Exhibit 10.1
FINAL
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is dated as of
February 10, 2005, among Synova Healthcare Group, Inc. (formerly known as
Advanced Global Industries Corporation), a Nevada corporation (the "Company"),
and each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a "Purchaser" and collectively the "Purchasers").
BACKGROUND
A. On January 13, 2005, the Company, Synova Healthcare, Inc., a
Delaware corporation ("Synova") and Synova AGBL Merger Sub, Inc., a Delaware
corporation and wholly owned subsidiary of the Company ("Merger Sub"), entered
into an Agreement and Plan of Merger (the "Merger Agreement") providing, among
other things, for the merger (the "Merger") of Synova with and into Merger Sub,
with Synova surviving the Merger.
B. The consummation of the Merger is subject, among other things,
to the receipt by the Company of commitments hereunder to purchase equity in the
Company in an aggregate amount of at least $3,000,000; provided, that Synova may
waive this condition if equity financing commitments of at least $2,000,000 in
the aggregate are received by the Company.
C. Subject to the terms and conditions set forth in this Agreement,
and pursuant to Section 4(2) of the Securities Act (as defined below), Rule 506
promulgated thereunder, and/or Regulation S (defined below), the Company desires
to issue and sell to each Purchaser, and each Purchaser, severally and not
jointly, desires to purchase from the Company, in the aggregate, up to seventy
(70) units (the "Units") at a price of $50,000 per Unit. Each Unit consists of
(i) 50,000 shares of Common Stock and (ii) a Warrant to purchase 40,000 shares
of Common Stock for $2.00 per share.
D. This Agreement (and the information provided herein) assumes,
and the consummation of the transactions contemplated herein is subject to, the
consummation of the Merger.
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 each Purchaser agrees
as follows with the intent to be legally bound:
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 have the
meanings indicated in this Section 1.1:
"Action" shall have the meaning ascribed to such term in
Section 3.1(j).
"Affiliate" means, with respect to any Person, any Person that,
directly or indirectly through one or more intermediaries, controls or 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.
"Closing" means the consummation of the purchase and sale of the
Units pursuant to Section 2.1.
"Closing Date" means the Trading Day when all of the Transaction
Documents have been executed and delivered by the applicable parties thereto,
and all conditions precedent to (i) the Purchasers' obligations to pay the
Subscription Amount and (ii) the Company's obligations to deliver the Securities
have been satisfied or waived.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock of the Company, par value
$.001 per share, and any securities into which such common stock may hereafter
be reclassified.
"Common Stock Equivalents" means any securities of the Company
or the Subsidiaries 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.
"Disclosure Schedules" means the Disclosure Schedules of the
Company attached hereto as Exhibit A.
"Effective Date" means the date that the Registration Statement
is first declared effective by the Commission.
"Escrow Agent" shall have the meaning set forth in the Escrow
Agreement.
"Escrow Agreement" shall mean the Escrow Agreement among Blank
Rome LLP, the Company, Synova, Rubin, Balin, Ortoli, Mayer & Xxxxx LLP, and the
Purchasers, which Escrow Agreement is in substantially the form of Exhibit B
hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exempt Issuance" means the issuance of (a) shares of Common
Stock or Common Stock Equivalents to employees, officers or directors of the
Company pursuant to any equity incentive plan in effect on the date hereof or
duly adopted by a majority of the non-employee members of the Board of Directors
of the Company or a majority of the members of a committee of non-employee
directors established for such purpose, (b) securities upon the exercise or
conversion of any securities issued hereunder or convertible securities, options
or warrants issued and outstanding on the date of this Agreement, provided that
such securities have not been amended since the date of this Agreement to
increase the number of such securities, and (c) securities issued pursuant to
acquisitions or strategic transactions approved by the Board of Directors of the
Company.
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"Indemnification Agreement" means that certain Indemnification
Agreement dated the date hereof among the Company, Synova, G. M. Capital
Partners, Ltd. and Oceana Partners LLC.
"Intellectual Property Rights" shall have the meaning ascribed
to such term in Section 3.1(o).
"Liens" means a lien, charge, security interest, encumbrance,
right of first refusal, preemptive right or other similar restriction.
"Material Adverse Effect" shall have the meaning ascribed to
such term in Section 3.1(b).
"Material Permits" shall have the meaning ascribed to such term
in Section 3.1(m).
"Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
"Placement Agents" means Oceana Partners LLC and G. M. Capital
Partners, Ltd.
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition).
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of this Agreement, among the Company and each
Purchaser, in substantially the form of Exhibit C hereto.
"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 Shares and the Warrant Shares.
"Regulation S" means Regulation S promulgated under the
Securities Act.
"Required Approvals" shall have the meaning ascribed to such
term in Section 3.1(e).
"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.
"Securities" means the Shares, the Warrants and the Warrant
Shares.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means the shares of Common Stock issued or issuable to
each Purchaser pursuant to this Agreement.
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"Subscription Amount" means, as to each Purchaser, the amounts
set forth below such Purchaser's signature block on the signature page hereto,
in United States dollars and in immediately available funds.
"Subsidiary" shall mean each of the subsidiaries of the Company
set forth on Schedule 3.1(a).
"Trading Day" means a day on which the Common Stock is traded on
a Trading Market. If the Common Stock is not listed or quoted for trading on any
Trading Market on the date in question, then Trading Day shall mean business
day.
"Trading Market" means the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the date in question:
the Nasdaq SmallCap Market, the American Stock Exchange, the New York Stock
Exchange, the Nasdaq National Market or the OTC Bulletin Board.
