
CERTIFICATE
I
certify
that the representations and responses below are true and accurate:
(a) In
order
for the Company to offer and sell the Securities in conformance with state
and
federal securities laws, the following information must be obtained regarding
your investor status. Please initial
each category
applicable to you as a Purchaser of Securities of the Company.
___ (1) A
natural
person whose individual net worth, or joint net worth with that person’s spouse,
at the time of his purchase exceeds $1,000,000;
___ (2) A
natural
person who had an individual income in excess of $200,000 in each of the two
most recent years, or joint income with that person’s spouse in excess of
$300,000, in each of those years, and has a reasonable expectation of reaching
the same income level in the current year;
___ (3) An
executive officer or director of the Company.
(b) Set
forth
in the space provided below the state(s), if any, in the U.S. in which you
maintained your residence during the past two years and the dates during which
you resided in each state:
_______________________________________________________________
____________________________________________________________________________________________________
____________________________________________________________________________________________________
_______________________________________________________________________________________________.
Dated:
,
2006
Name(s)
of Purchaser _________________________________________
Signature
__________________________________________________
Signature
__________________________________________________
EXHIBIT
C-2
Stock
Certificate Questionnaire
Pursuant
to Section 2.2(b) of the Agreement, please provide us with the following
information:
|
1.
|
The
exact name that the Shares are to be registered in (this is the name
that
will appear on the stock certificate(s)). You may use a nominee name
if
appropriate:
|
||
|
2.
|
The
relationship between the Purchaser of the Shares and the Registered
Holder
listed in response to Item 1 above:
|
||
|
3.
|
The
mailing address, telephone and telecopy number of the Registered
Holder
listed in response to Item 1 above:
|
||
|
4.
|
The
Tax Identification Number of the Registered Holder listed in response
to
Item 1 above:
|
EXHIBIT
D
Form
of
Opinion of Company Counsel
EXHIBIT
E
Transfer
Agent Instructions
As
of
_________, ____
Computershare
Trust Company, Inc.
000
Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx,
XX 00000
Attn:
_________________
Ladies
and Gentlemen:
Reference
is made to that certain Securities Purchase Agreement, dated as of May 2, 2006
(the “Agreement”),
by
and among HydroGen Corporation, a Nevada corporation (the “Company”),
and
the purchasers named on the signature pages thereto (collectively, the
“Holders”),
pursuant to which the Company is issuing to the Holders shares (the
“Shares”)
of
Common Stock of the Company, par value $0.001 per share (the “Common
Stock”),
and
warrants (the “Warrants”),
which
are exercisable into shares of Common Stock.
This
letter shall serve as our irrevocable authorization and direction to you
(provided that you are the transfer agent of the Company at such time):
(i) to
issue
shares of Common Stock upon transfer or resale of the Shares; and
(ii) to
issue
shares of Common Stock upon the exercise of the Warrants (the “Warrant
Shares”)
to or
upon the order of a Holder from time to time upon delivery to you of a properly
completed and duly executed Exercise Notice, in the form attached hereto as
Annex I,
which
has been acknowledged by the Company as indicated by the signature of a duly
authorized officer of the Company thereon together with indication of receipt
of
the exercise price therefor.
You
acknowledge and agree that so long as you have previously received
(a) written confirmation from the Company’s legal counsel that either
(1) a registration statement covering resales of the Shares and the Warrant
Shares has been declared effective by the Securities and Exchange Commission
(the “Commission”)
under
the Securities Act of 1933, as amended (the “Securities
Act”),
or
(2) sales of the Shares and the Warrant Shares may be made in conformity
with Rule 144(k) under the Securities Act (“Rule 144”)
and
(b) if applicable, a copy of such registration statement, then, unless
otherwise required by law, within three (3) business days of your receipt
of the notice referred to in (ii) above, you shall issue the certificates
representing the Shares and the Warrant Shares so sold to the transferees
registered in the names of such transferees, and such certificates shall not
bear any legend restricting transfer of the Shares and the Warrant Shares
thereby and should not be subject to any stop-transfer restriction.
