CONVERTIBLE SECURED PROMISSORY NOTE AND WARRANT PURCHASE
AGREEMENT
Dated as of June 10, 2008
among
BIOFORCE NANOSCIENCES HOLDINGS, INC.
and
THE PURCHASERS LISTED ON EXHIBIT A
CONVERTIBLE SECURED PROMISSORY NOTE AND WARRANT
PURCHASE AGREEMENT
This CONVERTIBLE SECURED PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT
(the "Agreement") is dated as of June 4, 2008 by and among BioForce Nanosciences
Holdings, Inc., a Nevada corporation (the "Company"), and each of the Purchasers
of Units, as described below, whose names are set forth on Exhibit A hereto
(individually, a "Purchaser" and collectively, the "Purchasers").
The parties hereto agree as follows:
ARTICLE I
Purchase and Sale of Units
Section 1.1 Purchase and Sale of Notes. Upon the following terms and
conditions, the Company shall issue and sell to the Purchasers, and each of the
Purchasers shall purchase from the Company, the number of units (the "Units"),
consisting of: (i) $1.00 in face amount of the Company's convertible secured
promissory notes (the "Notes"), in substantially the form attached hereto as
Exhibit B-1, convertible into shares of the Company's common stock, par value
$0.001 per share (the "Common Stock"), and (ii) three warrants, in substantially
the form attached hereto as Exhibit B-2 (the " Warrant"), set forth opposite
such Purchaser's name on Exhibit A hereto. The Company and the Purchasers are
executing and delivering this Agreement in accordance with and in reliance upon
the exemption from securities registration afforded by Rule 506 of Regulation D
("Regulation D") as promulgated by the United States Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"), or Section 4(2) of the Securities Act.
Section 1.2 Warrants. Each of the Warrants shall have a term of five
(5) years, have an exercise price per share equal to the Warrant Price (as
defined in the applicable Warrant) and shall be exercisable as stated in the
applicable Warrant.
Section 1.3 Conversion Shares. The Company has authorized and has
reserved and covenants to continue to reserve, free of preemptive rights and
other similar contractual rights of stockholders, a number of shares of Common
Stock equal to one hundred twenty percent (120%) of the number of shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all of the Convertible Secured Promissory Notes and exercise of the Warrants
then outstanding. Any shares of Common Stock issuable upon conversion of the
Convertible Secured Promissory Notes and exercise of the Warrants (and such
shares when issued) are herein referred to as the "Conversion Shares" and the
"Warrant Shares", respectively. The Conversion Shares and the Warrant Shares are
sometimes collectively referred to as the "Shares".
Section 1.4 Purchase Price and Closing. Subject to the terms and
conditions hereof, in consideration of and in express reliance upon the
representations, warranties, covenants, terms and conditions of this Agreement,
the Company agrees to issue and sell to the Purchasers and the Purchasers,
severally but not jointly, agree to purchase the Units for $1.00 per unit, and
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for an aggregate purchase price of Three Hundred Thousand Dollars ($300,000)
(the "Purchase Price"). The closing of the purchase and sale of the Units to be
acquired by the Purchasers from the Company under this Agreement shall take
place at the offices of Sonnenschein, Nath & Xxxxxxxxx, LLP, 000 XXX Xxxxxxx,
Xxxxx Xxxxx, XX 00000-0000 (the "Closing") at 10:00 a.m., New York time (i) on
or before June 10, 2008; provided, that all of the conditions set forth in
Article IV hereof and applicable to the Closing shall have been fulfilled or
waived in accordance herewith, or (ii) at such other time and place or on such
date as the Purchasers and the Company may agree upon (the "Closing Date").
Subject to the terms and conditions of this Agreement, at the Closing the
Company shall deliver or cause to be delivered to each Purchaser (x) a
Convertible Secured Promissory Note corresponding to the number of Units set
forth opposite the name of such Purchaser on Exhibit A hereto, (y) Warrants
corresponding to the number of Units as is set forth opposite the name of such
Purchaser on Exhibit A attached hereto and (z) any other documents required to
be delivered pursuant to Article IV hereof. At the Closing, each Purchaser shall
deliver its Purchase Price in the manner indicated on Exhibit A.
ARTICLE II
Representations and Warranties
Section 2.1 Representations and Warranties of the Company. The
Company hereby represents and warrants to the Purchasers, as of the date hereof
and the Closing Date (except as set forth on the Disclosure Schedule prepared in
connection with this Agreement (the "Disclosure Schedule") with each numbered
section of the Disclosure Schedule corresponding to the section number herein),
as follows:
(a) Organization, Good Standing and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Nevada and has the requisite corporate power to own, lease
and operate its properties and assets and to conduct its business as it is now
being conducted. The Company does not have any subsidiaries except as set forth
in the Company's Form 10-KSB for the year ended December 31, 2007, including the
accompanying financial statements (the "Form 10-KSB"), or in the Company's Form
10-QSB for the fiscal quarter ended March 31, 2008 (the "Form 10-QSB"). The
Company and each such subsidiary is duly qualified as a foreign corporation to
do business and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary except for any jurisdiction(s) (alone or in the aggregate) in which
the failure to be so qualified will not have a Material Adverse Effect (as
defined in Section 2.1(c) hereof) on the Company's financial condition.
(b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and perform this Agreement, the
Notes, and the Warrants (collectively the "Transaction Documents") and to issue
and sell the Notes, Shares and Warrants in accordance with the terms hereof. The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by it of the transactions contemplated hereby and thereby
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have been duly and validly authorized by all necessary corporate action, or will
be so authorized prior to the Closing, and no further consent or authorization
of the Company or its Board of Directors or stockholders will be required as of
the Closing. This Agreement has been duly executed and delivered by the Company,
and constitutes a 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, conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditor's rights and remedies or by
other equitable principles of general application.
(c) Capitalization. The authorized capital stock of the Company and
the shares thereof currently issued and outstanding as of the date hereof are
set forth in Section 2.1(c) of the Disclosure Schedule. All of the outstanding
shares of the Common Stock and Series A Convertible Preferred Stock (the
"Preferred Shares") have been duly and validly authorized. Except as set forth
on the Disclosure Schedule hereto, no shares of Common Stock are entitled to
preemptive rights or registration rights and there are no outstanding options,
warrants, scrip, rights to subscribe to, call or commitments of any character
whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company. There are no contracts, commitments,
understandings, or arrangements by which the Company is or may become bound to
issue additional shares of the capital stock of the Company or options,
securities or rights convertible into shares of capital stock of the Company.
The Company is not a party to any agreement granting registration or
anti-dilution rights to any person with respect to any of its equity or debt
securities. The Company is not a party to, and it has no knowledge of, any
agreement restricting the voting or transfer of any shares of the capital stock
of the Company. The offer and sale of all capital stock, convertible securities,
rights, warrants, or options of the Company issued prior to the Closing complied
with all applicable Federal and state securities laws, and no stockholder has a
right of rescission or claim for damages with respect thereto which would have a
Material Adverse Effect (as defined below). The Company has furnished or made
available to the Purchasers true and correct copies of the Company's Articles of
Incorporation as in effect on the date hereof (the "Articles"), and the
Company's Bylaws as in effect on the date hereof (the "Bylaws"). For the
purposes of this Agreement, "Material Adverse Effect" means any material adverse
effect on the business, operations, properties, prospects, or financial
condition of the Company and its subsidiaries and/or any condition,
circumstance, or situation that would prohibit or otherwise materially interfere
with the ability of the Company to perform any of its obligations under this
Agreement in any material respect.
(d) Issuance of Shares. The Notes and the Warrants to be issued at
the Closing have been duly authorized by all necessary corporate action, or will
be so authorized prior to the Closing. When the Conversion Shares and the
Warrant Shares are issued in accordance with the terms of the Notes and the
Warrants, respectively, such shares will be duly authorized by all necessary
corporate action and validly issued and outstanding, fully paid and
nonassessable, and the holders shall be entitled to all rights accorded to a
holder of Common Stock.