"Transaction Documents" means this Agreement, the Warrants, the
Escrow Agreement, the Registration Rights Agreement and any other documents or
agreements executed in connection with the transactions contemplated hereunder.
"Warrants" means the Common Stock Purchase Warrants described in
Section 2.2(a)(iii) and in substantially the form attached hereto as Exhibit D.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.
ARTICLE II
PURCHASE AND SALE
2.1 Closing. On the Closing Date, each Purchaser shall purchase from
the Company, severally and not jointly with the other Purchasers, and the
Company shall issue and sell to each Purchaser, the Units set forth under each
Purchaser's name on the signature pages hereto. The aggregate Subscription
Amounts for Units sold hereunder shall be up to $3,500,000. Promptly (but no
later than five (5) Trading Days) after satisfaction of the conditions set forth
in Section 2.2 and 2.3, the Closing shall occur at the offices of the Escrow
Agent or such other location as the parties shall mutually agree.
2.2 Deliveries.
(a) On the Closing Date, the Company shall deliver or cause
to be delivered to each Purchaser the following:
(i) this Agreement duly executed by the Company;
(ii) a certificate evidencing 50,000 Shares of Common
Stock registered in the name of such Purchaser for each Unit purchased by such
Purchaser;
(iii) a Warrant, registered in the name of such
Purchaser, exercisable immediately upon issuance for a term of 5 years after
issuance, pursuant to which such Purchaser
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shall have the right to acquire, for each Unit purchased by such Purchaser,
40,000 shares of Common Stock at an exercise price of two dollars ($2.00) per
share, subject to adjustment as provided therein; and
(iv) the Registration Rights Agreement duly executed
by the Company.
(b) On the Closing Date, each Purchaser shall deliver, or
cause to be delivered by the Escrow Agent, to the Company the following:
(i) this Agreement duly executed by such Purchaser;
(ii) such Purchaser's Subscription Amount by wire
transfer to the account of the Company; and
(iii) the Escrow Agreement and the Registration Rights
Agreement duly executed by such Purchaser.
2.3 Closing Conditions.
(a) The obligations of the Company hereunder in connection
with the Closing are subject to the following conditions being met:
(i) the accuracy in all material respects when made
and on the Closing Date of the representations and warranties of the Purchasers
contained herein;
(ii) all obligations, covenants and agreements of the
Purchasers required to be performed at or prior to the Closing Date shall have
been performed;
(iii) the delivery by the Purchasers of the items set
forth in Section 2.2(b) of this Agreement;
(iv) the Company shall have received an executed copy
of the Indemnification Agreement; and
(v) the consummation of the Merger (which is subject
to receipt by Synova of a Fund Balance Notice (as defined in the Escrow
Agreement) indicating an aggregate of $3,000,000 in Subscription Amounts from
the Purchasers hereunder; provided, however, that Synova may waive this
condition under the Merger Agreement if it receives a Fund Balance Notice
indicating an aggregate of at least $2,000,000 in Subscription Amounts from the
Purchasers hereunder.
(b) The respective obligations of the Purchasers hereunder
in connection with the Closing are subject to the following conditions being
met:
(i) the accuracy in all material respects on the
Closing Date of the representations and warranties of the Company contained
herein;
(ii) all obligations, covenants and agreements of the
Company required to be performed at or prior to the Closing Date shall have been
performed;
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(iii) the consummation of the Merger
(iv) the delivery of a customary legal opinion from
Rubin, Bailin, Ortoli, Mayer and Xxxxx LLP; and
(v) the delivery by the Company of the items set
forth in Section 2.2(a) of this Agreement.
2.4 Irrevocable Commitments. Prior to the Closing Date, the
Purchasers will be delivering (i) executed signature pages to this Agreement and
the other Transaction Documents to the Placement Agents (who will deliver such
signature pages to the Company) and (ii) their respective Subscription Amounts,
by wire transfer to the account provided below, to the Escrow Agent to be held
and disbursed in the manner provided in the Escrow Agreement. Each Purchaser
acknowledges and agrees that, subject to applicable law, their commitments to
purchase Units hereunder will be irrevocable upon delivery of their Subscription
Amounts (and signature pages to the Transaction Documents) as provided above,
and the Subscription Amounts will only be returned to the Purchasers (if ever)
in the manner described in the Escrow Agreement. All Subscription Amounts should
be delivered by the Purchasers to the Escrow Agent by wire transfer to the
following account:
Wire Transfer to: PNC Bank, N.A.
Philadelphia, PA
ABA #000000000
Credit: Blank Rome LLP Escrow Account
Account #0000000000
Reference: Synova
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. Except as set
forth under the corresponding section of the Disclosure Schedules, which
Disclosure Schedules shall be deemed a part hereof, the Company hereby makes the
representations and warranties set forth below to each Purchaser.
Notwithstanding anything contained herein or in any other Transaction Documents
to the contrary, the representations and warranties of the Company below assume
the consummation of the Merger and the giving effect thereto.
(a) Subsidiaries. All of the direct and indirect
subsidiaries of the Company are set forth on Schedule 3.1(a). The Company owns,
directly or indirectly, all of the capital stock or other equity interests of
each Subsidiary free and clear of any Liens, and all the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to subscribe for
or purchase securities.
(b) Organization and Qualification. Each of the Company and
the Subsidiaries 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 and use its properties and assets and to carry on its business
as currently conducted. Neither the Company nor any Subsidiary is in violation
or
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default 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 its 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 result in (i)
a material adverse effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business or financial condition of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company's ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a
"Material Adverse Effect"), and no Proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.