A
form of
written confirmation (to be used in connection with any sale) from the Company’s
outside legal counsel that a registration statement covering resales of the
Shares and the Warrant Shares has been declared effective by the Commission
under the Securities Act is attached hereto as Annex II.
Please
be
advised that the Holders are relying upon this letter as an inducement to enter
into the Agreement and, accordingly, each Holder is a third party beneficiary
to
these instructions.
Please
execute this letter in the space indicated to acknowledge your agreement to
act
in accordance with these instructions.
|
Very
truly yours,
|
|
|
HYDROGEN
CORPORATION
|
|
|
By:
__________________________________
|
|
|
Name:
________________________________
|
|
|
Title:
_________________________________
|
Acknowledged
and Agreed:
COMPUTERSHARE
TRUST COMPANY, INC.
By:
__________________________________
Name:
________________________________
Title:
_________________________________
Date:
_________________, 2006
Annex
I
Form
of
Exercise Notice
(To
be
executed by the Holder to exercise the right to purchase shares
of
Common
Stock under the foregoing Warrants)
To:
HydroGen
Corporation
(1) The
undersigned hereby elects to purchase _________ shares of Common Stock pursuant
to the above-referenced Warrant. Capitalized terms used herein and not otherwise
defined herein have the respective meanings set forth in the Warrant.
(2) The
Holder intends that payment of the Exercise Price shall be made as (check
one):
Cash
Exercise under Section 10
Cashless
Exercise under Section 10
(3) If
the
Holder has elected a Cash Exercise, the holder shall pay the sum of $_______
to
the Company in accordance with the terms of the Warrant.
(4) Pursuant
to this Exercise Notice, the Company shall deliver to the Holder _____________
Warrant Shares in accordance with the terms of the Warrant.
(5) By
its
delivery of this Exercise Notice, the undersigned represents and warrants to
the
Company that in giving effect to the exercise evidenced hereby the Holder will
not beneficially own in excess of the number of shares of Common Stock (as
determined in accordance with Section 13(d) of the Securities Exchange Act
of
1934) permitted to be owned under Section 11 of this Warrant to which this
notice relates.
Dated:_______________,
_____
Name
of
Holder: ___________________________
By:__________________________________
Name:
_______________________________
Title:
________________________________
(Signature
must conform in all respects to name of Holder as specified on the face of
the
Warrant)
Acknowledgement
The
Company hereby acknowledges this Exercise Notice and receipt of the appropriate
exercise price and hereby directs Computershare Trust Company, Inc. to issue
the
above indicated number of shares of Common Stock in accordance with the Transfer
Agent Instructions dated __________, 2006, from the Company and acknowledged
and
agreed to by Computershare Trust Company, Inc.
|
HYDROGEN
CORPORATION
|
|
|
By:
__________________________________
|
|
|
Name:
________________________________
|
|
|
Title:
_________________________________
|
Annex
II
Form
of
Notice of Effectiveness of Registration Statement
|
|
|
|
|
Computershare
Trust Company, Inc.
000
Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx,
XX 00000
Attn:
_________________
|
||
|
|
|
|
|
|
Re:
HydroGen
Corporation
|
|
Ladies
and Gentlemen:
We
are
counsel to HydroGen Corporation, a Nevada corporation (the “Company”),
and
have represented the Company in connection with that certain Securities Purchase
Agreement, dated as of May 2, 2006, entered into by and among the Company and
the buyers named therein (collectively, the “Purchasers”)
pursuant to which the Company issued to the Purchasers shares of the Company’s
Common Stock, par value $0.001 per share (the “Common
Stock”)
and
warrants exercisable for shares of Common Stock (the “Warrants”).
Pursuant to that certain Registration Rights Agreement of even date, the Company
agreed to register the resale of the Common Stock, including the shares of
Common Stock issuable upon exercise of the Warrants (collectively, the
“Registrable
Securities”)
under
the Securities Act of 1933, as amended (the “Securities
Act”).