(e) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
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transactions contemplated herein and therein do not and will not (i) violate any
provision of the Company's Articles or Bylaws, (ii) conflict with, or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, mortgage, deed of trust,
indenture, note, bond, license, lease agreement, instrument or obligation to
which the Company is a party or by which it or its properties or assets are
bound, (iii) create or impose a lien, mortgage, security interest, charge or
encumbrance of any nature on any property of the Company under any agreement or
any commitment to which the Company is a party or by which the Company is bound
or by which any of its respective properties or assets are bound, or (iv) result
in a violation of any federal, state, local or foreign statute, rule,
regulation, order, judgment or decree (including Federal and state securities
laws and regulations) applicable to the Company or any of its subsidiaries or by
which any property or asset of the Company or any of its subsidiaries are bound
or affected, except, in all cases other than violations pursuant to clauses (i)
and (iv) above, for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect. The business of the Company and its
subsidiaries is not being conducted in violation of any laws, ordinances or
regulations of any governmental entity, except for possible violations which
singularly or in the aggregate do not and will not have a Material Adverse
Effect. The Company is not required under Federal, state or local law, rule or
regulation to obtain any consent, authorization or order of, or make any filing
or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under the Transaction
Documents, or issue and sell the Notes, the Warrants, the Conversion Shares and
the Warrant Shares in accordance with the terms hereof or thereof (other than
any filings which may be required to be made by the Company with the Commission
or state securities administrators subsequent to the Closing, and any
registration statement which may be filed pursuant hereto); provided that, for
purposes of the representation made in this sentence, the Company is assuming
and relying upon the accuracy of the relevant representations and agreements of
the Purchasers herein.
(f) Commission Documents, Financial Statements. The Company is a
voluntary filer pursuant to Section 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the Company has timely filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the Commission pursuant to the reporting requirements of the Exchange
Act, including material filed pursuant to Section 13(a) or 15(d) of the Exchange
Act (all of the foregoing including filings incorporated by reference therein
being referred to herein as the "Commission Documents"). The Company has
delivered or made available to each of the Purchasers true and complete copies
of the Commission Documents. The Company has not provided to the Purchasers any
material non-public information or other information which, according to
applicable law, rule or regulation, was required to have been disclosed publicly
by the Company but which has not been so disclosed, other than with respect to
the transactions contemplated by this Agreement. At the times of their
respective filings, the Form 10-KSB and the Form 10-QSB complied in all material
respects with the requirements of the Exchange Act and the rules and regulations
of the Commission promulgated thereunder and other federal, state and local
laws, rules and regulations applicable to such documents, and, as of their
respective dates, none of the Form 10-KSB and the Form 10-QSB contained any
untrue statement of a material fact or omitted to state a material fact required
5
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the Commission Documents comply
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the Commission or other applicable rules
and regulations with respect thereto. Such financial statements have been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto or (ii) in the case of unaudited interim statements, to the extent
they may not include footnotes or may be condensed or summary statements), and
fairly present in all material respects the financial position of the Company
and its subsidiaries as of 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).
(g) Subsidiaries. The Disclosure Schedule hereto sets forth each
subsidiary of the Company, showing the jurisdiction of its incorporation or
organization and showing the percentage of each person's ownership. For the
purposes of this Agreement, "subsidiary" shall mean any corporation or other
entity of which at least a majority of the securities or other ownership
interest having ordinary voting power (absolutely or contingently) for the
election of directors or other persons performing similar functions are at the
time owned directly or indirectly by the Company and/or any of its other
subsidiaries. All of the outstanding shares of capital stock of each subsidiary
have been duly authorized and validly issued, and are fully paid and
nonassessable. There are no outstanding preemptive, conversion or other rights,
options, warrants or agreements granted or issued by or binding upon any
subsidiary for the purchase or acquisition of any shares of capital stock of any
subsidiary or any other securities convertible into, exchangeable for or
evidencing the rights to subscribe for any shares of such capital stock. Neither
the Company nor any subsidiary is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of the
capital stock of any subsidiary or any convertible securities, rights, warrants
or options of the type described in the preceding sentence. Neither the Company
nor any subsidiary is party to, nor has any knowledge of, any agreement
restricting the voting or transfer of any shares of the capital stock of any
subsidiary.
(h) No Material Adverse Change. Since March 31, 2008, the Company
has not experienced or suffered any Material Adverse Effect.
(i) No Undisclosed Liabilities. Neither the Company nor any of its
subsidiaries has any liabilities, obligations, claims or losses (whether
liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent
or otherwise) other than those incurred in the ordinary course of the Company's
or its subsidiaries respective businesses since March 31, 2008 and which,
individually or in the aggregate, do not or would not have a Material Adverse
Effect on the Company or its subsidiaries.
(j) No Undisclosed Events or Circumstances. No event or circumstance
has occurred or exists with respect to the Company or its subsidiaries or their
respective businesses, properties, prospects, operations or financial condition,
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.
6
(k) Indebtedness. The Form 10-KSB or Form 10-QSB sets forth as of a
recent date all outstanding secured and unsecured Indebtedness of the Company or
any subsidiary, or for which the Company or any subsidiary has commitments. For
the purposes of this Agreement, "Indebtedness" shall mean (a) any liabilities
for borrowed money or amounts owed in excess of $100,000 (other than trade
accounts payable incurred in the ordinary course of business), (b) all
guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same are or should be reflected in
the Company's balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (c) the present value of
any lease payments in excess of $25,000 due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor any subsidiary is
in default with respect to any Indebtedness.
(l) Title to Assets. Each of the Company and the subsidiaries has
good and marketable title to all of its real and personal property reflected in
the Form 10-KSB or Form 10-QSB, free and clear of any mortgages, pledges,
charges, liens, security interests or other encumbrances, except for those
disclosed in the Form 10-KSB or Form 10-QSB, statutory liens for which the
payment of current taxes are not yet delinquent, or such that, individually or
in the aggregate, do not cause a Material Adverse Effect. All leases of the
Company and each of its subsidiaries are valid and subsisting and, to its
knowledge, in full force and effect.
(m) Actions Pending. There is no action, suit, claim, investigation,
arbitration, alternate dispute resolution proceeding or any other proceeding
pending or, to the knowledge of the Company, threatened against the Company or
any subsidiary which questions the validity of this Agreement or any of the
other Transaction Documents or the transactions contemplated hereby or thereby
or any action taken or to be taken pursuant hereto or thereto. Except as set
forth in the Form 10-KSB or Form 10-QSB, there is no action, suit, claim,
investigation, arbitration, alternate dispute resolution proceeding or any other
proceeding pending or, to the knowledge of the Company, threatened, against or
involving the Company, any subsidiary or any of their respective properties or
assets. There are no outstanding orders, judgments, injunctions, awards or
decrees of any court, arbitrator or governmental or regulatory body against the
Company or any subsidiary or any officers or directors of the Company or
subsidiary in their capacities as such.
(n) Compliance with Law. The business of the Company and the
subsidiaries has been and is presently being conducted in accordance with all
applicable federal, state and local governmental laws, rules, regulations and
ordinances, except for such noncompliance that, individually or in the
aggregate, would not cause a Material Adverse Effect. The Company and each of
its subsidiaries have all franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for the
conduct of its business as now being conducted by it unless the failure to
possess such franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
(o) Taxes. The Company and each of the subsidiaries has accurately
prepared and filed all federal, state and other tax returns required by law to
7
be filed by it, has paid or made provisions for the payment of all taxes shown
to be due and all additional assessments, and adequate provisions have been and
are reflected in the financial statements of the Company and the subsidiaries
for all current taxes and other charges to which the Company or any subsidiary
is subject and which are not currently due and payable. None of the federal
income tax returns of the Company or any subsidiary have been audited by the
Internal Revenue Service. The Company has no knowledge of any additional
assessments, adjustments or contingent tax liability (whether federal or state)
of any nature whatsoever, whether pending or threatened against the Company or
any subsidiary for any period, nor of any basis for any such assessment,
adjustment or contingency.
(p) Certain Fees. No brokers, finders or financial advisory fees or
commissions will be payable by the Company or any subsidiary or any Purchaser
with respect to the transactions contemplated by this Agreement.
(q) Disclosure. Neither this Agreement or the Disclosure Schedule
nor any other documents, certificates or instruments furnished to the Purchasers
by or on behalf of the Company or any subsidiary in connection with the
transactions contemplated by this Agreement contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made herein or therein, in the light of the circumstances under which
they were made herein or therein, not misleading. It is understood that this
representation is qualified by the fact that the Company has not delivered to
the Purchasers, and has not been requested to deliver, a private placement or
similar memorandum or any written disclosure of the types of information
customarily furnished to purchasers of securities.
(r) Operation of Business. The Company and each of the subsidiaries
owns or possesses all patents, trademarks, domain names (whether or not
registered) and any patentable improvements or copyrightable derivative works
thereof, websites and intellectual property rights relating thereto, service
marks, trade names, copyrights, licenses and authorizations as set forth in the
Form 10-KSB or Form 10-QSB, and all rights with respect to the foregoing, which
are necessary for the conduct of its business as now conducted without any
conflict with the rights of others.