(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 and otherwise to
carry out its obligations thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary
action on the part of the Company and no further corporate authorization is
required by the Company in connection therewith, other than in connection with
the Required Approvals. Each Transaction Document has been (or upon delivery
will have been) duly executed by the Company and, when delivered in accordance
with the terms hereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms except (i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
(d) No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company, the issuance and sale of the Units and
the consummation by the Company of the other transactions contemplated 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, or (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 material agreement, credit facility, debt or other instrument (evidencing a
Company or Subsidiary debt or otherwise) or other agreement to which the Company
or any Subsidiary is a party or by which any material property or material asset
of the Company or any Subsidiary is bound, or (iii) subject to the Required
Approvals, conflict with or 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, or by
which any material property or material asset of the Company or a Subsidiary is
bound, except, in each case, as could not reasonably be expected to result in a
Material Adverse Effect.
(e) Filings, Consents and Approvals. The Company is not
required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal,
state, local or other governmental authority or other
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Person in connection with the execution, delivery and performance by the Company
of the Transaction Documents, other than (i) the filing with the Commission of
the Registration Statement (and any documents related thereto), (ii)
application(s) to each applicable Trading Market for the listing of the Shares
and Warrant Shares for trading thereon in the time and manner required by the
Registration Rights Agreement, and (iii) the filing of Form D with the
Commission and such filings as are required to be made under applicable state
securities laws (collectively, the "Required Approvals").
(f) Issuance of the Securities. The Shares and Warrants are
duly authorized and, when issued and paid for in accordance with the Transaction
Documents, will be validly issued, fully paid and nonassessable, free and clear
of all Liens, other than restrictions provided for in the Transaction Documents
and applicable securities laws. The Warrant Shares, when issued in accordance
with the terms of the Transaction Documents, will be validly issued, fully paid
and nonassessable, free and clear of all Liens imposed by the Company other than
restrictions provided for in the Transaction Documents and applicable securities
laws. The Company has reserved from its duly authorized capital stock the
maximum number of shares of Common Stock issuable pursuant to this Agreement and
the Warrants.
(g) Capitalization. The capitalization of the Company is as
described in Schedule 3.1(g). No Person has any right of first refusal,
preemptive right, right of participation, or any similar right to participate in
the transactions contemplated by the Transaction Documents. Except as (i) set
forth on Schedule 3.1(g), (ii) contemplated by the Transaction Documents, or
(iii) a result of the purchase and sale of the Securities, there are no
outstanding options, warrants, script 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 Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common Stock.
The issue and sale of the Securities will not obligate the Company to issue
shares of Common Stock or other securities to any Person (other than the
Purchasers and their designees) and will not result in a right of any holder of
Company securities to adjust the exercise, conversion, exchange or reset price
under such securities. Except as set forth on Schedule 3.1(g), there are no
stockholders agreements, voting agreements or other similar agreements with
respect to the Company's capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company's
stockholders.
(h) Litigation. Except as set forth on Schedule 3.1(h),
there is no action, suit, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against the Company, any
Subsidiary or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county or foreign) (collectively, an "Action") which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) would, if there were an
unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect.
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(i) Labor Relations. No material labor dispute exists or, to
the knowledge of the Company, is imminent with respect to any of the employees
of the Company that could reasonably be expected to result in a Material Adverse
Effect.
(j) Compliance. To the Company's knowledge, neither the
Company nor any Subsidiary (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 material indenture, loan or
credit agreement or any other material agreement or instrument to which it is a
party or by which it or any of its properties is bound, (ii) is in violation of
any order of any court, arbitrator or governmental body, or (iii) is in
violation of any statute, rule or regulation of any governmental authority,
including without limitation all foreign, federal and state laws applicable to
its business, except, in each case as would not have a Material Adverse Effect.
(k) Regulatory Permits. The Company and the Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities (including but not
limited to the FDA) necessary to conduct their respective businesses, except
where the failure to possess such permits would not have, or reasonably be
expected to result in, a Material Adverse Effect ("Material Permits"), and
neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.
(l) Title to Assets. The Company and the Subsidiaries have
good title in fee simple to all real property owned by them that is material to
the business of the Company and the Subsidiaries and good title in all personal
property owned by them that is material to the business of the Company and the
Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as
do not materially affect the value of such property and do not materially
interfere with the use made of such property by the Company and the Subsidiaries
and (ii) Liens for the payment of federal, state or other taxes, the payment of
which is neither delinquent nor subject to penalties. The Company and the
Subsidiaries are in substantial compliance with all leases covering real
property or facilities leased by them.
(m) Patents and Trademarks. The Company and the Subsidiaries
have, or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses and
other similar rights necessary for use in connection with their respective
businesses and which the failure to so have would have a Material Adverse Effect
(collectively, the "Intellectual Property Rights"). Neither the Company nor any
Subsidiary has received a written notice that the Intellectual Property Rights
used by the Company or any Subsidiary violates or infringes upon the rights of
any Person. To the knowledge of the Company, all such Intellectual Property
Rights are enforceable and there is no existing infringement by another Person
of any of the Intellectual Property Rights of the Company.
(n) 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 in which the
Company and the Subsidiaries are engaged. Neither the Company nor any Subsidiary
has any reason to believe that it will not be
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able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business without a significant increase in cost.