In
connection with the Company’s obligations under the Registration Rights
Agreement, on ,
2006,
the Company filed a Registration Statement on Form SB-2 (File
No. 333- )
(the
“Registration
Statement”)
with
the Securities and Exchange Commission (the “Commission”)
relating to the Registrable Securities which names each of the Purchasers as
a
selling stockholder thereunder.
In
connection with the foregoing, we advise you that a member of the Commission’s
staff has advised us by telephone that the Commission has entered an order
declaring the Registration Statement effective under the Securities Act at
____
[a.m.][p.m.] on __________, 2006, and we have no knowledge, after telephonic
inquiry of a member of the staff, that any stop order suspending its
effectiveness has been issued or that any proceedings for that purpose are
pending before, or threatened by, the Commission and the Registrable Securities
are available for resale under the Securities Act pursuant to the Registration
Statement.
This
letter shall serve as our standing notice to you that the Common Stock may
be
freely transferred by the Purchasers pursuant to the Registration Statement
so
long as the Holders certify they have complied with the plan of distribution
description in connection with their sales or transfer of the Common Stock
set
forth in the Registration Statement and with the prospectus delivery
requirements of the Securities Act. You need not require further letters from
us
to effect any future legend-free issuance or reissuance of shares of Common
Stock to the transferees of the Purchasers as contemplated by the Company’s
Transfer Agent Instructions dated __________, 2006. This letter shall serve
as
our standing instructions with regard to this matter.
|
|
|
|
|
|
|
|
|
Very
truly yours,
|
||
|
|
|
|
|
|
|
|
|
Xxxxxxxx
Xxxxxx
|
||
|
|
|
|
|
|
|
|
|
By:
________________________________
|
||
EXHIBIT
F
Wire
Instructions
Schedule
3.1(a)
Subsidiaries
HydroGen,
LLC, an Ohio Limited Liability Company.
Schedule
3.1(c)
Authorization;
Enforcement
Voting
Agreement between Company and Xxxxxxx Reverse Merger Fund, LLC, dated July
7,
2005
Schedule
3.1(g)
Capitalization
|
Common
stock, par value $0.001
|
||||
|
Shares
authorized
|
65,000,000
|
|||
|
Issued
and outstanding
|
7,614,904
|
|||
|
Series
B convertible preferred stock, par $0.001, authorized
|
||||
|
10,000,000
shares, no shares issued or outstanding
|
||||
|
Equity
compensation plans approved by security holders:
|
||||
|
Maximum
stock-based awards permitted under the plan
|
1,100,000
|
|||
|
Number
of Stock Options Outstanding
|
247,735
|
|||
|
Amount
available for future grants
|
852,265
|
|||
|
Equity
compensation plans not approved by security holders:
|
||||
|
Stock
options granted prior to the above plan’s approval
|
342,345
|
|||
Schedule
3.1(k)
Material
Changes
None.
Schedule
3.1(q)
Title
to
Assets
The
Company owns no real property assets, and leases all of its facilities.
Schedule
3.1(x)
Registration
Rights
|
1.
|
Registration
rights agreement dated July 7, 2005, between Company and Security
Management Company, LLC provides for registration of securities acquired
by their funds in the private placement consummated of even date.
The same
registration rights were granted to the investors in HydroGen LLC
which
was consummated of even date. The rights require the Company to register
the shares acquired in the investments within a certain time period
which
was met, and to maintain the currency and effectiveness of such
registration statement. In the event the Company does not maintain
that
currency and effectiveness, the investors have piggyback registration
rights on any subsequent registration statement of the
Company.
|
|
2.
|
In
connection with two capital raising transactions by HydroGen LLC,
the
Company is obliged to provide piggy back registration rights to investors
who acquired $100,000 or more of securities in the transactions.
The
Company has registered these securities, however, the piggy back
right
continues with respect to future registration statements if the initial
registration statement is not current or effective for some
reason.
|