(s) Environmental Compliance. The Company and each of its
subsidiaries have obtained all material approvals, authorization, certificates,
consents, licenses, orders and permits or other similar authorizations of all
governmental authorities, or from any other person, that are required under any
Environmental Laws. The Form 10-KSB or Form 10-QSB describes all material
permits, licenses and other authorizations issued under any Environmental Laws
to the Company or its subsidiaries. "Environmental Laws" shall mean all
applicable laws relating to the protection of the environment including, without
limitation, all requirements pertaining to reporting, licensing, permitting,
controlling, investigating or remediating emissions, discharges, releases or
threatened releases of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, materials or wastes, whether solid, liquid or
gaseous in nature, into the air, surface water, groundwater or land, or relating
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, material or wastes, whether solid, liquid or
gaseous in nature. The Company has all necessary governmental approvals required
8
under all Environmental Laws and used in its business or in the business of any
of its subsidiaries. The Company and each of its subsidiaries are also in
compliance with all other limitations, restrictions, conditions, standards,
requirements, schedules and timetables required or imposed under all
Environmental Laws. Except for such instances as would not individually or in
the aggregate have a Material Adverse Effect, there are no past or present
events, conditions, circumstances, incidents, actions or omissions relating to
or in any way affecting the Company or its subsidiaries that violate or may
violate any Environmental Law after the Closing Date or that may give rise to
any environmental liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation (i) under any
Environmental Law, or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including without limitation underground
storage tanks), disposal, transport or handling, or the emission, discharge,
release or threatened release of any hazardous substance.
(t) Books and Record Internal Accounting Controls. The books and
records of the Company and its subsidiaries accurately reflect in all material
respects the information relating to the business of the Company and the
subsidiaries, the location and collection of their assets, and the nature of all
transactions giving rise to the obligations or accounts receivable of the
Company or any subsidiary. The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient, in the judgment of the
Company, 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 GAAP 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
actions is taken with respect to any differences.
(u) Material Agreements. Neither the Company nor any subsidiary is a
party to any written or oral contract, instrument, agreement, commitment,
obligation, plan or arrangement, a copy of which would be required to be filed
with the Commission as an exhibit to a registration statement on Form S-3 or
applicable form (collectively, "Material Agreements") if the Company or any
subsidiary were registering securities under the Securities Act. The Company and
each of its subsidiaries has in all material respects performed all the
obligations required to be performed by them to date under the foregoing
agreements, have received no notice of default and are not in default under any
Material Agreement now in effect, the result of which could cause a Material
Adverse Effect. No written or oral contract, instrument, agreement, commitment,
obligation, plan or arrangement of the Company or of any subsidiary limits or
shall limit the payment of dividends on the Company's Preferred Shares, other
preferred stock, if any, or its Common Stock.
(v) Transactions with Affiliates. Except as set forth in the
Commission Documents, there are no loans, leases, agreements, contracts, royalty
agreements, management contracts or arrangements or other continuing
transactions between (a) the Company or any subsidiary on the one hand, and (b)
on the other hand, any officer, employee, consultant or director of the Company,
or any of its subsidiaries, or any person owning any capital stock of the
Company or any subsidiary or any member of the immediate family of such officer,
employee, consultant, director or stockholder or any corporation or other entity
controlled by such officer, employee, consultant, director or stockholder, or a
member of the immediate family of such officer, employee, consultant, director
or stockholder.
9
(w) Securities Act of 1933. Based in material part upon the
representations herein of the Purchasers, the Company has complied and will
comply with all applicable federal and state securities laws in connection with
the offer, issuance and sale of the Notes, Shares and Warrants hereunder.
Neither the Company nor, to its knowledge, anyone acting on its behalf, directly
or indirectly, has or will, prior to the Closing Date sell, offer to sell or
solicit offers to buy any of the Notes, Shares or Warrants to, or solicit offers
with respect thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any person, or has taken or will, prior to
the Closing Date, take any action so as to bring the issuance and sale of any of
the Notes, Shares and Warrants under the registration provisions of the
Securities Act and applicable state securities laws, and neither the Company nor
any of its affiliates, nor, to its knowledge, any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the Securities Act) in connection with
the offer or sale of any of the Notes, Shares and Warrants.
(x) Governmental Approvals. Except for the filing of any notice
prior or subsequent to the Closing Date that may be required under applicable
state and/or Federal securities laws (which if required, shall be filed on a
timely basis), including the filing of a Form D, no authorization, consent,
approval, license, exemption of, filing or registration with any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, is or will be necessary for, or in connection with, the
execution or delivery of the Notes and the Warrants, or for the performance by
the Company of its obligations under the Transaction Documents.
(y) Employees. Neither the Company nor any subsidiary has any
collective bargaining arrangements or agreements covering any of its employees.
Neither the Company nor any subsidiary has any employment contract, agreement
regarding proprietary information, non-competition agreement, non-solicitation
agreement, confidentiality agreement, or any other similar contract or
restrictive covenant, relating to the right of any officer, employee or
consultant to be employed or engaged by the Company or such subsidiary. No
officer, consultant or key employee of the Company or any subsidiary whose
termination, either individually or in the aggregate, could have a Material
Adverse Effect, has terminated or, to the knowledge of the Company, has any
present intention of terminating his or her employment or engagement with the
Company or any subsidiary.
(z) Absence of Certain Developments. Except as set forth in the Form
10-KSB, the Form 10-QSB or on Schedule 2.1(c) hereto, since March 31, 2008,
neither the Company nor any subsidiary has:
(i) issued any stock, bonds or other corporate securities or
any rights, options or warrants with respect thereto;
(ii) borrowed any amount or incurred or become subject to any
liabilities (absolute or contingent) except current liabilities incurred in the
ordinary course of business which are comparable in nature and amount to the
10
current liabilities incurred in the ordinary course of business during the
comparable portion of its prior fiscal year, as adjusted to reflect the current
nature and volume of the Company's or such subsidiary's business;
(iii) discharged or satisfied any lien or encumbrance or paid
any obligation or liability (absolute or contingent), other than current
liabilities paid in the ordinary course of business;
(iv) declared or made any payment or distribution of cash or
other property to stockholders with respect to its stock, or purchased or
redeemed, or made any agreements so to purchase or redeem, any shares of its
capital stock;
(v) sold, assigned or transferred any other tangible assets,
or canceled any debts or claims, except in the ordinary course of business;
(vi) sold, assigned or transferred any patent rights,
trademarks, trade names, copyrights, trade secrets or other intangible assets or
intellectual property rights, or disclosed any proprietary confidential
information to any person except to customers in the ordinary course of business
or to the Purchasers or their representatives;
(vii) suffered any substantial losses or waived any rights of
material value, whether or not in the ordinary course of business, or suffered
the loss of any material amount of prospective business;
(viii) made any changes in employee compensation except in the
ordinary course of business and consistent with past practices;
(ix) made capital expenditures or commitments therefor that
aggregate in excess of $100,000;
(x) entered into any other transaction other than in the
ordinary course of business, or entered into any other material transaction,
whether or not in the ordinary course of business;
(xi) made charitable contributions or pledges in excess of
$25,000;
(xii) suffered any material damage, destruction or casualty
loss, whether or not covered by insurance;
(xiii) experienced any material problems with labor or
management in connection with the terms and conditions of their employment;
(xiv) effected any two or more events of the foregoing kind
which in the aggregate would be material to the Company or its subsidiaries; or
(xv) entered into an agreement, written or otherwise, to take
any of the foregoing actions.
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(aa) Public Utility Holding Company Act and Investment Company Act
Status. The Company is not a "holding company" or a "public utility company" as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended. The Company is not, and as a result of and immediately upon the Closing
will not be, an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
(bb) ERISA. No liability to the Pension Benefit Guaranty Corporation
has been incurred with respect to any Plan (as defined below) by the Company or
any of its subsidiaries which is or would be materially adverse to the Company
and its subsidiaries. The execution and delivery of this Agreement and the
issuance and sale of the Notes and Warrants will not involve any transaction
which is subject to the prohibitions of Section 406 of ERISA or in connection
with which a tax could be imposed pursuant to Section 4975 of the Internal
Revenue Code of 1986, as amended, provided that, if any of the Purchasers, or
any person or entity that owns a beneficial interest in any of the Purchasers,
is an "employee pension benefit plan" (within the meaning of Section 3(2) of
ERISA) with respect to which the Company is a "party in interest" (within the
meaning of Section 3(14) of ERISA), the requirements of Sections 407(d)(5) and
408(e) of ERISA, if applicable, are met. As used in this Section 2.1(ac), the
term "Plan" shall mean an "employee pension benefit plan" (as defined in Section
3 of ERISA) which is or has been established or maintained, or to which
contributions are or have been made, by the Company or any subsidiary or by any
trade or business, whether or not incorporated, which, together with the Company
or any subsidiary, is under common control, as described in Section 414(b) or
(c) of the Code.