(o) Transactions With Affiliates and Employees. Except as
set forth on Schedule 3.1(o), none of the officers or directors of the Company
is presently a party to any transaction with the Company or any Subsidiary
(other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any officer or director or, to the
knowledge of the Company, any entity in which any officer or director has a
substantial interest or is an officer, director, trustee or partner, in each
case in excess of $60,000 other than (i) for payment of salary or consulting
fees for services rendered, (ii) reimbursement for expenses incurred on behalf
of the Company or any Subsidiary and (iii) for other employee benefits,
including stock option agreements under any stock option plan of the Company or
a Subsidiary.
(p) Certain Fees. Except to the Persons set forth on
Schedule 3.1(p), no brokerage or finder's fees or commissions are or will be
payable by the Company to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by this Agreement. The Purchasers shall have no direct
obligation with respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section that may
be due in connection with the transactions contemplated by this Agreement.
(q) Private Placement. Assuming the accuracy of the
Purchasers representations and warranties set forth in Section 3.2, no
registration under Section 5 of the Securities Act is required for the offer and
sale of the Securities by the Company to the Purchasers as contemplated hereby.
(r) Registration Rights. Except as provided in the
Registration Rights Agreement, no Person has any right to cause the Company to
effect the registration under the Securities Act of any securities of the
Company.
(s) Disclosure. All disclosure provided to the Purchasers
regarding the Company, its business and the transactions contemplated hereby,
including the Disclosure Schedules to this Agreement, furnished by or on behalf
of the Company with respect to the representations and warranties made herein
are true and correct with respect to such representations and warranties 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. The Company
acknowledges and agrees that no Purchaser makes or has made any representations
or warranties with respect to the transactions contemplated hereby other than
those specifically set forth in Section 3.2 hereof.
(t) Taxes. Except for matters (i) set forth on Schedule
3.1(t), or (ii) that would not, individually or in the aggregate, have, or
reasonably be expected to result in, a Material Adverse Effect, the Company and
each Subsidiary has filed all necessary federal, state and foreign income tax
returns and has paid or accrued all taxes shown as due thereon, and the
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Company has no knowledge of a tax deficiency which has been asserted or
threatened against the Company or any Subsidiary.
3.2 Representations and Warranties of the Purchasers Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:
(a) Organization; Authority. Such Purchaser, if not a
natural person, is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization with full right,
corporate or partnership power and authority to enter into and to consummate the
transactions contemplated by the Transaction Documents and otherwise to carry
out its obligations 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 similar action on the part of such
Purchaser. Each Transaction Document to which a Purchaser is a party has been
duly executed by such Purchaser, and, subject to Section 2.4, when delivered by
such Purchaser in accordance with the terms hereof, will constitute the valid
and legally binding obligation of such Purchaser, enforceable against such
Purchaser in accordance with its terms, except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies.
(b) Purchaser Representation. 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 as an investment as principal for its own account and not with a
view to or for distributing or reselling such Securities or any part thereof,
has no present intention of distributing any of such Securities and has no
arrangement or understanding with any other Persons regarding the distribution
of such Securities (this representation and warranty not limiting such
Purchaser's right to sell the Securities pursuant to the Registration Statement
or otherwise in compliance with applicable federal and state securities laws).
Such Purchaser is acquiring the Securities hereunder in the ordinary course of
its business. Such Purchaser does not have any agreement or understanding,
directly or indirectly, with any Person to distribute any of the Securities.
(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 any Warrants, it will be either: (i) an "accredited investor" as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities
Act, or (ii) a "qualified institutional buyer" as defined in Rule 144A(a) under
the Securities Act. Such Purchaser is not required to be registered as a
broker-dealer under Section 15 of the Exchange Act. Each Person who is
purchasing pursuant to Regulation S promulgated by the Commission under the
Securities Act represents that he, she or it is not a "U.S. Person" as that term
is defined in Regulation S and agrees to be bound by all of the terms and
conditions of Regulation S.
(d) 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
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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.
(e) 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.
(f) Relationship to Company; Access to Information. The
Purchaser either has a preexisting personal or business relationship with the
Company or its officers, directors or controlling persons, or, by reason of
Purchaser's business or financial experience, the Purchaser has the capacity and
has taken all steps necessary to protect the Purchaser's own interests in
connection with an investment in the Securities. The Purchaser has received and
read or reviewed with his Purchaser Representative, if any, and represents that
he is familiar with this Agreement, the other Transaction Documents, the
Disclosure Schedules and the other documents delivered to the Purchaser as part
of the offering of the Securities. The Company has made available to the
Purchaser such information and documents regarding the Company as Purchaser
deems necessary to enable him to make an informed decision concerning the
purchase of the Securities and the Company has provided answers to all of
Purchaser's questions relating to this investment in the Securities. The
Purchaser acknowledges that no federal or state agency has made any finding or
determination as to the fairness of the offering for investment or any
recommendation or endorsement of the Securities.
(g) Purchaser's Liquidity. The Purchaser has adequate means
of providing for the Purchaser's current needs and personal contingencies and
has no need for liquidity in connection with the investment in the Securities.
The Purchaser acknowledges that the Purchaser must bear the economic risk of
investment in the Securities for an indefinite period of time, and that the
Purchaser could sustain a loss of the Purchaser's entire investment in the
Securities without materially impairing the Purchaser's financial wherewithal.
The Purchaser's overall commitment to investments which are not readily
marketable is not disproportionate to the net worth of the Purchaser, and the
Purchaser's investment in the Securities will not cause such overall commitment
to become excessive.