(cc) Dilutive Effect. The Company understands and acknowledges that
its obligation to issue Conversion Shares upon conversion of the Notes in
accordance with this Agreement and the Certificate of Designation and its
obligations to issue the Warrant Shares upon the exercise of the Warrants in
accordance with this Agreement and the Warrants, is, in each case, absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interest of other stockholders of the Company.
(dd) No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would cause the offering of the Shares
pursuant to this Agreement to be integrated with prior offerings by the Company
for purposes of the Securities Act which would prevent the Company from selling
the Shares pursuant to Rule 506 under the Securities Act, or any applicable
exchange-related stockholder approval provisions, nor will the Company or any of
its affiliates or subsidiaries take any action or steps that would cause the
offering of the Shares to be integrated with other offerings. The Company does
not have any registration statement pending before the Commission or currently
under the Commission's review and since August 31, 2007, the Company has not
offered or sold any of its equity securities or debt securities convertible into
shares of Common Stock.
(ee) Xxxxxxxx-Xxxxx Act. The Company is in compliance with the
applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002 (the "Xxxxxxxx-Xxxxx
12
Act"), and the rules and regulations promulgated thereunder, that are effective,
and intends to comply with other applicable provisions of the Xxxxxxxx-Xxxxx
Act, and the rules and regulations promulgated thereunder, upon the
effectiveness of such provisions.
(ff) Independent Nature of Purchasers. The Company acknowledges that
the obligations of each Purchaser under the Transaction Documents 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 the Transaction Documents. The Company acknowledges that
the decision of each Purchaser to purchase securities pursuant to this Agreement
has been made by such Purchaser independently of any other purchase 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 of
its Subsidiaries which may have made or given by any other Purchaser or by any
agent or employee of any other Purchaser, and no Purchaser or any of its agents
or employees shall have any liability to any Purchaser (or any other person)
relating to or arising from any such information, materials, statements or
opinions. The Company acknowledges that nothing contained herein, or in any
Transaction Document, and no action taken by any Purchaser pursuant hereto or
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. The Company acknowledges that 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 for reasons of administrative convenience only, the
Transaction Documents have been prepared by counsel and such counsel does not
represent the Purchasers, who have retained their own individual counsel with
respect to the transactions contemplated hereby. The Company acknowledges that
it has elected to provide all Purchasers with the same terms and Transaction
Documents for the convenience of the Company and not because it was required or
requested to do so by the Purchasers. The Company acknowledges that such
procedure with respect to the Transaction Documents in no way creates a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to the Transaction Documents or the transactions contemplated
hereby or thereby.
(gg) Transfer Agent. The name, address, telephone number, fax
number, contact person and email address of the Company's transfer agent is set
forth on Schedule 2.1(gg) hereto. Section 2.2 Representations and Warranties of
the Purchasers. Each of the Purchasers hereby makes the following
representations and warranties to the Company with respect solely to itself and
not with respect to any other Purchaser:
(a) Organization and Standing of the Purchasers. If the Purchaser is
an entity, such Purchaser is a corporation or partnership duly incorporated or
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization.
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(b) Authorization and Power. Each Purchaser has the requisite power
and authority to enter into and perform this Agreement and to purchase the Notes
and Warrants being sold to it hereunder. The execution, delivery and performance
of this Agreement by such Purchaser and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate or partnership action, and no further consent or
authorization of such Purchaser or its Board of Directors, stockholders, or
partners, as the case may be, is required. This Agreement has been duly
authorized, executed and delivered by such Purchaser and constitutes, or shall
constitute when executed and delivered, a valid and binding obligation of the
Purchaser enforceable against the Purchaser in accordance with the terms
thereof.
(c) No Conflicts. The execution, delivery and performance of this
Agreement and the consummation by such Purchaser of the transactions
contemplated hereby and thereby or relating hereto do not and will not (i)
result in a violation of such Purchaser's charter documents or bylaws or other
organizational documents or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of any agreement, indenture or instrument or obligation to which
such Purchaser is a party or by which its properties or assets are bound, or
result in a violation of any law, rule, or regulation, or any order, judgment or
decree of any court or governmental agency applicable to such Purchaser or its
properties (except for such conflicts, defaults and violations as would not,
individually or in the aggregate, have a material adverse effect on such
Purchaser). Such Purchaser is not required under any foreign, Federal, state or
local law, rule or regulation to obtain any consent, authorization or order of,
or make any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under this
Agreement or to purchase the Notes or acquire the Warrants in accordance with
the terms hereof or thereof, provided that to the extent a representation made
in this sentence relies on a relevant representation or agreement of the
Company, such Purchaser is assuming and relying upon the accuracy of the
relevant representations and agreements of the Company herein.
(d) Acquisition for Investment. Each Purchaser is acquiring the
Notes and the Warrants solely for its own account for the purpose of investment
and not with a view to or for sale in connection with distribution. Each
Purchaser does not have a present intention to sell the Notes or the Warrants,
nor a present arrangement (whether or not legally binding) or intention to
effect any distribution of the Notes or the Warrants to or through any person or
entity; provided, however, that by making the representations herein and subject
to Section 2.2(h) below, such Purchaser does not agree to hold the Notes, Shares
or Warrants for any minimum or other specific term and reserves the right to
dispose of the Notes, Shares or Warrants at any time in accordance with the
applicable provisions of the Transaction Documents and Federal, foreign and
state securities laws applicable to such disposition. Each Purchaser
acknowledges that it is able to bear the financial risks associated with an
investment in the Notes and the Warrants and that it has been given full access
to such records of the Company and the subsidiaries and to the officers of the
Company and the subsidiaries and received such information as it has deemed
necessary or appropriate to conduct its due diligence investigation and has
sufficient knowledge and experience in investing in companies similar to the
Company in terms of the Company's stage of development so as to be able to
evaluate the risks and merits of its investment in the Company.
14
(e) Status of Purchasers. Such Purchaser is an "accredited investor"
as defined in Regulation D promulgated under the Securities Act. Such Purchaser
is not required to be registered as a broker-dealer under Section 15 of the
Exchange Act and such Purchaser is not a broker-dealer. Such Purchaser has not
been formed for the specific purpose of acquiring the Notes and the Warrants.
(f) Opportunities for Additional Information. Each Purchaser
acknowledges that such Purchaser has had the opportunity to ask questions of and
receive answers from, or obtain additional information from, the executive
officers of the Company concerning the financial and other affairs of the
Company, and to the extent deemed necessary in light of such Purchaser's
personal knowledge of the Company's affairs, such Purchaser has asked such
questions and received answers to the full satisfaction of such Purchaser, and
such Purchaser desires to invest in the Company.
(g) No General Solicitation. Each Purchaser acknowledges that the
Notes and the Warrants were not offered to such Purchaser by means of any form
of general or public solicitation or general advertising, or publicly
disseminated advertisements or sales literature, including (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine, or similar media, or broadcast over television or radio, or
(ii) any seminar or meeting to which such Purchaser was invited by any of the
foregoing means of communications.
(h) Rule 144. Such Purchaser understands that the Notes, Shares and
Warrants must be held indefinitely unless such Notes, Shares and Warrants are
registered under the Securities Act or an exemption from registration is
available. Such Purchaser acknowledges that such Purchaser is familiar with Rule
144 of the rules and regulations of the Commission, as amended, promulgated
pursuant to the Securities Act ("Rule 144"), and that such person has been
advised that Rule 144 permits resales only under certain circumstances. Such
Purchaser understands that to the extent that Rule 144 is not available, such
Purchaser will be unable to sell any Notes, Shares and Warrants without either
registration under the Securities Act or the existence of another exemption from
such registration requirement. Such Purchaser acknowledges that the Company has
no obligation to register or qualify the Notes, Shares and Warrants for resale
except as set forth in the Transaction Documents. Such Purchaser further
acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Notes,
Shares and Warrants, and on requirements relating to the Company which are
outside of the Purchaser's control, and which the Company is under no obligation
and may not be able to satisfy.
(i) General. Such Purchaser understands that the Notes and the
Warrants are being offered and sold in reliance on a transactional exemption
from the registration requirement of Federal and state securities laws and the
Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of such Purchaser set
forth herein in order to determine the applicability of such exemptions and the
suitability of such Purchaser to acquire the Notes and the Warrants.