(h) Short Sales. Without limiting anything in Article IV,
each Purchaser represents that from the date it was notified of the transactions
contemplated hereby until the Closing, neither it nor any Person over which the
Purchaser has direct control, have made, or will make, any net short sales of,
or granted, or will grant, any option for the purchase of, or entered into any
hedging or similar transaction with the same economic effect as a net short sale
in the Common Stock. Each Purchaser, severally and not jointly with the other
Purchasers, understands and acknowledges that the Commission currently takes the
position that coverage of short sales of shares of the Common Stock "against the
box" with the Securities purchased hereunder prior to the Effective Date is a
violation of Section 5 of the Securities Act. Accordingly, each Purchaser hereby
agrees not to use any of the Securities to cover any short sales prior to the
Effective Date. Additionally, each Purchaser, severally and not jointly with the
other Purchasers, agrees to comply in all respects with Regulation M under the
federal securities laws.
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(i) Special Representations for Regulation S Purchasers.
Each Purchaser who is purchasing Securities hereunder pursuant to Regulation S
promulgated by the Commission under the Securities Act hereby makes the
following additional representations and warranties to the Company:
(i) It understands and acknowledges that the
Securities have not been registered under the Securities Act or any other
applicable securities laws, and the Securities may not be sold or otherwise
transferred except in compliance with the registration requirements of the
Securities Act and any other applicable securities law or pursuant to an
exemption therefrom and in each case in compliance with the conditions for
transfer set forth in (iii) below.
(ii) It is a person that, at the time the buy order
for the Securities was originated, was outside the United States and was not a
U.S. person (and was not purchasing for the account or benefit of a U.S. person)
within the meaning of Regulation S.
(iii) It acknowledges that it will offer, sell or
otherwise transfer the Securities, prior to the date which is two years after
the later of the original issue date hereof and the last date on which the
Company or any affiliate of the Company was the owner of any of the Securities
(or any predecessor of the Securities), only (A) to the Company, (B) pursuant to
a registration statement that has been declared effective under the Securities
Act, (C) pursuant to offers and sales that occur outside the United States
within the meaning of Regulation S under the Securities Act in a transaction
meeting the Requirements of Rule 904 under the Securities Act, or (D) pursuant
to another available exemption from the registration requirements of the
Securities Act, subject to the Company's right prior to any offer, sale or
transfer pursuant to clause (C) or (D) to require the delivery of an opinion of
counsel, certificates and/or other information reasonably satisfactory to the
Company.
(iv) It agrees that it will not engage in hedging
transactions involving the Securities unless such transactions are in compliance
with the Securities Act.
(v) If it is a "dealer" or a person "receiving a
selling concession fee or other remuneration" within the meaning of Regulation S
under the Securities Act, it acknowledges that until the expiration of the
one-year "restricted period" within the meaning of Rule 903 of Regulation S
under the Securities Act, any offer or sale of the Securities shall not be made
by it to a U.S. person or for the account or benefit of a U.S. person within the
meaning of Rule 902(k) of the Securities Act.
(vi) It acknowledges that the Company and others will
rely upon the truth and accuracy of the foregoing representations, warranties
and agreements and agrees that, if any of the representations, warranties and
agreements made by Purchaser of the Securities are no longer accurate, it shall
promptly notify the Company.
(j) Indemnification Representations of Purchaser. Each
Purchaser represents and warrants that none of the representations or warranties
made by the Purchaser herein ("Purchaser Statements") contain any false or
misleading statement or omit to state a material fact. The Purchaser shall
indemnify the Company to the extent the Company incurs or suffers any damage,
expenses, loss, claim, judgment or liability resulting from the Company's
reliance upon any Purchaser Statement that is false or misleading.
13
(k) Additional Representations and Warranties of Purchasers.
Each Purchaser represents and warrants that:
(i) Purchaser has received, has carefully read and
understands the Risk Factors attached hereto as Exhibit E;
(ii) Purchaser has been furnished with all additional
documents and information which Purchaser has requested;
(iii) Purchaser has had the opportunity to ask
questions of, and received answers from, the Company concerning the Company and
the Securities and to obtain any additional information necessary to verify the
accuracy of the information furnished;
(iv) Purchaser has relied only on the foregoing
information and documents in determining to make an investment in the
Securities;
(v) The documents and information furnished by the
Company to the Purchasers in connection with the offering of the Securities do
not constitute investment, accounting, legal or tax advice, and Purchaser is
relying on its own professional advisers for such advice;
(vi) All documents, records and books pertaining to
Purchaser's investment have been made available for inspection by Purchaser and
by Purchaser's attorney, and/or Purchaser's accountant and/or Purchaser's
purchaser representative;
(vii) Purchaser understands, acknowledges and agrees
that the Company is relying solely upon the representations and warranties of
the Purchasers made herein in determining to sell Purchaser the Securities;
(viii) The Purchaser has not paid or given any
commission or other remuneration in connection with the purchase of the
Securities;
(ix) The Purchaser understands the meaning and legal
consequences of the foregoing representations and warranties. The Purchaser
certifies that each of the foregoing representations and warranties is true and
correct as of the date hereof and shall survive the execution hereof and the
purchase of the Securities;
(x) The Purchaser has not traded in securities of
the Company in violation of Rule 10b-5 under the Exchange Act or any other
federal or state xxxxxxx xxxxxxx or anti-fraud securities law.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) The Purchasers acknowledge and agree that the Securities
may only be disposed of in compliance with state and federal securities laws. In
connection with any transfer
14
of Securities, the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Securities under the Securities
Act.
(b) The Purchasers agree to the imprinting, so long as is
required by this Section 4.1(b), of a legend on any of the Securities in
substantially the following form:
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 AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.