15
(j) Independent Investment. Except as may be disclosed in any
filings with the Commission by the Purchasers under Section 13 and/or Section 16
of the Exchange Act, no Purchaser has agreed to act with any other Purchaser for
the purpose of acquiring, holding, voting or disposing of the Notes and the
Warrants purchased hereunder for purposes of Section 13(d) under the Exchange
Act, and each Purchaser is acting independently with respect to its investment
in the Notes and the Warrants.
(k) Trading Activities. No Purchaser nor any of its affiliates has
an open short position in the Common Stock and each Purchaser agrees that it
shall not, and that it will cause its affiliates not to, engage in any short
sales with respect to the Common Stock.
(l) Foreign Investors. If a Purchaser is not a United States person
(as defined by Section 7701(a)(30) of the Code), such Purchaser hereby
represents that it has satisfied itself as to the full observance of the laws of
its jurisdiction in connection with any invitation to subscribe for the Notes
and the Warrants or any use of this Agreement, including (i) the legal
requirements within its jurisdiction for the purchase of the Notes and the
Warrants, (ii) any foreign exchange restrictions applicable to such purchase,
(iii) any governmental or other consents that may need to be obtained, and (iv)
the income tax and other tax consequences, if any, that may be relevant to the
purchase, holding, redemption, sale, or transfer of the Units, the Notes and the
Warrants. The Purchaser's subscription and payment for and continued beneficial
ownership of the Notes and the Warrants will not violate any applicable
securities or other laws of the Purchaser's jurisdiction.
(m) Residence. If the Purchaser is an individual, then such
Purchaser resides in the state or province identified in the address of the
Purchaser set forth on Exhibit A; if the Purchaser is a partnership,
corporation, limited liability company or other entity, then the office or
offices of the Purchaser in which its principal place of business is located is
identified in the address or addresses of the Purchaser set forth on Exhibit A.
ARTICLE III
Covenants
Section 3.1 Covenants of the Company. The Company covenants with
each of the Purchasers as follows, which covenants are for the benefit of the
Purchasers and their permitted assignees (as defined herein):
a. Securities Compliance. The Company shall notify the Commission in
accordance with their rules and regulations, of the transactions contemplated by
any of the Transaction Documents, including filing a Form D with respect to the
Notes, Warrants, and Shares as required under Regulation D, and shall take all
other necessary action and proceedings as may be required and permitted by
applicable law, rule and regulation, for the legal and valid issuance of the
Notes, the Warrants, and the Shares to the Purchasers or subsequent holders.
16
b. Registration and Listing. The Company shall comply in all
respects with its reporting and filing obligations under the Exchange Act, to
comply with all requirements related to any registration statement filed
pursuant to this Agreement, and to not take any action or file any document
(whether or not permitted by the Securities Act or the rules promulgated
thereunder) to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under the Exchange Act or Securities Act,
except as permitted herein or therein. The Company will take all action
necessary to continue the listing or trading of its Common Stock on the OTC
Bulletin Board or other exchange or market on which the Common Stock is trading.
Subject to the terms of the Transaction Documents, the Company further covenants
that it will take such further action as the Purchasers may reasonably request,
all to the extent required from time to time to enable the Purchasers to sell
the Shares without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144 promulgated under the Securities Act.
Upon the request of the Purchasers, the Company shall deliver to the Purchasers
a written certification of a duly authorized officer as to whether it has
complied with such requirements.
c. Inspection Rights. The Company shall permit, during normal
business hours and upon reasonable request and reasonable notice, each Purchaser
or any employees, agents or representatives thereof, so long as such Purchaser
shall be obligated hereunder to purchase the Notes or shall beneficially own any
Notes, or shall own Conversion Shares which, in the aggregate, represent more
than 2% of the total combined voting power of all voting securities then
outstanding, for purposes reasonably related to such Purchaser's interests as a
stockholder to examine and make reasonable copies of and extracts from the
records and books of account of, and visit and inspect the properties, assets,
operations and business of the Company and any subsidiary, and to discuss the
affairs, finances and accounts of the Company and any subsidiary with any of its
officers, consultants, directors, and key employees.
d. The Company shall comply, and cause each subsidiary to comply,
with all applicable laws, rules, regulations and orders, noncompliance with
which could have a Material Adverse Effect.
e. Keeping of Records and Books of Account. The Company shall keep
and cause each subsidiary to keep adequate records and books of account, in
which complete entries will be made in accordance with GAAP consistently
applied, reflecting all financial transactions of the Company and its
subsidiaries, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made.
f. Reporting Requirements. If the Commission ceases making periodic
reports filed under the Exchange Act available via the Internet, then at a
Purchaser's request the Company shall furnish the following to such Purchaser so
long as such Purchaser shall beneficially own any Notes that have not been fully
converted or any Warrants that have not been fully exercised: (i) Quarterly
17
Reports filed with the Commission on Form 10-QSB as soon as practical after the
document is filed with the Commission, and in any event within five (5) business
days after the document is filed with the Commission; (ii) Annual Reports filed
with the Commission on Form 10-KSB as soon as practical after the document is
filed with the Commission, and in any event within five (5) business days after
the document is filed with the Commission; and (iii) Copies of all notices and
information, including without limitation notices and proxy statements in
connection with any meetings, that are provided to holders of shares of Common
Stock, within five (5) business days after the document is filed with the
Commission.
g. Other Agreements. The Company shall not enter into any agreement
in which the terms of such agreement would restrict or impair the right or
ability to perform of the Company or any subsidiary from performing under any
Transaction Document.
h. Subsequent Financings. The Company shall not issue any
Indebtedness ranking either senior to or pari-passu with the Notes while at
least 50% of the original principal amount of the Notes remains outstanding
without the consent of the holders of at least 75% of the principal amount of
the then outstanding Notes.
i. Distributions. So long as any Notes or Warrants remain
outstanding, the Company agrees that it shall not (i) declare or pay any
dividends or make any distributions to any holder(s) of Common Stock or (ii)
purchase or otherwise acquire for value, directly or indirectly, any Common
Stock or other equity security of the Company.
j. Use of Proceeds. The net proceeds from the sale of the Shares
hereunder shall be used by the Company for working capital, sales and marketing,
and general corporate purposes, and not to redeem any Common Stock or securities
convertible, exercisable or exchangeable into Common Stock or to settle any
outstanding litigation.
k. Reservation of Shares. So long as any of the Notes or Warrants
remain outstanding, the Company shall take all action necessary to at all times
have authorized, and reserved for the purpose of issuance, no less than one
hundred twenty percent (120%) the aggregate number of shares of Common Stock
needed to provide for the issuance of the Conversion Shares and the Warrant
Shares.
l. Transfer Agent Instructions. The Company shall issue irrevocable
instructions to its transfer agent, and any subsequent transfer agent, to issue
certificates, registered in the name of each Purchaser or its respective
nominee(s), for the Conversion Shares and the Warrant Shares in such amounts as
specified from time to time by each Purchaser to the Company upon conversion of
the Notes or exercise of the Warrants in the form of Exhibit F attached hereto
(the "Irrevocable Transfer Agent Instructions"). Prior to registration of the
Conversion Shares and the Warrant Shares under the Securities Act, all such
certificates shall bear the restrictive legend specified in Section 5.1 of this
Agreement. The Company warrants that no instruction other than the Irrevocable
Transfer Agent Instructions referred to in this Section 3.1(l) will be given by
the Company to its transfer agent and that the Shares shall otherwise be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement. If a Purchaser provides the Company with an opinion
of counsel, in a generally acceptable form, to the effect that a public sale,
18
assignment or transfer of the Shares may be made without registration under the
Securities Act or the Purchaser provides the Company with reasonable assurances
that the Shares can be sold pursuant to Rule 144 without any restriction as to
the number of securities acquired as of a particular date that can then be
immediately sold, the Company shall permit the transfer, and, in the case of the
Conversion Shares and the Warrant Shares, promptly instruct its transfer agent
to issue one or more certificates in such name and in such denominations as
specified by such Purchaser and without any restrictive legend. The Company
acknowledges that a breach by it of its obligations under this Section 3.1(l)
will cause irreparable harm to the Purchasers by vitiating the intent and
purpose of the transaction contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Section 3.1(l) will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Section 3.1(l), that
the Purchasers shall be entitled, in addition to all other available remedies,
to an order and/or injunction restraining any breach and requiring immediate
issuance and transfer, without the necessity of showing economic loss and
without any bond or other security being required.
m. Disposition of Assets. So long as the Notes remain outstanding,
neither the Company nor any Subsidiary shall sell, transfer or otherwise dispose
of any of its properties, assets and rights including, without limitation, its
software and intellectual property, to any person except for sales to customers
in the ordinary course of business or with the prior written consent of the
holders of a majority of the Notes then outstanding.
n. Reporting Status. So long as a Purchaser beneficially owns any of
the Shares, the Company shall timely file all reports required to be filed with
the Commission pursuant to the Exchange Act, and the Company shall not terminate
its status as an issuer required to file reports under the Exchange Act even if
the Exchange Act or the rules and regulations thereunder would permit such
termination.
o. Disclosure of Material Information. The Company covenants and
agrees that neither it nor any other person acting on its behalf has provided or
will provide any Purchaser or its agents or counsel with any information that
the Company believes constitutes material non-public information, unless prior
thereto such Purchaser shall have executed a written agreement regarding the
confidentiality and use of such information. The Company understands and
confirms that each Purchaser shall be relying on the foregoing representations
in effecting transactions in securities of the Company.
p. Pledge of Securities. The Company acknowledges and agrees that
the Shares may be pledged by a Purchaser in connection with a bona fide margin
agreement or other loan or financing arrangement that is secured by the Common
Stock. The pledge of Common Stock shall not be deemed to be a transfer, sale or
assignment of the Common Stock hereunder, and no Purchaser effecting a pledge of
Common Stock shall be required to provide the Company with any notice thereof or
otherwise make any delivery to the Company pursuant to this Agreement or any
other Transaction Document; provided that a Purchaser and its pledgee shall be
required to comply with the provisions of Article V hereof in order to effect a
sale, transfer or assignment of Common Stock to such pledgee. At the Purchasers'
expense, the Company hereby agrees to execute and deliver such documentation as
a pledgee of the Common Stock may reasonably request in connection with a pledge
of the Common Stock to such pledgee by a Purchaser.
19
q. Form SB-2 Eligibility. The Company currently meets the
"registrant eligibility" and transaction requirements set forth in the general
instructions to Form SB-2 applicable to "resale" registrations on Form SB-2 and
the Company shall file all reports required to be filed by the Company with the
Commission in a timely manner. Section 3.2
Section 3.2 Covenants of the Purchasers.
a. Trading Activities. Each of the Purchasers covenants with the
Company that for so long as such Purchaser owns the Warrants or the Shares, and
for a period of six (6) months thereafter, (i) such Purchaser's trading
activities with respect to the Shares shall be in compliance with all applicable
federal, state and foreign securities laws, and (ii) such Purchaser agrees that
it shall not, and it will cause its Affiliates (as defined below) not to, engage
in any short sales with respect to the Common Stock.
b. Confidentiality. Each Purchaser agrees that such Purchaser will
keep confidential and will not disclose, divulge, or use for any purpose (other
than to monitor its investment in the Company) any confidential information
obtained from the Company pursuant to the terms of the Transaction Documents,
unless such confidential information (i) is known or becomes known to the public
in general (other than as a result of a breach of this Section 3.2(b) by such
Purchaser), (ii) is or has been independently developed or conceived by the
Purchaser without use of the Company's confidential information, or (iii) is or
has been made known or disclosed to the Purchaser by a third party without a
breach of any obligation of confidentiality such third party may have to the
Company; provided, however, that a Purchaser may disclose confidential
information (x) to its attorneys, accountants, consultants, and other
professionals to the extent necessary to obtain their services in connection
with monitoring its investment in the Company; (y) to any Affiliate, partner,
member, stockholder, or wholly owned subsidiary of such Purchaser in the
ordinary course of business, provided that such Purchaser informs such Person
that such information is confidential and directs such Person to maintain the
confidentiality of such information; or (z) as may otherwise be required by law,
provided that the Purchaser promptly notifies the Company of such disclosure and
takes reasonable steps to minimize the extent of any such required disclosure.
For purposes of this Agreement, "Affiliate" means, with respect to any specified
person or entity (collectively, a "Person"), any other Person who, directly or
indirectly, controls, is controlled by, or is under common control with such
Person, including without limitation any general partner, managing member,
officer or director of such Person, or, in the case of natural persons, any
Immediate Family Member of such Person. For purposes of this Agreement,
"Immediate Family Member" means a child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, of a natural person referred to herein.
Section 3.3 Restrictions on Transfer.
20
a. The Notes, the Warrants and the Shares shall not be sold,
pledged, or otherwise transferred, and the Company shall not recognize and shall
issue stop-transfer instructions to its transfer agent with respect to any such
sale, pledge, or transfer, except upon the conditions specified in this
Agreement (including without limitation Section 5.1), which conditions are
intended to ensure compliance with the provisions of the Securities Act. A
transferring Purchaser will cause any proposed purchaser, pledgee, or transferee
of the Notes, the Warrants and the Shares held by such Purchaser to agree to
take and hold such securities subject to the provisions and upon the conditions
specified in this Agreement and to provide information reasonably requested by
the Company about such purchaser, pledgee or transferee. The Purchasers consent
to the Company making a notation in its records and giving instructions to any
transfer agent in order to implement the restrictions on transfer set forth in
this Section 3.3.
ARTICLE IV
CONDITIONS
Section 4.1 Conditions Precedent to the Obligation of the Company to
Sell the Shares. The obligation hereunder of the Company to issue and sell the
Notes and the Warrants to the Purchasers is subject to the satisfaction or
waiver, at or before the Closing, of each of the conditions set forth below.
These conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion.
(a) Accuracy of Each Purchaser's Representations and Warranties. The
representations and warranties of each Purchaser shall be true and correct in
all respects as of the date when made and as of the Closing Date as though made
at that time, except for representations and warranties that are expressly made
as of a particular date, which shall be true and correct in all respects as of
such date.
(b) Performance by the Purchasers. Each Purchaser shall have
performed, satisfied and complied in all respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by such Purchaser 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 which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(d) Delivery of Purchase Price. The Purchase Price for the Units has
been delivered to the Company at the Closing Date.
(e) Delivery of Transaction Documents. The Transaction Documents
have been duly executed and delivered by the Purchasers to the Company.
21
(f) Qualifications. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Notes and the Warrants pursuant to this Agreement shall be obtained and
effective as of the Closing.
Section 4.2 Conditions Precedent to the Obligation of the Purchasers
to Purchase the Units. The obligation hereunder of each Purchaser to acquire and
pay for the Units is subject to the satisfaction or waiver, at or before the
Closing, of each of the conditions set forth below. These conditions are for
each Purchaser's sole benefit and may be waived by such Purchaser at any time in
its sole discretion.
(a) Accuracy of the Company's Representations and Warranties. Each
of the representations and warranties of the Company in this Agreement shall be
true and correct in all respects as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
are expressly made as of a particular date), which shall be true and correct in
all respects as of such date.
(b) Performance by the Company. The Company shall have performed,
satisfied and complied in all respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing.
(c) No Suspension, Etc. Trading in the Company's Common Stock shall
not have been suspended by the Commission or the OTC Bulletin Board (except for
any suspension of trading of limited duration agreed to by the Company, which
suspension shall be terminated prior to the applicable Closing), and, at any
time prior to the Closing Date, trading in securities generally as reported by
Bloomberg Financial Markets ("Bloomberg") shall not have been suspended or
limited, or minimum prices shall not have been established on securities whose
trades are reported by Bloomberg, or on the New York Stock Exchange, nor shall a
banking moratorium have been declared either by the United States or New York
State authorities, nor shall there have occurred any material outbreak or
escalation of hostilities or other national or international calamity or crisis
of such magnitude in its effect on, or any material adverse change in any
financial market which, in each case, in the judgment of such Purchaser, makes
it impracticable or inadvisable to purchase the Notes and Warrants.
(d) 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 which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(e) No Proceedings or Litigation. No action, suit or proceeding
before any arbitrator or any governmental authority shall have been commenced,
and no investigation by any governmental authority shall have been threatened,
against the Company or any subsidiary, or any of the officers, directors or
22
affiliates of the Company or any subsidiary seeking to restrain, prevent or
change the transactions contemplated by this Agreement, or seeking damages in
connection with such transactions.
(f) Certificates. The Company shall have executed and delivered to
the Purchasers the certificates (in such denominations as such Purchaser shall
request) for the Notes and the Warrants being acquired by such Purchaser at the
Closing (in such denominations as such Purchaser shall request).
(g) Resolutions. The Board of Directors of the Company shall have
adopted resolutions consistent with Section 2.1(b) hereof in a form reasonably
acceptable to such Purchaser (the "Resolutions").