(c) Certificates evidencing the Shares and Warrant Shares
shall not contain any legend (including the legend set forth in Section 4.1(b)),
(i) following any sale of such Shares or Warrant Shares pursuant to Rule 144,
(ii) if such Shares or Warrant Shares are eligible for sale under Rule 144(k),
(iii) if such legend is not required under applicable requirements of the
Securities Act (including judicial interpretations and pronouncements issued by
the Staff of the Commission) and (iv) in the case of (i) and (ii) above, if the
registered owner of such certificate delivers an appropriate representation
letter to the Company and its counsel. The Company agrees that at such time as
such legend is no longer required under this Section 4.1(c), it will, no later
than three Trading Days following the delivery by a Purchaser to the Company or
the Company's transfer agent of a certificate representing Shares or Warrant
Shares, as the case may be, issued with a restrictive legend, deliver or cause
to be delivered to such Purchaser a replacement certificate representing such
Securities that is free from such legends.
(d) Each Purchaser, severally and not jointly with the other
Purchasers, agrees that the removal of the restrictive legend from certificates
representing Securities as set forth in this Section 4.1 is predicated upon the
Company's reliance that the Purchaser will sell any Securities pursuant to the
registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom.
(e) Notwithstanding anything contained herein to the
contrary, and in addition to any other legends required by law or hereunder,
Securities purchased hereunder in reliance on
15
Regulation S promulgated by the Commission under the Securities Act shall be
imprinted with a legend in substantially the following form:
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND ARE BEING OFFERED AND SOLD ONLY PURSUANT TO
OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT. THESE
SECURITIES MAY NOT BE RE-OFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR
NOT SUBJECT TO, REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER
THIS SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON
WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER
OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY), ONLY (A)
TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, OR (D)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S
RIGHT PRIOR TO ANY OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE
(C) OR (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATES AND/OR OTHER INFORMATION REASONABLY SATISFACTORY TO
THE COMPANY. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE
HEREOF FURTHER AGREES NOT TO ENGAGE IN HEDGING TRANSACTIONS
INVOLVING THESE SECURITIES UNLESS SUCH TRANSACTIONS MEET THE
REQUIREMENTS AND COMPLY WITH THE SECURITIES ACT.
Notwithstanding anything contained herein to the contrary, the Company
will not, and is not permitted to, register the transfer of any Securities sold
hereunder on the Company's books or records, unless such Securities have been
transferred in accordance with or pursuant to (A) the
16
provisions of Regulation S, (B) a registration statement declared effective by
the Commission or (C) another available exemption from registration under the
Securities Act.
4.2 Furnishing of Information. From and after the Effective Date of
the Registration Statement, as long as any Purchaser owns 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 the Exchange Act, 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 Securities 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 such Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144.
4.3 Securities Laws Disclosure; Publicity. The Company shall, by
8:30 a.m. Eastern time on or before the second Trading Day following the Closing
Date, issue a press release reasonably acceptable to the Placement Agents (on
behalf of the Purchasers) disclosing the material terms of the transactions
contemplated hereby. Except as required by applicable law, the Company and the
Placement Agents (on behalf of the Purchasers) shall consult with each other in
issuing any other press releases with respect to the transactions contemplated
hereby, and neither the Company nor the Placement Agents or any Purchaser shall
issue any such press release or otherwise make any such public statement without
the prior consent of the Company, with respect to any press release of any
Purchaser, or without the prior consent of the Placement Agents (on behalf of
the Purchasers), with respect to any press release of the Company, which consent
shall not unreasonably be withheld, except if such disclosure is required by
law, in which case the disclosing party shall promptly provide the other party
with prior notice of such public statement or communication. The Company will
copy Xxxxxxx Xxxxxxx, Esq. (Grushko & Xxxxxxx, P.C., 000 Xxxxx Xxxxxx, Xxxxx
0000, Xxx Xxxx, XX 10176) on all correspondence delivered by the Company to the
Placement Agents under this Section.
4.4 Indemnification of Purchasers. Subject to the provisions of this
Section 4.4, the Company will indemnify and hold the Purchasers and their
directors, officers, shareholders, partners, employees and agents (each, a
"Purchaser Party") harmless from any and all losses, liabilities, obligations,
claims, damages, costs and expenses, including all judgments, amounts paid in
settlements (subject to the provisions below), court costs and reasonable
attorneys' fees and costs of investigation that any such Purchaser Party may
suffer or incur as a result of or relating to (a) any breach of any of the
representations, warranties, covenants or agreements made by the Company in this
Agreement or (b) any action instituted against a Purchaser, or any of their
respective Affiliates, by any stockholder of the Company who is not an Affiliate
of such Purchaser or any other Purchaser, with respect to any of the
transactions contemplated by the Transaction Documents (unless such action is
based upon a breach of such Purchaser's representation, warranties or covenants
under the Transaction Documents or any agreements or understandings such
Purchaser may have with any such stockholder or any violations by the Purchaser
of state or federal securities laws or any conduct by such Purchaser which
constitutes fraud, gross negligence, willful misconduct or malfeasance). If any
action shall be brought against any Purchaser Party in respect of which
indemnity may be sought pursuant to this Agreement, such Purchaser Party shall
promptly notify the Company in writing, and the
17
Company shall have the right to assume the defense thereof with counsel of its
own choosing. Any Purchaser Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Purchaser Party
except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a
reasonable period of time to assume such defense and to employ counsel (assuming
an obligation to so assume the defense) or (iii) in such action there is, in the
reasonable opinion of such separate counsel, a material conflict on any material
issue between the position of the Company and the position of such Purchaser
Party. The Company will not be liable to any Purchaser Party under this
Agreement (i) for any settlement by an Purchaser Party effected without the
Company's prior written consent, which shall not be unreasonably withheld or
delayed, or (ii) to the extent, but only to the extent that a loss, claim,
damage, judgment or liability is attributable to any Purchaser Party's breach of
any of the representations, warranties, covenants or agreements made by the
Purchasers in this Agreement or in the other Transaction Documents.