(h) Reservation of Shares. As of the Closing Date, the Company shall
have reserved out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Notes and the exercise of the
Warrants, a number of shares of Common Stock equal to one hundred twenty percent
(120%) of the aggregate number of Conversion Shares issuable upon conversion of
the Notes outstanding on the Closing Date and the number of Warrant Shares
issuable upon exercise of the number of Warrants assuming such Warrants were
granted on the Closing Date.
(i) Secretary's Certificate. The Company shall have delivered to
such Purchaser a secretary's certificate, dated as of the Closing Date, as to
(i) the Resolutions, (ii) the Articles, (iii) the Bylaws, and (iii) the
authority and incumbency of the officers of the Company executing the
Transaction Documents and any other documents required to be executed or
delivered in connection therewith.
(j) Officer's Certificate. The Company shall have delivered to the
Purchasers a certificate of an executive officer of the Company, dated as of the
Closing Date, confirming the accuracy of the Company's representations,
warranties and covenants as of such Closing Date and confirming the compliance
by the Company with the conditions precedent set forth in Section 4.2 as of the
Closing Date.
(k) Material Adverse Effect. No Material Adverse Effect shall have
occurred at or before the Closing Date.
(i) Qualifications. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Notes and the Warrants pursuant to this Agreement shall be obtained and
effective as of the Closing.
23
ARTICLE V
Stock Certificate Legend
Section 5.1 Legend. Each certificate representing the Notes and
Warrants, and, if appropriate, securities issued upon conversion thereof, shall
be stamped or otherwise imprinted with a legend substantially in the following
form (in addition to any legend required by applicable state securities or "blue
sky" laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED ABSENT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH
AN AVAILABLE EXEMPTION FROM REGISTRATION. THE COMPANY MAY REFUSE
TO AUTHORIZE ANY TRANSFER OF THE SECURITIES IN RELIANCE ON AN
EXEMPTION FROM REGISTRATION UNTIL IT HAS RECEIVED AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH
REGISTRATION IS NOT REQUIRED.
THE COMPANY IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OF STOCK
OR MORE THAN ONE SERIES OF ANY CLASS OF STOCK. THE DESIGNATIONS,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER
SPECIAL RIGHTS OF THE SHARES OF EACH CLASS OR SERIES THEREOF AND
THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH RIGHTS,
ARE SET FORTH IN THE ARTICLES OF INCORPORATION OF THE COMPANY. A
COPY OF SAID ARTICLES OF INCORPORATION WILL BE FURNISHED FREE OF
CHARGE TO THE HOLDER OF THIS CERTIFICATE UPON WRITTEN REQUEST TO
THE SECRETARY OF THE COMPANY.
THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY
AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY.
The Company agrees to reissue certificates representing any of the Shares,
without the legend set forth above if at such time, prior to making any transfer
of any such securities, such holder thereof shall give written notice to the
Company describing the manner and terms of such transfer and removal as the
Company may reasonably request. Such proposed transfer and removal will not be
effected until: (a) either (i) the Company has received a written opinion of
legal counsel who shall, and whose legal opinion shall be, reasonably
satisfactory to the Company, addressed to the Company, to the effect that the
registration of such Shares under the Securities Act is not required in
connection with such proposed transfer, (ii) a registration statement under the
Securities Act covering such proposed disposition has been filed by the Company
with the Commission and has become effective under the Securities Act, (iii) the
Company has received other evidence reasonably satisfactory to the Company that
such registration and qualification under the Securities Act and state
securities laws are not required, or (iv) the holder provides the Company with
24
reasonable assurances reasonably satisfactory to counsel to the Company, that
such security can be sold pursuant to Rule 144 under the Securities Act; and (b)
either (i) the Company has received a written opinion of legal counsel who
shall, and whose legal opinion shall be reasonably satisfactory to the Company,
addressed to the Company to the effect that registration or qualification under
the securities or "blue sky" laws of any state is not required in connection
with such proposed disposition, or (ii) the Company has received other evidence
reasonably satisfactory to the Company that compliance with applicable state
securities or "blue sky" laws has been effected or a valid exemption exists with
respect thereto. The Company will respond to any such notice from a holder
within five (5) business days. In the case of any proposed transfer under this
Section 5.1, the Company will use commercially reasonable efforts to comply with
any such applicable state securities or "blue sky" laws, but shall in no event
be required, (x) to qualify to do business in any state where it is not then
qualified, (y) to take any action that would subject it to tax or to the general
service of process in any state where it is not then subject, or (z) to comply
with state securities or "blue sky" laws of any state for which registration by
coordination is unavailable to the Company. The restrictions on transfer
contained in this Section 5.1 shall be in addition to, and not by way of
limitation of, any other restrictions on transfer contained in any other section
of this Agreement. Whenever a certificate representing the Shares is required to
be issued to a Purchaser without a legend, in lieu of delivering physical
certificates representing the applicable Shares (provided that a registration
statement under the Securities Act providing for the resale of the Shares is
then in effect and such request is in connection with a sale), the Company shall
cause its transfer agent to electronically transmit such Shares to a Purchaser
by crediting the account of such Purchaser's Prime Broker with the Depository
Trust Company ("DTC") through its Deposit Withdrawal Agent Commission ("DWAC")
system (to the extent not inconsistent with any provisions of this Agreement)
provided that the Company and the Company's transfer agent are participating in
DTC through the DWAC system.
ARTICLE VI
Indemnification
Section 6.1 General Indemnity. The Company agrees to indemnify and
hold harmless the Purchasers (and their respective directors, officers,
managers, partners, members, shareholders, affiliates, agents, successors and
assigns) from and against any and all losses, liabilities, deficiencies, costs,
damages and expenses (including, without limitation, reasonable attorneys' fees,
charges and disbursements) incurred by the Purchasers solely as a result and to
the extent of a material inaccuracy in or breach of the representations,
warranties or covenants made by the Company herein. Each Purchaser severally but
not jointly agrees to indemnify and hold harmless the Company and its directors,
officers, affiliates, agents, successors and assigns from and against any and
all losses, liabilities, deficiencies, costs, damages and expenses (including,
without limitation, reasonable attorneys' fees, charges and disbursements)
incurred by the Company solely as result and to the extent of a material
inaccuracy in or breach of the representations, warranties or covenants made by
such Purchaser herein. In addition, each Purchaser agrees to indemnify and to
hold harmless the Company from any liability for any commission or compensation
in the nature of a finder's or broker's fee arising from the transactions
contemplated by this Agreement (and the costs and expenses of defending against
25
such liability or asserted liability) for which each Purchaser or any of its
officers, employees, or representatives is responsible. The maximum aggregate
liability of each Party pursuant to its indemnification obligations under this
Article VI shall not exceed the portion of the Purchase Price paid by such
Purchaser hereunder.
Section 6.2 Indemnification Procedure. Any party entitled to
indemnification under this Article VI (an "indemnified party") will promptly
give written notice to the indemnifying party of any matters giving rise to a
claim for indemnification; provided, that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Article VI except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any action, proceeding or claim is brought against an
indemnified party in respect of which indemnification is sought hereunder, the
indemnifying party shall be entitled to participate in and, unless in the
reasonable judgment of the indemnified party a conflict of interest between it
and the indemnifying party may exist with respect of such action, proceeding or
claim, to assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. In the event that the indemnifying party advises an
indemnified party that it will contest such a claim for indemnification
hereunder, or fails, within thirty (30) days of receipt of any indemnification
notice to notify, in writing, such person of its election to defend, settle or
compromise, at its sole cost and expense, any action, proceeding or claim (or
discontinues its defense at any time after it commences such defense), then the
indemnified party may, at its option, defend, settle or otherwise compromise or
pay such action or claim. In any event, unless and until the indemnifying party
elects in writing to assume and does so assume the defense of any such claim,
proceeding or action, the indemnified party's costs and expenses arising out of
the defense, settlement or compromise of any such action, claim or proceeding
shall be losses subject to indemnification hereunder. The indemnified party
shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the indemnified party which relates to such action or claim. The indemnifying
party shall keep the indemnified party fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. If
the indemnifying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense. The indemnifying party shall not be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent, which consent shall not be unreasonably withheld.
Notwithstanding anything in this Article VI to the contrary, the indemnifying
party shall not, without the indemnified party's prior written consent, settle
or compromise any claim or consent to entry of any judgment in respect thereof
which imposes any future obligation on the indemnified party or which does not
include, as an unconditional term thereof, the giving by the claimant or the
plaintiff to the indemnified party of a release from all liability in respect of
such claim. The indemnification required by this Article VI shall be made by
periodic payments of the amount thereof during the course of investigation or
defense, as and when bills are received or expense, loss, damage or liability is
incurred, so long as the indemnified party irrevocably agrees to refund such
moneys if it is ultimately determined by a court of competent jurisdiction that
26
such party was not entitled to indemnification. The indemnity agreements
contained herein shall be in addition to (a) any cause of action or similar
rights of the indemnified party against the indemnifying party or others, and
(b) any liabilities the indemnifying party may be subject to pursuant to the
law.
ARTICLE VII
Miscellaneous
Section 7.1 Fees and Expenses. Except as otherwise set forth in this
Agreement and the other Transaction Documents, each party shall pay the fees and
expenses of its advisors, 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, provided
that the Company shall pay the Purchasers' attorneys' fees and expenses
(including disbursements and out-of-pocket expenses) incurred in connection with
(i) the preparation, negotiation, execution and delivery of this Agreement and
the other Transaction Documents and the transactions contemplated thereunder,
which payment shall be made at Closing, and (ii) any amendments, modifications
or waivers of this Agreement or any of the other Transaction Documents requested
by the Company. The Company shall also pay to the Purchasers all reasonable fees
and expenses incurred by the Purchasers in connection with the enforcement of
this Agreement or any of the other Transaction Documents, including, without
limitation, all reasonable attorneys' fees and expenses.
Section 7.2 Specific Enforcement, Consent to Jurisdiction; Waiver of
Jury Trial.
(a) The Company and the Purchasers acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement or the other Transaction Documents were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent or
cure breaches of the provisions of this Agreement or the Registration Rights
Agreement and to enforce specifically the terms and provisions hereof or
thereof, this being in addition to any other remedy to which any of them may be
entitled by law or equity.
(b) Each of the Company and the Purchasers (i) hereby irrevocably
submits to the jurisdiction of the United States District Court sitting in the
Delaware and the courts of the State of Delaware for the purposes of any suit,
action or proceeding arising out of or relating to this Agreement or any of the
other Transaction Documents or the transactions contemplated hereby or thereby
and (ii) hereby waives, and agrees not to assert in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
such court, that the suit, action or proceeding is brought in an inconvenient
forum or that the venue of the suit, action or proceeding is improper. Each of
the Company and the Purchasers consents to process being served in any such
suit, action or proceeding by mailing a copy thereof 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 in this Section 7.2 shall affect or limit any right to serve
process in any other manner permitted by law.
27
(c) Waiver of Jury Trial. EACH OF THE PARTIES HEREBY UNCONDITIONALLY
AND IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
Section 7.3 Entire Agreement; Amendment. This Agreement and the
Transaction Documents contains the entire understanding and agreement of the
parties with respect to the matters covered hereby and, except as specifically
set forth herein or in the Transaction Documents, neither the Company nor any of
the Purchasers makes any representations, warranty, covenant or undertaking with
respect to such matters and they supersede all prior understandings and
agreements with respect to said subject matter, all of which are merged herein.
No provision of this Agreement may be waived or amended other than by a written
instrument signed by the Company and the holders of at least seventy-five
percent (75%) of the Preferred Shares then outstanding, and no provision hereof
may be waived other than by an a written instrument signed by the party against
whom enforcement of any such amendment or waiver is sought. No such amendment
shall be effective to the extent that it applies to less than all of the holders
of the Preferred Shares then outstanding. 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 or holders of
Preferred Shares, as the case may be.
Section 7.4 Notices. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery by telex (with correct answer back
received), telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the Company: BioForce Nanosciences Holdings, Inc.
0000 Xxxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxx, Xxxx, 00000
Attn: Chief Executive Officer
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
with copies (which shall not Sonnenschein, Nath & Xxxxxxxxx, LLP
constitute notice) to: 000 XXX Xxxxxxx
Xxxxx Xxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
If to any Purchaser: At the address of such Purchaser
set forth on Exhibit A to this
Agreement
28
Any party hereto may from time to time change its address for notices by
giving at least ten (10) days written notice of such changed address to the
other party hereto.
Section 7.5 Waivers. No waiver by either party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provisions, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter.
Section 7.6 Headings. The article, section and subsection headings
in this Agreement are for convenience only and shall not constitute a part of
this Agreement for any other purpose and shall not be deemed to limit or affect
any of the provisions hereof.
Section 7.7 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and assigns.
Section 7.8 No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
Section 7.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware, without
giving effect to any of the conflicts of law principles which would result in
the application of the substantive law of another jurisdiction. This Agreement
shall not be interpreted or construed with any presumption against the party
causing this Agreement to be drafted.
Section 7.10 Survival. The representations and warranties of the
Company and the Purchasers shall survive the execution and delivery hereof and
the Closing until the first anniversary of the Closing Date, except the
agreements and covenants set forth in Articles I, III, V, VI and VII of this
Agreement shall survive the execution and delivery hereof and the Closing
hereunder.
Section 7.11 Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement and shall become effective when counterparts have been signed by each
party and delivered to the other parties hereto, it being understood that all
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.
29
Section 7.12 Publicity. The Company agrees that it will not
disclose, and will not include in any public announcement, the name of the
Purchasers without the consent of the Purchasers unless and until such
disclosure is required by law or applicable regulation, and then only to the
extent of such requirement.
Section 7.13 Severability. The provisions of this Agreement and the
Transaction Documents are severable and, in the event that any court of
competent jurisdiction shall determine that any one or more of the provisions or
part of the provisions contained in this Agreement or the Transaction Documents
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision or part of a provision of this Agreement or the Transaction
Documents and such provision shall be reformed and construed as if such invalid
or illegal or unenforceable provision, or part of such provision, had never been
contained herein, so that such provisions would be valid, legal and enforceable
to the maximum extent possible.
Section 7.14 Further Assurances. From and after the date of this
Agreement, upon the request of any Purchaser or the Company, each of the Company
and the Purchasers shall execute and deliver such instrument, documents and
other writings as may be reasonably necessary or desirable to confirm and carry
out and to effectuate fully the intent and purposes of this Agreement, the
Notes, the Conversion Shares, the Warrants, and the Warrant Shares.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
30
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.
BIOFORCE NANOSCIENCES HOLDINGS, INC.
By:
----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chief Financial Officer
PURCHASER
By:
----------------------------------
Name:
Title:
EXHIBIT A to the
CONVERTIBLE SECURED PROMISSORY NOTE AND WARRANT PURCHASE
AGREEMENT FOR
BIOFORCE NANOSCIENCES HOLDINGS, INC.
Method of Purchase Price Payment
Number of ----------------------------------------
Name and Address of Purchaser Units Purchased Wire Transfer(1) Note Surrender(2)
----------------------------- --------------- ---------------- -----------------
FCPR SGAM AI Biotechnology Fund 200,000.00 $200,000.00 $0.00
Immueble XXXX
000 Xxxxx Xxxxx Renault
Xxxxx Xx Xxxxxxx, Xxxxx, Xxxxxx 00000
Xx. Xxxxx X. Xxxx 33,333.33 $23,333.33 $10,000.00
0000 X. Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Xx. Xxxx X. Xxxxxxxxx 33,333.33 $23,333.33 $10,000.00
0000 Xxxxxxx Xxxx
Xxxx, XX 00000
Xx. Xxxxxxx X. Xxxxx 33,333.33 $23,333.33 $10,000.00
0000 Xxxxxxx Xxxx
Xxxx, XX 00000
(1) Wire transfer will be made in immediately available funds to an account
designated by the Company
(2) Notes to be surrendered are promissory notes evidencing cash advances made
to the Company on May 28, 2008 and May 29, 2008
EXHIBIT B-1 to the
CONVERTIBLE SECURED PROMISSORY NOTE AND WARRANT PURCHASE
AGREEMENT FOR
BIOFORCE NANOSCIENCES HOLDINGS, INC.
FORM OF CONVERTIBLE SECURED PROMISSORY NOTE
EXHIBIT B-2 to the
CONVERTIBLE SECURED PROMISSORY NOTE AND WARRANT PURCHASE
AGREEMENT FOR
BIOFORCE NANOSCIENCES HOLDINGS, INC.
FORM OF WARRANT
EXHIBIT C to the
CONVERTIBLE SECURED PROMISSORY NOTE AND WARRANT PURCHASE
AGREEMENT FOR
BIOFORCE NANOSCIENCES HOLDINGS, INC.
TRANSFER AGENT INSTRUCTIONS