4.5 Reservation of Common Stock. As of the date hereof, the Company
has reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue Shares pursuant to this
Agreement and Warrant Shares pursuant to any exercise of the Warrants.
4.6 Listing of Common Stock. The Company hereby agrees to use
reasonable commercial efforts as soon as reasonably practicable following the
Effective Date to list all of the Shares and Warrant Shares on the OTC Bulletin
Board. After the Company's Common Stock is accepted for listing and/or trading
on the OTC Bulletin Board, and for at least a period of two years thereafter,
the Company will use reasonable commercial efforts to continue the listing and
trading of its Common Stock on the OTC Bulletin Board or other Trading Market.
4.7 Equal Treatment of Purchasers. No consideration shall be offered
or paid to any person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents unless the same consideration is
also offered to all of the parties to the Transaction Documents. For
clarification purposes, this provision constitutes a separate right granted to
each Purchaser by the Company and negotiated separately by each Purchaser, and
is intended to treat the Company and the Purchasers as a class and shall not in
any way be construed as the Purchasers acting in concert or as a group with
respect to the purchase, disposition or voting of Securities or otherwise.
4.8 Participation in Future Financing. From the Closing Date until
nine (9) months after the Effective Date, upon any private equity financing
(i.e., non-public offering) by the Company of its Common Stock or Common Stock
Equivalents (a "Subsequent Financing"), each Purchaser shall have the right to
participate, on a pro rata basis, in up to 50% of such Subsequent Financing (the
"Participation Maximum"). At least three (3) Trading Days prior to the closing
of the Subsequent Financing, the Company shall deliver to each Purchaser,
subject to the Purchaser's agreement to keep such information confidential, a
written notice of its intention to effect a Subsequent Financing (a "Subsequent
Financing Notice"), which Subsequent Financing Notice shall provide a summary of
the details of such financing, including, the amount of proceeds intended to be
raised thereunder and a general description of the Person(s) with whom such
Subsequent Financing is proposed to be effected. If a Purchaser desires to
exercise its
18
rights under this section and to participate in such Subsequent Financing, it
shall deliver notice to such effect to the Company within three (3) Trading Days
after the date the Subsequent Financing Notice is delivered. If by 6:30 p.m.
(New York City time) on the third Trading Day after delivery of the Subsequent
Financing Notice to each of the Purchasers, notifications by the Purchasers of
their willingness to participate in the Subsequent Financing is, in the
aggregate, less than the Participation Maximum, then the Company may effect the
remaining portion of such Participation Maximum (as well as the remaining
portion of the Subsequent Financing) on the terms and to the Persons set forth
in the Subsequent Financing Notice. If the Company receives no notice from a
Purchaser as of such third Trading Day, such Purchaser shall be deemed to have
notified the Company that it does not elect to participate. The Company must
provide the Purchasers with a second Subsequent Financing Notice, and the
Purchasers will again have the right of participation set forth above in this
Section 4.8, if the Subsequent Financing subject to the initial Subsequent
Financing Notice is not consummated for any reason on the terms set forth in
such Subsequent Financing Notice within 90 Trading Days after the date of the
initial Subsequent Financing Notice. Notwithstanding the foregoing, this Section
4.8 shall not apply in respect of an Exempt Issuance.
4.9 Subsequent Equity Sales.
(a) Anti-Dilution. If at any time that a Purchaser is still
holding shares of Common Stock purchased hereunder, the Company shall issue
(other than Exempt Issuances) any Common Stock or Common Stock Equivalents to
any other person or entity at a price per share less than $1.00 (taking into
account both the initial price and any exercise price in the case of a
convertible security), without the consent of each Purchaser then holding Common
Stock purchased hereunder, then the Company shall issue, for each such occasion,
additional shares of Common Stock to each Purchaser then-holding shares of
Common Stock purchased hereunder so that the average per share purchase price of
the shares of Common Stock issued to the Purchaser hereunder (of only the Common
Stock purchased hereunder and still owned by the Purchaser) is equal to such
other lower price per share, but not less than the par value of the Common
Stock. The delivery to the Purchaser of the additional shares of Common Stock
pursuant to this Section shall be promptly after the closing date of the
transaction giving rise to the requirement to issue additional shares of Common
Stock under this Section. For purposes of the issuance and adjustment described
in this paragraph, the issuance of any Common Stock Equivalents shall result in
the issuance of the additional shares of Common Stock upon the issuance of such
Common Stock Equivalents. If the Company issues additional shares of Common
Stock to a Purchaser under this Section, such Purchaser shall be entitled to
"piggy-back" registration rights with respect to such shares of Common Stock
pursuant to, and in accordance with, Section 6(e) of the Registration Rights
Agreement; provided, however, that such "piggy-back" registration rights shall
not apply with respect to the Registration Statement. Notwithstanding anything
contained herein to the contrary, this Section only applies to issuances made by
the Company during the twelve (12) month period following the Closing Date. The
rights of the Purchasers set forth in this Section are in addition to any other
rights the Purchasers have pursuant to this Agreement and any other agreement
referred to or entered into in connection herewith.
(b) No Variable Rate Transactions. In addition to the
limitations set forth herein, from the Closing Date until one (1) year after the
Effective Date, the Company shall be prohibited from effecting or enter into an
agreement to effect any Subsequent Financing involving a "Variable Rate
Transaction" (as defined below). The term "Variable Rate
19
Transaction" shall mean a transaction in which the Company issues or sells (i)
any debt or equity securities that are convertible into, exchangeable or
exercisable for, or include the right to receive additional shares of Common
Stock either (A) at a conversion, exercise or exchange rate or other price that
is based upon and/or varies with the trading prices of or quotations for the
shares of Common Stock at any time after the initial issuance of such debt or
equity securities, or (B) with a conversion, exercise or exchange price that is
subject to being reset at some future date after the initial issuance of such
debt or equity security or upon the occurrence of specified or contingent events
directly or indirectly related to the business of the Company or the market for
the Common Stock.
(c) Subsequent Financing Block. If the Purchasers invest an
aggregate of at least $3,000,000 in connection with their Unit purchases
hereunder, then from the Closing Date until the date that is six (6) months
after the Effective Date, without the consent of Purchasers who hold in the
aggregate more than fifty (50%) percent of Shares purchased under this Agreement
and then outstanding, the Company shall not issue shares of Common Stock or
Common Stock Equivalents, other than Exempt Issuances; provided however, the six
(6) months period shall be extended for the number of Trading Days during such
period in which (a) trading in the Common Stock is suspended by any Trading
Market, or (b) following the Effective Date, the Registration Statement is not
effective or the prospectus included in the Registration Statement may not be
used by the Purchasers for the resale of the Shares and Warrant Shares.
4.10 Board of Directors. On or promptly after the Closing, the
Company will use reasonable commercial efforts to cause Xxxxxxxx X. Xxxxxxxx to
be appointed as a member of the Company's board of directors, to serve in
accordance with the Company's charter and bylaws.
ARTICLE V
MISCELLANEOUS
5.1 Fees and Expenses. The Company shall pay up to an aggregate of
$20,000 in legal fees actually accrued to one or more legal counsel, mutually
chosen by the Placement Agents, for such counsel's services in representing the
Purchasers in connection with this Agreement and the other Transaction
Documents. Except as otherwise set forth in this Agreement, each party shall pay
the fees and expenses of its advisers, counsel, accountants and other experts,
if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all stamp and other taxes and duties levied in connection
with the sale of the Securities.
5.2 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 and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
5.3 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 at the
facsimile number set forth on the signature pages attached hereto or email (if
provided by the Purchaser) to the email address set forth on the signature pages
hereto, in each
20
case, prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the next
Trading Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number set forth on the signature pages
attached hereto or email (if provided by the Purchaser) to the email address set
forth on the signature pages hereto, in each case, on a day that is not a
Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c)
the second Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (d) upon actual receipt by the party to
whom such notice is required to be given. The address for such notices and
communications shall be as set forth on the signature pages attached hereto.
5.4 Amendments; Waivers. No provision of this Agreement may be
waived or amended except in a written instrument signed by the Company and
Purchasers holding a majority of the Shares purchased hereunder and then
outstanding. 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.
5.5 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.
5.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser.
5.7 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 as otherwise set forth in Section 4.9.
5.8 Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents shall be
governed by and construed and enforced in accordance with the internal laws of
the State of Delaware, without regard to the principles of conflicts of law
thereof. Each party hereby irrevocably submits to the exclusive jurisdiction of
the state and federal courts sitting in the State of Delaware 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 any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof 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
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right to serve process in any manner permitted by law. The parties hereby waive
all rights to a trial by jury. If either party shall commence an action or
proceeding to enforce any provisions of the Transaction Documents, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its attorneys' fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.
5.9 Survival. The representations and warranties of the Company
herein shall survive for a period of eighteen (18) months after the Closing.
5.10 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 subject to Section 2.4, 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.
5.11 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.
5.12 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
timely written notice to the Company, any relevant notice, demand or election in
whole or in part without prejudice to its future actions and rights.
5.13 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 customary and reasonable
indemnity, if requested by the Company. 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.
5.14 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 the defense that a
remedy at law would be adequate.
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5.15 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.
5.16 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. 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 Document. 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. Each Purchaser has been represented by its own separate legal counsel
in their review and negotiation of the Transaction Documents.
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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.
Address for Notice:
SYNOVA HEALTHCARE GROUP, INC. SYNOVA HEALTHCARE, INC.
Rose Tree Corporate Center
0000 X. Xxxxxxxxxx Xxxx
By: /s/ Xxxxxx Xxxxxxxxxx-Xxxxx Xxxxx 0000, Xxxxxxxx XX
--------------------------- Xxxxx, XX 00000
Name: Xxxxxx Xxxxxxxxxx-Xxxxx
Title: President
With a copy to (which shall not constitute notice)
BLANK ROME LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esquire
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOW]
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[PURCHASER SIGNATURE PAGES TO
SYNOVA SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
Name of Investing Entity: ______________________________________________________
Signature of Authorized Signatory of Investing Entity: _________________________
Name of Authorized Signatory: __________________________________________________
Title of Authorized Signatory: _________________________________________________
Email Address of Authorized Entity: ____________________________________________
Address for Notice of Investing Entity:
Address for Delivery of Securities for Investing Entity (if not same as above):
Subscription Amount:
Units:
EIN Number:
[SIGNATURE PAGES CONTINUE]
25
